AnnualReport 2012/2013
Financial Highlights .....2
What we do .....4
History .....6
Chairman’s Review .....8
Group Managing Director/Chief Executive
Officer’s Review .....10
Board of Directors .....16
Corporate Senior Management .....20
Our Brands .....22
Sector Reviews .....26
Information and Communications Technology .....555
Sustainability Report .....557
Human Resources .....66
Corporate Governance .....68
Risk Management .....766
Audit Committee Report .....7788
Business Operations Committee Report .....80
Remuneration Committee Report .....81
Directors’ Report .....84
Statement of Directors’ Responsibility .....88
Independent Auditor’s Report .....8899
Statement of Comprehensive Income .....90
Statement of Other Comprehensive Income .....91
Statement of Financial Position .....9992
Statement of Changes in Equity .....993
Statement of Cash Flows .....9955
Significant Accounting Policies .....97
Notes to the Financial Statements .....1337
Economic Value Statement .....21166
Ten Year Summary .....218
Share Information .....219
Subsidiaries & Associates .....221
Glossary .....224
Notice of the Annual General Meeting .....2277
Notes .....228
Form of Proxy .....2331
Corporate Information .....Inner bacba k cooover
Annual Report 2012/2013 | 1
Bold. Adventurous. Willing to step onto the road less travelled and lead the way
into uncharted territory. At Brown & Company PLC we are very proud of the bold
attitude that has brought us so far.
From the earliest days we have been a pioneering company - one that has
embraced change, economic, technological and social, to become who we are
now - a strongly established corporate with a very progressive attitude.
Browns is now geared to expand into sunshine industries and we are confident
that we will bring greater value to thousands of stakeholders we serve today.
We know we can do anything we choose. Because we dare.
2 | Brown & Company PLC
GROUP COMPANY
31st March 2013 2012 2011 2013 2012 2011
Results for the Year
Revenue (Gross) Rs.Mn 14,184 14,387 12,095 9,847 10,542 7,810
EBIT Rs.Mn 1,525 3,881 3,895 430 1,056 1,069
Profit / (Loss) before Taxation Rs.Mn 455 3,462 3,604 (556) 609 771
Profit / (Loss) after Taxation Rs.Mn 412 3,077 3,282 (465) 399 507
Group Profit / (Loss) Attributable to Equity holders Rs.Mn 360 1,171 2,188 (465) 399 507
Position at the Year end
Shareholders’ Funds Rs.Mn 15,096 13,881 14,914 13,789 13,860 15,468
Total Assets Rs.Mn 34,542 32,831 27,282 23,222 21,226 20,254
Market Capitalization Rs.Mn 8,356 10,993 20,540 8,356 10,993 20,540
Retained Earnings Rs.Mn 9,103 8,409 7,507 7,384 7,894 7,602
Financial Ratios
Gross Profit (%) % 20.50% 23.50% 26.39% 19.48% 23.34% 23.20%
Interest Cover Times 1.42 9.26 13.36 0.44 2.36 3.58
Current Ratio Times 1.32 1.80 3.07 1.00 1.24 1.12
Price earnings (year-end) (times) Times 23.21 9.39 9.39 -17.98 27.57 40.53
Debt to Equity % 50% 41% 24% 68% 53% 30.0
Return on Equity % 1.80% 13.67% 14.90% -3.40% 2.70% 4.60%
Per Share
Earnings (basic) (Rs.) Rs. 5.08 16.52 30.87 (6.56) 5.63 7.15
Market Value (year-end) (Rs.) Rs. 117.90 155.10 289.80 117.90 155.10 289.80
Net assets (year-end) (Rs.) Rs. 212.99 195.85 210.43 194.56 195.55 218.24
Value Generated
Economic Value Generated
Gross Economic Value Generated Rs.Mn 14,533 17,689 14,674 10,268 10,837 8,605
Cost of Goods and service Provided Rs.Mn (10,896) (12,433) (9,654) (9,220) (9,348) (7,390)
Net Economic Value Addition Rs.Mn 3,638 5,256 5,020 1,047 1,489 1,215
Economic Value Distributed
Employees Rs.Mn 1,554 1,236 1,057 326 290 229
Government Rs.Mn 122 245 231 229 205 60
Providers of Funds Rs.Mn 1,302 560 378 987 447 298
Economic Value Retained Rs.Mn 660 3,215 3,354 (495) 547 628
Group Employment (No. of persons) Number 760 724 653 534 535 466
Annual Report 2012/2013 | 3
The year under review was primarily one of consolidation following a few years of expansion and restructuring. Given the challenging conditions, the company adopted an approach of assessing the situation, filling in gaps, making corrections and consolidating operations. Existing businesses were aligned more closely with the overall goals of the Group, while new business opportunities were also pursued. In order to stay innovative and competitive,organisations need to find and take advantage of new opportunities that would propel the company forward.
VisionTo be a leading Sri Lankan conglomerate excelling through sunshine industries with a global presence and cutting edge technology.
12/1311/1210/1109/10
Rs. (Mn)Revenue
14,1
84
8,95
3
12,0
95
14,3
87
Rs. (Mn)Total Assets
12/1311/1210/1109/10
34,5
42
18,5
91
27,2
82
32,8
31
Rs. (Mn)Equity
12/1311/1210/1109/10
23,0
14
13,4
58
21,8
41
23,1
53
4 | Brown & Company PLC
Browns Investments PLCFLC Holdings PLCLOLC Leisure Ltd.Sierra Holdings (Pvt) Ltd.Agstar Fertilizers PLCGal-Oya Holdings (Pvt) LtdRoyal Fernwood Porcelain Ltd.Other Investments
Investments
Agriculture DivisionSifang Lanka (Pvt) Ltd.Plantation Support Services
Agriculture& Plantations
BatteryKlevenberg (Pvt) Ltd.Power SystemsGeneral Trading
Power Generation Marine& ManufacturingBrowns Group Industries (Pvt) Ltd.Browns Thermal Engineering (Pvt) Ltd.Browns Industrial Park Ltd.
Annual Report 2012/2013 | 5
Browns Tours (Pvt) Ltd.BG Air Services (Pvt) Ltd.
Travel & Leisure
Veterinary Pharmaceuticals
Vet PharmaHome & OfficeSolutions
Healthcare
Integrated Business SolutionsRetailConsumerCommodity Trading
6 | Brown & Company PLCMr. James Brown, Founder of the Browns Group
Annual Report 2012/2013 | 7
The Browns Group is one of the most diversified entities in Sri Lanka with 20 plus subsidiaries and associates focused on trading and strategic investments. The Group traces its history back to James Brown, a young engineer and mechanic from London who arrived in Ceylon in 1872, seeking the adventure and fortunes of the orient. Starting off with a bicycle repair shop near Gleneagle in Hatton, he launched Brown & Company Limited in 1875 to manufacture and repair tea machinery. Over the next decade Browns grew in size and scope and was incorporated as a rupee company. In 1947 the company bought over the total equity capital of the Hatton Bank Limited and the Hatton Transport & Agency Co. Ltd. to become the Browns Group. The Group has since forged ahead, seeking opportunities in sunshine industries and establishing for itself a reputation of solidity and resilience.
8 | Brown & Company PLC
As we expand into new geographical areas we are hopeful that we will complement the Government’s policies so as to enable a mutual partnership in the rebuilding and development of the country.
Annual Report 2012/2013 | 9
Dear Shareholder,
On behalf of the Board of Directors of Brown and Company PLC, it is my pleasure to present to you the annual report and Financial Statements for the year ended 31st March 2013, and to briefly review the performance of the Company during this period.
My sincere appreciation goes to our outgoing chairperson Mrs. Rohini Nanayakkara who joined Browns in July 2006. Mrs. Nanayakkara, a veteran leader in the financial sector, facilitated the growth strategy of Browns to become a leading conglomerate in the country. Having taken the leadership role at Browns as Executive Chairman a month from the end of the financial year, I wish to take this conglomerate with a rich history of over 137 years to greater heights.
The Company that was formed in 1875 to manufacture, repair and import agricultural and farming machinery, to this date holds the leading position in this sector. The Group’s resilience has been time tested - from colonial times to independent Sri Lanka, through open economy to post civil war.
Today Browns is a conglomerate that operates in growth industries of agriculture, plantations, marine engineering, manufacturing, home and office solutions, power generation, travel and leisure, veterinary pharmaceuticals, construction and healthcare with market leader positions in many of the sectors in which it operates.
Through Browns Investments PLC (BI), the Company’s investment vehicle, Browns has invested in several key areas including leisure & entertainment, construction, plantation & agriculture as well as manufacturing. To capitalize on the benefits of the tourism boom expected in the next few years, BI has invested in and is constructing hotels in the south coast as well as Dambulla, whilst holding a 30% share in LOLC Leisure Ltd which holds a substantial number of hotel properties in the East & South coasts.
The company’s investment in plantation sector compromises 40 tea and rubber estates covering 19,000 acres of tea & 13,000 acres under rubber. Investments in the construction sector of BI include holdings in major construction Companies such as Sierra Constructions (Pvt) Ltd and Ajax Engineers (Pvt) Ltd. The Group also has a significant stake in Agstar Fertilizers PLC which supplies planting material, fertilizer and crop care products.
Healthcare has been identified by the Group to be a remarkably resilient and rapidly growing sector. In line with this, the Group ventured in to the sector during the year under review via the acquisition of a 25-bed hospital that will be expanded into a 60-bed, fully equipped, secondary care General Hospital in Ragama.
Other important areas of expansion include real estate and entertainment. Browns, holding commercial properties in strategic locations, has plans to further develop their portfolio of real estate assets, some as conference and entertainment centres, in line with the government’s plan to develop Colombo city into a commercial and tourist hub.
The opening of the North and the East along with the removal of restrictions on fishing off the shores of Sri Lanka have given the Group immense opportunity to penetrate these areas and further develop the Group’s businesses. With the government focusing on agriculture, rural development, regional development and fisheries, Browns is well positioned to take advantage of these new opportunities, supported by its unblemished reputation and brand recognition in almost all regions of the country.
The year under review was a challenging one for Browns, primarily because the agriculture sector was adversely affected by drought followed by floods, as well as the high interest rate regimes that prevailed throughout most of the year. The trading businesses of Browns were especially impacted by the high interest rates, the curtailing of credit in the first half of the year as well as the price fluctuations on imports due to Rupee depreciation. The Group recorded a turnover of Rs 14.2Bn in the year under review, while net profit was Rs 412Mn. A more detailed review of financial performance is available later in this report.
The Group, while exploring opportunities for expansion and growth in business areas, has also understood the need to increase productivity and efficiency in its operations. During the year under review, the Browns Industrial Park (Pvt) Ltd in Pannala, which is a fully owned subsidiary of Browns, was upgraded to serve all manufacturing, logistics and warehousing needs of the Group. This enables greater synergies between all divisions and subsidiaries that were previously housed in many different locations.
The Group also implemented a much needed Enterprise Resource Planning (ERP) solution and also introduced a shared services concept to its finance function. The ERP will seamlessly integrate the business functions of the Group from assembly and production to core finance functions, and will be further expanded to include a Business Intelligence (BI) package and a Customer Relationships Management (CRM) system in the coming year, true to Browns’ tradition of being a responsive Company in meeting customer needs and developing closer relationships.
The Group, which is recognised as a one-stop-shop for many products and services, will continue to study and ascertain areas where Group synergies between current business lines and new investments can be further enhanced. With the recent consolidation of shareholding, there will be greater synergies achieved between LOLC and Browns, which the Group companies have already begun to leverage on. For instance, in terms of facilitating micro-financing opportunities for farmer communities and dealer networks.
We will always ensure that Browns remains an innovative conglomerate and a household name across Sri Lanka. As we expand into new geographical areas we are hopeful that we will complement the Government’s policies so as to enable a mutual partnership in the rebuilding and development of the country. In this regard, Browns will take on the challenge of aligning its business model, and most importantly, foster the work force to embrace the change of growth economies alongside their personal growth.
In conclusion, I wish to record my sincere appreciation towards all our employees for their dedication and hard work that has resulted in the Group’s recognition as one of the most trusted conglomerates in the country today. I wish to thank the Board of Directors for their support and guidance. I would also like to thank our principals and partners for their unblemished relationship with the Company and the Group. I look forward to another year of continued success and wish to thank the shareholders of the company for the trust and confidence they have placed in me and the management in taking the Company and Group forward.
Ishara Nanayakkara Executive Chairman
10 | Brown & Company PLC
The current year saw robust performance with regard to the continued market leadership position in key segments and continued investments in strategic sectors.
Annual Report 2012/2013 | 11
Dear Stakeholder,
It is with pleasure that I present to you the audited Financial
Statements of Brown and Company PLC and review its performance
for the financial year ending 31st March 2013.
The year under review was a challenging one on many fronts
both globally and locally, which had a resultant impact on the
operations of the Group. Stagnant or declining economic conditions
in Europe including the sovereign debt crisis, as well as continued
unemployment in the West, dampened the world economy to a
great extent. However, Asia in general and developing countries in
particular did perform generally well. As Browns is largely dependent
on markets in Asia, the impact on the Group was reduced, although
certain global pricing actions did trickle down to the final consumer.
Sri Lanka’s GDP growth was below forecast and we also witnessed
a marginal contraction in the agriculture sector mainly due to
unfavourable weather, which adversely impacted the economy in
those geographical areas as well as the operations of the Group.
There were prolonged droughts in parts of the country followed by
flooding, which together resulted in a low harvesting season and
made it one of the worst years for this sector. In addition, there were
interest rate and foreign exchange rate fluctuations during the year, as
well as changes in broad money supply that resulted in the curtailing
of credit through banks. However, this correction meant a better
foothold on inflation which for the most part remained stable during
the year.
All of these factors had an impact on Browns, which is predominantly
a trading concern dependent on imports, with significant interests
in agriculture. The rupee devaluation, higher interest regime and
restricted cash flows due to credit curtailment caused trading
volumes to contract. Increased import prices, especially at the
beginning of the year when large trading stocks are carried in order
to cater to the upcoming high agricultural season and the New Year,
also affected business. The company held large inventory unsold
due to higher rates without any recourse to price increases as lower
disposable incomes and consumer credit restricted margins. At
retail level, restricted cash flows affected dealers and end consumers
who faced difficulties in obtaining and making timely repayments
on banking facilities. In essence the business was feeling a ‘double
blow’ effect with both the interest rate and foreign exchange rates
contributing negatively to the cost of doing business. The company
absorbed part of the loss in order to hold its market share and
customer base, while maintaining a healthy balance sheet. The
adoption of a more medium-term results management strategy paid
off, with Browns maintaining the high market shares it enjoys across
industries and retaining its customer base.
Financial PerformanceThe year under review was primarily one of consolidation following
a few years of expansion and restructuring. Given the challenging
conditions described above, the company adopted an approach
of assessing the situation, filling in gaps, making corrections and
consolidating operations. Existing businesses were aligned more
closely with the overall goals of the Group, while new business
opportunities were also pursued. In order to stay innovative and
competitive,organisations need to find and take advantage of
new opportunities that would propel the company forward. The
healthcare business was one such new business opportunity for the
Browns Group, with the focus for the year being on entering and
establishing itself in this sector.
Group revenue remained static against the prior year, recording
Rs.14.2 Bn as compared to Rs.14.4 Bn in the previous year. This
achievement is noteworthy considering the challenges that the
business faced. Overall sales at Group level remained unchanged
during the year when compared to the previous year, which is also an
achievement in a difficult year and is a reflection of the success of the
strategy adopted by the organisation to tide over a difficult period.
Diversification of business activities also mitigated the unfavourable
results from particular sectors.
Gross profit for the Group declined 14% to Rs. 2.91 Bn when
compared to the previous year’s earnings of Rs.3.39 Bn. This significant
decline came about due to the changes in foreign exchange rates
and pricing actions by principals as explained elsewhere in this
review. However, commencing this financial year, all stocks have been
cleared and pricing adjustments have been initiated for a healthy
result in the coming year. The Group recorded Rs. 455 Mn in Profit
before tax (PBT), while other income also declined significantly due
to one-off income recorded during the previous year and a 155%
increase in finance costs. When adjusted for the one-off income
recorded in 2011/12, the decline in PBT is 44%. The increase in finance
costs is the result of increases in interest rates, which impacted the
debt financing undertaken during the previous year to expand
Brown’s strategic investments, as well as having to carry a larger than
envisaged working capital during the current year. However, the
Group has already taken corrective measures by divesting several
non-core and underutilised assets and by bringing working capital
to acceptable levels. Distribution expenses too were above average
due to certain last minute provisioning requirements. At Group level,
“Thee yyearr unnder rrevieeww waaas prrrimarrily one oof coonsoolidattion ffoollowwwinggg a feew yearrss of expaansioon anndd resstruuccturiing.””
“... thhe coompaany aadopptteed aaan aappproach of asssesssingg the situaaattionn, filllling in gaapps, mmakking ccorreecctioonns aannd conssoolidatinng operatiioons.. Exiisstingg busiinnessses wwere alignnneed mmmorree closselyy withh the oveerall ggoalss oof tthhe GGGroupp, whillee neww buusineess ooppporrttunniities weree alsoo puursueed. Inn oorddeer ttoo stayy iinnoovattive aand ccoomppeetittivve, orgaannisaationns neeed tooo findd anndd takke advaanntagge off neww opppoortuuunitties thhat wouuldd prropeel thee commppanyyy forrwardd.”
12 | Brown & Company PLC
declines in PBT were also due to the ongoing losses at the Galoya
sugar factory and the leisure sector which are still in early stages of
operation and are expected to generate positive results from 2015/16
onwards. Profit After Tax (PAT) declined to Rs. 411 Mn over the Rs. 3 Bn
recorded the previous year, primarily due to declines in gross profits,
increased interest payments and substantial decline in other income
offset by positive changes in fair value of investment properties.
At company level, revenue declined by 7% when compared to the
previous year. This was primarily due to declines in trading concerns
especially in the agriculture sector as reflected in the segmental
analysis later in this report.
General market sentiment affected trading at the Colombo Stock
Exchange, which affected most companies including Browns. While
the share price as at end March 2013 stood at Rs.117.90 as against Rs.
155.10 in March 2012, net assets per share stood at Rs. 212.99 when
compared to Rs 195.85 the previous year. This indicates that the share
still has significant value left based on fundamentals. We believe
that as the market shifts from being speculative to one based on
fundamentals, the share would have significant value.
Performance of Divisions and SubsidiariesSome business divisions and subsidiaries such as Veterinary
Pharmaceuticals, Batteries and Power Systems did exceptionally well
during the year. While overall profits were lower, the current year
saw robust performance with regard to continued market leadership
position in key segments and continued investments in strategic
sectors. In addition, a three-pronged approach is in place for the
Group to manage its businesses in the short to medium term.
The first of these is consolidation and restructuring of back-office
functions to further rationalise costs and seamlessly integrate all
Strategic Business Units (SBUs) and subsidiaries, which has been
a priority. The Shared Service Center, ERP solution, centralised
warehousing and logistics and the planned ‘Star Hub’ to have a
state of the art after-sales service for all sectors falls within this plan
of action. This is expected to deliver faster and accurate customer
responses while ensuring cost efficiencies. Therefore, investments
were made to upgrade service infrastructure and related facilities.
In this regard, the Shared Service Centre and the ERP project were the
two most significant changes that came in to effect during the year
under review. The Shared Services Centre is expected to free front-line
business units from performing administrative functions and be more
proactive in channel building and marketing activities.
Another major change was that the entire organisation was
converted to a full-time online Microsoft ERP platform. The overall
business information model has improved tremendously and further
improvements will be added in the areas of after-sales and front-
end services. This will further enhance the quality of information
processes. Along with this, new standard operating procedures and
ERP functional user manuals are being developed in order to set
the ground rules for continued good administration. This ERP is also
expected to help the organization in its business expansion programs
by providing flexibility in decision making with both speed and the
volume of data availability.
The second approach is the consolidation of the businesses that were
initiated or acquired recently for optimum performance. The Galoya
sugar factory, leisure sector businesses under Browns Investments
and the Porcelain business fall within this strategy. New businesses
that are still in the implementation and growth stages are being
closely monitored to ensure that the final results are within the
expectations of the Group’s overall strategies and goals. Expansion
of existing businesses and filling gaps in the current trading portfolio
also falls within this strategic direction.
Galoya Plantations (Pvt) Ltd progressed well during the year under
review with the plant producing sugar for the first time after an
absence of almost 15 years. This is a significant achievement not only
from a Group point of view but also from a community point of view,
as the livelihood of over 4,000 farmer families was revived and the
factory introduced much-needed economic activity to the Hingurana
area in the Ampara district. With over 2200 hectares already
cultivated, plans are to grow a further 1300 hectares in the coming
year. The leisure sector which is handled through subsidiary Browns
Investments PLC continued to expand during the year. The controlling
stake of Green Paradise Agro Eco Hotel in Dambulla was acquired,
which filled a need to have a presence in the central province – a key
tourist destination. Construction of the 172-room resort in Kosgoda
continued during the year and is expected to be operational in 2014.
Browns Tours (Pvt) Ltd and travels, made significant progress during
“Gall-Oyaa Plaantationss pprogggressssed welll dduriing tthe yyear uuunndeerr reevview withh the plannt prroduccciing ssuggaar for the fiirst timme aftter annn absssencce of almoosst 155 years. TThis iiss a ssignniificaant achiieevemmentt, nott onlyyy froomm aa Grouupp pooint of viiew bbuut aallso ffrom a coommmuunityy poinnt off vviewww, asss the livellihhoood off overr 4,00000 faaarmmeer fammillies...”
“Anoottherr maajor cchanggee wwaas tthhat the entirre orrganiisatiooonn wwaas convveerteed too a fuull-timmme oonnlinne Micrroosofft ERRP pllatfoorrmm. TTThe ooveraall busiinnesss infformaationn mmodddel hhhas improovedd treemenndousslly aannd ffuurthher improovemmennts wiill bee aadddeed iinn thee areaass of afteer-saales aannd ffrronntt-endd servvices.. Thiis willl furrttherr enhhhancee the qqualiity oof infformaattionnn prroocessses.””
Group Maanaaging Direector / Chhief Executivve Officer’ss ReReview Coonntd.
Annual Report 2012/2013 | 13
the year, particularly in the in-bound tourist segment, securing several
large arrivals including cruise ships. The sector recorded profits of over
100% against the prior year.
Future expansion into new areas of business is the third approach.
The foray into the healthcare sector was a milestone for the Browns
Group. The initial acquisition of the St. Peters hospital in Ragama
was concluded and complete refurbishment and upgrading of the
property, including the addition of a new wing, got underway during
the year. Related activities such as nursing and channeling were also
initiated during the year.
During the year under review, the Group continued to make strategic
investments to introduce operational efficiencies to its divisions and
subsidiaries. Further investments were made to the facility at Pannala
under the Browns Industrial Park, which is a fully owned subsidiary
of Browns. This facility was upgraded to serve all manufacturing and
logistics functions of the group and to facilitate warehousing and
logistics services for internal as well as external organisations. During
the years ahead. In addition, establishing after - sales services along
with training facilities to enhance the knowledge of dealers and
customers have been a priority in many sectors.
Marketing and BrandingThe overall marketing strategy of the group for the Strategic Business
Units was to maintain market share and re-align processes to bring
about cost efficiencies and improvements in service delivery.
Details of marketing and branding activities for each SBU is available
elsewhere in this report.
The launch of the BG brand was a significant milestone for Browns
during the year under review. Building on the brand image and
recognition established over 138 years as well as superior sourcing
and industry experience we are able to source from the best
manufacturers around the globe. The concept behind BG is to
combine the best sourcing options throughout the globe and
package it with Browns heritage of quality and trust, thus delivering
an above-average value proposition to local consumers in terms of
price and quality. The brand, which currently caters to the consumer
electronics and durables sector, is doing significantly well with urban
consumers. Sales of some products such as high end 55” LED TV’s –
one of the highest selling in this category - is evidence that customers
place significant faith in the brand, which is competing in the high-
price ranges, on par with reputed international brands. The BG brand
also has a highly diversified portfolio of small appliances such as
kitchen equipment that holds significant market share.
Two of Browns’ well known brands, Exide and TAFE, continued to
enjoy premier market leadership positions with shares in excess of
50%. Investments in these brands continued with greater emphasis
on advertising activities to engage the end consumer. TAFE continues
to enhance its after-sales services to ensure that it remains the best
in the industry. The sale of mobile trucks under the brand name
’Tracktec Mobile’ as well as several other infrastructure improvements
are being pursued to enable end-users to have unparallel levels of
service that have hitherto not been seen in this industry.
Lucas, a brand handled by subsidiary Klevenberg (Pvt) Ltd, continued
to make in-roads into the battery market and now enjoys number
two market position behind Exide in this sector. It is recognised
as a brand that is highly trusted by the upper end of the segment.
The positioning of Lucas as a lifestyle brand is a first in this business
segment in Sri Lanka.
“Thee launnch of thhe BGG bbraannd wwwas aa signnifficaant mmilesstonee ffor BBroowwns duriinng thhe yyear uunderr revviieww, building on tthe bbrandd iimaaage aaand recooggnition estabblishheed oovver 1138 yearrss,”
the year, the company also launched its Consumer division, which
has initially embarked on the import and marketing of canned fish.
Gradual expansion into other areas such as soya, rice and sugar are
currently being explored. New brands that have been created for
these commodities have been accepted well by the consumers.
The Integrated Business Solution SBU, apart from its traditional office
automation related products, signed up with ‘Bianca Renee’, an
internationally reputed brand of furniture that caters specifically to
the leisure sector. A tie-up with ’Enigin’, UK - an innovative technology
based company specialising in energy saving options-is expected to
give greater results in the years ahead as many organisations explore
energy conservation measures as a best practice. The ‘Eukanuba’ dog
food range and the veterinary pharmaceutical sector continued to
grow very aggressively with new products and improved services. As
in previous years, the home delivery concepts, free technical advice
to farm owners, and introduction of innovative products such as live
vaccines gave this sector an edge over others. Extended, company-
owned and franchised service facilities were introduced by subsidiary
Browns Thermal Engineering Pvt Ltd. Being the largest radiator
manufacturer in Sri Lanka, the Company caters to both the auto and
non-auto sector and has the capacity to turn out any type of radiator.
Sifang Lanka (Pvt) Ltd, another fully owned subsidiary added the six-
seater three wheeler under the brand ’BG-Pace’ to its range. This is yet
another first in the Sri Lankan market. The diesel vehicle is catching up
fast in areas outside of Colombo and the service will be expanded in
“Braanndinng haas reemainnneed aaan immmporrtantt areaa of ffocuss for the oorrgaannisaaation. Posiittioniing sstrattegieess havvve bbeeen larggely bbasedd on conssuumeerr neeeds and wwe hhave conttinueedd too dessiign our mmarkketinng sttrateeggies iin ssuuch aa mannnner tthatt we sstay rreelevvvantt to thhe segmmmentts thhat wee opeeerratee in..””
14 | Brown & Company PLC
Makita/Mactec power tools and Tailin grinding wheels enjoyed
number one positions in their respective brand segments. The re-
launch of Eclipse hacksaw blades helped increase sales of this product
by over 50% as against the prior year.
During the year under review, FG Wilson generators and the smaller
Kva generator sets under the brand Firman did extremely well. FG
Wilson now enjoys leading position in terms of value in the larger
generator segment - an achievement that has been made possible as
Browns provides the best after-sales care in the industry supported by
dedicated sales and service teams. Currently, Firman enjoys a number
two position in the market with a share in excess of 16%.
Branding has remained an important area of focus for the
organisation. Positioning strategies have been largely based on
consumer needs and we have continued to design our marketing
strategies in such a manner that we stay relevant to the segments
that we operate in.
SustainabilityThe Group is conscious of its commitment to the communities it
serves and operates in, and this is an ethos that is built into all our
business operations. The battmobiles which are operated throughout
the island provide services free of charge for anyone who needs
them, regardless of the brand of battery used. The Group also holds
free seminars and training sessions to educate farmers and end-users
on the best practices in that market segment, such as the proper
use and maintenance of equipment, veterinary services and many
other aspects. The millions of rupees spent on these service programs
is testament to the company policy of doing business with the
community at heart.
The revival of the Galoya sugar factory as detailed elsewhere in this
report is also evidence of how an entire village has benefited from the
operations: the livelihood for over 4000 farmer families have improved
with subsidies and financing assistance provided by Browns; the
local economy in general was revived through provision of jobs for
people in an area that has been neglected over the past 15 years; it
has contributed to conservation of the environment with the factory
producing electricity for its own use, as well as providing a health
benefit to approximately 1000 households by distributing purified
water through the company-run water purification plant.
As a major Corporate Social Responsibility project the company
embarked on an IT literacy program, providing computers and
computer labs to some of the most deserving rural schools. The
program was well received by the community and was implemented
in coordination with the educational office in the Matale district.
Future OutlookMacroeconomic fundamentals will continue to affect our business,
especially in trading segments. The continued depressed trading
conditions due to various economic and other factors are expected
to continue throughout the coming year and will pose a challenge for
Browns. However, given its market leadership positions, and as history
has proven time and again, Browns is expected to do better than its
competition even during challenging times. The move by authorities
to stabilise interest rates to more acceptable levels should also
improve the investment climate and increase consumption of goods
and services by end users.
There have been several improvements made internally at Browns,
which should bring about positive results in the coming year. As
mentioned earlier, non-performing, non-core and idle assets are
either being divested or restructured for better use, and significant
reductions in working capital have been achieved through better
stock and debtor management. The steps taken by the company
should increase cash inflows and reduce finance costs significantly.
Supplier prices and credit terms have been re-negotiated in key
sectors, which have already resulted in increased margins since the
fourth quarter of the current year. The improved and enhanced
centralised warehousing and logistics process, cost rationalisation in
administrative areas through shared service centers and centralised
ERP is expected to bring about better cost management in the year
ahead.
The Group will continue to invest in brands and brand building to
stay relevant to the end consumers while taking advantage of market
leader positions in key brands. This will also entail a special channel-
based focus to ensure that push strategies are aligned to the overall
goals and targets of the Group. In addition, new products and models
will be introduced to fill voids in our product portfolios.
The GGrouup wwill coontinnuue ttoo innvvest in branndds aand bbrandd buiillddinngg too stayy releevaant to tthe ennd cooonnsuummerrss whhile takiinng addvanntagee of mmmarkkeet leeaderr posiittionss in key bbrannddss.
The GGrouup iss consciouuuss off its commmmitmmentt to tthe coommmmuuniitties iit servvees annd ooperaates iinn, annnd thhhis iss an eethoss thaat is bbuiltt iintoo all oour busiinnesss opeeratioons.
Group Maanaaging Direector / Chhief Executivve Officer’ss ReReview Coonntd.
Annual Report 2012/2013 | 15
The Star Hub program is a special program created to reach every
corner of the country to provide after-sales services. Continuous
improvements will also be made to innovative solutions such as
battmobiles, 24-hour services on generators and home delivery
concepts, among others.
In conclusion, I thank all our customers, financial institutions,
suppliers, shareholders, and other business partners for their
continued loyalty and support. I would also like to thank the senior
management and staff for their dedication and hard work towards
achieving the goals and values of Brown and Company PLC. I also
thank the Chairman and the Board of Directors for their guidance and
for placing their trust in me for the past 7 years. Browns is well poised
to achieve greater success in the coming years and we look forward
to the support of our stakeholders.
Murali Prakash
Group Managing Director / CEO
16 | Brown & Company PLC
Annual Report 2012/2013 | 17
Left to Right
Mr. S. VV. SSomasundeeram / Non - Executive Director
Mr. N. M. Prakaash / Group Managing Director/ CEO
Mr. W. D.. K. Jayyawarddena / Non - Executive Director
Mr. I. CC. NNanayyakkaraa / Executive Chairman
Mr. A. L. Devassurenddra / Deputy Chairman / Non - Executive
Director (Resigned w.e.f. 15/7/2013)
Mrs. K.. UU. Amaarasingghe / Non - Executive Director
Mr. H. P. J. de SSilva / Independent Non - Executive Director
18 | Brown & Company PLC
Mr. I. C. NanayakkaraThe Executive Chairman / Executive DirectorMr. Ishara Nanayakkara is an astute businessman who holds Directorial positions in many corporates and conglomerates in Sri Lanka.
He ventured into the arena of financial services with the strategic investment in LOLC PLC and was appointed to the Board in 2002. He has an exposure to an array of financial services through his stewardship in two flagship finance companies in the group – Lanka ORIX Finance PLC and Commercial Leasing and Finance PLC (CLC) where he is involved as an Executive Director and Chairman respectively.
He is also involved in both life and general insurance through LOLC Insurance Company and in stock brokering through LOLC Securities Company, factoring through LOLC Factors and deeply involved in micro finance and Islamic finance. He is recently appointed as the Deputy Chairman of Seylan Bank, reinstating his expertise in the banking sector.
His interest in Micro Finance is evident through his recurrent contribution to PRASAC, the largest microfinance Company in Cambodia and in his own initiative, LOLC Micro Credit Ltd, one of the largest private sector microfinance institutions in Sri Lanka, where he currently serves as the Chairman. This commitment is further extended through his newest venture in LOLC Myanmar Micro Finance Company Ltd, where he is the founding chairman. He was instrumental in the recent joint venture of BRAC and LOLC.
His passion for Renewable energy is reflected through the energy portfolio of the LOLC Group - comprising of hydro power, agri waste and bio- mass – a promising source of alternate energy. The sustainable investments of the LOLC Group companies are poised to offer their share to the environment.
Mr. Nanayakkara is also conversant in sustainable Forestry and Plantation through group companies – Maturata Plantations Ltd, Pussellawa Plantations Ltd and Gal-Oya Plantations (Pvt) Ltd. The Agstar Fertilizers PLC, a leading agri input provider in the country, has further enhanced the Group’s contribution to the agriculture & plantation sectors.
The participation in Sierra Constructions (Pvt) Ltd, one of the largest construction companies in the country is timely, considering the contribution of the construction sector to the post war development.
Mr Nanayakkara is focused on the immense opportunities presented by the leisure sector. With the acquisitions of some of the leading hotels in the Southern coast alongside key properties in the North and East, development plans are underway for the leisure subsidiaries of LOLC Group and Browns Group – Eden Hotel Lanka PLC, Palm Garden Hotels PLC, Tropical Villas (Pvt) Ltd, Riverina Resorts (Pvt) Ltd, Dickwella Resorts (Pvt) Ltd, Samudra Beach Resorts (Pvt) Ltd in Kosgoda and Green Paradise Agro Eco Hotel in Dambulla.
Mr Nanayakkara is the Chairman of Browns Investments PLC, the investing arm of the Browns Group.
Mr Nanayakkara’s involvement in multifaceted business fields is conclusive proof of his perpetual interest on the growth sectors of the Sri Lankan economy.
He holds a diploma in Business Accounting from Australia.
Mr. A. L. Devasurendra Deputy Chairman / Non - Executive Director (Resigned w.e.f. 15/7/2013)Mr. Ajith Devasurendra is a veteran in the financial services industry in Sri Lanka and counts more than 29 years work experience both in Sri Lanka and overseas. As one of the pioneers in the money brokering and Government Securities markets he was able to bring new dimensions to the local money market industry. Mr. Devasurendra was a past president of the Sri Lanka Money Brokers Association and also the first president of the Sri Lanka Primary Dealers Association. He acted as a consultant to Price Water House Coopers, Bombay, India on a USAID project.
At present he is the Deputy Chairman of Taprobane Holdings PLC and Director of Environmental Resources Investments PLC. He is also in many committees that focus on the development of the financial markets in Sri Lanka.
Mr. N. M. PrakashGroup Managing Director/ CEOMr. Prakash holds a MBA from University of Southern Queensland and is also a Certified Professional Marketer (Asia Pacific) and a Certified Management Accountant (Aust.). He also holds an Executive Diploma in Business Administration from the University of Colombo and is an Alumni of the National University of Singapore and Asian Institute of Management, Manila. He is a Fellow of the Chartered Management Institute (London) and Certified Professional Managers Sri Lanka. He served as the Sales Director for Singer (Sri Lanka) PLC, a multinational company involved in retailing of durables. Mr. Prakash has also served as the Deputy Credit Director and Credit Manager for many years, handling the marketing and management of hire purchase and related credit portfolios at Singer. He also served on the Boards of Singer (Sri Lanka) Ltd, Singer Finance Lanka Ltd and Singer Industries (Ceylon) Ltd.
At present, he is the Group Managing Director / Chief Executive Officer of Browns Group of Companies, a public quoted conglomerate involved in trading, manufacturing, finance, travel and tours, plantations and investments.
Mr. H. P. J. De SilvaIndependent Non - Executive DirectorMr. Janaka de Silva holds a B.Sc., (Ceylon) and a M.B.A. (Sri Jayawardenapura). He is a Fellow of the Institute of Chartered Accountants of Sri Lanka, Chartered Institute of Management Accountants and Institute of Bankers of Sri Lanka.
Mr. De Silva served as a Consultant to National Development Bank during the period of August 2003 to December 2007 and advised the Bank on the integration of financial and accounting systems on the merger of NDB Bank with NDB.
He joined Union Bank of Colombo Ltd at the pre-operational stage of the Bank as General Manager/Chief Operations Officer and was responsible for the design and implementation of all operational
Annual Report 2012/2013 | 19
policies, procedures and systems. He designed and implemented the information systems topology, pioneered web presence and internet banking amongst indigenous banks. Under his direction the Bank obtained ISO 9002 Quality Certification covering all divisions and became the first bank in Sri Lanka to connect ATMs to a major international network. Mr. De Silva was appointed Managing Director/CEO in May 2002.
During April 1992 to April 1995, Mr. De Silva served as the Director - Operations of American Express Bank, Colombo and was responsible for all operational activities and functioned as the Quality Co-ordinator of the Colombo Office.
In February 1987, Mr. De Silva joined Sampath Bank and was the founder General Manager/CEO. He made the bank the most technologically advanced financial institution with all branches connected online for the first time in Sri Lanka. He was the first to introduce credit cards with a major international franchise and a multipoint ATM network. He pioneered many new innovations such as extended banking hours, interest on daily balance on Savings Accounts, and the use of UV lights for signature verification.
In September 1976, Mr. De Silva joined Bank of Ceylon as Assistant General Manager/Controller and was elevated to the position of Corporate Advisor in 1979. He set up the IT function in 1978 and by end of 1985, this it was the largest IT facility in the country. He introduced computerised banking with central processing and multipoint access to Sri Lanka. He was the head of the Audit function conducting internal audits of over 200 branch offices throughout the country. Further, he introduced new techniques such as statistical sampling. He was also a member of the Steering Committee to set up the Automated Clearing House of Sri Lanka.
Mr. De Silva also served as a Lecturer/ Accountant at Indeco Ltd, Lusaka, Zambia, from 1973 -1976, the Finance Manager at Building Material Corporation and, during the period 1970 to 1972, was Senior Accountant of the State Engineering Corporation.
Mr. S. V. SomasunderamNon - Executive DirectorMr. Somasunderam is a Chartered Management Accountant and a fellow member of CIMA (U.K.)
He joined Walker & Greig in 1985 for a period of one year as a management trainee and thereafter joined his family business.
In 1994, Mr. Somasunderam established a company in U.K. together with his British partners for the purpose of acquiring a wireless local loop licence to provide telecommunication services in Sri Lanka and to seek funding for the same. In 1994, he founded Lanka Bell Ltd and was successful in obtaining the licence. Mr. Somasunderam was an Executive Director; and thereafter, Deputy Chairman of Lanka Bell Ltd until he divested his shares in 2005 together with his foreign partners.
Mr. Somasunderam acquired controlling interest of the Browns Group of Companies together with his partners in year 2005 and was appointed to the Board of Browns Group of Companies as Deputy Chairman, and thereafter Group Director from 1st July 2006.
Mr. Somasunderam is also Managing Director and Chairman of Lexus Developers Ltd. It was established in 2005 for the purpose of constructing apartments.
Mr. Somasunderam is also an investor in the Sri Lankan stock market with investments in several blue chip companies.
Mr. W.D.K. JayawardenaNon - Executive DirectorMr. Kapila Jayawardena holds a MBA in Financial Management, is an Associate of the Institute of Cost and Executive Accountants and was awarded Fellowship of the Institute of Bankers (IBSL) in 2006.
He has varied experience in the fields of Banking, Audit, Relationship Management, Corporate Finance, Corporate Banking , Investment Banking and Treasury Management.
Mr. Jayawardena was appointed as the Chairman of the Sri Lanka Bankers Association (SLBA) in 2003/2004 and served as President of the American Chamber of Commerce in Sri Lanka in 2006/2007.
He served as a Director of Lanka Clear, National Institute of Business Management (NIBM) and the Institute of Bankers (IBSL).
Mr. Jayawardene was appointed to the Financial Sector Reforms Committee (FSRC) and was a member of the Finance sector and Capital Market cluster of the National Council of Economic Development (NCED). He was a key member of the inaugural sovereign rating team and sovereign debt of Sri Lanka appointed by the Governor of the Central Bank.
He was presented with the prestigious Combined Support Group Award by the US Navy for services rendered after the Tsunami in 2005. The Government of Sri Lanka appointed him to the Board of Sri Lanka Fulbright Commission in 2010.
Mr. Jayawardena was appointed to the Council of the National Chamber of Commerce of Sri Lanka on 27th January 2011.
Mr. Jayawardena has over 27 years experience in all areas of banking out of which 9 years was in the capacity of CEO/Country Head Citibank Sri Lanka and Maldives. He was the first Sri Lankan to be appointed as a Senior Creditor Officer (SCO) by Citibank in Sri Lanka. During his leadership, Citibank in Sri Lanka was rated AAA by Fitch Ratings in Sri Lanka. Citi Bank Sri Lanka was the first foreign bank to obtain an AAA rating.
Mr. Jayawardena is also the Chairman of Lanka Orix Finance PLC, LOLC Insurance Ltd, LOLC General Insurance Ltd, LOLC Life Insurance Ltd, LOLC Securities Ltd, Speed Italia (Pvt) Ltd, United Dendro Energy Solutions (Pvt) Ltd, Palm Garden Hotels PLC, Riverina Resorts (Pvt) Ltd and Eden Hotel Lanka PLC.
He is the Group Managing Director/CEO of Lanka ORIX Leasing Company PLC and serves on the Boards of LOLC Micro Credit Ltd, and Commercial Leasing & Finance PLC. Mr. Jayawardena is also a Director of Browns Investments PLC.
Mrs. K. U. AmarasingheNon - Executive DirectorMrs. Amarasinghe holds an Honours Degree in Economics. She serves on the Boards of Lanka ORIX Leasing Company PLC, LOLC Insurance Ltd, LOLC General Insurance Ltd, LOLC Life Insurance Ltd, LOLC Leisure Ltd , LOLC Motors Ltd , LOLC Securities Ltd , Speed Italia (Pvt) Ltd , United Dendro Energy Solutions (Pvt) Ltd, Palm Garden Hotels PLC, Riverina Resorts (Pvt) Ltd and Eden Hotel Lanka PLC. She also serves as a Director on the Board of Commercial Leasing & Finance PLC.
20 | Brown & Company PLC
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Annual Report 2012/2013 | 21
1. Mr. Rimoe Saldin Group Chief Operating Officer,
Managing Director /CEO - Browns Investments PLC
2. Mr. Panduka WeerasingheSenior Vice President - Agriculture, Battery, Porcelain & New
Business, Director / CEO - Browns Tours (Pvt) Ltd / B.G.Air
Services (Pvt) Ltd, Browns Real Estates (Pvt) Ltd, Director -
Associated Battery Manufacturers (Ceylon ) Ltd
3. Mr. Chaminda Ediriwickrama Senior Vice President - Vetpharma, Director / CEO- Sifang Lanka
(Pvt) Ltd & Sifang Lanka Trading (Pvt) Ltd
4. Mr. Suresh Tissaaratchy Senior Vice President - Brands, Marketing & Corporate Affairs
Browns Group of Companies
5. Mr. Kennedy Joseph Senior Vice President - General Trading, Power Systems &
Environmental Engineering
6. Mr. Canisius Fernando Senior Vice President / Director / CEO - Browns Industrial Park Ltd,
Browns Thermal Engineering (Pvt) Ltd & Browns Group Industries
(Pvt) Ltd
7. Mr. Panduka Goonawardena Group Chief Financial Officer
8. Mrs. Nayantha Delpechitra
General Manager - Group Legal/ Group Secretary
9. Mr. Rajitha Seneviratne General Manager - B.G. Air Services (Pvt) Ltd,
Director - Browns Tours (Pvt) Ltd
10. Mr. Manjula Wijemanne General Manager - Integrated Business Solutions / Consumer / Retail
Director / General Manager - Klevenberg (Pvt) Ltd
11. Mr. C. N. Rathakrishnan General Manager - Enterprise Resource Planning Process
12. Mr. Jeremy Rajiah General Manager - Plantation Support Services
13. Mr. Dinesh Samarathunga Group Chief Information Officer
14. Mr. Vishwa Lokugamage General Manager - Browns Group Industries (Pvt) Ltd and
Browns Thermal Engineering (Pvt) Ltd
15. Dr. Sajeeva Narangoda Director/GM - Browns Health Care (Pvt) Ltd and
Browns Health Care North Colombo (Pvt) Ltd
16. Mr. Nalin Jayawardena General Manager - Consumer
17. Mr. Vishwa Kumarasinghe General Manager - Sifang Lanka (Pvt) Ltd
18. Mr. Gihan De Silva General Manager - Agriculture
19. Mr. Ushan Wijewardena General Manager - Battery
Left to Right
17 18 19
22 | Brown & Company PLC
Browns is all about Brands The Browns Group with over 138 years of expertise in marketing has
introduced a number of products which have won the hearts of our
customers. Trust, quality and Reliability have been the hallmarks of all
brands marketed by Browns.
Having been the pioneers in agricultural mechanisation through the
introduction of the first Massey Ferguson tractors and being leaders
in the vehicle battery market, the Browns Group has continued to
innovate and make strides in managing several local and international
brands in the many segments that it operates in.
Driven by a philosophy of keeping the ‘customer’ as its central focus,
the Group has been able to maintain leadership in many segments
that it operates in by closely identifying the needs and wants of its
diverse customer segments.
The augmented function of service has played a significant role in this
success with Browns having one of the widest service networks in the
country. Be it a tractor, or a vehicle battery, or a generator or an AC,
Browns has pioneered a number of unique service offerings. From the
Exide Battmobile helping you when your vehicle battery gives way to
door-to-door delivery of Eukanuba dog food, to 24 hour installation of
ACs to online monitoring of generators to 24 hour service back up for
photocopiers are a few of the services we provide to our customers
to ensure their tasks and responsibilities are carried out efficiently .
The further expansion of the Service Star Hub concept would further
strengthen this area in the future.
In the marine division a special service facility was established at
the fishing harbour at Kudawella where day-to-day maintenance
and overhaul of marine engines take place. In addition, a spare parts
counter and battery charging unit has been established, which is a
great value addition to the fishing community.
A specialised workshop for radiators was established at Galle where
owners of any vehicle could get their radiators serviced or repaired.
The Browns Group acts as a true brand custodian for its brands,
strategically managing all its brands and seeking new channels
and touch-points to make its product available across the country.
This fact is further justified when one looks at the long-standing
relationships Browns has had with most of its international brands.
Headed by the Group Managing Director himself and driven by
Corporate and Divisional brand teams, the company is always looking
at building the value of the brands we manage and that has been
proven through most brands holding number 1 position or being
within the first three positions in most industries we operate in. As
brand custodian, our philosophy is to nurture and grow the brands
through all channels available, whilst adding value to all our brands
through customer-centric value additions.
The Group’s own Brand ‘BG’ continued to show good growth and
has been accepted as a true value-for-money offering to customers.
Launched during the last year ,the BG product continued to make in-
roads into the consumer electronics segment as a true quality value
proposition. The 55 inch LED 3D TV, water pumps, audio & AC range
have performed well during the year. Sourced from the best factories
in the world, BG will continue to provide products and services with
true quality and value.
The year also saw the launch of the ‘BG’ three-wheeler which is
assembled in our Pannala factory premises. This product which was
being piloted has shown good acceptance and will be rolled out to
the market within the new financial year.
“Drivveen byy a phhilosoophy ofof keeeepinngg the ‘custtoomerr’ as iits ceentrall fof cuuss, thhee Group has bbeeen aable to maaintaain n leaadersship inn manny segmmentts thaat it oopperaattes iinn by closeellyy ideentiffying tthe nneeeeds aandd wwantts of its ddivversee cusstomeer seggmem nttts.”
Annual Report 2012/2013 | 23
Exide launched its range of specially designed batteries, for two and
four stroke three-wheelers.
Browns launched one of the hospitality world’s most sought after
brands, ‘Bianca Renee’, that specialises in designing, furnishing and
equipping of hotels, bars, restaurants, banquet halls, convention
centres, offices and conference facilities for multinationals, embassies
and diplomatic residences, public buildings, hospitals, clinics and
patient-care centres, shopping complexes, guest houses, clubs and
even educational facilities.
On the international brand front, Sharp continued to drive its
innovative category of Plasmacluster air purifiers which ensures clean
air through its patent technology. This product, which is about living
healthy, ensures clean air is circulated while bacteria and mould is
broken down through the release of positive and negative ions. This
together with the ‘Healsio’ oven, which reduces fat and oil content in
the cooking process, are some of the products.
The revolutionary mirror-less Olympus OM-D, was voted the best
Camera for 2012 by the Digital Photography Review (DPR). The OM-D
competed against a host of world leading camera brands and shone
through as voted by the DPR readers. The Olympus OM-D is a ground-
breaking, new, digital, interchangeable-lens camera, perfect for
people who want to ‘take part’, ‘create’ and ‘share’. This revolutionary
mirror- less camera has an exceptionally light and compact body.
Pitney Bowes launched its innovative security solutions where
data on soft or hard format could be made completely secure with
tamper-proof technology .This would be an ideal product for those
who seek verification.
Browns also launched two canned fish products to the market under
the brand names Samudra and Sealine which are now available in
15,000 outlets Island wide.
In the poultry sector the Group launched a protein supplement
named ‘Proteina’ which is an extract from fish and is imported from
reputed manufacturers. Another introduction has been the SG 9R
vaccine which is a permanent solution to the salmonella disease
commonly associated with poultry farming.
In the future the Group would continue to address changing
customer needs and cater to them through the introduction of
innovative products and services through multiple touch-points.
Over 60Brands
24 | Brown & Company PLC
Investments
Marine & Manufacturing
Agriculture & Plantations
Power Generation
Trusted for Generations, Worldwide
Our Brandds CContd.
Annual Report 2012/2013 | 25
Home & Office Solutions
Vet Pharma
Travel & Leisure
26 | Brown & Company PLC
Investments
Browns Investments PLC
FLC Holdings PLC
LOLC Leisure Ltd.
Sierra Holdings (Pvt) Ltd.
Agstar Fertilizers PLC
Gal-Oya Holdings (Pvt) Ltd
Royal Fernwood Porcelain Ltd.
Other Investments
Annual Report 2012/2013 | 27
Browns Investments PLC (BI) is a subsidiary of Brown and Company
PLC and is also the strategic investment arm for the Group. BI
ensures that its investment strategy is in line with the company’s
vision of having a presence in emerging or sunshine industries that
are expected to lead national growth. Whilst the company has
active management interest in most investments, it also has a few
passive investments where there is only a Board representation. The
company is currently engaged in the diversified industries of agri-
business and plantations, leisure and entertainment, construction and
Exports, and Manufacturing
The current year for BI has been one of consolidation. With Net Assets
in excess of Rs. 7 Bn, the company’s investment strategies are to
invest in the medium to long-term, or invest to hold and divest at an
appropriate time.
Agri-Business and PlantationsPlantationsBI has interests in the Plantations sector through FLC Holdings PLC
(FLCHPLC), a joint Venture formed with Perpetual Holdings (Pvt)
Ltd. FLCH is the holding company of Pussellawa Plantations Ltd and
Maturata Plantations Ltd which together manage 33 tea estates and
13 rubber estates. In addition to managing a total of 18,736 acres of
tea and 14,465 acres of rubber that produce 11.6 Mn kg of tea and
3.3 Mn kg rubber respectively, the plantations also have interests in
coconut (519 acres) and other crops including timber (4,618 acres).
Pussellawa Plantations Ltd. also manage two green tea factories - that
are amongst few available in Sri Lanka.
Plantations and agri-business of BI reaps many benefits of group
synergies through the parent company Browns, especially with the
supply of world renowned machinery, technical support and services
to customers. It also has the added advantage of having Agstar
Fertilizer PLC - supplier of fertilizer and crop care products -within the
Group.
FLCH posted favourable financial results during the year driven by
marginal increases in tea prices and productivity improvements due
to better practices.
The hydro power plants developed in the plantations have
successfully supplied 3.2 MW of electricity to the national grid. The
company is in the process of making further enhancements in order
to increase the supply in the next few years.
Agri BusinessBI together with LOLC PLC and the Sierra Group hold an over 80%
stake in Agstar Fertilizer PLC – a company that supplies straight and
blended fertiliser, crop-care products and seeds to the agriculture
sector. Agstar already has a reputation amongst the farming
community as a provider of total solutions to farmers, which should
bode well for the future.
The financial year for Agstar has been a positive one especially when
compared to the competition. Despite the bad weather experienced
in the country, volume and profits have marginally increased when
compared to the previous year. However, the company is faced with
the challenge of delayed fertiliser subsidies, which is a common trend
in the industry.
BI ensures that its investment strategy is in line with the company’s vision of having a presence in emerging or sunshine industries that are expected to lead national growth.
Rs. 2,625MnTurnover
28 | Brown & Company PLC
Leisure and Entertainment LeisureThe leisure industry overall has seen growth over the past three years
with tourist arrivals to the country increasing 17.5% in 2012 from
the 855,975 to 1,005,605 visitors in 2011. The number is expected to
rise in the coming years with a target of 2.5Mn visitors expected in
2016. The country is rapidly developing the infrastructure including
the expansion in the number of hotel rooms, and Browns is set to
capitalise on this with the investments made in hotels in key parts of
the Island.
BI holds a 30% stake in LOLC Leisure Ltd, the managing company
for Palm Gardens, Riverina, Tropical Villas and Eden. Palm Gardens,
Riverina and Tropical Villas were demolished during the year to
commence the building of a 400 room 5-star hotel in the combined
property that will be managed by an international brand once in
operation. Stage 2 of the development plan is to commence the
building of residential condominiums on the same property.
The other hotel properties of the Group will be refurbished in time
to meet the high demand of tourism expected in the coming years.
Eden Resort & Spa, with no interruptions to its operations, is currently
undergoing a refurbishment plan which started towards the end of
the financial year. Dickwella Resort & Spa which was acquired two
years ago has been in operation throughout the financial year but is
expected to undergo a major refurbishment in the next two years.
The building of the hotel in Kosgoda is progressing according to plan.
However, the company is awaiting approval to expand the proposed
150 rooms to 172 rooms in this newest 5-star hotel. The company is
also currently negotiating with an international brand to manage the
operations after the planned soft opening next year.
A 67-room property in Dambulla was acquired post balance sheet by
BI. The brand new hotel Green Paradise Agro Eco Hotel, which was
commissioned about a year ago, consists of villas and is situated in
close proximity to the cultural triangle. The company is also awaiting
approval for the two proposed boutique hotels in the Maturata
Plantations Ltd and Pussellawa Plantations Ltd. In addition, BI is
aggressively pursuing opportunities on the East Coast of the country.
EntertainmentBrowns ventured into the entertainment arena during the last
financial year with the acquisition of Excel World, located in the heart
of Colombo. During the financial year the conference and meeting
facilities were given a facelift. In the long term the Company plans to
convert the six-acre land into a mixed development consisting of a
hypermarket, restaurants, conference centre and an entertainment
centre. The company hopes to capitalise on the expansion of
Colombo City into a tourist hub.
ConstructionBI and LOLC PLC together hold a significant shareholding in Sierra
Construction (Pvt) Ltd and Sierra Holdings (Pvt) Ltd. The Sierra Group
is a dominant member in the engineering and construction sector
in Sri Lanka, with operations in India, Maldives, Qatar, Saudi Arabia
and Australia. Though the investment in Sierra has been passive in
nature, there are synergies that can be achieved with the construction
projects of Browns Group. Sierra has had a few successful competitive
bids in obtaining contracts for some of the Browns property projects.
The recently acquired Ajax Engineers (Pvt) Ltd is the market leader in
manufacturing glass and aluminium doors and windows. With the
boom in the construction industry, performance of Ajax Engineers
(Pvt) Ltd is expected to contribute positively to the Browns Group.
The construction of the commercial building complex in Borella, a
commercial suburb of Colombo, is progressing according to plan and
is expected to be completed by 2014.
Exports and Manufacturing Royal Fernwood Porcelain Ltd (RFPL), a subsidiary of BI with a 77%
stake, is a manufacturer of high quality tableware for the local and
export markets. The manufacturing facility in Kosgama handles a
capacity of 600,000 pieces a month and includes prestigious brands
such as ‘House of Frazer, Lenox, Pottery Barn, Debenhams, John Lewis,
Crate & Barrel and Country Road’.
Locally, RFPL is the only manufacturer to have a SLS certification by
the Sri Lanka Standards Board. Currently, RFPL products are exported
to key clients in niche markets and are also supplied to the local
market through the Browns dealer network which was also expanded
during the year.
The company hopes to expand its operations by introducing new
designs to the local and exports markets. The company will also
increase factory efficiencies such as re-aligning logistics and better
sourcing of raw materials, etc in order to compete on better price
points. The company will also look for new markets and establish
its brand value by participating in trade exhibitions and creating
high quality and novel products backed by relevant communication
mechanisms.
Other InvestmentsBI holds an investment portfolio of Rs. 2.4 Bn of which approximately
Rs 1Bn is a trading portfolio that has been affected by the
performance of the Colombo Stock Exchange (CSE). The portfolio
includes investments in financial services, diversified holdings,
agriculture and plantation sectors.
Investments
“For the first time in Sri Lanka, a sugarcane harvesting machine was imported to mechanise the harvesting process of the cane fields. The machine harvests 100 – 160 metric tons of sugarcane per day in comparison to the 1 metric ton per day per 1 manual labour day.”
Annual Report 2012/2013 | 29
The Company also has a land portfolio in excess of Rs. 500Mn – which
is either used within the Group or held for future development.
Gal-Oya Holdings (Pvt) Ltd / Gal-Oya Plantations (Pvt) LtdGal-Oya Holdings (Pvt) Ltd, (GOHL) is a consortium formed by
Brown & Company PLC, Lanka Orix Leasing Company PLC and the
Government of Sri Lanka as a Public-Private Partnership (PPP). The
new company was formed in 2009 as a joint venture between the
Government of Sri Lanka and the consortium, where 51% of the
ownership is retained with the Government of Sri Lanka and 49% of
the ownership is with the consortium. The consortium was appointed
as the exclusive management agent, to revitalise the former
Hingurana Sugar Industries Limited that has been closed since 1997.
Cultivation:The plantation consists of 7,659 hectares (ha) of land with
approximately 5,200 ha of irrigated land allotted amongst 4,400
families. The project area is divided in to 5 major zones, namely:
Varipathanchena, Galmaduwa, Deegawapi, Hingurana and Neetha. A
nucleus estate with an extent of 166 ha of land with a water scheme
will be supporting the 5200 ha of cultivatable land for sugar cane.
Location Cultivatable
Extent (ha)
Number of
Allottees
Varipathanchena 1,067 947
Galmaduwa 1,233 926
Deegawapi 1,034 870
Hingurana 764 697
Neetha 1,104 1,001
Total 5,202 4,441
Sugarcane NurseryAgronomy Division of GOPL has been producing seed cane and
conducting research on various aspects of sugar cane agriculture
since its inception in 2010. The Division maintains over 134 SRI
sugarcane clones as a source of future planting material, and
Trail programs. In 2012 and 2013, the agronomy area consisted of
approximately 159.25 ha, out of which 28 ha is for the maintenance of
primary seeds and 200 ha is for the secondary nursery. In addition to
the nursery, a few select farmers too provide seeds in order to meet
the supply-demand gap.
Achievements in 2012/13Key Statistics
As at 31st March 2013
Sugar Cane cultivation - Plantations 1980.5 ha
Sugar Cane cultivation - Agronomy 159.25 ha
Total farmers 1,879
Target and Achievement during 2012/13
Target Achievement
New Planting (ha) 1,300 1,380.30
Total Harvesting (MT) 46,800 69,936.54
Seed Cane (MT) 10,400 16,130.54
Commercial Cane (MT) 46,800 53,806
Yield (MT/ha) – Plant Crop 80 100
New technology for harvesting to overcome labour scarcity:For the first time in Sri Lanka a sugarcane harvesting machine was
imported to mechanise the harvesting process of the cane fields.
The machine harvests 100 – 160 metric tons of sugar cane per day in
comparison to the one metric ton per day per one manual labour day.
Production:Sugar production in the refurbished factory commenced on 16th July
2012 after a lapse of 15 years. The detail of cane crushing and sugar
production during the production period is given below.
Cane Crushed 53,806.51 MT
Total Marketable Sugar Production 3,315.70 MT
Rendement 6.203
Total Molasses Production 2,679.95 MT
Royal Fernwood Porcelain Ltd (RFPL)A subsidiary of BI with a 77% stake and is a manufacturer of high
quality tableware for the local and export markets. The manufacturing
facility in Kosgama handles a capacity of 600,000 pieces a month
and includes the prestigious brands such as ‘House of Frazer, Lenox,
Pottery Barn, Debenhams,John Lewis, Crate & Barrel, Country Road’.
The industry experienced a steep increase in energy costs, and
globally this was a challenge as the company is competing in
international markets with products that are manufactured in
countries that have a high usage of alternate energy sources.
Therefore, the RFPL factory underwent a refurbishment to include
heat generators using the same duct system in order to keep the
energy costs low.
The company is also taking measures to decrease the CO2 emissions
to meet international standards as required by most buyers in the
developed markets. Locally RFPL is the only manufacturer to have
a SLS certification by the Sri Lanka Standards Board. Currently, RFPL
products are exported to key clients in niche markets and are also
supplied to the local market through the Browns dealer network
which was also expanded during the year.
The company hopes to expand its operations by introducing new
designs to the local and exports markets. The company will also
increase factory efficiencies such as re-aligning logistics and better
sourcing raw materials etc in order to compete on better price points.
The company will look for new markets and establish its brand values
by participation at trade exhibitions and creating high quality and
novel products backed by relevant communication mechanisms.
30 | Brown & Company PLC
Agriculture & Plantations
Agriculture Division
Sifang Lanka (Pvt) Ltd.
Plantation Support Services
Annual Report 2012/2013 | 31
Browns hopes to introduce futuristic models of farming equipment with better features while increasing the aspirational value of the brand.
AgricultureBrown and Company PLC was instrumental in introducing agriculture
mechanisation to Sri Lanka, and has been serving this sector for over
100 years. The Agriculture Strategic Business Unit (SBU) of Browns is
the sole distributor for Massey Ferguson and TAFE four wheel tractors.
It also markets Howard Rotovators, BG Trailers, BG Sprayers and other
BG branded implements.
Financial and Operating PerformanceThe year under review was a challenging one for the agriculture
sector with the first half of the year affecting cultivation due to
droughts and the second half of the year having heavy rains and
floods. The SBU was also affected by the appreciation of the US Dollar
since the agricultural equipment business is import based. Though
the sector was affected negatively, Browns remained at number one
in the four-wheel tractor market during the year under review.
Paddy farming where four wheel tractors are commonly used had
negative growth during the period under review due to adverse
weather conditions. This resulted in tractor industry sales dropping
by 41%. However, the Browns Agriculture SBU crossed the Rs. 3.2 Bn
mark in revenue.
Browns’ success has been a result of the motivated and competitive
team behind its sales and operations. The team has been providing
unparalleled services to customers through technical training and
after sales services, building a rapport with the farmers and dealers
which is essential during challenging times. Browns has a strong
dealer network for distribution of agricultural material consisting of an
exclusive dealer network and a non-exclusive dealer network. During
the financial year Browns continued to offer free registration of four-
wheel tractors and provided full insurance for the first year at no cost
by partnering with Sri Lanka Insurance Corporation and Lanka Orix
Leasing Company PLC.
In an effort to increase sales, dealers were given targets for the two
seasons - Yala and Maha - with winners receiving fully sponsored
tours to South Africa and Australia. The 38 member contingent
to Australia is the largest ever dealer tour group to have received
a fully sponsored tour to that country. Browns also felicitated and
recognised the top performing dealers at a dealer convention where
the principals from TAFE India too were present. Also, Browns was the
only input supplier in the four-wheel tractor category to win a gold
award in 2012 from the National Agri Council that is affiliated to the
Chamber of Commerce.
Future OutlookBrowns hopes to introduce futuristic models of farming equipment
with better features while increasing the aspirational value of
the brand. The distribution network for spare parts too will be
strengthened in the coming year.
Browns will offer training and seminars to dealers and farmers on
mechanisation and increasing their yield using farming equipment.
Furthermore, the company will continue to assist the farmers with
micro-financing opportunities through the parent company LOLC PLC
and other reputed financial institutes.
Rs. 3,856MnTurnover
32 | Brown & Company PLC
Agriculture & PlantationsSifang Lanka (Pvt) LimitedSifang Lanka (Pvt) Ltd is a fully owned subsidiary of Brown and
Company PLC, marketing light agriculture machinery such as Sifang
and Yamasha brand two-wheel tractors and the Sifang brand of
mini-combine harvesters. During the year under review, the company
launched a diesel three-wheeler under the BG Pace brand.
Financial and Operating PerformanceThe year under review was a challenging one for the company due
to the adverse weather conditions that prevailed throughout the
year. After experiencing three consecutive periods of drought, the
agriculture sector was hit hard with floods which contributed to
lower than expected demand for two wheel tractors. However, the
company maintained a 37% market share during the year with the
help of the newly introduced Sifang mini-combine harvester for
paddy farming, along with other products. The agriculture sector
has also been going through a stage of price volatility and the small
harvesters have been a popular product as the pricing fits right into
the budgets of many farmers.
The company has also been expanding into light transportation
products, and the newly launched three-wheeler is the only one in
the country that is approved to transport six passengers. The three-
wheelers which are manufactured in collaboration with Indian based
Pace Argo, are modified with parts manufactured in Sri Lanka to meet
local consumer preferences. The six-passenger three-wheelers have
the second largest market share in the diesel category.
Amidst the challenges faced, the company, through the introduction
of new products and strengthened franchised service agents, did
remarkably well to reach a revenue of Rs. 600 Mn during the year
under review. The company has 58 franchise service agents, covering
all business areas island-wide and supported by a team of company
technicians who promise a service delivery within 24 hours.
Future OutlookThe company will focus on providing farmers with the necessary
knowledge on handling equipment and have special promotions to
help the low-end farmers. The company will also work with parent
company LOLC PLC to provide the lowest possible rates to farmers in
order to ease their burden on associated financing costs.
The company will also continue its product diversification to reduce
seasonal dependence on sales. It will also promote the
three-wheelers as a family vehicle to farmers by leveraging on the
“Browns” brand already established among the farming communities.
Plantations Support ServicesPlantations Support Services Division of Brown and Company PLC
supplies tea and rubber processing machinery as well as allied
products to the manufacturers of tea and rubber in Sri Lanka.
Division’s clients include plantation companies, private tea factory
owners and the state owned plantations.
Browns represents some of the well known brands in machinery
including Parucco from India for heating and drying solutions,
Marshall - Fowler, a Kenyan company based in India for a wide range
of tea machinery, Aarkay Group from India for tea driers, Benson
Corporation from Taiwan for green tea machinery and Kelachandra
Iron and Steel works from Kerala, India for rubber machinery.
The company also provides total engineering solutions in terms
of both electrical and mechanical functions, and advisory services
on energy saving management solutions. In addition, the division
also acts as a one-stop shop for the Group’s other products such as
tractors, batteries, generators etc. by linking them to the plantation
companies.
Financial and Operating PerformancePlantations Support Services division recorded revenue of Rs. 136.2
Mn, a growth of 16% over the previous year. During the year under
review, the Division continued to support the technical aspects
related to the Hingurana Sugar Factory in Gal-Oya which the Browns
Group is operating as a public private partnership with the Sri Lanka
Government in an effort to revive the local sugar industry. The
Division also continues to support the tea estates of the Finlays Group
by offering a 24/7 on call service for maintenance and repairs to their
plant and equipment. The division held a market share of 70% for
wood fired heaters in 2012/13.
“...the company maintained a 37% market share during the year with the help of the newly introduced Sifang mini-combine harvester for paddy farming, along with other products.
It has also has been expanding into light transportation products, and the newly launched three-wheeler is the only one in the country that is approved to transport six passengers.”
Annual Report 2012/2013 | 33
Browns is conducting a pilot project with drip irrigation for tea
plantations in Sri Lanka. Two hectares in Bogawantalawa are being
used for the pilot and is being monitored by the Tea Research
Institute to ascertain the success of the programme. Also new to
Browns and new to the Country is the introduction of a green leaf
weighing system for electronic monitoring of green leaf weighment,
attendance, etc., to eliminate waste and increase productivity.
Talawakalle, Bogawantalawa and Horana Plantations are trying out
the new equipment on a trial basis.
Future OutlookBrowns will continue the two pilot projects introduced during the
financial year in the hope that they will be successful in the Sri
Lankan landscape. In addition, the Division hopes to introduce new
products especially in the areas of energy reduction/conservation to
its product portfolio.
The company also provides total engineering solutions in terms of both electrical and mechanical functions and advisory services on energy saving management solutions.
34 | Brown & Company PLC
Power Generation
Battery
Klevenberg (Pvt) Ltd.
Power Systems
General Trading
Annual Report 2012/2013 | 35
A customer centric service initiative was a key value addition in this sector.
BatteryBrowns Battery strategic business unit (SBU) is the sole distributor
for the Exide brand of batteries – Exide Power Plus, Exide Ultra, Exide
Biker, Exide 3WD, Exide Din type, and Exide Marine as well as BG
deionised water, BG jumper cables and BG charging equipment. With
over 500 dealer outlets, key partners and suppliers, Exide is the market
leader in providing batteries to the automotive battery market.
Exide has built a reputation over the years as a premium battery
that is reliable and long lasting. A total of 95% of the batteries are
manufactured in Sri Lanka while 5% are imported from India. Exide
has faced fierce competition over the years due to operating in a
market with minimum entry and exit barriers. However, the product
quality combined with superior service has enabled Exide to sustain
its number one position.
BG deionised water is the only battery water that has SLS status from
the Sri Lanka Standards Institution, and BG jumper cable supplied by
Kelani Cables is the only cable that caters to both petrol and diesel
vehicles.
Financial and Operating PerformanceThe SBU crossed Rs. 2.4 Bn in revenue during the year which is a
marked achievement compared to the Rs. 680 Mn recorded five years
ago. The unparalleled service levels delivered by a motivated team
have propelled the growth of the SBU during the year.
During the year under review, the SBU introduced a new battery
targeting 3-wheel vehicles under the brand name of Exide 3WD
which had an exceptional performance during the year.
The Battmobile service too expanded its services to 65 locations
throughout the country. Battmobile which provides a free service to
stalled motorists regardless of the brand of battery used, also helped
the SBU secure additional customers to Browns with the exceptional
service provided. In addition, Browns Power Mart, a one-stop-shop
that provides total solutions for all battery needs, continued to
perform well. The three centres in Colombo, Galle and Kurunegala
as well as the mini power marts in regional centres in Jaffna, Ampara
and Vavuniya continued to service customers whilst taking the time
to advise them on better battery care and reasons for battery failure.
2012/13 saw the Exide brand sponsor some of the best motor racing
events in the country including Foxhill, Gunners Super Cross and
Cavalry with Brown’s own Exide racing team taking part in some
races and winning awards for the company. The Exide motor rally
in Colombo attracted all brands of vehicles using Exide batteries.
Exide was placed 19th in the unlisted brands category in the Brands
Finance Survey, surpassing some of the other well known brands.
Exide also continued to motivate its dealers with technical seminars
and service campaigns and recognised key high performing dealers
with fully paid travel packages to overseas locations.
Future OutlookThe future of the Exide battery looks promising with the surge of new
vehicles that were imported to the country in the last 2-3 years. With
the relaxation of duty on import vehicles, the number of new cars
and motorcycles increased in the past few years and will be due for a
battery change in the 2014/15 year and beyond.
The company also hopes to increase product quality with new
machinery and technology.
Rs. 4,420MnTurnover
36 | Brown & Company PLC
The company will capitalise on the brand equity built by the Browns
Group over the years when introducing new products/brands to
the market. The company will continue to strengthen the dealer
network and build customer-centric value additions, thus increasing
the aspirational value of the brand as a long term strategy.
Klevenberg (Pvt) LimitedKlevenberg is a subsidiary of Brown and Company PLC and is the sole
distributor of Lucas automotive products from the UK. The company
markets a complete range of premium automotive batteries for all
categories of vehicles including cost of European as well as motor
cycles and three-wheel vehicles. The company promotes Lucas
Premium MF, a top-of-the-range maintenance-free battery with
a two year comprehensive warranty targeting premium vehicle
owners, Lucas Powerride for motor cycle owners and Lucas Buddy
battery for three-wheeler owners. The company also operates two
Lucas premium service centres that are open to all who need battery
servicing and a check on the electrical systems regardless of the
brand of battery used.
Financial and Operating PerformanceDuring the year under review, the company consolidated its sales and
operations functions and streamlined the dealer channel. Klevenberg
increased its market share from 16% to 19% during the year, in
keeping with the goal of sustaining a market share of approximately
20%. Net profit for the company grew by 157% when compared to
the previous year.
During the year, Klevenberg concentrated its efforts on reaching out
to the three-wheeler market. Three-wheelers is one of the fastest
growing automobile segments in the country. Klevenberg, which has
understood the needs of the three-wheeler market, introduced the
Power Generation
“During the year under review, the SBU introduced a new battery targeting 3-wheel vehicles under the brand name of Exide 3WD which had an exceptional performance during the year.
The company also made a substantial investment during the year on improving its auto rescue facility that provides a 24 hour mobile service for auto repairs for all automobile users.”
Lucas Buddy battery during the year under review and launched an
Owners Club giving lifestyle benefits to the owners of three-wheelers
lifestyle benefits. The Owners Club members receive discounts to
fashion malls and other lifestyle discounts including programs that
benefit the entire family.
The company also made a substantial investment during the year
on improving its auto-rescue facility that provides a 24-hour mobile
service for auto repairs for all automobile users. Services such as
on-site replacement of batteries, door step assistance in the event of
auto-electrical failure etc., are provided by the auto rescue facility with
services performed free for Lucas users.
Klevenberg is a pioneer in providing unmatched after sales and
post sales services to customers as well as providing auto services
to those who need it. The company has built partnerships with
leading organisations to provide auto services to their customers.
The partnership with the Automobile Association (AA) of Sri Lanka
continued with Lucas investing in the AA Call boxes. Services ranging
from replacing flat tyres, towing, jump starting, etc are provided to
all auto users through the Nuwara Eliya and Colombo AA centers
while similar services are offered to the auto users in Jaffna through
the Browns Centre. The company also partnered with Sri Lanka
Insurance Corporation (SLIC) to provide auto solutions such as mobile
and towing services free of charge to the SLIC premium customers
as well as providing discounted pricing on battery purchases to their
premium customers.
Future OutlookThe company could see a surge in battery sales in all market
segments as a result of the new vehicles that entered the market
in the last three years during the times of relaxed import taxes. The
typical life of a new battery is 2-3 years and Lucas hopes to capitalise
on the replacement battery market in due time. The infrastructure
development in the North and the East, once completed, is expected
to further increase the number of automobiles in the future, which
will increase the need for batteries even further.
The three-wheeler owners club introduced during the financial year
too is expected to increase the sales of batteries through word-of-
mouth amongst the clientele. A discount and incentive program is
available to existing Owner’s Club members for referrals and repeat
purchases.
Branding activities and change in product packaging highlighting
the benefits of the battery will bring in positive results in the
future, with Lucas investing heavily on event sponsorships such as
participating in fun motor rallies and classic car rallies to build brand
image. Marketing strategies through advertising, social media and
the introduction of a CRM system in order to capture details of loyal
customers should bode well for the future of the Lucas brand.
Power SystemsThe Power Systems Strategic Business Unit (SBU) of Brown and
Company PLC imports and markets the F. G. Wilson brand of generators
from the UK. The SBU has its own after sales division which carries out
services, repairs and maintenance 24 hours a day, 365 days a year and is
a provider of complete electrical energy solutions.
Annual Report 2012/2013 | 37
“... contributing to the positive results for the year is the direction it took in becoming a complete electrical energy solutions provider over being a mere seller of generators.”
Financial and Operating PerformanceAs a high-tech, high quality product, HG Wilson is one of the leading
generator brands in the market. The division was challenged during
the year with the depreciation of the Rupee and the contraction of
disposable income.
Cash liquidity of the customer is a concern for this product as it is
not sold on credit. Unlike the competitors, that follow a multi brand
strategy, the Power System SBU follows a single brand – single
product strategy and hence is unable to compete on price or cater to
the price conscious segment. However, the SBU partnered with LOLC
to enable small-scale clients to receive financing and thus was able to
retain market share as it did in the past.
The SBU also changed its strategy of competing only in the
conventional market to include more project based sales in order to
stay competitive. This change in strategy has already resulted in the
SBU generating additional sales.
Also contributing to the positive results for the year is the direction
it took in becoming a complete electrical energy solutions provider
over being a mere seller of generators. The service component
comprises of provision of equipment, installation, 24-hour assistance
across the country through Browns regional centres in Dambulla,
Kurunegala, Badulla, Ampara, Jaffna and in the South. The service
promise of Browns to its customers is that down-time will be limited
to three to six hours. The trust in the quality of service provided by
Browns has resulted in achieving over 1000 service contracts thus
far. The SBU also introduced a remote monitoring system to provide
enhanced service delivery to the customer. The system allows instant
notification of any breakdown or malfunction via SMS, enabling the
service staff to attend to the needs with improved response time. The
monitoring which is currently done as a pilot project is showing signs
of success.
The division entered rental operations during the year and it has been
successful thus far. The rentals are offered to customers for a nominal
fee as a temporary replacement during a breakdown or as a rental
in place of a permanent solution. The division is studying the rental
market closely to evaluate if operations should be expanded in the
coming year.
Future OutlookSustaining market share with a single brand – single product has
been a challenge in a tough market consisting of competitors
offering high, medium and small capacity generators with varying
price points. The division hopes to introduce related products and
increase the product portfolio to overcome this situation. In addition,
with the increase in electricity tariffs, commercial customers have
been faced with unexpectedly higher utility bills and the SBU has
recognised the need for power saving equipment. The SBU hopes to
add power saving equipment to its product portfolio in the
coming year.
With B2B sales being an important aspect in this business, the SBU
will continue to participate in corporate exhibitions such as the
Techno exhibition and the Constructors exhibition to increase its
visibility and build relationships with potential customers.
General TradingThe General Trading Division of Browns consists of machinery,
hardware, and electrical products. The machinery and hardware area
carries power tools, cutting and grinding wheels, engineering tools,
hacksaw blades and hand tools from world renowned suppliers such
as Makita, Maktec, Tailin, Eclipse and Tekiro. The electrical products
consist of Firman generators, Usha Euro CFL bulbs and BG Fans.
Financial and Operating PerformanceThe Division sustained its market leadership position in power tools
with 37% market share and in hacksaw blades with 45% market
share. On average, each product grew by 3%-4% during the year with
fireman generators growing by 5% to reach a market share of 16%,
keeping in line with the 17% targeted for the year.
The dealer distributor model in this operation has worked well for
the division with the current distribution channel exceeding over
450 dealers islandwide. However, the business was marginally
affected due to the cash liquidity issues of dealers that affected their
credit limits. Due to the efficient sales and support team at hand,
the downward trend was curtailed early in the year and the division
achieved good growth. The profitability of the division was also
challenged during the first two quarters with the appreciation of
the rupee which appears to have stabilised towards the end of the
financial year.
The after sales support centres have added a new dimension to the
sales support function and have helped fuel an increase in the service
contracts signed. Browns regional centres in Dambulla, Kurunegala,
Badulla, Ampara, Jaffna and in the South along with seven franchise
service points across the island have improved the after sales
experience of the customer. In addition, the main centre in Colombo
performs warranty repairs with a one-day service for power tools.
Browns has taken the initiative to train staff and end users on the
products offered and have conducted many seminars over the years.
During the year under review the division won the ‘best display of
engineering services’ presented by Techno Exhibition Committee and
the ‘best display of power tools’ in the Constructors award sector.
Future OutlookBrowns hopes to expand the product portfolio in the coming year in
order to gain an edge over the competition, bring in additional revenue
and strengthen the division’s business. In addition, the relationships and
confidence built between Browns and the dealers has been a definite
advantage in the growth of the business. Therefore the dealer network
too will be expanded to 650 in the coming year.
38 | Brown & Company PLC
Marine & Manufacture
Browns Group Industries (Pvt) Ltd.
Browns Thermal Engineering (Pvt) Ltd.
Browns Industrial Park Limited
Annual Report 2012/2013 | 39
Browns Industrial Park Limited Browns Industrial Park Limited serves as the logistics and
manufacturing hub for the Browns Group of Companies. Browns
Industrial Park is situated on 25 acres of land and consists of 300,000
sq ft of warehousing facility, making it one of the largest in the
country. During the year under review, all manufacturing operations
of Browns Group Industries (Pvt) Limited (BGIL) and Browns Thermal
Engineering (Pvt) Limited (BTEL), the manufacturing and assembly
plants of Tafe and Sifang tractors as well as the central warehouse and
stores of the Browns Group, moved to the new location.
The consolidated warehouse of Browns contains over 17,000 SKUs
worth approximately Rs 2 Bn. The warehouse contains state-of-the- art
technology with inventory controlled through an ERP system which
has introduced increased efficiency, accuracy and accountability to the
operations. Browns Industrial Park Ltd will improve synergies between
various divisions and companies of Browns Group that were previously
housed in a number of different locations.
The facility that is built on 50% of the land contains a waste disposal
system, waste water treatment facility and a chemical treatment plant
and possesses of all necessary environmental certifications. 70% of the
current warehousing facility is rented to other entities. The industrial park
which also contains lodging, food and training facilities can be expanded
further on the remaining land and rented as investment property.
Browns Group Industries (Pvt) Limited Browns Group Industries (Pvt) Limited (BGIL) is a subsidiary of Brown
and Company PLC that provides complete solutions to the boat
building industry. BGIL markets a range of high quality inboard and
outboard marine engines under the brands Yanmar, Ashok Leyland,
Hyundai Deo Dong, Parson, Powertech, and other related accessories.
The company also manufactures plastic containers and other plastic
components for batteries manufactured by the Associated Battery
Manufacturers (Ceylon) Ltd, in addition to managing a boiler division
for the Group.
Financial and Operating PerformanceThe company had a successful year with growth in revenue and
market share. The success can be attributed to the introduction of
new products, strengthening of the service and maintenance teams,
brand recognition and the newly introduced boiler division.
The inboard engine segment saw the newly introduced Deodong
brand of engines from Korea do well during the year. In a market
where second hand engines dominate, the Deodong brand with its
cost efficient and affordable pricing competed well to increase its
sales when compared to the previous year.
The inboard engine section also opened a new workshop in
Kudawella fisheries harbour in the Matara district to repair parts
and sell spare parts. In addition, the workshop in Negombo was
expanded to attract the craft owners from the North and the East
that require repair services. With the growth in the fisheries industry
especially with the opening of the seas in the North and the East, the
demand for repairs and maintenance has seen a growth. Therefore,
the expansion of the Negombo workshop should bode well for the
future as it is the closest city to the North that has expertise in marine
repairs.
The consolidated warehouse of Browns contains over 17,000 SKUs. The warehouse contains state-of-the-art technology with inventory controlled through an ERP system, which has introduced increased efficiency, accuracy and accountability to the operations.
Rs. 507MnTurnover
40 | Brown & Company PLC
The outboard engine segment introduced two new brands during
the year under review - Parsun and Powertech engines - both from
China. The products backed by the Browns service promise picked
up in sales towards the later part of the year. The company also
participated in boat shows in Colombo and Korea and provided
sponsorships for races in Negombo and Bolgoda to strengthen its
brand image with customers.
BGIL, as a manufacturer of plastic injections for sister companies,
saw its sales increase by 50% during the year. In addition, the newly
acquired boiler division which acts as the agents for the world famous
Cochran brand from UK and the Daelim Royal brand from Korea,
performed well during the year. The multi product - multi brand
strategy targeting various price points has worked well for BGIL to
keep its market share steady in this area. The division also introduced
an alternative to diesel and furnace oil boilers by introducing the cost
effective solid fuel burners from India. Steam Jen solid fuel burners
use coconut husk, fire wood and paddy husk to fuel the burners.
Future OutlookThe Company is carefully observing the government’s policies for the
fisheries industry in the coming years, especially for the North and the
Marine & Manufacture
The warehouse contains state-of- the-art technology with inventory controlled through an ERP system giving increased efficiency with accuracy and accountability to the operations.
The outboard engine segment introduced two new brands during the year under review - Parsun and Powertech engines - both from China.
The introduction of the RADCO radiator coolant during the year showed slow but steady progress in a very competitive environment.
East. Further expansion of the fishing industry in the North and East
will fuel the growth of the marine business in the new year.
Browns plans to expand the market share of the outboard engine
segment in the coming year. With the planned marketing activities
and participation in trade shows, Browns will also strengthen its brand
value and image. In addition, the company will conduct various
workshops in fisheries harbours to educate the users on equipment
and after-care.
Browns Thermal Engineering (Pvt) Ltd. Browns Thermal Engineering (Pvt) Ltd is a fully owned subsidiary of
Brown and Company PLC that manufactures heat exchangers for
the auto and non-auto segments including automotive radiators,
locomotive radiators, non-auto radiators, oil and air coolers, and
driers. The company is also the market leader for the RADCO brand of
radiators with a 42% market share.
Financial and Operating PerformanceThe influx of imported second hand and refurbished radiators to the
Sri Lankan market has challenged the genuine local brands due to
a low price strategy adopted by importers. The government of Sri
Lanka which has been monitoring the market situation introduced a
10% duty for these imports. However, the results of this measure are
yet to have an impact on local manufacturers.
The Company’s Gross Profit margin was affected during the year
primarily due to the high cost of copper and brass, two imported
raw materials used in the manufacture of radiators. The Company’s
diversification into aluminum core radiators to overcome the
uncertainty and volatility of the copper market is expected to give
the division good returns in the future. Also adding to the challenge
is the import duty that was imposed on customers who assemble
cars as the volumes are now expected to drop with higher costs.
However, the company’s strategy to diversify into the non-auto
segment by providing heat exchange systems to tea estates has seen
positive results. The new initiative introduced during the year has
already brought in additional sales. In addition, the introduction of
the RADCO radiator coolant during the year showed slow but steady
progress in a very competitive environment.
Future OutlookThe diversification into the non-auto segment is expected to grow
during the year, especially given that radiator and boiler requirements
of tea estates are now handled as a fully integrated solution package.
The convenience to the customer who has to work with just one
partner for both products as well as after-sales care is a significant
advantage to Browns.
Annual Report 2012/2013 | 41
The company will continue to educate the auto body shop owners on
the products and services under its ‘Karmika Navodaya’ programme.
The Technical Upliftment programme has so far been successful in
many parts of the country and will be expanded to other areas during
the year. In addition, the company will conduct workshops directly
for the end customer in order to enhance the Browns brand and
create awareness amongst customers.
42 | Brown & Company PLC
Home & Office Solutions
Integrated Business Solutions
Retail
Consumer
Commodity Trading
Annual Report 2012/2013 | 43
The sector continued to introduce new brands and services to meet evolving customer expectations.
Home and OfficeBrowns Home and Office sector consists of the Integrated Business
Solutions division, Retail division and the Consumer division. These
divisions provide a range of consumer electronic products and office
automation products whilst establishing relevant customer touch
points to market the Group’s products.
Integrated Business SolutionsThe Integrated Business Solutions (IBS) division broadened its
horizons and aligned itself to move into growth areas such as leisure
and energy management products whilst marketing its core products
in the office automation and IT category. The Division markets world
renowned brands such as Sharp, OCE, Pitney Bowes, Vivitek, Scan Coin
and Bianca Renee amongst a host of others.
Financial and Operating PerformanceThe year under review was a challenging one given the contraction
in the economy, high competition and availability of low priced
refurbished products in the market.
However, the division continued to maintain its market share in
photocopiers the core office automation product distributed by
Browns. Though the total market for photocopiers declined during
the year, Browns remained the second largest player in the segment
with a market share of 24%. Browns continued to be one of the key
players in the high-end category of printers, through the OCE range
of printers which caters to cut sheet and wide format printing.
The ‘Doculine’ rental solution showed positive growth during the
year and is currently the third largest player in the rental market. The
division provides flexible and customised solutions with a 24-hour
service available to clients with critical operations.
The office automation segment provides services across the country
through a network of service franchises and Browns own staff.
Browns service offerings include a 24-hour service for mission critical
operations, stationing of back up machines, job tracking mechanisms
and others. Customers have easy access to service centres that
provide a 24-hour service to get any of their issues resolved. Job
tracking mechanisms with immediate feedback to customers
through the use of SMS technology or e-mail, online monitoring
of breakdowns and repairs, etc., are some of the initiatives taken to
strengthen the service experience of customers. One hour response
time is guaranteed for key customers with critical operations. A
customer satisfaction survey is also carried out on a periodic basis
to ascertain our service levels and areas for improvement, and
the introduction of the new ERP system will further enhance the
customer servicing function.
Browns also launched the hospitality world’s most sought after brand
‘Bianca Renee’, a brand that specialises in designing, furnishing of
equipment for hotels, bars, restaurants, banquet halls, convention
centers, offices, and conference facilities for multinationals, embassies
and diplomatic residences.
During the year under review, the division introduced ‘Enigin’
products and services from UK that provide total energy solutions to
clients. Browns offers consultation and follow-up audits as a package
with the Enigin real time energy management system. The division
reached a revenue of Rs 550.9 Mn during the year.
Rs. 2,379MnTurnover
44 | Brown & Company PLC
Home & Office SolutionsFuture OutlookWith the success in printing solutions, the Division will take active
measures to expand the product portfolio in this area. IBS will also
continue to introduce innovative products, especially IT software
solutions to the market. In order to compete with the sub-standard,
low-priced products that have entered the market, the Division will
continue to enhance the service aspect of the business to provide
customers with the necessary after sales care. Browns also expects
good growth to come from some of the new lines that have been
established to cater to the leisure and energy sectors. The activation
of the island wide e-service hub will also further enhance our value
proposition to our customer base.
Retail Division The Retail division manages the retail showrooms at Brown and
Company PLC which includes 14 Browns centres, regional centres,
the Discovery Store and outlets in the modern trade channel. All the
above channels have been set up after carefully studying the varying
customer segments we serve and analysing their requirements. The
Retail division markets the entire range of products of the Group.
Financial and Operating PerformanceThe failure of three consecutive agro seasons due to adverse weather
conditions had a negative impact on this Division which primarily
markets agricultural equipment across the country.
The modern trade channel continues to perform well with the
expansion of supermarket chains and shows good potential for future
growth. The Arpico and Keells chains now carry a range of products
such as Belkin, BG, Olympus, Sharp, 3M and many others.
The introduction of the Discovery Store - a concept store born out of
customer feedback, showed positive signs of growth during the year.
The concept store which specialises in IT, consumer electronics and
white goods enables customers to experience the product prior to
purchasing. This feature offers customers the satisfaction they look for
when purchasing large ticket items such as the 55” LED 3D television.
The division also promotes healthy lifestyles by offering products
such as Healsio microwave oven that encourages healthy cooking. In
an effort to expand the reach of the Browns retail product portfolio,
during the year, Browns partnered with Singer Sri Lanka which is the
largest retailer in the country, to carry some of the Browns products in
over 400 Singer outlets.
Future OutlookTaking forward the concept of the Discovery store, Browns will open
its first flagship store in Colombo during the next financial year. The
concept of a customer experience zone is fast becoming popular and
bodes well for the future of retailing in Sri Lanka.
The company will also expand its presence in the modern trade
channel whilst exploring opportunities to bring innovative products
to the Sri Lankan market.
Consumer DivisionThe Consumer division of Browns is entrusted with the marketing
and dealings of consumer electronics and related products to
consumers through dealers. The Division markets Sharp electronic
products, Olympus brand of digital cameras, binoculars and voice
recorders, Mitashi gaming and entertainment products and Belkin
surge protectors to name a few. In addition, the Division also markets
consumer electronics, small appliances and water pumps under
Brown’s own BG brand.
Financial and Operating PerformanceThe Browns consumer division recorded a 44% increase in revenue
during the year with LED and LCD televisions contributing to the
majority of the growth. This growth was also driven by the expansion
of the dealer network by 100 dealers to bring the total to 420 as at the
end of the financial year.
The ‘Doculine’ rental solution showed positive growth during the year and is currently the third largest player in the rental market.
The modern trade channel continues to perform well with the expansion of supermarket chains and shows good potential for future growth.
The Division also introduced 37 new SKUs during the year which included the BG brand of air conditioners for domestic and industrial use, 3D LED televisions, home coolers, subwoofers and fans.
Annual Report 2012/2013 | 45
Currently, Browns holds the number three position in the dealer
market with a market share of 12%. The reasons for this achievement
has been the trust, quality products and services provided to our loyal
dealer base.
The Division’s mission is to provide a range of products and services
which continuously enhance the value proposition for the dealer
network in Sri Lanka through innovative and customer centric
solutions. True to its mission, the Consumer division carries an
extensive product portfolio covering many international brands as
well as Brown’s BG brand. The BG brand which was introduced to
the market four years ago contributed to 40% of revenue, surpassing
other reputed brands.
The Division also introduced 37 new SKUs during the year which
included the BG brand air conditioners for domestic and industrial
use, 3D LED televisions, home coolers, subwoofers and fans.
The Company’s ‘no frills’ warehouse outlets Direct2U proved to be a
success by capturing the market with high quality products offered
at competitive prices. The outlet situated in Bloemendhal in close
proximity to the electronic bazaar contributed to 15% of the growth.
All three ‘Direct2U’ outlets, as they are named, offer the entire product
range to the customer.
Future Outlook The Division hopes to expand the product range in the coming year
with audio-visual products, water solution equipment, other white
goods among others, and is envisioning a 15% growth in revenue
with an expected dealer network expansion to 540 by the end of the
next financial year.
Commodity Trading DivisionThe division launched its own range of canned fish products during
the year under review and has successfully captured 10% of the
market by packaging it under three price levels for the consumer
market, and one large packaging for the industrial segment.
The products, under brands ‘Samudra’ and ‘Sealine’, are currently
available through modern trade channels, stand-alone shops and
supermarkets, totaling over 15,000 outlets.
Future OutlookThe division will enter the soya product market in the coming year
and will expand the product range to include basmati rice imported
from Pakistan in the near future. The division will also increase the
number of outlets and its products will be sold in an additional 30,000
outlets.
Browns FarmsBrowns entered the farming arena during the year under review
to produce export oriented food products. A pilot project with
pineapple was commenced on 25 acres of Brown’s own property
which will be ready for harvesting in the coming year.
Future OutlookBrowns Farms is currently in the process of acquiring 1000 acres for
cultivation and export of tropical fruits. Browns will partner with
suitable foreign partners with technical expertise in agriculture
manufacturing to form a joint venture. Currently, the division is
exploring the feasibility of growing mango, banana, pomegranate,
pineapple and sesame for the export market.
46 | Brown & Company PLC
Vet Pharma
Veterinary Pharmaceuticals
Annual Report 2012/2013 | 47
Growth at Browns has been sustainable due to the reputation built with high quality products offered by leading global brands.
Veterinary PharmaceuticalsThe Veterinary Pharmaceuticals division of Browns markets a portfolio
of leading global brands for poultry, companion animals and dairy
sectors. Browns is a market leader in the supply of nutrition, drugs,
vaccines, vitamins, minerals and antibiotics primarily for the poultry
and companion animal sector, with a few products being supplied to
the dairy sector.
Financial and Operating PerformanceThe Division performed well during the year under review. Browns
poultry segment grew by over 20% when compared to the previous
year when the industry itself grew only by 10%. The Division has seen
a growth over the past five years, and in particular the year under
review saw a 20% increase in profitability.
Growth at Browns has been sustainable due to the reputation built
with high quality products offered from leading global brands.
Intervet Schering Plough biologicals from Netherlands, Zagro supply
feed additives and supplements from Singapore, Eukanuba dog food
from Proctor and Gamble USA and the poultry supplement Stallon
which is a joint venture between an Italian promoter and an Indian
manufacturer, are some of the leading brands offered by Browns.
Browns has built a strong brand loyalty with its small, medium and
large farmers and farmer societies that has resulted in the Division
maintaining market leadership position in biological supplies and
minerals and vitamins whilst maintaining second position in pet
foods. The pet foods market has seen a growth of 10% as a result
of premium pricing associated with the branded products which
has not been favourable to the consumers due to the economic
condition in the country.
The pilot project of supplying large scale protein supplements to
the poultry segment, introduced during the last financial year, was a
success and has been added to the product portfolio of the Division.
The brand ‘Proteina’ is a feed additive product extracted from fish and
is imported from Malaysia and Pakistan.
Browns has also been in the forefront of finding a permanent solution
to the salmonella disease commonly associated with poultry farming.
During the year under review, a live vaccine – SG9R- was introduced
successfully to eliminate Salmonella, and Browns hopes to continue
supplying the vaccine in the coming year.
The success of the Division has been due to the dedicated team
of sales staff, and the best performing pharmaceuticals sales staff
member was duly recognised at the SLIM NASCO Awards.
Future OutlookThe future strategy of the division is to have a mix of distributors and
direct customers to strengthen the network, and provide technical
assistance and training through Browns own veterinary surgeons.
Browns will strengthen the product portfolio to include disinfectants
that will assist in farmer management, and will also continue sales of
the newly introduced ‘Proteina’ brand.
The division will also strengthen the marketing plan by recognising
customers and rewarding them with annual incentives such as
foreign trips. Browns will also further build its brand image by
participating in dog shows, and charity events such as Rabies
prevention activities.
Rs. 401MnTurnover
48 | Brown & Company PLC
Healthcare
Annual Report 2012/2013 | 49
Browns vision is to deliver quality and innovative healthcare to every Sri Lankan through comprehensive integrated clinical practice, state of the art facilities and personalised care.
Browns Health Care (Pvt) LtdThe Browns Group entered the healthcare sector during the year
acquiring assets of St. Peter’s hospital in Ragama in the Gampaha
District.
Browns vision is to deliver quality and innovative healthcare to every
Sri Lankan through comprehensive integrated clinical practice, state-
of the art facilities and personalised care and aiming to continuously
enhance the value proposition to its stakeholders through innovative
and patient centric solutions.
HospitalsSt. Peters hospital, now under Browns Group - was a family owned,
25- bed hospital that had been in operation for over 30 years and had
established a name for itself in the Gampaha District. The hospital
is located strategically across from the Teaching Hospital in Ragama
where over 100 consultants are available for services. The hospital
currently caters to approximately 150 outdoor patients per day with
over 35 consultants visiting the facility.
The hospital is undergoing a refurbishment and will be upgraded to
a 60-bed, fully fledged, secondary care General Hospital. This modern,
purpose-built facility will be designed to offer quality care while
assuring safety to all patients, and will be renamed suitably to clearly
indicate that it is a subsidiary of Browns. Staff and management of
this hospital will aim to provide quality services to the consumer
and will work with the patients and their families’ to achieve the best
possible clinical outcomes. Browns hospitals will always encourage
medical, nursing and other allied health staff to adhere to the highest
standards of ethics and practice evidence based medicine.
There is a widening gap in private sector healthcare facilities with
the change in demographic, epidemiological, socio – economic and
health-seeking behavioural factors.
Considering the disease burden and the investment options available,
Browns feels that it is more feasible to set up a hospital that caters to
a majority of the disease conditions as well as other services that are
required of a hospital. Furthermore, it is also important to consider the
availability of fast evolving non-invasive medical technology that can
be offered instead of the capital intensive invasive services. Therefore,
General Hospitals with multi – speciality facilities will be the choice for
Brown’s healthcare sector expansion plans.
Private sector hospitals in Sri Lanka are concentrated mainly in the
western province and as such has given rise to a large number of
patients seeking treatment in Colombo. Furthermore, community
migration towards the suburbs of Colombo as a choice of residence
has been evident with the construction of many housing projects
during the last few decades. This has resulted in the growth of middle
income groups in areas such as Battaramulla, Piliyandala, Kadawatha,
Ragama and Maharagama. Other major cities in the country such
as Kandy, Kurunegala and Negombo have already seen a growth in
demand for better private sector healthcare.
The above analysis confirms that placing hospitals in these areas
will not only improve the accessibility to healthcare in general but
will also fill the vacuum that exists in private healthcare in these
areas. In the many studies done, it has also been highlighted that a
patient centric hospital, as opposed to the current practice of doctor
50 | Brown & Company PLC
centric hospitals will have a greater potential in today’s context.
Attractive infrastructure, faster patient processes, new technology, a
comfortable environment and patient oriented pricing models are
critical factors that are demanded by patients.
Therefore, building 35-75 bed, secondary care general hospitals would
be very much central to the main strategy of Browns Health Care.
Therefore, Browns is already exploring opportunities to build a
specialised care hospital in Kandy, which is one of the largest cities
outside of Colombo. Being centrally located in the country, Kandy is
expected to attract patients from cities further away for specialised
medical attention. It will be positioned as a dedicated cancer hospital
along with aged care to assist the aging population of the country
and as a facility that will attract tourists for medical purposes. Browns
is awaiting environmental approvals to commence the construction.
Diagnostic Centres Browns Health Care plans to establish three Diagnostic centres in
and around the city of Colombo during the next financial year. This
diagnostic centre model has been proven to be successful in India
and several other countries including Singapore. These centers will
Browns is already exploring opportunities to build a specialised care hospital in Kandy, which is one of the largest cities outside of Colombo along with three diagnostic centres in other areas.
The first fully-fledged medical laboratory was inaugurated at the new hospital in Ragama in June 2013. These centres will carry out a full range of laboratory investigations such as Heamatology, Microbiology and Biochemistry while collecting samples such as blood, urine and stools from the patients.
Healthcare be focusing mainly on Diagnostic Imaging and Medical Laboratory
services. This model will also accommodate approximately 7-10
consultation chambers for medical consultants to practice in the
areas of obstetrics and gynaecology, general medicine, paediatrics
and general surgery. A fully fledged pharmacy, an outpatient facility
and a medical practitioner will be available to provide services
throughout the day.
Medical LaboratoryThe first fully-fledged medical laboratory was inaugurated at the new
hospital in Ragama in June 2013. These centres will carry out a full
range of laboratory investigations such as Heamatology, Microbiology
and Biochemistry while collecting samples such as blood, urine and
stools from the patients. Having Brown’s own medical laboratories
has its advantages such as comparatively low investment and low
operational costs. It will also be conveniently fed by a network of
collection centers and operate as a standalone centre with very low
clinical risks.
Nursing SchoolWith Browns entering the healthcare sector, it has also being realised
that there is a shortage of qualified healthcare employees in the
country. Therefore, with the acquisition of the hospital in Ragama,
Browns has invested in training 60 nursing students through the
International Institute of Health Sciences (IIHS) that have many foreign
accreditations and affiliations with many international universities.
With the expansion of the healthcare sector, Browns hopes to start its
own nursing school in the near future.
Annual Report 2012/2013 | 51
Future OutlookGiven the entry of the LOLC group into the leisure sector, there are
synergies that can be achieved with the healthcare sector in the area
of Medical Tourism. To this end, Browns Health Care will apply for
international hospital accreditation through a reputed International
Hospital Accreditation Agency so that it will have the necessary
recognition and stature internationally.
Browns future plans for the hospital sector will be surrounding the
objective of providing the best possible healthcare at affordable
prices using the most up-to-dated and appropriate technology while
enabling high touch patient care and standardised procedures to
minimise hospital stays. Browns will also concentrate on introducing
high quality diagnostic centres with deep geographical penetration
to support early diagnosis of various non-communicable as well
as communicable diseases, thereby providing easy access to major
healthcare for the citizens that are in remote parts of the country.
52 | Brown & Company PLC
Travel & Leisure
Browns Tours (Pvt) Ltd.
BG Air Services (Pvt) Ltd.
Annual Report 2012/2013 | 53
The travel wing is evolving into a fully integrated leisure provider.
Browns Tours (Pvt) Limited and BG Air Services (Pvt) LimitedThe Travel and Leisure sector at Browns consists of BG Air Services
(Pvt) Ltd which is the General Sales Agent (GSA) for two European
based airlines - Austrian Airlines and Scandinavian Airlines, and
Browns Tours (Pvt) Ltd which handles inbound and outbound tours.
Browns Tours has been a pioneer in the Sri Lankan travel industry with
over 47 years of experience. Browns travel division has expanded
its inbound tourism team to include specialised services in aviation,
cruises and event management, and provides a one-stop shop to all
tourists – local and foreign.
Financial and Operating PerformanceAs a destination management company, Browns Tours had a
successful year. Revenue for the year was Rs. 4.6 Mn, a growth
of 254% from the Rs. 1.3 Mn achieved in 2011/12. Company
performance was driven primarily by the growth in corporate sales for
inbound tourism.
During the year under review, ‘Browns Tours Events’ specialising in
the MICE (Meetings, Incentives, Conferences and Events) market
organised many inbound events for tour groups. Browns Tours
Events were responsible for the organisation of the events from
the blue-print of the concept to the grand finale with theme logo
development, design and print management of all material, hotel
and event location, coordination/management, coordination of
activities etc. The total solution offering in organising events enabled
Browns Tours to organize a six day event for 250 delegates of a major
company, a few destination wedding packages for overseas clients
and many other events for local clientele.
‘Browns Tours Cruises’, a recently developed concept in order to
capture the cruise ship market that arrives in Sri Lanka, had its first
experience with 276 guests from the Carnival cruise ship that docked
at the Colombo port. Browns Tours Cruises offers its customers
a variety of services including pickup/transfers from the port,
organisation of on-shore excursions for group tours, hotel transfers
and experiential tours, multilingual tour guides, and customised tour
packages.
‘Browns Tours Aviation’ offers assistance to any airline – scheduled
or ad hoc – to operate flights by assisting with obtaining permission
from the Civil Aviation Authority in Sri Lanka to operate flights in and
out of Colombo, SLOT clearance from Sri Lankan Airlines, landing and
parking clearance to park crafts overnight, aircraft catering services
and menus, customs and immigrations formalities for crews, etc.,
amongst a host of other services. Browns Tours Aviation hopes to use
the expertise built over the last 20 years and is strongly positioned to
capitalise on the increase in charter flights that will touch down in Sri
Lanka.
Browns Tours was also named a top ten agent by Qatar Airways and
won the top agent award from KLM, Air France and Northwest Airlines
during the year, confirming that Browns Tours is amongst the top
agents in Sri Lanka that provides superior packages in ‘world holidays’.
Though the inbound segment had success during the year, the
outbound segment had a less than favourable year primarily due
to the depreciation of the rupee against the US dollar. The volatile
Rs. 38MnTurnover
54 | Brown & Company PLC
Travel & Leisure
political climate in the Middle-East too was a contributing factor
towards the less than favourable results. Browns outbound tours
which offers unique tour packages to all five continents partnered
with new destinations such as Morocco, Turkey, Greece and Bhutan
in order to mitigate the risk associated with the Middle Eastern
destinations. The year under review saw a total of approximately
1,400 passengers using the services offered by Browns outbound
segment.
Future OutlookWith the expected increase in tourist arrivals in the country and
some of Brown’s own hotels in operation during the next financial
year, Browns Tours inbound division is expected to have a better
performance.
Browns Tours (Pvt) Ltd has also introduced a dedicated after-sales
services representative to handle all after-sales care in order to
minimise negative experiences of clients, especially after a long
journey. Browns Tours (Pvt) Ltd also plans on further strengthening
the service component with a 24 by 7 dedicated hotline for all
travellers.
The Company hopes to expand the Browns brand and image
internationally to strengthen the inbound and outbound travel
divisions. The Company’s main priorities for next year are to obtain
the Sri Lanka Association of Inbound Tour Operators (SLAITO)
membership which will enable it to stay competitive with the major
players.
Annual Report 2012/2013 | 55
The Information and Communications Technology (ICT) department
at Browns is responsible for information technology infrastructure and
security, business solutions and communications. The ICT department
supports 14 divisions and 8 subsidiaries of Brown and Company PLC.
A comprehensive ICT road map that was developed for the Browns
Group in 2010/11 outlined the tasks to be achieved by 2012/13. The
Department has successfully been implementing all the required
tasks that were identified and are now well placed to provide efficient
and effective service to all divisions and subsidiaries of the Browns
Group.
Information Technology Infrastructure and SecurityIT infrastructure and security includes the management of Local Area
Networks (LAN), Wide Area Networks (WAN), remote connectivity,
desktop connectivity, hardware, firewall, wireless networking, CCTV
solutions, routers, switches etc. The infrastructure backbone of Browns
is run through the Microsoft Enterprise Agreement (EA) 2008 – R2
where it enables systems centre operations management where the
servers can be monitored centrally and configuration management
where solutions can be deployed across the Group from a central
location. The Department also manages over 450 e-mail users in the
Group.
In addition, the Department was also responsible for building the
infrastructure for Healthcare sector using in-house expertise. The
Department will build the clinical management solutions system
next and also plans to build the electronic medical records including
linkage of laboratories.
The Group is also in the process of migrating to O365 cloud
computing by the end of the next financial year. The project-which is
currently underway-once completed will make Browns one of the few
companies in the country to be using this latest technology.
The Department has also undertaken to develop comprehensive
disaster recovery and business continuity plans in order to be
prepared in case of an emergency. The Department also carries out
periodical security audits on the existing systems to ensure that all
ports are secure and any vulnerability is detected and solved
Business SolutionsUnder the business solutions area of operations, the Microsoft
Dynamics AX 2009 ERP solution went live during the current year
though it was introduced to Browns last year.
During the year under review, ERP the went live for all 14 divisions
at Browns with all except the service and fixed asset modules being
completed.
When evaluating the uses of ERP, Browns Group identified 86 areas
that ERP could be of benefit, of which some of the main modules
introduced during the year were the Letter of Credit (LC), inter-
division transactions, GP share automation, Delayed Payment
Document acceptance (DPDA) and statutory charges calculations.
The LC and DPDA modules are important to Browns as the company
is over 80% dependent on imports. With multiple suppliers spread
The IICCT deeparrtmennt supppop rtsss 14 dddivisioons and 8 subsidiaaries oof Browown aaand CCompany PLC.
Three Year IT Roadmap
2010/11 2011/12 2012/13
Infrastructure Introduction to Post implementation Review
Overhaul Enterprise Resource (PIR) of ERP
Planning (ERP) Standard Operating
Procedures (SOP)
Business Intelligence (BI)
Cloud Computing
56 | Brown & Company PLC
across the globe, the new ERP system helps Browns to have an
efficient import handling process.
Overall the ERP process at Browns has increased efficiencies and the
acceptance of the new system has been positive. Users have adapted
to the new processes and requirements with ease primarily due to
the effective training sessions had for all of the 150 users, with each
one getting 8 to 10 hours of initial training. ICT department also
provides continuous on-going training sessions for all users,
A post implementation review of ERP by a third party was initiated
during the year to ascertain the standards of internal controls and
feedback on issues.
Communications Browns Group is connected through a centralized PABX system
for voice communication. There are over 100,000 extensions used
throughout the Group and the ICT department has re-negotiated
rates and adopted cost reduction methodologies such as least cost
routing method by strategically subscribing to multiple service
providers. The Department also undertook measures to remove idle
extensions and phone lines, thereby bringing about cost savings to
the company.
Future OutlookThe ERP system is also the base for introducing other administrative
improvements within the Group such as the use of standard
operating procedure (SOP) and the ERP user manual. SOP is currently
being developed and will be available to the Group during the next
financial year and will provide guidelines to divisions and subsidiaries
on uniform practices and processes that are acceptable to the Group
while also detailing the ‘do’s and ‘dont’s’ to the end user. The ERP
manual once completed will complement the on-going training
efforts of the ICT division in bringing all users up to speed in using the
system.
During the next financial year the service module of ERP will be
launched, which will be beneficial to almost all of Browns divisions
and subsidiaries that provide equipment and machinery services.
This will bring about further efficiencies to a process that is currently
handled manually. In addition, a Customer Resource Management
(CRM) system will be introduced during the next financial year to
facilitate better after sales care and solutions.
Also in the pipeline is to introduce a Bill of Quantities (BOQ), ABC
analysis, physical volumes and weight analysis for cubic capacity for
delivery and storage requirements.
The ICT division will also introduce a Business Intelligence system to
facilitate better Management Information System reporting. The MIS
reporting system, which will be accessible by senior management
when introduced will enable them to evaluate business driven Key
Performance Indicators (KPIs) via dashboards, and KPI driven balance
score cards.
The ICT division will work towards achieving ISO 90001 on 2008
standards that will govern the ITIL procedures and policies for Browns
ICT. The division hopes to expand its expertise to provide systems
solutions to other entities and become a revenue generating division
within the Group by 2014.
Informatiion and Commmunications Technoology Contd.
Annual Report 2012/2013 | 57
Sustainability Report
This is the first sustainability report for Brown & Company PLC, and
is issued as part of the Annual Report and Audited Accounts for
the year ending March 31st, 2013. This report details and reviews
activities and data related to Browns Group of Companies’ operations
in Sri Lanka and wherever applicable to any overseas concerns
pertaining to the financial year 2012/13 ending 31st March. It
reports on the practices and processes involved in our sustainability
endeavours across the triple bottom line vis-a-vis economic, social
and environmental performance. We believe the GRI framework is a
core tool for sustainability reporting and as such, we have attempted
to report along the guidelines and recommendations set forth in the
GRI guidelines. We hope to improve our reporting to present a more
comprehensive, technically fine-tuned sustainability report in future.
At Browns, the strategy guiding our sustainability initiatives is three-
pronged: to contribute to national economic development through
operational excellence and strategic initiatives that are aligned with
national priorities; build enduring relationships with our stakeholders
which includes our employees, customers and the community
we live in; contribute to protection of the environment through
the sustainable use of resources such that we meet present needs
without compromising the ability of future generations to meet their
own needs.
The following is a report of the sustainability initiatives of Brown and
Company PLC for the year ending March 31st 2013. The performance
of the company is measured across the three main areas mentioned
above: economic, social and environmental performance.
Economic Sustainability In the area of economic sustainability Browns focused on two main
areas: operational excellence across all its business divisions and
subsidiaries, and contribution to national economic development.
Operational excellence can be demonstrated through Browns
maintaining leading market share in most of the sectors it operates
in, the superior quality of its products and services marketed to its
customers, and its linkages with local and foreign suppliers. The
following are some of the market shares that Browns enjoys: Lucas
- 19%, Exide - 52%, Dagenite - 1%, Tafe (four wheel tractors) - 58%,
Sifang (two wheel tractors) - 65%, branded power tool segment
(Maktec and Makita) - 36%, branded marine engine market (Yanmar,
Ashok Leyland) - 30%, Radiators (Radco) - 42% , Vetpharma - poultry
- 31% and pet animal - 27% and high end generators - 27%. Browns
has clearly demonstrated its strength as an organisation in the strong
financial performance it has recorded year after year and as reported
elsewhere in this annual report. It has also established itself as a
household name across Sri Lanka and has inspired loyalty among
its customer base that has helped it withstand external challenges
and economic shocks. Browns maintains an extensive network of
recognised local and foreign dealers, which has been instrumental
in maintaining a diversified product base across different economic
segments, contributing to the growth in sales volumes and earnings.
58 | Brown & Company PLC
Browns has also undertaken strategic investments and initiatives that
are closely aligned with national priorities, which in turn contributes
to national development. The Group invested in reviving the national
sugar estate and factory – Hingurana Sugar Industries. Not only does
the output contribute towards meeting a gap in local production
of sugar, it also provides employment to an out-grower network of
farmers. For further details, please see the case study.
In another strategic initiative, Brown and Company PLC has expanded
into the field of private healthcare, helping to bridge a gap in the
overall healthcare service provision in Sri Lanka. There is currently a
national shortage of beds and a need for more specialised diagnostic
services. Construction is to begin shortly on a 60-bed secondary
care general hospital in Ragama, which will provide the following
facilities: Outdoor care, Inward Care, Specialist Care, Diagnostics, and
Ambulatory Care at an affordable price. Brown and Company PLC will
also launch a chain of laboratories in the Gampaha district, providing
the following tests: bio-chemistry, haematology, microbiology and
clinical pathology, serology and histology. The launch of the new
hospital is expected to provide jobs to 400 people.
In the area of marine engineering, Brown and Company PLC has
invested to improve service facilities at the fisheries harbours of Sri
Lanka, which will be of immense benefit to development of the
industry as a whole. Initially, the service improvement has been
introduced at Kudawella, with plans to extend this to Negombo and
Trincomalee.
Social Responsibility For Browns, the philosophy behind its social responsibility initiatives
is to build enduring relationships with the people it impacts. This
includes its employees, its customers and the wider community in
which it operates. For its employees this involves creating a healthy
work environment in which they can grow and thrive, with numerous
opportunities for personal and professional growth. It also extends to
include benefits for employees and their families and consideration of
a healthy work-life balance. For customers, there are several benefits
such as free services and workshops for farmers and fisherman
for instance, that are of far-reaching importance. A decision was
made in the past year that one of the main platforms on which its
sustainability initiatives for the external community would be based is
improving IT literacy in schools and supporting youth education. (See
Case Study). Each division also undertakes smaller welfare projects for
disadvantaged groups of individuals.
Employee WelfareEmployee welfare is a priority at Browns. The organisation has 760
permanent staff and 174 staff on an out-sourced basis. In 2012/13,
91 new positions were created. There are several best practices that
Browns follows with respect to labour standards and human rights
in relation to employees. Workers are unionised and union meetings
are held quarterly with three members from each union and annually
with the Chairman, GMD and ten members of each union. A health
and safety policy has been finalised in the draft HR policy manual. A
Browns Emergency Response Team to manage staff in case of any
emergency incidents was formed and 32 Members were selected
as Emergency Response Team members. Each member was given
training on first aid and fire safety by St. John’s Ambulance Services &
Colombo Municipal Fire and Rescue Training Centre respectively. An
annual evacuation mock drill was conducted on 21st of June 2012 for
the main head office building. A comprehensive Occupational Safety
and Health Audit was Conducted for the Head Office building by
National Institute of Occupational Safety and Health on
24th May 2012.
Several training programs were held for staff following a
comprehensive needs assessment. A total of 57 training programs
were conducted (38 internal programs and 19 external programs) in
which a total of 666 employees participated. The training programs
were conducted on the following topics: Communication and
presentation skills, team work, ICT to optimise work processes and
expedite decision making, customer service, talent acquisition and
attracting the best employees for superior business performance,
health and safety awareness, finance/ marketing and HR knowledge
for non-specialist staff of respective areas to create cross functional
awareness and appreciation, a comprehensive induction and
“Several training programs were held for staff following a comprehensive needs assessment. A total of 57 training programs were conducted (38 internal programs and 19 external programs) in which a total of 666 employees participated.”
Training Programme
Sustainability Report Contd.
Annual Report 2012/2013 | 59
corporate awareness program for new employees as a compulsory
requirement, a systematic decision making workshop for all
top executives of the Group. In addition, there were specialised
training needs identified under sales and marketing areas – a core
competency of the Browns Group. These included: marketing
planning and branding, credit management, motivation for sales
performance.
High performers from Browns Strategic Business Units participated
in the NASCO 2012 competition organised by SLIM and Sriyan de
Seram of Vet Pharma managed to achieve a Bronze award under the
pharmaceutical sales category. A Browns sales conference was held
for all the staff members of the Group who are directly or indirectly
involved with the sales function to communicate new sales strategies
and to motivate them for better performance. The event took place
on the 10th of November 2012 at the conference facility of Excel
world. This was an initiative directly overseen by the GMD/CEO’s office
and MD Mr. Murali Prakash himself was personally involved with the
organising of the conference and the key presentations.
Customers, Community and the Public The social responsibility initiatives of Brown and Company for
customers, the public and the broader community have been
reported below by business division.
Power Generation This Division launched the highly successful Battmobile - a mobile
battery service that is available free of charge for any motorist
who needs urgent roadside assistance. Free technical seminars
on automotive battery use and maintenance as well as service
campaigns are also provided for the public. All Power Mart employees
voluntarily donated a day’s salary to provide medicine’s to the cancer
hospital in Maharagama; the division donated several required
items to schools, and also sponsored the illumination of the Dalada
Maligawa during the Kandy Perahera and a Wesak Dansal. The
division has also supported motor sports in Sri Lanka through several
sponsorships over the years.
AgricultureBrowns has established a Farmer Mechanisation Training Centre
(FMTC) in Anuradhapura and signed a MOU to train farmers free
of charge under the Govi Nana Pahana programme. The three day
program is conducted every month and is fully sponsored by Browns.
The training consists of theory and practical components related to
farm mechanisation such as how to increase yield with less labour,
use of equipment for optimum productivity etc. Farmers are also
provided with awareness sessions on hygienic practices by medical
staff from the Browns hospital. Browns also joined hands with Sri
Lanka Agriculture School’s Past Pupils General Association to conduct
training programs for students of the school under the ‘Sisu Nana
Pahana’ programme. Browns Agriculture division has also hired a
leading trainer to provide training sessions to dealers on how to run
an effective dealer business.
SifangThis Division provided farmers with education programmes such
as demonstrations on handling agricultural equipment Sifang also
negotiated with leasing companies to provide farmers with the best
possible rates for agricultural equipment.
Vet Pharma This Division has in-house veterinary surgeons that provide education
to farmers on best practices. They also provide surgery facilities
and other veterinary services free of charge including prescribing
medicines. Veterinary surgeons are flown down to Sri Lanka from
various countries - Netherlands, Thailand, Philippines, India and the
US – to provide training for farmers as well Browns’ own veterinary
surgeons. Training programs include: best farm management
practices such as cleanliness and hygiene, preventative care, diseases,
“Browns has established a Farmer Mechanisation Training Centre (FMTC) in Anuradhapura and signed a MOU to train farmers free of charge under the Govi Nana Pahana programme.”
Revitalising the Rural Economy Brown and Company PLC and the LOLC Group inked a deal with
the Government of Sri Lanka to revive ‘Gal-Oya Plantations’, a non
-operational state sugar firm that was formerly known as Hingurana
Sugar Industries.
Hingurana Sugar Industries previously experienced huge losses prior
to 2007 under Gal-Oya Plantation Ltd (GOPL) which resulted in the
factory closing its doors for 15 years. At a time where Sri Lanka’s sugar
producing sector was reduced to a crisis-ridden industry, Browns
Investments ventured into reviving the plantation which consists of
7659 hectares (ha) of land with approximately 5200 ha of cultivatable
extent allotted amongst 4,400 families. According to national policy
on the development of Sri Lanka’s sugar industry, local manufacturers
have the potential to produce at least 50% of the domestic
requirement of sugar and other value-added sugarcane products in
the future.
The project area is divided into five major zones namely
Varipathanchena, Galmaduwa, Deegawapi, Hingurana and Neetha. A
nucleus estate with an extent of 166 ha of land with a water scheme
will be supporting the 5200 ha of cultivatable land for sugarcane.
Sugar production in the refurbished factory commenced on 16th
July 2012. Approximately 10,000 hectares of land which was earlier
used to grow sugarcane was used by farmers to grow other crops
including paddy. Since taking over the factory from the Government,
the consortium has also managed to grow 250 hectares of sugarcane
which was required for their operations through a farmer outgrower
system.
The Agronomy Division of GOPL has been producing seed cane and
conducting research on various aspects of sugar cane agriculture
since its inception in 2010. The Division maintains over 134 SRI
sugarcane clones as a source of future planting material and Trail
programs. In 2012 and 2013, the agronomy area consisted of
approximately 159.25 ha, of which 28ha is for the maintenance of
primary seeds and 200 ha is for the secondary nursery. In addition to
the nursery, a few select farmers also provide seeds in order to meet
the supply-demand gap.
Sustainability Report Contd.
As at 31st March 2013
Sugar Cane cultivation - Plantations 1980.5 ha
Sugar Cane cultivation - Agronomy 159.25 ha
Total farmers 1,879
Cane crushed 53,806.51 MT
Total marketable sugar production 3,315.70 MT
Total Sugar Sales 3,302.5 MT
Total Revenue from Sugar sales Rs. 326,332,625
The consortium invested almost Rs 2 billion to date to turn around
the factory to operating status. Apart from sugar production, the
multi-purpose Gal-Oya Sugar factory complex operated by the
consortium also generates electricity and supplies purified water to
the national grid. The third project of the company is the impeccable
water purification plant which also supplies water to the National
Water Supply and Drainage Board. The investment for this project
is Rs. 15 million. With the revitalisation of the Gal-Oya sugar factory
and related operations, the Gal-Oya water purification plant too was
activated in order to provide a much needed service to approximately
1000 households in the area. At a time when there are many water
borne diseases and other tertiary health concerns such as kidney
failures etc due to contaminated water ways, the Gal-Oya water
purification plant provides 100,000 litres of clean water per day to the
local Water Board. The plant receives the water that flows through
the RP17 Canal which is an off-shoot of the D.S. Senanayaka tank in
Inginiyagala. The plant then sends the water through a sand filtration
process before it is pumped into tanks for chemical treatment.
A chemical test and monitoring is done by the Gal-Oya staff on a
daily basis with daily visits by the experts at the Water Board for their
own independent check on the quality of water. The sand filters are
washed using high pressure water pumps before the next cycle of
filtration takes place.
60 | Brown & Company PLC
The Gal-Oya venture has provided 789 direct employment
opportunities and created over 7,500 indirect job opportunities for
the local community.
Type of Employment As at 31.03.2013
Executive 37
Non Executive 138
Contacted 309
Casual 305
Total 789
Farmer Assistance - FinancialSugarcane cultivation is currently done on an out-grower basis where
the farmers are given financial assistance for extension services, land
preparation for cultivation, fertiliser, chemicals and transportation of
harvested cane to the factory. The farmers are given a cash advance
totaling Rs 30,000 per year which is recovered by setting it off against
the crop at the end of the year and the balance is paid back within
three years on a pre-agreed schedule.
Farmers are paid Rs 4,000 per ton for their yield which has been
increased to Rs. 4100 per ton in the new year. Since a farmer produces
approximately 100,000 tons of sugarcane per harvesting season, the
cultivation of sugarcane could enables the farmer to have earnings
of upto Rs. 400,000 per year with a net profit of approximately
Rs. 250,000 per year. This is a significant increase in income when
compared to earnings from other crops.
Farmer Assistance – Agri InsuranceGal-Oya also provides an insurance scheme to farmers with a 50%
subsidy on cost to protect them against total or partial crop loss as a
result of due to flood, drought, excess water, pests, diseases, damage
including from wild animal and other natural perils including fire.
Farmer Assistance – inter-crop for year round incomeWhile the farmers were engaged in paddy cultivation, they used to
make an income twice a year and are not accustomed to the concept
of ‘saving for a rainy day’. The downfall of cultivating a crop that is
harvested just once a year is that the farmer needs to survive on
this income throughout the year. Therefore, while encouraging the
farmers to use the banking system for their financial needs, Gal-Oya is
also experimenting with a smaller farmer community to harvest inter-
crops during off season periods for an additional source of income
during the season.
Higher ReturnsThough the Gal-Oya factory operation is in its early stages,
farmers who have already harvested their first crop are looking
forward to the growth of the industry in the future.
When interviewed, Mr. G. L. D. Somarathna and Mr. K.L.M.
Ismail - both sugarcane farmers - as well as Mr. W.M. Somapala
– a seed cane farmer, all envisioned a better future with the
revitalisation of the Gal-Oya sugar factory.
All three had been sugarcane farmers prior to 1997 when the
factory was involved in sugar production. Since the closing of
factory operations, they had resorted to paddy farming which
is much more labour intensive and is cultivated twice year with
little or no financial assistance. The farmers had no access to
machinery, training on latest cultivation methodologies, high
yielding seeds etc. On average their annual profits were Rs.
30,000 which was the only source of income to maintain a
household with an average of four members.
Fifteen years later, their annual profit on average in the first
year of cultivation is Rs. 250,000. The farmers are given financial
assistance, a subsidised insurance scheme, high yielding seed
cane, access to a knowledge-base on best farming practices.
In addition, Gal-Oya has also further developed the existing
irrigation system by building more canals as needed and
cleaning up roadways for better access.
All three farmers have immediate relatives and extended
relatives that have also re-started sugarcane cultivation. Some
of them had family members working in the factory itself
bringing in a stable monthly income. In general, people from
the area were of the view that “everyone in the village now has
a source of income – directly or indirectly created by the revival
of the Gal-Oya plantation”.
Annual Report 2012/2013 | 61
62 | Brown & Company PLC
Sustainability Report Contd.
possible threats etc. The average cost of training is approximately Rs.
140,000 per month, totaling approximately Rs. 1.7mn a year. About
75-100 farmers attend per session and on average two sessions are
held every month. The division has partnered with Embark (Dog
adoption program) to provide rabies vaccines, other medicines and
dog food for the program. It has also partnered with the Colombo
Municipal Council in their rabies prevention program
Plantation services This Division facilitates/sponsors planters to go to India to observe
new trends and better agricultural practices.
HealthcareTwo health-camps were carried out with the collaboration of the
Ragama business community and Wattala UC. Further, medical
officers were sent to various social activities conducted by temples,
churches and various other organisations. The purpose of these
health-camps was to provide medical consultations along with
medicines to low income earners of the area. This will enhance the
image of the up and coming hospital as well as the brand.
This Division also provided free training programs for nurses with
international qualifications including allowances, food and lodging
while on training.
Power systemsThis Division donated a generator set to Nallur Temple in Jaffna and
also assisted religious and non-profit organisations by providing
discounted prices on products.
Travel This division created several jobs through the expansion of its
inbound tourism segment such as for chauffeurs and tour guides,
while also developing the local economy. This division also supported
local craftsmen by commissioning their services to provide event/
meeting memorabilia when organizing MICE events. The division
with support from Pitney Bowes (Asia Pacific) Pte Ltd carried out the
refurbishment of the primary section of Kudapaduwa Sinhala Mix
School, Negombo.
General Trading Browns sponsored the 2012 Mannar District Soccer tournament on
the 18th & 19th of May 2012. The tournament was organised by the
leading football club in the area, Green Field Sports Club. General
Trading and Power Systems Divisions along with Sifang Lanka Pvt Ltd
and Vet Pharma supported the event with valuable gifts and sports
kits for the participants.
Marine Engineering The BTEL division conducted workshops to enhance the knowledge
of dealers, retailers, garage owners and end-users like fleet owners
and general vehicle owners. The Radco Radiator ‘Karmika Navodaya’
program was launched in 2012 to rejuvenate radiator technology in
Sri Lanka. The event was successfully conducted in the two regions
of Anuradhapura & Negombo with effective training and knowledge
sharing sessions by Director/General Manager Mr. Anoj Munidasa &
Deputy General Manager (Operations) Mr. Sudarshan Karunarathne.
In addition, a training session was conducted with the collaboration
of Lucas Battery Division on radiator maintenance for the technicians
of the Automobile Association by the Director/General Manager
Mr. Anoj Munidasa and on effective customer service conducted by
Mr. Dhanesh Jayathillake. Nearly 50 technicians participated in the
training.
Browns Investments The following social responsibility activities were conducted on
Maturata Plantations:
“Two health-camps were carried out with the collaboration of the Ragama business community and Wattala UC. Further, medical officers were sent to various social activities conducted by temples, churches and various other organisations.”
Empowering Young People to Face the Future’The Browns Group has identified the need to support the broader
community we live and work in and to build sustainable businesses
that reflects the value it lives by as the foundation for its corporate
social responsibility (CSR) programme.
Browns’ first fully-fledged CSR project was to develop IT education
especially in high poverty districts where facilities are limited to
support such programmes. The vision of the Browns IT education
project is to enable all students including those in the villages to
have access to advanced technologies so that each child will be
empowered to face the future challenges of a global village.
During the year under review, Browns took this CSR concept to the
Matale District by providing IT centres to two schools in collaboration
with the Zonal Education Office of the Central Province. Browns
helped equip the two IT Centers of Kalalpitiya Vidyalaya and
Mahanama Vidyalaya with computers, printers, desks, chairs and
other accessories. Each centre is be equipped with five computers
with an average student to computer ratio of 17:1. The centre will be
operated under the guidance of a trained teacher. Mahanama College
– Kirimatiyawa restarted operations in 2006 with just eight students
and two teachers while today it has 221 students ranging from year
one to eight. The school has a faculty of 17 teaching staff. Kalalpitiya
Vidyalaya, Ukuwela commenced operations in 1962, with the most
basic of structures and is now a 140 student strong establishment
with a teacher to student ratio of 1:11. This mixed gender school
provides education to students ranging from year one up to the
Ordinary Level Examinations.
Browns also donated computers to Dankada TV, Maussagala TV,
Wevalmada TV in Rattota, Yatawataa TV in Yatawatta and Matale West
TV in Ukuwela in the Matale district.
Browns is committed to investing in under-developed and under-
served areas around the country, not only through CSR but also
by expanding its operations into rural areas through their regional
centers and wide network of dealers. Currently the company has
regional centers in Ampara, Dambulla, Kurunegala, Batticoloa and
Jaffna. Browns also has over 1500 dealers island-wide. This rapid
expansion has contributed to creating employment and growing the
rural economy.
Browns has already identified a few schools for the next phase of the
CSR programme with the hope that it will enable the next generation
to develop a set of skills that will be key to the upliftment of society in
general.
Brighter Futures“This is a long standing dream come true, as most of our
children have very little chance if at all to have computer
facilities.. It is with great gratitude that I accept this IT center
provided to us by Brown and Company and on behalf of the
students, teachers and parents of this school I would like to
thank you and the Zonal Education office for making this a
reality.” - Mrs. W. G. Ramyawathi Principal of the Kalalpitiya
Vidyalaya,
“It was our ambition to ensure that every school in our
District be equipped with at least one computer to ensure
that every student received not only a sound education in IT
but also practical computer knowledge. I am very happy to
state that today with the help of Brown & Company PLC that
ambition has been fulfilled. I take this opportunity to thank
the Management of Browns for their immense contribution
towards making our endeavour a success.” -Mr. Y.M.M.S.
Yapa, Director of the Zonal Education Office of the Central
Province.
“Browns is committed to investing in under-developed and under-served areas around the country, not only through CSR but also by expanding its operations into rural areas through their regional centers and wide network of dealers.”
Annual Report 2012/2013 | 63
64 | Brown & Company PLC
(1) Establishment of Welfare Societies on all estates managed by
Maturata Plantations Limited with the participation of estate staff
and work-force where the sole benefits go to the estate work-
force.
(2) Organised awareness programmes and seminars on prevention
of drug addiction, child abuse, teenage pregnancy, spread of
Dengue, importance of breast feeding, diet of pregnant mothers
and lactating mothers.
(3) Organised medical camps with the participation of specialists
with regard to Blood Pressure, Diabetes, Oral Cancers, inclusive of
Eye clinics.
(4) Mobile service was conducted on the issue of Birth Certificates
and National Identity Cards for estate residents, which is an
important concern for them.
(5) Job opportunities were provided through the Estate Worker
Housing Co-operative society by way of opening up of sewing
centres, bakeries, barber salons, franchise shops which will
provide services to the estate work-force. A well organized EWHCS
could provide loan facilities, maintenance of savings accounts
for their future commitments and infrastructure such as assisting
them with regard to construction of toilets for each worker
family, bathing places etc. Also household cash management by
the Ladies Committee is in operation. Many other loan facilities
were provided through the VANISA Bank for Wedding, Funerals
and other ceremonial functions, even for the purchase of school
books.
(6) Increased productivity – Best Awards were provided to recognise
top performance and motivate workers in the categories of Staff
and Workers on a divisional basis on each plantation, with the
participation of Head Office Staff.
(7) Organised drama competitions on education and welfare
programmes on the estates and also organized a field trip for
estate workers. Seminars were also organized on gender issues
and alcoholism.
(8) A ‘Shramadana’ campaign was organised to get support of the
estate for the maintenance of roads and footpaths.
(9) Employment was offered to staff and worker children who were
suitably qualified for the position.
(10 ) Scholarships were awarded to children of staff and workers who
gained University admission.
The following social responsibility activities were conducted on
Pussellawa Plantations:
(1) Infrastructure development activities included the construction
of 25 new houses, re-roofing of existing houses, building latrines,
upgrading staff quarters, building footpaths, water schemes, field
rest rooms.
(2) Awareness programs were held to promote gender equality and
empower women
(3) Awareness programs were held with the Ministry of Health on
improvement of maternal health, combating HIV and other
diseases, and improving the nutritional status of workers
(4) The plantation obtained Rainforest Alliance certification for all its
estates, contributing towards environmental sustainability.
(5) Awareness programs on household money management was
held for estate workers
(6) Health camps were held to check eyesight of workers, on oral
cancer and dengue prevention.
Sustainability Report Contd.
Environmental Sustainability There have been several activities undertaken across the organisation
to conserve energy and introduce environmentally friendly operating
practices as well as ‘green’ products. Given below are the main
initiatives undertaken during the year under each business unit/
division.
Power Generation The total energy used by the Power Generation division was 4410961
KWH. Several initiatives have been taken to reduce energy use such
as purchase of energy efficient rated electrical equipment like motors
and pumps; re-designing of processes by which the total ampere
input is reduced. For example, the charging system of MF batteries;
a new capacitor bank has been added to increase the power factor
of electricity by up to 99%. Brown’s expects to achieve ISO: 50001
certification for which a new Energy Manager has been appointed
to monitor and control all energy consumption. A total of 32,854000
litres of water is sent annually to the waste-water treatment plant and
treated water is being reused. Gaseous emissions and ambient air
quality is monitored to comply with Central Environmental Authority
Annual Report 2012/2013 | 65
standards. Products are also recycled wherever possible as part of
Brown’s ‘Go Green’ initiative. For instance, LED and scrap batteries
recycling takes place at the Browns factory as well as rigi foam
packing material which is used to package batteries. All products are
manufactured according to the ISO: 14001 Environment Management
System.
General TradingThe General Trading Division of Brown and Company introduced
energy efficient and eco- friendly lighting solutions to the Sri Lankan
market under ‘Think Green and be different.’ This was held during the
Techno 2012 exhibition. Cold Cathode Fluorescent Lamps (CCFL)
Lamps were introduced mainly to fill a gap in the market for better
energy-saving and eco-friendly products for energy conservation in
the country. CCFL has a very low mercury content and very low heat
generation. Browns GTD division collaborated with 1AB COMMS (Pvt)
Ltd in Singapore to display energy efficient and eco-friendly lighting
solutions at this exhibition. 1AB COMMS displayed a comprehensive
range of energy saving solutions targeted at both commercial and
industrial applications. The stall displayed CCFL and induction lamps
with higher energy efficiency that is manufactured using Japanese
technology. The commercial launch of the CCFL lamp took place
along with the inaugural opening of the Techno Exhibition by Hon.
Minister Basil Rajapakse and Hon. Minister Wimal Weerawansa. Further
strengthening the importance of the energy conservation message,
product presentation was taken place under ‘Think green and be
Different’ concept at the Engineering Pavilion on the first day of the
exhibition.
Healthcare With development of the new hospital, several environmentally
friendly measures have been put in place. These include:
Recycling water – a waste water treatment plant will be installed to
treat the waste water before dumping it into a land-fill. The same will
also be used for gardening and flushing purposes;
Reducing waste - measures are being explored to reduce the amount
of waste generated – the expected quantity of medical waste (clinical
waste) generation including sharps (but excluding human anatomical
wastes) will be 252 kg per week and 201.6 kg per week during 100%
bed occupancy and 80% bed occupancy, which is expected from the
second year of operation.
Recycling products - the hospital intends to collect sharp waste
in cardboard containers which will be provided by Finlay Rentokil
Ceylon (Pvt) Limited (a CEA licensed infectious/clinical waste
management firm). All other bio-medical waste will be segregated
from municipal wastes, for which preliminary arrangements have
been made with the Kandy Four Gravets and Gangawata Korale
Pradeshiya Saba to remove them on a daily basis. Finlay Rentokil
Ceylon (Pvt) Limited have been already entrusted to collect the
sharp and infectious waste to be taken away on a daily basis for
hydroclaving and incineration, respectively. It is intended to remove
the bins (avoiding meal times and visiting hours) using trolleys, hence
to avoid possible spills. A separate biomedical waste storage area
will be made available, which has been designed to avoid foul odour
generation and spill runoffs. Furthermore, it is planned to make use
of rigid-walled HDPE containers (lined with yellow bags provided by
Finlays) to collect the different types of infectious wastes and they
will be carried using trolleys to avoid spills. All personnel engaged in
biomedical waste management will be required to wear appropriate
personnel protective equipment.
Home and Office Solutions The Sharp brand offers a range of environmentally conscious
products and devices, which are among the main product offering
of the home and office division of Browns. Sharp is well known for
developing environmentally conscious products and devices as well
as maintaining stringent certification standards for the same. These
standards are revised each year, thereby constantly improving the
environmental performance of its products and devices.
Sharp calls its environmentally conscious products Green Products
(GP). Among its Green Products, Sharp has been certifying those
that offer a particularly high level of environmental performance as
Advanced Green Products (AGP), and further, among these AGPs,
certifying those with the highest possible levels of environmental
performance as Super Green Products (SGP). SGP and AGP
certifications apply to products worldwide, but Sharp incorporates
certification criteria set by region based on the needs of customers
and on official systems introduced in each region to not only deliver
high environmental performance, but also to create SGPs and AGPs
tailored to specific regions.
PorcelainThe porcelain arm of Browns has taken steps to reduce the company’s
carbon footprint, reduce waste generation and recycle waste as per
Central Environmental Authority requirements. Total energy used
at the porcelain factory is 1566 metric tons of LP gas. There have
been efforts made to use renewable energy sources and increase
energy efficiency. For instance, the heat generated from kilns is
used to power the dryers, which saves on gas consumption. Also,
treated water from the waste water treatment plant is re-used at the
washing stage of the manufacturing process. Other initiatives include
monitoring of carbon dioxide emissions to maintain air quality, as
well as recycling of factory product rejects to make other porcelain
products.
Farming Farming is a relatively new venture for Brown and Company and
guidelines are in place to use the optimal amount of farm inputs to
ensure sustainability. The amount of artificial fertilisers used is also
minimised and sustainable farming practices are implemented such
as the use of organic sprays.
Several initiatives have been taken to reduce energy use such as purchase of energy efficient rated electrical equipment like motors and pumps; re-designing of processes by which the total ampere input is reduced.
66 | Brown & Company PLC
The Human Resources (HR) division of Brown and Company PLC
has gone through a transformation process over the past two years
to enhance the HR function and processes, thereby giving the
employees of Browns an environment where they can develop to
their full potential. During the year, the Division undertook a study of
the job description (JD) for all executives in order to better align the
functions with industry standards. The HR division works diligently to
align its functions to meet the vision of the Division which is to align
the employees of the Group to the vision, mission and objectives of
the Group, engage employees in the business to ensure optimum
motivation levels and to develop all employees to build commitment
and drive business performance.
Performance EvaluationIn this light, the performance management process at Browns was
further enhanced to include a 360 evaluation and feedback process
for executive as well as manual staff members. This process was
introduced during the 2012/13 year as an additional feature to the
existing performance evaluation process that is carried out twice a
year to evaluate staff against pre-set key performance indicators that
are aligned with company goals. The first appraisal identifies the
training and development needs of staff members and the second
appraisal decides on promotions and increments. During the year
under review, the results of the skill assessment of manual and clerical
staff that were conducted last year were made available for their
superiors to make informed decisions on their performance.
Training and DevelopmentDuring the year, the company focused on creating a training culture
within the Group. The HR staff believes in living by example and
therefore the training initiative included a specialised training
program for HR staff to develop their skills. ‘HR Circle’ - as the program
is named, is conducted to enhance the presentation skills of staff
members where they are encouraged to conduct a presentation to
the ‘circle’ on any given subject.
In addition, Group staff are encouraged to attend skill development
and technical training programs where training is provided four
times a month for interested staff members. During the year, 846 staff
members attended training sessions comprising of 5,200 hours of
total training.
A Memorandum of understanding (MOU) was entered in to with
NAITA to train of healthcare sector staff for the coming year.
Annual Report 2012/2013 | 67
Employee Benefits and WelfareAll employees at Browns are offered medical coverage including
hospitalisation, a spectacle allowance and access to an in-house
doctor and pharmacy services. During the year under review,
hospitalisation and OPD coverage was increased.
During the year, employees were offered subsidised rates to purchase
Browns retail goods. With this scheme, employees now can afford
to purchase international brands known for quality and reliability for
their own use. Browns believe that happy employees are an asset
to the company. In this regard, a grievance and counseling process
too was introduced at Browns during the year. The counseling
and grievance processes are handled in parallel by trained HR staff.
However, outside counseling specialists are brought in if needed and
are paid for by the company.
were provided with training on first aid and fire fighting. In addition,
building evacuation training was held and drills were conducted for
the benefit of all employees so that everyone is aware of their roles
and responsibilities in case of an emergency. A building evaluation
was conducted by the health and safety institute and a report was
issued with no adverse findings.
“Broowwns bbelievve thaat haappppy eemmpllooyeess are an assset tto thee commpanyy. In tthhis rregardd, a grievvaancee andd counnselinngg proocesss too wwas introodduceed at Browwns duururingg thee yyear.””
Browns also know the importance of helping children of employees
complete their education and therefore have supported a scholarship
programme for children who are successful in the grade 5 scholarship
exam and at the university entrance level.
Employee Communication The employee communication process at Browns was enhanced over
the past few years with the introduction of the quarterly newsletter
and other modes such as online tools. The newsletter was enhanced
during the year with a 50% increase in content including corporate
news, employee news, employee creative articles as well as articles
and painting published by the children of employees where awards
were given to the best creative child.
In order to encourage employee interaction and team building,
a Christmas tree decorating contest was introduced where
all departments including the subsidiaries took part. An inter-
departmental cricket tournament too was organized by the Browns
sports club with the participation of teams covering most subsidiaries.
Health and SafetyEmployee health and safety comes first at Browns! An Emergency
response team was created during the year with a team member
available on each floor and in each subsidiary. All team members
Browns and its subsidiaries are also aware of accidents that could
occur in the work place and therefore have provided personal
protective equipment at factories. A training programme on the use
of these equipment such as visors, industrial gloves, masks etc have
been carried out for all users and their supervisors. All supervisors
have also been trained on handling emergency situations.
Future OutlookThe HR division understands the importance of team work and
building a rapport amongst each other. In this regards, the division
will conduct more programmes for all Browns employees to
participate in, get to know each other and enjoy the time spent with
colleagues and superiors.
The HR division is working on strengthening the HR manual and Code
of Ethics. This ongoing project has been piloted with all incoming
new staff members. The roll out to the entire group is expected to
take place in the coming year.
68 | Brown & Company PLC
Corppooratee Govvernannce iss cconnccernneed withh mmainntainning thhe baallaanceee bettwweenn econnoomic and sociaal goaallss anndd beettweenn indivvidduall andd communaaal l goaaals. TThhe Goveerrnannce frrame--workk eexistts too encoouuragee thee efficcient ususe ooff ressoourcees and ttoo reqquiree accoountaabbiilityy for tthe stewwaardshhip oof thosse ressoourccees. TTThe aiim iss to alliggn ass closely aas posssis blee thee interrest of innddividuuals,, corpporatiioonns aannd ssoocietyty
We firmly believe in good corporate governance, a system by
which companies are directed and controlled. It ensures regulatory,
compliance and accountability. The Company holds itself accountable
to the highest standards of corporate governance and provides
public accessibility to the information of the Company. Corporate
Governance lays the basis for responsible performance–oriented
management and control which is geared towards sustainable value
creation. Corporate Governance has been institutionalised at all levels
in the Group through a strong set of corporate values which have
been adhered to by the senior management and Board of Directors in
the performance of their official duties and in other situations which
could affect the Group image. The Company is committed to the
highest standards of integrity, ethical values and professionalism in all
its activities.
Formal publication of the Code of Best Practice on Corporate
Governance Rules issued jointly by Securities and Exchange
Commission of Sri Lanka (SEC) and The Institute of Chartered
Accountants of Sri Lanka is considered as a strong gesture to
strengthen transparency, accountability, and disclosure of its business
practices.
Corporate Governance Framework
INTERNAL GOVERNANCE
STRUCTURE
ASSURANCE OF
COMPLIANCE
REGULATORY
FRAMEWORK
CHAIRMAN & BOARD
OF DIRECTORS
MANAGING
DIRECTOR/CEO
SHAREHOLDERS
INTERNAL CONTROL
COMPANY’S CODE OF CONDUCT
EXTERNAL AUDIT
INTERNAL AUDIT
SE
NIO
R V
ICE
PR
ES
IDE
NT
S
GR
OU
P-L
EG
AL
&
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ES
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BOARD COMMITTEES
AU
DIT
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MU
NE
RA
TIO
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ES
S
OP
ER
AT
ION
S
MANDATORY
COMPLIANCE
Companies Act No 7
of 2007
Listing Rules of the
CSE
VOLUNTARY
COMPLIANCE
The Code of Best
Practice on Corporate
Governance
published by
The Securities
and Exchange
Commission and The
Institute of Chartered
Accountants of SL.GR
OU
P C
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F F
INA
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IAL
OF
FIC
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Annual Report 2012/2013 | 69
The Company is committed towards its corporate values and adheres
to the Code of Best Practice on Corporate Governance.
The consistent adherence to the principles and practices of good
Corporate Governance has resulted in the company acquiring a
matchless reputation in Sri Lanka for fidelity and dependability
amongst all its stakeholders.
The Corporate Governance framework has been incorporated within
the Group with adherence to the following:
Complying with laws , rules and regulations within the territory
Allegiance to the Group Values
Ensuring that no individual has unfettered decision making
powers
Exercising professionalism and integrity in all business
transactions
Timely and efficient decision making and resource allocation
within a framework which is compliant with the laws of the
territory and standards of governance
The key components of the Corporate Governance framework of the
Company comprising of Internal Governance Structure, Assurance of
Compliance and Regulatory Framework which guides the Company
towards the progress by way of developing and implementing
appropriate corporate strategies are discussed in detail in this report.
Internal Governance StructureThe Role of the ChairmanThe Chairman’s primary role is to ensure that the Board is effective
in its tasks of setting and implementing the Company’s directions
and strategy. Also the Chairman is expected to act as the Company’s
leading representative which will involve the presentation of the
Company’s aims and policies to the outside world. While providing
leadership to the Board, the Chairman should ensure that the
participation and contribution of the Executive, Non Executive and
Non/ Independent Directors are encouraged and their views on the
matters under consideration are determined.
The Board considers that none of Chairman’s other commitments
interfere with the discharge of his responsibilities to the Group. The
Board is satisfied that the Chairman makes sufficient time to serve the
Company effectively.
The ppoositiions of thee Chaairirmaann anndd thee Mannaagingg Direector havee bbeennn seppaarateed inn ordeer to mmainttain aa balaancn e ooof poowwer aand authhoority.y.
Adhering to the Code of Best Practice on Corporate Governance
issued by the Securities and Exchange Commission of Sri Lanka and
the Chartered Accountants of Sri Lanka, the Company has made
a clear division of responsibilities between the Chairman and the
Managing Director to ensure a balance of power and authority, in
such a way that no individual has unfettered powers of decision-
making.
Board of DirectorsThe Board of Directors are the ultimate governing body of the
Company and is abundant in experience, professionalism and has a
wide range of expertise in diverse fields as set out on pages 18 to 19.
The Board is responsible for the ultimate supervision of the Group.
In all actions taken by the Board, the Directors are expected to
exercise their business judgment considering the best interest of
the Company. The Directors participate in defining goals, visions,
strategies and business targets. All Directors are able to and willingly
add value and independent opinion on the decision making process,
which is of immense benefit for the effective functioning of the Board.
The questions raised by Shareholders at General Meetings are readily
answered by the Board members and they maintain an appropriate
dialogue with the Shareholders.
The Board gives leadership in setting the strategic direction and
establishing a sound control framework for the successful functioning
of the Company. The Board’s composition reflects a sound balance of
independence and anchors.
Key Responsibilities of the Chairman
Provide leadership to the Company and ensure the
Board of Directors works effectively and discharges its
responsibilities.
Ensuring that the directors receive accurate, timely
and clear information, including on the Company’s
current performance, to enable the Board to take sound
decisions, monitor effectively and provide advice to
promote the success of the Company
Ensure the continual improvement in quality and calibre
of the Executives
Promote a culture of openness and debate by facilitating
the effective contribution of Non-Executive Directors in
particular and encouraging active engagement by all
members of the Board.
Ensuring effective communication with shareholders
Ensure an appropriate balance is maintained between
the interests of shareholders and other stakeholders
(employees, customers, suppliers and the community).
Ensure the long term sustainability of the business.
Uphold the highest standards of integrity and probity
70 | Brown & Company PLC
Composition of the Board and Directors’ IndependenceAs at 31st March 2013, the Board consists of 7 members comprising
of-
4 Non-Executive Directors
1 Independent Non-Executive Director
2 Executive Directors
Subsequently Mr. R. M. Nanayakkara was appointed as a Non-
Executive Director to fill the casual vacancy created consequent to
the resignation of Mr. A. L. Devasurendra on 15th July 2013.
Independence of the Directors have been determined in accordance
with the Colombo Stock Exchange Rules and the Independent
Non- Executive Director has submitted signed confirmations of his
independence.
Transactions which have a material bearing on the Company is
disclosed by way of circulars to shareholders and by announcements
to the Colombo Stock Exchange.
The Non-Executive Directors are required to notify the Chairman
of their outside Board appointments and the Chairman reviews
such appointments in consultation with the other Directors where
necessary to ascertain any possible conflicts of interest.
Name of Director Executive / Non ExecutiveIndependent/ Non
Independent
Involvement/interest in Share
holding
*I. C. Nanayakkara Executive Non Independent Yes
** Mrs. R. L. Nanayakkara Non-Executive Non Independent No
***A. L. Devasurendra Non-Executive Non Independent Yes
N. M. Prakash Executive Non Independent Yes
S. V. Somasunderam Non-Executive Non Independent Yes
H. P. J. de Silva Non-Executive Independent No
W. D. K. Jayawardena Non-Executive Non Independent No
Mrs. K. U. Amarasinghe Non-Executive Non Independent No
****R. M. Nanayakkara Non-Executive Non Independent No
* Mr. I.C. Nanayakkara was appointed as the Executive Chairman with effect from 01st March 2013.
**Mrs. R.L. Nanayakkara resigned with effect from 28th February 2013
***Mr. A.L. Devasurendra resigned with effect from 15th July 2013
****Mr. R.M. Nanayakkara was appointed as a Non-Executive Director with effect from 15th July 2013
Board Responsibilities and Decision RightsThe business of the Company is conducted by its managers, officers
and employees under the direction of the Executive Directors
and the oversight of the Board to enhance the long term value
of the Company for its shareholders. The Board aims at fulfilling
its responsibilities by creating value for all stakeholders that is
sustainable and beneficial. The Board of Directors are well equipped
to realise the Company’s corporate business. The Board meets
monthly and gives full consideration to the following:-
Review strategic and operational issues
Approve interim and annual budgets.
Review Profit and working capital forecasts and monthly
management accounts
Provide advice and guidelines to Senior Managers through the
Group Managing Director/ Chief Executive Officer.
Provide and circulate timely and periodic reports to shareholders.
Sanction major investments.
Approve interim and annual reports.
The Board is responsible ultimately for the Group financial
performance.
The Booardd reccognisses thhee rigghhts ooof all stakkehholdders wwhichh encoououraggges aacctive co-operraationn betwween the CCoompaany aand thhe stakkehholdders.
Corporatee Goovernancce Contd.
Annual Report 2012/2013 | 71
The Company Secretaries are responsible for ensuring that Board
procedures are followed and all Directors have access to the
Company Secretaries, S.F.L. Services (Pvt) Ltd (formerly known as
Standard Finance (Pvt) Ltd), the Secretaries provide support to the
Board on all Corporate Governance matters & compliance with
applicable rules & regulations.
All Directors receive appropriate training relevant to their experience
and position within the Company.
Board BalanceThe balance of Executive, Non-Executive and Independent Non-
Executive Directors on the Board who are professionals/ academics/
business leaders holding senior positions in their respective fields
ensures a right balance between executive expediency and
independent judgment as no individual Director or small groups of
Stakeholders’ Rights Framework
ShareholdersThe Company is committed to
enhance long term shareholder
value and facilitate the existing
shareholder rights
EmployeesThe Company is committed
to build a convenient work
environment
Customers/CommunityThe Company is committed to
maintain and enhance its public
reputation and to meet its CSR
RegulatorsThe Company is committed
to ensure the fulfillment of all
regulatory frameworks fulfilling
the legal and good governance
practices adopted by the
Company
Directors dominate the Board discussion and decision-making. The
Independent Directors shall be able to ensure equal benefits for all
shareholders with independent views and opinions.
Directors are provided with monthly reports of performance
and minutes of the Board Meetings and are given the specific
documentation necessary, in advance of such meetings.
The Chairman ensures all Directors are adequately briefed on issues
arising at meetings.
No ssinngle indiividuaal hass uunffeetterred decissiion mmakiing poowerrss
72 | Brown & Company PLC
Corpporate Govvernance Contd.
Board Meetings and AttendanceFor the financial year ending 31st March 2013 there has been a total
number of 11 Board Meetings and Directors attendance for the same
is shown below.
Any instances of non-attendance at Board Meetings were generally
related to prior business, personal commitments or illness.
Name of Director
Date of Meeting
Total
number of
meetings
attended
I. C. Nanayakkara √ √ √ √ √ √ √ - - √ √ 09
*Mrs. R. L. Nanayakkara √ √ √ √ √ √ √ - - √ - 10
**A. L. Devasurendra √ √ √ √ √ √ √ √ - - √ 09
N. M. Prakash √ √ √ √ √ √ √ √ √ √ √ 11
S. V. Somasunderam √ √ √ √ √ √ √ √ √ √ √ 11
H. P. J. de Silva √ √ √ √ √ √ √ √ √ √ √ 11
W. D. K. Jayawardena √ √ √ √ √ √ √ √ √ √ - 10
Mrs. K. U. Amarasinghe √ √ √ √ √ √ √ √ √ √ - 10
***R. M. Nanayakkara - - - - - - - - - - - 0
*Mrs. R.L. Nanayakkara resigned w.e.f. 28th February 2013
**Mr. A.L. Devasurendra resigned w.e.f. 15th July 2013
***Mr. R.M. Nanayakkara appointed w.e.f. 15th July 2013
22
/05
/12
26
/06
/12
24
/07
/12
16
/08
/12
25
/09
/12
23
/10
/12
20
/11
/12
19
/12
/12
15
/01
/13
26
/02
/13
27
/03
/13
Procedure for Directors to Obtain Professional AdviceThe Directors obtain independent and professional advice with
regard to decision making in their duties.
Financial AcumenFinancial acumen has been a key attribute of successful careers of the
Board of Directors who have held senior management positions in
other institutions.
The Board consists of four senior accountants, who possess the
necessary knowledge to offer the Board guidance on matters of
finance.
Appointment and Re-election of Directors The Company’s Articles of Association call for one of the Directors
in office to retire at each Annual General Meeting. The Directors
who retire are those longest in office since their appointment/ re-
appointment. Retiring Directors are generally eligible for re-election
by the shareholders.
The Managing Director shall not, while he continues to hold that
office, be subject to retirement by rotation, and he shall not be taken
into account in determining the rotation of retirement of Directors.
All new appointments are communicated to the shareholders via the
Colombo Stock Exchange.
Mr.I.C Nanayakkara 82%
Mrs. R.L Nanayakkara 91%
Mr.N.M Prakash 100%
Mr.S.V Somasunderam 100%
Mr.A.L Devasurendra 82%
Mrs.K.U.Amerasinghe 91%
Mr.W.D.K.Jayawardena 91%
Mr.H.P.J De Silva 100%
Mr.R.M. Nanayakkara -
Board Meetings and Attendance
Annual Report 2012/2013 | 73
The Board is actively engaged in succession planning to ensure that
the Board composition is periodically renewed and that the Board
retains its effectiveness at all times.
Assurance of Compliance This element is the supervisory module of the group Corporate
Governance framework, where a range of assurance mechanisms
such as monitoring, effectiveness tests are carried out and corrective
actions are proposed and implemented.
Board CommitteesThe Board has delegated some of its functions to Board Committees
while retaining final decision rights pertaining to matters under the
purview of these committees. The compositions of the Committees
are given in the chart 1 below:
Audit CommitteeThe Audit Committee meets on a quarterly basis to approve the
Quarterly and Annual Financial Statements and to recommend the
same to the Board prior to its issuance. The Committee comprises of :
Mr. H.P.J. de Silva - Acting Chairman /Independent Non-Executive
Director
Mrs. R.L. Nanayakkara - Non Executive Director (resigned w.e.f.
28/02/13)
Mrs. K.U. Amarasinghe - Non-Executive Director (appointed on
26/02/2013)
Mr. W.D.K. Jayawardena - Non-Executive Director (appointed on
26/02/2013)
The Group Managing Director/CEO, the Group Chief Operating
Officer, the Group Chief Financial Officer, the representatives of the
Internal Auditors join the meetings of the committee by invitation of
its members.
For the financial year ending 31st March 2013 there have been a total
number of four (04) Audit Committee Meetings and the attendance
of the members are shown in the chart 2 below:
BOARD OF DIRECTORS
BOARD COMMITTEES
EXTERNAL & INTERNAL AUDIT
Board Committees
Audit Committee Remuneration Committee Business Operations
Committee
Group Management
Committee
1 Independent Non-Executive
Director
2 Non-Executive Directors
1 Independent Non-Executive
Director
1 Executive Director
Group Managing Director /
CEO
1 Executive Director
2 Non Executive Directors
Executive Chairman
Group Managing Director /
CEO
Divisional and Departmental
heads
Name of member
Date of Audit Committee Meetings
Attendance23rd October 2012
13th November
201212th February 2013 04th March 2013
Mr. H.P.J. de Silva √ √ √ √ 4/4
Mrs. R.L. Nanayakkara √ √ √ √ 4/4
Mrs. K.U. Amarasinghe - - - - 0/1
Mr. W.D.K. Jayawardena - - - - 0/1
Chart 1
Chart 2
74 | Brown & Company PLC
Corporatee Goovernancce Contd.
The Committee recommends the appointment and fees of the
Internal Auditors M/s. Ernst and Young Advisory Services (Pvt) Ltd,
having given due consideration to their independence.
The Internal Auditors carry out financial audits and systems audits on
a pre-planned basis to ensure effectiveness of the various functions,
reviews the internal controls, checks compliance with the accounting
standards and reports non-compliance, serious errors to the Executive
Chairman, Group Managing Director/CEO and concerned Managers
for rectification or corrective action.
The Audit Committee also meets with the External Auditors M/s.
KPMG to review the Audits and the objectivity and independence of
the Auditors. Audit Committee report is given on pages 78 to 79.
Remuneration Committee The Remuneration Committee, which met on regular occasions
during the period under review, comprises of one Independent
Non-Executive Director and one Executive Director (the Chairman).
The Remuneration Committee is responsible for-
assisting the Board of Directors in establishing remuneration
policies and practices in the Group;
evaluating the performance of the Executives of the Group; and
in reviewing and recommending to the Board appropriate
remuneration packages based on industry level and contributions
made to the organization
The detailed Remuneration Committee Report is given on page 81 of
the Annual Report.
Business Operations CommitteeThe Business Operations Committee met on regular intervals
depending on the need and urgency. The Committee comprises
of the Group Managing Director/CEO, N.M. Prakash and three
Directors namely, A.L. Devasurendra (resigned on 15th July 2013), I.C.
Nanayakkara and S.V. Somasunderam.
The Business Operations Committee Report is given on page 80 of
the Annual Report.
Group Management CommitteeThe day-to-day affairs of the Group are carried out by the Group
Management Committee chaired by the Executive Chairman, the
Group Managing Director/CEO, and consisting of Divisional and
Departmental Heads. The Group Management Committee meets
every month to review Corporate, Divisional and Departmental
performances against predetermined Annual Business Plans and
Budgets.
The Group Management Committee formulates strategy, seeks
Board approval for these strategies, and implements it within the
policy framework, which demands best practice in dealing with
stakeholders.
The introduction of peer adjusted organisational ratings in
determining pay for performance has resulted in the search
by business units, sectors and industry group of productivity
enhancements, process improvements and cost efficiencies within a
framework of better teamwork.
Browns Group - ERP and SSCThe Microsoft Dynamics AX-2009, is a tier one global Enterprise
Recourses Planning (ERP) which is owned and marketed by Microsoft
corporation, USA which was implemented by the Company in the
year 2012.
As a direct benefit of the ERP where common business processes
were identified, Browns Group Shared Services Centre (SSC) which is
a single entity that will consolidate the entire back office operations
of Financial and Accounting (F & A) of the entire group to improve
processes and efficiency was also set up.
With the implementation of ERP, the major change was that the entire
organization was converted to a full time Microsoft EPR platform. The
overall business information model has improved tremendously and
further improvements will be added in the areas of after sales and
front- end services. This will further enhance the quality of information
process along with this new standard operating procedure and ERP
functional user manuals are being developed in order to set the
ground rules for continued good administration.
This ERP is also expected to help the organization in its business
expansion programme by providing flexibility in decision making
with both speed and volume of data availability.
Shareholder ValueThe Board constantly strives to enhance shareholders’ values who
have built this winning organization.
Shareholder RelationsThe Board considers the Annual General Meeting as a prime
opportunity to communicate with shareholders. The Shareholders are
given the opportunity of exercising their rights at the Annual General
Meeting. The notice of the Annual General Meeting and the relevant
documents required are published and sent to the shareholders
within the statutory period. The Company circulates the agenda
for the meeting and shareholders vote on each issue separately.
All shareholders are invited and encouraged to participate at the
Annual General Meeting. The Annual General Meeting provides an
opportunity for shareholders to seek and obtain clarifications and
information on the performance of the Company and to informally
meet the Directors. The external auditors are also present at the
Annual General Meeting to render any professional assistance that
may be required. Shareholders who are not in a position to attend the
Annual General Meeting in person are entitled to have their voting
rights exercised by a proxy of their choice.
Annual Report 2012/2013 | 75
The Company published and circulated quarterly accounts in a timely
manner as its principal communications with shareholders and
others. This enables the stakeholders to make a rational judgment of
the Company.
Going ConcernThe Board of Directors, after reviewing the financial position and the
cash flow of the Company are of the belief that the Company has
adequate resources to continue operations well into the foreseeable
future. Therefore the Board adopts the going concern basis in
preparing Financial Statements.
AccountabilityThe Board places greater emphasis on complete disclosure of Group
financial information within the bounds of commercial reality and
has taken necessary steps to ensure the integrity of the Group’s
accounting and financial reporting systems and internal control
systems and also their review and monitoring on a periodic basis.
The Board is responsible for formulating internal control and
implementing adequate & appropriate internal control system.
Ethical StandardsThe Board is committed to maintaining high ethical standards
in conducting its business and to communicate its values to its
employees and agents and ensure their conduct is based on such
values.
Corporate Social ResponsibilityRights and claims of stakeholder groups such as employees,
consumers, clients, suppliers, creditors and the government are
also considered important apart from the shareholders. Corporate
decisions are made with due consideration.
The Group acknowledges the issues facing the environment and
adopts a responsible attitude whilst meeting all of its business
objectives. The Group’s policy is, wherever economically practical, to
recycle waste material and conserve water and energy.
Risk assessments carried out across the Group’s operations take
account of environmental, social and ethical matters.
Self Governance Practices by the CompanyThe Solvency Statements prepared by the Group Chief Financial
Officer is tabled every quarter at the Board Meeting in order to view
whether the Company is solvent.
As provided by the Companies Act No.7 of 2007, the Company
has obtained insurance cover for Directors and key officials of the
Company.
The New rules of Corporate Governance and disclosure requirements
for listed companies, as mandated by the Securities Exchange
Commission of Sri Lanka and also in the requirements of the listing
rules of the Colombo Stock Exchange are complied with importance
as it helps to build an ethical environment in the Company.
Internal Audit FunctionTo strengthen internal controls and to obtain independent assurance
M/s. Ernst & Young Advisory Services (Pvt) Ltd had been appointed
as internal auditors to monitor and report on the adequacy of the
financial and operational systems of the Divisions.
Regulatory FrameworkThis refers to the regulatory structure within which the Group
operates towards conforming to established governance related laws,
regulations and best practice.
Compliance with Legal RequirementsThe Board is conscious of its responsibility to the shareholders, the
government and the society in which it operates and is committed to
upholding the highest standards of ethical behaviour in conducting
its business. The Board, through the Group Legal Division, the Group
Finance Division and its other operating structures, strives to ensure
that the Company and all of its subsidiaries and associates comply
with the laws and regulations of the countries they operate in.
The Group has complied with the requirement of the Companies Act
No. 07 of 2007.
The Vehicle used by the Group in developing and implementing
the Group’s involvement in the Community had ensured that the
social programmes of the Group are consistent with the principles of
sustainable development.
76 | Brown & Company PLC
Risk Management is an integral function in any organisation be
it a corporate, a not for profit or a government entity. Browns has
understood the importance of risk management especially in
the current context of doing business in a dynamic and volatile
environment. Browns is also aware that success in a business lies
in its ability to respond to key risks by adequately preparing for
unforeseen challenges and therefore, has initiated the initial stage of a
comprehensive risk management program.
The initial stage of the risk management process of identifying major
risks associated with Financial, Regulatory and Legal, Operational and
Reputational risk areas and identifying the mitigating circumstances
especially in a conglomerate setting, are reflected below.
Risk Category Identified Risks Mitigating Circumstances
Financial
Foreign Exchange Risk Carefully study the future forecast of currency movement in order to manage
any forex losses
Interest Rate risk Periodical analysis of the current investments and debt to take timely action
to minimize any adverse impact
Liquidity Risk Regular financial planning and monitoring especially working capital
planning and cash flow management
Credit Risk Comprehensive systems and procedures in place to monitor and evaluate
debtors and recoveries.
Investment Risk Proper valuation and feasibility studies of future investments
Regulatory and Legal
New and Existing
Regulations
Monitoring proposed laws and regulations that effect the sectors the Group
operates in
Attending forums and meetings such as meetings and seminars organized by
the Chamber of commerce to keep abreast of latest rules and regulations
Litigation Well experienced in-house legal team who handles all litigation/
investigations.
Expert legal advice and counsel is sought with on-going litigation when
necessary
Operational Risk
Information Technology Staff is encouraged and mandated to undergo training on a regular basis
The standard Operating Procedures (SOP) and ERP user manual to guide staff
on do’s and don’t in the use of IT and other processes.
Human Resources Structured performance evaluation and feedback program to enhance career
development and support career goals of staff members
Programs to enhance work life balance and increase the retention rates of
employees
HR policies and procedures manual including a code of conduct and ethics to
guide staff
Marketing CRM system to be introduced in 2013/14 to enable MIS reports that are key to
understanding customer concerns, requirements etc
Business continuity Browns is in the process of introducing a
Disaster Recovery Systems and
Business Continuity planning
Suppliers Senior management is encouraged to build a rapport with suppliers
especially international partners
Regular monitoring of contracts to ensure that requirements laid out by the
principals are met and are up to standard
Annual Report 2012/2013 | 77
Risk Category Identified Risks Mitigating Circumstances
Reputational
Service Delays Regular training for service staff, dealers and distributors to provide prompt
service and minimize service delays
Service Interruptions Adequate systems in place including notifications via SMS and 24 x 7
monitoring by staff
FutureBrowns’ focus on Risk management for the foreseeable future is going
to be strong, with the need to expand the program to include the
identification of risks tolerance limits, risk registers, critical risks that
need immediate attention, adequate training of staff members and
identifying risk escalation processes etc. The Group envisions forming
a new division in order to give Risk management its highest priority in
the coming year.
78 | Brown & Company PLC
Role of the CommitteeThe role of the Audit committee which reports its findings to the
Board, is to ensure the integrity of the financial reporting of the
Company, internal and external audit processes of the Company and
the maintenance of sound internal control and risk management
systems of the Company and it’s compliance with legal and
regulatory requirements.
CompositionThe Audit Committee, appointed by and responsible to the Board
of Directors, comprises of one Independent Non-Executive Director
and two Non Executive Directors, with the Company Secretary
acting as Secretary. Independent Non-Executive Director acts as the
Acting Chairman and is also a Fellow of the Institute of Chartered
Accountants of Sri Lanka and the Chartered Institute of Management
Accountants of Sri Lanka. The Independent Non-Executive Director
satisfies the criteria for independence as specified in the Standards on
Corporate Governance for listed Companies issued by the Securities &
Exchange Commission of Sri Lanka.
The members of the Audit Committee are:-
Mr. H. P. J. de Silva
Acting Chairman / Independent Non-Executive Director
Mrs. R. L. Nanayakkara
Non Executive Director (resigned w.e.f 28th February 2013)
Mrs. K. U. Amarasinghe
Non-Executive Director (appointed w.e.f 26th February 2013)
Mr. W. D. Kapila Jayawardena
Non-Executive Director (appointed w.e.f 26th February 2013)
Consequent to the resignation of Mrs. R.L. Nanayakkara, a Non
Executive Director of the Audit Committee, Mrs. K. U. Amarasinghe
and Mr. W. D. K. Jayawardena were appointed.
The Group Managing Director/ Chief Executive Officer together with
the Group Chief Operating Officer and Group Chief Financial Officer
attends all meetings of the Committee by invitation. The other Senior
Managers, Internal and External Auditors are requested to be present
when required.
MeetingsThe Audit Committee had four (04) meetings during the year under
review. The minutes of the Audit Committee are circulated among the
Board and are signed by the Chairman of the Board.
Financial ReportingThe Committee oversees the Company’s financial reporting on
behalf of the Board of Directors as part of its responsibility and
have reviewed the Quarterly and Annual Financial Statements and
recommended them to the Board for its deliberations prior to their
issuance.
The Committee reviewed the Financial Statements to ensure
consistency of the accounting policies and their compliance with the
Sri Lanka Accounting Standards.
The Committee has also regularly discussed the operations of the
Company and its future prospects with the management and is
satisfied that all relevant matters have been taken into account in the
preparation of the Financial Statements.
Internal AuditIn addition to the Company’s Internal Audit Section, an independent
organization, M/s. Ernst & Young Advisory Services (Pvt) Ltd., were
engaged during the year, to enhance the Internal Audit. The main
focus of the Internal Audit was to provide independent assurance on
the overall system of internal controls and governance by evaluating
the adequacy of internal controls, and compliance with laws and
regulations and established policies and procedures of the Company.
The reports submitted by Ernst & Young Advisory Services (Pvt)
Ltd have been reviewed by the Committee in the presence of
the Senior Managers of the Company, and compliance with the
recommendations of the Internal Auditors have been followed
through at subsequent reviews.
Controls & RisksDuring the year, the Committee reviewed the effectiveness of the
Company’s system of Internal Control. The Committee also assessed
the major business and control risks and the control environment
prevalent in the Company and advised the Board on action to be
taken where weaknesses were observed.
External AuditorsThe Audit Committee evaluated the independence of the External
Auditors and the effectiveness of the audit process.
The Committee met with the External Auditors in relation to the
scope of the audit and also to discuss the Management Letter at the
conclusion of the audit.
Annual Report 2012/2013 | 79
The Committee reviewed the audited Financial Statements with the
External Auditors who are responsible for expressing an opinion on
its conformity with the Sri Lanka Accounting Standards. And also the
External Auditors kept the Audit Committee advised on an on-going
basis regarding any unresolved matters of significance.
The Audit Committee evaluated the independence of the External
Auditors and recommended to the Board of Directors that M/s. KPMG
be appointed as Auditors for the financial year ending 31st March
2014, subject to the approval of the shareholders at the Annual
General Meeting.
ConclusionConsidering the reports submitted by the External Auditors and the
Internal Auditors of the Company and the certification provided
by the Senior Management, the Committee is of the view that the
financial position of the Company has been adequately monitored.
H. P. J. de Silva
Acting Chairman
30th July 2013
80 | Brown & Company PLC
The Committee comprises of the Group Managing Director/CEO
(Mr. N.M. Prakash) and three Directors namely Mr. A.L. Devasurendra
(resigned on 15th July 2013), Mr. I.C. Nanayakkara and Mr. S.V.
Somasunderam.
The primary responsibility of this committee is to look at strategic
directives and investments for the group prior to being ratified by
the Board so as to have a better representation in this process and to
expedite decisions.
The Committee meets at regular intervals depending on the need
and urgency.
Browns Group is in the process of expanding which includes not only
investments into the existing manufacturing and trading operations
but also in areas that are strategic and would complement the core
growth strategies of the organisation. The Committee also evaluates
the pros and cons of such substantial investments and the related
opportunity costs of funds, to have a better balance between the
growth strategies and stakeholder requirements. In such evaluations
the Committee endeavours to strike a balance between the short,
medium and long-term investments in order to post continuous and
harmonious growth without interruptions.
N. M. Prakash
Group Managing Director/CEO
30th July 2013
Annual Report 2012/2013 | 81
The Remuneration Committee re-constituted under the new
Corporate Governance rules of the Colombo Stock Exchange
is responsible to the Board of Directors and comprises of one
Independent Non-Executive Director and one Executive Director with
the Company Secretary functioning as its Secretary. The members of
the Remuneration Committee are:
Mr. I.C. Nanayakkara – The Chairman /Executive Director
Mr. H.P.J. De Silva – Independent Non-Executive Director
Mrs. R.L. Nanayakkara– Non Executive Director (resigned w.e.f.
28/02/2013)
The Chief Executive Officer attends meetings on invitation by the
members.
The Remuneration Committee met half yearly. The Committee
interacted with Board member when the necessity arose. The Board
was also kept informed of the work of the Committee.
The main responsibilities of the Remuneration Committee would be:
To recommend the remuneration of the Directors, GMD/CEO and
members of the senior management.
To recommend the policy governing annual increments to staff.
To recommend the policy governing annual ex-gratia payments
to staff.
Accordingly, the Committee will review and re-draft the remuneration
policy and based on the recommendations of the Committee, the
Board shall approve the adoption of the policy.
The policy will cover the remuneration to Executive and Non-
Executive Director, including the Executive Chairman and the
Executive Group Managing Director/CEO. Under the terms of this
policy, remuneration will be related to performance and contribution.
I. C. Nanayakkara
Chairman, Remuneration Committee
30th July 2013
82 | Brown & Company PLC
Interim Financial Statements and Annual Report in terms of Rules 7.4 and 7.5 of the Colombo Stock Exchange For the three months ended 30th June 2012 (Unaudited ) in August
2012
For the six months ended September 2012 (Unaudited ) in November
2012
For the nine months ended December 2012 (Unaudited ) in February
2013
For the year ended 31st March 2013 (Unaudited ) in May 2013
Annual Report & Accounts for the year ended 31st March 2013
(Audited) in August 2013
One Hundred and Twenty First Annual General Meeting to be held in
September 2013
Proposed Financial Calendar 2013/2014
Interim Financial Statements and Annual Report in terms of Rules 7.4 and 7.5 of the Colombo Stock Exchange For the three months ended June 2013 (Unaudited ) in August 2013
For the six months ended September 2013 (Unaudited ) in November
2013
For the nine months ended December 2013 (Unaudited ) in February
2014
For the year ended 31st March 2014 (Unaudited ) in May 2014
Annual Report & Accounts for the year ended 31st March 2014
(Audited) in August 2014
One Hundred and Twenty Second Annual General Meeting to be held
in September 2014
Financial Calendar 2012/2013
Annual Report 2012/2013 | 83
Financial ContentDirectors’ Report .....84
Statement of Directors’ Responsibility .....88
Independent Auditor’s Report .....89
Statement of Comprehensive Income .....90
Statement of Other Comprehensive Income .....91
Statement of Financial Position .....92
Statement of Changes in Equity .....93
Statement of Cash Flows .....95
Significant Accounting Policies .....97
Notes to the Financial Statements .....137
Economic Value Statement .....216
Ten Year Summary .....218
84 | Brown & Company PLC
Directors’ Report
The Directors of Brown and Company PLC have pleasure in presenting
to members their Report and the Audited Consolidated Financial
Statements for the year ended 3lst March 2013.
Principal Activities
Browns Group consists of a portfolio of diversed business operations
in the commercial market today by continuously expanding in all
business segments in line with the core strategy of creating wealth for
all stakeholders.
The principal activities of Brown and Company PLC are described in
the Group Managing Director/CEO’s Review on pages 11 to 15 of this
report, while that of the Subsidiaries and Associate Companies are
given on pages nos 27 to 54 of this report.
The review of the Group progress and performance during the year
with comment on the financial results and prospects is contained in
the Chairman’s Review on page no 9.
Review of Business and Future Developments
The Group is looking out for opportunities to venture in sunshine
industries and differentiate to create new paradigms and hybrid
markets and be the first in it, whilst it is also actively looking at
possibilities of obtaining more foreign agencies for its trading
activities.
Group Turnover
The Turnover of the Group was Rs. 14.18 Bn as compared with
Rs. 14.38 Bn in the previous year. A detailed analysis of the Group
Turnover is given in Note No. 1 of the Financial Statements.
Gross Profit
The Group Gross Profit for the year was Rs. 2.91Bn, compared with the
Group Gross Profit of Rs. 3.38 Bn for the previous year.
Group Investments
Investments of the Company and the Group in Subsidiaries,
Associates, Joint Ventures and other long term external equity
investments amounted to Rs.13,639 Mn (2012-Rs.12,482 Mn) and
Rs. 9,545 Mn (2012-Rs. 10,188 Mn), respectively. Detailed description
of the Subsidiaries, Associates, Joint Ventures and other long term
external equity investments held at the balance sheet date, are given
in Note No. 16 to 19 in the Financial Statements .
Property, Plant and Equipment
Information relating to the movement in Property, Plant and
Equipment is given in Note No. 9 of these Financial Statements.
Market Value of Properties
The market values of the Land and Buildings owned by the Company
and Group are included on the basis of valuation carried out by a
professionally qualified valuer. Detailed description is given in Note
No. 9.4 to the Financial Statements .
Stated Capital
The Stated Capital of the Company as at the date of this Report is
Rs.2,005,601,000 which consists of 70,875,000 ordinary shares (2012 –
Rs.2,005,601,000).
Reserves
The total Group Reserves at 31st March 2013 amounts to Rs. 13.09 Bn
as compared with Rs. 11.87 Bn in the previous year.
Segment Reporting
Segment wise contribution to group revenue, results, asset and
liabilities is provided in pages 212 to 215 in the Financial Statements.
Taxation
A reversal provision has been reflected for income tax due to deferred
tax in Brown and Company PLC amounting to Rs. 91.77 Mn for the
current year, as compared to Rs. 210 Mn provision for tax in the
previous year. The provision for taxation for the Group is Rs. 43 Mn as
compared with Rs. 384 Mn in the previous year. Taxation has been
provided at the appropriate rates indicated in Note No. 6.2 of the
Financial Statements
Share Holdings/Share Information
The market value of an ordinary share of the Company as at 31st
March 2013 was Rs. 117.90 (31st March 2012 – Rs. 155.10). The
number of shareholders as at 31st March 2013 was 2470 (31st March
2012 – 2422) . An analysis of shareholders based on shares held, the
distribution of ownership and market values for the last five years are
provided on page 219.
The information in respect of earnings, dividends, net assets per share
is given on pages 140 and 187.
Shareholders
It is a Group policy to treat its shareholders equitably and maximize
shareholder wealth. Quarterly returns of financial results with any
developments or changes would be circulated to the shareholders on
a timely basis.
Events Occurring After the Balance Sheet Date
There have been no events subsequent to the balance sheet date
which would have any material effect on the Company or the Group.
Employment Policies
The Group employment policies respect the individuals and offer
equal career opportunities, regardless of sex, race or religion, and
consider the relationship with the employees to be good. The
number of persons employed in the Company and its subsidiaries as
at 31st March 2013 was 760 (724 as at 31st March 2012)
Annual Report 2012/2013 | 85
The Company promotes a culture of teamwork, integrity and
dedication, and remuneration is linked to performance by annual
appraisals of both qualitative and quantitative performance of all
employees.
Customers
The Group firmly believes in investing time and effort in discovering
exactly what the customer wants and then giving it to them at the
best price and building relationship and loyalty by supplying the
demand in the best manner possible every single time. In other
words, we believe in selling customer excellence. In addition the
Company also carries out customer awareness programmes and
customer service campaigns. The Company deals with both corporate
and retail customers.
Supplier Policy
The Group places great emphasis on the importance of suppliers
to the Group, building loyalty and ensuring payments are made
promptly. Further, a clear communication terms of payment as part of
commercial agreements is being maintained.
Statutory Payments
Directors, to the best of their knowledge and belief, are satisfied that
all statutory payments in relation to employees and the Government
have been made up to date.
Environmental Protection
It is the Group policy to keep adverse effects on the environment to
a minimum and to promote co-operation and compliance with the
relevant authorities and regulations.
Corporate Governance & Internal Control
The information called for by this item with respect to the practice
followed by the Group is set out in the Corporate Governance
statement on Pages 68 to 75.
Going Concern
As in the statement of Directors’ Responsibilities given on page 88,
the Directors have adopted the Going Concern basis in preparing the
Financial Statements.
Directorate
The Directors of the Company during the year under review are as
follows:
Mr. I. C. Nanayakkara
Executive Chairman/Executive Director (Appointed as the Executive
Chairman on 1st March 2013)
Mrs. R. L. Nanayakkara
Non-Executive Chairperson (Resigned on 28th February 2013)
Mr. A. L. Devasurendra
Non-Executive Deputy Chairman (Resigned on 15th July 2013)
Mr. N. M. Prakash
Executive - Group Managing Director/ CEO
Mr. S. V. Somasunderam
Non-Executive Director
Mr. H. P. J. de Silva
Non-Executive Independent Director
Mr. W. D. K. Jayawardena
Non-Executive Director
Mrs. K. U. Amarasinghe
Non-Executive Director
Mr. R. M. Nanayakkara
Non-Executive Director (Appointed on 15th July 2013)
Profit and Appropriations
GROUP
For the year ended 31st March 2013 2012
Rs 000 Rs 000
Profit for the period 359,963 1,170,876
Retained Profit brought forward
from previous year 8,356,111 7,453,933
Dividend Paid Associates - (942)
Issue of Ordinary shares/Cost of share issue (1,399) (115,793)
Change in effective holding (743) (6,578)
On Acquisition of Subsidiary 274,122 2,380
Revaluation of Property, Plant and Equipment 116,807 (58,065)
Net Change in Fair value of Available For
Sale Financial Assets, Net of Tax - 18,383
Defined Benefit Plan Actuarial
Gains / (Losses), Net of Tax (19,113) (13,696)
Preference dividend paid (832) (832)
Dividend Paid (35,438) (93,555)
Retained Profit carried forward 9,049,478 8,356,111
COMPANY
For the year ended 31st March 2013 2012
Rs 000 Rs 000
Profit/ (Loss) for the year (464,708) 398,788
Retained Profit brought forward
from previous year 1,980,602 1,689,146
Defined Benefit Plan Actuarial
Gains / (Losses), Net of Tax (9,191) (13,777)
Dividend Paid (35,438) (93,555)
Retained Profit carried forward 1,471,265 1,980,602
86 | Brown & Company PLC
Directors’ Meetings
The Directors conduct Board Meetings on a monthly basis. Board
decisions are resolved by resolutions at meetings, by circulation and
also through circular Board papers which are approved and signed by
all the Directors and tabled at the Board Meetings. The Minutes of the
Board Meetings, the Agenda for the next meeting and the monthly
Management Reports are circulated to all the Directors in advance to
the meetings.
Resignations of Non-Executive Directors
Mrs. R.L. Nanayakkara, Non-Executive Chairperson resigned from the
Board of Directors with effect from 28th February 2013.
Mr. A.L. Devasurendra, Deputy Chairman/Non Executive Director
resigned from the Board of Directors with effect from 15th July 2013.
Appointment of the Executive Chairman /Executive Director
Mr. I. C. Nanayakkara, who was a Non Executive Director since 28th
September 2005 was appointed as the Executive Chairman/Executive
Director with effect from 1st March 2013, consequent to the
resignation of Mrs. R. L. Nanayakkara, Non-Executive Chairperson.
Appointment of Non-Executive Director
Mr. R.M. Nanayakkara a Non Executive Director was appointed to
the Board of Directors with effect from 15th July 2013 to fill the
casual vacancy created consequent to the resignation of Mr. A.L
Devasurendra.
Re-Election of Directors
In accordance with Articles 24(6) of the Articles of Association of the
Company, Mr. H.P. J. de Silva an Independent Non- Executive Director
retires by rotation, and being eligible, offers himself for re-election.
In accordance with Section 210 of the Companies Act No. 7 of 2007,
Mr. R. M. Nanayakkara a Non-Executive Director retires and offers
himself for re-election. Special notice has been received pursuant
to Sections 145 and 211 of the Companies Act No. 7 of 2007 of
the intention to propose ordinary resolution for such re-election
notwithstanding the age limit of 70 years stipulated by Section 210 of
the said Companies Act.
Board Committees
The Board has established Committees for better monitoring and
guidance of different aspects of operations and control.
Audit Committee Mr. H.P.J. de Silva (appointed as the Acting Chairman)
Mrs. R.L Nanayakkara (resigned on 28/02/2013)
Mrs. K.U. Amarasinghe (appointed on 26/02/2013)
Mr. W.D.K. Jayawardena (appointed on 26/02/2013)
The Audit Committee reviewed the type and quantum of non-audit
services provided by the External Auditors to the Group to ensure that
their independence as Auditors has not been impaired.
The report of the Audit Committee is given on pages 78 and 79.
Remuneration CommitteeMrs. R. L. Nanayakkara- Chairperson (resigned on 28/02/2013)
Mr. I. C. Nanayakkara (appointed chairman on 01st March 2013)
Mr. H. P. J. de Silva
The report of the Remuneration committee is given on page 81.
Business Operations Committee Mr. N.M. Prakash - Group Managing Director/CEO
Mr. A.L. Devasurendra - Deputy Chairman (Resigned on 15/07/2013)
Mr. I.C. Nanayakkara - Director
Mr. S.V. Somasunderam - Director
The report of the Business Operations committee is given on
page 80.
Interest Register
The Directors have made the declarations required by the Companies
Act No. 7 of 2007. These have been entered into the Interest Register
which is maintained by the Company.
The Company carried out transactions in the ordinary course of
business with entities in which a Director of the Company is a
Director. The transactions with entities where a Director of the
Company either has control or exercises significant influence have
been classified as related party transactions and disclosed in
Note No. 44 in the Financial Statements
The Directors have no direct or indirect interest in any other contract
or proposed contract with the Company.
Directors’ Report
Annual Report 2012/2013 | 87
Directors’ Shareholdings
The Directors interests in shares as at 31st March 2013 were as follows :-
As at As at
31st March 31st March
2013 2012
Mr. I C Nanayakkara 99,900 99,900
Mr. A.L.Devasurendra
(Resigned on 15/07/2013) 1,098,900 1,098,900
Mr. N M Prakash
Margin Trading 35,100 35,100
Mr. S.V.Somasunderam
Individual 3,027,400 2,877,400
Margin Trading Nil 150,000
Mr. H P J. de Silva Nil Nil
Mr. W.D.K.Jayawardena Nil Nil
Mrs. K U Amarasinghe Nil Nil
Mr. R.M. Nanayakkara
(Appointed on 15/07/2013) Nil Nil
Remuneration of Directors
The remuneration of the Directors are disclosed in Note No. 5.
List of Largest Shareholders of the Company
The list of 20 largest shareholders and the percentage held by each at
3lst March 2013 is given on page 220 of the Financial Statements.
Subsidiary and Associate Companies and its Directors
The Directors of subsidiary and associate companies as at date are
given on pages 221 to 223 of the Financial Statements.
Accounting Policies
The accounting policies adopted in the preparation of the Financial
Statements are given on pages 97 to 119. There were changes in the
accounting policies adopted in the year under review
Annual Report
The Board of Directors approved the Consolidated Financial
Statements on 30th July 2013. The appropriate number of copies of
this report will be submitted to Colombo Stock Exchange and to the
Sri Lanka Accounting and Auditing Standards Monitory Board on or
before 31st August 2013.
Annual General Meeting
The Annual General Meeting will be held at Park Premier, Excel World,
No 338, T. B. Jayah Mawatha, Colombo 10 on Twenty Fourth day of
September 2013 at 10.30 a. m. The Notice of the Annual General
Meeting is given on page 227.
Auditors
In accordance with Section 154 (1) of the Companies Act No. 7 of
2007, a resolution proposing the reappointment of Messrs. KPMG,
Chartered Accountants as Auditors of the Company for the ensuing
year will be proposed at the Annual General Meeting.
In terms of Section 155 (a) of the Companies Act No. 7 of 2007 a
resolution authorizing the Directors to fix the remuneration of the
Auditors Messrs. KPMG, Chartered Accountants for the ensuing year
will be proposed at the Annual General Meeting.
The fees paid to Auditors are disclosed in Note No. 5 to the Financial
Statements. As far as the Directors are aware, the Auditors do not have
any relationship (other than that of an Auditor) with the Company or
any of its subsidiaries other than those disclosed above. The Auditors
also do not have any interest in the Company or any of its group
Companies.
For and on behalf of the Board
I. C . Nanayakkara
Executive Chairman
N. M. Prakash
Group Managing Director/CEO
S.F.L. SERVICES (PVT) LTD
(Formerly known as STANDARD FINANCE (PVT) LIMITED)
SECRETARIES
Colombo 30th July 2013
88 | Brown & Company PLC
The responsibility of the Directors in relation to the Financial
Statements for the year ended 31st March 2013 which have been
prepared and presented in conformity with the requirements of the
Sri Lanka Accounting Standards, the Listing Rules of the Colombo
Stock Exchange and the Companies Act No.7 of 2007, is set out in the
following statement .
The responsibility of the Auditors in relation to the Financial
Statements is set out in the Report of the Auditors on pages 89 of
the Report. As per the provisions of the Companies Act No. 7 of 2007,
the Directors are required to prepare Financial Statements, for each
financial year and place before a General Meeting which comprise:
1. An Income Statement, which presents a true and fair view of
the profit and loss of the Company and its subsidiaries for the
financial year;
2. A Statement of changes in Equity which presents a true and
fair view of the changes in the Company’s and its Subsidiaries
retained earnings for the financial year;
3. A Statement of Cash Flow which presents a true and fair view
of the flow of cash in and out of the business for the financial
year; and
4. A Balance Sheet, which presents a true and fair view of the
state of affairs of the Company and its subsidiaries as at the
end of the financial year.
and which comply with the requirements of the Act.
The Directors are of the view that, in preparing these Financial
Statements :
1. The appropriate accounting policies have been selected and
applied in a consistent manner. Material deviations, if any have
been disclosed and explained;
2. All applicable Accounting Standards, as relevant, have been
followed.
3. Judgments and estimates have been made which are
reasonable and prudent.
The Directors are also of the view that the Company has adequate
resources to continue in operation and have applied the going
concern basis in preparing these Financial Statements.
Further, the Directors have a responsibility to ensure that the
Company maintains sufficient accounting records to disclose, with
reasonable accuracy of the financial position of the Company and
of the Group, also to reflect the transparency of transactions and
to ensure that the Financial Statements presented comply with the
requirements of the Companies Act.
Statement of Directors’ Responsibility
The Directors are also responsible for taking reasonable steps to
safeguard the Assets of the Company and that of the Group and
in this regard to give proper consideration to the establishment of
appropriate internal control systems with a view to preventing and
detecting fraud and other irregularities.
The Directors are required to prepare the Financial Statements and
to provide the Auditors with every opportunity to take whatever
steps and undertake whatever inspections they may consider to be
appropriate to enable them to give their Audit Opinion.
The Directors are of the view that they have discharged their
responsibilities as set out in this statement.
Compliance Report
The Directors confirm that to the best of their knowledge, all taxes,
duties and levies payable by the Company and its subsidiaries, all
contributions levies and taxes payable on behalf of and in respect
of the employees of the Company and its subsidiaries, and all other
known statutory dues as were due and payable by the Company and
its subsidiaries as at the Balance Sheet date have been paid or, where
relevant provided for.
The Board of Directors confirms that the Company, based on the
information available, satisfies the Solvency test as and when required
according to the Section 56(2) of the Companies Act No. 07 of 2007.
By order of the Board
N. M. Prakash
Group Managing Director/CEO
30th July 2013
Annual Report 2012/2013 | 89
Independent Auditor’s Report
INDEPENDENT AUDITOR’S REPORT
TO THE SHAREHOLDERS OF BROWN & COMPANY PLCReport on the Financial StatementsWe have audited the accompanying financial statements of Brown
& Company PLC (“the Company”) and the consolidated financial
statements of the Company and its subsidiaries (“the Group”), which
comprise the statements of financial position as at 31 March 2013, the
statements of comprehensive income, changes in equity and cash
flows for the year then ended, and notes, comprising a summary of
significant accounting policies and other explanatory information set
out on pages 90 to 215 of the annual report.
Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation
of these financial statements in accordance with Sri Lanka
Accounting Standards. This responsibility includes: designing,
implementing and maintaining internal control relevant to the
preparation and fair presentation of financial statements that are
free from material misstatement, whether due to fraud or error;
selecting and applying appropriate accounting policies; and making
accounting estimates that are reasonable in the circumstances.
Scope of Audit and Basis of OpinionOur responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in
accordance with Sri Lanka Auditing Standards. Those standards
require that we plan and perform the audit to obtain reasonable
assurance whether the financial statements are free from material
misstatement.
An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting policies used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation.
We have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purposes of
our audit. We therefore believe that our audit provides a reasonable
basis for our opinion.
Opinion- CompanyIn our opinion, so far as appears from our examination, the Company
maintained proper accounting records for the year ended 31 March
2013 and the financial statements give a true and fair view of the
financial position of the Company as at 31 March 2013, and of its
financial performance and its cash flow for the year then ended in
accordance with Sri Lanka Accounting Standards.
Opinion- GroupIn our opinion, the consolidated financial statements give a true
and fair view of the financial position of the Company and its
subsidiaries dealt with thereby as at 31 March 2013, and of its
financial performance and its cash flows for the year then ended in
accordance with Sri Lanka Accounting Standards.
Report on Other Legal and Regulatory RequirementsThese financial statements also comply with the requirements of
Sections 153(2) to 153(7) of the Companies Act No. 07 of 2007.
CHARTERED ACCOUNTANTS
Colombo, 30 July 2013.
90 | Brown & Company PLC
Statement of Comprehensive Income
Group Company
For the year ended 31st March 2013 2012 2013 2012
Notes Rs.000 Rs.000 Rs.000 Rs.000
Revenue 1 14,183,801 14,387,354 9,847,137 10,542,321
Cost of Sales (11,273,283) (11,005,943) (7,929,268) (8,082,182)
Gross Profit 2,910,518 3,381,411 1,917,869 2,460,139
Other Income 2 361,676 2,838,749 91,504 35,514
Distribution Expenses (1,128,312) (665,159) (882,176) (469,386)
Administrative Expenses (1,661,540) (1,455,456) (1,020,711) (888,020)
Other Expenses (19,815) (675,488) (5,123) (341,742)
Finance Income 3 494,581 331,932 327,072 258,304
Finance Costs 4 (1,070,375) (418,956) (986,737) (447,446)
Change in Fair Value of Investment Properties 10 869,721 219,887 1,820 1,224
Share of Loss of Equity Accounted Investees (Net of Tax) 18 (301,790) (94,931) - -
Profit / (Loss) before Taxation 5 454,664 3,461,989 (556,482) 608,587
Tax (Expense) / Reversal 6 (43,063) (384,638) 91,774 (209,799)
Profit / (Loss) for the Year 411,601 3,077,351 (464,708) 398,788
Profit / (Loss) Attributable to:
Equity holders of the Company 359,963 1,170,876 (464,708) 398,788
Non-Controlling Interest 51,638 1,906,475 - -
411,601 3,077,351 (464,708) 398,788
Earnings per Share
Basic Earnings / (Loss) per Share (Rs.) 7 5.08 16.52 (6.56) 5.63
Diluted Earnings / (Loss) per Share (Rs.) 7 5.08 16.52 (6.56) 5.63
Dividend per Share (Rs.) 8 0.50 1.32 0.50 1.32
The Significant Accounting Policies and Notes as set out in pages 97 to 215 form an integral part of these Financial Statements.
Annual Report 2012/2013 | 91
Statement of Other Comprehensive Income
Group Company
For the year ended 31st March 2013 2012 2013 2012
Rs.000 Rs.000 Rs.000 Rs.000
Profit / (Loss) for the Year 411,601 3,077,351 (464,708) 398,788
Other Comprehensive Income
Revaluation of Property, Plant and Equipment 348,840 267,235 126,237 153,189
Deferred Tax impact on Revaluation 4,446 5,070 2,014 5,658
Net Change in Fair Value of Available-for-Sale Financial Assets 173,823 (2,066,540) 310,606 (2,058,292)
Defined Benefit Plan Actuarial Gains/(Losses) for the year (20,460) (13,703) (9,191) (13,777)
Realised Revaluation on Disposal (3,476) - - -
Other Comprehensive Income/ (Expense) for the year, Net of Tax 503,173 (1,807,938) 429,666 (1,913,222)
Total Comprehensive Income/ (Expense) for the year, Net of Tax 914,774 1,269,413 (35,042) (1,514,436)
Attributable to:
Equity holders of the Company 979,307 (844,563) (35,042) (1,514,436)
Non-Controlling Interest (64,533) 2,113,976 - -
914,774 1,269,413 (35,042) (1,514,436)
The Significant Accounting Policies and Notes to the Financial Statements from Pages 97 to 215 form an integral part of these Financial
Statements.
92 | Brown & Company PLC
Statement of Financial Position
Group Company
31st March 31st March 1st April 31st March 31st March 1st April 2013 2012 2011 2013 2012 2011 Notes Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
ASSETSNon-Current AssetsProperty, Plant and Equipment 9 6,829,098 6,509,437 4,727,690 4,056,265 3,942,441 3,558,251Investment Properties 10 5,857,212 4,685,617 826,344 111,691 111,971 110,747Prepaid Lease Rentals 11 189,044 196,472 189,337 45,046 45,649 46,250Intangible Assets 12 233,456 168,095 65,849 68,513 14,745 21,824Capital Work in Progress 13 650,350 135,450 21,999 2,135 56,396 -Bearer Biological Assets 14 1,975,422 1,842,608 1,600,287 - - -Consumable Biological Assets 15 1,567,671 1,514,295 1,630,001 - - -Investment in Subsidiaries 16 - - - 7,985,978 7,110,798 6,858,816Investment in Joint Venture 17 - - - 13,000 10,000 10,000Investments in Equity Accounted Investees 18 1,430,458 1,707,308 1,448,957 248,998 248,998 248,998Other Investments - Long term 19 4,718,776 4,349,537 5,950,949 3,705,083 3,394,477 5,017,987Deferred Tax Assets 20 281,489 189,703 274,812 200,110 80,426 153,167Loans to Related Parties - Due after one year 21 3,169 3,928 22,623 - - -Total Non-Current Assets 23,736,145 21,302,450 16,758,848 16,436,819 15,015,901 16,026,040
Current AssetsInventories 22 2,209,731 2,737,001 1,261,602 1,448,109 1,968,998 690,002Trade and Other Receivables 23 2,692,582 1,982,823 1,299,576 2,034,220 1,393,760 999,513Deposits and Prepayments 24 417,021 203,617 322,565 64,700 113,701 178,662Loans to Related Parties - Due within one year 25 1,107,099 1,412,727 431,334 778,187 532,515 405,036Amounts due from Related Parties 26 289,317 303,523 297,088 451,298 282,791 144,486Tax Recoverable 27 59,647 4,298 202 42,019 - -Other Investments - Short term 28 3,395,654 4,130,902 5,545,776 1,685,770 1,717,809 1,072,560Cash at Bank and in Hand 29 634,720 753,575 1,364,914 280,705 200,833 737,228Total Current Assets 10,805,771 11,528,466 10,523,057 6,785,008 6,210,407 4,227,487TOTAL ASSETS 34,541,916 32,830,916 27,281,905 23,221,827 21,226,308 20,253,527
EQUITY AND LIABILITIESStated Capital 30 2,005,601 2,005,601 2,005,601 2,005,601 2,005,601 2,005,601Capital Reserves 31 3,987,572 3,465,922 5,401,247 4,399,483 3,960,626 5,860,071Revenue Reserves 31 9,102,591 8,409,224 7,507,046 7,384,362 7,893,699 7,602,243Equity Attributable to Equity holders of the Company 15,095,764 13,880,747 14,913,894 13,789,446 13,859,926 15,467,915Non-Controlling Interest 7,918,315 9,272,244 6,927,084 - - -Total Equity 23,014,079 23,152,991 21,840,978 13,789,446 13,859,926 15,467,915
Non Current LiabilitiesInterest Bearing Borrowings - Due after one year 32 2,287,576 2,255,059 1,050,937 1,018,273 1,538,771 746,439Rescheduled Debentures 33 - - 410 - - -Finance Lease Obligations - Due after one year 34 89,084 85,058 88,724 6,145 - -Retirement Benefit Obligations 35 517,695 483,500 433,620 83,113 64,833 44,592Deferred Tax Liabilities 36 295,098 282,037 258,890 - - -Deferred Income 37 175,470 173,014 152,753 23,349 22,285 19,061Loans from Related Parties - Due after one year 38 - - 28,665 1,232,917 738,580 199,484Total Non Current Liabilities 3,364,923 3,278,668 2,013,999 2,363,797 2,364,469 1,009,576
Current LiabilitiesAccounts Payable & Accrued Expenses 39 2,296,310 2,924,259 1,892,840 1,589,560 2,018,888 1,184,431Interest Bearing Borrowings- Due within one year 32 799,493 1,169,465 405,257 520,493 593,292 319,457Finance Lease Obligations - Due within one year 34 5,811 6,058 6,300 2,543 - 328Loans from Related Parties - Due within one year 40 - - 33,119 711,221 322,991 1,291,518Amounts due to Related Parties 41 345,099 285,361 314,663 120,405 282,470 309,460Income Tax Payable 42 92,098 147,647 158,438 - 59,563 103,316Dividend Payable 75,396 41,280 20,483 45,461 27,160 16,083Short Term Interest Bearing Borrowings 3,264,259 1,544,012 516,389 3,044,960 1,508,057 500,000Bank Overdraft 1,284,448 281,175 79,449 1,033,941 189,492 51,443Total Current Liabilities 8,162,914 6,399,257 3,426,928 7,068,584 5,001,913 3,776,036TOTAL EQUITY AND LIABILITIES 34,541,916 32,830,916 27,281,905 23,221,827 21,226,308 20,253,527
Net Assets per Share (Rs.) 43 212.99 195.85 210.43 194.56 195.55 218.24
The Significant Accounting Policies and Notes to the Financial Statements from Pages 97 to 215 form an integral part of these Financial Statements.
It is certified that these Financial Statements have been prepared and presented in compliance with the requirements of the Companies Act No.7 of 2007.
P. S. GoonawardenaGroup Chief Financial Officer
The Board of Directors is responsible for the Preparation and Presentation of these Financial Statements.Signed for and on behalf of the Board by,
I.C. Nanayakkara N. M. PrakashChairman Group Managing Director/CEO
Colombo, 30th July 2013
Annual Report 2012/2013 | 93
Statement of Changes in Equity
Eq
uit
y A
ttri
bu
tab
le t
o E
qu
ity
ho
lde
rs o
f th
e C
om
pa
ny
Gro
up
Oth
er
N
on
S
tate
d
Re
va
lua
tio
n
Av
ail
ab
le f
or
C
ap
ita
l G
en
era
l R
eta
ine
d
C
on
tro
llin
g
Tota
l
C
ap
ita
l R
ese
rve
S
ale
Re
serv
e
Re
serv
e
Re
serv
e
Ea
rnin
gs
Tota
l In
tere
st
Eq
uit
y
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
Ba
lan
ce a
s a
t 1
st A
pri
l 20
11
2
,00
5,6
01
6
96
,03
7
4,5
02
,99
4
20
2,2
16
5
3,1
13
7
,45
3,9
33
1
4,9
13
,89
4
6,9
27
,08
4
21
,84
0,9
78
Pro
fit
for
the
pe
rio
d
- -
- -
- 1
,17
0,8
76
1
,17
0,8
76
1
,90
6,4
75
3
,07
7,3
51
Oth
er
Co
mp
reh
en
siv
e In
com
e
Re
valu
atio
n o
f P
rop
ert
y, P
lan
t an
d E
qu
ipm
en
t -
13
3,9
12
-
- -
(58
,06
5)
75
,84
7
19
1,3
88
2
67
,23
5
De
ferr
ed
Tax
imp
act
on
Bu
ildin
g R
eva
luat
ion
-
5,0
70
-
- -
- 5
,07
0
- 5
,07
0
Ne
t C
han
ge
in F
air
valu
e o
f A
vaila
ble
Fo
r Sa
le
Fi
nan
cial
Ass
ets
, Ne
t o
f Tax
-
- (2
,10
1,0
44
) -
- 1
8,3
83
(2
,08
2,6
61
) 1
6,1
20
(2
,06
6,5
40
)
De
fin
ed
Be
ne
fit
Pla
n A
ctu
aria
l Gai
ns
/ (L
oss
es)
, Ne
t o
f Tax
-
- -
- -
(13
,69
6)
(13
,69
6)
(7)
(13
,70
3)
Tota
l Oth
er
Co
mp
reh
en
siv
e In
com
e
- 1
38
,98
2
(2,1
01
,04
4)
- -
(53
,37
8)
(2,0
15
,44
0)
20
7,5
01
(1
,80
7,9
38
)
Div
ide
nd
Pai
d t
o N
on
-Co
ntr
olli
ng
Inte
rest
s -
- -
- -
- -
(50
,11
2)
(50
,11
2)
Oth
er
mo
vem
en
t in
Ne
t A
sse
ts o
f Eq
uit
y A
cco
un
ted
Inve
ste
es
- -
- -
- (9
42
) (9
42
) (2
,42
8)
(3,3
70
)
Issu
e o
f O
rdin
ary
shar
es/
Co
st o
f sh
are
issu
e
- -
- -
- (1
15
,79
3)
(11
5,7
93
) 9
6,6
96
(1
9,0
97
)
Imp
act
on
SLF
RS
ado
pti
on
of
sub
sid
iary
-
26
,60
1
- -
- -
26
,60
1
89
2
6,6
90
Ch
ang
e in
eff
ect
ive
ho
ldin
g
- 1
36
-
- -
(6,5
78
) (6
,44
2)
(7,7
31
) (1
4,1
73
)
Pre
fere
nce
div
ide
nd
-
- -
- -
(83
2)
(83
2)
83
2
-
On
Acq
uis
itio
n o
f Su
bsi
dia
ry
- -
- -
- 2
,38
0
2,3
80
1
93
,83
7
19
6,2
17
Div
ide
nd
Pai
d
- -
- -
- (9
3,5
55
) (9
3,5
55
) -
(93
,55
5)
Ba
lan
ce a
s a
t 3
1st
Ma
rch
20
12
2
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5,6
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8
61
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6
2,4
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0
20
2,2
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5
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6,1
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1
3,8
80
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7
9,2
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4
23
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2,9
91
Pro
fit
for
the
pe
rio
d
- -
- -
- 3
59
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3
35
9,9
63
5
1,6
38
4
11
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1
Oth
er
Co
mp
reh
en
siv
e In
com
e
Re
valu
atio
n o
f P
rop
ert
y, P
lan
t an
d E
qu
ipm
en
t -
34
6,2
77
-
- -
11
6,8
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4
63
,08
4
(11
4,2
44
) 3
48
,84
0
De
ferr
ed
Tax
imp
act
on
Bu
ildin
g R
eva
luat
ion
-
5,2
14
-
- -
- 5
,21
4
(76
8)
4,4
46
Re
aliz
ed
Re
valu
atio
n o
n D
isp
osa
ls
- (3
,47
6)
- -
- -
(3,4
76
) -
(3,4
76
)
Ne
t C
han
ge
in F
air
valu
e o
f A
vaila
ble
Fo
r Sa
le
Fi
nan
cial
Ass
ets
, Ne
t o
f Tax
-
- 1
73
,63
5
- -
- 1
73
,63
5
18
8
17
3,8
23
De
fin
ed
Be
ne
fit
Pla
n A
ctu
aria
l Gai
ns
/ (L
oss
es)
, Ne
t o
f Tax
-
- -
- -
(19
,11
3)
(19
,11
3)
(1,3
47
) (2
0,4
60
)
Tota
l Oth
er
Co
mp
reh
en
siv
e In
com
e
- 3
48
,01
5
17
3,6
35
-
- 9
7,6
94
6
19
,34
4
(11
6,1
71
) 5
03
,17
3
Div
ide
nd
Pai
d t
o N
on
-Co
ntr
olli
ng
Inte
rest
s -
- -
- -
- -
(96
,90
5)
(96
,90
5)
Issu
e o
f O
rdin
ary
shar
es/
Co
st o
f sh
are
issu
e
- -
- -
- (1
,39
9)
(1,3
99
) (1
,06
2)
(2,4
61
)
Ch
ang
e in
eff
ect
ive
ho
ldin
g
- -
- -
- (7
43
) (7
43
) (4
56
) (1
,19
9)
Pre
fere
nce
div
ide
nd
-
- -
- -
(83
2)
(83
2)
83
2
-
On
Acq
uis
itio
n o
f Su
bsi
dia
ry
- -
- -
- 2
74
,12
2
27
4,1
22
(1
,19
1,8
05
) (9
17
,68
3)
Div
ide
nd
Pai
d
- -
- -
- (3
5,4
38
) (3
5,4
38
) -
(35
,43
8)
Ba
lan
ce a
s a
t 3
1st
Ma
rch
20
13
2
,00
5,6
01
1
,20
9,7
71
2
,57
5,5
85
2
02
,21
6
53
,11
3
9,0
49
,47
8
15
,09
5,7
64
7
,91
8,3
15
2
3,0
14
,07
9
The
Sig
nifi
can
t A
cco
un
tin
g P
olic
ies
and
No
tes
to t
he
Fin
anci
al S
tate
me
nts
fro
m P
age
s 9
7 t
o 2
15
form
an
inte
gra
l par
t o
f th
ese
Fin
anci
al S
tate
me
nts
.
94 | Brown & Company PLC
Statement of Changes in Equity
Co
mp
an
y
Re
va
lua
tio
n
Av
ail
ab
le
Oth
er
S
tate
d
Re
serv
e
for
Sa
les
Ca
pit
al
Ge
ne
ral
Re
tain
ed
To
tal
C
ap
ita
l (P
PE
) R
ese
rve
R
ese
rve
R
ese
rve
E
arn
ing
s E
qu
ity
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
Ba
lan
ce a
s a
t 1
st A
pri
l 20
11
2
,00
5,6
01
9
80
,31
8
4,6
79
,75
3
20
0,0
00
5
,91
3,0
97
1
,68
9,1
46
1
5,4
67
,91
5
Oth
er
Co
mp
reh
en
siv
e In
com
e
Re
valu
atio
n o
f P
rop
ert
y, P
lan
t an
d E
qu
ipm
en
t -
15
3,1
89
-
- -
- 1
53
,18
9
De
ferr
ed
Tax
imp
act
on
Bu
ildin
g R
eva
luat
ion
-
5,6
58
-
- -
- 5
,65
8
Ne
t C
ahn
ge
in F
air
valu
e o
f A
vaila
ble
Fo
r Sa
le F
inan
cial
Ass
ets
, Ne
t o
f Tax
-
- (2
,05
8,2
92
) -
- -
(2,0
58
,29
2)
De
fin
ed
Be
ne
fit
Pla
n A
ctu
aria
l Gai
ns
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The
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.
Annual Report 2012/2013 | 95
Statement of Cash Flows
Group Company
For the year ended 31st March 2013 2012 2013 2012
Rs.000 Rs.000 Rs.000 Rs.000
Cash Flows from Operating Activities
Profit/ (Loss) before Taxation 454,664 3,461,989 (556,482) 608,587
Adjustment for:
Share of Loss of Equity Accounted Investees 301,790 94,931 - -
(Gain)/ Loss on Disposal of Investments 318 (52,217) - -
Depreciation on Property, Plant and Equipment 261,244 212,940 63,374 59,484
Amortization of Prepaid Lease Rentals 4,788 8,015 604 601
Amortization of Capital Grants (4,683) (5,350) - -
Amortization of Intangible Assets 27,646 8,015 24,929 7,839
Provision for Retiring Gratuity 93,767 73,054 24,719 11,312
Provision for Bad & Doubtful Debts 85,765 78,213 78,123 5,383
Amortization of Deferred Income (5,364) (5,203) (514) 3,224
Provision for Intercompany Receivables - - 4,405 (12,214)
Provision for Slow Moving Stocks 142,895 24,434 143,145 4,247
Dividend Income (184,028) (105,865) (219,544) (212,993)
Negative Goodwill - (2,656,003) - -
Interest Income (310,553) (226,066) (107,529) (107,528)
Change in Fair Value of Investment Properties (869,721) (219,887) (1,820) (1,224)
(Gain)/Loss on Changes in Fair Value of Short term Investments (151,879) 2,224 1,760 235,903
(Gain)/ Loss on Disposal of Investment Properties (7,019) - 402 -
Gain on Changes in Fair Value of Biological Assets (83,948) (37,394) - -
Gain on Disposal of Property, Plant and Equipment (3,801) (9,172) (2,303) (2,420)
Interest Expense 1,070,375 418,956 986,737 447,446
Operating Profit before Working Capital Changes 822,256 1,065,614 440,006 1,047,647
Working Capital Changes
(Increase)/Decrease in Inventories 384,377 (1,499,834) 377,743 (1,206,140)
Increase in Trade and Other Receivable (1,008,928) (642,506) (669,582) (427,041)
(Increase)/Decrease in Amounts due from Related Companies 330,164 230,882 (183,200) (126,092)
Increase/(Decrease) in Trade and Other Payables (612,132) 1,045,536 (416,383) 844,380
Increase/(Decrease) in Amounts due to Related Companies 59,738 (91,087) (162,065) (26,990)
Cash Generated from/ (Used in) Operations (24,525) 108,605 (613,480) 105,764
Interest Paid (1,070,375) (418,956) (986,737) (447,446)
Income Tax Paid (197,905) (236,752) (127,477) (178,077)
Retiring Gratuity Paid (62,382) (41,173) (6,438) (1,834)
Net Cash Flows used in Operating Activities (1,355,187) (588,276) (1,734,133) (521,593)
96 | Brown & Company PLC
Group Company
For the year ended 31st March 2013 2012 2013 2012
Rs.000 Rs.000 Rs.000 Rs.000
Cash Flows from Investing Activities
Purchase of Property, Plant and Equipment (1,064,612) (946,776) (75,041) (347,061)
Acquisition of Bearer Biological Assets- Net of Immature Grants (112,069) (111,900) - -
Purchase of Investment Properties (104,058) - - -
Proceeds from Sale of Investment Properties 9,119 - 1,698 -
Purchase of Intangible Assets (93,007) (110,301) - (759)
Investment in Equity Accounted Investees - (341,314) - -
Investment in Subsidiaries (934,988) (1,197,376) (875,180) (246,737)
Capital Grants Received 399 - - -
Proceeds from Sale of Timber Stocks - 19,233 -
Short term Investments made (43,430) (3,076,003) 30,281 (1,322,734)
Investment in joint venture - - (3,000) -
Proceeds from Sale of Property, Plant and Equipment 12,039 - 2,303 2,599
Proceeds from Sale of Investments 717,681 3,356,045 - -
Dividend Received 184,028 105,865 219,544 212,993
Interest Received 310,553 226,066 107,529 107,528
Net Cash Flows used in Investing Activities (1,118,345) (2,076,461) (591,866) (1,594,171)
Cash Flows from Financing Activities
Loans Received 2,713,723 3,288,328 2,923,202 2,458,058
Repayment of Loans (1,330,932) (1,514,784) (1,342,702) (940,731)
Expenses on issue of shares - (115,293) - -
Redemption of Rescheduled Debentures - (410) - -
Proceeds from issue of Shares to Non - Controlling Interest - 288,850 - -
Lease Rentals Paid (14,252) (12,536) (1,942) (327)
Dividend Paid (17,137) (82,480) (17,136) (82,480)
Net Cash Flows Generated from Financing Activities 1,351,402 1,851,675 1,561,422 1,434,520
Net Decrease in Cash and Cash Equivalents during the Year (1,122,130) (813,063) (764,576) (681,244)
Cash and Cash Equivalents at the beginning of the Year 472,402 1,285,465 11,341 692,585
Cash and Cash Equivalents at the end of the Year (649,728) 472,402 (753,235) 11,341
Analysis of Cash and Cash Equivalents at the end of the Year
Cash at Bank and in Hand 634,720 753,577 280,705 200,833
Bank Overdraft (1,284,448) (281,175) (1,033,940) (189,492)
(649,728) 472,402 (753,235) 11,341
The Significant Accounting Policies and Notes to the Financial Statements from Pages 97 to 215 form an integral part of these Financial
Statements.
Statement of Cash Flows
Annual Report 2012/2013 | 97
Significant Accounting Policies
1 CORPORATE INFORMATION
1.1 Reporting entity Brown & Company PLC (‘the Company’) is a public quoted company
incorporated on 17th August 1892 with limited liability and domiciled
in Sri Lanka. The registered office of the Company is located at No.
481, T.B. Jayah Mawatha, Colombo 10, Sri Lanka and the business
office is located at No. 34, Sir Mohamed Macan Marker Mawatha,
Colombo 3, Sri Lanka.
The Consolidated Financial Statements of the Company as at and
for the year ended 31st March 2013 comprise the Company and its
subsidiaries (together referred to as the “Group” and individually as
“Group entities”) and the Group’s interest in associates and jointly
controlled entities.
The Group is primarily involved in trading business for a wide variety
of customer segments and also engaged in diversified activities such
as Investments, leisure, plantations, healthcare and construction, etc.
Ordinary shares of the company are listed on the main board of the
Colombo Stock Exchange (CSE).
1.2 Principal Activities and Nature of Operations There were no significant changes in the nature of the principal
activities of the Company and the Group during the financial year
under review. Principal activities of the company are described in
detail in the “Management Discussion and Analysis” to the annual
report.
1.3 Parent Entity and Ultimate Parent EntityIn the opinion of the Directors, the Company’s ultimate parent
undertaking is Lanka Orix Leasing Company PLC.
1.4 Date of Authorization for IssueThe Consolidated Financial Statements of Brown & Company PLC
for the year ended 31 March 2013 were authorized for issue in
accordance with the resolution of the board of directors on
30th July 2013.
2 BASIS OF PREPARATION
2.1 Statement of ComplianceThe Consolidated Financial Statements of the group and the separate
Financial Statements of the company, have been prepared and
presented in accordance with the Sri Lanka Accounting Standards
(SLFRS/LKAS) laid down by The Institute of Chartered Accountants
of Sri Lanka (ICASL) and in compliance with the requirements of the
Companies Act No. 07 of 2007, provides appropriate disclosures as
required by the listing rules of the Colombo Stock Exchange.
These are the Company’s and the Group’s first Financial Statements
prepared in accordance with SLFRSs/ LKAS’s (referred to as ‘SLFRS’ in
these Financial Statements) and SLFRS 1 First-time Adoption of Sri
Lanka Accounting Standard has been applied.
An explanation of how the transition to SLFRS/LKAS has affected on
the reported financial position, financial performance and cash flows
of the Group is provided in Note No. 7.
2.2 Basis of MeasurementThese Financial Statements have been prepared on the historical
cost basis with no adjustments being made for inflationary factors
affecting the Financial Statements, except for the following material
items in the statement of financial position,
Financial instruments at Fair Value through Profit or Loss are
measured at fair value
Available-for-sale financial assets are measured at fair value
The liability for defined benefit obligations are measured at the
present value
Lands and buildings are measured at fair value
Investment properties are measured at fair value
Consumable Biological assets (timber stocks) are measured at
fair value less cost to sell
2.3 Functional and presentation currencyThe functional currency is the currency of the primary economic
environment in which the entities of the group operate.
The Consolidated Financial Statements are presented in Sri Lankan
Rupee (SLR), which is the functional currency of the Company and the
Group’s presentation currency. All financial information presented in
Sri Lankan Rupees has been rounded to the nearest thousands unless
stated otherwise.
2.4 Use of estimates and judgmentsThe preparation of the Consolidated Financial Statements in
conformity with SLFRSs/LKAS’s requires Management to make
judgments, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets, liabilities,
income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are based on historical
experience and various other factors that are believed to be
reasonable under the circumstances, the results which form the basis
of making the judgments about the carrying amount of assets and
liabilities that are not readily apparent from other sources.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognized in the period
in which the estimates are revised and in any future periods affected.
Information about critical judgments in applying accounting policies
that have the most significant effect on the amounts recognized in
the Consolidated Financial Statements is included in the following
notes to these Financial Statements.
98 | Brown & Company PLC
Significant Accounting Policies
Critical accounting estimate/judgment Disclosure reference
Note Page
Bearer Biological Assets –Rubber &
Coconut14 153 - 156
Consumer Biological Assets - Timber 15 156 -158
Determination in fair value of Investment
properties10 147 - 148
Revaluation of lands & buildings 9 145
Goodwill on acquisition 12 151 - 152
Retirement benefit obligation 35 181 - 182
Deferred Taxation
20 & 36
166 - 167
&
182 - 183
Useful lives of property, plant and
equipment3.3.1.5 106 - 107
Useful lives of intangible assets 3.3.7.5 109
2.5 Going ConcernThe Board of Directors has made an assessment of Group’s ability to
continue as going concern and is satisfied that it has the resources
to continue in business for the foreseeable future. Furthermore, the
Board of Directors’ is not aware of any material uncertainties that
may cast significant doubt upon the Group’s ability to continue as
going concern. Therefore these Financial Statements continue to be
prepared on a going concern basis.
2.6 Materiality and AggregationEach material class of similar items is presented separately in the
Consolidated Financial Statements. Items of dissimilar nature or
function are presented separately unless they are immaterial as
permitted by the Sri Lanka Accounting Standards LKAS - 01 on
Presentation of Financial Statements.
2.7 OffsettingAssets and liabilities, and income and expenses, are not offset unless
required or permitted by SLFRSs.
2.8 Comparative InformationPrevious period figures and Notes have been restated and reclassified
wherever necessary to conform to the current year’s presentation.
2.9 Directors’ Responsibility for the Financial Statements
The Board of Directors is responsible for the preparation and
fair presentation of these Consolidated Financial Statements in
accordance with Sri Lanka Accounting Standards and as per the
provisions of the Companies Act No. 07 of 2007. This responsibility
includes: designing, implementing and maintaining internal controls
relevant to the preparation and fair presentation of Financial
Statements that are free from material misstatement, whether due
to fraud or error; selecting and applying appropriate accounting
policies; and making accounting estimates that are reasonable in the
circumstances.
2.10 New Accounting Standards issued but not Effective at Balance sheet Date
Standards issued but not yet effective up to the date of issuance of
the group’s Financial Statements with their effective dates are listed
below. None of these is expected to have a significant effect on the
Financial Statements of the Group. Therefore, extent of the impact has
not been determined.
Accounting
Standard
Name of the Standard Effective Date
SLFRS 9 Financial Instruments
Classification and Measurement
1st January 2015
SLFRS 10 Consolidated Financial
Statements
1st January 2014
SLFRS 11 Joint Arrangements 1st January 2014
SLFRS 12 Disclosure of Interest in other
entities
1st January 2014
SLFRS 13 Fair value Measurement 1st January 2015
2.10.1 SLFRS 9 - Financial InstrumentsSLFRS 9 - Financial Instruments, which will replaces the provisions
of LKAS 39 Financial Instruments: Recognition and Measurement on
classification and measurement of financial assets and requirements
with respect to the classification and measurement of financial
liabilities, the de-recognition of financial assets and financial liabilities
and how to measure fair value were added to SLFRS 9. Most of
these requirements have been carried forward without substantive
amendment from LKAS 39. However, to address the issue of own
credit risk some changes was made to the fair value option for
financial liabilities.
The standard is applied retrospectively in accordance with LKAS 8
Accounting Policies, Changes in Accounting Estimates and Errors with
certain exemptions.
2.10.2 SLFRS 10 - Consolidated Financial StatementsSLFRS 10 Consolidated Financial Statements, which replaces LKAS
27 Consolidated and Separate Financial Statements and SIC-12
Consolidation-Special Purpose Entities. Additionally, the ICASL
published SLFRS - 12 Disclosure of Interests in Other Entities and LKAS
27 Separate Financial Statements.
The main changes from LKAS 27 and SIC-12 are a single control model
is applied to determine whether an investee should be consolidated,
Control assessment includes consideration of substantive potential
voting rights as opposed to currently exercisable potential voting
Annual Report 2012/2013 | 99
rights, Guidance is provided for assessing whether the investor is a
principal or an agent in respect of its relationship with the investee. A
principal could consolidate an investee whereas an agent would not
because the linkage between power and returns is not present.
2.10.3 SLFRS 11 - Joint ArrangementsSLFRS 11 Joint Arrangements, which replaces LKAS 31 Interests
in Joint Ventures and SIC-13 Jointly Controlled Entities - Non-
Monetary Contributions by Ventures. SLFRS 11 also amends LKAS 28
Investments in Associates.
The following are the main changes from LKAS 31;
The structure of the joint arrangement, although still an important
consideration, is no longer the main factor in determining the type
of joint arrangement and therefore the subsequent accounting and
If a joint arrangement is determined to be a joint venture, then the
joint venture accounts for its investment using the equity method
in accordance with LKAS 28 Investments in Associates and Joint
Ventures; the free choice between using either the equity method or
proportionate consolidation has been eliminated.
2.10.4 SLFRS 12 - Disclosure of Interests in Other EntitiesSLFRS 12 Disclosure of Interests in Other Entities is a consolidated
disclosure standard requiring a wide range of disclosures about an
entity’s interests in subsidiaries, joint arrangements, associates and
unconsolidated ‘structured entities’.
The objective of SLFRS 12 is to require the disclosure of information
that enables users of Financial Statements to evaluate the nature of,
and risks associated with, its interests in other entities, the effects of
those interests on its financial position, financial performance and
cash flows.
2.10.5 SLFRS 13 - Fair Value MeasurementSLFRS 13 Fair Value Measurement applies to SLFRSs that require or
permit fair value measurements or disclosures and provides a single
SLFRS framework for measuring fair value and requires disclosures
about fair value measurement. The Standard defines fair value on the
basis of an ‘exit price’ notion and uses a ‘fair value hierarchy’, which
results in a market-based, rather than entity-specific, measurement.
SLFRS 13, defines fair value, sets out in a single SLFRS a framework
for measuring fair value and requires disclosures about fair value
measurements.
2.10.6 Withdrawal of UITF RulingsThe Urgent Issue Task Force (UITF) rulings issued prior to 1 January
2012 have been superseded by the Sri Lanka Accounting Framework
with effect from 1 January 2012. Consequently it is now required to
treat transactions which any of UITF rulings applied, in accordance
with Sri Lanka Accounting Framework effective from 1 January 2012.
Since the SORP issued by the ICASL has not been finalized as of the
date of auditor’s report, Company’s Joint Venture’s Sub-subsidiaries
have not been complied with the SORP issued by the Institute of
Chartered Accountants of Sri Lanka.
3 SIGNIFICANT ACCOUNTING POLICIES
3.1 GeneralThe accounting policies set out below have been applied consistently
to all periods presented in these Consolidated Financial Statements
and in preparing the opening SLFRS statement of financial position
at 1 April 2011 for the purposes of the transition to SLFRSs, unless
otherwise indicated.
These accounting policies have been applied consistently by entities
within the Group where applicable and deviations if any, have been
disclosed accordingly.
3.2 Basis of ConsolidationThe Consolidated Financial Statements (referred to as the ‘group’)
comprise the Financial Statements of the company and its
subsidiaries, associates and jointly controlled entities. The Financial
Statements of the subsidiaries, associates and jointly controlled
entities are prepared for the same reporting period as the parent
company, using consistent accounting policies in compliance with
the Group accounting policies unless otherwise stated.
All intra-Group balances, income and expenses, unrealised gains
and losses resulting from intra-Group transactions and dividends are
eliminated in full.
Losses within a subsidiary are attributed to the non-controlling
interest even if that results in a deficit balance. A change in the
ownership interest of a subsidiary, without a loss of control, is
accounted for as an equity transaction. If the group losses control
over a subsidiary, it:
Derecognises the assets (including goodwill) and liabilities of
the subsidiary
Derecognises the carrying amount of any non-controlling
interest
Derecognises the cumulative transaction differences, recorded
in equity
Recognises the fair value of consideration received
Recognises the fair value of any investment retained
Recognises any surplus or deficit in profit or loss
Reclassify the parent’s share of components previously
recognised in other comprehensive income to profit or loss or
retained earnings, as appropriate
The Consolidated Financial Statements of Browns & Company PLC.,
as at and for the year ended 31 March 2013 comprise the company,
its subsidiaries, associates and jointly controlled entities. (Together
referred to as the ‘Group’).
100 | Brown & Company PLC
3.2.1 Business CombinationsBusiness combinations are accounted for using the acquisition
method in accordance with the SLFRS 3. - Business Combinations.
The cost of an acquisition is measured as the aggregate of the
consideration transferred, measured at acquisition date fair value
and the amount of any non-controlling interest in the acquiree. For
each business combination, the group elects whether it measures
the non-controlling interest in the acquiree either at fair value or
at the proportionate share of the acquiree’s identifiable net assets.
Other cost related to acquisition are expensed 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.
If the business combination is achieved in stages, the acquisition
date fair value of the acquirer’s previously held equity interest in the
acquiree is remeasured to fair value at the acquisition date through
profit or loss.
After the control of an entity is obtained, changes in ownership
interest that do not result in a loss of control are accounted as equity
transactions and gain or loss from these changes are not recognized
in Income Statement.
Any contingent consideration to be transferred by the acquirer will be
recognized at fair value at the acquisition date. Subsequent changes
in the fair value of the contingent consideration which is deemed to
be an asset or liability, will be recognized in accordance with LKAS 39
either in profit or loss or as a change to other comprehensive income.
3.2.1.1 Acquisitions on or after 1st April 2011The Group measures goodwill as the fair value of the consideration
transferred including the recognized amount of any non-controlling
interest in the acquiree, less the net recognised amount (generally
fair value) of the identifiable assets acquired and liabilities assumed,
all measured as of the acquisition date. When the excess is negative, a
bargain purchase gain is recognized immediately in profit or loss.
3.2.1.2 Acquisitions prior to 1st April 2011As part of its transition to SLFRSs, the Group elected not to restate
those business combinations that occurred prior to 1st April 2011.
In respect of acquisitions prior to 1st April 2011, goodwill represents
the amount recognized under the previous Sri Lanka Accounting
Standards.
3.2.2 SubsidiariesSubsidiaries are entities controlled by the Group. Control exists when
the Company has the power, directly or indirectly, to govern the
financial and operational policies of an entity so as to obtain benefits
from its activities. In assessing control, potential voting rights that
presently are exercisable or convertible are taken into account.
The Financial Statements of subsidiaries are included in the
Consolidated Financial Statements from the date that control
commences until the date that control ceases. Acquisition of
subsidiaries is accounted for using the acquisition method of
accounting.
The accounting policies of subsidiaries have been changed when
necessary to align them with the policies adopted by the Group.
If a member of the group uses accounting policies other than
those adopted in the Consolidated Financial Statements for similar
transactions and events in similar circumstances, appropriate
adjustments are made to its Financial Statements in preparing the
Consolidated Financial Statements.
3.2.3 Non-controlling interestsThe interest of outside shareholders in the Group Companies
is disclosed separately in the net assets not owned, directly or
indirectly, by the group in the consolidated Statements of Financial
Position within equity, separately from the equity attributable to
equity holders of the group under the heading of Non-Controlling
interest. Non-Controlling interest in the comprehensive income
statement of the Group are presented separately in the consolidated
comprehensive income Statement.
3.2.4 Acquisition of Non-controlling interestsSubsequent to the acquisition of control, any further acquisition
of net assets from non-controlling interests is accounted for as
transactions with owners in their capacity as owners. Therefore no
goodwill is recognized as a result of such transactions.
Any difference between the amount by which the Non - Controlling
Interest is adjusted and the fair value of the consideration paid or
received shall be recognized directly in equity and attributed to the
owners of the parent.
3.2.5 Loss of controlThe parent can loose control of a subsidiary with or without a change
in absolute or relative ownership levels. Upon the loss of control, the
Group derecognizes the assets and liabilities of the subsidiary, any
minority interests and the other components of equity related to
the subsidiary. Any surplus or deficit arising on the loss of control is
recognized in Profit or Loss.
If the Group retains any interest in the previous subsidiary, then
such interest is measured at fair value at the date that control is lost.
Subsequently it is accounted for as an equity-accounted investee or
as other financial asset depending on the level of influence retained.
3.2.6 Deemed DisposalsChanges in a parent’s ownership interest in a subsidiary that do not
result in a loss of control are accounted for as an equity transaction.
Significant Accounting Policies
Annual Report 2012/2013 | 101
3.2.7 Financial Reporting DateThe Consolidated Financial Statements incorporating all subsidiaries,
joint ventures and investments in equity accounted investees
(associates) , in the group are prepared to a common financial year
ending March 31. In the case where the reporting dates are different
from the group reporting dates, adjustments are made for any
significant transactions or events up to 31 March.
3.2.8 Jointly-Controlled EntitiesJoint ventures are those entities over whose activities the Group has
joint control, established by contractual agreement and requiring
unanimous consent for strategic financial and operating decisions.
Jointly-controlled entities are accounted for using proportionate
consolidation method, from the date that joint control commences
until the date that joint control ceases. The group combines its share
of the joint ventures’ individual income and expenses, assets and
liabilities and cash flows on a line-by-line basis with similar items in
the group’s Financial Statements.
3.2.9 Equity Accounted Investees (Associates)Equity Accounted Investees (Associates) are those entities in which
the Group has significant influence, but not control, over the financial
and operating activities. Significant influence is presumed to exist
when the Group holds 20% to 50% of the equity and voting power of
another entity which are neither subsidiaries or joint ventures of the
Group.
The investments in Equity Accounted Investees (Associates) are
carried in the Statements of Financial Position at cost plus post
acquisition changes in the group’s share of net assets of the associates
using the equity method. Goodwill relating to an associate is included
in the carrying amount of the investment.
After application of the equity method, the group determines
whether it is necessary to recognize any additional impairment loss
with respect to the group’s net investment in Equity Accounted
Investees (Associates).
The Consolidated Statement of Comprehensive Income reflects the
share of the results of operations of an Equity Accounted Investees
(Associates). Where there has been a change recognized directly
in the equity of an Equity Accounted Investees (Associates), the
group recognizes its share of any changes in the statement of
changes in equity. When the group’s share of losses in an Equity
Accounted Investees (Associates) equals or exceeds the interest in the
undertaking, the group does not recognize further losses unless it has
incurred obligations or made payments on behalf of the entity. The
group ceases to use the equity method of accounting on the date
from which it no longer has significant influence in the associate. The
accounting policies of associate companies conform to those used for
similar transactions of the group.
3.2.10 Goodwill acquired in a Business CombinationsGoodwill acquired in a business combination is initially measured at
cost being the excess of the cost of the business combination over
the group’s interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities. Following initial recognition,
goodwill is measured at cost less any accumulated impairment losses.
Goodwill is reviewed for impairment, annually or more frequently if
events or changes in circumstances indicate that the carrying value
may be impaired. For the purpose of impairment testing, goodwill
acquired in a business combination is, from the acquisition date,
allocated to groups of cash-generating units that are expected
to benefit from the synergies of the combination. Impairment is
determined by assessing the recoverable amount of the cash-
generating unit to which the goodwill relates. Where the recoverable
amount of the cash generating unit is less than the carrying amount,
an impairment loss is recognized. The impairment loss is allocated first
to reduce the carrying amount of any goodwill allocated to the unit
and then to the other assets pro-rata to the carrying amount of each
asset in the unit.
Where goodwill forms part of a cash-generating unit and part of the
operation within that unit is disposed of, the goodwill associated
with the operation disposed of is included in the carrying amount of
the operation when determining the gain or loss on disposal of the
operation.
Carrying amount of the goodwill arising on acquisition of subsidiaries
and joint ventures is presented as an intangible and the goodwill on
an acquisition of an equity accounted investment is included in the
carrying value of the investment.
3.2.11 Gain on Bargain Purchase (negative goodwill)If the Group’s interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities exceeds the cost of the acquisition
of the entity, the Group will reassess the measurement of the
acquiree’s identifiable assets and liabilities and the measurement
of the cost and recognize the difference immediately in the
Consolidated Statement of Comprehensive Income.
3.2.12 Balances and transactions eliminated on ConsolidationIntra-group balances and transactions and any unrealised gains
arising from intra-group transactions, are eliminated in preparing
the Consolidated Financial Statements. Unrealised gains arising
from transactions with associates are eliminated to the extent of
the Group’s interest in the enterprise, against the investment in
the associate. Unrealised losses are eliminated in the same way as
unrealised gains.
102 | Brown & Company PLC
3.3 Assets and Bases of their Valuation 3.3.1 Property, Plant and Equipment3.3.1.1 Basis of Recognition and MeasurementItems of Property, plant and equipment are recognized if it is
probable that future economic benefits associated with the asset
will flow to the Group and cost of the asset can be reliably measured.
Property, plant and equipment are measured at cost/revaluation less
accumulated depreciation/ impairment losses.
3.3.1.2 Freehold (Own) AssetsThe cost of Property, plant and equipment includes expenditure
that is directly attributable to the acquisition of the asset. The cost
of self-constructed assets includes the cost of materials and direct
labour, any other costs directly attributable to bringing the assets to a
working condition for their intended use, the costs of dismantling and
removing the items and restoring the site at which they are located
and capitalized borrowing costs.
Purchased software that is integral to the functionality of the related
equipment is capitalized as part of that equipment.
When parts of an item of property, plant and equipment have
different useful lives, they are accounted for as separate items of
property, plant and equipment.
3.3.1.2 (a) Cost ModelThe Group applies the cost model to all property, plant and
equipment except freehold land and buildings; which are recorded at
cost of purchase together with any incidental expenses thereon less
any accumulated depreciation and accumulated impairment losses.
3.3.1.2 (b) Revaluation ModelThe Group revalues its land and buildings which are measured at its
fair value at the date of revaluation less any subsequent accumulated
depreciation and accumulated impairment losses. Revaluations are
made with sufficient regularity to ensure that the carrying amount
does not differ materially from that which would be determined using
fair value at the balance sheet date.
On revaluation of lands and buildings, any increase in the revaluation
amount is credited to the revaluation reserve in shareholder’s equity
unless it off sets a previous decrease in value of the same asset that
was recognized in the Statement of Comprehensive Income. A
decrease in value is recognized in the Statement of Comprehensive
Income where it exceeds the increase previously recognized in the
revaluation reserve. Upon disposal, any related revaluation reserve is
transferred from the revaluation reserve to retained earnings and is
not taken into account in arriving at the gain or loss on disposal.
3.3.1.3 Subsequent CostsThe cost of replacing part of an item of property, plant and
equipment is recognized in the carrying amount of the item if it is
probable that the future economic benefits embodied within the
part will flow to the Group and its cost can be measured reliably. The
carrying amount of the replaced part is de-recognized. The costs
of the day-to-day servicing of property, plant and equipment are
recognized in Profit or Loss as incurred.
3.3.1.4 De-recognitionAn item of property, plant and equipment is de-recognized upon
disposal or when no future economic benefits are expected from its
use or disposal.
The gain or loss on disposal of an item of property, plant and
equipment is determined by comparing the proceeds from disposal
with the carrying amount of the property, plant and equipment,
and is recognized net within other income/other expenses in the
Statement of Comprehensive Income. When revalued assets are
sold, the amounts included in the revaluation surplus reserve are
transferred to retained earnings.
3.3.1.5 DepreciationDepreciation is based on the cost of an asset less its residual value.
Significant components of individual assets are assessed and if a
component has a useful life that is different from the remainder of
that asset, that component is depreciated separately.
Depreciation is recognized in Statement of Comprehensive Income
on a straight-line basis over the estimated useful life of each
component of an item of property, plant and equipment. Leased
assets are depreciated over the shorter of the lease term and their
useful lives unless it is reasonably certain that the Group will obtain
ownership by the end of the lease term. Lands are not depreciated.
Depreciation of an asset begins when it is available for use and ceases
at the earlier of the date that the asset is classified as held for sale and
the date that the asset is de-recognized.
Depreciation methods, useful life values are assessed at the reporting
date. The estimated useful lives for the current year are as follows:
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Annual Report 2012/2013 | 103
The estimated useful lives for the current and comparative year are as
follows:
Property, Plant & Equipment No. of Years
Range
Rate Range
Buildings 20 to 50 years 2 % to 5 %
Plant & Machinery 5 to 30 years 3.33% to 20%
Motor Vehicles 1 to 15 years 6.66% to 100%
Tools & Equipment 8 to 40 years 2.5% to 12.50%
Computers 4 to 8 years 12.50% to 25%
Furniture & Fittings 5 to 20 years 5% to 20%
Ergonomic Equipment 25 years 4%
Water, Sanitations & Others 20 years 5%
Roads & Bridges 50 years 2%
Penstock Pipeline 20 years 5%
Security Fences 3 years 33.33%
Power/Electricity Supply 131/3 years 7.5%
Air Conditioners 5 years 20%
Generator 8 years 12.5%
Cutlery, Crockery & Glassware 5 years 20%
Linen 3 years 33.33%
Sewage System 20 years 5%
Improvement to lease hold Over the Lease period
Buildings Over the Lease period
Improvements to leasehold buildings and buildings constructed on
leasehold land are amortized over the lower of their economic useful
life or unexpired period of lease.
Depreciation of an asset begins when it is available for use and ceases
at the earlier of the date that the asset is classified as held for sale and
the date that the asset is derecognized.
The useful life, depreciating methods and residual values are assessed
annually or in an earlier date where any circumstance indicates such
assessment is required.
3.3.2 Capital Work-in-ProgressCapital work-in-progress is stated at cost. These are expenses of a
capital nature directly incurred in the construction of an asset. Capital
work in progress is transferred to the respective asset accounts at the
time of the first utilization or at the time the asset is commissioned.
3.3.3 Leasehold Property, Plant & Equipment (Assets Acquired on Finance Leases)
3.3.3.1 Finance LeasesProperty, Plant and Equipment on finance leases, which effectively
transfer to the company substantially the entire risk and rewards
incidental to ownership of the leased items, are disclosed as finance
leases at their cash price and depreciated over the period the
company is expected to benefit from the use of the leased assets.
The corresponding principal amount payable to the lessor is shown
as a liability.
The interest element of the rental obligation applicable to each
financial year is charged to the statement of comprehensive income
over the period of the lease so as to produce a constant periodic rate
of interest on the remaining balance of the liability for each period.
The cost of improvements to or on leased property is capitalized, and
depreciated over the unexpired period of the lease or the estimated
useful lives of the improvements, whichever is shorter.
3.3.3.2 Operating Leases Leases where the lessor effectively retains substantially all the risks
and benefits of ownership over the leased term are classified as
operating leases.
Lease payments paid under operating leases are recognized as an
expense in the statement of comprehensive income.
3.3.4 Prepaid Lease RentalsPrepaid lease rentals paid to acquire land use rights are amortized
over the lease term in accordance with the pattern of benefits
provided. Leasehold properties are tested for impairment annually
and are written down where applicable. The impairment loss, if any, is
recognized in the Statement of Comprehensive Income.
3.3.5 Investment Property3.3.5.1 Basis of RecognitionInvestment property is property held either to earn rental income or
for capital appreciation or for both, but not for sale in the ordinary
course of business, use in the production or supply of goods or
services or for administrative purposes.
3.3.5.2 Basis of Measurement3.3.5.2.1 Fair value ModelInvestment properties are initially recognized at cost. Subsequent to
initial recognition the investment properties are stated at fair values,
which reflect market conditions at the Balance Sheet date. Gains or
losses arising from changes in fair value are included in the Statement
of Comprehensive Income in the year in which they arise.
Where Group companies occupy a significant portion of the
investment property of a subsidiary, such investment properties
are treated as property, plant and equipment in the Consolidated
Financial Statements, and accounted for as per LKAS 16- Property,
Plant and Equipment.
104 | Brown & Company PLC
3.3.5.2.2 De-recognition Investment properties are de-recognized when either they have
been disposed of or when the investment property is permanently
withdrawn from use and no future economic benefit is expected
from its disposal. Any gains or losses on the retirement or disposal
of an investment property are recognized in the Statement of
Comprehensive Income in the year of retirement or disposal.
3.3.5.2.3 Subsequent Transfers to/from Investment PropertyTransfers are made to investment property when, and only when,
there is a change in use, evidenced by the end of owner occupation,
commencement of an operating lease to another party or
completion of construction or development.
Transfers are made from investment property when, and only when,
there is a change in use, evidenced by commencement of owner
occupation or commencement of development with a view to sale.
For a transfer from investment property to owner occupied, the
deemed cost of property for subsequent accounting is its fair value at
the date of change in use. If the property occupied by the Company
as an owner occupied property becomes an investment property, the
Company, accounts for such property in accordance with the policy
stated under property, plant and equipment up to the date of change
in use.
For a transfer from owner occupied to investment property, any
difference between the fair value of the property at that date
and its previous carrying amount is recognized in the Statement
of Comprehensive Income. When the Company completes the
construction or development of a self-constructed investment
property, any difference between the fair value of the property at that
date and its previous carrying amount is recognized in the Statement
of Comprehensive Income.
3.3.5.2.4 Determining Fair Value External and independent valuers, having appropriate recognized
professional qualifications and recent experience in the location and
category of property being valued, values the investment property
portfolio every year.
The fair values are based on market values, being the estimated
amount for which a property could be exchanged on the date of
the valuation between a willing buyer and a willing seller in an arm’s
length transaction after proper marketing wherein the parties had
each acted knowledgeably.
3.3.6 Impairment of AssetsThe group assesses at each reporting date whether there is an
indication that an asset may be impaired. If any such indication exists,
or when annual impairment testing for an asset is required, the group
makes an estimate of the asset’s recoverable amount. An asset’s
recoverable amount is the higher of an asset’s or cash generating
unit’s (CGU’s) fair value less costs to sell and its value in use and is
determined for an individual asset, unless the asset does not generate
cash inflows that are largely independent of those from other assets
or groups of assets.
Where the carrying amount of an asset exceeds its recoverable
amount, the asset is considered impaired and is written down to its
recoverable amount. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. Impairment
losses are recognized in the Statement of Comprehensive Income
statement except for impairment losses in respect of Property, Plant
and Equipment which are recognized against the revaluation reserve
to the extent that it reverses a previous revaluation surplus.
An assessment is made at each reporting date as to whether there
is any indication that previously recognized impairment losses
may no longer exist or may have decreased. Previously recognized
impairment losses other than in respect of goodwill, are reversed only
if there has been an increase in the recoverable amount of the asset.
Such increase is recognized to the extent of the carrying amount had
no impairment losses been recognized previously.
3.3.7 Intangible Assets3.3.7.1 Basis of RecognitionAn Intangible Asset is recognized if it is probable that future
economic benefits that are attributable to the assets will flow to the
entity and the cost of the assets can be measured reliably.
3.3.7.2 Basis of MeasurementIntangible assets acquired separately are measured as initial
recognition at cost. Following initial recognition intangible assets
are carried at cost less any accumulated amortization and any
accumulated impairment losses. The useful life of intangible assets is
assessed to be either finite or indefinite. Intangible assets with finite
useful life are amortized over the useful economic life and assessed
for impairment whenever there is an indication that the intangible
asset may be impaired. The amortization period and the method
for an intangible asset with a finite useful life is reviewed at least at
each financial year end. Intangible assets with indefinite useful lives
are tested for impairment annually either individually or at the cash
generating unit level.
3.3.7.3 Subsequent ExpenditureSubsequent expenditure on intangible assets is capitalized only when
it increases the future economic benefits embodied these assets. All
other expenditure is expensed when incurred.
3.3.7.4 De-recognitionIntangible assets are de-recognized on disposal or when no future
economic benefits are expected from its use. The gain or loss
arising from de-recognition of intangible assets are measured as
the difference between the net disposal proceeds and the carrying
amount of the asset.
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Annual Report 2012/2013 | 105
3.3.7.5 AmortizationAmortization is recognized in the Statement of Comprehensive
income on a straight-line basis over the estimated useful life of
intangible assets, other than goodwill, from the date that they are
available for use.
The estimated useful life of each intangible asset is as follows;
Computer Software 4-5 years
Amortization methods, useful lives and residual values are reviewed at
each reporting date and adjusted if appropriate.
3.3.8 Non-Current Assets Held for Sale and Discontinued Operations
Non-current assets and disposal groups classified as held for sale are
measured at the lower of their carrying amount and fair value less
costs to sell. Non-current assets and disposal groups are classified as
held for sale only when the sale is highly probable and the asset or
disposal group is available for immediate sale in its present condition.
In the consolidated statement of comprehensive income of the
reporting period, and of the comparable period of the previous year,
income and expenses from discontinued operations are reported
separately from income and expenses from continuing operations.
Property, plant and equipment and intangible assets once classified
as held for sale are not depreciated or amortized.
3.4 Financial Instruments3.4.1 Non derivative Financial Instruments3.4.1.1 Initial RecognitionThe Group initially recognizes loans and advances, deposits, debt
securities issued and subordinated liabilities on the date at which
they are originated. All the financial assets and liabilities other than
regular way purchases and sales are recognized on the trade date at
which the Group becomes a party to the contractual provisions of the
instruments.
3.4.1.2 De-recognitionThe Group derecognizes a financial asset when the contractual rights
to the cash flows from the financial asset expire, or when it transfers
the financial asset in a transaction in which substantially all the risks
and rewards of ownership of the financial asset are transferred or
in which the Group neither transfers nor retains substantially all
the risks and rewards of ownership and it does not retain control of
the financial asset. Any interest in transferred financial assets that
qualify for de-recognition that is created or retained by the Group is
recognized as a separate asset or liability in the statement of financial
position. On de-recognition of a financial asset, the difference
between the carrying amount of the asset (or the carrying amount
allocated to the portion of the asset transferred), and the sum of (i)
the consideration received (including any new asset obtained less any
new liability assumed) and (ii) any cumulative gain or loss that had
been recognized in other comprehensive income is recognized in
Profit or Loss.
The Group enters into transactions whereby it transfers assets
recognized on its statement of financial position, but retains either all
or substantially all of the risks and rewards of the transferred assets
or a portion of them. If all or substantially all risks and rewards are
retained, then the transferred assets are not derecognized.
In transactions in which the Group neither retains nor transfers
substantially all the risks and rewards of ownership of a financial asset
and it retains control over the asset, the Group continues to recognize
the asset to the extent of its continuing involvement, determined
by the extent to which it is exposed to changes in the value of the
transferred asset.
The Group/Company derecognizes a financial liability when its
contractual obligations are discharged or cancelled or expire.
3.4.1.3 OffsettingFinancial assets and liabilities are offset and the net amount presented
in the statement of financial position when, and only when, the
Group has a legal right to offset the amounts and intends either
to settle on a net basis or to realize the asset and settle the liability
simultaneously.
3.4.1.4 Amortized cost measurementThe amortized cost of a financial asset or liability is the amount at
which the financial asset or liability is measured at initial recognition,
minus principal repayments, plus or minus the cumulative
amortization using the effective interest method of any difference
between the initial amount recognized and the maturity amount,
minus any reduction for impairment.
3.4.1.5 Fair value measurement Fair value is the amount for which an asset could be exchanged, or a
liability settled, between knowledgeable, willing parties in an arm’s
length transaction on the measurement date.
When available, the Group measures the fair value of an instrument
using quoted prices in an active market for that instrument. A market
is regarded as active if quoted prices are readily and regularly available
and represent actual and regularly occurring market transactions on
an arm’s length basis.
If a market for a financial instrument is not active, the Group
establishes fair value using a valuation technique. Valuation
techniques include using recent arm’s length transactions between
knowledgeable, willing parties (if available), reference to the current
fair value of other instruments that are substantially the same,
discounted cash flow analyses and other equity pricing models.
The chosen valuation technique makes maximum use of market
inputs, relies as little as possible on estimates specific to the Group,
incorporates all factors that market participants would consider
in setting a price, and is consistent with accepted economic
methodologies for pricing financial instruments.
106 | Brown & Company PLC
The best evidence of the fair value of a financial instrument at
initial recognition is the transaction price, i.e. the fair value of
the consideration given or received, unless the fair value of that
instrument is evidenced by comparison with other observable
current market transactions in the same instrument or based on
a valuation technique whose variables include only data from
observable markets. When transaction price provides the best
evidence of fair value at initial recognition, the financial instrument is
initially measured at the transaction price and any difference between
this price and the value initially obtained from a valuation model is
subsequently recognized in Profit or Loss.
Valuation of Financial InstrumentsThe Group measures the fair values using the following fair value
hierarchy that reflects the significance of the inputs used in making
the measurements.
Level 1 – Quoted market price (unadjusted) in an active market of an
identical instrument.
Level 2 – Valuation techniques based on observable inputs, either
directly (i.e., as prices) or indirectly (i.e., derived from prices), this
category included instruments valued using: quoted market prices
in active markets similar instruments; quoted prices for identical or
similar instruments in markets are considered less than active: or
other valuation techniques where all significant inputs are directly
observable from market data.
Level 3 – Valuation techniques use significant unobservable inputs.
This category includes all instruments where the valuation technique
includes inputs not based on observable data and the unobservable
inputs have a significant effect on the instrument’s valuation.
This category includes instruments that are valued based on quoted
prices for similar instruments where significant unobservable
adjustments or assumptions are required to reflect differences
between the instruments.
Fair values of financial assets and financial liabilities that are traded
in active markets are based on quoted market prices or dealer price
quotations. For all other financial instruments the Group determines
fair values using valuation techniques
Valuation techniques include net present value and discounted
cash flow models, comparison to similar instruments for which
market observable prices exist, other equity pricing models and
other valuation models. Assumptions and inputs used in valuation
technique include risk free and bench mark interest rates, credit
spreads and other premium used in estimating discount rates, bond
and other equity prices, foreign currency exchange rates, equity and
equity index prices and expected price volatilities and correlations.
The objective of valuation techniques is to arrive at a fair value
determination that reflects the price of the financial instruments
at the reporting date that would have been determined by market
participants acting at arm’s length.
The Group widely recognized valuation models for determining
the fair value of common and more simple financial instruments.
Observable prices and model inputs are usually available in the
market for listed debt and equity securities. Availability of observable
market inputs reduces the need of management judgment and
estimation and also reduces the uncertainty associated with
determination of fair values. Availability of observable market prices
and inputs varies depending on the products and markets are is
prone to changes based on specific events and general conditions in
the financial markets.
The table below shows the different basis used in assessing the fair
value of financial instruments,
Instrument Category Fair value basis and assumptions Fair value hierarchy
Financial Assets
Fair value through profit or loss
- Trading equity shares Valued using market prices Level 1
Loans and receivables
Loans & Advances Stated at amortized cost Level 3
Staff loans Stated at amortized cost
Loan given to employees at below market rate will be identified at market rate by
discounting the loan at market rate. The group companies used 19%-25% rate for
this purpose.
Level 3
- Repo investments Stated at amortized cost Level 2
- Commercial papers Stated at amortized cost Level 2
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Annual Report 2012/2013 | 107
3.4.1.6 Identification and measurement of impairmentAt each reporting date the Group assesses whether there is objective
evidence that financial assets not carried at fair value through Profit
or Loss are impaired. A financial asset or a group of financial assets
is (are) impaired when objective evidence demonstrates that a loss
event has occurred after the initial recognition of the asset(s), and that
the loss event has an impact on the future cash flows of the asset(s)
that can be estimated reliably.
Objective evidence that financial assets (including equity securities)
are impaired can include significant financial difficulty of the borrower
or issuer, default or delinquency by a borrower, restructuring of a
loan or advance by the Group on terms that the Group would not
otherwise consider, indications that a borrower or issuer will enter
bankruptcy, the disappearance of an active market for a security, or
other observable data relating to a group of assets such as adverse
changes in the payment status of borrowers or issuers in the group
of economic conditions that correlate with defaults in the group.
In addition, for an investment in an equity security, a significant or
prolonged decline in its fair value below its cost is objective evidence
of impairment.
The Group considers evidence of impairment for loans and advances
at both a specific and collective basis. All individually significant loans
and advances are assessed for specific impairment. All individually
significant loans and advances found not to be specifically impaired
are then collectively assessed for any impairment that has been
incurred but not yet identified.
Loans and advances that are not individually significant are
collectively assessed for impairment by grouping them together with
similar risk characteristics based on product types.
In assessing collective impairment the Group uses statistical modeling
of historical trends of the probability of default, timing of recoveries
and the amount of loss incurred, adjusted for management’s
judgment as to whether current economic and credit conditions
are such that the actual losses are likely to be greater or less than
suggested by historical modeling, Default rates, loss rates and the
expected timing of future recoveries are regularly taken into account
to ensure that they remain appropriate.
Impairment losses on assets carried at amortized cost are measured
as the difference between the carrying amount of the financial asset
and the present value of estimated future cash flows discounted
at the asset’s original effective interest rate. Impairment losses are
recognized in Profit or Loss and reflected in an allowance account
against loans and advances. Interest on impaired assets continues
to be recognized through the unwinding of the discount. When a
subsequent event causes the amount of impairment loss to decrease,
the decrease in impairment loss is reversed through Profit or Loss.
Impairment losses on available-for-sale investment securities
are recognized by transferring the cumulative loss that has been
recognized in other comprehensive income to Profit or Loss as a
reclassification adjustment. The cumulative loss that is reclassified
from other comprehensive income to Profit or Loss is the difference
between the acquisition cost, net of any principal repayment and
amortization, and the current fair value, less any impairment loss
previously recognized in Profit or Loss. Changes in impairment
provisions attributable to time value are reflected as a component of
interest income.
If, in a subsequent period, the fair value of an impaired available-
for-sale debt security increases and the increase can be objectively
related to an event occurring after the impairment loss was
recognized in Profit or Loss, the impairment loss is reversed, with the
amount of the reversal recognized in Profit or Loss. However, any
subsequent recovery in the fair value of an impaired available-for-sale
equity security is recognized in Other Comprehensive Income.
Instrument Category Fair value basis and assumptions Fair value hierarchy
- Corporate debentures No investment has been made
Held to Maturity No investment has been classified at held to maturity
Available for sale instruments
- Treasury Bonds Valued using market yields
In valuing the Bonds at market rates the bid quotes available in the market.
Level 1
- Treasury Bills Valued using market yields
In valuing the Bills at market rates the bid quotes available in the market.
Level 1
Financial Liabilities
Other Financial Liabilities Stated at amortized cost Level 3
108 | Brown & Company PLC
3.4.2 Financial Assets Financial assets are within the scope of LKAS 39 are classified
appropriately as Fair value through Profit or Loss (FVTPL), loans and
receivables (L&R), held to maturity investments (HTM), available-for-
sale financial assets (AFS) as appropriate. The Group determines the
classification of its financial assets at initial recognition.
All the financial assets are recognized initially at fair value plus
transaction costs, except in the case of financial assets recorded at fair
value through profit or loss.
3.4.2.1 Financial assets at fair value through Profit or LossA financial asset is classified at fair value through Profit or Loss if it
is classified as held for trading or is designated as such upon initial
recognition. Financial assets are designated at fair value through Profit
or Loss if the Group manages such investments and makes purchase
and sale decisions based on their fair value in accordance with the
Group’s documented risk management or investment strategy. Upon
initial recognition, transaction costs are recognized in Profit or Loss as
incurred.
Financial assets at fair value through Profit or Loss are measured at fair
value, and subsequent therein are recognized in Profit or Loss.
3.4.2.2 Loans and ReceivablesLoans and receivables are non-derivative financial assets with fixed
or determinable payments that are not quoted in an active market.
Such assets are recognized initially at fair value plus any directly
attributable transaction costs. Subsequent to initial recognition, loans
and receivables are measured at amortized cost using the effective
interest method, less any impairment losses.
Loans and receivables of the Group comprise of the following,
(a) Advances and Loans Advances and loans to related parties, employees and customers
comprised of loans, loans with fixed instalments and advances.
Loans of such nature with fixed instalments are stated in the Balance
Sheet net of possible loan losses and net of interest, which is not
accrued to revenue.
(b) Trade ReceivablesTrade and other receivables are stated at the amounts that are
estimated to realize, net of provisions for bad and doubtful
receivables. A provision for doubtful debts is made where as there
is objective evidence that the Company will not be able to recover
all amounts due according to the original terms of receivables. Bad
debts are written-off when identified.
3.4.2.3 Held-to-maturity financial assetsIf the Group has the positive intent and ability to hold debt or
investment securities to maturity, then such financial assets are
classified as held-to-maturity. Held-to-maturity financial assets
are recognized initially at fair value plus any directly attributable
transaction costs. Subsequent to initial recognition held to- maturity
financial assets are measured at amortized cost using the effective
interest method, less any impairment losses.
Any sale or reclassification of a more than insignificant amount of
held-to-maturity investments not close to their maturity would result
in the reclassification of all held-to-maturity investments as available-
for-sale, and prevent the Group from classifying investment securities
as held-to-maturity for the current and the following two financial
years.
3.4.2.4 Available-for-sale financial assetsAvailable-for-sale financial assets are non-derivative financial assets
that are designated as available for- sale and that are not classified
in any of the previous categories. The Group’s investments in equity
securities and certain debt securities are classified as available-for-sale
financial assets.
Subsequent to initial recognition, these are measured at fair value
and changes therein, other than impairment losses are recognized in
other comprehensive income and presented within equity in the fair
value reserve. When an investment is derecognized, the cumulative
gain or loss in other comprehensive income is transferred to Profit or
Loss.
3.4.2.5 Other Current assetsAssets classified as current assets in the Statement of Financial
Position are those expected to realize during the normal operating
cycle of business or within one year from the Statement of Financial
Position date, whichever is longer and cash balances. Assets other
than current assets are those which the Group/Company intends to
hold beyond the one year period from the Statement of Financial
Position date
a) Other Receivables and Prepayments Other receivable balances and prepayments are stated at estimated
amounts receivable after providing for doubtful receivables.
b) Short Term Investments Short term investments are measured at fair value since their carrying
values are almost equal to its fair value.
c) Cash and Cash EquivalentsCash and cash equivalents comprise of cash in hand and cash at
banks and other highly liquid financial assets which are held for the
purpose of meeting short-term cash commitments with original
maturities of less than three months which are subject to insignificant
risk of changes in their fair value.
Bank overdrafts that are repayable on demand and form an integral
part of the Group cash management are included as a component of
cash and cash equivalents for the purpose of the statement of cash
flows
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3.4.2.6 InventoriesInventories are measured at the lower of cost and net realizable value.
The cost of inventories is based on the first-in first-out principle,
and includes expenditure incurred in acquiring the inventories,
production or conversion costs and other costs incurred in bringing
them to their existing location and condition.
In the case of manufactured inventories and work in progress, cost
includes an appropriate share of production overheads based on
normal operating capacity. Net realizable value is the estimated
selling price in the ordinary course of business, less the estimated
costs of completion and selling expenses.
For the manufacturing stocks, provision for slow moving inventories is
made when the holding period exceeds 365 days, and the sale of the
inventories is no longer probable.
The cost incurred in bringing inventories to its present location and
condition is accounted using the following cost formula:
Type of Inventory Method of Valuation
Input Materials Weighted Average Cost Formula
Growing Crop - Nurseries At the cost of direct materials,
direct labour and appropriate
proportion of directly
attributable overheads less
provision for over- grown plants
Harvested Crop Agricultural produce harvested
from an entity’s biological
assets shall be measured at
its fair value less costs to sell
at the point of harvest. Such
measurement is deemed to
be the cost at the time of
transferring the harvested crop
to inventories.
Spares and Consumables Weighted average Cost basis
Finished goods and work-in-
progress
First in First out (FIFO) basis
3.4.3 FINANCIAL LIABILITIES AND PROVISIONS3.4.3.1 Financial Liabilities The Group initially recognizes debt securities and Loans & Borrowings
on the date that they are originated. All other financial liabilities
are recognized at initially on the trade date, which is the date that
the Company becomes party to the contractual provisions of the
instruments.
The Group derecognizes a financial liability when its contractual
obligations are discharged, cancelled or expired.
The Group classifies non-derivative financial liabilities into the other
financial liabilities category. Such financial liabilities are recognized
initially at fair value plus any directly attributable transaction cost.
Subsequent to initial recognition, these financial liabilities are
measured at amortized cost using effective interest rate method.
Other financial liabilities comprise of Loans & Borrowings, bank
overdraft and debentures issued.
3.4.3.2 Accounts Payables and Accrued ExpensesTrade and other payables are stated at cost.
3.4.3.3 ProvisionsProvisions are made for all obligations existing as at the date of
Statement of Financial Position when it is probable that such an
obligation will result in an outflow of resources and a reliable estimate
can be made of the quantum of the outflow. All contingent liabilities
are disclosed as a note to the Financial Statements unless the outflow
of resources is remote. Contingent assets are disclosed, where inflow
of economic benefit is probable.
3.4.4.1 Other Liabilities and Provisions 3.4.4.1.1 General
Liabilities classified as current liabilities on the statement of financial
position are those which fall due for payment on demand or within
one year from the Statement of Financial Position date. Non-current
liabilities are those balances that fall due for payment after one year
from the Statement of Financial Position date. All known liabilities
have been accounted for in preparing these Financial Statements.
Provisions and liabilities are recognized when the company has a
legal or constructive obligation as a result of past events and it is
probable that an outflow of economic benefits will be required to
settle the obligation.
3.4.4.2 Employee benefits3.4.4.2.1 Defined Benefit Plan –Retirement Benefit
Obligations
A defined benefit plan is a post -employment benefit plan other
than a defined contribution plan. The liability recognized in the
balance sheet in respect of defined benefit plan is the present value
of the defined benefit obligation at the balance sheet date. Benefits
falling due more than 12 months after the balance sheet date
are discounted to present value. The defined benefit obligation is
calculated annually by independent actuaries using Projected Unit
Credit Method (PUC) as recommended by LKAS – 19 “Employees
benefits”. The assumptions based on which the results of the actuarial
valuation was determined, are disclosed in Note No. 35 to the
Financial Statements.
The Retirement Benefit Obligation is based on the actuarial valuation
carried out by the M/s. Actuarial & Management Consultants (Pvt) Ltd.
110 | Brown & Company PLC
Provision has been made for retirement gratuities from the first year
of service of all employees, in conformity with LKAS 19 on Employee
Benefit. However under the Payment of Gratuity Act No.12 of 1983,
the liability to an employee arises only on completion of five years of
continued service.
The liability is not externally funded.
3.4.4.2.2 Defined Contribution Plans
A Defined Contribution Plan is a post-employment benefit plan under
which an entity pays fixed contributions into a separate entity and
will have no legal or constructive obligation to pay further amounts.
Obligations for contributions to Defined Contribution Plans are
recognized as an employee benefit expense in the Statement of
Comprehensive Income in the periods during which services are
rendered by employees.
The Group Contributes 12% and 3% of gross emoluments to
employees as Employees Provident Fund (EPF) & Employees Trust
Fund (ETF) contribution respectively.
3.4.4.2.3 Employees’ Provident Fund (EPF)
The Company and employees contribute 12% and 8% respectively
on the gross emoluments of each employee to the above mentioned
funds.
3.4.4.2.4 Employees’ Trust Fund (ETF)
The Company contributes 3% of the gross emoluments of each
employee to the Employees’ Trust Fund.
3.4.4.3 Short-term employee benefitsShort-term employee benefit obligations are measured on an
undiscounted basis and are expensed as the related service is
provided. A liability is recognized for the amount expected to be paid
under short-term cash bonus if the company has a present legal or
constructive obligation to pay this amount as a result of past services
provided by the employee, and the obligation can be estimated
reliably.
3.4.5 Finance LeasesProperty and Equipment on finance leases, which effectively transfer
to the Group substantially the entire risk and rewards incidental to
ownership of the leased items, are disclosed as finance leases at their
cash price and depreciated over the period the Group is expected to
benefit from the use of the leased assets.
The corresponding principal amount payable to the lessor is shown
as a liability. Lease payments are apportioned between the finance
charges and reduction of the lease liability so as to achieve a constant
rate of interest on the outstanding balance of the liability. The interest
payable over the period of the lease is transferred to an interest in
suspense account. The interest element of the rental obligations
pertaining to each financial year is charged to the Statement of
Comprehensive Income over the period of lease.
3.4.5.1 Lease Payments
Payments made under operating leases are recognized in Profit
or Loss on a straight-line basis over the term of the lease. Lease
incentives received are recognized as an integral part of the total
lease expense, over the term of the lease.
Minimum lease payments made under finance leases are apportioned
between the finance expense and the reduction of the outstanding
liability. The finance expense is allocated to each period during the
lease term so as to produce a constant periodic rate of interest on the
remaining balance of the liability.
3.4.6 Provisions, Contingent Assets and Contingent Liabilities
Provisions are made for all obligations existing as at the Balance
Sheet date when it is probable that such an obligation will result in
an outflow of resources and a reliable estimate can be made of the
quantum of the outflow. All contingent liabilities are disclosed as a
note to the Financial Statements unless the outflow of resources is
remote. Contingent assets are disclosed, where inflow of economic
benefit is probable.
STATEMENT OF COMPREHENSIVE INCOME
3.5 RevenueIncome comprises of revenue, income and other income other than
those relating to contributions from equity participants.
The following are the main components of the revenue;
Trading & Related Services Sale of consumer, agricultural,
motor vehicles and industrial
items and providing related
services.
Leisure Accommodation sales, Service
Charges, Food & Beverages
income and outlet sales.
Plantation Sale of perennial crops
Power Generation Sale of electrical energy, sale of
solar system.
Revenue is income that arises in the course of ordinary activities
of group companies. Other Income such as interest on treasury
bills, gain on disposal of property, plant and equipment, rental
income, dividend income, foreign exchange gain, gain on disposal
of investments securities, gain on marked to market valuation of
investments is also included in Other income.
3.5.1 Revenue RecognitionRevenue is recognized to the extent that it is probable that the
economic benefits will flow to the Group, and the revenue and
associated costs incurred or to be incurred can be reliably measured.
Revenue is measured at the fair value of the consideration received or
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Annual Report 2012/2013 | 111
receivable, net of trade discounts and value added taxes, net of sales
within the Group.
3.5.1.1 Goods soldRevenue from the sale of goods in the course of ordinary activities is
measured at the fair value of the consideration received or receivable,
net of returns, trade discounts and volume rebates. Revenue is
recognized when persuasive evidence exists, usually in the form of
an executed sales agreement, that the significant risks and rewards
of ownership have been transferred to the customer, recovery of the
consideration is probable, the associated costs and possible return of
goods can be estimated reliably, there is no continuing management
involvement with the goods, and the amount of revenue can be
measured reliably.
If it is probable that discounts will be granted and the amount can be
measured reliably, then the discount is recognized as a reduction of
revenue as the sales are recognized. The timing of the transfer of risks
and rewards varies depending on the individual terms of the sales
agreement.
3.5.1.2 Rendering of ServicesRevenue from services rendered is recognized in Profit or Loss in
proportion to the stage of completion of the transaction at the
reporting date. The stage of completion is assessed by reference to
surveys of work performed.
3.5.1.3 Fees and Other IncomeFees and commission income and expense that are integral to the
effective interest rate on a financial asset or liability are included in the
measurement of the effective interest rate.
Other fees and commission income, including servicing fees,
investment management fees, sales commission are recognized as
the related services are performed.
Other fees and commission expense relate mainly to transaction and
service fees, which are expensed as the services are received.
3.5.1.4 Net Trading IncomeNet trading income comprise of gains less losses related to trading
assets and liabilities, and includes all realized and unrealised fair value
changes, interest, dividends and foreign exchange differences.
3.5.1.5 Net income from other financial instruments at fair value through Profit or LossNet income from other financial instruments at fair value through
Profit or Loss relates to non-trading derivatives held for risk
management purposes that do not form part of qualifying hedge
relationships and financial assets and liabilities designated at fair value
through Profit or Loss, and include all realized and unrealised fair
value changes, interest, dividends and foreign exchange differences.
3.5.1.6 Rental IncomeRental income from investment property is recognized in profit or loss
on a straight-line basis over the term of the lease. Lease incentives
granted are recognized as an integral part of the total rental income,
over the term of the lease. Rental income from subleased property is
recognized as other income.
Rental income is recognized in the income statement as it accrues.
3.5.1.7 Dividend IncomeDividend income is recognized in the income statement, when the
right to receive payment is established.
3.5.1.8 Interest IncomeInterest income and expense are recognized in Profit or Loss using the
effective interest method. The effective interest rate is the rate that
exactly discounts the estimated future cash payments and receipts
through the expected life of the financial asset or liability (or, where
appropriate, a shorter period) to the carrying amount of the financial
asset or liability. When calculating the effective interest rate, the
Group estimates future cash flows considering all contractual terms of
the financial instrument, but not future credit losses.
The calculation of the effective interest rate includes all fees paid are
an integral part of the effective interest rate. Transaction costs include
incremental costs that are directly attributable to the acquisition or
issue of a financial asset or liability.
Interest income and expense presented in the Statement of
Comprehensive Income include:
interest on financial assets and financial liabilities measured at
amortized cost calculated on an effective interest basis
interest on available for sale investment securities calculated
on an effective interest basis
Interest income and expense on all trading assets and liabilities are
considered to be incidental to the Group’s trading operations and are
presented together with all other changes in the fair value of trading
assets and liabilities in net trading income.
Fair value changes on other financial assets and liabilities carried at
fair value through Profit or Loss, are presented in net income from
other financial instruments at fair value through profit or loss in the
Statement of Comprehensive Income.
3.5.1.9 Gains and LossesGains or Losses on the disposal of Property, Plant and Equipment and
other Non-Current assets, including investments held by the Group
have been accounted for in the Statement of Comprehensive Income,
after deducting from the net sales proceeds on disposal the carrying
amount of such Assets.
112 | Brown & Company PLC
3.5.2 Government Grants3.5.2.1 Amortization of Government Grants ReceivedAn unconditional government grant is recognized in the Statement of
Income as other income when the grant becomes receivable.
Other government grants are recognized initially as deferred income
at fair value when there is reasonable assurance that they will be
received and the Group will comply with the conditions associated
with the grant and are then recognized in the Statement of Income as
other income on a systematic basis over the useful life of the asset.
Grants that compensate the Group for expenses incurred are
recognized in the Statement of Income as other income on a
systematic basis in the same periods in which the expenses are
recognized.
3.6 Expenses RecognitionExpenses are recognized in the Statement of Income 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 & equipment in a
state of efficiency has been charged to income in arriving at the profit
for the year.
For the presentation of the Statement of Comprehensive Income the
Directors are of the opinion that the nature of the expenses method
present fairly the element of the Company’s performance, and hence
such presentation method is adopted.
Preliminary and pre-operational expenditure is recognized in the
Statement of Income.
Repairs and renewals are charged to the Profit or Loss in the year in
which the expenditure is incurred.
3.6.1 Operating LeasesPayments made under operating leases are recognized in Profit
or Loss on a straight-line basis over the term of the lease. Lease
incentives received are recognized as an integral part of the total
lease expense, over the term of the lease.
3.6.2 Finance costsFinance costs comprise interest expense on borrowings and
impairment losses recognized on financial assets (other than trade
receivables), are recognized in the Statement of Comprehensive
Income.
3.6.3 Borrowing costsBorrowing costs that are directly attributable to the acquisition,
construction or production of qualifying assets that take a substantial
period of time to get ready for its intended use or sale, are capitalized
as part of the assets.
Borrowing costs that are not directly attributable to the acquisition,
construction or production of a qualifying asset are recognized in
profit or loss using the effective interest method.
3.6.4 TaxationTax expense comprises of current, deferred tax and other
statutory taxes. Income tax expense is recognized in Statement of
Comprehensive income except to the extent that it relates to items
recognized directly in the statement changes in equity.
3.6.4.1 Income Tax ExpenseCurrent tax is the expected tax payable or recoverable on the taxable
income or loss for the year, using tax rates enacted or substantively
enacted at the reporting date, and any adjustment to tax payable in
respect of previous years. Current tax payable also includes any tax
liability arising from the tax on dividend income.
The provision for income tax is based on the elements of income and
expenditure as reported in the Financial Statements and computed
in accordance with the provisions of the Inland Revenue Act. No 10 of
2006 and subsequent amendments thereto.
Current tax assets and liabilities for the current and prior periods are
measured at the amount expected to be recovered from or paid to
the Commissioner General of Inland Revenue.
3.6.4.2 Deferred Tax Deferred tax is recognized in respect of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognized for:
Temporary differences on the initial recognition of assets or
liabilities in a transaction that is not a business combination
and that affects neither accounting nor taxable Profit or Loss;
Temporary differences related to investments in subsidiaries
and jointly controlled entities to the extent that it is probable
that they will not reverse in the foreseeable future; and
Taxable temporary differences arising on the initial recognition
of goodwill.
Taxable temporary differences arising on subsidiaries,
associates or joint ventures who have not distributed their
entire profits to the parent or investor.
Deferred tax is measured at the tax rates that are expected to be
applied to temporary differences when they reverse, based on
the laws that have been enacted or substantively enacted by the
reporting date.
Deferred tax assets and liabilities are offset if there is a legally
enforceable right to offset current tax liabilities and assets, and they
relate to income taxes levied by the same tax authority on the same
taxable entity, or on different tax entities, but they intend to settle
current tax liabilities and assets on a net basis or their tax assets and
liabilities will be realized simultaneously.
A deferred tax asset is recognized for unused tax losses, tax credits
and deductible temporary differences, to the extent that it is probable
that future taxable profits will be available against which they can be
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Annual Report 2012/2013 | 113
utilized. Deferred tax assets are reviewed at each reporting date and
are reduced to the extent that it is no longer probable that the related
tax benefits will be realized.
Deferred tax assets and liabilities are not discounted.
The net increase in the carrying amount of deferred tax liability
net of deferred tax asset is recognized as deferred tax asset is
recognized as deferred tax expense and conversely any net decrease
is recognized as reversal to deferred tax expense, in the Statement of
Comprehensive Income.
3.6.4.3 Companies enjoying tax holidaysGroup companies enjoying a tax exemption period shall only
recognize deferred tax in their Financial Statements for temporary
differences, where reversals of such differences extend beyond the
tax exemption period.
Deferred Tax shall not be considered nor provided for assets/
liabilities for which tax impacts and reversals take place within the tax
exemption period. There will be no tax implications that take place
after the expiration of the tax exemption period for such assets.
Where a Company is entitled to claim the total value or any part of
expenditure made during the tax holiday period, as deductions for
tax purposes after the tax holiday period, such an entity will treat such
amount of expenditure as part of the tax base throughout the tax
holiday period in the purpose of recognizing deferred tax.
3.6.4.4 Withholding Tax on DividendsDividend distributed out of taxable profit of the local companies
attracts a 10% deduction at source and is not available for set off
against the tax liability of the Company. Withholding tax that arises
from the distribution of dividends by the Company is recognized
at the same time as the liability to pay the related dividend is
recognized.
3.6.4.5 Economic Service Charge (ESC)As per the provisions of Economic Service Charge Act No. 13 of 2006
and subsequent amendments thereto, ESC is payable on the liable
turnover at specified rates. ESC is deductible from the income tax
liability. Any unclaimed amount can be carried forward and set off
against the income tax payable in the five subsequent years as per
the relevant provision in the Act.
3.6.4.6 Nation Building Tax (NBT)As per the provisions of the Nation Building Tax Act, No. 9 of 2009 and
the subsequent amendments thereto, Nation Building Tax should be
payable at the rate of 2% with effect from 1 January 2011 on the liable
turnover as per the relevant provisions of the Act.
3.6.4.7 Value Added Tax on Financial Services (VAT on FS)VAT on Financial Services is calculated in accordance with the
amended VAT Act No. 7 of 2003 and subsequent amendments
thereto. The base for the computation of VAT on Financial Services is
the accounting profit before income tax adjusted for the economic
depreciation and emoluments of employees. VAT on financial services
is computed on the prescribed rate of 12%.
3.6.4.8 Sales Taxes (Value Added Tax and Turnover Tax)Revenues, expenses and assets are recognized net of the amount of
sales tax except for the following;
Sales tax incurred on a purchase of a assets or services is not
recoverable from the taxation authority, in which case the
sales tax is recognized as part of the cost of acquisition of the
asset or as part of the expense item as applicable; and
Receivables and payables that are stated with the amount of
sales tax included.
The net amount of sales tax recoverable from, or payable to, the
taxation authority is included as part of other receivables or other
payables in the balance sheet.
3.7 Earnings per ShareThe Group presents basic earnings per share and diluted earnings per
share 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 the dividing the profit or
loss attributable to ordinary shareholders of the company by the
weighted average number of ordinary shares outstanding adjusted
for the effects of all dilutive potential ordinary shares. The details of
earnings per share are given in Note 7 to the Consolidated Financial
Statements.
3.8 Cash Flow StatementThe Cash Flow Statement has been prepared using the ‘Indirect
Method’ of preparing Cash Flows in accordance with the Sri Lanka
Accounting Standard -LKAS 7 ‘Statement of Cash Flows.’ Cash and
cash equivalents comprise short term, highly liquid investments that
are readily convertible to known amounts of cash and are subject to
an insignificant risk of changes in value.
Cash and cash equivalents comprise of cash in hand and cash at
banks and other highly liquid financial assets which are held for the
purpose of meeting short-term cash commitments with original
maturities of less than three months which are subject to insignificant
risk of changes in their fair value.
3.9. Related Party Disclosures3.9.1 Transactions with Related PartiesThe Company carries out transactions in the ordinary course of
its business with parties who are defined as related parties in Sri
Lanka Accounting Standard –LKAS 24. The Pricing applicable to
such transactions is based on the assessment of the risk and pricing
model of the Company and is comparable with what is applied to
transactions between the Company and its unrelated Customers.
114 | Brown & Company PLC
3.9.2 Transactions with Key Management PersonnelAccording to Sri Lanka Accounting Standard -LKAS 24 “Related Party
Disclosures”, Key management personnel, are those having authority
and responsibility for planning, directing and controlling the activities
of the entity. Accordingly, the Board of Directors (including executive
and non-executive Directors), personnel that hold designation of
Deputy General Manager and above positions and their immediate
family member have been classified as Key Management Personnel of
the Company.
The immediate family member is defined as spouse or dependent.
Dependent is defined as anyone who depends on the respective Key
Management Personnel for more than 50% of his/her financial needs.
3.10 Discontinuing OperationsA discontinuing operation is a clearly distinguishable component of
the Group’s business that is abandoned or terminated pursuant to a
single plan, and which represents a separate major line of industry or
geographical area of operations.
3.11 Segment reportingAn operating segment is a component of the Group that engages
in business activities from which it may earn revenues and incur
expenses, including revenues and expenses that relate to transactions
with any of the Group’s other components. All operating segments
operating results are reviewed regularly by Group Board of Directors
to make decisions about resources to be allocated to the segment
and to assess its performance, and for which discrete financial
information is available.
3.11.1 Reporting segments The group’s internal organization and management is structured
based on individual products and services which are similar in nature
and process and where the risk and return are similar. Accordingly
Group’s reportable segments comprise of Trading, Manufacturing,
Finance, Plantation and Investments.
3.11.2 Segment informationSegment information has been prepared in conformity with the
accounting policies adopted for preparing and presenting the
Consolidated Financial Statements of the group. Segment results,
assets and liabilities include items directly attributable to a segment
as well as those that can be allocated on a reasonable basis. Segment
capital expenditure is the total cost incurred during the period to
acquire segment assets that are expected to be used for more than
one period.
Expenses that cannot be directly identified to a particular segment
are allocated on bases decided by the management and applied
consistently throughout the year.
3.12 Events after the Balance Sheet Date All material post Balance Sheet events have been considered and
where appropriate adjustments or disclosures have been made in the
respective Notes to the Financial Statements
3.13 Commitments and Contingencies
All discernible risks are accounted for in determining the amount of
all known liabilities. Contingent Liabilities are possible obligations
whose existence will be confirmed only by uncertain future events
or present obligations where the transfer of economic benefit is not
probable or cannot be reliably measured. Contingent Liabilities are
not recognized in the Balance Sheet but are disclosed unless they are
remote.
4 ACCOUNTING POLICIES SPECIFIC TO THE “ BUSINESSES OF THE JOINT VENTURES & SUBSIDIARIES”
4.1 Plantation Sector4.1.1 Agricultural ActivitiesThe Group considers all the activities that are managed in biological
transformation and harvest of biological assets for sale or for
conversion into agricultural produce or into additional biological
asset.
4.1.2 Bearer Biological Assets Biological assets are classified as mature biological assets and
immature biological assets. Mature biological assets are those that
have attained harvestable specifications or are able to sustain regular
harvests. Immature biological assets are those that have not yet
attained harvestable specifications. Tea, rubber, coconut, timber, other
plantations and nurseries are classified as biological assets.
The biological assets are further classified as bearer biological assets
and consumables biological assets. Bearer biological assets includes
tea, rubber and coconut trees, those that are not intended to be
sold or harvested, however, used to grow for harvesting agricultural
produce from such biological assets. Consumable biological
assets includes managed timber own by the company (Eucalyptus
Torariyana, Albezzia, Graveelia, Eucalyptus Grandis, Astonia, Pinus,
Toona, Mahogany, Teak, Jak, Rubber, Nadun, Mango, Pellen, Hora,
Domba, Lunumidella, Wal Del and Mara on the plantations have been
taken into consideration in this valuation of timber trees) those that
are to be harvested as agricultural produce or sold as biological assets.
The entity recognizes the biological assets when, and only when, the
entity controls the assets as a result of past event, it is probable that
future economic benefits associated with the assets will flow to the
entity and the fair value or cost of the assets can be measured reliably.
Nursery cost includes the cost of direct materials, direct labour and
an appropriate proportion of directly attributable overheads, less
provision for overgrown plants.
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Annual Report 2012/2013 | 115
4.1.2.1 Bearer Biological Assets – At CostThe Group recognizes Tea and Other Crops except for Rubber and
Coconut, at cost in accordance with the new ruling issued by the
Institute of Chartered accountants of Sri Lanka dated 2nd March 2012,
due to the impracticability of carrying out a proper fair valuation. New
ruling provides the option to measure bearer biological assets using
LKAS16 – Property, Plant and Equipment. The Group measures Tea
and Other Crops at their cost less any accumulated depreciation and
any accumulated impairment losses at the end of the financial period.
Limited Life Land Development Cost on Bearer Biological Assets at Cost (New/ Re-Planting)
The total cost of land preparation, rehabilitation, new planting,
replanting, crop diversification, inter-planting and fertilizing etc,
incurred between the time of planting and harvesting (When
the planted area attains maturity) are classified as immature
plantations. These immature plantations are shown at direct
costs plus attributable overheads, including interest (borrowing
cost) attributable to long-term loans used for financing immature
plantations.
Attributable overheads incurred on the plantation are apportioned
based on the labour days spent on respective replanting and new
planting and capitalized on the immature areas. The remaining non-
attributable overhead is expensed in the accounting period in which
it is incurred.
The expenditure incurred on bearer biological assets (tea) fields,
which come into bearing during the year, has been transferred to
mature bearer biological assets and depreciated over their useful life
in accordance with the LKAS16 – Property, Plant and Equipment.
Infilling CostsThe land development costs incurred in the form of infilling have
been capitalized to the relevant mature field where infilling results
in an increase in the economic life of the relevant field beyond its
pre-infilling standard of performance. Infilling costs so capitalized
are depreciated over the newly assessed remaining useful life of the
relevant mature plantation or the unexpired lease period, whichever
is lower.
Infilling cost that are not capitalized have been charged to the
statement of comprehensive income in the year in which they are
incurred.
Growing Crop NurseriesNursery cost includes the cost of direct materials, direct labour and an
appropriate proportion of directly attributable overheads.
4.1.2.2 Bearer Biological Assets – At Fair ValueThe Group recognizes the Rubber and Coconut plantations at fair
value less estimated point-of-sale-of-costs, in accordance with LKAS
41- Agriculture. Point-of-sales-costs include all the costs that would
be necessary to sell the assets, including costs necessary to get the
assets to market. In respect of Rubber and Coconut Plants having
below six years of age as at the date of financial position, have been
taken at cost. The fair value of rubber and coconut are measured
using DCF Method based on forecasted future cash flows.
The Group has engaged an Independent Chartered Valuation
Surveyor Mr. K.T.D. Tissera in determining the fair value of Rubber
and Coconut Bearer Biological Assets. The valuer has valued the latex
component of Rubber, and also Coconut using the forecasted crop,
prices and cost of production based on past statistics. The scrap
value, being the timber component of trees is valued by using the
available log prices in city centers less point-of-sale-costs. All other
assumptions are given in Note No. 14. The Group measured the
Rubber and Coconut plantations at fair value less estimated-point-of-
sale-costs as at each date of Statement of Financial Position and the
gain or loss on changes in fair value is recognized in the Statement of
comprehensive income.
The estimated useful lives for the current and comparative years are
as follows;
No of Years Rate
Tea 30-33 1/3 years 3% to 3.33%
Rubber 20 years 5%
Coconut 50 years 2%
Cardamom / Cinnamon 15 years 6.67%
4.1.3 Consumable Biological assetsTrees namely teak, mahogany, Nadun, mango, Albezzia, Wal del,
rubber and etc are considered as consumable biological assets
and measured in accordance with LKAS 41- Agriculture. The initial
costs incurred in planting such trees are capitalized until the
market determined prices or values are not available and for which
alternative estimates of fair value are to be clearly unreliable. Once the
fair value of such a biological asset becomes reliably measurable, the
group measures it at its fair value less costs to sell. The change in fair
values will be directly identified in income statement.
The company has engaged an Independent Chartered Valuation
Surveyor Mr. K.T.D. Tissera in determining the fair value of managed
Timber Plantation. The valuer has valued the Timber Plantation per
tree valuation basis by using available log prices in city centers less
point-of-sale-costs. The timber plants having less than three years
old have not been taken in to the valuation and hence, the cost of
such plants has been added to the valuation. All other assumptions
are given in Note No. 15. The Group measures the Timber Plantation
at fair value less estimated-point-of-sale-costs as at each date of
Statement of Financial Position. The gain or loss on changes in
fair value of Timber Plantation is recognized in the Statement of
comprehensive income.
116 | Brown & Company PLC
The Main Variables in DCF Model Concerns
Variable Comments
Currency Valuation Rs.
Timber Content Estimate based on physical verification of
girth, height and considering the growth
of each species in different geographical
regions.
Economic Useful Life
(Harvesting Period)
Estimate based on the normal life span of
each species.
Selling Price Estimate based on prevailing Sri Lankan
market price. Factor all the conditions
to be fulfilled in bringing the trees into
saleable condition.
Discount Rate Future cash flows are discounted at 12 %
(Not adjusted for inflation)
Growing Crop NurseriesNursery cost includes the cost of direct materials, direct labour and an
appropriate proportion of directly attributable overheads.
4.1.4 Permanent Land Development CostsPermanent land development costs are those costs incurred making
major infrastructure development and building new access roads on
leasehold lands.
These costs have been capitalized and amortized over the remaining
lease period.
4.1.5 Leasehold Rights to Bare Land of JEDB/SLSPC Estate Assets and Immovable (JEDB/SLSPC) Estates Assets on Finance Lease
Leasehold Rights to bare land of JEDB/SLSPC estate assets and
immovable (JEDB/SLSPC) estates assets have been classified as
finance lease in terms of the statement of recommended practice
(SoRP) issued on right-to-use of land on lease. Accordingly, The value
of the lease obtained on a long-term basis, have been stated at the
recorded carrying values as at the effective date of SoRP on right-to-
use of land on lease. Prepaid lease rentals paid to acquire rights are
included in the right-to- use the land.
4.1.6 AmortizationThe Right-to-use of land on lease is amortized over the remaining
lease term of such asset or over the useful life of the underlying asset
if shorter. Leasehold rights are tested for impairment annually and
are written down where applicable. The impairment loss, if any, is
recognized in the Income Statement.
Amortization rates used for the purpose are as follows:
No. of Years Rate %
Bare Land 53 1.89
Improvement to Lands 30 3.33
Mature Plantations 30 3.33
Buildings 25 4.00
Machinery 15 6.67
Crop Diversification 30 3.33
Water and Sanitation 20 5.00
Other Vested Assets 30 3.33
Permanent Land Development 53 1.89
4.1.7 InventoriesInventories are measured at the lower of cost and net realizable value.
The cost of inventories is based on the first-in first-out principle,
and includes expenditure incurred in acquiring the inventories,
production or conversion costs and other costs incurred in bringing
them to their existing location and condition.
In the case of manufactured inventories and work in progress, cost
includes an appropriate share of production overheads based on
normal operating capacity. Net realizable value is the estimated
selling price in the ordinary course of business, less the estimated
costs of completion and selling expenses.
For the manufacturing stocks, provision for slow moving inventories is
made when the holding period exceeds 365 days, and the sale of the
inventories is no longer probable.
The cost incurred in bringing inventories to its present location and
condition is accounted using the following cost formula:
Agricultural Produce harvested from Biological Assets
Agricultural produce harvested from an entity’s Biological Assets is
measured at its fair value less cost to sell at the point of harvest. Such
measurement is deemed to be the cost at the time of transferring the
harvested crop to inventories.
Finished/Semi finished Agricultural Produce of Biological Assets
Finished and Semi Finished Agricultural Produce are valued adding
the cost of conversion depending on the existing state of conversion
as at the date of financial position and thereafter vale at the lower of
cost or net realizable value.
Net realizable value is the estimated selling price at which stocks
can be sold in the ordinary course of business after allowing for cost
of realization and/or cost of conversion from their existing state to
saleable condition.
Significant Accounting Policies
Annual Report 2012/2013 | 117
Input material, Spares and ConsumablesAt actual cost on weighted average basis.
Certified Emission Reduction (CER)Carbon credit units as at the balance sheet date have been valued at
their estimated net realizable value as inventories and disclosed in the
Financial Statements as Certified Emission Reduction.
CER represents units of greenhouse gas reduction that has been
generated certified by the United Nations under the Cleaned
Development Mechanism (CDM) provision of the Kyoto Protocol.
These CERs can be traded and sold and used by industrialized
countries to meet part of their emission reduction targets.
According to the ruling issued by Sri Lanka Accounting and
Auditing Standards Monitoring Board (SLAASMB), CER units have
been recognized as an asset and disclosed under inventories. These
inventories have been measured at Net Realizable Value (NRV) and
any changes in value as at Balance Sheet date is recognized in the
Income Statement.
4.1.8 Grants and SubsidiesGovernment grants are recognized where there is reasonable
assurance that the grant will be received and all attached conditions
will be compiled with. When the grant relates to an expense item, it is
recognized as income over the period necessary to match the grant
on a systematic basis to the costs that it is intended to compensate.
Where the grant relates to an asset, it is recognised as deferred
income and released to income in equal amounts over the expected
useful life of the related asset.
Where the Group receives non-monitory grants, the asset and the
grant are recorded gross at nominal amounts and released to the
statement of comprehensive income over the expected useful life
and pattern of consumption of the benefit of the underlying asset
by equal annual instalments. Where loans or similar assistance are
provided by governments or related institutions with an interest rate
below the current applicable market rate, the effect of this favourable
interest is regarded as additional government grant.
Grants related to property, plant and equipment other than grants
received for biological assets are initially deferred and allocated to the
statement of comprehensive income on a systematic basis over the
useful life of the related property, plant and equipment.
Government grant related to the Biological Assets which are
measured at fair value less point sale cost is directly charged to the
carrying value of such assets in accordance with the applicable
financial framework.
4.1.9 Borrowing CostBorrowing costs incurred in respect of specific loans that are utilized
for field development activities have been capitalized as a part of the
cost of the relevant immature plantation. The capitalization will cease
when the crops are ready for commercial harvest.
The amount so capitalized and the capitalization rates are disclosed in
the Notes to the Financial Statements.
Borrowing costs that are not directly attributable to the acquisition,
construction or production of a qualifying asset are recognized in
profit or loss using the effective interest method.
4.1.10 Liability to make lease rentalsThe liability to make the rentals to the lessor is recognized on
amortized cost using effective interest rate method. The finance cost
is recognized in the income statement under finance cost using
effective interest rate method.
4.1.11 Revenue Recognition4.1.11.1 Gains Arising from Changes in Fair Value of Biological Assets Gains or losses arising on initial recognition of biological assets at
fair value less estimated point of sale costs are recognized in the
statement of comprehensive income. Gains or losses arising on change
in fair value due to subsequent measurements are recognized in the
statement of comprehensive income in the period in which they arise.
4.1.11.2 Sale of Electrical Energy Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the company and the revenue and
associated costs incurred can be reliably measured. Revenue is
measured at the fair value of the consideration received or receivable
net of trade discounts and sales taxes.
4.1.11.3 Certified Emission Reduction (CER)Certified Emission Reduction income is recognized on accrual basis.
5 Financial Risk Management5.1 OverviewThe Group has exposure to the following risks from its use of financial
instruments:
Credit risk
Liquidity risk
Market risk
Operational risk
This note presents information about the Group’s exposure to each
of the above risks, the Group’s objectives, policies and processes
for measuring and managing risk, and the Group’s management of
capital.
Further quantitative disclosures are included throughout these
Consolidated Financial Statements
5.2 Risk management frameworkThe Board of Directors has overall responsibility for the establishment
and oversight of the Company’s risk management framework. Risk
management policies and systems are reviewed regularly to reflect
changes in market conditions and the Company’s activities.
118 | Brown & Company PLC
5.2.1 Credit RiskCredit risk is the risk of financial loss to the Group/Company if a
customer or counterparty to financial instruments fails to meet its
contractual obligations. Credit risk is mainly arising from Group/
Company’s receivable from customers.
5.2.2 Liquidity RiskLiquidity risk is the risk that the Group will encounter difficulty in
meeting the obligations associated with its financial liabilities that
are settled by delivering cash or another financial asset. The Group
uses the maturity analysis all the financial instruments to manage the
liquidity risk.
5.2.3 Exposure to Liquidity RiskThe Group relies on deposits from customers and issued debt
securities such as debentures as its primary sources of funding.
Deposits which consist most of short term maturity in nature
increases the liquidity risk for the financial service sector and hence
the Group actively manages this risk through maintaining competitive
pricing and constant monitoring of market trends.
5.2.3.1 Management of Liquidity RiskThe Group/Company’s approach to managing liquidity is to ensure,
as far as possible, that it will always have sufficient liquidity to meet
its liabilities when due without incurring unacceptable losses or
risking financial position of the Group/Company while maintaining
regulatory requirements and debt covenants agreed with the fund
providers. The Group/Company treasury manages the liquidity
position as per the treasury policies and procedures.
5.2.4 Market risk The Group exposes to the market risk due to changes in market risk
such as Foreign exchange rates, Interest rate, and equity prices.
Group expose to foreign currency is mainly due to the loans and
borrowings obtained. The Group manages its exposure to the foreign
exchange rates by entering in to forward rate contracts with the
banks. In this way the Group eliminates substantial exposure on
foreign currency risk.
The Group ensures the mix of variable and fixed rate borrowings
to manage the any exposure due to interest rate movement in the
market. These are monitored by the Group treasury division.
The Group investment in quoted equity shares are always subjected
to change in equity prices. The Group manages this risk mainly by
diversifying its investment portfolio.
5.2.5 Capital Management The Board of Directors monitors the return on capital investment on
a month basis. This review is mainly carried out through Return on
investment analysis prepared on a quarterly basis. The plan forecasts
are also reviewed on a monthly basis to ensure that targets are met in
order to manage the capital invested on the group companies.
The Board of Directors also decides and monitors the level of
dividends to ordinary shareholders.
The company does not subject to any externally impose capital
requirements. However companies within the group have such
requirement based on the industry in which such company
established. The group companies which require externally imposed
capital will monitor such requirement on a regular basis and report
to respective legal authority in order to ensure compliance with such
regulatory requirement.
6 First Time Adoption of SLFRS and LKASThese Financial Statements for the year ended 31st March, 2013, are
the first set of Financial Statements that the company has prepared in
accordance with SLFRS and LKAS. For the period upto and including
the year ended 31st March, 2012, the company prepared its Financial
Statements in accordance with local generally accepted accounting
practice (SLAS).
Accordingly, the company has prepared these Financial Statements
which comply with SLFRS/LKAS applicable for periods ending on or
after 31st March, 2013, together with the comparative period data
as at and for the year ended 31st March, 2012 as described in the
accounting policies. In preparing these Financial Statements, the
company’s opening statement of financial position was prepared
as at 01st April, 2011, which is the company’s date of transition to
SLFRS/LKAS. This note explains the principal adjustments made by the
company in terms of the new financial reporting framework.
6.1 Exemptions AppliedSLFRS 1 –First time Adoption of Sri Lanka Accounting Standard
allows first time adopters certain exemptions from the retrospective
application of certain SLFRS/LKAS.
There was no requirement to make use of any such exemptions.
6.1.1 Optional exemptions the Group has opted to apply:
a) SLFRS 3 - Business CombinationsThis has not been applied to acquisitions of subsidiaries, which are
considered businesses for SLFRS/LKAS, or of interests in associates
and joint ventures that occurred before 1 April 2011. The Group has
not applied LKAS 21 retrospectively to fair value adjustments and
goodwill from business combinations that occurred before the date
of transition to SLFRS/LKAS. Such fair value adjustments and goodwill
are treated as assets and liabilities of the parent rather than as assets
and liabilities of the acquiree. Therefore, those assets and liabilities
are already expressed in the functional currency of the parent or
are nonmonetary foreign currency items and no further translation
differences occur.
Use of this exemption means that the SLAS carrying amounts of
assets and liabilities, which are required to be recognised under
SLFRS/LKAS, are stated at their deemed cost at the date of the
acquisition. After the date of the acquisition, measurement is in
accordance with SLFRS/LKAS. Assets and liabilities that do not qualify
for recognition under SLFRS/LKAS are excluded from the opening
SLFRS/LKAS statement of financial position.
Significant Accounting Policies
Annual Report 2012/2013 | 119
SLFRS 1 also requires that the SLAS carrying amount of goodwill must
be used in the opening SLFRS/LKAS statement of financial position
(apart from adjustments for goodwill impairment and recognition or
derecognition of intangible assets). In accordance with SLFRS 1, the
Group has tested goodwill for impairment at the date of transition to
SLFRS/LKAS.
b) Fair value of revaluation as deemed costInvestments were carried in the statement of financial position
prepared in accordance with SLAS on the basis of valuations
performed prior to 31 March 2012. The Group has elected to regard
those values as deemed cost at the date of the revaluation since they
were broadly comparable to fair value.
c) Investment in subsidiaries, jointly controlled entities and associates
The Group has measured its investments in certain subsidiaries,
joint ventures and associates at deemed cost, which is the carrying
amount as per SLAS at the date of transition 1 April 2011.
d) Designation of previously recognized financial instruments - Unquoted equity instruments
The Group has designated unquoted equity instruments held as at 1
April 2011 as available-for-sale investments.
6.1.2 Optional exemptions which the Group has opted not to apply:
e) Borrowing CostsIn the Group the treatment of borrowing costs were already aligned
as per SLFRS/LKAS.
f) Employee benefits (LKAS 19)SLAS’s and the SLFRS/LKAS were already aligned as regards to these
transactions.
6.1.3 Optional exemptions not applicable to the Group:
g) Assets and liabilities of subsidiary, associates and joint ventures
The subsidiary, associate and joint ventures in the Group have
transited from SLAS to SLFRS/ LKAS simultaneously with the parent
Company.
h) Transfers of assets from customers as per IFRIC 18
The Group does not have these types of arrangements as at the date
of transition.
i) Compounded Financial instrumentsThe Group does not have these types of financial instruments as at
the date of transition.
j) Decommissioning liabilities included in the cost of property, plant and equipment
The Group does not have any decommissioning liabilities relating to
property, plant and equipment.
k) Financial assets or intangible assets accounted for under IFRIC 12
The Group has not entered into agreements within the scope of IFRIC
12.
l) Extinguishing Financial liabilities with equity instruments
The Group has not used equity instruments to extinguish financial
liabilities and the provisions in IFRIC 19 extinguishing financial
liabilities are not applicable to the Group.
m) Severe hyperinflationThe Group does not operate in a hyperinflationary economy.
6.1.4 Mandatory exception applicable to the Group:a) Significant accounting judgments, estimates and
assumptionsSignificant accounting judgments, estimates and assumptions at 1
April 2011 and at 31 March 2012 are consistent with those made for
the same dates in accordance with SLAS effective up to 31 March
2012 (after adjustments to reflect any differences in accounting
policies). The estimates used by the Group to present these amounts
in accordance with SLFRS/LKAS effective from 1 April 2012 reflect
conditions at 1 April 2011, the date of transition to SLFRS/LKAS and as
of 31 March 2012.
b) Non-controlling interestsThe requirement of SLFRS 3 is that total comprehensive income is
attributed to the owners of the parent and to the non-controlling
interests even if this results in the non-controlling interests having a
deficit balance. The Group applies above requirement prospectively
from the date of transition to SLFRS/LKAS.
6.1.5 Mandatory exceptions not applicable to the Group:
c) De-recognizing of financial assets and financial liabilities
De-recognition requirements in SLFRS 9 requires prospective
application for transactions occurring on or after the date of
transition.
d) Hedge accountingThe Group has not entered into any hedging relationships. The
standard states that hedging relationships of a type that does not
qualify for hedge accounting in accordance with LKAS 39 should
not be reflected in the opening SLFRS/ LKAS statement of financial
position.
6.1.6 Explanations for transition to SLFRS/LKASsIn preparing SLFRS/LKAS statement of financial position for previously
reported financial periods, required adjustments have been made
in accordance with the respective SLFRS/LKASs. The effect of the
transition from SLASs to SLFRS/LKASs has been presented in the
reconciliation statements and accompanying notes to the material
reconciliation items in Note No. 7 in these Financial Statements.
120 | Brown & Company PLC
7 E
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9
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9,6
77
) (6
4,9
61
) (3
84
,63
8)
(21
5,3
11
) 5
,51
2
(20
9,7
99
)
Pro
fit
for
the
ye
ar
3
,05
9,6
27
1
7,7
24
3
,07
7,3
51
4
06
,51
3
(7,7
25
) 3
98
,78
8
Att
rib
uta
ble
to
:
Equ
ity
ho
lde
rs o
f th
e C
om
pan
y
1,1
77
,19
2
(6,3
16
) 1
,17
0,8
76
4
06
,51
3
(7,7
25
) 3
98
,78
8
No
n-c
on
tro
llin
g In
tere
st
1
,88
2,4
35
2
4,0
40
1
,90
6,4
75
-
- -
Pro
fit
for
the
ye
ar
3
,05
9,6
27
1
7,7
24
3
,07
7,3
51
4
06
,51
3
(7,7
25
) 3
98
,78
8
Significant Accounting Policies
Annual Report 2012/2013 | 121
7.2
Rec
onci
liat
ion
of
Tota
l Oth
er C
ompr
ehen
sive
In
com
e fo
r th
e Ye
ar E
nde
d 31
st M
arch
20
12
G
rou
p
Co
mp
an
y
E
ffe
cts
of
Eff
ect
s o
f
Tr
an
siti
on
to
Tr
an
siti
on
to
SL
AS
fo
r S
LF
RS
/LK
AS
S
LF
RS
/LK
AS
S
LA
S
SL
FR
S/L
KA
S
SL
FR
S/L
KA
S f
or
N
ote
s to
th
e
the
ye
ar
en
de
d
Re
cla
ssifi
cati
on
&
for
the
ye
ar
en
de
d
for
the
ye
ar
en
de
d
Re
cla
ssifi
cati
on
&
the
ye
ar
en
de
d
Fo
r th
e y
ea
r e
nd
ed
R
eco
nci
lia
tio
n
31
st M
arc
h 2
01
2
Re
-me
asu
rem
en
t 3
1st
Ma
rch
20
12
3
1st
Ma
rch
20
12
R
e-m
ea
sure
me
nt
31
st M
arc
h 2
01
2
Rs.
00
0
Rs.
00
0
Rs.
00
0
Rs.
00
0
Rs.
00
0
Rs.
00
0
Pro
fit
/ (L
oss
) fo
r th
e y
ea
r
3,0
59
,62
7
17
,72
4
3,0
77
,35
1
40
6,5
13
(7
,72
5)
39
8,7
88
Oth
er
com
pre
he
nsi
ve
inco
me
Re
va
lua
tio
n s
urp
lus
of
pro
pe
rty,
p
lan
t a
nd
eq
uip
me
nt
Re
valu
atio
n s
urp
lus
10
-
26
7,2
35
2
67
,23
5
- 1
53
,18
9
15
3,1
89
De
ferr
ed
tax
imp
act
on
Re
valu
atio
n
-
- -
- 5
,65
8
5,6
58
Av
ail
ab
le f
or
sale
fin
an
cia
l in
stru
me
nts
Ne
t ch
ang
e in
fai
r va
lue
of
avai
lab
le-
fo
r-sa
le fi
nan
cial
ass
ets
1
1
- (2
,06
6,5
40
) (2
,06
6,5
40
)
(2,0
58
,29
3)
(2,0
58
,29
3)
Ne
t ch
ang
e in
fai
r va
lue
of
avai
lab
le-f
or-
sale
-
fin
anci
al a
sse
ts t
ran
sfe
rre
d t
o in
com
e s
tate
me
nt
-
- -
- -
-
Imp
airm
en
t o
n a
vaila
ble
for
sale
fi
nan
cial
inst
rum
en
ts
-
- -
- -
-
reco
gn
ise
d in
inco
me
sta
tem
en
t
- -
- -
- -
De
fin
ed
be
ne
fit
pla
n a
ctu
ari
al g
ain
s (l
oss
es)
De
fin
ed
be
ne
fit
pla
n a
ctu
aria
l gai
ns
(lo
sse
s) fo
r th
e y
ear
- (1
3,7
03
) (1
3,7
03
) -
(10
,76
3)
(10
,76
3)
De
ferr
ed
tax
on
act
uar
ial g
ain
s (lo
sse
s) fo
r th
e y
ear
- -
- -
(3,0
14
) (3
,01
4)
Inco
me
tax
re
cog
nis
ed
in o
the
r co
mp
reh
en
sive
inco
me
-
5,0
70
5
,07
0
- -
-
Oth
er
com
pre
he
nsi
ve in
com
e/
(exp
en
se)
fo
r th
e y
ear
, ne
t o
f ta
x
- -
- -
- -
Tota
l co
mp
reh
en
sive
inco
me
/ (e
xpe
nse
) fo
r th
e y
ear
3,0
59
,62
7
(1,7
90
,21
4)
(1,2
69
,41
3)
40
6,5
13
(1
,92
0,9
48
) (1
,51
4,4
35
)
Att
rib
uta
ble
to
:
Equ
ity
ho
lde
rs o
f th
e C
om
pan
y
1,1
77
,19
2
(69
4,2
04
) 4
82
,98
8
40
6,5
13
(1
,92
0,9
48
) (1
,51
4,4
35
)
No
n-c
on
tro
llin
g In
tere
st
1
,88
2,4
35
(1
,09
6,0
10
) 7
86
,42
5
- -
-
Tota
l co
mp
reh
en
sive
inco
me
/ (e
xpe
nse
) fo
r th
e y
ear
3,0
59
,62
7
(1,7
90
,21
4)
1,2
69
,41
3
40
6,5
13
(1
,92
0,9
48
) (1
,51
4,4
35
)
122 | Brown & Company PLC
7 E
XP
LAN
ATIO
N T
O T
HE
TR
AN
SIT
ION
OF
SLFR
S/LK
AS
7.3
Rec
onci
liat
ion
of
Stat
emen
t of
Fin
anci
al P
osit
ion
31S
t M
arch
20
12
G
rou
p
Co
mp
an
y
E
ffe
cts
of
Eff
ect
s o
f
Tr
an
siti
on
to
Tr
an
siti
on
to
SL
AS
S
LF
RS
/LK
AS
S
LF
RS
/LK
AS
S
LA
S
SL
FR
S/L
KA
S
SL
FR
S/L
KA
S
N
ote
s to
th
e
As
at
Re
cla
ssifi
cati
on
&
As
at
As
at
Re
cla
ssifi
cati
on
&
As
at
Fo
r th
e y
ea
r e
nd
ed
R
eco
nci
lia
tio
n
31
st M
arc
h 2
01
2
Re
-me
asu
rem
en
t 3
1st
Ma
rch
20
12
3
1st
Ma
rch
20
12
R
e-m
ea
sure
me
nt
31
st M
arc
h 2
01
2
AS
SE
TS
No
n-C
urr
en
t A
sse
ts
Pro
pe
rty,
Pla
nt
and
Eq
uip
me
nt
12
8
,38
3,0
03
(1
,87
3,5
66
) 6
,50
9,4
37
3
,95
1,3
63
(8
,92
2)
3,9
42
,44
1
Inve
stm
en
t P
rop
ert
ies
13
3
,91
1,5
68
7
74
,04
9
4,6
85
,61
7
11
1,9
71
-
11
1,9
71
Pre
pai
d L
eas
e R
en
tals
18
4,5
52
1
1,9
20
1
96
,47
2
45
,64
9
- 4
5,6
49
Inta
ng
ible
Ass
ets
16
8,3
91
(2
96
) 1
68
,09
5
14
,74
5
- 1
4,7
45
Cap
ital
wo
rk in
Pro
gre
ss
14
1
28
,38
9
7,0
61
1
35
,45
0
56
,39
6
- 5
6,3
96
Be
are
r B
iolo
gic
al A
sse
ts
15
-
1,8
42
,60
8
1,8
42
,60
8
- -
-
Co
nsu
me
r B
iolo
gic
al A
sse
ts
16
-
1,5
14
,29
5
1,5
14
,29
5
- -
-
Tim
be
r St
ock
1
7
2,0
62
,60
9
(2,0
62
,60
9)
- -
- -
Inve
stm
en
ts in
Su
bsi
dia
rie
s 1
8
- -
- 1
,20
7,2
01
5
,90
3,5
97
7
,11
0,7
98
Inve
stm
en
ts in
Jo
int
Ve
ntu
re
- -
- -
10
,00
0
- 1
0,0
00
Inve
stm
en
ts in
Eq
uit
y A
cco
un
ted
Inve
ste
es
19
1
,60
9,1
45
9
8,1
63
1
,70
7,3
08
2
48
,99
8
- 2
48
,99
8
Oth
er
Inve
stm
en
ts L
on
g T
erm
2
0
4,6
11
,03
7
(26
1,5
00
) 4
,34
9,5
37
3
,39
4,4
77
-
3,3
94
,47
7
De
ferr
ed
Tax
Ass
et
21
1
83
,61
1
6,0
92
1
89
,70
3
76
,74
7
3,6
80
8
0,4
27
Loan
s to
Re
late
d P
arti
es
22
3
82
,76
7
(37
8,8
39
) 3
,92
8
50
5,7
01
(5
05
,70
1)
-
21
,62
5,0
72
(3
22
,62
2)
21
,30
2,4
50
9
,62
3,2
48
5
,39
2,6
54
1
5,0
15
,90
2
Cu
rre
nt
Ass
ets
Inve
nto
rie
s 2
3
2,6
93
,67
4
43
,32
7
2,7
37
,00
1
1,9
16
,40
3
52
,59
5
1,9
68
,99
8
Trad
e a
nd
Oth
er
Re
ceiv
able
s 2
4
2,1
34
,58
5
(15
1,7
62
) 1
,98
2,8
23
1
,47
3,9
48
(8
0,1
88
) 1
,39
3,7
60
De
po
sits
an
d P
rep
aym
en
ts
2
90
,29
8
(86
,68
1)
20
3,6
17
1
13
,70
1
- 1
13
,70
1
Loan
s to
Re
late
d P
arti
es
22
1
,03
5,5
94
3
77
,13
3
1,4
12
,72
7
26
,81
5
50
5,7
00
5
32
,51
5
Am
ou
nts
du
e f
rom
Re
late
d P
arti
es
2
87
,98
6
15
,53
7
30
3,5
23
2
82
,79
2
(1)
28
2,7
91
Tax
Re
cove
rab
le
25
1
24
4
,17
4
4,2
98
-
- -
Oth
er
Inve
stm
en
ts S
ho
rt T
erm
2
6
4,3
89
,09
5
(25
8,1
93
) 4
,13
0,9
02
1
,71
7,8
09
-
1,7
17
,80
9
Cas
h a
t B
ank
and
in H
and
2
7
49
1,8
11
2
61
,76
4
75
3,5
75
2
00
,83
3
- 2
00
,83
3
11
,32
3,1
67
2
05
,30
0
11
,52
8,4
66
5
,73
2,3
01
4
78
,10
6
6,2
10
,40
7
Tota
l Ass
ets
32
,94
8,2
38
(1
17
,32
2)
32
,83
0,9
16
1
5,3
55
,54
9
5,8
70
,76
0
21
,22
6,3
09
Significant Accounting Policies
Annual Report 2012/2013 | 123
G
rou
p
Co
mp
an
y
E
ffe
cts
of
Eff
ect
s o
f
Tr
an
siti
on
to
Tr
an
siti
on
to
SL
AS
S
LF
RS
/LK
AS
S
LF
RS
/LK
AS
S
LA
S
SL
FR
S/L
KA
S
SL
FR
S/L
KA
S
N
ote
s to
th
e
As
at
Re
cla
ssifi
cati
on
&
As
at
As
at
Re
cla
ssifi
cati
on
&
As
at
Fo
r th
e y
ea
r e
nd
ed
R
eco
nci
lia
tio
n
31
st M
arc
h 2
01
2
Re
-me
asu
rem
en
t 3
1st
Ma
rch
20
12
3
1st
Ma
rch
20
12
R
e-m
ea
sure
me
nt
31
st M
arc
h 2
01
2
EQ
UIT
Y A
ND
LIA
BIL
ITIE
S
Ca
pit
al a
nd
Re
serv
es
Stat
ed
Cap
ital
2,0
05
,60
1
- 2
,00
5,6
01
2
,00
5,6
01
-
2,0
05
,60
1
Cap
ital
Re
serv
es
28
4
,15
9,3
35
(6
93
,41
3)
3,4
65
,92
2
3,9
60
,62
6
- 3
,96
0,6
26
Re
ven
ue
Re
serv
es
29
8
,18
0,6
63
2
28
,56
1
8,4
09
,22
4
2,0
63
,73
0
5,8
29
,96
8
7,8
93
,69
9
Eq
uit
y A
ttri
bu
tab
le t
o E
qu
ity
ho
lde
rs o
f P
are
nt
1
4,3
45
,59
9
(46
4,8
52
) 1
3,8
80
,47
4
8,0
29
,95
7
5,8
29
,96
8
13
,85
9,9
26
Min
ori
ty In
tere
st
9
,14
1,5
76
(1
30
,66
8)
9,2
72
,24
4
-
-
Tota
l Eq
uit
y
2
3,4
87
,17
5
(33
4,1
83
) 2
3,1
52
,99
1
8,0
29
,95
7
5,8
29
,96
8
13
,85
9,9
26
No
n-C
urr
en
t L
iab
ilit
ies
Inte
rest
Be
arin
g B
orr
ow
ing
s
2,2
62
,01
7
(6,9
58
) 2
,25
5,0
59
1
,53
8,7
71
-
1,5
38
,77
1
Re
sch
ed
ule
d D
eb
en
ture
s
- -
- -
-
Fin
ance
Le
ase
Ob
ligat
ion
s
85
,05
8
- 8
5,0
58
-
-
Re
tire
me
nt
Be
ne
fit
Ob
ligat
ion
s
48
2,2
61
1
,23
9
48
3,5
00
6
4,8
33
-
64
,83
3
De
ferr
ed
Tax
Lia
bili
ty
30
1
6,5
67
2
65
,47
0
28
2,0
37
-
-
De
ferr
ed
Inco
me
3
1
17
8,8
83
(5
,86
9)
17
3,0
14
-
22
,28
5
22
,28
5
Loan
s fr
om
Re
late
d P
arti
es
-
- -
73
8,5
80
-
73
8,5
80
3,0
24
,78
6
25
3,8
82
3
,27
8,6
68
2
,34
2,1
84
2
2,2
85
2
,36
4,4
69
Cu
rre
nt
Lia
bil
itie
s
Acc
ou
nts
Pay
able
an
d A
ccru
ed
Exp
en
ses
32
2
,93
4,1
95
(9
,93
6)
2,9
24
,25
9
2,0
00
,38
1
18
,50
7
2,0
18
,88
8
Inte
rest
Be
arin
g B
orr
ow
ing
s d
ue
wit
hin
on
e y
ear
3
3
1,1
16
,20
8
53
,25
7
1,1
69
,46
5
59
3,2
92
-
59
3,2
92
Fin
ance
Le
ase
Ob
ligat
ion
s d
ue
wit
hin
on
e y
ear
5,9
88
7
0
6,0
58
- -
Loan
s fr
om
Re
late
d P
arti
es
- -
- -
32
2,9
91
-
32
2,9
91
Am
ou
nts
du
e t
o R
ela
ted
Par
tie
s
29
7,8
42
(1
2,4
81
) 2
85
,36
1
28
2,4
70
-
28
2,4
70
Inco
me
Tax
Pay
able
3
4
13
5,9
64
1
1,6
83
1
47
,64
7
59
,56
3
- 5
9,5
63
Div
ide
nd
Pay
able
27
,16
2
14
,11
8
41
,27
9
27
,16
1
(1)
27
,16
0
Sho
rt T
erm
Inte
rest
Be
arin
g B
orr
ow
ing
s 3
3
1,6
40
,31
1
(96
,29
9)
1,5
44
,01
1
1,5
08
,05
7
- 1
,50
8,0
57
Ban
k O
verd
raft
27
8,6
09
2
,56
6
28
1,1
75
1
89
,49
1
- 1
89
,49
2
6,4
36
,27
9
(37
,02
2)
6,3
99
,25
7
4,9
83
,40
6
18
,50
8
5,0
01
,91
3
32
,94
8,2
39
(1
17
,32
4)
32
,83
0,9
16
1
5,3
55
,54
7
5,8
70
,76
0
21
,22
6,3
08
Ne
t A
sse
ts p
er
Sh
are
(R
s.)
2
02
.41
19
5.8
5
11
3.3
0
1
95
.55
124 | Brown & Company PLC
7 E
XP
LAN
ATIO
N T
O T
HE
TR
AN
SIT
ION
OF
SLFR
S/LK
AS
7.4
Rec
onci
liat
ion
of
the
Stat
emen
t of
Fin
anci
al P
osit
ion
as
at 1
ST A
PR
IL 2
011
G
rou
p
Co
mp
an
y
E
ffe
cts
of
Eff
ect
s o
f
Tr
an
siti
on
to
Tr
an
siti
on
to
SL
AS
S
LF
RS
/LK
AS
S
LF
RS
/LK
AS
S
LA
S
SL
FR
S/L
KA
S
SL
FR
S/L
KA
S
N
ote
s to
th
e
As
at
Re
cla
ssifi
cati
on
&
As
at
As
at
Re
cla
ssifi
cati
on
&
As
at
Fo
r th
e y
ea
r e
nd
ed
R
eco
nci
lia
tio
n
31
st M
arc
h 2
01
1
Re
-me
asu
rem
en
t 3
1st
Ma
rch
20
11
3
1st
Ma
rch
20
11
R
e-m
ea
sure
me
nt
31
st M
arc
h 2
01
1
AS
SE
TS
No
n-C
urr
en
t A
sse
ts
Pro
pe
rty,
Pla
nt
and
Eq
uip
me
nt
12
6
,64
5,1
28
(1
,91
7,4
38
) 4
,72
7,6
90
3
,56
2,4
67
(4
,21
6)
3,5
58
,25
1
Inve
stm
en
t P
rop
ert
ies
13
1
60
,34
4
66
6,0
00
8
26
,34
4
11
0,7
47
-
11
0,7
47
Pre
pai
d L
eas
e R
en
tals
18
9,3
36
1
1
89
,33
7
46
,25
0
- 4
6,2
50
Inta
ng
ible
Ass
ets
66
,24
0
(39
1)
65
,84
9
21
,82
5
(1)
21
,82
4
Cap
ital
wo
rk in
Pro
gre
ss
14
2
0,3
37
1
,66
2
21
,99
9
- -
-
Be
are
r B
iolo
gic
al A
sse
ts
15
-
1,6
00
,28
7
1,6
00
,28
7
- -
-
Co
nsu
me
r B
iolo
gic
al A
sse
ts
16
-
1,6
30
,00
1
1,6
30
,00
1
- -
-
Tim
be
r St
ock
1
7
1,7
14
,34
3
(1,7
14
,34
3)
- -
- -
Inve
stm
en
ts in
Su
bsi
dia
rie
s 1
8
- -
- 9
55
,22
0
5,9
03
,59
6
6,8
58
,81
6
Inve
stm
en
ts in
Jo
int
Ve
ntu
re
-
- -
10
,00
0
- 1
0,0
00
Inve
stm
en
ts in
Eq
uit
y A
cco
un
ted
Inve
ste
es
19
1
,44
3,2
98
5
,65
9
1,4
48
,95
7
24
8,9
98
-
24
8,9
98
Oth
er
Inve
stm
en
ts L
on
g T
erm
2
0
6,0
86
,89
3
(13
5,9
44
) 5
,95
0,9
49
5
,01
7,9
87
-
5,0
17
,98
7
De
ferr
ed
Tax
Ass
et
21
2
45
,51
8
29
,29
4
27
4,8
12
1
51
,98
5
1,1
83
1
53
,16
8
Loan
s to
Re
late
d P
arti
es
22
3
03
,19
7
(28
0,5
74
) 2
2,6
23
4
04
,93
8
(40
4,9
38
) -
16
,87
4,6
34
(1
15
,78
6)
16
,75
8,8
48
1
0,5
30
,41
7
5,4
95
,62
4
16
,02
6,0
41
Cu
rre
nt
Ass
ets
Inve
nto
rie
s 2
3
1,2
33
,96
5
27
,63
7
1,2
61
,60
2
64
3,2
39
4
6,7
63
6
90
,00
2
Trad
e a
nd
Oth
er
Re
ceiv
able
s 2
4
1,4
05
,06
9
(10
5,4
91
) 1
,29
9,5
78
1
,06
6,3
82
(6
6,8
69
) 9
99
,51
3
De
po
sits
an
d P
rep
aym
en
ts
3
21
,79
7
76
8
32
2,5
65
1
78
,66
3
(1)
17
8,6
62
Loan
s to
Re
late
d P
arti
es
22
1
53
,98
7
27
7,3
47
4
31
,33
4
98
4
04
,93
8
40
5,0
36
Am
ou
nts
du
e f
rom
Re
late
d P
arti
es
2
88
,03
5
9,0
53
2
97
,08
8
14
4,4
85
1
1
44
,48
6
Tax
Re
cove
rab
le
25
1
24
7
8
20
2
- -
-
Oth
er
Inve
stm
en
ts S
ho
rt T
erm
2
6
5,5
48
,06
5
(2,2
89
) 5
,54
5,7
76
1
,07
2,5
60
-
1,0
72
,56
0
Cas
h a
t B
ank
and
in H
and
2
7
1,3
64
,49
0
42
4
1,3
64
,91
4
73
7,2
28
-
73
7,2
28
10
,31
5,5
32
2
07
,52
7
10
,52
3,0
59
3
,84
2,6
55
3
84
,83
2
4,2
27
,48
7
Tota
l Ass
ets
27
,19
0,1
66
9
1,7
41
2
7,2
81
,90
7
14
,37
3,0
72
5
,88
0,4
56
2
0,2
53
,52
8
Significant Accounting Policies
Annual Report 2012/2013 | 125
G
rou
p
Co
mp
an
y
E
ffe
cts
of
Eff
ect
s o
f
Tr
an
siti
on
to
Tr
an
siti
on
to
SL
AS
S
LF
RS
/LK
AS
S
LF
RS
/LK
AS
S
LA
S
SL
FR
S/L
KA
S
SL
FR
S/L
KA
S
N
ote
s to
th
e
As
at
Re
cla
ssifi
cati
on
&
As
at
As
at
Re
cla
ssifi
cati
on
&
As
at
Fo
r th
e y
ea
r e
nd
ed
R
eco
nci
lia
tio
n
31
st M
arc
h 2
01
1
Re
-me
asu
rem
en
t 3
1st
Ma
rch
20
11
3
1st
Ma
rch
20
11
R
e-m
ea
sure
me
nt
31
st M
arc
h 2
01
1
EQ
UIT
Y A
ND
LIA
BIL
ITIE
S
Ca
pit
al a
nd
Re
serv
es
Stat
ed
Cap
ital
2,0
05
,60
1
- 2
,00
5,6
01
2
,00
5,6
01
-
2,0
05
,60
1
Cap
ital
Re
serv
es
28
6
,08
8,0
23
(6
86
,77
6)
5,4
01
,24
7
5,8
60
,07
1
- 5
,86
0,0
71
Re
ven
ue
Re
serv
es
29
7
,09
8,2
48
4
08
,79
8
7,5
07
,04
6
1,7
50
,77
2
5,8
51
,47
0
7,6
02
,24
3
Eq
uit
y A
ttri
bu
tab
le t
o E
qu
ity
h
old
ers
of
Pa
ren
t
15
,19
1,8
72
(2
77
,97
8)
14
,91
3,8
94
9
,61
6,4
44
5
,85
1,4
70
1
5,4
67
,91
5
Min
ori
ty In
tere
st
6
,79
9,8
16
1
27
,26
8
6,9
27
,08
4
-
-
Tota
l Eq
uit
y
2
1,9
91
,68
8
(15
0,7
10
) 2
1,8
40
,97
8
9,6
16
,44
4
5,8
51
,47
0
15
,46
7,9
15
No
n-C
urr
en
t L
iab
ilit
ies
Inte
rest
Be
arin
g B
orr
ow
ing
s
1,0
50
,93
7
- 1
,05
0,9
37
7
46
,43
9
- 7
46
,43
9
Re
sch
ed
ule
d D
eb
en
ture
s
41
0
- 4
10
- -
Fin
ance
Le
ase
Ob
ligat
ion
s
88
,72
5
(2)
88
,72
4
-
-
Re
tire
me
nt
Be
ne
fit
Ob
ligat
ion
s
43
3,6
17
3
4
33
,62
0
44
,59
2
- 4
4,5
92
De
ferr
ed
Tax
Lia
bili
ty
30
3
3,5
17
2
25
,37
3
25
8,8
90
- -
De
ferr
ed
Inco
me
3
1
15
7,7
27
(4
,97
4)
15
2,7
53
19
,06
1
19
,06
1
Loan
s fr
om
Re
late
d P
arti
es
2
8,6
65
-
28
,66
5
19
9,4
84
-
19
9,4
84
1,7
93
,59
8
22
0,4
00
2
,01
3,9
99
9
90
,51
5
19
,06
1
1,0
09
,57
6
Cu
rre
nt
Lia
bil
itie
s
Acc
ou
nts
Pay
able
an
d A
ccru
ed
Exp
en
ses
32
1
,88
1,1
00
1
1,7
40
1
,89
2,8
40
1
,17
4,5
07
9
,92
4
1,1
84
,43
1
Inte
rest
Be
arin
g B
orr
ow
ing
s d
ue
wit
hin
on
e y
ear
3
3
39
7,8
68
7
,39
0
40
5,2
57
3
19
,45
7
- 3
19
,45
7
Fin
ance
Le
ase
Ob
ligat
ion
s d
ue
wit
hin
on
e y
ear
6,3
00
-
6,3
00
3
28
-
32
8
Loan
s fr
om
Re
late
d P
arti
es
3
3,1
19
-
33
,11
9
1,2
91
,51
8
- 1
,29
1,5
18
Am
ou
nts
du
e t
o R
ela
ted
Par
tie
s
30
9,0
39
5
,62
4
31
4,6
63
3
09
,45
9
1
30
9,4
60
Inco
me
Tax
Pay
able
3
4
15
8,1
48
2
90
1
58
,43
8
10
3,3
17
(1
) 1
03
,31
6
Div
ide
nd
Pay
able
16
,08
7
4,3
94
2
0,4
83
1
6,0
85
-
16
,08
5
Sho
rt T
erm
Inte
rest
Be
arin
g B
orr
ow
ing
s 3
3
52
3,7
70
(7
,39
0)
51
6,3
80
5
00
,00
0
- 5
00
,00
0
Ban
k O
verd
raft
79
,44
9
- 7
9,4
49
5
1,4
42
-
51
,44
3
3,4
04
,88
0
22
,04
8
3,4
26
,92
9
3,7
66
,11
3
9,9
24
3
,77
6,0
36
27
,19
0,1
66
9
1,7
38
2
7,2
81
,90
5
14
,37
3,0
72
5
,88
0,4
55
2
0,2
53
,52
7
Ne
t A
sse
ts p
er
Sh
are
(R
s.)
2
14
.35
21
0.4
3
13
5.6
8
2
18
.24
126 | Brown & Company PLC
7 EXPLANATION TO THE TRANSITION OF SLFRS/LKAS 7.5 Note on Explanation to the Transition of SLFRS/LKAS Reconciliation of Total Comprehensive Income for the Year Ended 31st March 2012
Note 1 Revenue - Group/Company Profit & loss of the perennial crop has been recognised in the financial period of harvesting in terms of SLAS 32. Thus the unsold stocks were
treated as a part of revenue. The scope of revenue recognition was changed to LKAS 18. Accordingly, the revenue is recognised based on the date
of auction where the recognition criteria’s are met and therefore the quantity which is sold at auction is treated as the sales.
Interest income is recognized using the EIR method in accordance with LKAS 39 and the difference has been reversed from Revenue and
recorded as a gain to the previous financial year (Retained Earnings).
The revenue will be recognised when the criteria for sale of goods is met under the relevant agreement. Accordingly an adjustment is made in
order to comply with the requirement under SLFRS in order to recognise such revenue.
Services income and early settlement discounts offered has been accounted on the basis of its realisations and occurences due to timing
differences as per LKAS 18 on revenue recognition.
Year ended
31st March 2012
Group Company
Rs. ‘000 Rs. ‘000
Net impact on remeasurement of revenue-unsold stock of perennial Crop 10,079 -
Interest income is recognized using the EIR method in accordance with LKAS 39 (2,100) -
Revenue recognition as per LKAS 18- Upon sale of goods due to timing differences (11,469) (9,225)
Annual Maintenance Income not realised due to timing differences (5,907) (5,907)
Early settlement discounts offered to customers not netted of with gross sales (16,250) -
2 Cost of Sales - Group/Company Matching the Cost of Sales Against Revenue Recognition of the cost of sales has been changed in relation to the changes identified in revenue recognition. Thus, cost of sales consists the
costs that are directly attributable to goods sold.
Net difference of cost of opening stocks and the closing perennial stocks were adjusted to the cost of production in arriving this. Further, the
measurement of unsold tea and rubber stocks have been adjusted, in terms of LKAS 2 and LKAS 41.
Decrease in depreciation/ amortization due to fair valuation of bearer biological assets, rubber and coconut. Depreciation and amortization charged under SLAS on Rubber and Coconut was reversed in adopting fair value of bearer biological assets,
rubber and coconut under LKAS 41.
Reclassification of costs which are not directly attributable to cost sales Exchange losses which is not directly attributable to cost of sales now are reclassified to other expenses
Expenses directly attributable to cost of sales included in Administration costs now reclassified to cost of sales
Year ended
31st March 2012
Group Company
Rs. ‘000 Rs. ‘000
Net difference on opening and closing unsold produce stock at lower of deemed cost or NRV (8,641) -
Revenue recognition as per LKAS 18- upon sale of goods due to timing differences (19,089) 5,832
Reclassification of exchange loss not directly attributable to cost of sale to other expenses 46,474 46,474
Direct working expenses recovery now reclassified to cost of sales 12,892 12,892
Provision for Free Services (8,936) -
Reversal of Depreciation and Amortization Charges during the year ended 31st March 2012 for Rubber and
Coconut due to Fair Value 14,582 -
Significant Accounting Policies
Annual Report 2012/2013 | 127
3 Other Income/Finance Income - Group/Company Sale of trees Proceeds from sale of trees recognized under other income transferred to respective Consumer Biological Assets measured at fair value under
LKAS 41.
Gain on Money Market Investments The impact in fair valuation of investments as per LKAS 39 is recognized under other income.
Gain/(Loss) on Changes in Fair Value of Biological Assets Rubber, Coconut and timber plantations are recognized at fair valuation in accordance with LKAS 41. The gain/(loss) on changes in fair value
during the year is recognized accordingly.
Reclassification Reclassification of income as per the SLFRS/LKAS illustrative Financial Statements mainly derived from Interest income and dividend income
Year ended
31st March 2012
Group Company
Rs. ‘000 Rs. ‘000
Reversal of Proceeds from Sale of Trees (42,780) -
Gain on Money Market Investments 2,224 -
Gain/(Loss) on Fair Valuation of Bearer Biological Assets 146,674 -
Gain/(Loss) on Fair Valuation of Consumable Biological Assets (94,329) -
Reclassification of Interest and Dividend income as finance income (331,932) (257,750)
4 Distribution Expenses- Group/Company Sales related costs Costs directly attributable to sales now accounted due to its contractual obligations
Reclassification of costs which are not directly attributable to cost sales Distribution costs which is not directly attributable to cost of sales now reclassified
Year ended
31st March 2012
Group Company
Rs. ‘000 Rs. ‘000
Early settlement discounts 10,230
Warranty Provision after sales (8,061) (8,061)
Expenses on distribution due to sales timing differences (1,701) (1,701)
Reclassification of costs from administration costs due to its nature (26,850) (19,395)
5 Administration Expenses - Group/Company In accordance to SLFRS 1 (Para 30), A sub-subsidiary of the Group (MDPL), use fair value as deemed cost as at transition date. Fair value of the
above plant and equipment has been ascertained by Independent valuation carried by Incorporated valuer and consultant using open market
value method of valuation as at 1st April 2011. As a result of fair valuation, previously recognized depreciation has been reduced by Rs. 9Mn.
Year ended
31st March 2012
Group Company
Rs. ‘000 Rs. ‘000
Acturial loss on defined benefit plan now charged to Other Comprehensive income 10,552 10,763
Depreciation on deemed costs on Property,plan and Equipment 4,146 (4,706)
Reclassification of distribution costs from administration costs previously classified (25,500) 26,850
Depreciation impact on Re-valuation 8,852
Derecognition of loss on fair value of Money Market Securities 7,422
128 | Brown & Company PLC
7 EXPLANATION TO THE TRANSITION OF SLFRS/LKAS
7.5 Note on Explanation to the Transition of SLFRS/LKAS 6 Other Expenses - Group/Company Transaction cost of Equity transaction In accordance with LKAS 32-” Financial Instrument presentation “Transaction costs of equity has been recognised to the equity statement.
However, these costs were recorded under Other expenses as per previous financial frame work.
Gain/(Loss ) on Fair valuation of Asset Available for sale assets In Accordance with LKAS 39, Gain or loss from Assets available for sale has been recognised in the other Comprehensive income. However, in
accordance with previous financial from work gain from fair valuation of respective assets recorded under other expenses.
Year ended
31st March 2012
Group Company
Rs. ‘000 Rs. ‘000
Cost incurred on equity transaction has been reversed directly to equity 115,793 -
Reclassification of exchange loss not directly attributable to cost of sale to other expenses (59,367) (59,367)
7 Finance Costs-Group/Company
Year ended
31st March 2012
Group Company
Rs. ‘000 Rs. ‘000
Capitalization of borrowing costs 15,299 -
8 Change in Fair value of Investment Properties-Group/Company The Group has reclassified certain property under LKAS 40 as Investment Property since these land were used for the purpose of capital
appreciation and to earn rental income.
Year ended
31st March 2012
Group Company
Rs. ‘000 Rs. ‘000
Change in Fair value of Investment Properties due to reclassification from PPE net of additions during the year (31,337) -
9 Taxation The effect of transition on Income Taxes is due to SLFRS convergence adjustments.
Year ended
31st March 2012
Group Company
Rs. ‘000 Rs. ‘000
Tax Effect arising from the transition to SLFRS adoption - 5,512
Remeasurement of unrecognised deferred tax expenses (63,526) -
Significant Accounting Policies
Annual Report 2012/2013 | 129
10 Revaluation Surplus of Property, Plant and Equipment With the adoption of SLFRS/LKAS, revaluation surplus of Property, Plant and Equipment during the financial year ended 31 march 2012 has been
reclassified through Other Comprehensive Income Statement
As at
31st March 2012
Group Company
Rs. ‘000 Rs. ‘000
Reclassification of Revaluation Surplus of Property, Plant and Equipment 267,235 153,189
11 Net change in fair value of available-for-sale financial assets With the adoption of SLFRS/LKAS, difference arising from fair valuation of the available for sales financial assets classified as long term during the
financial year ended 31 march 2013 has been reclassified through Other Comprehensive Income Statement
As at
31st March 2012
Group Company
Rs. ‘000 Rs. ‘000
Net change in fair value of available-for-sale financial assets (2,066,540) (2,058,293)
12 Property, Plant and Equipment The Group elected to apply the optional exemption to use the deemed cost for certain assets under property plant & equipment under First time
adoption of SLFRS 1.
Transfer to Bearer Biological Assets previously recognized in Property, Plant and Equipment under SLAS.
Re-classify Land Development Cost under Property, Plant and Equipment.
The Group has reclassified certain property under SLFRS/LKAS as Investment property since these lands were used for the purpose of capital
appreciation and to earn a rental income.
Group Company
31st March 31st March 31st March 31st March
2012 2011 2012 2011
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Property,plant and equipment impairment upon deemed
costs on first time adoption - - (8,922) (4,216)
Immature/Mature Plantations reclassified under Bearer Biological
Assets (724,888) (807,662) - -
Transfer to Consumer Biological Assets (244,714) - -
Reclassification of Property,plant & equipment as Investment
properties as per LKAS 40 (838,000) (666,000) - -
Immovable(JEDB/SLSPC)Assets on Finance Lease(Other
than Bare Land) (64,954) (70,422) - -
130 | Brown & Company PLC
7 EXPLANATION TO THE TRANSITION OF SLFRS/LKAS
7.5 Note on Explanation to the Transition of SLFRS/LKAS 13 Investment Properties The Group has reclassified certain property under SLFRS/LKAS as Investment property since these lands were used for the purpose of capital
appreciation and to earn a rental income.
Group Company
31st March 31st March 31st March 31st March
2012 2011 2012 2011
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Reclassification of Property, Plant & Equipment as Investment
properties as per LKAS 40 774,050 666,000 - -
14 Capital Work in Progress As per LKAS 23 capitalisation of borrowing costs previously not capitalised now adjusted with Capitalisation of Borrowing costs directly relating to
construction of as asset.
Group Company
31st March 31st March 31st March 31st March
2012 2011 2012 2011
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
7,061 1,662 - -
15 Bearer Biological Assets Tea, Rubber, Coconut and Other Crops are categorized under Bearer Biological Assets.
Tea and Other Crops are recorded at cost due to practical difficulties to adopt fair value model. Rubber and Coconut Crops are recorded at fair
value as per LKAS 41.
The components of Bearer Biological Assets previously recognized under Property, Plant and Equipment and Timber Stocks are transferred to
Bearer Biological Assets.
Nurseries of Tea, Rubber and Other Crops were previously classified as inventory under SLAS which has to be re-classified under Bearer/
Consumable Biological Assets as per LKAS 41.
Group Company
31st March 31st March 31st March 31st March
2012 2011 2012 2011
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Transfer of value of timber component from Consumable to Bearer
Biological Assets - Rubber 457,105 436,460 - -
Transfer of value of timber component from Consumer to Bearer
Biological Assets - Coconut 8,361 - - -
Land Development Cost (15,200) (15,011) - -
Immovable (JEDB/SLSPC) Mature/Immature Plantations reclassified
under Bearer Biological Assets 65,733 69,431 - -
Mature/Immature Plantations reclassified under Bearer
Biological Assets 934,987 807,662 - -
Growing Crop Nurseries’ reclassified under Biological Assets 8,166 5,640 - -
Impact on Fair Valuation of Bearer Biological Assets 400,247 305,623 - -
Reversal of Depreciation/ Amortization charged on Mature
Plantations - Rubber and Coconut 11,544 11,544 - -
Reversal of Grant Received on Rubber Replanting (28,335) (21,062) - -
Significant Accounting Policies
Annual Report 2012/2013 | 131
16 Consumable Biological Assets Timber component of rubber trees were initially recorded under consumable biological assets after fair valuation in terms of LKAS 41. Due to fair
valuation of letex and timber of Rubber trees, the timber component of rubber trees was reclassified under bearer biological assets ( rubber) in
terms of LKAS 41.
Group Company
31st March 31st March 31st March 31st March
2012 2011 2012 2011
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Transfer of value of timber component from
Consumer to Bearer Biological Assets (548,313) (435,929) - -
Transfer from Property, Plant and Equipment - 351,587 - -
Transfer from previously classified as Timber stock 2,062,608 1,714,343 - -
17 Timber Stock Timber stocks are now reclassified as consumer biological assets in term of LKAS 41.
Accordingly timber stock previously classified now reclassified as Consumer Biological Assets
Group Company
31st March 31st March 31st March 31st March
2012 2011 2012 2011
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Timber stock previously classified now reclassified as Consumer
Biological Assets 2,062,609 1,714,343 - -
18 Investment in Subsidiaries Certain investments in subsidiaries were revalued as at the SLFRS transition date of 1st April 2011 as allowed by SLFRS 1-First time adoption of Sri
Lanka Accounting standards. The fair value of those investments shall be the deemed cost thereafter. Accordingly the fair value gains pertaining
to investment in Browns Investments PLC, S.F.L Services (Pvt) Ltd (Formerly Standard Finance Pvt Ltd) and investment in Browns Group Industries
(Pvt) Ltd were taken into retained earnings as at the transition date.
The valuation was based on the following methods and assumptions:
Valuation technique: P/E based market valuation (Level 2 inputs)
Data input: Comparable market data available at Colombo Stock Exchange
Risk allowance: 50% on the valuation
Discounted Cash flow method (DCF) where P/E based market multiple method is not available
Group Company
31st March 31st March 31st March 31st March
2012 2011 2012 2011
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Valuation of investment in subsidiaries at deemed cost - - 5,898,252 5,898,252
Fair Value of the Guarantees given - - 5,345 5,345
132 | Brown & Company PLC
7 EXPLANATION TO THE TRANSITION OF SLFRS/LKAS
7.5 Note on Explanation to the Transition of SLFRS/LKAS 19 Investments in Equity Accounted Investees Investment in equity accounted investees were fair valued as of transition to SLFRS date (1/4/2011) as allowed by SLFRS 1-First time adoption of
Sri Lanka Accounting standards. The fair value of those investments as at 1/4/2011 shall be considered deemed cost thereafter of that investment.
Group Company
31st March 31st March 31st March 31st March
2012 2011 2012 2011
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Revaluation of Property plant and equipment owned by Investments
in Equity Accounted Investees 91,001 5,659 - -
Deferred tax on Revaluation 3,548 - - -
20 Other Investments - Long TermUnder previous SLAS, the Group and Company accounted for the other investments - long term measured at cost. Under SLFRS/LKAS,the Group
and Company have designated such investments as available for sale Investments. LKAS 39 requires available for sale investments measured at
Fair Value. The difference between the fair value under SLFRS/LKAS and carrying value under previous SLAS has been recognised as separate
component of Equity.
Group Company
31st March 31st March 31st March 31st March
2012 2011 2012 2011
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Fair Value change on assets available for sale assets (272,694) (144,953) - -
Share advance reclassified under Long term Investments. 15,151 9,009 - -
21 Deferred Tax Asset The effect of transition on Income taxes is due to the temporary difference arised due to the SLFRS convergence is recognized.
Group Company
31st March 31st March 31st March 31st March
2012 2011 2012 2011
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Due to Property, plant and equipment Revaluation 1,324 15,594 1,597 -
Due to Acturial valuation loss on Retirement Benefit plan - Gratuity 2,082 1,183 2,082 1,183
Deferred tax due to timing differences on SLFRS/LKAS adjustments 2,685 12,517 - -
22 Loans to Related Parties- Due after one year Loans given to related parties have been reclassified based on the terms and condition of the loan agreements in accordance to LKAS 39.
Group Company
31st March 31st March 31st March 31st March
2012 2011 2012 2011
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Net adjustment to Loans to Related Parties- Due with in one year (378,839) (280,574) (505,701) (404,938)
- - - -
(378,839) (280,574) (505,700) (404,938)
Significant Accounting Policies
Annual Report 2012/2013 | 133
23 Inventories The produce stock of biological assets ie. tea and rubber were valued at their estimated realizable values, net of direct selling expenses as per
SLAS 32. With the adoption of SLFRS, the agricultural products that are harvested from biological assets ie. green leaf and latex are required
to measure at its fair value less cost to sell at the point of harvest. Therefore, it is scoped under LKAS 2 and its fair value is the cost at the date
of applying this standard. The cost of semi-finished and finished products are estimated through attributing the direct manufacturing cost
into the fair value of biological product’s cost of conversion, depending on the existing state of conversion as at the date of financial position.
Subsequently, the measurement of inventory is carried at the lower of cost and estimated net realizable value in accordance with LKAS 2.
Group Company
31st March 31st March 31st March 31st March
2012 2011 2012 2011
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Removal of produce stock valuation as per SLAS (134,472) (168,600) - -
Inclusion of produce stock valuation as per SLFRS 120,401 149,258 - -
Growing Crop Nurseries’ reclassified under Biological Assets (Refer L.4) (8,723) (6,172) - -
Inventory restatement due to revenue recognition upon timing differences 66,115 46,466 52,595 46,763
24 Trade and Other Receivables The revenue will be recognised when the criteria for sale of goods is met under the relevant agreement and with the condition of all risks and
rewards passed to the customer . Accordingly an adjustment is made in order to comply with the requirement under SLFRS in order to recognise
such revenue as per LKAS 18. Due to the effect of such impact on trade receivables not adjusted.
Impairment assessment for financial asset has been carried out as per LKAS 39 and effect of such has been now recognised.
Group Company
31st March 31st March 31st March 31st March
2012 2011 2012 2011
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Trade Receivables restatement due to revenue recognition (84,198) (72,729) (72,094) (62,869)
Revenue recognition on installations and Annual Maintenance 2,124 6,048 2,124 6,048
Impairment of Trade Receivables (16,538) (15,363) (10,216) (10,047)
Share advance reclassified under Long term Investments. (15,151) (9,009) - -
Early settlement discounts (5,936) - - -
Reclassification of staff loan as receivables (4,492) - - -
25 Tax Recoverable
Group Company
31st March 31st March 31st March 31st March
2012 2011 2012 2011
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Tax Effect arising from transition from SLFRS adoption 3,699 78 - -
134 | Brown & Company PLC
7 EXPLANATION TO THE TRANSITION OF SLFRS/LKAS
7.5 Note on Explanation to the Transition of SLFRS/LKAS 26 Other Investments -Short term Group Company
31st March 31st March 31st March 31st March
2012 2011 2012 2011
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Call deposits previously recognised under short term investments now
reclassified under Cash and Bank (258,193) (2,289) - -
27 Cash at Bank and in Hand Group Company
31st March 31st March 31st March 31st March
2012 2011 2012 2011
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Call deposits previously recognised under short term investments
now reclassified under Cash and Bank 261,764 424 - -
28 Capital Reserves Capital reserves include revaluation reserves and other capital reserves under previous gap. However revaluation reserve has been reclassified as
other component of equity under SLFRS/LKAS.
Other component of equity includes revaluation reserve and available for sale reserve.
Further Group has reclassified certain property under LKAS 40 as Investment property since these lands were used for the purpose of capital
appreciation and to earn rental income. Upon the transition to SLFRS 1 first time adoption on transition date 1st April 2011 revaluation gain
pertaining to certain properties now classified to revenue reserves.
Group Company
31st March 31st March 31st March 31st March
2012 2011 2012 2011
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Impact on capital reserves due to SLFRS Conversions (693,413) (633,666) - -
29 Revenue Reserves Due to the application of SLFRS/LKAS first time adoption , measurement and presentation of Financial Statements have changed. The Group has
assessed the useful life of the property, plant & equipment and accounted under deem cost and which has accounted through retained earnings.
Further the Group has recomputed the deferred tax, financial assets, inventory and financial liability and has recorded under fair value and
adjusted through retained earnings. Also the Group has reclassified certain property under SLFRS/LKAS 40 as Investment property since these
lands were used for the purpose of capital appreciation and to earn a rental income. Upon the reclassification with SLFRS 1 first time adoption,
revaluation gain pertaining to certain properties now classified to revenue reserves.
At Company level certain investments in subsidiaries were revalued as at the SLFRS transition date of 1/4/2011 as allowed by SLFRS 1-First time
adoption of Sri Lanka Accounting standards. The fair value of those investments shall be the deemed cost thereafter of those investments.
Accordingly the fair value gains pertaining to investment in Browns Investments PLC, S.F.L Services (Pvt) Ltd ( Formerly Standard Finance Pvt Ltd)
and investment in Browns Group Industries (Pvt) Ltd were taken into retained earnings as at the transition date.
Significant Accounting Policies
Annual Report 2012/2013 | 135
30 Deferred Tax Liability The deferred tax effect arises due to the increase of the taxable temporary difference mainly as a result of fair valuation of biological assets. The
liability as at 1 April 2011 and 31 March 2012 has been increased as analysed below.
This measurement effects on the net assets in the Statement of Financial Position as at 1 April 2011, 31 March 2012 and Comprehensive Income
for the year ended 31 March 2012 as follows.
Group Company
31st March 31st March 31st March 31st March
2012 2011 2012 2011
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Unutilized Tax Losses (80,261) (69,365) - -
Employee benefits (54,803) (54,843) - -
Property, Plant & Equipment 99,396 58,403 - -
Bearer Biological Assets 149,031 128,178 - -
Consumer Biological Assets 151,429 163,000 - -
31 Deferred Income The impact of amortizing grants over the useful life relating to biological assets in accordance to LKS/SLFRS were considered under differed
income. under LKAS 20 grant related to immature plantations are deducted from the carrying value of the immature plantations since immature
plantations are carried at cost.
Adjustments have also been made in accordance to LKAS 18 “Revenue Recognition”
Group Company
31st March 31st March 31st March 31st March
2012 2011 2012 2011
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Reversal grant received on timber plantations (2,973) (2,972) - -
Reversal grant received on Immature Rubber plantations (25,156) (21,061) - -
Annual Maintenance income now recognised 22,285 19,061 22,285 19,061
32 Accounts Payable and Accrued Expenses Group Company
31st March 31st March 31st March 31st March
2012 2011 2012 2011
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Early settlement discounts provision (293) 1,869 2,143 1,869
Warranty on sales provision (7,925) 10,132 17,818 9,590
Effect of unwinding liability (1,703) (1,703) (1,703) (1,703)
136 | Brown & Company PLC
7 EXPLANATION TO THE TRANSITION OF SLFRS/LKAS
7.5 Note on Explanation to the Transition of SLFRS/LKAS 33 Interest Bearing Borrowings due within one year and Short Term Interest Bearing Borrowings Group Company
31st March 31st March 31st March 31st March
2012 2011 2012 2011
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Reclassification 53,257 7,390 - -
34 Income Tax Payable Group Company
31st March 31st March 31st March 31st March
2012 2011 2012 2011
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Tax Effect on income tax based on the transition to SLFRS has been adjusted 11,683 290 - (1)
35 Other The effect of Transition, other than above, relate to reclassification of balances to be in compliance with SLFRS/LKAS.
36 Statement of Cash Flows The transition from SLAS to SLFRS/ LKAS has not had a material impact on the statement of cash flows.
Significant Accounting Policies
Annual Report 2012/2013 | 137
Group Company
For the year ended 31st March 2013 2012 2013 2012
Rs.000 Rs.000 Rs.000 Rs.000
1 REVENUE
Gross Revenue (Note 1.1) 14,183,801 14,387,354 9,847,137 10,542,321
1.1 Revenue - Industry SegmentsTrading 10,704,673 11,100,167 9,847,137 10,542,321
Manufacturing 744,346 1,166,168 - -
Travel & Tours 31,790 20,335 - -
Finance 78,172 44,135 - -
Plantation 2,553,652 1,844,163 - -
Investments 71,168 212,386 - -
Total Segment Revenue - Gross 14,183,801 14,387,354 9,847,137 10,542,321
2 OTHER INCOME
Rent - 15,810 1,162 507
Management Fees - 1,200 29,000 29,000
Gain on Disposal of Property, Plant and Equipment 3,801 9,172 2,303 2,420
Gain on Foreign Currency Translation 49,379 - 49,326 -
Secretarial Fees 300 335 - -
Loss on Disposal of Investments (318) 37,394 - -
Gain on Changes in Fair Value of Short term Investments 153,640 2,224 - -
Others (Note 2.1) 154,874 2,772,614 9,713 3,587
361,676 2,838,749 91,504 35,514
2.1 OthersMiscellaneous Income 143,171 65,327 9,713 3,587
Gain on Disposal of Investment Properties 7,019 - - -
Negative Goodwill - 2,656,003 - -
Amortization of Capital Grants 4,684 5,350 - -
Sale of Trees - 45,934 - -
154,874 2,772,614 9,713 3,587
3 FINANCE INCOME
Dividend Income 184,028 105,865 219,544 212,993
Interest Income 310,553 226,067 107,528 45,311
494,581 331,932 327,072 258,304
4 FINANCE COSTS
Interest on Loans 949,138 399,490 880,091 442,977
Interest on Finance Lease 14,057 14,513 1,121 10
Interest on Benefit Liability 433 4,837 6,483 4,459
Interest on Overdraft 106,747 116 99,042 -
1,070,375 418,956 986,737 447,446
Notes to the Financial Statements
138 | Brown & Company PLC
Group Company
For the year ended 31st March 2013 2012 2013 2012
Rs.000 Rs.000 Rs.000 Rs.000
5 PROFIT / (LOSS) BEFORE TAXATION
Profit / (Loss) before Taxation is stated after charging all expenses
including the following:
Directors’ Emoluments 33,498 23,760 13,429 12,660
Auditors’ Remuneration
Audit fees and expenses- Parent Auditors 3,390 2,665 1,300 1,200
Audit fee and expenses - Other Auditors 4,035 3,653 - -
Secretarial Fees 478 605 300 300
Depreciation 261,244 212,940 63,375 59,484
Amortization of Finite Life Intangible Assets 27,646 8,015 24,929 7,839
Provision for Bad & Doubtful Debts and Write offs 42,088 9,544 70,547 5,383
Provision for Slow Moving Stocks 120,209 24,434 140,774 4,246
Wages & Salaries 1,331,863 1,099,777 271,407 234,755
Defined Contribution Plan Cost- EPF and ETF 160,291 150,828 38,811 33,509
Defined Benefit Plan Cost- Retiring Gratuity 61,439 59,446 24,719 22,075
Provision for fall in value of Investments 1,760 591,511 1,760 235,903
6 TAXATION
The Company and its Subsidiaries are liable to taxation at the rate of 28% (2011/2012- 28%), 10% and 15% in accordance with the provisions of
Inland Revenue Act No. 10 of 2006 and subsequent amendments there to.
Group Company
For the year ended 31st March 2013 2012 2013 2012
Rs.000 Rs.000 Rs.000 Rs.000
6.1 Income Tax (Expense) / ReversalIncome Tax on current year profits (Note 6.2) 87,731 250,571 19,596 131,414
Deferred Tax Originating during the year (Note 6.4) (79,144) 120,651 (117,670) 80,897
Under/(Over) Provision during prior years 34,476 13,416 6,300 (2,512)
43,063 384,638 (91,774) 209,799
Notes to the Financial Statements
Annual Report 2012/2013 | 139
Group Company
For the year ended 31st March 2013 2012 2013 2012
Rs.000 Rs.000 Rs.000 Rs.000
6.2 Reconciliation of Accounting Profit / (Loss) to Income Tax
Accounting Profit / (Loss) before Taxation 454,664 3,461,989 (556,482) 608,587
Adjustment on Disallowable Expenses 1,946,865 1,341,482 455,417 434,307
Adjustment on Allowable Expenses (225,918) (436,020) (8,504) (2,082)
Tax Exempt Income (374,110) (2,711,110) (219,544) (213,618)
Adjustment on Capital Allowances (122,733) (93,706) (122,733) (95,140)
Tax Losses Utilized (Note - 6.3) (122,097) (312,348) (37,684) (262,719)
Loss incurred for the year (Note - 6.3) (558,987) 35,687 (559,513) -
Taxable Income 997,684 1,285,974 (1,049,043) 469,335
Income Tax @ 28% (last year 28%) 32,615 154,349 19,596 131,414
Income Tax @ 10% 16,167 18,345 - -
Income Tax @ 15% 38,949 77,877 - -
Income Tax on Current year Profits 87,731 250,571 19,596 131,414
6.3 Tax Losses UtilizedTax Loss Brought Forward 733,424 1,010,085 271,096 533,815
Tax Losses Utilized during the year (122,097) (312,348) (37,684) (262,719)
Loss incurred during the year (558,987) 35,687 559,513 -
Tax Losses carried forward 52,340 733,424 792,925 271,096
6.4 Deferred Tax ExpenseProvision/(Reversal) from Deferred Taxation (79,144) 120,651 (117,670) 80,897
(79,144) 120,651 (117,670) 80,897
140 | Brown & Company PLC
7 EARNINGS / (LOSS) PER SHARE
Basic Earnings / (Loss) per ShareThe calculation of basic earnings / (loss) per share is based on the Profit/(Loss) attributable to ordinary shareholders and the weighted average
number of ordinary shares outstanding during the year.
Basic earnings / (Loss) per share are calculated as follows:
Group Company
2013 2012 2013 2012
Profit / (Loss) Attributable to Equity holders of the Company (Rs.000) 359,963 1,170,876 (464,708) 398,788
Weighted Average Number of Ordinary Shares in Issue (‘000) 70,875 70,875 70,875 70,875
Basic Earnings / (Loss) per Share (Rs.) 5.08 16.52 (6.56) 5.63
Diluted Earnings per ShareThere were no potentially dilutive ordinary shares outstanding at any time during the year/ previous year.
8 DIVIDEND PER SHARE
The dividend per share is based on the dividend paid for the period covered by the Financial Statements.
Group Company
2013 2012 2013 2012
Dividends Paid (Rs’000) 35,438 93,555 35,438 93,555
Weighted average number of Ordinary Shares in issue (‘000) 70,875 70,875 70,875 70,875
Dividend per Share (Rs.) 0.50 1.32 0.50 1.32
8.1 The interim dividend was paid on 12th October 2012.
8.1.1 The interim dividend of Rs 0.50 per share, represented redistribution of dividends received by the Company and was therefore not
subjected to 10% tax deduction.
Notes to the Financial Statements
Annual Report 2012/2013 | 141
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70
7
,69
9,2
76
7
,15
2,5
48
Acc
um
ula
ted
De
pre
cia
tio
n
Bal
ance
at
the
be
gin
nin
g o
f th
e
ye
ar 0
1st
Ap
ril 2
01
2
51
,42
0
- 3
6,3
14
7
0,0
36
3
,56
9
15
4,1
05
1
22
,86
2
17
2,7
85
1
9
16
,05
6
15
,94
5
64
3,1
10
4
97
,97
1
On
Acq
uis
itio
n o
f su
bsi
dia
ry
- -
- -
- -
- -
- -
- -
67
9,3
06
Ch
arg
e fo
r th
e y
ear
4
,30
2
- 2
5,5
10
2
2,9
84
8
92
5
9,7
90
5
1,5
86
5
1,1
82
1
,59
0
8,6
40
3
4,7
68
2
61
,24
4
21
2,9
40
Ad
just
me
nts
/Im
pai
rme
nt
- -
- -
- (1
,43
4)
(91
4)
(2,9
28
) -
- -
(5,2
76
) -
Dis
po
sals
-
- -
- -
- -
(1,5
25
) -
(16
) -
(1,5
41
) (6
,99
6)
On
Re
valu
atio
n
- -
(15
,30
2)
(12
5)
- (6
,42
4)
(4,2
13
) -
- -
- (2
6,0
64
) (1
5,8
85
)
Tran
sfe
rs
(2,1
21
) -
(1,2
85
) -
- 1
,12
2
- 9
32
-
68
(1
3)
(1,2
97
) (7
24
,22
6)
Ba
lan
ce a
t th
e e
nd
of
the
ye
ar
3
1st
Ma
rch
20
13
5
3,6
01
-
45
,23
7
92
,89
5
4,4
61
2
07
,15
9
16
9,3
21
2
20
,44
6
1,6
09
2
4,7
48
5
0,7
00
8
70
,17
7
64
3,1
10
Ne
t B
oo
k V
alu
e
As
at
31
st M
arc
h 2
01
3
15
,00
9
4,6
41
,82
7
74
1,1
55
1
90
,19
4
31
,22
7
66
0,1
86
2
14
,50
8
14
9,8
38
8
,63
5
18
,05
0
15
8,4
70
6
,82
9,0
98
As
at 3
1st
Mar
ch 2
01
2
20
,26
9
4,3
46
,06
7
65
1,6
44
2
05
,40
7
32
,11
9
69
3,7
91
1
84
,77
5
18
8,2
05
1
06
1
9,9
73
1
67
,08
1
6,5
09
,43
7
As
at 3
1st
Mar
ch 2
01
1
25
,11
0
3,6
43
,88
5
38
4,3
23
4
3,5
77
3
3,0
11
2
52
,06
7
12
7,7
42
9
4,7
43
2
,61
7
8,3
57
9
6,5
14
4
,72
7,6
90
142 | Brown & Company PLC
9 P
RO
PE
RT
Y, P
LAN
T A
ND
EQ
UIP
ME
NT
CO
NT
D.
9.2
Pro
pert
y, P
lan
t an
d E
quip
men
t -
Com
pan
yA
s a
t 3
1st
Ma
rch
Im
pro
ve
me
nts
Fu
rnit
ure
F
ree
ho
ld
Le
ase
ho
ld
F
ree
ho
ld
Fre
eh
old
to
Le
ase
ho
ld
Le
ase
ho
ld
Pla
nt
an
d
an
d O
ffice
M
oto
r M
oto
r
Tota
l To
tal
L
an
d
Bu
ild
ing
s B
uil
din
gs
Bu
ild
ing
s M
ach
ine
ry
Eq
uip
me
nt
Ve
hic
les
Ve
hic
les
Co
mp
ute
rs
20
13
2
01
2
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
Co
st/
Va
lua
tio
n
Bal
ance
at
the
be
gin
nin
g o
f th
e y
ear
0
1st
Ap
ril 2
01
2
3,4
36
,79
2
14
7,0
84
2
73
,82
9
35
,68
8
21
,42
6
13
1,7
78
4
7,1
36
-
15
,78
7
4,1
09
,52
0
3,6
71
,36
3
Ad
dit
ion
s -
- 7
,64
6
- 1
,89
8
24
,39
7
3,6
50
1
0,1
20
2
,89
6
50
,60
7
29
0,6
65
Re
valu
atio
n
13
3,7
84
(1
0,8
69
) -
- -
- -
- -
12
2,9
15
1
49
,00
5
Dis
po
sals
-
- -
- -
- (1
,39
5)
- -
(1,3
95
) (1
,51
3)
Ba
lan
ce a
t th
e e
nd
of
the
ye
ar
3
1st
Ma
rch
20
13
3
,57
0,5
76
1
36
,21
5
28
1,4
75
3
5,6
88
2
3,3
24
1
56
,17
5
49
,39
1
10
,12
0
18
,68
3
4,2
81
,64
7
4,1
09
,52
0
Acc
um
ula
ted
De
pre
cia
tio
n
Bal
ance
at
the
be
gin
nin
g o
f th
e
ye
ar 0
1st
Ap
ril 2
01
2
- -
68
,71
0
3,5
68
1
,06
8
61
,30
2
26
,54
9
- 5
,88
2
16
7,0
79
1
13
,11
2
Ch
arg
e fo
r th
e y
ear
-
3,3
23
2
2,7
37
8
92
1
,77
9
23
,01
0
4,4
10
1
,57
2
5,2
98
6
3,3
75
5
9,4
83
On
Dis
po
sals
-
- -
- -
- (1
,39
5)
- -
(1,3
95
) (1
,33
4)
On
Re
valu
atio
n
- (3
,32
3)
- -
- -
- -
- (3
,67
7)
(4,1
82
)
Ba
lan
ce a
t th
e e
nd
of
the
ye
ar
3
1st
Ma
rch
20
13
-
- 9
1,4
47
4
,46
0
2,8
47
8
4,3
12
2
9,5
64
1
,57
2
11
,18
0
22
5,3
82
1
67
,07
9
Ne
t B
oo
k V
alu
e
As
at
31
st M
arc
h 2
01
3
3,5
70
,57
6
13
6,2
15
1
90
,02
8
31
,22
8
20
,47
7
71
,86
3
19
,82
7
8,5
48
7
,50
3
4,0
56
,26
5
As
at 3
1st
Mar
ch 2
01
2
3,4
36
,79
2
14
7,0
84
2
05
,11
9
32
,12
0
20
,35
8
70
,47
6
20
,58
7
- 9
,90
5
3,9
42
,44
1
As
at 3
1st
Mar
ch 2
01
1
3,2
36
,08
1
16
7,2
90
4
3,1
68
3
3,0
11
1
0,6
00
3
9,5
08
2
3,4
31
-
5,1
62
3
,55
8,2
51
Notes to the Financial Statements
Annual Report 2012/2013 | 143
9.3
Pro
pert
y, P
lan
t an
d E
quip
men
t -
Gro
up
9.3.
1 A
sset
s on
Fin
ance
Lea
se -
Gro
up
As
exp
lain
ed
mo
re f
ully
in N
ote
11
.1, a
ll JE
DB
/SLS
PC
est
ate
leas
e d
ee
ds
hav
e b
ee
n e
xecu
ted
to
dat
e. In
te
rms
of
the
ru
ling
of
the
UIT
F o
f th
e In
stit
ute
of
Ch
arte
red
Acc
ou
nta
nts
of
Sri
Lan
ka, a
ll im
mo
vab
le a
sse
ts in
th
e J
EDP
/SLS
PC
est
ate
s u
nd
er
fin
ance
leas
es
hav
e b
ee
n t
ake
n in
to t
he
bo
oks
of
the
Co
mp
any’
s su
b-
sub
sid
iari
es
(nam
ely
, Mat
ura
ta P
lan
tati
on
s Lt
d. a
nd
Pu
sse
llaw
a P
lan
tati
on
s Lt
d.)
retr
osp
ect
ive
to
15
th J
un
e’1
99
2. F
or
this
pu
rpo
se, t
he
Bo
ard
of
the
afo
resa
id c
om
pan
ies
de
cid
ed
at
the
ir m
ee
tin
gs
that
th
ese
ass
ets
be
re
valu
ed
at
the
ir
bo
ok
valu
es
as t
he
y ap
pe
ar in
th
e b
oo
ks o
f th
e J
EDP
/SLS
PC
, on
th
e d
ay im
me
dia
tely
pre
ced
ing
th
e d
ate
of
form
atio
n o
f th
e a
bo
ve c
om
pan
ies.
Th
ese
ass
ets
hav
e b
ee
n t
ake
n in
to t
he
Co
mp
any’
s su
b-
sub
sid
iari
es
(nam
ely
, Mat
ura
ta P
lan
tati
on
s Lt
d. a
nd
Pu
sse
llaw
a P
lan
tati
on
s Lt
d.)
as a
t 1
5th
Ju
ne’
19
92
an
d d
ep
reci
ate
d a
s fo
llow
s;
As
at
31
st M
arc
h
Ve
ste
d
P
erm
an
en
t
Oth
er
U
nim
pro
ve
d
Imp
rov
em
en
ts
Ve
ste
d
Mo
tor
W
ate
r L
an
d
Ro
ad
s V
est
ed
To
tal
Tota
l
L
an
d
To L
an
d
Pla
nta
tio
ns
Ve
hic
les
Co
mp
ute
rs
Bu
ild
ing
s M
ach
ine
ry
Sa
nit
ati
on
D
ev
elo
pm
en
t a
nd
Bri
dg
es
Ass
ets
2
01
3
20
12
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
Co
st/
Va
lua
tio
n
Bal
ance
as
at 0
1st
Ap
ril 2
01
2
24
3
1,8
68
8
55
1
5,5
34
3
14
3
2,5
95
1
4,9
61
4
,47
3
13
7
34
8
36
1
71
,68
9
68
,55
7
Ad
dit
ion
s -
- -
- -
- 2
,09
6
- -
- -
2,0
96
9
59
Acq
uis
itio
n o
f Su
bsi
dia
ry
- -
- -
- -
- -
- -
- -
9,9
02
Tran
sfe
r O
ut
- -
- (1
,43
4)
(31
4)
- (3
,42
7)
- -
- -
(5,1
75
) (6
,96
9)
On
Dis
po
sals
-
- -
- -
- -
- -
- -
- (7
60
)
Bal
ance
at
the
en
d o
f th
e y
ear
3
1st
Mar
ch 2
01
3
24
3
1,8
68
8
55
1
4,1
00
-
32
,59
5
13
,63
0
4,4
73
1
37
3
48
3
61
6
8,6
10
7
1,6
89
Am
ort
iza
tio
n
Bal
ance
as
at 0
1st
Ap
ril 2
01
2
15
1
1,2
25
5
62
1
0,6
03
6
8
24
,43
2
9,3
00
4
,44
1
50
2
27
3
61
5
1,4
20
4
3,4
45
Acq
uis
itio
n o
f Su
bsi
dia
ry
- -
- -
- -
- -
- -
- -
7,4
32
Ch
arg
e fo
r th
e y
ear
8
6
2
28
2
,05
8
- 1
,78
7
35
3
(9)
3
12
-
4,3
02
3
,87
9
Tran
sfe
r O
ut
- -
- (9
36
) (6
8)
- (1
,11
7)
- -
- -
(2,1
21
) (2
,90
6)
On
Dis
po
sals
-
- -
- -
- -
- -
- -
- (4
30
)
Ba
lan
ce a
s a
t 3
1st
Ma
rch
20
13
1
59
1
,28
7
59
0
11
,72
5
- 2
6,2
19
8
,53
6
4,4
32
5
3
23
9
36
1
53
,60
1
51
,42
0
Ne
t B
oo
k V
alu
e
As
at
31
st M
arc
h 2
01
3
84
5
81
2
65
2
,37
5
- 6
,37
6
5,0
94
4
1
84
1
09
-
15
,00
9
As
at 3
1st
Mar
ch 2
01
2
92
6
43
2
93
4
,93
1
24
6
8,1
63
5
,66
1
32
8
7
12
1
- 2
0,2
69
As
at 3
1st
Mar
ch 2
01
1
10
0
70
5
32
1
5,3
34
-
7,7
55
1
0,5
10
1
65
8
9
13
1
- 2
5,1
10
Inve
stm
en
t in
pla
nta
tio
n a
sse
ts w
hic
h w
ere
imm
atu
re a
t th
e t
ime
of
han
din
g o
ver
to t
he
Co
mp
any’
s su
b-
sub
sid
iari
es
(nam
ely
Mat
ura
ta P
lan
tati
on
s Lt
d. a
nd
Pu
sse
llaw
a P
lan
tati
on
s
Ltd
.) b
y w
ay o
f e
stat
e le
ase
s ar
e s
ho
wn
un
de
r Im
mat
ure
Pla
nta
tio
ns
( re
valu
ed
as
at 2
2n
d J
un
e’1
99
2 )
, all
of
wh
ich
hav
e b
ee
n t
ran
sfe
rre
d t
o M
atu
re P
lan
tati
on
s as
at
Bal
ance
Sh
ee
t d
ate.
144 | Brown & Company PLC
9 PROPERTY, PLANT AND EQUIPMENT CONTD.
9.3 Property, Plant and Equipment - Group9.3.2 Other Tangible Assets - Group
Land Water Penstock
and Sanitations Roads and Pipe Security Total Total
Buildings and Others Bridges Line Fences Others 2013 2012
Cost/ Valuation Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
Balance as at 1st April 2012 16,512 12,322 38,484 41,854 845 73,009 183,026 156,381
Additions 89 433 1,010 - - 24,858 26,391 26,892
Transferred Out - - - - - (247) (247) (247)
Balance as at 31st March 2013 16,601 12,755 39,494 41,854 845 97,620 209,170 183,026
Accumulated Depreciation
Balance as at 1st April 2012 1,312 6,712 2,587 4,156 759 420 15,945 7,314
Transferred Out - - - - - (13) (13) (13)
Charge for the year 314 541 755 2,093 - 31,065 34,768 8,643
Balance as at 31st March 2013 1,625 7,253 3,342 6,248 759 31,473 50,700 15,945
Net Book Value
As at 31st March 2013 14,976 5,502 36,152 35,606 87 66,147 158,470
As at 31st March 2012 15,201 5,607 35,893 37,700 86 72,594 167,081
As at 31st March 2011 15,010 6,252 35,805 39,427 20 - 96,514
These Immovable/Movable Assets vested in the subsidiaries of FLC Holdings PLC ( Formerly known as Free Lanka Capital Holdings PLC).(namely
Maturata Plantations Ltd and Pussellawa Plantations Ltd.)
Notes to the Financial Statements
Annual Report 2012/2013 | 145
9 P
RO
PE
RT
Y, P
LAN
T A
ND
EQ
UIP
ME
NT
CO
NT
D.
9.4
Pro
pert
y, P
lan
t an
d E
quip
men
t -
Com
pan
y9.
4.1
Rev
alu
atio
n o
f La
nd
and
Bu
ildi
ngs
Lan
d a
nd
Bu
ildin
gs
ow
ned
by
the
Co
mp
any
hav
e b
een
re
-val
ued
by
an In
corp
ora
ted
Val
uer
, Mr.H
alee
m G
ho
use
on
th
e b
asis
of m
arke
t va
lue
and
Co
ntr
acto
r (c
ost
) as
ind
icat
ed b
elo
w, a
nd
the
surp
lus
on
rev
alu
atio
n a
s at
31s
t M
arch
201
3 am
ou
nti
ng
to
Rs.
126
.2 M
n (2
011/
2012
- R
s. 1
53 M
n) h
as b
een
cre
dit
ed t
o t
he
Rev
alu
atio
n R
eser
ve A
cco
un
t o
f th
e C
om
pan
y d
uri
ng
th
e ye
ar.
De
tails
of
Co
mp
any’
s la
nd
s an
d b
uild
ing
s st
ate
d a
t va
luat
ion
are
ind
icat
ed
be
low
;
Av
era
ge
Tota
l M
ain
V
alu
e
B
asi
s o
f E
ffe
ctiv
e D
ate
P
rop
ert
y
Ex
ten
t B
uil
din
g
pe
r S
q.F
t.
La
nd
B
uil
din
g
Pro
pe
rty
V
alu
ati
on
o
f V
alu
ati
on
V
alu
er
La
nd
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146 | Brown & Company PLC
9 PROPERTY, PLANT AND EQUIPMENT CONTD.
As at As at
As at 31st March 1st April
31st March 2013 2012 2011
Land Buildings Total Total Total
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
9.4.2 Surplus on Revaluation during the year No 481,T.B Jayah Mawatha, Colombo 10. 9,974 144 10,118 5,761 63,135
Devanampiyatissa Mawatha, Colombo 10. 70,960 (2,459) 68,501 107,793 42,604
Demanhandiya , Negombo. 29,049 1,586 30,635 15,424 18,666
Gangadara Mawatha, Ratmalana. 8,717 (9,270) (553) 12,636 17,576
Habarana Road, Dambulla 9,125 4,224 13,349 3,968 13,417
No 3, Udaya Mawatha Ratmalana. (Now Off Gangadara
Mawatha, Ratmalana) 2,719 (1,875) 843 3,467 8,795
Main Street, Ambalantota. 3,240 104 3,344 4,140 -
Total Revaluation Surplus 133,784 (7,546) 126,237 153,189 164,193
As at As at As at
31st March 31st March 1st April
2013 2012 2011
Rs.000 Rs.000 Rs.000
9.4.3 Revaluation Reserve as atDemanhandiya, Negombo. 354,640 324,005 308,581
No 3, Udaya Mawatha Ratmalana. (Now Off Gangadara Mawatha, Ratmalana) 72,766 71,921 68,455
Devanampiyatissa Mawatha, Colombo 10. 1,038,556 970,055 862,262
No 481,T.B Jayah Mawatha, Colombo 10. 1,588,387 1,578,269 1,572,508
Gangadara Mawatha, Ratmalana. 149,273 149,826 137,190
167/92, Avissawella Road, Orugodawatta. 5,359 5,359 5,359
Habarana Road, Dambulla 41,934 28,584 24,617
Main Street, Ambalantota. 7,483 4,142 -
Total on Land & Buildings 3,258,398 3,132,161 2,978,972
Plant & Machinery 5,567 5,567 5,567
Total Revaluation surplus 3,263,965 3,137,728 2,984,539
Appropriated for bonus issue (1997/1998) (14,000) (14,000) (14,000)
Deferred Tax impact on Building Revaluation (2007/2008) (4,831) (4,831) (4,831)
Deferred Tax impact on Building Revaluation (2008/2009) 12,881 12,881 12,881
Appropriated for bonus issue (2008/2009) (1,984,500) (1,984,500) (1,984,500)
Deferred Tax impact on Building Revaluation (2009/2010) (3,345) (3,345) (3,345)
Deferred Tax impact on Building Revaluation (2010/2011) (10,427) (10,427) (10,427)
Deferred Tax impact on Building Revaluation (2011/2012) 5,658 5,658 -
Deferred Tax impact on Building Revaluation (2012/2013) 2,016 - -
Revaluation Reserve as at 31st March 2013 1,267,416 1,139,165 980,318
Notes to the Financial Statements
Annual Report 2012/2013 | 147
Group Company
As at As at As at As at As at As at
31st March 31st March 1st April 31st March 31st March 1st April
2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
10 INVESTMENT PROPERTIES
Balance at the beginning of the year 4,685,617 826,344 117,480 111,971 110,747 117,480
On Acquisition of Subsidiary - 3,500,000 - - - -
Additions (10.2) 104,059 - 49,597 - - -
Disposals (2,100) - (8,448) (2,100) - (8,448)
Transfers from / (to) PPE 199,915 139,386 666,000 - - -
Change in Fair Value during the year 869,721 219,887 1,715 1,820 1,224 1,715
Balance at the end of the year 5,857,212 4,685,617 826,344 111,691 111,971 110,747
Hatton Property
Land Buildings Total
Rs.000 Rs.000 Rs.000
10.1 Summary of Investment Properties - CompanyBalance as at 1st April 2010 99,002 18,478 117,480
Disposals (5,047) (3,401) (8,448)
Change in fair value during the year 1,435 280 1,715
Balance as at 31st March 2011 95,390 15,357 110,747
Change in fair value during the year 5,054 (3,830) 1,224
Balance as at 31st March 2012 100,444 11,527 111,971
Disposals (1,255) (845) (2,100)
Change in fair value during the year 3,320 (1,500) 1,820
Balance as at 31st March 2013 102,500 9,182 111,691
Investment properties include properties situated in Hatton containing in extent 200 perches bearing Assessment Nos 97 and 99, Dunbar Road,
Dumburugiriya, Hatton.These properties were valued by Mr.Haleem Ghouse, an Incorporated Valuer having recent experience in the location and
category of the investment properties being valued. As at 31st March 2013 and 31st March, 2012, the Investment properties were revalued for
Rs.111.7 Mn and Rs. 111.9 Mn, respectively, and the resulting gains and losses were recognised in the Profit or Loss. Rental income earned from
investment properties by the Company during the year amounted to Rs 1.8 Mn (2011/2012 - Rs. 1.2 Mn). Hatton Property represents the Land
and Building situated in Hatton.
10.2 Investment Properties of the Group Include Following:10.2.1 Leasehold land at Excel WorldThe Company’s Sub-subsidiary, Millennium Developments ( Pvt) Ltd ( MDPL, A subsidiary of Excel Global Holdings ( Pvt) Ltd) has Leasehold rights
to its property bearing Plan No. 784A, No 338, T.B Jayah Mawatha, Colombo 10, Containing in extent 897 perches. The property was valued by
Independent Valuer Mr. K.T.D. Tissera, a member of the Institute of Valuers of Sri Lanka in determining the fair value as at 1st April 2012 and 31st
March 2013 to be Rs. 3,750 Mn and 3,718 Mn respectively. The resulting loss for the year Rs.35Mn has been recognized in the Profit and Loss.
Rental Income of Rs.82.3 Mn has been earned from this investment Property by MDPL during the year ended 31st March 2013.
148 | Brown & Company PLC
10 INVESTMENT PROPERTIES CONTD.
10.2.2 Property owned by F L C Properties (Pvt) Limited (Formerly Free Lanka Capital Properties (Pvt) Ltd.)F L C Properties (Pvt) Ltd a fully owned subsidiary of the company has a land extent of 49.50 perches bearing Assessment No. 19, Dudley
Senanayake Mawatha, Colombo 08. The Company has adopted Fair Value Model for Investment Property as per the Sri Lanka Accounting
Standard- LKAS 40. The Company has engaged an Independent Valuers Mr.W. M .Chandrasena, a member of the Institute of Valuer of Sri Lanka in
determine the fair value as at 31st March’ 2013 of the said Investment Property which amounted to Rs. 272Mn.
10.2.3 Property owned by Brown Investments PLC (BIPLC)Browns Investments PLC has a land containing in extent 28.07 perches bearing Assessment No. 30, Havelock Road, Colombo 05. The Group
has adopted Fair Value Model for Investment Property as per the Sri Lanka Accounting Standard - LKAS 40. The Company has engaged an
Independent Valuer Mr.W. M .Chandrasena, a member of the Institute of Valuers of Sri Lanka in determine the fair value as at 31st March’ 2013 of
the said Investment Property which amounted to Rs. 126Mn. Rental Income of Rs.0.7Mn has been earned from this investment Property by BIPLC
during the year ended 31st March 2013.
10.2.4 Property owned by S.F.L. Services Pvt Limted (Formerly Standard Finance Pvt Limited)The Company’s Subsidiary S.F.L. Services Pvt Limted ( Formerly Standard Finance Pvt Limited) owned 2 land plots containing in extent of 131
perches bearing Plan No. 8798, No. 88, Glennie Street, Slave Island , Colombo 2 (perches 30.5) and bearing Plan No. 1006, No.432, Malabe
Road, Pittugala, Malabe ( perches 100.5) respectively. The Company has adopted Fair Value Model for Investment Property as per the Sri Lanka
Accounting Standard - LKAS 40. The Company has engaged an Independent Valuer Mr. Haleem Ghouse, a member of the Institute of Valuers
of Sri Lanka in determine the fair value as at 31st March’ 2013 of the said Investment Properties which amounted to Rs.114 Mn and Rs.68Mn
respectively. The resulting gain for the year Rs.10.7 Mn has been recognized in the Profit and Loss.
10.2.5 Property owned by Browns Industrial Park Limited (BIPL)The Company’s Subsidiary, Browns Industrial Park Limited has Leasehold rights to property bearing plan no 289 dated 16th March 1992 ,Gonawila
, Markandura. Accordingly BIPL has reclassified this property under SLFRS/LKAS as investment property as at 1st April 2011 since this property
were used for the purpose of capital appreciation and to earn rental income. Upon this reclassification, the Company has adopted Fair Value
Model for Investment Property as per the Sri Lanka Accounting Standard - LKAS 40.This Property consists of land and buildings with a land
extent over 25.5 acres. The Company has engaged an Independent Valuer Mr.W. M .Chandrasena, a member of the Institute of Valuer of Sri Lanka
in determine the fair value as at 1st April 2011 and 31st March 2012 to be Rs.603Mn and Rs.602 Mn respectively. The property was valued by
Independent Valuer Mr.P.W.Senarathna, a Chartered valuation Surveyor of Sri Lanka who determined the fair value as at 31st March 2013 to be Rs.
1,572Mn. The resulting gain for the year Rs.868 Mn net of capital improvements has been recognized in the Profit and Loss. Rental Income of Rs.45
Mn has been earned from this investment Property by BIPL during the year ended 31st March 2013.
Group
As at As at As at
31st March 31st March 1st April
2013 2012 2011
Rs.000 Rs.000 Rs.000
10.3 Summary of Investment Properties - GroupLand 4,015,311 3,682,701 277,987
Buildings 1,841,901 1,002,916 548,357
5,857,212 4,685,617 826,344
Notes to the Financial Statements
Annual Report 2012/2013 | 149
Group Company
As at As at As at As at As at As at
31st March 31st March 1st April 31st March 31st March 1st April
2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
11 PREPAID LEASE RENTALS
Gross Value
Balance at the beginning of the year 247,519 256,894 426,728 48,653 48,653 48,653
Additions during the Period (2,640) (9,375) - - - -
On Disposal of Joint Venture - - (169,834) - - -
Balance at the end of the year 244,879 247,519 256,894 48,653 48,653 48,653
Amortization
Balance at the beginning of the year 51,047 67,557 113,017 3,004 2,403 1,802
Amortization during the Period 4,788 (16,510) 601 604 601 601
On Disposal of Joint Venture - - (46,061) - - -
Balance at the end of the year 55,835 51,047 67,557 3,607 3,004 2,403
Carrying Value 189,044 196,472 189,337 45,046 45,649 46,250
The Leasehold Right to Bare Land of JEDB/SLSPC Estates is being amortized by equal amounts over a 53 year period and the unexpired period of
the lease as at the Balance Sheet date is 32 years.
11.1 Prepaid Lease Rentals- GroupLease agreements of all JEDB/SLSPC estates handed over to the Company’s Joint Venture’s Sub-subsidiaries have been executed to date. All
of these lease are retroactive to 15th June’ 1992, the date of formation of the Company’s Joint Venture’s Sub-subsidiaries. The leasehold rights
to the bare land on all of these estates have been taken into the books of the Company’s Joint Venture’s Sub-subsidiaries on 15th June’1992,
immediately after formation of the Company’s Joint Venture’s Sub-subsidiaries, in terms of the ruling obtained from the Urgent Issue Task Force
(UITF) of the Institute of Chartered Accountants of Sri Lanka. For this purpose, Board of the Company’s Joint Venture’s Sub-subsidiaries decided
at its meetings that lease bare land would be revalued at the value established for this land by Valuation Specialist Dr.Wickramasinghe just prior
to the formation of the Company’s Joint Venture’s Sub-subsidiaries . The value as at 15th June’1992 was taken in to the books of Company’s Joint
Venture’s Sub-subsidiaries namely Maturata Plantation Limited and Pussellawa Plantations Limited, and the amortization of the leasehold rights
up to 31st March 2013 are as follows.
Leasehold Rights to Bare Land of JEDB/SLSPC Estate Assets and Immovable (JEDB/SLSPC) Estates Assets on Finance Lease obtained on a long
term basis by the Company’s Joint Venture’s Sub-subsidiaries, are stated at the recorded carrying values as at the effective date of Sri Lanka
Accounting Standard No.19 – Leases, in line with Ruling of the Urgent Issues Task Force of the Institute of Chartered Accountants of Sri Lanka.
Such carrying amounts are amortized over the remaining Lease term or useful life of such asset whichever is shorter.
“The Institute of Chartered Accounts of Sri Lanka has issued a Statement of Recommended Practice (SORP) (with effect from 01st January 2012)
for Right-to-use of Land on Lease on 19th December, 2012. Since the SORP issued by the ICASL has not been finalized as of the date of auditor’s
report, Company’s Joint Venture’s Sub-subsidiaries have not been complied with the SORP issued by the Institute of Chartered Accountants of Sri
Lanka.
Therefore, respective Leasehold Right to bear lands are accounted as the existing practice of “Urgent Issue Task Force (UITF) rulings” issued prior
to 01st January, 2012 which has been superseded by the Sri Lanka Accounting Framework with effect from 01st January, 2012 Company’s Joint
Venture’s Sub-subsidiaries.
150 | Brown & Company PLC
11 PREPAID LEASE RENTALS CONTD.11.2 Maturata Plantations LtdSince the fair value of revalued assets differs materially from its carrying amount, the Board of Directors of Maturata Plantations Limited, a
Company’s Joint Venture’s Sub-subsidiaries, on 20th December 2005 has decided a further revaluation to be carried out as at 31st December
2005. The net amounts have been restated to the new valuation carried out by an independent and qualified valuer, Mr.K.Auther Perera. The
values of Bare land which was not subjected to a land survey has been based on the current freehold bare land values which varies from District
to District and estate to estate depending on demand. The freehold values have been converted into leasehold value depending on the balance
period of the lease. The revised UITF ruling does not permit further revaluation of Leasehold lands.
11.2.1 Carrying Value of Revalued Leasehold Property of Maturata Plantations Limited (MPL) at Cost Model - Group.
The carrying value of Leasehold Right to bare land of JEDB/SLSPC Estates of the MPL that would have been included in the Financial Statements
as at 31st March, 2013 had the asset been carried at initial valuation less accumulated amortization is as follows:
Leasehold Right to Bare Land of JEDB/SLSPC Estates Group
As at As at As at
31st March 31st March 1st April
2013 2012 2011
Rs.000 Rs.000 Rs.000
Revaluation as at 22nd June 1992 89,896 89,896 89,896
89,896 89,896 89,896
Accumulated Amortization as at 01st April 33,543 31,847 30,151
Amortization for the Year 1,696 1,696 1,696
Accumulated Amortization as at 31st March 35,239 33,543 31,847
Written Down Value as at 31st March 54,657 56,353 58,049
11.2.2 Land Acquired/ in the Process of being Acquired by the Government & Divested as at 31st March 2013.
Maturata Plantations LimitedThe Government of Sri Lanka has acquired a total land extent of 223.1445 hectares and also in the process of being acquired a further total land
extent of 877.3567 hectares.
The Land divested at the year end totaling to 822.00 hectares.
Pussellawa Plantations LtdThe Government of Sri Lanka has acquired a total land extent of 82.50 hectares and also in the process of being acquired a further total land
extent of 7.02 hectares.
The Land divested at the year end totaling to 89.52 hectares.
No adjustments have been made to the records in respect of the lands acquired as the compensations receivable on the major acquisition are
not known and the transactions pertaining to those acquisitions have been incomplete as at 31st March, 2013.
Government has acquired 50.3285 Hect of Pitipana Estate, Homagama under the Section 2 of the Urban Development Authority [Special Projects]
act through section 38[a] for town development by Extra Ordinary Gazette notification no.1539/9 dated 03rd March 2008.
Pussellawa Plantations Ltd filed a fundamental rights case against the Minister of Lands and Land Development at Supreme Courts stating that
the Gazette notification is illegal, Null and void which is pending as at the date of statement of financial position. No adjustments have been
made to the written down book value in respect of the acquisitions referred above as the compensation is receivable by the company on the
land acquired as per the Lease Agreement.
11.3 Prepaid Lease Rentals- CompanyLease rentals paid to acquire right to use the lands have been classified as pre paid lease rentals, and are amortised over the lease term (80 years).
Notes to the Financial Statements
Annual Report 2012/2013 | 151
Group Company
As at As at As at As at As at As at
31st March 31st March 1st April 31st March 31st March 1st April
2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
12 INTANGIBLE ASSETSGross Value
Balance at the beginning of the year 212,461 102,207 60,027 33,223 32,464 5,176
Additions during the year 93,007 110,301 42,180 78,697 759 27,288
Transfers - (47) - - - -
On Disposal of Joint Venture - - - - - -
Balance at the end of the year 305,468 212,461 102,207 111,920 33,223 32,464
Amortization
Balance at the beginning of the year 44,366 36,358 18,287 18,478 10,639 2,707
Amortization during the year 27,646 8,015 18,072 24,929 7,839 7,932
Transfers - (7) - - - -
Balance at the end of the year 72,012 44,366 36,358 43,407 18,478 10,639
Carrying Value 233,456 168,095 65,849 68,513 14,745 21,824
31st March 2013 31st March 2012
Goodwill Software Total Goodwill Software Total
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
12.1 Summary of Intangible Assets- Group Gross value
Balance at the beginning of the year 177,983 34,478 212,461 68,533 33,673 102,206
Additions during the year - 93,007 93,007 109,450 851 110,301
Transfers - - - - (46) (46)
Balance at the end of the year 177,983 127,485 305,468 177,983 34,478 212,461
Amortization
Balance at the beginning of the year 24,818 19,548 44,366 24,818 11,540 36,358
Amortization during the year - 27,646 27,646 - 8,015 8,015
Transfers - - - - (7) (7)
Balance at the end of the year 24,818 47,194 72,012 24,818 19,548 44,366
Carrying Value 153,165 80,291 233,456 153,165 14,930 168,095
31st March 2011
Goodwill Software Total
Rs.000 Rs.000 Rs.000
Gross value
Balance at the beginning of the year 53,877 6,543 60,420
Additions during the year 14,656 27,247 41,903
Transfers - (117) (117)
Balance at the end of the year 68,533 33,673 102,206
Amortization
Balance at the beginning of the year 14,818 3,468 18,286
Amortization during the year 10,000 8,072 18,072
Transfers - - -
Balance at the end of the year 24,818 11,540 36,358
Carrying Value 43,715 22,133 65,848
152 | Brown & Company PLC
12 INTANGIBLE ASSETS CONTD. Goodwill on Provision for Carrying Value
Acquisition Impairment 31st March 31st March 1st April
2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
12.2 Summary of Goodwill - GroupKlevenberg (Pvt) Ltd. 56,623 (4,818) 51,805 51,805 -
Galoya Holdings (Pvt) Ltd. 5,026 - 5,026 5,026 5,026
Sifang Lanka (Pvt) Ltd. 7,698 - 7,698 7,698 7,698
Walker & Greig (Pvt) Ltd. 36,085 (20,000) 16,085 16,085 16,085
Browns Motors (Pvt) Ltd. 250 - 250 250 250
IG Browns Rubber Industries (Pvt) Ltd. 14,293 - 14,293 14,293 11,793
Browns Investments PLC 9,564 - 9,564 9,564 -
FLC Hydro Power PLC 2,863 - 2,863 2,863 -
Ajax Engineers (Pvt) Ltd., 25,057 - 25,057 25,057 -
Excel Restaurants (Pvt) Ltd 20,524 - 20,524 20,524 -
177,983 (24,818) 153,165 153,165 40,852
12.3 Software with a finite life is amortized over the period of the expected economic useful life time . As per the Group policy software
intangible asset is amortise over 4 years. Goodwill as at the Balance Sheet date has been tested for impairment and no additional
impairment losses were identified. Recoverable value of Goodwill has been estimated based on the expected future cash flows.
12.4 Negative Goodwill on Acquisition of shares
2011/2012
Rs.000
Free Lanka Capital Holding PLC 15,480
Excel Global Holdings (Pvt) Ltd. 2,607,597
Taprobane Capital (Pvt) Ltd. 48,406
2,671,483
Group Company
As at As at As at As at As at As at
31st March 31st March 1st April 31st March 31st March 1st April
2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
13 CAPITAL WORK IN PROGRESSBalance at the beginning of the year 135,450 21,999 47,378 56,396 - -
Additions during the year 581,291 113,451 18,609 66,708 56,396 -
Amount Capitalized during the year (66,391) - (22,479) 120,969 - -
On Disposal of Joint Venture - - - (56,396) - -
Transfer to Intangible Assets - - (21,509) - - -
Balance at the end of the year 650,350 135,450 21,999 2,135 56,396 -
13.1 Capital Work in ProgressCapital Work in Progress comprises of the following items:
Buildings 549,873 89,664 6,604 2,135 - -
Intangible Assets - - - - 56,396 -
Plant and Machinery - 1,430 4,760 - - -
Water Sanitation 96,354 106 105 - - -
Roads and Bridges 3,842 4,619 4,170 - - -
Hydro Power - 39,260 6,254 - - -
Others 281 371 106 - - -
650,350 135,450 21,999 2,135 56,396 -
Notes to the Financial Statements
Annual Report 2012/2013 | 153
As At 31.03.2013 As At 31.03.2012
Tea Others Total Tea Others Total
Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000
14 BEARER BIOLOGICAL ASSETS
- GROUP
14.1.1 At Cost14.1.1.1 On Finance LeaseRevaluation as at 22nd June 1992 101,538 - 101,538 101,538 - 101,538
Balance as at 31st March 101,538 - 101,538 101,538 - 101,538
Amortization
Balance as at 01st April 61,872 - 61,873 58,516 - 58,516
Amortization for the year 3,344 - 3,343 3,357 - 3,357
Balance as at 31st March 65,216 - 65,216 61,873 - 61,873
Written Down Value as at 31st March 36,322 - 36,322 39,665 - 39,665
14.1.1.2 Investments after Formation of the Company
Immature Plantations
Balance as at 01st April 91,278 3,765 95,043 107,200 1,593 108,793
Additions 30,330 12,446 42,776 36,841 2,306 39,147
Transfer Out (19,299) - (19,299) (52,763) (134) (52,897)
Written off - (406) (406) - - -
Balance as at 31st March 102,309 15,805 118,114 91,278 3,765 95,043
Mature Plantations
Balance as at 01st April 327,393 956 328,349 274,629 821 275,450
Transfer In 19,299 - 19,299 52,763 134 52,899
Balance as at 31st March 346,692 956 347,648 327,392 955 328,349
Depreciation
Balance as at 01st April 73,467 194 73,661 64,438 170 64,608
Charge for the year 10,204 229 10,433 9,029 25 9,053
Balance as at 31st March 83,671 423 84,094 73,467 195 73,661
Written Down Value as at 31st March 365,330 16,338 381,668 345,203 4,525 349,728
14.1.1.3 Growing Crop NurseriesBalance as at 01st April 3,995 2,024 6,019 2,567 745 3,313
Charge for the year (128) (1,690) (1,818) 1,428 1,278 2,706
Balance as at 31st March 3,867 334 4,201 3,995 2,023 6,019
154 | Brown & Company PLC
14 BEARER BIOLOGICAL ASSETS - GROUP CONTD.
As At 31.03.2013 As At 31.03.2012
Rubber Coconut Total Rubber Coconut Total
Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000
14.1.2 At Fair Value14.1.2.1 On Finance LeaseBalance as at 1st April 431,496 7,099 438,595 379,026 6,863 385,889
Decrease due to sale (25,808) - (25,808) (24,700) - (24,700)
Decrease due to harvesting Reversal of depreciation - - - - - -
Gain/( Loss )on Fair Valuation (12,955) 334 (12,621) 77,170 238 77,406
Fair value as at 31st March 392,733 7,433 400,166 431,496 7,101 438,595
14.1.2.2 Investments after formation of the company
Balance as at 1st April 998,619 7,832 1,006,451 838,529 7,573 846,102
Additions 106,330 44 106,374 98,243 113 98,356
Grant Received on Immature Rubber (2,900) - (2,900) (7,272) - (7,272)
Gain/(Loss) on Fair valuation 40,982 (217) 40,765 69,119 148 69,269
Carrying value as at 31st March 1,143,031 7,659 1,150,690 998,619 7,834 1,006,451
14.1.2.3 Growing Crop NurseriesBalance as at 01st April 2,146 - 2,146 2,326 - 2,326
Increase/Decrease 229 - 229 (179) - (179)
Balance as at 31st March 2,375 - 2,375 2,147 - 2,147
Carrying Value of Rubber & Coconut as at 31st March 1,538,139 15,092 1,553,231 1,432,262 14,935 1,447,197
Total Carrying value as at 31st March 1,943,658 31,764 1,975,422 1,821,125 21,483 1,842,608
Total Carrying value as at 01st April 2011 1,582,863 17,424 1,600,287
14.1.2.4 Gain / Loss on Fair Value of Biological Assets 28,027 117 28,144 146,289 386 146,675
14.1.2.5 The carrying value of Rubber and Coconut as at year / period end has been computed as follows.
As At 31.03.2013 As At 31.03.2012
Rubber Coconut Total Rubber Coconut Total
Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000
Carrying Value of Rubber/Coconut as per the
Valuation Report as at 31st March 1,058,847 15,092 1,073,939 1,055,344 13,806 1,069,150
Add: Cost of Immature Rubber and Coconut
Plants below harvesting stage as at 31st March,
2013 not considered for Valuation 476,915 - 476,915 374,770 1,129 375,899
Growing Crop Nurseries 2,377 - 2,377 2,146 - 2,148
Carrying Value of Rubber/Coconut
Assets as at 31st March 1,538,139 15,092 1,553,231 1,432,260 14,935 1,447,197
Maturata Plantations Ltd/Pussellawa Plantations Ltd
14.2 Borrowing Costs amounting to Rs 17,936/= (Previous Year - Rs 15,299/=) incurred on borrowings obtained to meet expenses relating to
bearer biological Assets have been capitalized.
Notes to the Financial Statements
Annual Report 2012/2013 | 155
14.3 Capitalization of borrowing costs will cease when the bearer biological Assets are ready for bearing.
14.4 Bearer biological assets, namely Rubber and Coconut plantations are recognized at its fair value less cost to sell under LKAS 41 -
Agriculture. However the Company’s Subsidiary measures Tea and Other Bearer Biological Assets at cost using LKAS 16 - Property Plant &
Equipment in accordance with the new ruling issued by the Institute of Chartered accountants of Sri Lanka dated 2nd March 2012, due to
the impracticability of carrying out proper fair valuation.
14.5 Rubber and Coconut plantations as at 31st March 2013 of the company’s Subsidiary was valued by Mr K.T.D. Tissera, an independent
Chartered Valuation Surveyor as per the Valuation Report dated 15th April 2013 having separately valued latex/crop and timber
components based on the physically verified statistics on a field by field basis. Rubber and Coconut plantations were retrospectively
valued as at 31st March 2012 and 31st March 2011 by the same Chartered valuation Surveyor on a field by field basis.
14.6 The valuation has been prepared in respect of each estate separately for the latex/nuts and the timber component of the Rubber/Coconut
plantation.
14.7 Bearer Biological Assets - Group
14.8 The Rubber and Coconut plants having below six years of age as at the date of financial position have been taken at cost.
14.9 The valuer has valued the latex/nuts component of Rubber, and Coconut using the forecasted crop, prices and cost of production based
on past statistics on the basis of net present value of expected future cash flows using a discount rate of 20% per annum (i.e. 8% Risk Free
Rate plus 4% Risk Premium plus 8% Inflation). The scrap value, being the timber component of trees is valued by using the available log
prices in city centres less point-of-sale-costs on the basis of net present value of expected future cash flows using a discount rate of 12%
per annum.
14.10 In valuing the Rubber and Coconut plantations, under-mentioned factors have been taken into consideration.
1 The present age of trees and yields of each separate field.
2 Maturity age of the trees.
3 Number of years remaining to harvest.
4 Rubber/Coconut Plants having below six years of age have not been taken into the valuation.
5 Past prices of latex and Coconut for forecasting future price trend and the current market price of timber as per the available log
prices in city centres less point-of-sale-costs to determine the value of timber component.
6 Field level cost to determine the cost of production of latex and Coconut.
7 Annual yield level is estimated and derived based on last year yield.
14.11 The significant assumptions used in the valuation of Rubber and Coconut plantations are as follows:
a) Future cash flows of timber component of Rubber and Coconut are determined by references to current timber prices without
considering the inflationary effect.
b) The on-going cost of growing trees which are deducted in determining the net cash flows are constant in real terms.
c) Rubber/Coconut Plants have been valued working out the period that would take for those trees to be harvested.
d) Due consideration has been given for cost of felling and transport.
156 | Brown & Company PLC
14 BEARER BIOLOGICAL ASSETS - GROUP CONTD.
14.12 Sensitivity Analysis - GroupSensitivity Variation on Sales PriceValues as appearing in the Statement of Financial Position are very sensitive to price changes with regard to the average sales prices applied.
Simulations made for rubber show that a rise or decrease by 10% of the estimated future selling price has the following effect on the net present
value of biological assets:
Variance Variance
As at 31st March 2013 Rs. Rs.
-10% +10%
Rubber (105,884,817) 105,884,817
Sensitivity Variation on Discount RateValues as appearing in the Statement of Financial Position are very sensitive to changes of the discount rate applied. Simulations made for rubber
show that a rise or decrease by 1% of the estimated future discount rate has the following effect on the net present value of biological assets:
Variance Variance
As at 31st March 2013 Rs. Rs.
-1% +1%
Rubber 50,796,440 (46,408,963)
Group Company
As At As At As At As At
31.03.2013 31.12.2012 31.03.2013 31.12.2012
Rs. ‘000s Rs. ‘000s Rs. ‘000s Rs. ‘000s
15 CONSUMABLE BIOLOGICAL ASSETS (TIMBER)
Balance as at 1st April 1,514,295 1,630,001 - -
Increase due to New Planting 10,572 11,631 - -
Sale of Trees (12,960) (18,080) - -
Increase/Decrease in Growing Crop Nursery (40) 24 - -
1,511,867 1,623,576 - -
Gain/(Loss) on Fair Valuation 55,804 (109,281) - -
1,567,671 1,514,295 - -
The carrying value of Consumable Biological Assets as at year end
has been computed as follows.
Carrying Value as per the Valuation Report as at 31st March 1,550,854 1,481,676 - -
Add: Cost of Timber Plants below three years of age as at
31.03.2013 not considered for Valuation 16,301 32,063 - -
Growing Crop Nurseries 516 556 - -
Carrying Value of Timber Stocks as at 31st March 1,567,671 1,514,295 - -
Total Carrying value as at 01st April 2011 1,630,001
Notes to the Financial Statements
Annual Report 2012/2013 | 157
15.1 GROUPMaturata Plantations Ltd/Pussellawa Plantations LtdThe Consumable Biological Assets as at 31st March 2013 of the entity was valued by Mr K.T D Tissera, an independent Chartered Valuation
Surveyor as per the Valuation Report dated 24th April 2013 prepared on the physically verified timber statistics provided by the company on a
tree by tree basis. The timber trees were valued as at 31st March 2012 by the same Chartered valuation Surveyor on a tree by tree basis as per the
timber statistics provided by the company. The value of trees transferred after three years, from cost to fair value have been valued on field /block
basis by discounting the value of expected timber content of trees at the time of harvest. It is expected that only 60% of the presently available
trees will remain on the field at the time of final harvest.
The entity has valued the Consumable Biological Assets consist of trees over 3 years of age, which have been properly establish in the field at fair
value less estimated point-of-sale-costs. The direct cost attributable to new/re-planting pertaining to trees having three years or less have been
added to the Consumable Biological Assets.
Timber Trees namely Eucalyptus Torariyana, Albezzia, Graveelia, Eucalyptus Grandis, Astonia, Pinus, Toona, Mahogany, Teak, Jack, Turpentine,
Nadun, Mango, Pellen, Hora, Lunumidella, Mara etc. available on the plantations have been taken into consideration in this valuation of Timber
Trees.
In valuing the Consumable Biological Assets, under-mentioned factors have been taken into consideration.
1 The present age of trees.
2 Maturity age of the tree.
Maturity of the tree is based on the variety of the species of the tree.
3 Annual marginal increase in timber content.
4 Number of years to harvest
5 Timber content of harvestable trees on maturity.
6 Timber Plants having below three years of age have not been taken into the valuation.
7 The timber content of immature trees at an estimated future harvestable year
8 The current price of species of timber per cubic foot at the relevant year.
Trees have been valued as per the current timber prices in the domestic market based on the price list of the State Timber Corporation and prices
of timber trees sold by estates and prices of logs and sawn timber in the popular timber traders in Sri Lanka.
The fair value is determined on the basis of net present value of expected future cash flows using a discount rate of 12% per annum. The
significant assumptions used in the valuation of Consumable Biological Assets are as follows:
a) Future cash flows are determined by references to current timber prices without considering the inflationary effect.
b) The on-going cost of growing trees which are deducted in determining the net cash flows are constant in real terms.
c) Timber Trees that have not come up to a harvestable size are valued working out the period that would take for those trees to grow up to
a harvestable size.
d) The Present Value of the Trees is worked out based on the projected size and the estimated number of years it would take to reach that
size. This is worked out on the basis of an annual marginal increase of Timber content which normally ranges from 0.50 to 1.50 cm per year
for trees of diameter girth over 10 cm.
e) The value of each matured species of timber is worked out on the price of a cubic foot of timber in the market of the species and the
available cubic content of timber in the tree.
f ) Due consideration has been given for cost of felling, transport, sawing, cost to sell including obtaining of approval for felling.
158 | Brown & Company PLC
15 CONSUMABLE BIOLOGICAL ASSETS (TIMBER) CONTD.15.2 Consumable Biological Assets (Timber) - Group15.2.1 Gain / (Loss) Arising from Changes in Fair Value Less Cost to SellManaged trees include commercial timber plantations cultivated in estates. The cost of immature trees is treated at approximate fair value
particularly on the ground of little biological transformation has taken place and impact of the biological transformation on price is not material.
When such Plantations become mature, the additional investments since taken over to bring them to maturity are transferred from Immature to
Mature.
The fair value of managed trees was ascertained since the LKAS 41 is only applicable for managed agricultural activity in terms of the ruling issued
by The Institute of Chartered Accountants of Sri Lanka. The valuation was carried by using Discounted Cash Flow (DCF) methods. In ascertaining
the fair value of timber a physical verification was carried out covering all the estates.
The valuations, as presented in the external valuation models based on net present values, take into account the long-term exploitation of the
timber plantation. Because of the inherent uncertainty associated with the valuation at fair value of the biological assets due to the volatility
of the variables, their carrying value may differ from their realizable value. The Board of Directors retains their view that commodity markets
are inherently volatile and that long-term price projections are highly unpredictable. Hence, the sensitivity analysis regarding selling price and
discount rate variations as included in this note allows every investor to reasonably challenge the financial impact of the assumptions used in the
LKAS 41 against his own assumptions.
The biological assets of company is cultivated in leased lands. When measuring the fair value of the biological assets it was assumed that these
concessions can and will be renewed at normal circumstances. Timber content expects to be realized in future and is included in the calculation
of the fair value that takes into account the age of the timber plants and not the expiration date of the lease.
15.3 Sensitivity Analysis-GroupSensitivity Variation on Sales PriceValues as appearing in the Statement of Financial Position are very sensitive to price changes with regard to the average sales prices applied.
Simulations made for timber show that a rise or decrease by 10% of the estimated future selling price has the following effect on the net present
value of biological assets:
Variance Variance
As at 31st March 2013 Rs. Rs.
-10% +10%
Managed Timber (155,085,357) 155,085,357
Sensitivity Variation on Discount Rate
Values as appearing in the Statement of Financial Position are very sensitive to changes of the discount rate applied. Simulations made for timber
show that a rise or decrease by 1% of the estimated future discount rate has the following effect on the net present value of biological assets:
Variance Variance
As at 31st March 2013 Rs. Rs.
-1% +1%
Managed Timber 91,212,356 (76,843,732)
The Group is exposed to a number of risks related to its timber plantations;
Regulatory and environmental risksThe Group is subject to laws and regulations imposed by the environmental authorities of Sri Lanka. The Group has established environmental
policies and procedures aimed at compliance with local environmental and other laws. Management performs regular reviews to identify
environmental risks and to ensure that the systems in place are adequate to manage those risks.
Supply and demand riskThe Group is exposed to risks arising from fluctuations in the price and sales volume of timber. When possible the Group manages this risk by
aligning its harvest volume to market supply and demand. Management performs regular industry trend analyses to ensure that the Group’s
pricing structure is in line with the market and to ensure that projected harvest volumes are consistent with the expected demand.
Climate and other risksThe Group’s timber plantations are exposed to the risk of damage from climatic changes, diseases, forest fires and other natural forces. The Group
has extensive processes in place aimed at monitoring and mitigating those risks, including regular forest health inspections and industry pest and
disease surveys.
Notes to the Financial Statements
Annual Report 2012/2013 | 159
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,63
8
38
,63
8
38
,63
8
42
,01
2
42
,01
2
42
,01
2
16.2
A
s at
31
st M
arch
20
13
, Bro
wn
& C
om
pan
y P
LC o
wn
s 3
8.6
8%
of
the
sh
are
ho
ldin
g o
f “B
row
ns
Inve
stm
en
ts P
LC”,
wh
ich
am
ou
nts
to
71
7,0
26
,21
3 s
har
es
( ye
ar e
nd
ed
31
st M
arch
20
12
sh
are
ho
ldin
g w
as 2
7.9
5%
ho
ldin
g 5
17
,61
6,4
00
sh
are
s). D
uri
ng
th
e fi
nan
cial
ye
ar T
apro
ban
e H
old
ing
s P
LC (
wh
o w
as a
par
ty t
o p
revi
ou
sly
agre
ed
Sh
are
ho
lde
r ag
ree
me
nt)
has
div
est
ed
its
shar
es
he
ld a
t B
row
ns
Inve
stm
en
ts P
LC p
artl
y to
Bro
wn
& C
om
pan
y P
LC. A
cco
rdin
gly
pre
vio
usl
y e
nte
red
“Sh
are
ho
lde
r A
gre
em
en
t” b
etw
ee
n B
row
n &
Co
mp
any
PLC
an
d T
apro
ban
e H
old
ing
s P
LC b
eca
me
ine
ffe
ctiv
e d
uri
ng
th
e fi
nan
cial
ye
ar 2
01
2/1
3. H
ow
eve
r B
row
n &
Co
mp
any
PLC
has
no
w e
nte
red
into
a fo
rmal
sh
are
ho
lde
r ag
ree
me
nt
wit
h L
OLC
Inve
stm
en
ts L
imit
ed
wh
ich
ho
lds
13
.17
% o
f th
e s
har
eh
old
ing
of
Bro
wn
s In
vest
me
nts
PLC
wh
ich
am
ou
nts
to
24
4,9
27
,50
0 s
har
es,
to
ge
the
r sh
all h
old
Fif
ty O
ne
po
int
Seve
n T
wo
pe
r ce
nt
(51
.72
%)
in B
row
ns
Inve
stm
en
ts P
LC, w
hils
t B
row
n &
Co
mp
any
PLC
an
d L
OLC
Inve
stm
en
ts L
imit
ed
are
de
siro
us
of
en
teri
ng
into
th
is A
gre
em
en
t to
gu
aran
tee
ach
ievi
ng
th
e o
bje
ctiv
e o
f se
ttin
g fo
rth
th
e t
erm
s an
d c
on
dit
ion
s u
nd
er
wh
ich
th
e p
arti
es
inte
nd
to
co
-op
era
te a
nd
par
tici
pat
e jo
intl
y in
gra
nti
ng
th
e a
uth
ori
ty t
o B
row
n &
Co
mp
any
PLC
to
ap
po
int
the
me
mb
ers
to
th
e B
oar
d o
f D
ire
cto
rs o
f B
row
ns
Inve
stm
en
ts P
LC, a
nd
acc
ord
ing
ly b
oth
par
tie
s e
nte
red
in t
o a
form
al w
ritt
en
ag
ree
me
nt
on
22
nd
Jan
uar
y 2
01
3, b
y se
ttin
g o
ut
abo
ve t
erm
s an
d c
on
dit
ion
s ag
ree
d u
po
n b
y th
em
.
A
s p
er
the
ab
ove
ag
ree
me
nt
, Bro
wn
& C
om
pan
y P
LC s
till
has
th
e c
on
tro
l to
go
vern
th
e fi
nan
cial
an
d o
pe
rati
ng
po
licie
s o
f B
row
ns
Inve
stm
en
ts P
LC, a
s p
er
SLFR
S 3
” Bu
sin
ess
Co
mb
inat
ion
s “
acco
rdin
gly
th
e c
om
pan
y h
as a
cco
un
ted
for
Bro
wn
s In
vest
me
nts
PLC
as
a Su
bsi
dia
ry.
160 | Brown & Company PLC
16 INVESTMENTS IN SUBSIDIARIES16.3 Acquisitions of SubsidiariesOn 22nd July 2011 Browns Investments PLC (BIPLC), a subsidiary has acquired 100% holding of Excel Global Holdings (Pvt) Ltd with a purchase
consideration of Rs. 888,386,921/- and the main business activity of the entity is Investments.
On 4th April 2011 BIPLC has acquired 100% holding of Samudra Beach Resorts (Pvt) Ltd with a purchase consideration of Rs 10,000,00/- and the
main business activity of the entity is operating beach resort at Kosgoda. This hotel is still under construction.
On 30th January 2012 BIPLC has acquired 51% holding of Ajax Engineers (Pvt) Ltd with a purchase consideration of Rs 100,000,00/- and the main
business activity of the entity is Construction.
On 31st March 2012 Royal Fernwood Porcelain Ltd has converted Rs. 71.3Mn value of loan to the ordinary shares.(Rs.1.04 X 68,557,692 shares =
Rs.71,300,000) As a result of that BIPLC has acquired 18% holding of the said company. And the company has a 59%(No of shares 242,169,778)
indirect holding through Taprobane Capital (Pvt) Ltd. Main business activity of the entity is Manufacturing, Exporting and retail porcelain related
products.
On 27th December, 2011 the BIPLC has acquired balance 60.33% holding of Taprobane Capital (Pvt) Ltd. Prior to this acquisition, this company
was Associate Company to the Group and, as a result, this Company is now treated as Subsidiary.
16.3.1 The acquisition had the following effect on the Group’s assets and liabilities on the acquisition date.
BRSPL TCPL SBRL EGHL AJAX Total
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
Property, Plant and Equipment - 728,295 - 65,979 5,288 799,562
Investment Property - - - 3,500,000 - 3,500,000
Deferred Expenditure - 43,222 - - - 43,222
Other Investments - Long term - - - - 20,090 20,090
Inventories - 138,180 - - 63,996 202,176
Trade and Other Receivables - 87,947 60,699 8,944 58,734 216,324
Amounts due from Related Parties 50,000 - 10,000 - - 60,000
Other Investments - Short term - - - 14,520 75,873 90,393
Deposits and Advances - 38,239 - - 2,356 40,595
Cash and Cash Equivalents - 6,232 - 3,193 268 9,693
Interest Bearing Borrowings - (227,872) - (27,185) - (255,057)
Finance Lease Obligation - (2,298) - - (204) (2,502)
Retirement Benefit Obligations - (18,994) - (1,603) (6,457) (27,054)
Amounts due to Related Parties - (67,483) (60,699) - (6,964) (135,146)
Deferred Tax - (7,685) - - - (7,685)
Long Term Loan Liabilities - (196,314) - - - (196,314)
Trade and Other Payables - (179,063) - (22,735) (52,523) (254,321)
Deposits and Advances - - - (25,483) - (25,483)
Income Tax Payable - - - - (8,259) (8,259)
Bank Overdraft - (23,990) - (19,646) (5,250) (48,886)
Net Identifiable Assets and Liabilities 50,000 318,416 10,000 3,495,984 146,948 4,021,348
Non-Controlling interests - (85,814) - - (72,005) (157,819)
Share of Net Assets recognized in the previous years - (74,400) - - - (74,400)
Goodwill (Negative Goodwill) on Acquisition - (48,406) - (2,607,597) 25,057 (2,630,947)
Cash paid on acquisition 50,000 109,796 10,000 888,387 100,000 1,158,183
Analysis of Cash on Acquisition of the Subsidiaries
Cash paid on Acquisition (50,000) (109,796) (10,000) (888,387) (100,000) (1,158,183)
Cash at bank Acquired - (17,758) - (16,453) (4,982) (39,193)
Net Cash Outflow (50,000) (127,554) (10,000) (904,840) (104,982) (1,197,376)
Notes to the Financial Statements
Annual Report 2012/2013 | 161
Company
As at As at As at
31st March 31st March 1st April
2013 2012 2011
Rs.000 Rs.000 Rs.000
17 INVESTMENT IN JOINT VENTURE
Galoya Holdings (Pvt) Ltd. 13,000 10,000 10,000
13,000 10,000 10,000
The investment in the Galoya Holdings (Pvt) Ltd. has been recognised in the Financial Statements on the basis of proportionate consolidation
method. Galoya Holdings (Pvt) Ltd. is the Management Company of Galoya Plantations (Pvt) Ltd. Further details have been disclosed in the
Note 17.1.
17.1 The summarized Financial Statements of Galoya Holdings (Pvt) Ltd. is as follows:
As at As at As at
31st March 31st March 1st April
2013 2012 2011
Rs.000 Rs.000 Rs.000
Non Current Assets 5,829 4,594 11,678
Current Assets 6,167 163 146
Non Current Liabilities (1,784) - -
Current Liabilities (20,403) (18,056) (16,578)
Net Liabilities (10,190) (13,299) (4,754)
Statement of Comprehensive Income For the For the
year ended year ended
31st March 31st March
2013 2012
Rs.000 Rs.000
Other Income 787 -
Expenses (3,679) (8,545)
Loss before Taxation (2,892) (8,545)
Taxation - -
Loss after Taxation (2,892) (8,545)
162 | Brown & Company PLC
18
INV
EST
ME
NT
S IN
EQ
UIT
Y A
CC
OU
NT
ED
IN
VE
STE
ES
18.1
In
vest
men
ts in
Equ
ity
Acc
oun
ted
Inve
stee
s -
Gro
up
G
rou
p H
old
ing
%
No
. of
sha
res
Gro
up
A
s a
t A
s a
t A
s a
t A
s a
t A
s a
t A
s a
t A
s a
t A
s a
t A
s a
t
3
1st
Ma
rch
3
1st
Ma
rch
1
st A
pri
l 3
1st
Ma
rch
3
1st
Ma
rch
1
st A
pri
l 3
1st
Ma
rch
3
1st
Ma
rch
1
st A
pri
l
2
01
3
20
12
2
01
1
20
13
2
01
2
20
11
2
01
3
20
12
2
01
1
R
s. 0
00
R
s. 0
00
R
s. 0
00
Un
qu
ote
d In
vest
me
nts
*Ass
oci
ate
d B
atte
ry M
anu
fact
ure
rs (
Ce
y) L
td. (
AB
M)
38
.5%
3
8.5
%
38
.5%
2
,43
9,3
55
2
,43
9,3
55
2
,43
9,3
55
2
4,3
94
2
4,3
94
2
4,3
94
Inv
est
or
S.F.
L. S
erv
ice
s P
vt L
td
(Fo
rme
rly
kno
wn
as
Sta
nd
ard
Fin
ance
(P
vt)
Ltd
.)
* M
elfo
rt G
ree
n T
eas
(P
vt)
Ltd
. (M
GTP
L)
12
.68
%
12
.68
%
12
.6%
8
8,4
00
8
8,4
00
8
8,4
00
5
,63
1
5,6
31
5
,63
1
Inv
est
or
Bro
wn
s In
vest
me
nts
PLC
* G
alo
ya P
lan
tati
on
s (P
vt)
Ltd
.(GP
PL)
2
2.0
5%
2
2.0
5%
2
2.0
5%
2
2,3
09
,41
2
22
,30
9,4
12
2
2,3
09
,41
2
24
8,9
98
2
48
,99
8
24
8,9
98
Inv
est
or
Bro
wn
& C
om
pan
y P
LC.
* LO
LC L
eis
ure
Ltd
. (LO
LCLL
) 3
0.0
%
30
.0%
3
0.0
%
48
,18
4,5
00
4
8,1
84
,50
0
48
,18
4,5
00
1
,18
6,0
65
1
,18
6,0
65
8
48
,77
4
Inv
est
or
Bro
wn
s In
vest
me
nts
PLC
* Ta
pro
ban
e C
apit
al (
Pvt
) Lt
d. (
TCP
L)
- -
40
.0%
-
- 4
,84
0,0
00
-
- 4
8,4
00
Inv
est
or
Bro
wn
s In
vest
me
nts
PLC
* V
erg
inia
Inte
rnat
ion
al In
vest
me
nts
Ltd
. (V
IIL)
40
%
40
%
- 8
00
,00
0
80
0,0
00
-
4,0
00
4
,00
0
-
Inv
est
or
Bro
wn
s In
vest
me
nts
PLC
* Ta
pro
ban
e P
lan
atio
ns
Ltd
.(TP
L)
45
%
45
%
- 2
2,5
00
2
2,5
00
-
23
2
3
-
Inv
est
or
Bro
wn
s In
vest
me
nts
PLC
* R
ain
Fo
rest
Eco
Lo
dg
e (
Pvt
) Lt
d.(R
FLP
L)
5.4
6%
5
.46
%
- 6
,39
9,3
75
6
,39
9,3
75
-
17
,47
0
17
,47
0
-
Inv
est
or
Bro
wn
s In
vest
me
nts
PLC
Tota
l Co
st o
f In
vest
me
nt
- G
rou
p
1,4
86
,58
1
1,4
86
,58
1
1,1
76
,19
7
Notes to the Financial Statements
Annual Report 2012/2013 | 163
18.1
.1 G
rou
p sh
are
of N
et A
sset
s of
Equ
ity
Acc
oun
ted
Inve
stee
s
E
qu
ity
Va
lue
of
Inv
est
me
nt
in A
sso
cia
tes
as
at
31
st M
arc
h 2
01
3 -
Gro
up
R
FL
PL
T
PL
V
IPL
LO
LCL
PL
T
CP
L
AB
M
MG
TP
L
GP
PL
To
tal
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
Co
st o
f In
vest
me
nt
- -
- -
- 2
4,3
94
5
,63
1
- 3
0,0
25
Shar
e o
f n
et
asse
ts a
s at
31
st M
arch
20
10
-
- -
- -
14
5,0
58
-
- 1
45
,05
8
On
Dis
po
sal o
f Jo
int
Ve
ntu
re
- -
- -
- -
(5,6
39
) -
(5,6
39
)
Acq
uis
itio
n m
ade
du
rin
g t
he
ye
ar
- -
- 8
48
,77
4
48
,40
0
- -
24
8,9
98
1
,14
6,1
72
Shar
e o
f P
rofi
t/(L
oss
) o
f A
sso
ciat
e C
om
pan
y af
ter T
ax
- -
- 7
1,5
34
8
2,4
02
4
4,8
29
5
,27
1
(45
,76
1)
15
8,2
75
Div
ide
nd
Pai
d
- -
- -
- (2
3,1
64
) (1
,77
0)
- (2
4,9
34
)
Eq
uit
y V
alu
e o
f In
ve
stm
en
t a
s a
t 1
st A
pri
l 20
11
-
- -
92
0,3
08
1
30
,80
2
19
1,1
17
3
,49
3
20
3,2
37
1
,44
8,9
57
Acq
uis
itio
n m
ade
du
rin
g t
he
ye
ar
17
,47
0
23
4
,00
0
33
7,2
91
2
3,8
02
41
0
- 3
82
,99
6
Shar
e o
f P
rofi
t/(L
oss
) o
f A
sso
ciat
e C
om
pan
y af
ter T
ax
(93
2)
5,0
71
-
(25
,20
6)
(80
,20
4)
51
,23
3
20
6
(45
,09
9)
(94
,93
1)
Shar
e o
f O
the
r C
om
pre
he
nsi
ve In
com
e
- -
- 9
4,5
48
-
- -
- 9
4,5
48
Re
cog
niz
ed
as
a Su
bsi
dia
ry
- -
-
(74
,40
0)
- -
- (7
4,4
00
)
oth
er
eq
uit
y m
ove
me
nt
(1,2
98
) -
- (4
,65
6)
- -
- -
(5,9
54
)
Div
ide
nd
Re
ceiv
ed
-
- -
- -
(43
,90
8)
- -
(43
,90
8)
Eq
uit
y V
alu
e o
f In
ve
stm
en
t a
s a
t 3
1st
Ma
rch
20
12
1
5,2
40
5
,09
4
4,0
00
1
,32
2,2
85
-
19
8,4
42
4
,10
9
15
8,1
38
1
,70
7,3
08
Acq
uis
itio
n m
ade
du
rin
g t
he
ye
ar
- -
- -
- -
30
1
- 3
01
Shar
e o
f P
rofi
t/(L
oss
) o
f A
sso
ciat
e C
om
pan
y af
ter T
ax
(54
6)
(1,8
66
) -
(24
1,6
53
) -
41
,44
3
88
3
(10
0,0
51
) (3
01
,79
0)
Shar
e o
f O
the
r C
om
pre
he
nsi
ve In
com
e
- -
- 5
5,1
28
-
- -
- 5
5,1
28
Tran
sfe
rre
d t
o lo
ng
te
rm In
vest
me
nts
at
fair
Val
ue
(1
4,6
94
) -
- -
- -
- -
(14
,69
4)
Ad
just
me
nt
on
eff
ect
ive
ho
ldin
g
- -
- 1
1,4
75
-
- -
- 1
1,4
75
Div
ide
nd
Re
ceiv
ed
-
(1,0
00
) -
(65
5)
- (2
5,6
15
) -
- (2
7,2
70
)
Eq
uit
y V
alu
e o
f In
ve
stm
en
t a
s a
t 3
1st
Ma
rch
20
13
-
2,2
28
4
,00
0
1,1
46
,58
0
- 2
14
,27
0
5,2
93
5
8,0
87
1
,43
0,4
58
164 | Brown & Company PLC
18
INV
EST
ME
NT
S IN
EQ
UIT
Y A
CC
OU
NT
ED
IN
VE
STE
ES
CO
NT
D.
18.1
.2 S
um
mar
ised
Fin
anci
al I
nfo
rmat
ion
of
Equ
ity
Acc
oun
ted
Inve
stee
s
3
1st
Ma
rch
20
13
3
1st
Ma
rch
1
st A
pri
l
20
12
2
01
1
Fo
r th
e y
ea
r e
nd
ed
R
FL
PL
T
PL
V
IPL
LO
LCL
PL
A
BM
M
GT
PL
G
PP
L
Tota
l To
tal
Tota
l
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
Re
ven
ue
5
93
1
12
,86
7
- 9
02
,67
4
2,0
99
,21
3
40
,64
8
32
6,3
58
3
,04
2,5
35
3
,84
3,6
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Oth
er
Inco
me
-
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58
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8
8,8
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9
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2
5,9
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- (2
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Du
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d u
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LC L
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ted
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row
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stm
en
ts P
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gat
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ly c
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ute
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s. 2
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de
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m G
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tel P
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to
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d d
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ver
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ear
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th
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in e
stim
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a re
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of
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lop
me
nt
and
th
e L
OLC
Le
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re G
rou
p r
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ize
d a
loss
of
Rs.
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0 M
n c
on
seq
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18.2
In
vest
men
ts in
Equ
ity
Acc
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ted
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stee
s -
Com
pan
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H
old
ing
%
No
. of
sha
res
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an
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A
s a
t A
s a
t A
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s a
t A
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s a
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s a
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s a
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3
1st
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3
1st
Ma
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3
1st
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3
1st
Ma
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3
1st
Ma
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3
1st
Ma
rch
3
1st
Ma
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3
1st
Ma
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3
1st
Ma
rch
2
01
3
20
12
2
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1
20
13
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2
20
11
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3
20
12
2
01
1
R
s.0
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R
s.0
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R
s.0
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Un
qu
ote
d In
ve
stm
en
ts
Gal
oya
Pla
nat
ion
s (P
vt)
Ltd
. 2
2.0
5%
2
2.0
5%
2
2.0
5%
2
2,3
09
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2
22
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9,4
12
2
2,3
09
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2
24
8,9
98
2
48
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8
24
8,9
98
2
48
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8
24
8,9
98
2
48
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8
Gal
oya
Pla
nta
tio
ns
(Pvt
) Lt
d is
th
e p
riva
te p
ub
lic p
artn
ers
hip
en
tere
d in
to b
y th
e G
rou
p w
he
re a
to
tal o
f 4
9%
of
the
Co
mp
any
is h
eld
by
LOLC
PLC
an
d B
row
n &
Co
mp
any
PLC
. Th
e
Go
vern
me
nt
of
Sri L
anka
ho
lds
51
% o
f th
e C
om
pan
y.
Notes to the Financial Statements
Annual Report 2012/2013 | 165
19
OT
HE
R I
NV
EST
ME
NT
S -
LON
G T
ER
M
G
rou
p
Co
mp
an
y
A
s a
t A
s a
t A
s a
t A
s a
t A
s a
t A
s a
t
3
1st
Ma
rch
3
1st
Ma
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1
st A
pri
l 3
1st
Ma
rch
3
1st
Ma
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1
st A
pri
l
2
01
3
20
12
2
01
1
20
13
2
01
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20
11
R
s.0
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R
s.0
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R
s.0
00
R
s.0
00
R
s.0
00
R
s.0
00
Qu
ote
d In
vest
me
nts
(N
ote
s 1
9.1
, 19
.2)
3,7
15
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5
3,4
03
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1
5,0
30
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3
3,7
05
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3
3,3
94
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7
5,0
17
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7
Qu
ote
d In
vest
me
nts
- R
ela
ted
( N
ote
19
.3)
34
4,6
21
4
07
,26
7
35
4,6
12
-
- -
Un
qu
ote
d In
vest
me
nts
(N
ote
19
.4)
65
8,7
90
5
39
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9
56
6,0
74
-
- -
4
,71
8,7
76
4
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9,5
37
5
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0,9
49
3
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5,0
83
3
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4,4
77
5
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7,9
87
19.1
Q
uot
ed I
nve
stm
ents
- G
rou
p
N
um
be
r o
f sh
are
s C
ost
C
arr
yin
g V
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s a
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1st
Ma
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1st
Ma
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1
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pri
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1st
Ma
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1st
Ma
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1
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pri
l 3
1st
Ma
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3
1st
Ma
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1
st A
pri
l
2
01
3
20
12
2
01
1
20
13
2
01
2
20
11
2
01
3
20
12
2
01
1
Rs.
00
0
Rs.
00
0
Rs.
00
0
Rs.
00
0
Rs.
00
0
Rs.
00
0
Hat
ton
Nat
ion
al B
ank
PLC
2
2,1
86
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4
22
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6,1
24
1
3,2
05
,23
0
77
3,0
29
7
73
,02
9
33
8,2
47
3
,70
5,0
83
3
,39
4,4
77
5
,01
7,9
87
Hat
ton
Nat
ion
al B
ank
PLC
-No
n V
oti
ng
7
,70
0
7,7
00
7
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0
24
5
24
5
24
5
1,9
06
1
,12
3
1,6
26
Bro
wn
s B
eac
h H
ote
ls P
LC
38
6,0
13
3
86
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3
38
6,0
13
2
,92
9
2,9
29
2
,92
9
6,6
39
5
,85
3
8,4
00
Joh
n K
ee
lls H
ote
ls P
LC
31
,57
3
31
,57
3
31
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3
37
9
37
9
37
9
1,7
37
1
,65
8
2,2
50
77
6,5
82
7
76
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2
34
1,8
00
3
,71
5,3
65
3
,40
3,1
11
5
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0,2
63
19.2
Q
uot
ed I
nve
stm
ents
- C
ompa
ny
N
um
be
r o
f sh
are
s C
ost
C
arr
yin
g V
alu
e
A
s a
t A
s a
t A
s a
t A
s a
t A
s a
t A
s a
t A
s a
t A
s a
t A
s a
t
3
1st
Ma
rch
3
1st
Ma
rch
1
st A
pri
l 3
1st
Ma
rch
3
1st
Ma
rch
1
st A
pri
l 3
1st
Ma
rch
3
1st
Ma
rch
1
st A
pri
l
2
01
3
20
12
2
01
1
20
13
2
01
2
20
11
2
01
3
20
12
2
01
1
Rs.
00
0
Rs.
00
0
Rs.
00
0
Rs.
00
0
Rs.
00
0
Rs.
00
0
Hat
ton
Nat
ion
al B
ank
PLC
2
2,1
86
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4
22
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6,1
24
1
3,2
05
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0
77
3,0
29
7
73
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9
33
8,2
47
3
,70
5,0
83
3
,39
4,4
77
5
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7,9
87
77
3,0
29
7
73
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9
33
8,2
47
3
,70
5,0
83
3
,39
4,4
77
5
,01
7,9
87
166 | Brown & Company PLC
Notes to the Financial Statements
19 OTHER INVESTMENTS - LONG TERM -LONG TERM CONTD.
19.3 Quoted Investments-Related Company
Group Company
As at As at As at As at As at As at
31st March 31st March 1st April 31st March 31st March 1st April
2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
Sierra Cables PLC 70,864 106,667 201,494 - - -
Agstar Fertilizer PLC - - 153,118 - - -
Taprobane Holdings PLC 73,757 100,600 - - - -
Commercial Leasing & Finance PLC 200,000 200,000 - - - -
344,621 407,267 354,612 - - -
Group Company
As at As at As at As at As at As at
31st March 31st March 1st April 31st March 31st March 1st April
2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
19.4 Unquoted InvestmentsHotel Hanthana Ltd. 190 190 190 - - -
Motor Marvels (Pvt) Ltd. 4,800 4,800 4,800 4,800 4,800 4,800
Sierra Constructions (Pvt) Ltd. 335,605 299,938 346,386 - - -
Sierra Holdings (Pvt) Ltd. 308,430 228,183 219,843 - - -
Others 15,074 11,357 164 - - -
664,099 544,468 571,383 4,800 4,800 4,800
Provision for fall in value of Investments (5,309) (5,309) (5,309) (4,800) (4,800) (4,800)
658,790 539,159 566,074 - - -
Group Company
As at As at As at As at As at As at
31st March 31st March 1st April 31st March 31st March 1st April
2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
20 DEFERRED TAX ASSETS
Balance at the beginning of the year 189,703 274,812 339,469 80,426 153,167 297,484
On Acquisition of Subsidiary 6,987 33,126 3,940 - -
Transferred from Deferred Tax Liability - - (8) - -
Deferred Tax impact on Building Revaluation 5,654 2,367 (10,455) 2,014 8,156 (10,426)
Recognized/ (Reversal) during the year 79,144 (120,651) (58,134) 117,670 (80,897) (133,891)
Balance at the end of the year 281,489 189,703 274,812 200,110 80,426 153,167
Annual Report 2012/2013 | 167
20 DEFERRED TAX ASSETS CONTD.
20.1 The Closing Deferred Tax Asset balance relates to the following; Group
31st March 2013 31st March 2012 1st April 2011
Temporary Tax Temporary Tax Temporary Tax
Difference Effect Difference Effect Difference Effect
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
20.1.1 GroupProperty, Plant & Equipment (195,261) (54,869) (126,215) (35,029) (70,746) (24,761)
Employee Benefit Liabilities 97,334 26,797 87,304 24,445 49,444 17,305
Losses available for offset against future Taxable Income 1,020,235 285,665 616,703 172,677 782,074 273,726
Deferred Tax impact on Revaluation of Investment Properties (1,820) (510) (1,224) (343) (280) (98)
Deferred Tax recognized on General Provisions 66,967 18,750 77,845 21,797 20,258 7,089
987,456 275,835 654,414 183,548 780,749 273,261
Deferred Tax impact on Building Revaluation 20,193 5,654 21,986 6,156 4,431 1,551
1,007,648 281,489 676,399 189,704 785,180 274,812
Company
31st March 2013 31st March 2012 1st April 2011
Temporary Tax Temporary Tax Temporary Tax
Difference Effect Difference Effect Difference Effect
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
20.1.2 CompanyProperty, Plant & Equipment (164,629) (46,096) (106,341) (29,775) (70,883) (19,847)
Employee Benefit Liabilities 83,113 23,272 77,971 21,832 44,592 12,486
Losses available for offset against future Taxable Income 790,818 221,431 281,096 78,707 568,504 159,181
Deferred Tax impact on Revaluation of Investment Properties (1,820) (510) (1,224) (343) (280) (78)
Deferred Tax recognized on General Provisions - - 15,527 4,348 659 185
707,482 198,097 267,029 74,769 542,592 151,927
Deferred Tax impact on Building Revaluation 7,193 2,013 20,207 5,657 4,431 1,240
714,675 200,110 287,236 80,426 547,023 153,167
20.2 Deferred Tax liability charged credited to Equity - GroupAccording to Sri Lanka Accounting Standard LKAS 14 (Revised 2005) “Income Taxes”, deferred tax shall be charged or credited directly to equity if
the tax relates to items that are credited or charged, in the same or in a different period, directly to equity. Accordingly, the deferred tax liability
arising on revaluation of property, plant and equipment of Rs. 5.2 Mn was charged /credited directly to revaluation reserve in the Statement of
Changes in Equity in the year 2012/13 (Rs. 5 Mn -2011/12).
168 | Brown & Company PLC
Group Company
As at As at As at As at As at As at
31st March 31st March 1st April 31st March 31st March 1st April
2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
21 LOANS TO RELATED PARTIES - DUE AFTER ONE YEAR
Browns Holdings Ltd 1,569 2,328 2,623 - - -
Director of Klevenberg (Pvt) Ltd. 1,600 1,600 20,000 - - -
3,169 3,928 22,623 - - -
Group Company
As at As at As at As at As at As at
31st March 31st March 1st April 31st March 31st March 1st April
2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
22 INVENTORIES
Raw Material 185,897 325,288 263,848 194 - -
Work-in-Progress 56,172 113,001 19,733 11,967 7,895 7,373
Finished Goods 1,979,741 2,154,497 869,082 1,605,315 1,996,977 726,397
Input Material 15,392 22,791 16,520 - - -
Growing Crop Nurseries - 3,870 5,022 - - -
- Tea 139,281 106,247 122,791 - - -
- Rubber 12,299 14,145 26,189 - - -
- Coconut 100 115 555 - - -
Consumables and Spares 15,542 71,355 7,798 - - -
Goods in Transit 61,078 55,667 30,505 48,521 41,240 29,100
Certified Emission Reduction 529 6,116 11,216 - - -
2,466,030 2,873,092 1,373,259 1,665,997 2,046,112 762,870
Less: Provision for Slow Moving Stocks (256,300) (136,091) (111,657) (217,888) (77,114) (72,868)
2,209,730 2,737,001 1,261,602 1,448,109 1,968,998 690,002
Group Company
As at As at As at As at As at As at
31st March 31st March 1st April 31st March 31st March 1st April
2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
23 TRADE AND OTHER RECEIVABLES
Trade Receivables 2,624,792 1,952,317 1,409,689 2,062,256 1,465,197 1,075,172
Other Receivables (Note 23.1) 397,580 318,208 168,045 221,528 107,580 97,975
3,022,372 2,270,525 1,577,734 2,283,784 1,572,777 1,173,147
Less: Provision for Bad and Doubtful Debts (329,790) (287,702) (278,158) (249,564) (179,017) (173,634)
2,692,582 1,982,823 1,299,576 2,034,220 1,393,760 999,513
Notes to the Financial Statements
Annual Report 2012/2013 | 169
Group Company
As at As at As at As at As at As at
31st March 31st March 1st April 31st March 31st March 1st April
2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
23.1 Other ReceivablesVAT Recoverable 49,243 29,039 8,092 23,871 5,175 -
Staff Loan 24,683 19,434 5,531 - - 325
WHT Recoverable 14,889 22,739 5,899 113 2,140 342
Dividend Receivable 167,870 6,216 3,063 161,671 - -
Others 140,895 240,780 145,460 35,873 100,265 97,308
397,580 318,208 168,045 221,528 107,580 97,975
Group Company
As at As at As at As at As at As at
31st March 31st March 1st April 31st March 31st March 1st April
2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
24 DEPOSITS AND PREPAYMENTSDeposits 28,914 15,215 21,134 15,193 8,784 14,900
Prepayments 388,107 188,402 301,431 49,507 104,917 163,762
417,021 203,617 322,565 64,700 113,701 178,662
Group Company
As at As at As at As at As at As at
31st March 31st March 1st April 31st March 31st March 1st April
2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
25 LOANS TO RELATED PARTIES - DUE WITHIN ONE YEAR
Royal Fernwood Porcelain Ltd. - 82,800 10,243 56,304 26,800 -
Lexinton Holdings (Pvt) Ltd. 510,214 812,303 100,329 - - -
Engineering Services (Pvt) Ltd. 33,091 32,304 40,793 26,000 26,000 -
Browns Investments PLC - - - - - 98
Taprobane Holdings (Pvt) Ltd - 133,095 - - - -
Masons Mixture Ltd. 64,977 57,377 64,077 64,977 57,377 64,077
Galoya Plantations (Pvt) Ltd. 498,817 288,962 167,875 498,817 288,962 167,875
Browns Industrial Park Ltd. - - - 73,007 73,007 73,007
Sifang Lanka (Pvt) Ltd. - - - 22,577 15 -
BG Air Services (Pvt) Ltd. - - - 36,505 20,000 20,000
Browns Investments PLC - - - - 40,354 79,979
Director of Klevenberg (Pvt) Ltd. - 5,886 48,017 - - -
1,107,099 1,412,727 431,334 778,187 532,515 405,036
170 | Brown & Company PLC
Group Company
As at As at As at As at As at As at
31st March 31st March 1st April 31st March 31st March 1st April
2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
26 AMOUNTS DUE FROM RELATED PARTIES
Associated Battery Manufacturers (Cey) Ltd. 25,828 34,494 931 11 8 8
Agstar Fertilizer PLC 2 - - 2 - -
BG Air Services (Pvt) Ltd - - - 614 3,112 823
Browns Capital (Pvt) Ltd. - - - - - 250
Browns Group Industries (Pvt) Ltd. - - - 58,089 45,120 31,001
Browns Health Care (Pvt) Ltd. - - - - - 1,660
Browns Industrial Park Ltd. - - - 185,866 39,308 -
Browns Investments PLC - - - 24,249 16,511 5,691
Browns Real Estates (Pvt) Ltd. - - - - 299 -
Browns Thermal Engineering (Pvt) Ltd. - - - 29,756 21,707 12,652
Browns Tours (Pvt) Ltd. - - - 9,179 7,715 7,810
C.F.T. Engineering (Pvt) Ltd. - - - 317 106 56
Ceylon Estate Teas (Pvt) Ltd - 2,668 1,601 - - -
Ceylon Ayurvedic Teas (Pvt) Ltd 222 - - - - -
Diesel & Motor Engineering PLC 50 50 1,113 - - -
Engineering Services (Pvt) Ltd. 9,411 8,916 8,910 8,092 7,656 7,356
ESL Trading(Pvt)Ltd - - - 41 - -
FLMC Sudima Timber Products (Pvt) Ltd. 142 69 - - - -
FLC Joint Venture (Pvt) Ltd. 183,527 190,896 194,006 - - -
FLC Estate Bungolws (Pvt) Ltd. 23 4 - - - -
Free Lanka Trading Company (Pvt) Ltd. 7 - 42 - - -
Free Lanka Trading Liquor (Pvt) Ltd - 2 - - - -
Galoya Holdings (Pvt) Ltd. 36 36 - 72 72 -
Galoya Plantations (Pvt) Ltd. 3,293 - - 3,293 - -
Hatton Transport & Agency Co. (Pvt) Ltd. - - - - - 1,193
IG Browns Rubber Industries (Pvt) Ltd. - - - 1,186 148 24
Klevenberg (Pvt) Ltd. - - - 1,348 10,896 -
LOLC Leisure Ltd. 41,126 45,934 - - - -
Masons Mixture Ltd. 25,548 19,310 38,169 21,533 17,105 34,284
Melfort Green Teas (Pvt) Ltd. 17 178 2,154 - - -
Perpetual Holdings Ltd - - 162 - - -
Royal Fernwood Porcelain Ltd. - - 50,000 15,017 91 -
Rain Forest Eco lodge 65 - - - -
Samudra Beach Resorts (Pvt) Ltd. - - - 5 5 -
Sierra Constructions (Pvt) Ltd. - 52 - - - -
Sifang Lanka (Pvt) Ltd. - - - 61,578 51,655 33,807
Sifang Lanka Trading (Pvt) Ltd. - - - 3,000 - -
Snowcem Products Lanka (Pvt) Ltd. - - - 24,554 20,048 17,325
S.F.L Services (Pvt) Ltd. - - - 34,652 67,902 14,496
Taprobane Securities (Pvt) Ltd. - - - 16 - -
Taprobane Capital (Pvt) Ltd. - - - 3 - -
Taprobane Planations Ltd - 914 - - - -
Taprobane Holdings PLC 3 - - - - -
Browns Holdings Ltd. 16 - - - - -
Walker & Greig (Pvt) Ltd. - - - 3 - 14,937
289,317 303,523 297,088 482,476 309,464 183,373
Less: Provision for Intercompany Receivables (Note 26.1) - - - (31,178) (26,673) (38,887)
289,317 303,523 297,088 451,298 282,791 144,486
Notes to the Financial Statements
Annual Report 2012/2013 | 171
Group Company
As at As at As at As at As at As at
31st March 31st March 1st April 31st March 31st March 1st April
2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
26.1 Provision for Inter Company Receivables
Snowcem Products Lanka (Pvt) Ltd. - - - 24,554 20,049 17,326
Walker & Greig (Pvt) Ltd. - - - - - 14,937
Masons Mixture Ltd. - - - 6,624 6,624 6,624
- - - 31,178 26,673 38,887
Group Company
As at As at As at As at As at As at
31st March 31st March 1st April 31st March 31st March 1st April
2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
27 TAX RECOVERABLE
Balance at the beginning of the year 4,298 202 3,513 (59,563) - -
On Acquisition of Subsidiary - - (818) - - -
Provision for the Year (18,949) (9,842) - (25,896) - -
Payment made/(Recovered) during the year 74,298 13,938 (2,493) 127,478 - -
Balance at the end of the year 59,647 4,298 202 42,019 - -
Group Company
As at As at As at As at As at As at
31st March 31st March 1st April 31st March 31st March 1st April
2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
28 OTHER INVESTMENTS - SHORT TERM
Fixed and Call Deposits 314,310 246,413 2,304,440 - 6,800 6,800
Treasury Bills 11,024 12,499 1,795 - - -
Treasury Bonds 32,602 100,835 21,903 - 23,481 -
Commercial Papers - 688,703 940,847 - - -
REPO 12,943 55,578 278,136 - - 21,903
Investment in Quoted Shares (Note 28.1, 28.2) 3,024,775 3,026,874 1,998,655 1,685,770 1,687,528 1,043,857
3,395,654 4,130,902 5,545,776 1,685,770 1,717,809 1,072,560
172 | Brown & Company PLC
28
OT
HE
R I
NV
EST
ME
NT
- S
HO
RT
TE
RM
28.1
In
vest
men
t in
Qu
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ares
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um
be
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3
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Ma
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1
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3
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3
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1
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pri
l
2
01
3
20
12
2
01
1
20
13
2
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2
20
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2
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of
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Rs.
00
0
Rs.
00
0
Rs.
00
0
Rs.
00
0
Rs.
00
0
Rs.
00
0
Dia
log
Axi
ata
PLC
4
6,9
90
,60
0
46
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0,6
00
4
6,9
90
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0
54
6,1
89
5
46
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9
54
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4
27
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7
33
3,6
39
4
98
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0
Joh
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old
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s P
LC
27
3
27
3
20
5
26
2
6
26
6
7
42
5
9
Seyl
an B
ank
PLC
- V
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3
2,2
59
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7
31
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2,1
64
1
2,4
16
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6
1,7
79
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9
1,7
62
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1
2,1
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0
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11
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6
1,6
11
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2
93
4,9
98
Am
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Leis
ure
PLC
1
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13
2
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2
13
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76
7
6
12
4
Me
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Ban
k o
f Sr
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66
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66
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88
3
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8
3,6
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1
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3
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3
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3
Ch
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18
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0
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3
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1
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1
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29
He
mas
Ho
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PLC
1
83
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0
1,9
23
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1,7
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83
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2
83
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2
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2
51
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1
Hay
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3
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-
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Tru
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1
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-
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54
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2
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2
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33
Seyl
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PLC
- N
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- -
1,7
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6
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8
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1
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1,0
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4
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3
51
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3
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19
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0
Envi
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me
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10
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- -
- 1
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Val
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- -
52
3,0
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The
Fin
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1
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Fin
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-
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3
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5
Notes to the Financial Statements
Annual Report 2012/2013 | 173
28.2
In
vest
men
t in
Qu
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Sh
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C
om
pa
ny
N
um
be
r o
f S
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3
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3
1st
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1
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pri
l 3
1st
Ma
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3
1st
Ma
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1
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pri
l 3
1st
Ma
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3
1st
Ma
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1
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pri
l
2
01
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20
12
2
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1
20
13
2
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2
20
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of
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5
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2
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1
2,4
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6
2,1
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0
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0
1,6
11
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6
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3
93
4,9
97
Am
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Leis
ure
PLC
1
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0
1,0
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1
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2
13
2
13
2
77
7
6
12
4
Me
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Ban
k o
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0
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8
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3
Ch
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LC
18
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0
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3
0,7
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3
0,7
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1
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1
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2
3,8
29
He
mas
Ho
ldin
gs
PLC
1
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0,0
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1
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0,0
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1
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0,0
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5
0,7
49
5
0,7
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5
0,7
49
2
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2
8,4
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4
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80
Hay
leys
PLC
2
8,6
00
2
8,6
00
2
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1
1,2
79
1
1,2
79
1
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8
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7
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6
10
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5
FLC
Ho
ldin
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LC
1,4
20
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0
1,4
20
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0
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5
7,1
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3,6
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2
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0
-
Envi
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me
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sou
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vest
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PLC
1
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- -
2
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2,2
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7
174 | Brown & Company PLC
Group Company
As at As at As at As at As at As at
31st March 31st March 1st April 31st March 31st March 1st April
2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
29 CASH AT BANK AND IN HAND
Cash at Bank 625,833 745,858 1,357,886 280,705 200,833 737,228
Cash in Hand 6,981 5,83 3,196 - - -
Cash in Transit 1,906 2,334 3,832 - - -
634,720 753,575 1,364,914 280,705 200,833 737,228
Group Company
As at As at As at As at As at As at
31st March 31st March 1st April 31st March 31st March 1st April
2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
30 STATED CAPITAL
70,875,000 Ordinary Shares 2,005,601 2,005,601 2,005,601 2,005,601 2,005,601 2,005,601
Group Company
As at As at As at As at As at As at
31st March 31st March 1st April 31st March 31st March 1st April
2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
31 RESERVES
31.1 Capital ReservesRevaluation of Property, Plant and Equipment 1,209,771 861,756 696,037 1,267,416 1,139,165 980,318
Available for Sales Reserve 2,575,585 2,401,950 4,502,994 2,932,067 2,621,461 4,679,753
Capital Reserves 202,216 202,216 202,216 200,000 200,000 200,000
3,987,572 3,465,922 5,401,247 4,399,483 3,960,626 5,860,071
31.2 Revenue ReservesGeneral Reserve 53,113 53,113 53,113 5,913,097 5,913,097 5,913,097
Retained Earnings 9,049,478 8,356,111 7,453,933 1,471,265 1,980,602 1,689,146
9,102,591 8,409,224 7,507,046 7,384,362 7,893,699 7,602,243
31.3 Revaluation ReserveThe revaluation reserve relates to the revaluation surplus of property, plant and equipment and the long-term investments. Once the respective
revalued items have been disposed, the relevant portion of revaluation surplus is transferred to retained earnings.
31.4 Fair Value Reserve on AFSThe fair value reserve comprises the cumulative net change in the fair value of available-for-sale financial assets until the assets are derecognized
or impaired.
Notes to the Financial Statements
Annual Report 2012/2013 | 175
Group Company
As at As at As at As at As at As at
31st March 31st March 1st April 31st March 31st March 1st April
2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
32 INTEREST BEARING BORROWINGS
Balance at the beginning of the year 3,424,524 1,456,194 1,599,808 2,132,063 1,065,896 639,580
On Acquisition of Subsidiary - 255,058 - - - -
Obtained during the year 682,230 2,166,186 806,395 - 1,450,000 775,000
Repayments (1,019,685) (452,913) (644,141) (593,295) (383,833) (348,684)
Transfers - - (121,250) - - -
On Disposal of Joint Venture - - (184,618) - - -
Balance at the end of the year 3,087,069 3,424,524 1,456,194 1,538,766 2,132,063 1,065,896
Payable after one Year 2,287,576 2,255,059 1,050,937 1,018,273 1,538,771 746,439
Payable within one Year 799,493 1,169,465 405,257 520,493 593,292 319,457
3,087,069 3,424,524 1,456,194 1,538,766 2,132,063 1,065,896
32.1 Analysis of Non-Current portion of Interest Bearing Borrowings - Company
Payable Payable after One year
Name of the Lending Institution Within Payable Payable More than 31st March 31st March 1st April
One year 1-2 years 2-5 Years 5Years 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
Hatton National Bank PLC - - - - - 42,215 98,795
Hatton National Bank PLC 6,110 - - - 6,110 28,970 51,830
Hatton National Bank PLC - - - - - 12,518 37,514
Hatton National Bank PLC 70,000 70,000 122,500 - 262,500 332,500 -
Commercial Bank of Ceylon PLC 14,513 - - - 14,513 30,347 46,180
Commercial Bank of Ceylon PLC 7,500 7,500 1,250 - 16,250 23,750 31,250
Commercial Bank of Ceylon PLC 20,844 20,844 10,358 - 52,046 72,890 93,734
Commercial Bank of Ceylon PLC 45,840 45,840 64,900 - 156,580 202,420 248,260
Commercial Bank of Ceylon PLC 125,004 83,320 - - 208,324 333,328 458,333
Commercial Bank of Ceylon PLC 112,500 112,500 65,625 - 290,625 403,125 -
DFCC Bank 118,182 118,182 295,454 - 531,818 650,000 -
Total 520,493 458,186 560,087 - 1,538,766 2,132,063 1,065,896
176 | Brown & Company PLC
32
INT
ER
EST
BE
AR
ING
BO
RR
OW
ING
S C
ON
TD
.
32.2
Se
curi
ty a
nd
Rep
aym
ent
Term
s -
Com
pan
y
Ou
tsta
nd
ing
O
uts
tan
din
g
Ou
tsta
nd
ing
Ba
lan
ce
Ba
lan
ce
Ba
lan
ce
Na
me
of
the
Le
nd
ing
Inst
itu
tio
n
Na
ture
of
Re
pa
ym
en
t
as
at
31
st
as
at
31
st
as
at
1st
fa
cili
ty
Term
s S
ecu
rity
M
arc
h 2
01
3
Ma
rch
20
12
A
pri
l 20
11
Rs.
00
0
Rs.
00
0
Rs.
00
0
Hat
ton
Nat
ion
al B
ank
PLC
Te
rm L
oan
1
08
mo
nth
ly in
stal
me
nts
M
ort
gag
e o
ver
Lan
d a
nd
Bu
ildin
gs
at
- 4
2,2
15
9
8,7
95
Hat
ton
Nat
ion
al B
ank
PLC
Te
rm L
oan
9
0 m
on
thly
inst
alm
en
ts
TB
Jay
ah M
awat
ha
and
De
van
amp
iyat
issa
6
,11
0
28
,97
0
51
,83
0
Hat
ton
Nat
ion
al B
ank
PLC
Te
rm L
oan
6
0 m
on
thly
inst
alm
en
ts
Maw
ath
a C
olo
mb
o 1
0 fo
r R
s. 7
92
Mn
. 2
62
,50
0
33
2,5
00
-
Hat
ton
Nat
ion
al B
ank
PLC
Te
rm L
oan
6
0 m
on
thly
inst
alm
en
ts
-
12
,51
8
37
,51
4
Co
mm
erc
ial B
ank
of
Ce
ylo
n P
LC
Term
Lo
an
72
mo
nth
ly in
stal
me
nts
M
ort
gag
e o
ver
19
Mn
HN
B s
har
es
and
1
4,5
14
3
0,3
47
4
6,1
81
Co
mm
erc
ial B
ank
of
Ce
ylo
n P
LC
Term
Lo
an
96
mo
nth
ly in
stal
me
nts
m
ort
gag
e o
ver
Lan
d &
Bu
ildin
gs
at
16
,25
0
23
,75
0
31
,25
0
Co
mm
erc
ial B
ank
of
Ce
ylo
n P
LC
Term
Lo
an
72
mo
nth
ly in
stal
me
nts
R
atm
alan
a an
d D
amb
ulla
5
2,0
46
7
2,8
90
9
3,7
34
Co
mm
erc
ial B
ank
of
Ce
ylo
n P
LC
Term
Lo
an
72
mo
nth
ly in
stal
me
nts
15
6,5
80
2
02
,42
0
24
8,2
60
Co
mm
erc
ial B
ank
of
Ce
ylo
n P
LC
Term
Lo
an
48
mo
nth
ly in
stal
me
nts
20
8,3
24
3
33
,32
8
45
8,3
32
Co
mm
erc
ial B
ank
of
Ce
ylo
n P
LC
Term
Lo
an
48
mo
nth
ly in
stal
me
nts
29
0,6
25
4
03
,12
5
-
DFC
C B
ank
Term
Lo
an
66
mo
nth
ly in
stal
me
nts
M
ort
gag
e o
ver
24
Mn
ord
inar
y sh
are
s o
f
53
1,8
17
6
50
,00
0
-
Seyl
an B
ank
PLC
he
ld b
y th
e B
row
n &
Co
mp
any
PLC
in f
avo
ur
of
DFC
C B
ank.
Co
mp
an
y T
ota
l
1,5
38
,76
6
2,1
32
,06
3
1,0
65
,89
6
32.3
Se
curi
ty a
nd
Rep
aym
ent
Term
s -
Gro
up
i)
Kle
ve
nb
erg
(P
vt)
Ltd
.
H
atto
n N
atio
nal
Ban
k P
LC
Term
Lo
an
60
mo
nth
ly in
stal
me
nts
M
ort
gag
e o
ver
50
ye
ars
leas
eh
old
Lan
d a
nd
-
- 2
,62
1
H
atto
n N
atio
nal
Ban
k P
LC
Term
Lo
an
B
uild
ing
at
Avi
ssaw
ella
Ro
ad, O
rug
od
awat
ta,
- -
3,4
88
We
llam
pit
iya.
-
- 6
,10
9
ii)
Bro
wn
s In
du
stri
al P
ark
Ltd
B
ank
of
Ce
ylo
n
Term
Lo
an
9 a
nn
ual
inst
alm
en
ts
Co
rpo
rate
Gu
aran
tee
of
Bro
wn
&
11
1,9
98
1
39
,99
8
16
7,9
98
C
om
pan
y P
LC a
nd
Mo
rtg
age
ove
r Le
ase
ho
ld
Pro
pe
rty
at M
akan
du
ra.
1
11
,99
8
13
9,9
98
1
67
,99
8
Notes to the Financial Statements
Annual Report 2012/2013 | 177
Ou
tsta
nd
ing
O
uts
tan
din
g
Ou
tsta
nd
ing
Ba
lan
ce
Ba
lan
ce
Ba
lan
ce
Na
me
of
the
Le
nd
ing
Inst
itu
tio
n
Na
ture
of
Re
pa
ym
en
t
as
at
31
st
as
at
31
st
as
at
1st
fa
cili
ty
Term
s S
ecu
rity
M
arc
h 2
01
3
Ma
rch
20
12
A
pri
l 20
11
iii)
A
jax
En
gin
ee
rs (
Pv
t) L
td.
Pe
op
le’s
Le
asin
g C
om
pan
y Te
rm L
oan
2
4 m
on
thly
inst
alm
en
ts
Mo
rtg
age
ove
r fi
xed
de
po
sit
amo
un
tin
g
96
0
1,7
86
-
to R
s.2
.4 M
n in
Pe
op
le’s
Le
asin
g C
om
pan
y
9
60
1
,78
6
-
iv)
Mil
len
niu
m D
ev
elo
pm
en
t (P
vt)
Ltd
.
D
FCC
Ban
k Te
rm L
oan
5
4 m
on
thly
inst
alm
en
ts
Mo
rtg
age
ove
r P
lan
t an
d M
ach
ine
ry
10
,37
0
19
,25
9
-
am
ou
nti
ng
to
Rs.
40
Mn
in E
xce
l Wo
rld
Ad
ven
ture
Par
k
1
0,3
70
1
9,2
59
-
v)
Ro
ya
l Fe
rnw
oo
d P
orc
ela
in L
td.
H
atto
n N
atio
nal
Ban
k P
LC
Term
Lo
an
84
mo
nth
ly in
stal
me
nts
M
ort
gag
e o
ver
lan
d, b
uild
ing
& im
mo
vab
le
92
,94
1
10
9,4
18
-
H
atto
n N
atio
nal
Ban
k P
LC
Term
Lo
an
84
mo
nth
ly in
stal
me
nts
m
ach
ine
ry a
mo
un
tin
g t
o R
s.3
00
Mn
an
d la
nd
, 8
,73
0
10
,27
9
-
H
atto
n N
atio
nal
Ban
k P
LC
Term
Lo
an
84
mo
nth
ly in
stal
me
nts
b
uild
ing
& im
mo
vab
le m
ach
ine
ry a
mo
un
tin
g
60
,83
7
70
,52
4
-
Hat
ton
Nat
ion
al B
ank
PLC
Te
rm L
oan
8
4 m
on
thly
inst
alm
en
ts
to
USD
3.2
5 M
n.
2,1
43
4
8,7
92
-
Hat
ton
Nat
ion
al B
ank
PLC
Te
rm L
oan
8
4 m
on
thly
inst
alm
en
ts
4
6,1
27
5
4,1
13
-
H
atto
n N
atio
nal
Ban
k P
LC
Term
Lo
an
84
mo
nth
ly in
stal
me
nts
8,9
52
1
0,4
16
-
H
atto
n N
atio
nal
Ban
k P
LC
Term
Lo
an
84
mo
nth
ly in
stal
me
nts
23
,55
6
27
,49
4
-
2
43
,28
6
33
1,0
36
-
vi)
B
row
ns
Inv
est
me
nts
PLC
Sa
mp
ath
Ban
k P
LC
Term
Lo
an
16
qu
arte
rly
inst
alm
en
ts
Shar
es
acce
pta
ble
to
th
e b
ank
lod
ge
d in
a
54
6,0
00
5
12
,00
0
-
cu
sto
dia
n a
cco
un
t o
f th
e b
ank
wit
h c
har
ge
s
on
se
curi
tie
s an
d P
ow
er
of
Att
orn
ey.
B
ank
of
Ce
ylo
n
Term
Lo
an
12
0 m
on
thly
inst
alm
en
ts
Mo
rtg
age
ove
r la
nd
an
d b
uild
ing
of
4
00
,00
0
- -
Sam
ud
hra
Be
ach
Re
sort
s (P
vt)
Ltd
9
46
,00
0
51
2,0
00
-
vii
) F
L C
Ho
ldin
gs
PLC
La
nka
Ori
x Fi
nan
ce C
o. P
LC
Term
Lo
an
Re
volv
ing
cre
dit
fac
ility
R
s.2
50
Mn
sh
ort
te
rm d
ep
osi
t in
LO
LFC
. 1
7,0
76
2
2,7
76
-
1
7,0
76
2
2,7
76
-
178 | Brown & Company PLC
32
INT
ER
EST
BE
AR
ING
BO
RR
OW
ING
S C
ON
TD
.
32.3
Se
curi
ty a
nd
Rep
aym
ent
Term
s -
Gro
up
Ou
tsta
nd
ing
O
uts
tan
din
g
Ou
tsta
nd
ing
Ba
lan
ce
Ba
lan
ce
Ba
lan
ce
Na
me
of
the
Le
nd
ing
Inst
itu
tio
n
Na
ture
of
Re
pa
ym
en
t
as
at
31
st
as
at
31
st
as
at
1st
fa
cili
ty
Term
s S
ecu
rity
M
arc
h 2
01
3
Ma
rch
20
12
A
pri
l 20
11
vii
i)
Ma
tura
ta P
lan
tati
on
s L
imit
ed
Se
ylan
Ban
k P
LC
Term
Lo
an
24
mo
nth
ly in
stal
me
nts
M
ort
gag
e o
ver
leas
eh
old
rig
hts
of
Bra
mle
y
- -
3,4
09
Te
rm L
oan
2
4 m
on
thly
inst
alm
en
ts
Esta
te fo
r R
s.1
3.0
Mn
. Pri
mar
y M
ort
gag
e fo
r
- -
2,9
57
Te
rm L
oan
4
8 m
on
thly
inst
alm
en
ts
Rs.
36
Mn
an
d S
eco
nd
ary
Mo
rtg
age
bo
nd
for
9
,66
3
16
,49
0
23
,31
7
Te
rm L
oan
4
8 m
on
thly
inst
alm
en
ts
Rs.
50
Mn
ove
r le
ase
ho
ld r
igh
ts o
f G
on
apit
iya
1
,47
9
2,3
66
3
,25
3
Te
rm L
oan
6
0 m
on
thly
inst
alm
en
ts
Esta
te. M
ort
gag
e o
ver
leas
eh
old
rig
hts
of
Alm
a
30
,03
0
38
,22
0
7,3
91
Es
tate
for
Rs.
26
Mn
.
A
sian
De
velo
pm
en
t B
ank.
Te
rm L
oan
6
3 m
on
thly
inst
alm
en
ts
Mo
rtg
age
ove
r le
ase
ho
ld r
igh
ts o
f e
stat
e la
nd
, 6
81
3
,31
3
6,9
25
Te
rm L
oan
7
0 m
on
thly
inst
alm
en
ts
bu
ildin
gs,
fixe
d a
nd
flo
atin
g a
sse
ts o
f R
agal
la
76
4
2,0
45
3
,40
9
Te
rm L
oan
6
4 m
on
thly
inst
alm
en
ts
Esta
te fo
r R
s.7
4.7
5 M
n. M
ort
gag
e o
ver
leas
eh
old
-
19
1
38
2
Te
rm L
oan
7
8 m
on
thly
inst
alm
en
ts
rig
hts
of
est
ate
lan
d, b
uild
ing
s, fi
xed
an
d fl
oat
ing
-
1,4
20
2
,07
5
Te
rm L
oan
8
4 m
on
thly
inst
alm
en
ts
asse
ts o
f M
aha
Uva
Est
ate
for
Rs.
19
.50
Mn
. 1
,27
0
2,0
33
2
,79
6
Te
rm L
oan
4
7 m
on
thly
inst
alm
en
ts
Mo
rtg
age
ove
r le
ase
ho
ld r
igh
ts o
f e
stat
e la
nd
, -
- 3
2
b
uild
ing
s, fi
xed
an
d fl
oat
ing
ass
ets
of
Ense
lwat
te
Es
tate
for
Rs.
10
2.2
5 M
n. P
rim
ary
Mo
rtg
age
ove
r
st
ock
in t
rad
e fo
r R
s. 2
00
.0 M
n
La
nka
Ori
x Le
asin
g P
LC
PD
P L
oan
1
08
mo
nth
ly in
stal
me
nts
P
rim
ary
Co
nti
nu
ing
mo
rtg
age
bo
nd
for
49
2
62
7
76
1
u
nd
er
AD
B
10
2 m
on
thly
inst
alm
en
ts
Rs.
42
.93
Mn
ove
r th
e u
ne
xpir
ed
leas
eh
old
3
,59
4
4,8
26
6
,05
8
P
lan
tati
on
9
6 m
on
thly
inst
alm
en
ts
rig
hts
ove
r th
e la
nd
cal
led
An
nin
gka
nd
a 1
0,1
02
1
2,1
22
1
4,1
43
D
eve
lop
me
nt
and
Pan
ilkan
da
Esta
tes
in D
en
iyay
a an
d
- -
4,2
75
P
roje
ct
48
mo
nth
ly in
stal
me
nts
Fr
ee
hill
Bu
ng
alo
w in
Nu
war
a El
iya.
Pri
mar
y
- -
12
,28
5
co
nti
nu
ing
mo
rtg
age
bo
nd
on
all
that
un
exp
ire
d
7,2
20
6
,07
9
-
le
ase
ho
ld r
igh
ts o
ver
Lan
d, E
stat
e a
nd
Pre
mis
es
ca
lled
“Hay
es
Gro
up
” in
De
niy
aya/
Rat
hn
apu
ra.
P
rim
ary
con
tin
uin
g m
ort
gag
e b
on
d o
n a
ll th
at
u
ne
xpir
ed
leas
eh
old
rig
hts
ove
r La
nd
, Est
ate
an
d P
rem
ise
s ca
lled
an
d k
no
wn
as
“St.
Le
on
ard
s Es
tate
’’. 7
1,6
91
7
1,6
91
-
1
36
,98
6
16
1,4
23
9
3,4
68
Notes to the Financial Statements
Annual Report 2012/2013 | 179
Ou
tsta
nd
ing
O
uts
tan
din
g
Ou
tsta
nd
ing
Ba
lan
ce
Ba
lan
ce
Ba
lan
ce
Na
me
of
the
Le
nd
ing
Inst
itu
tio
n
Na
ture
of
Re
pa
ym
en
t
as
at
31
st
as
at
31
st
as
at
1st
fa
cili
ty
Term
s S
ecu
rity
M
arc
h 2
01
3
Ma
rch
20
12
A
pri
l 20
11
ix)
Pu
sse
lla
wa
Pla
nta
tio
ns
Ltd
.,
B
ank
of
Ce
ylo
n
Term
Lo
an
12
0 m
on
thly
inst
alm
en
ts
Leas
eh
old
rig
hts
of
He
lbo
dd
e &
1
,23
2
5,2
18
7
,25
8
Te
rm L
oan
1
20
mo
nth
ly in
stal
me
nts
St
elle
nb
urg
Est
ate
s.
1,6
57
2
,36
5
3,4
97
Term
Lo
an
12
0 m
on
thly
inst
alm
en
ts
Leas
eh
old
rig
hts
of
Pu
sse
lla E
stat
e.
3,1
78
2
,98
4
4,3
10
Term
Lo
an
12
0 m
on
thly
inst
alm
en
ts
Leas
eh
old
rig
hts
of
Me
lfort
& M
oo
loya
Est
ate
s.
5,5
25
7
,73
1
9,9
37
Leas
eh
old
rig
hts
of
Kal
oo
gal
la, M
oo
loya
&
G
irag
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180 | Brown & Company PLC
Group Company
As at As at As at As at As at As at
31st March 31st March 1st April 31st March 31st March 1st April
2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
33 RESCHEDULED DEBENTURES
Balance at the beginning of the year - 410 2,250 - - -
Settlement of Debentures - (410) (818) - - -
On Disposal of Joint Venture - - (1,022) - - -
Balance at the end of the year - - 410 - - -
Interest Rate ApplicableInterest rate applicable to Rescheduled Debentures is one year weighted average Treasury Bill gross rate ( before 10% withholding tax ) which
prevails immediately prior to 11th November every year.
Group Company
As at As at As at As at As at As at
31st March 31st March 1st April 31st March 31st March 1st April
2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
34 FINANCE LEASE OBLIGATIONS
Balance at the beginning of the year 161,154 169,867 339,423 - 338 3,689
On Acquisition of Subsidiary - 2,500 1,773 - -
Obtained during the year 18,391 1,323 2,882 14,162 - -
Paid during the Year (14,252) (12,536) (19,816) (1,942) (338) (3,351)
On Disposal of Joint Venture - - (154,395) - - -
Balance at the end of the year 165,293 161,154 169,867 12,220 - 338
Interest in Suspense (70,398) (70,038) (74,843) (3,532) - (10)
Capital outstanding at the end of the year 94,895 91,116 95,024 8,688 - 328
34.1 Lease Payable due after one yearAmounts due after one Year 153,749 150,827 158,663 8,644 - -
Less: Interest in Suspense (64,665) (65,769) (69,938) (2,499) - -
89,084 85,058 88,724 6,145 - -
34.2 Lease Payable due within one yearAmounts due within one Year 10,457 10,515 11,205 3,577 - 338
Less: Interest in Suspense (4,646) (4,457) (4,905) (1,034) - (10)
5,811 6,058 6,300 2,543 - 328
Notes to the Financial Statements
Annual Report 2012/2013 | 181
Group Company
As at As at As at As at As at As at
31st March 31st March 1st April 31st March 31st March 1st April
2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
35 RETIREMENT BENEFIT OBLIGATIONS
Change in the Retirement Benefit Obligations are as follows.
Defined Benefit Obligation at the beginning of the year 483,500 433,620 661,931 64,833 44,592 62,785
On Acquisition of Subsidiary - 7,090 3,331 - - -
Interest on Benefit Liability 880 5,072 7,801 9,189 4,459 6,906
Current Service Cost 116,157 92,593 102,350 9,046 6,853 4,776
Actuarial Gain / (Loss) (20,460) (13,703) 1,243 6,483 10,763 6,808
Benefit paid (62,382) (41,172) (75,315) (6,438) (1,834) (36,683)
On Disposal of Joint Venture - - (267,721) - - -
Defined Benefit Obligation at the end of the year 517,695 483,500 433,620 83,113 64,833 44,592
This Liability is not externally funded.
35.1 The total amount charged to Profit and Loss in respect of Retirement Benefit Obligation is made up as follows:
Group Company
As At As At As At As At
31st March 31st March 31st March 31st March
Rs. ‘000s Rs. ‘000s Rs. ‘000s Rs. ‘000s
Gratuity charge for the year - - - -
Interest charge for the year 880 5,072 9,189 4,459
Current service cost 116,157 92,593 9,046 6,853
117,037 97,665 18,235 11,312
35.2 Brown & Company PLC measures its retirement benefit obligation together with following subsidiaries and Joint Ventures using an
actuarial valuation carried out by Messer Actuarial and Management Consultants (Pvt) Ltd.
Sifang Lanka Trading (Pvt) Ltd.
BG Air Services (Pvt) Ltd.
Brown Tours (Pvt) Ltd.
Browns Group Industries (Pvt) Ltd.
Browns Thermal Engineering (Pvt) Ltd.
Free Lanka Plantations Company (Pvt) Ltd.
Free Lanka Management Company (Pvt) Ltd.
FLC Holdings PLC
182 | Brown & Company PLC
35 RETIREMENT BENEFIT OBLIGATIONS
35.3 The principal assumptions used in the actuarial valuation are as follows:
Company
As at As at As at
31st March 31st March 1st April
2013 2012 2011
Rs.000 Rs.000 Rs.000
35.3.1 Financial Assumptionsa) Discount rate (the rate of interest used to discount the future 10% 10% 10%
cash flows in order to determine the present value
b) Future salary increase
Executive 10% 10% 10%
Non- Executive 9% 9% 9%
c) Retirement age 60 yrs 60 yrs 60 yrs
35.3.2 Demographic AssumptionsIn addition to the above, demographic assumptions such as mortality, withdrawal and disability, and retirement age were considered for the
actuarial valuation. “A 67/07 mortality table” issued by the Institute of Actuaries, London was used to estimate the gratuity liability of the Company.
Group Company
As at As at As at As at As at As at
31st March 31st March 1st April 31st March 31st March 1st April
2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
36 DEFERRED TAX LIABILITIES
Balance at the beginning of the year 282,037 258,890 225,373 - - -
Transfers - (10,812) (8) - - -
Charged/(Reversal) during the year 13,061 33,959 6,155 - - -
Liability in respect of Revaluation of Property,
Plant and Equipment - - 27,370 - - -
Balance at the end of the year 295,098 282,037 258,890 - - -
Notes to the Financial Statements
Annual Report 2012/2013 | 183
36.1 The Closing Deferred Tax Liability balance relates to the following;
Group
31st March 2013 31st March 2012 1st April 2011
Temporary Tax Temporary Tax Temporary Tax
Difference Effect Difference Effect Difference Effect
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
Property, Plant & Equipment 260,383 72,847 240,597 67,285 601,273 168,323
Bearer Biological Assets 765,071 214,220 708,218 198,301 186,225 52,143
Consumer Biological Assets 559,882 156,767 541,018 151,485 582,143 163,000
Employee Benefit Liabilities (205,677) (57,549) (195,696) (54,776) (197,212) (55,211)
Losses available offset against future Taxable Income (325,668) (91,187) (286,643) (80,260) (247,736) (69,366)
1,053,991 295,098 1,007,494 282,037 924,693 258,890
Group Company
As at As at As at As at As at As at
31st March 31st March 1st April 31st March 31st March 1st April
2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
37 DEFERRED INCOME
37.1 Capital Grants Gross value
Balance at the beginning of the year 190,421 171,188 332,179 - - -
Additions during the year 399 19,233 (10,181) - - -
On Disposal of Joint Venture - - (150,810) - - -
Balance at the end of the year 190,820 190,421 171,188 - - -
Amortization
Balance at the beginning of the year 44,802 39,599 62,534 - - -
Amortization during the year 5,364 5,203 5,456 - - -
On Disposal of Joint Venture - - (28,391) - - -
Balance at the end of the year 50,166 44,802 39,599 - - -
Balance at the end of the year- Net 140,654 145,619 131,589 - - -
184 | Brown & Company PLC
37 DEFERRED INCOME
Group Company
As at As at As at As at As at As at
31st March 31st March 1st April 31st March 31st March 1st April
2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
37.2 PHDT Lease RentalsBalance at the beginning of the year 1,956 2,103 4,121 - - -
Amortization during the Year (147) (147) (147) - - -
On Disposal of Joint Venture - - (1,871) - - -
Balance at the end of the year 1,809 1,956 2,103 - - -
37.3 Income Received in AdvanceBalance at the beginning of the Period 25,439 19,061 - 22,285 19,061 -
Additions during the Period 19,063 24,563 19,061 5,058 21,389 19,061
Amortization during the Period (11,495) (18,185) - (3,995) (18,165) -
Balance at the end of the Period 33,007 25,439 19,061 23,349 22,285 19,061
Total Deferred Income 175,470 173,014 152,753 23,349 22,285 19,061
37.1.1 The above Capital Grants represents the following:- i The funds received from the Plantation Housing and Social Welfare Trust (PHSWT), MTIP and PHDT are for the development of
Workers Welfare Facilities and improvement to Institutional Facilities.
ii The funds received from the Tea Board is for the construction of the CTC Tea Factory at Delta Estates.
iii The funds received from the Plantation Reform Project is for the Development of Forestry Plantations.
iv Subsidy received from the Rubber Controller Department is for Rubber Replanting.
The amount spent is capitalized under the relevant classification of Property, Plant and Equipment, the corresponding grant component is
reflected under Deferred Income and is being amortized over the useful life span of the related assets.
37.1.2 Premises at St. Andrew’s Drive in Nuwara Eliya has been leased out to Plantation Human Development Trust for a period of 20 years
commencing from August 2005 at a total lease rental of Rs.10 Mn. Lease Rentals received are deferred and amortized over the lease period
commencing from August 2005.
Notes to the Financial Statements
Annual Report 2012/2013 | 185
Group Company
As at As at As at As at As at As at
31st March 31st March 1st April 31st March 31st March 1st April
2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
38 LOANS FROM RELATED PARTIES DUE AFTER ONE YEAR
S.F.L Services (Pvt) Ltd. - - - 1,232,917 738,580 199,484
Ishara Traders (Pvt) Ltd. - - 28,665 - - -
- - 28,665 1,232,917 738,580 199,484
Group Company
As at As at As at As at As at As at
31st March 31st March 1st April 31st March 31st March 1st April
2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
39 ACCOUNTS PAYABLES & ACCRUED EXPENSES
Accounts Payable 1,483,885 2,340,122 1,386,744 1,161,544 1,829,746 987,045
Accrued Expenses 262,475 206,711 213,956 186,470 150,512 168,641
VAT Payable 22,810 27,612 20,663 5,363 - 3,550
Turnover Tax Payable 1,075 1,105 1,105 1,075 1,105 1,105
WHT Payable 6,447 2,431 34,737 - 165 1,728
Other Payables 519,618 346,278 235,635 235,108 37,360 22,362
2,296,310 2,924,259 1,892,840 1,589,560 2,018,888 1,184,431
Group Company
As at As at As at As at As at As at
31st March 31st March 1st April 31st March 31st March 1st April
2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
40 LOANS FROM RELATED PARTIES DUE WITHIN ONE YEAR
Ishara Traders (Pvt) Ltd. - - 32,760 - - -
Lanka Orix Leasing Company PLC - - 359 - - -
Browns Tours (Pvt) Ltd. - - - - - 5,000
Browns Group Motels Ltd. - - - 4,126 3,497 3,497
S. F. L.Services (Pvt)Ltd. - - - 375,698 213,673 765,802
Browns Health Care (Pvt) Ltd - - - 74,280 - -
Browns Group Industries (Pvt) Ltd. - - - 11,338 20,000 10,000
Browns Investments PLC - - - 245,779 85,821 507,219
- - 33,119 711,221 322,991 1,291,518
186 | Brown & Company PLC
Group Company
As at As at As at As at As at As at
31st March 31st March 1st April 31st March 31st March 1st April
2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
41 AMOUNTS DUE TO RELATED PARTIES
Free Lanka Trading Company Ltd. 25,332 629 545 - - -
FLC Holdings PLC 83 25,975 905 - - -
FLC Joint Venture Company Ltd. - - 25,000 - - -
FLC Estate Bungalows (Pvt) Ltd. 464 500 - - - -
Cricket Club Café 2 2 2 - - -
Commercial Leasing and Company PLC (CLC) 11,794 - - - - -
Engineering Services (Pvt) Ltd. - - 3,527 - - -
Galoya Plantations (Pvt) Ltd. 9,818 8,950 7,898 - - -
Perpetual Holdings Ltd. 161,900 165,363 161,742 - - -
Associated Battery Manufacturers (Cey) Ltd. 116,385 72,492 109,533 - - -
Masons Mixture Ltd. 764 764 764 - - -
Royal Fernwood Porcelain Ltd - 2,794 - - - -
Taprobane Securities (Pvt) Ltd. - - 2 - - -
Taprobane Holdings PLC - - 4,500 - - -
Browns Holdings Ltd. - - 245 - - 245
Taprobane Plantations Ltd. 17,917 7,197 - - - -
Sierra Civil Engineering (Pvt) Ltd. 273 328 - - - -
Ishara Traders (Pvt) Ltd. 17 17 - - - -
Taprobane Plantations Ltd. - - - - - -
Arrc Capital ( Pvt) Ltd. 350 350 - - - -
Hatton Transport & Agency Co. (Pvt) Ltd. - - - 16,646 16,697 17,941
Klevenberg (Pvt) Ltd. - - - - - 55,804
Browns Group Motels Ltd. - - - 5,164 5,721 5,682
Browns Battery (Pvt) Ltd. - - - - - 66
Browns Motors (Pvt) Ltd. - - - 4,683 4,696 4,722
Browns Capital (Pvt) Ltd. - - - 49,689 49,742 50,000
Browns Health Care (Pvt) Ltd. - - - - 155,614 175,000
Browns Real Estates (Pvt) Ltd. - - - 44,223 50,000 -
345,099 285,361 314,663 120,405 282,470 309,460
As at As at As at As at As at As at
31st March 31st March 1st April 31st March 31st March 1st April
2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
42 INCOME TAX PAYABLEBalance at the beginning of the year 147,647 158,438 30,754 59,563 103,316 129
Provision for the year 95,858 230,094 238,297 - 134,324 129,385
ESC Recoverable (9,188) (10,880) (42,699) - - (18,955)
WHT Recoverable (17,791) (5,013) (7,915) - - (2,064)
Under/ (Over) Provision during prior year (821) (2,178) - - - -
Transfers - - - (59,563) - -
Payments made during the year (123,607) (222,814) (59,999) - (178,077) (5,179)
Balance at the end of the year 92,098 147,647 158,438 - 59,563 103,316
Notes to the Financial Statements
Annual Report 2012/2013 | 187
Group Company
As at As at As at As at As at As at
31st March 31st March 1st April 31st March 31st March 1st April
2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
43 NET ASSETS PER SHARE
Equity Attributable to Equity holders
of the Company (Rs.000) 15,095,764 13,880,747 14,913,894 13,789,443 13,859,926 15,467,915
Weighted Average Number of Ordinary
Shares in Issue (‘000) 70,875 70,875 70,875 70,875 70,875 70,875
Net Assets per Share (Rs.) 212.99 195.85 210.43 194.56 195.55 218.24
44 RELATED PARTY DISCLOSURES
44.1 The Directors of Brown & Company PLC are also the Directors of the following related companies.
Name of the Director
BC
PLC
LOLC
PLC
BG
IPL
BT
PL
SF
LS
PL
HTA
CP
L
SP
LP
L
BG
ML
CF
TE
L
BG
AS
PL
KP
L
SL
PL
SLT
PL
BM
PL
WG
PL
BIP
LC
BIP
L
BH
CP
L
BC
PL
AB
M(C
)L
IGB
RIP
L
BT
EP
L
GH
PL
GP
PL
MM
L
ES
PL
Se
yP
LC
TS
PL
TH
PLC
RF
PL
BH
L
Mr.I.C Nanayakkara√ √++ + + + + + + + + + + + + + *√ - - - - - - - - +++ +++ √ - - - -
Mrs. R.L Nanayakkara - √ √ √ √ √ - √ √ √ - √ √ - √ - √ √ - - √ √ - - √ √ - - √ - -
Mr.N.M Prakash √ - √ √ √ √ √ √ √ √ √ √ √ - √ √ √ √ - √ √ √ √ - √ √ - - - √ -
Mr.S.V Somasunderam √ - √ √ √ √ √ √ √ √ √ √ √ - √ √ √ √ - √ - √ - - √ √ - - - - √
Mr.A.L Devasurendra **√ - - - - - - - - - - - - - - - - - - - - - - - - - - - √ - **√
Mrs.K.U.Amerasinghe √ √ - - - - - - - - - - - - - √ - - - - - - - - - - - - - - -
Mr.W.D.K.Jayawardena √ √ - - - - - - - - - - - - - √ - - - - - - - - - - - - - - -
Mr.H.P.J De Silva √ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Mr.R.M. Nanayakkara ***√ - - - - - - - - - - - - √ - - - - - - - - - - - - - - - - -
+ Alternate to Mrs. R.N.A. Nanayakkara *Appointed on 01/ 03/ 2013 **Resigned on 15/ 07/ 2013
++ Alternate to Mr. R.M. Nanayakkara ***Appointed w.e.f 15/07/2013
+++ Alternate to Mr. R.M. Nanayakkara / Mrs. R.N.A. Nanayakkara
188 | Brown & Company PLC
44 RELATED PARTY DISCLOSURES CONTD.
44.1 The Directors of Brown & Company PLC are also the Directors of the following related companies contd.
Name of the Company Nature of the Relationship
Lanka Orix Leasing Company PLC (LOLCPLC) Ultimate ParentBrowns Group Industries (Pvt) Ltd. (BGIPL) SubsidiaryBrowns Tours (Pvt) Ltd. (BTPL) SubsidiaryS.F.L Services (Pvt) Ltd. (SFLSPL) SubsidiaryThe Hatton Transport & Agency Co. (Pvt) Ltd. (HTACPL) SubsidiarySnowcem Products Lanka (Pvt) Ltd. (SPLPL) SubsidiaryBrowns Group Motels Ltd. (BGML) SubsidiaryC.F.T Engineering Ltd. (CFTEL) SubsidiaryB.G Air Services (Pvt) Ltd. (BGASPL) SubsidiaryKlevenberg (Pvt) Ltd. (KPL) SubsidiarySifang Lanka (Pvt) Ltd. (SLPL) SubsidiarySifang Lanka Trading (Pvt) Ltd. (SLTPL) SubsidiaryBrowns Battery (Pvt) Ltd. (BBPL) SubsidiaryBrowns Motors (Pvt) Ltd. (BMPL) SubsidiaryWalker & Greig (Pvt) Ltd. (WGPL) SubsidiaryBrowns Investments PLC (BIPLC) SubsidiaryBrowns Industrial Park Ltd (BIPL) SubsidiaryBrowns Health Care (Pvt) Ltd (BHCPL) SubsidiaryBrowns Capital (Pvt) Ltd (BCPL) SubsidiaryBrowns Real Estates (Pvt)Ltd (BREPL) SubsidiaryI.G. Browns Rubber Industries (Pvt) Ltd. (IGBRIPL) SubsidiaryBrowns Thermal Engineering (Pvt) Ltd. (BTEPL) SubsidiaryAjax Engineers (Pvt)Ltd (AJEX) SubsidiaryAssociate Battery Manufacturers (Cey) Ltd. (ABM(C)L) AssociateGaloya Plantations (Pvt) Ltd. (GPPL) AssociateMelfort Green Teas (Pvt) Ltd. (MGTPL) AssociateLOLC Leisure Ltd. (LOLCLPL) AssociateVirginia International Investments Ltd. (VIIL) AssociateTaprobane Plantations Ltd. (TPPL) AssociateRain Forest Eco Lodge (Pvt) Ltd. (RFELPL) AssociateGaloya Holdings (Pvt) Ltd. (GHPL) Joint VentureF L C Joint Venture (Pvt) Ltd (Formerly Known as Free Lanka Capital (Pvt) Ltd) (FLCJVL) Joint VentureRoyal Fernwood Porcelain Ltd. (RFPL) Sub-SubsidiaryExcel Global Holdings (Pvt) Ltd. (EGHPL) Sub-SubsidiarySamudhra Beach Resorts (Pvt)Ltd (SBRPL) Sub-SubsidiaryTaprobane Capital (Pvt) Ltd. (TCPL) Sub-SubsidiaryF L C Holdings PLC (Formerly Known as Free Lanka Capital Holdings PLC) (FLCHL ) Sub-SubsidiaryMasons Mixture Ltd. (MML) Other AffiliateEngineering Services (Pvt) Ltd. (ESPL) Other AffiliateFree Lanka Trading Company (Pvt) Ltd. (FLTCPL) Other AffiliateCricket Club Café (CCC) Other AffiliateFree Lanka Teas (Pvt) Ltd. (FLTPL) Other AffiliateSeylan Bank PLC (SeyBPLC) Other AffiliateTaprobane Securities (Pvt) Ltd. (TSPL ) Other AffiliateBrowns Holdings Limited (Formerly Known as Taprobane Fund Management Ltd.) (TFML) Other AffiliateTaprobane Holdings PLC (THPL) Other AffiliateF L C Power Holdings (Pvt) Ltd (Formerly Known as Free Lanka Power Holdings (Pvt) Ltd) (FLCPHL) Joint Venture’s-Sub-SubsidiaryEnselwatte Power (Pvt) Ltd (Formerly Known as Free Lanka Power 3 (Pvt) Ltd) (EPL) Joint Venture’s-Sub-SubsidiaryDolekanda Power (Pvt) Ltd (Formerly Known as Free Lanka Power 2 (Pvt) Ltd) (DPL) Joint Venture’s-Sub-SubsidiaryF L C Properties (Pvt) Ltd (Formerly Known as Free Lanka Capital Properties (Pvt) Ltd) (FLCPL ) Joint Venture’s-Sub-SubsidiaryF L C Hydro Power PLC (Formerly Known as Hydro Power Free Lanka PLC) (FLCHPPLC) Joint Venture’s-Sub-SubsidiaryHalgranoya Hydro Power (Pvt) Ltd (Formerly Known as Free Lanka Power 1 (Pvt) Ltd ) (HHPL) Joint Venture’s-Sub-SubsidiaryThebuwena Hydro Power (Pvt) Ltd (Formerly Known as Hydro Power Free Lanka 2 (Pvt) Ltd) (THPL) Joint Venture’s-Sub-SubsidiaryStellenberg Hydro Power (Pvt) Ltd (Formerly Known as Hydro Power Free Lanka 3 (Pvt) Ltd) (SHPL) Joint Venture’s-Sub-SubsidiaryF L C Estate Bungalows (Pvt) Ltd (Formerly Known as Free Lanka Estate Bungalows (Pvt) Ltd) (FLCEBL) Joint Venture’s-Sub-Subsidiary
Notes to the Financial Statements
Annual Report 2012/2013 | 189
44.2 Related Party TransactionsThe Company carries out transactions in the ordinary course of its business with parties who are defined as related parties in Sri Lanka Accounting
Standard-LKAS 24 “Related Party Disclosures”, the details of which are reported below. The pricing applicable to such transactions is based on the
assessment of the risk and pricing model of the Company, and is comparable with what is applied to transactions between the Company and its
unrelated customers.
44.3 Transactions of Brown & Company PLC with Related Companies Providing the Services44.3.1 Share of Group OverheadsThe Company has incurred Group Expenses on behalf of the Related companies during the year on reimbursement basis as follows;
31.3.2013 31.3.2012
Group Group
Name of the Company Overheads Overheads
Rs.’000 Rs.’000
Browns Group Industries (Pvt) Ltd. 8,443 10,494
Sifang Lanka (Pvt) Ltd. 20,193 11,787
Browns Health Care (Pvt) Ltd 11,216 32,913
Masons Mixture Ltd. 928 608
Browns Thermal Engineering (Pvt) Ltd. 6,039 5,265
Klevenberg (Pvt) Ltd. 16,861 7,412
Engineering Services (Pvt) Ltd. 1,851 595
S. F. L.Services (Pvt)Ltd. 3,879 453
BG Air Services (Pvt) Ltd. 674 521
Browns Group Motels Ltd. 69 171
Browns Tours (Pvt) Ltd. 5,569 129
Browns Investments PLC 2,753 1,777
Snowcem Products Lanka (Pvt) Ltd. 4,505 2,723
Browns Motors (Pvt) Ltd. - 25
C.F.T. Engineering (Pvt) Ltd. 210 51
Browns Industrial Park Ltd 9,144 93
Royal Fernwood Porcelain Ltd. 20 91
Hatton Transport Agency Company (Pvt) Ltd 1,244 51
Browns Properties (Pvt) Ltd 295
Browns Capital (Pvt) Ltd 718 8
Galoya Holdings (Pvt) Ltd. - 72
Browns Real Estates (Pvt) Ltd 5,587 5
Sumudra Beach Resorts (Pvt)Ltd - 5
I.G. Browns Rubber Industries (Pvt) Ltd. 1,055 -
42.3.2 Loans granted to Related CompaniesThe Company has granted and recovered the following Loan balances during the year.
Interest Loan
Loan Charged/ Recovered/
Granted Capitalized Transferred
Name of the Company Rs.’000 Rs.’000 Rs.’000
Masons Mixtures Ltd. 7,700 - -
Galoya Plantations (Pvt) Ltd. 117,500 93,356 -
BG Air Services (Pvt) Ltd. - 3,572 10,000
Sifang Lanka (Pvt) Ltd. 64,100 2,977 44,587
Royal Fernwood Porcelain Ltd. 23,200 6,305 -
190 | Brown & Company PLC
44 RELATED PARTY DISCLOSURES CONTD.
44.3.3 Loans obtained from Related Companies Loan Interest Loan Interest
Obtained Charged Repaid Paid
Name of the Company Rs.’000 Rs.’000 Rs.’000 Rs.’000
S. F. L.Services (Pvt)Ltd. 857,688 139,183 168,072 32,729
Browns Group Industries (Pvt) Ltd. - 1,515 10,000 -
Browns Investments PLC 637,926 11,488 441,341 7,760
Browns Health Care (Pvt) Ltd. 74,280 6,067 - -
44.3.4 Trading TransactionsThe Company has engaged in the following trading transactions with Related Companies under the normal commercial terms and conditions.
2012/2013 2011/2012 2010/2011
Name of the Company Sales Purchases Sales Purchases Sales Purchases
Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000
Associated Battery Manufacturers (Cey) Ltd. 78 1,385,247 153 1,538,385 17,737 1,639,867
Browns Thermal Engineering (Pvt) Ltd. 180 5,601 38 1,619 430 13,189
Engineering Services (Pvt) Ltd. 834 782 - - 2,378 7,310
Browns Group Industries (Pvt) Ltd. 1,293 4,996 1,407 3 649 137
Browns Tours (Pvt) Ltd. - 65 - - 95 -
B.G Air Services (Pvt) Ltd. 28 5,537 4,006 - 245 -
Walker & Greig (Pvt) Ltd. - - - 14,631 - 1,297
S. F. L.Services (Pvt)Ltd. 8 - 190 - - -
Browns Industrial Park Ltd. 4,267 - 185 - - -
Klevenberg (Pvt) Ltd. 1,155 5,316 3,995 310 - -
Sifang Lanka (Pvt) Ltd. 181 27,431 15,743 53,401 - -
Browns Investments PLC 115 - - - - -
Browns Health Care (Pvt) Ltd 638 - - - - -
Royal Fernwood Porcelain Ltd. 167 121,359 - - - -
44.3.5 Management FeeThe Company has provided Management Consultation to its Related Companies and has charged Management Fees as follows.
2012/2013 2011/2012 2010/2011
Name of the Company Rs.’000 Rs.’000 Rs.’000
Browns Group Industries (Pvt) Ltd. 7,000 7,000 7,000
Sifang Lanka (Pvt) Ltd. 3,000 7,000 7,000
S. F. L.Services (Pvt)Ltd. 5,000 5,000 5,000
Browns Thermal Engineering (Pvt) Ltd. 5,000 5,000 5,000
Browns Investments PLC 5,000 5,000 5,000
Klevenberg (Pvt) Ltd 4,000 - -
Notes to the Financial Statements
Annual Report 2012/2013 | 191
44.3.6 The Company has paid an interim dividend of Rs.0.50 per share to its shareholders during the year including the following related
companies.
2012/2013 2011/2012 2010/2011
Rs.’000 Rs.’000 Rs.’000
Engineering Services (Pvt) Ltd. 8,294 21,897 21,897
Masons Mixtures Ltd. 6,866 18,127 18,127
Lanka Orix Leasing Company PLC 1,691 4,160 4,160
Mutugala Estates Ltd. 1,493 3,941 3,941
Pathregalla Estates Ltd. 981 2,589 2,589
Taprobane Holdings PLC - 531 531
44.3.7 The Company recognised dividends from the following related companies during the year.
2012/2013 2011/2012 2010/2011
Rs.’000 Rs.’000 Rs.’000
S. F. L.Services (Pvt)Ltd. 21,600 47,683 464,116
Browns Group Industries (Pvt) Ltd. 585 5,031 4,072
Klevenberg (Pvt) Ltd. 2,881 - -
Seylan Bank PLC. 21,807 - 11,175
B.G Air Services (Pvt) Ltd. 176 29 -
44.3.8 The Company has made the following new investments during the year.
2012/2013 2011/2012
No of No of
Shares % Rs’000 Shares % Rs’000
Klevenberg (Pvt) Ltd. - - - 2,736,000 16% 62,700
Browns Investments PLC 199,409,313 10.73% 875,180 27,616,400 0.76% 698,698
Browns Real Estates (Pvt) Ltd. - - - 5,000,000 100% 50,000
44.4 Transactions Between Related Companies44.4.1 S. F. L. Services (Pvt)Ltd.(SFL)* SFL has earned following income from group companies during the year
Secretarial Fees Dividend Income
Rs.’000 Rs.’000
Browns Group Industries (Pvt) Ltd 65 45
Browns Tours (Pvt) Ltd 60 -
Browns Thermal Engineering (Pvt) Ltd 75 -
Engineering Services (Pvt) Ltd 60 -
Masion Mixtures (Pvt) Ltd 65 -
Browns Group Motels (Pvt) Ltd 5 -
IG Browns Rubber Industries (Pvt) Ltd 60 -
Hatton Transport Agency (Pvt) Ltd 30 -
Snowcem Products (Pvt) Ltd 10 -
Associated Battery Manufacturers (Cey) Ltd. 150 -
Brown & Company PLC 275 -
192 | Brown & Company PLC
44 RELATED PARTY DISCLOSURES CONTD.44.4 Transactions Between Related Companies Contd.44.4.1 S. F. L. Services (Pvt)Ltd.(SFL) Contd. SFL has charged interest and granted the following Loan amounts during the year.
Loan Interest
Granted Charged
Rs.’000 Rs.’000
Browns Investment PLC - 62,800
Engineering Services (Pvt) Ltd. - 786
C.F.T. Engineering Ltd. - 6,246
Browns Holdings Ltd. - 278
Royal Fernwood Porcelain Ltd. - 6,564
Lexinton Holdings Ltd. - 64,698
Browns & Company PLC - 139,217
Sifang Lanka (Pvt) Ltd. - 11,814
44.4.2 Browns Group Industries (Pvt) Ltd. (BGIL)BGIL has earned income from following group companies during the year.
Rent Management Dividend Overheads Others
Fees
Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000
Browns Thermal Engineering (Pvt) Ltd 514 1,200 1,834 - 390
BG Air Services (Pvt) Ltd - - 191 - -
BGIL has made the following new investment during the year
No.of Shares % Rs 000
Browns Thermal Engineering (Pvt) Ltd 675,000 45% 59,808
44.4.3 Browns Thermal Engineering (Pvt) Ltd. (BTEPL)BTEPL has earned income from following group company during the year.
Others
Rs.’000
Browns Group Industries (Pvt) Ltd 1,455
44.4.4. Browns Tours (Pvt) Ltd. (BTL)BTL has earned income from following group company during the year
Rent Dividend
Rs.’000 Rs.’000
BG Air Services (Pvt) Ltd 978 180
44.4.5 Browns Industrial Park (Pvt) Ltd. (BIPL)BIPL has earned rent income from following group companies during the year
Rent
Rs.’000
Brown & Company PLC 4,495
Browns Group Industries (Pvt) Ltd. 1,177
Browns Thermal Engineering (Pvt) Ltd. 2,949
Sifang Lanka (Pvt) Ltd. 1,931
Notes to the Financial Statements
Annual Report 2012/2013 | 193
44.4.6 Browns Investment PLC
Name of Related Company Relationship Description of Transaction
F L C Holdings PLC ( formerly known as Joint Venture’s Subsidiary The Company has received Rs.2,182,212/= dividend income
Free Lanka Capital Holdings Ltd., (FLCHPLC) during the year. (previous year Rs.600,000/=)
F L C Joint Venture Co., Pvt Ltd ( formerly known Joint Venture The Company has received Rs.10,000,000/= dividend income
as Free Lanka Capital Holdings Ltd., (FLCJVL) during the year.
S.F.L.Services (Pvt) Ltd., Other Affiliate The company has fully settled loan obtained from S.F.L.Services
( formerly known as Standard (Pvt) Ltd during the previous year. (previous year Rs.67,735,822/=)
Finance Pvt Ltd) (SFL)
The Company has incurred an interest expense of Rs.62,800,126/=
(Previous Year - Rs.61,159,251/=) on loans obtained from S.F.L.
Services ( Pvt) Ltd.
Company has received advances amounting to Rs.275,000,000/=
from SFL and it has been settled in full during the year.
The Company has granted Rs.55,666,409/- during the Financial
year.
During the year Company has earned Rs.1,716,051/= an interest
income on loans given to SFL Services ( Pvt) Ltd.
Royal Fernwood Porcelain Ltd., (RFPL) Subsidiary The Company has given a loan of Rs.57,000,000/= to RFPL.
(Previous year 56,200,000/=) and RFPL has fully settled loan during
the Financial year.
During the year company has earned an interest income of
Rs.8,502,498/= (Previous year Rs.4,871,800/=) on loans granted
to RFPL.
The Company has purchased Rs.61,826,050/- valued land and
buildings from RFPL.
Lanka Orix Finance Ltd., (LOFL) Other Affiliate No Transitions
Lexinton Holdings Ltd.,(LHL) Other Affiliate The Company has recovered Rs. 464,882,815/= during the year.
(Previous year - Rs.818,946,115)
The Company has earned an interest income of Rs.129,848,896/=
on loans granted to LHL. (Previous year - Rs.107,923,245/= )
Excel Global Holdings (Pvt) Ltd.,(EGHL) Subsidiary No Transitions
Millennium Development (Pvt) Ltd., (MDPL) Sub-subsidiary The Company has recovered the outstanding loan balance
amounting of Rs. 15,830,000 during the year. ( Previous year-
Rs. 5,963,766/-)
The Company has earned an interest income of 2,097,951/= on
loans granted to MDPL. (Previous year - Rs.963,766/= )
194 | Brown & Company PLC
44 RELATED PARTY DISCLOSURES CONTD.
44.4 Transactions Between Related Companies Contd.44.4.6 Browns Investment PLC
Name of Related Company Relationship Description of Transaction
Taprobane Capital (Pvt) Ltd., (TCPL) Subsidiary The Company has earned an interest income of 11,843,339/= on
loans granted to TCPL. (Previous year - Rs.1.678,632/= )
Samudra Beach Resorts (Pvt) Ltd.(SBRPL) Subsidiary The Company has paid Rs.250,000,000/- Mobilization advance on
behalf of Samudra Beach Resorts ( Pvt) Ltd.
The Company has paid Rs.434,150,973/- Construction payments
on behalf of Samudra Beach Resorts ( Pvt) Ltd
The Company has incurred expenses of Rs.19,348,845/-on behalf
of SBRPL during the year. ( Previous year- Rs. 34,642/-)
The Company has sold Rs.321,000,000/- valued lands to SBRPL.
Agstar Fertilizers PLC Other Affiliate The Company has received Rs.1,950,000/= dividend income
during the year.
44.4.6.1 Obtaining and Providing Servicesa) FLC Holdings PLC (formerly known as Free Lanka Capital Holding Limited (FLCHPLC) with Other Related Parties
Name of Related Company Relationship Description of Transaction
Maturata Plantations Ltd., (MPL) Joint Ventures Subsidiary FLCHPLC has granted Rs.150,000,000/= to Maturata Plantations
Ltd,during the year(Previous Year Rs.115,000,000 /-)and received
Rs.20,876,800/= (Previous Year Rs.31,573,200/-)from MPL in part
settlement of loan. The Company has earned Rs.30,981,600/= as
loan interest.(Previous Year Rs.9,791,809/-)
FLCHPLC has granted a Corporate Guarantee on behalf of
Maturata Plantations Ltd to Lanka Orix Leasing Co. PLC for
Rs. 275.0 Mn. In return, a Counter Guarantee was received from
Maturata Plantations Ltd for the same amount and on the same
terms and conditions.
FLCHPLC received Rs.2,757,504/- as a guarantee fee from MPL
Free Lanka Management Co. (Pvt) Ltd., (FLMCL ) Joint Venture FLCHPLC has earned Rs.86,729,781/=(Previous Year
Rs. 63,205,674/=) from FLMC as Dividend for Investment made by
the Company.
Notes to the Financial Statements
Annual Report 2012/2013 | 195
Name of Related Company Relationship Description of Transaction
FLC Properties (Pvt) Ltd. (FLCPL) Joint Venture Current Year Nil.F L C Properties (Pvt) Ltd had issued 35,000,000
(Formerly known as Free Lanka nos. Ordinary Shares to F L C Holdings PLC (FLCHPLC) at Rs. 10/- per
Capital Properties (Pvt) Ltd.) share in the Previous year against the advances.
During the year the Company has granted an advance of
Rs.290,000,000/- to F L C Properties (Pvt) Ltd (Previous year -
Rs.290,000,000/-).
F L C Holdings PLC has settled Rs.2,583,607 for operational
expenses and financial charges on behalf of the F L C Properties
(Pvt) Ltd (Previous year - Rs. 10,396,845/-).
Ceylon Estate Teas (Pvt) Ltd (CETL) Joint Venture’s FLMCL loan granted to CETL Rs.21,500,000/-(Previous Year
Rs.4,000,000/-)
Sub-subsidiary FLMCL received loan interest Rs.602,603/-(Previous Year Nil.
FLMCL has invested in shares for Rs.45,500,000/-(Previous Year Nil.)
Dolekanda Power (Pvt) Ltd. (DPL) Joint Venture’s FLCHL has paid Rs.450,729 (Previous Year Rs.Nil) to DPL as
(Formerly known as Free Lanka Sub-subsidiary operational expenses.
Power 2 Co.(Pvt) Ltd.)
Enselwatte Power (Pvt) Ltd. (EPL) Joint Venture’s FLCHLPLC has paid Rs.10,895,778 (Previous Year Rs.Nil) to EPL as
(Formerly known as Free Lanka operational expenses.
Power 3 Co.(Pvt) Ltd.) Sub-subsidiary FLCHLPLC has settled during the year a Promissory Note worth of
Rs.10,000,000/= issued in favour of Free Lanka Power 3 (Pvt) Ltd.
FLC Estate Bungalows (Pvt) Ltd. (FLEL) Joint Venture’s FLCHLPLC has Paid Rs.83,518 (Previous Year Rs.16,398) to (FLEL) as
(Formerly known as Free Lanka Sub-subsidiary Administrative expenses.
Estate Bungalows (Pvt) Ltd.) (FLEBL)
Lanka Orix Finance Co. PLC (LOFC) Other Affiliate FLCHLPLC has earned Rs. 35,791,740/-/- as Gross Interest Income for
the Short Term Deposits made in LOFCL during the
year. 9 (Previouse Year Rs.25,845,387/-) The Short Term Deposit as
at 31st March 2013 amounted to Rs. 175,000,000/- (Previous Year -
Rs.250,000,000/-)
The Company has obtained a revised Speed Draft Facility
Rs.80,000,000/-(Originally 115,000,000/- ) and repaid Rs.
20,876,800/- during the year (Previous year - Rs.31,573,200). The
interest paid for the loan during the Year was Rs. 14,288,564/-
(Previous year - 6,071,404).
Commercial Leasing & Finance PLC (CLFPLC) Other Affiliate FLCHLPLC has earned Rs. 42,717,187/- as Gross Interest Income for
the Short Term Deposits made in CLCL during the year.(Previous
Year Rs.11,200,235/-) The Short Term Deposit as at 31st March 2013
amounted to Rs. 110,000,000/- (Previous Year - 154,868,525/-)
Lanka Orix Leasing Co PLC (LOLC) Ultimate Parent FLCHLPLC has earned Rs. 37,646,233/- as Gross Interest Income
for the Short Term Deposits made in LOLC during the year.
(Previous Year Rs.14,687,52/-)The Short Term Deposit as at 31st
March 2013 amounted to Rs. 250,000,000/- (Previous Year -
Rs.250,000,000/-)
LOLC Factors Ltd (LOLCFL) Other Affiliate FLCHLPLC has earned Rs. 25,202,877/- as Gross Interest Income for
the Short Term Deposits made in LOLCFL during the year.(Previous
Year Rs.10,430,340/-) The Short Term Deposit as at 31st March
2013 amounted to Rs. 100,000,000/- (Previous Year -
Rs.300,000,000/-)
196 | Brown & Company PLC
44 RELATED PARTY DISCLOSURES CONTD.
44.4 Transactions Between Related Companies Contd.44.4.6.1 Obtaining and Providing Services Contd.b) Maturata Plantations Ltd., (MPL )
Name of Related Company Relationship Description of Transaction
Pussellawa Plantations Ltd., (PPL) Joint Venture’s MPL has paid Rs. 152,779/-, Rs. 1,264,164/-, Rs. 175,000/-, &
Rs. 581,396 for generator fuel,office rent,rubber consultation, and
Sub-subsidiary other administration charges respectively
MPL has Incurred Rs.51,000/- for purchase of Rubber Plants.
MPL has been received Rs.215,146/- as reimbursement of
administration expenses met by the company on behalf of PPL.
Lanka Orix Leasing Co. PLC.(LOLC) Ultimate parent MPL has obtained a revolving fund facility of Rs. 275,000,000/-
during the year and of which Rs. 262,605,732/- is utilized at the
end of the date of statement of financial position
MPL has paid off Rs. 12,405,888/- (Previous Year - Rs.18,528,342/-)
in settlement of Commercial Loans & loans obtained under ADB
Plantation development Project through LOLC.
MPL has paid off Rs. 1,965,828/- (excluding Input VAT) (Previous
Year - Rs.1,040,312/-) in settlement of loans obtained under
finance leasing arrangements from LOLC.
MPL’S Loan amount payable was increased by Rs.4,180,296/-
(Previous Year Rs.22,266,890/-)
MPL has incurred an interest expense of Rs. 75,343,752/- (Previous
Year - Rs.18,678,793/-) for loans obtained from LOLC.
Free Lanka Trading (Pvt) Ltd., (PLTCL) Other Affiliate MPL has incurred a vehicle rent expense of Rs. 1,200,000/-
(Previous year - Rs.900,000/-) for obtaining vehicles on rent.
FLC Power Holdings (Pvt) Ltd. Joint Venture’s MPL has incurred expenditure of Rs. 58,272/- pertaining to its
(Formerly known as Free Lanka Sub Subsidiary Hydro Power Projects
Power Holdings PLC)
Ishara Traders (Pvt) Ltd. Other Affiliate MPL has repaid Rs. 225,000,000/- and incurred an interest expense
of Rs. 37,402,740/- (Previous year - Rs. 36,846,576/-) during the year
Brown & Company PLC Immediate parent Company MPL has paid Rs. 158,000/-, Rs. 30,400/-, Rs. 121,050/-,
Rs. 1,053,842/-, Rs. 196,000/-, Rs.2,900,000/- & Rs. 164,970/- for
purchase of batteries, C.F.L. bulbs, buying toners & servicing
photocopy machines, generator repair & servicing, purchasing
drier trays, purchase of energy efficient fans and other items
respectively
Notes to the Financial Statements
Annual Report 2012/2013 | 197
c) Free Lanka Management Company (Pvt) Ltd., ( FLMCL )
Name of Related Company Relationship Description of Transaction
Pussellawa Plantations Ltd., (PPL) Joint Venture’s FLMCL has received Rs. 208,930,806/- (Previous year
Sub Subsidiary Rs.208,657,052/-) as Management fees
FLMCL has invested Rs. 32,800/- (Previous year Rs.1,140/-) as Share
Advance
FLMCL has received Rs. 39,435,109/- (Previous year
Rs.50,566,151/-) as Dividend.
Ceylon Estate Teas (Pvt) Ltd Other Affiliate FLMCL loan granted to CETL Rs.21,500,000/-(Previous Year
Rs.4,000,000/-)
FLMCL received loan interest Rs.602,603/-(Previous Year Nil.)
FLMCL has invested in shares for Rs.45,500,000/-(Previous Year Nil.)
Melfort Green Teas (Pvt) Ltd ) (MGTL) Associate FLMCL has received Rs. 5,850,000/- (Previous year Rs 2,925,000/-.)
as Dividend
FLMC Sudima Timber Products (Pvt) Ltd Other Affiliate FMLCL has incurred Rs. 269,525/-,(Previous year Rs.253,181/-) as
Preliminary Expenses
Agstar Fertilizer PLC Other Affiliate FLMCL has received Rs. 157,500/- (Previous year Rs.Nil.) as
Dividend
d) Pussellawa Plantations Ltd., (PPL) with other related parties
Name of Related Company Relationship Description of Transaction
Melfort Green Teas (Pvt) Ltd (MGTPL) Associate Current Year Rs.Nil. Previous Year PPL had earned Rs.7,391,641/- for
the Supply of Green Tea Leaf to MGTPL
PPL has earned Rs.8,324,335/- (Previous year Rs. 8,731,366/-) for
lent Labour and others to MGTPL
PPL has earned Rs.84,836/- (Previous year Rs. 27,763/-) for supply
of Teas to MGTPL
PPL has given Short Term Loans amounting to Rs nil (Previous year
Rs. 28,500,000/-) to MGTPL
PPL has obtained an Interest on short term loan amounting to Rs.
Nil (previous Year Rs.859,830/-) from MGTPL
PPL has incurred Rs. 2,064,590/-,(Previous year Rs.3,371,335/-) for
tea purchased from MGTPL
PPL has received from MGTPL of Rs. 2,799,573/- (Previous Year
Rs.643,430/-) as reimbursement of Other Expense
198 | Brown & Company PLC
44 RELATED PARTY DISCLOSURES CONTD.44.4 Transactions Between Related Companies Contd.44.4.6.1 Obtaining and Providing Services Contd.d) Pussellawa Plantations Ltd., (PPL ) Contd.
Name of Related Company Relationship Description of Transaction
Melfort Green Teas (Pvt) Ltd (MGTPL) PPL has received Rs. 200,000/- (Previous year Rs.Nil/-) as reimbursement of Office refurnishing cost from MGTPL.
PPL has received Rs. 2,423,200/- (Previous year Rs.Nil/-) as reimbursement of Office and Factory rent from MGTPL
PPL has received Rs. 260,375/- (Previous year Rs.124,644/-) as reimbursement of Communication and other Expenses from MGTPL
PPL has paid Rs. 179,266/- on behalf of MGTPL (Previous year Rs.2,563,576/-) as Communication and other Expenses.
PPL has paid Rs.1,500,000 (Previous Year Rs. Nil) for Tea purchases. PPL has received Rs. 8,280,410/- (Previous year Rs.7,027,687/-) as reimbursement of Rent labour and other charges from MGTPL PPL Has earned Rs. 8,324,335/- (Previous year Rs. 8,731,366/-) for lent labour and other to MGTPL PPL has earned Rs. 84,836/- (Previous year Rs. 27,763/-) for supply of Teas to MGTPL PPL has Given Short Term Loans amounting to Rs nil (Previous year Rs. 28,500,000/-) to MGTPL PPL has obtained an Interest on short term loan amounting to Rs. nil (Previous year Rs. 859,830/-) from MGTPL
Maturata Plantations Ltd (MPL) Joint Venture’s PPL has paid Rs. 3,359,664/- on behalf of MPL (Previous year Sub Subsidiary Rs.2,563,576/-) as Office Rent, Refurnishing cost and Other services
PPL has paid Rs. 149,773/- to MPL (Previous year Rs.97,742/-) as Vehicle Maintenance & Hiring Charges PPL has received Rs. 149,431/- (Previous year Rs.109,638/-) as reimbursement of Vehicle Maintenance & Hiring Charges from MPL PPL has received Rs. 2,159,664/- (Previous year Rs. Nil/-) as Office Rent from MPL PPL has received Rs. 706,603/- (Previous year Rs.956,768/-) as reimbursement of Other Services from MPL
PPL has paid Rs.754,344/- to MPL (Previous Year Rs.713,952/-) as Communication and Other Expenses. PPLPPL has obtained office rent Rs.2,159,664/-(Previous Year Rs.Nil) has paid Rs.754,344/- to MPL (Previous Year Rs.713,952/-) as Communication and Other Expenses.
The Tea Leaf Resort Holdings (Pvt) Ltd Joint Venture’s Subsidiary PPL has received Rs. 996,040/- (Previous Year Rs. Nil) as (TLRHL) reimbursement of Valuation fee for Geragama, Ayr Bungalow & Hotel Project
Notes to the Financial Statements
Annual Report 2012/2013 | 199
Name of Related Company Relationship Description of Transaction
Ceylon Estate Teas (Pvt) Ltd (CETL) Other Affiliate Current Year Rs.Nil. Previous Year PPL had received Rs. 5,000,000/-
as settlement of Short Term Loan from CETL.
PPL has earned Rs.74,500/- (Previous year Rs. 859,426/-) for supply
of Teas to CETL
PPL has paid Rs. 239,013/- (Previous year Rs.1,293,908/-) as
Communication and Other Expense
PPL has received Rs. 591,180/- (Previous year Rs.220,610/-) as
reimbursement of Communication and Other Expenses from
CETL
PPL has received Rs. 208,583/- (Previous year Rs 35,450.) as
reimbursement of Tea sales from CETL
PPL has received Rs. 928,000/- (Previous year Rs.Nil.) as
reimbursement of Office rent from CETL.
PPL has received Rs. 117,160/- (Previous year Rs Nil.) as
reimbursement of Survey and labour charges from CETL
F L C Hydro Power PLC Joint Venture’s PPL has paid Rs. 768,779/- (Previous year Rs.1,198,788/-)as Office
(Formerly Known as Hydro Power Sub Subsidiary refurnishing cost, Communication and other services
Free Lanka PLC)(HPFPLC)
PPL has received Rs nil (Previous year Rs. 46,530,806/-) as
settlement of Short Term Loan by HPF PLC
PPL has received Rs 354,255/- (Previous year Rs. 290,501/-) as
reimbursement of cost of labour and transport charges from
HPFPLC
PPL has received Rs 769,066/- (Previous year Rs. 801,888/-) as
reimbursement of Communication and other services from
HPFPLC
Thebuwana Hydro Power (Pvt) Ltd (THPL) Joint Venture’s Current Year Rs.Nil .(Previous Year PPL had received Rs 2,868,511/-
(Formerly known as Hydro Free Sub Subsidiary as reimbursement of Expenses paid on Thebuwana Projects).
Lanka 2 Pvt Ltd)(HPF2L)
Stellinberg Hydro Power (Pvt) Ltd (SHPL) Joint Venture’s Current Year Rs.Nil Previous Year PPL had received Rs 2,181,872/-
(Formerly known as Hydro Free Lanka Sub Subsidiary as reimbursement of Expenses paid on Stellenberg Project.
3 Pvt Ltd)(HPF3L)
200 | Brown & Company PLC
44 RELATED PARTY DISCLOSURES CONTD.
44.4 Transactions Between Related Companies Contd.44.4.6.1 Obtaining and Providing Services Contd.d) Pussellawa Plantations Ltd., (PPL ) Contd.
Name of Related Company Relationship Description of Transaction
Free Lanka Trading Company (Pvt) Ltd Other Affiliate PPL has paid Rs 157,658/-(Previous year Rs 164,977/-) as
Communication and Travelling Expenses
PPL has received Rs 228,977/- (Previous year Rs 247,974/-) as
reimbursement of Communication and Traveling Expenses
PPL has paid Rs 2,700,000/-(Previous year Rs .900,000/-) as Vehicle
hiring Charges
PPL has settled vehicle hiring charges Rs.3,600,000/-
(Previous Year Rs.Nil)
PPL has earned Rs.124,525/- (Previous year Rs. 55,375/-) for supply
of Teas to FLTC
Lanka Orix Leasing Co, PLC Ultimate parent PPL has repaid loan capital of Rs.9,642,444/-(Previous year
Rs.9,038,871/-) to LOLC
PPL has incurred an Interest expenses of Rs. 4,370,982/-(previous
year Rs.5,729,619/-) on loan obtained from LOLC.
Commercial Leasing PLC Other Affiliate No transactions
Brown & Company PLC Immediate parent PPL has incurred an expenses of Rs. 876,063/-(Previous year Rs
905,186/-) for the Consumables
company
Agstar Fertilizers PLC Other Affiliate PPL has incurred an expenses of Rs.36,757,662/-(Previous year
Rs 38,250,261) for the fertilizer purchased during the year
e) F L C Hydro Power PLC (Formerly known as Hydro Power Free Lanka PLC) (FLCHPPLC) with Other Related Parties
Name of Related Company Relationship Description of Transaction
Thebuwana Hydro Power (Pvt) Ltd. (THPL) Joint Venture’s FLCHPPLC has incurred total expense
(Formely Known as Hydro Power Free Sub Subsidiary amounting to Rs.87,528,125/- (Previous Year - Rs.3,384,487/-) for
Lanka2 (Pvt) Ltd) (HPFL2L) operational expenses and finance charges on behalf of the
company.
FLCHPPLC has settled Promissory note worth of
Rs. 10,000,000/- to the Company during the Year
Notes to the Financial Statements
Annual Report 2012/2013 | 201
Name of Related Company Relationship Description of Transaction
Stellenberg Hydro Power (Pvt) (SHPL) Joint Venture’s FLCHPPLC has incurred total expense
(Formely Known as Hydro Power Sub Subsidiary (Pvt) Ltd., (HPFL3L) amounting to Rs.83,296,248/- (Previous Year -
Free Lanka 3) (HPF3L) Rs. 7,369,674/-) for operational expenses and finance charges on
behalf of the company
FLCHPPLC has settled Promissory Note worth of
Rs.10,000,000 to the company during the year.
Halgaranoya Hydro Power (Pvt) Ltd. (HHPL) Joint Venture’s FLCHPPLC has incurred total expense
(Formerly Known as Free Lanka Sub Subsidiary amounting to Rs.1,580,307/- (Previous Year - Rs.645,685/-) for
Power 1 (Pvt) Ltd.,(FLP1L) operational expenses and finance charges on behalf of the
company.
FLCHPPLC has settled the due of Maturata
Plantations Ltd. amounting to Rs.1,827,882 directly on behalf of
the company.
Dolekanda Power (Pvt) Ltd. (DPL) Joint Venture’s FLCHPPLC has incurred total expense
(Formerly Known as Free Lanka Sub Subsidiary amounting to Rs.193,412 (Previous Year - Rs.72,827) for operational
Power 2 (Pvt) Ltd., (FLP 2L) expenses and finance charges on behalf of the company.
FLCHPPLC has settled the due of Maturata
Plantations Ltd. amounting to Rs.136,859 directly on behalf of the
company.
Enselwatta Power (Pvt) Ltd. (EPL) Joint Venture’s FLCHPPLC has incurred total expense
(Formerly Known as Free Lanka Power Sub Subsidiary amounting to Rs.4,831,093 (Previous Year - Rs.5,147,647 ) for
3 (Pvt) Ltd., (FLP 3L) operational expenses and finance charges on behalf of the
company.
FLCHPPLC has settled the due of Maturata
Plantations Ltd. amounting to Rs.908,910 directly on behalf of the
company.
FLC Power Holding (Pvt) Ltd. (FLCPHL) Joint Venture’s FLCHPPLC has incurred total expense
(Formerly Known as Free Lanka Power Sub Subsidiary amounting to Rs.159,947 (Previous Year - Rs.304,182 ) for
Holding (Pvt) Ltd., (FLPHL) operational expenses and finance charges on behalf of the
company.
FLCHPPLC has settled the due of Pussellawa
Plantation Ltd. amounting to Rs.25,440 directly on behalf of the
company.
FLCHPPLC has fully settled the due amount of
Hydro Power Free Lanka PLC amounting to Rs.489,569 during the
year.
Pussellawa Plantations Limited (PPL) Joint Venture’s Pussellawa Plantations has incurred total expenses amounting to
Sub Subsidiary Rs.1,168,459 On behalf of the Hydro Power Free Lanka PLC .
FLCHPPLC has settled Rs.1,128,958 during
the year.
202 | Brown & Company PLC
44 RELATED PARTY DISCLOSURES CONTD.
44.4 Transactions Between Related Companies Contd.44.4.6.1 Obtaining and Providing Services Contd.f) FLC Properties (Pvt) Ltd., (FLCPL) (Formerly Known as Free Lanka Capital Properties (Pvt) Ltd.
Name of Related Company Relationship Description of Transaction
The Tea Leaf Resort Holdings (Pvt) Ltd (TLRHL) Joint Venture’s Tea Leaf Resort Holding (Pvt) Ltd has settled Professional Fees of
Sub Subsidiary Rs.57,120 in the previous year. TLRHL has incurred Rs.19,096 in the
current year which has been subsequently settled.
Pussellawa Plantations Ltd., (PPL) Joint Venture’s PPL has charged Rs.1,335,616 (Previous Year Rs.5,607,692) at 15%
Sub Subsidiary per annum on the loan granted to the FLCPL
Sierra Civil Engineering (Pvt) Ltd Other Affiliate Sierra Civil Engineering (Pvt) Ltd has billed for the value worked
done amounting to Rs. 244,140,272/-during the year (Previous
year - 48,911,744/-)
Melfort Green Teas (Pvt) Ltd., (MGTPL) Associate FLMCL has received Rs.2,925,000 (Previous Year Rs.8,775,000 ) as
Dividend
Rain Forest Eco Lodge (Pvt) Ltd (RFELL) Other Affiliate RFELL has been issued 6,399,375 nos. of Ordinary Shares
equivalent to 20% of issued Ordinary Share Capital of Rs. 10/- each
of Rain Forest Eco Lodge (Pvt) Ltd.
MPL has incurred Rs. 6,352,363/- (Previous Year - Rs.4,516,218/-) for
the green leaf bought from RFELL.
MPL has earned Rs. 6,270,363/- (Previous Year - Rs.6,432,679/-) as
reimbursement of expenses met by the company on behalf of
RFELL.
g) F L C Hydro Power PLC (HPFPLC) (Formerly Known as Hydro Power Free Lanka PLC)
Name of Related Company Relationship Description of Transaction
Halgranoya Hydro Power (Pvt) Ltd Joint Venture’s F L C Hydro Power PLC has incurred total expense amounting to
(Formerly Known as Free Lanka Sub Subsidiary Rs.5,988,355/- (Previous Year - Rs.1,580,307/-) for capital expenses
Power 1 (Pvt) Ltd. and finance charges on behalf of the company.
F L C Hydro Power PLC has settled Promissory Note worth of
Rs.10,000,000/- to the company during the year
F L C Hydro Power PLC has settled the due of Matuarata
Plantations Ltd; amounting to Rs. 33,697/- for operational
expenses. ( Previous year Rs.1,827,882/-) directly on behalf of the
company.
Dolekanda Power (Pvt) Ltd Joint Venture’s F L C Hydro Power PLC has incurred total expense amounting to
(Formely Known as Free Lanka Sub Subsidiary Rs.132,111/-(Previous Year-Rs.193,412/-)for capital expenses and
Power 2 (Pvt) Ltd. finance charges on behalf of the company.
Notes to the Financial Statements
Annual Report 2012/2013 | 203
Name of Related Company Relationship Description of Transaction
Enselwatte Power (Pvt) Ltd Joint Venture’s F L C Hydro Power PLC has incurred total expense amounting to
(Formerly Known as Free Lanka Sub Subsidiary Rs.202,061/- (Previous Year - Rs.4,831,093/-) for capital expenses
Power 3 (Pvt) Ltd. and finance charges on behalf of the company.
F L C Power Holdings (Pvt)Ltd Joint Venture’s Company has fully settled the due amount of Hydro Power Free
(Formerly Known as Free Lanka Sub Subsidiary Lanka PLC amounting to Rs. 99,389 (Previous Year Rs.489,569/-)
Power Holdings (Pvt) Ltd. during the year.
Pussellawa Plantations Limited Joint Venture’s Pussellawa Plantations Limited has incurred total expenses
Sub Subsidiary amounting to Rs. 3,355,348/-( Previous Year Rs.1,168,459/-) on
behalf of the Company.
F L C Hydro Power PLC has settled Rs. 3,326,087/- (Previous Year
Rs.1,128,958 /-) during the year.
h) Excel Global Holdings (Pvt) Ltd., (EGHPL) with other related parties
Name of Related Company Relationship Description of Transaction
Millennium Developments (Pvt) Ltd Subsidiary No Transitions during the year
Taprobane Plantations Ltd Associate No Transitions during the year
i) Excel Restaurants (Pvt) Ltd., (ERPL) with other related parties
Name of Related Company Relationship Description of Transaction
Millennium Development (Pvt) Ltd. Subsidiary MDPL has received Rs.4,800,000 during the financial year.
j) Millennium Development (Pvt) Ltd., (MDPL) with other related parties
Name of Related Company Relationship Description of Transaction
Taprobane Plantation Ltd Associate MDPL has earned Rs.31,751,424 as rent income.
204 | Brown & Company PLC
44 RELATED PARTY DISCLOSURES CONTD.
44.5 There are no any other Related Party transactions to be Disclosed in accordance with the continuing listing requirements of
Colombo Stock Exchange
44.6 Compensation to Key Management PersonnelAccording to Sri Lanka Accounting Standard- LKAS 24 “Related Party Disclosures”, Key management personnel are those having authority and
responsibility for planning, directing and controlling activities of the entity. Accordingly, the Board of Directors (including executive and Non-
executive Directors) has been classified as Key Management Personnel of the Company. Emoluments paid to Key Management Personnel have
been disclosed in Note 5.
This note should be read in conjunction with Note No. 21, 25 - Loan to Related Companies, Note No. 26 - Amounts due from Related Companies,
Note No. 38, 40 - Loan from Related Companies and Note No. 41 - Amounts due to Related Companies.
45 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group has loans and other receivables, trade and other receivables, and cash and short-term deposits that arise directly from its operations.
The Group also holds available-for-sale investments and may enter into derivative transactions. The Group’s principal financial liabilities comprise
of loans and borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance
the Group’s operations and to provide guarantees to support its operations. The Group is exposed to market risk, credit risk and liquidity risk.
45.1 Credit risk Credit risk is the risk that a 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, foreign exchange transactions and other financial instruments.
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.
Exposure to credit risk The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was
as follows.
Carrying Amount
2013 2013
Rs. 000 Rs. 000
Group Company
Trade and Other Receivable 3,109,603 2,098,921
Loans to Related Companies 1,107,099 778,187
Amounts due from Related Companies 289,318 451,298
Cash at Bank and in Hand 634,720 280,704
5,140,739 3,609,110
Notes to the Financial Statements
Annual Report 2012/2013 | 205
Trade and Other Receivable The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers
the default risk of the industry in which customers operate, as this factor may have an influence on credit risk.
Each new customer is analysed individually for creditworthiness before the Group’s standard payment and delivery terms and conditions are
offered. The Group’s review includes external ratings, when available, and in some cases bank references. Purchase limits are established for
each customer, which represents the maximum open amount without requiring approval from the management. These limits are reviewed
periodically. Customers that fail to meet the Group’s benchmark creditworthiness may transact with the Group only on a prepayment basis. In
addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.
The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables.
The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss
component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss
allowance is determined based on historical data of payment statistics for similar financial assets.
Loans Given to Related Parties The Group’s amounts due from related parties consist of the balances from affiliate companies.
Cash at Bank and in HandThe Group held cash and cash equivalents of Rs. 635 Mn as at the reporting date, which represents its maximum credit exposure on these assets.
The cash and cash equivalents are held with bank and financial institution counterparties, with good credit ratings.
45.2 Liquidity Risk Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled
by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have
sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to the Group’s reputation.
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 short and 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.
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of multiple sources of funding
including debentures, bank loans, overdrafts and finance leases over a broad spread of maturities.
45.2.1 Net debt / (cash)
Group Company
As at 31 st March 2013 Rs. ‘000 Rs. ‘000
Short term investments 3,395,655 1,685,770
Cash in hand and at bank 634,720 280,704
Total liquid assets 4,030,374 1,966,474
Non current portion of borrowings 2,287,576 1,018,273
Short term borrowings 3,264,259 3,044,960
Current portion of borrowings 799,493 520,493
Bank overdrafts 1,284,448 1,033,940
Total liabilities 7,635,776 5,617,667
Net debt / (cash) (3,605,401) (3,651,194)
206 | Brown & Company PLC
45 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES CONTD.
45.2.2 Liquidity risk management The mixed approach combines elements of the cash flow matching approach and the liquid assets approach. The business units attempt to
match cash outflows in each time bucket against a combination of contractual cash inflows plus other inflows that can be generated through the
sale of assets, repurchase agreements or other secured borrowings. The Group and Company net cash positions excluding long term borrowings
amounting to Rs. 1.32 Mn and Rs. 2.63 Mn respectively.
45.3 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 risk comprise of the following types of risk:
Interest rate risk
Currency risk
Commodity price risk
Equity price risk
The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the
return.
The analysis excludes the impact of movements in market variables on the carrying values of other post-retirement obligations, provisions, and
the non-financial assets and liabilities.
45.3.1 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 Group’s long-term debt obligations with floating
interest rates.
Most lenders grant loans under floating interest rates. The management periodically analyse the interest rate movements to manage this risk by
taking mitigating actions.
45.3.2 Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign
exchange rates. The Group has exposure to foreign currency risk due to foreign currency transactions which are affected by foreign exchange
movements. Group treasury analyses the market condition of foreign exchange and provides market updates to the board, with the use of
external consultants’ advice. Based on the suggestions made by Group treasury, the board takes decisions on whether to hold, sell, or make
forward bookings of foreign currency.
Capital management The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future
development of the business. Capital consists of ordinary shares, retained earnings and non-controlling interests of the Group. The Board of
Directors monitors the return on capital as well as the level of dividends to ordinary shareholders.
The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages
and security afforded by a sound capital position.
45.4.1 FINANCIAL INSTRUMENTS - GROUPa) The fair value of a financial instrument is the amount at which the instrument could be exchanged or settled between knowledgeable and
willing parties in an arm’s length transaction, other than in a forced liquidation or sale.
(i) Classes of financial instruments that are not carried at fair value and of which carrying amounts are a reasonable approximation of fair
value are Current trade and other receivables, cash and cash equivalents, trade and other payables and loans and borrowings.
Notes to the Financial Statements
Annual Report 2012/2013 | 207
45.4
.1 F
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INST
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208 | Brown & Company PLC
45
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64
1
,17
8,1
75
-
- -
- -
-Lo
ans
to R
ela
ted
Par
tie
s 7
78
,18
7
53
2,5
15
4
05
,03
6
- -
- -
- -
Am
ou
nts
du
e f
rom
re
late
d p
arti
es
45
1,2
98
2
82
,79
1
14
4,4
86
-
- -
- -
-Sh
ort
te
rm in
vest
me
nts
-
30
,28
1
28
,70
3
1,6
85
,77
0
1,6
87
,52
8
1,0
43
,85
7
- -
-C
ash
in h
and
an
d a
t b
ank
28
0,7
04
2
00
,83
3
73
7,2
28
-
- -
- -
-To
tal
3,6
09
,11
0
2,5
53
,88
4
2,4
93
,62
8
1,6
85
,77
0
1,6
87
,52
8
1,0
43
,85
7
3,7
05
,08
3
3,3
94
,47
7
5,0
17
,98
7
Bo
th c
arry
ing
am
ou
nt
and
fai
r va
lue
of
avai
lab
le-f
or-
sale
fin
anci
al a
sse
ts a
re e
qu
al.
The
fai
r va
lue
of
loan
s an
d r
ece
ivab
les
do
es
no
t si
gn
ifica
ntl
y va
ry f
rom
th
e v
alu
e b
ase
d o
n t
he
am
ort
ise
d c
ost
me
tho
do
log
y fo
r th
e C
om
pan
y.
Fin
anci
al li
abil
itie
s by
cat
egor
ies
F
ina
nci
al
lia
bil
itie
s m
ea
sure
d
a
t a
mo
rtis
ed
co
st
A
s a
t
As
at
As
at
3
1st
Ma
rch
3
1st
Ma
rch
1
st A
pri
l In
Rs.
‘00
0
20
13
2
01
2
20
11
Fin
an
cia
l in
stru
me
nts
in n
on
cu
rre
nt
lia
bil
itie
sB
orr
ow
ing
s 1
,02
4,4
18
1
,53
8,7
71
7
46
,43
9
Fin
an
cia
l in
stru
me
nts
in c
urr
en
t li
ab
ilit
ies
Trad
e a
nd
oth
er
pay
able
s 1
,58
9,5
60
2
,01
8,8
88
1
,18
4,4
31
Am
ou
nts
du
e t
o r
ela
ted
par
tie
s 1
20
,40
5
28
2,4
70
3
09
,46
0Lo
an f
rom
Re
late
d p
arti
es
71
1,2
21
3
22
,99
1
1,2
91
,51
8Sh
ort
te
rm b
orr
ow
ing
s 3
,04
4,9
60
1
,50
8,0
57
5
00
,00
0C
urr
en
t p
ort
ion
of
bo
rro
win
gs
52
3,0
36
5
93
,29
2
31
9,7
85
Oth
er
curr
en
t fi
nan
cial
liab
iliti
es
45
,46
3
86
,72
5
11
9,4
01
Ban
k o
verd
raft
s 1
,03
3,9
40
1
89
,49
1
51
,44
2To
tal
7,0
68
,58
5
5,0
01
,91
4
3,7
76
,03
7
The
Co
mp
any
has
no
t d
esi
gn
ate
d a
ny
fin
anci
al a
sse
ts o
r lia
bili
tie
s u
po
n in
itia
l re
cog
nit
ion
, as
fair
val
ue
th
rou
gh
pro
fit
or
loss
.
The
fai
r va
lue
of
fin
anci
al li
abili
tie
s d
oe
s n
ot
sig
nifi
can
tly
vary
fro
m t
he
val
ue
bas
ed
on
th
e a
mo
rtis
ed
co
st m
eth
od
olo
gy.
Notes to the Financial Statements
Annual Report 2012/2013 | 209
45.4
.3
Fin
anci
al A
sset
s an
d Li
abil
itie
s by
Fai
r Va
lue
Hie
rarc
hy
- G
rou
pTh
e G
rou
p u
ses
the
follo
win
g h
iera
rch
y fo
r d
ete
rmin
ing
an
d d
iscl
osi
ng
th
e f
air
valu
e o
f fi
nan
cial
inst
rum
en
ts b
y va
luat
ion
te
chn
iqu
e:
Leve
l 1: q
uo
ted
(u
nad
just
ed
) p
rice
s in
act
ive
mar
kets
for
ide
nti
cal a
sse
ts o
r lia
bili
tie
s;
Leve
l 2: o
the
r te
chn
iqu
es
for
wh
ich
all
inp
uts
wit
h s
ign
ifica
nt
eff
ect
on
th
e r
eco
rde
d f
air
valu
es
are
ob
serv
able
, eit
he
r d
ire
ctly
or
ind
ire
ctly
;
Leve
l 3: t
ech
niq
ue
s th
at u
se in
pu
ts t
hat
hav
e a
sig
nifi
can
t e
ffe
ct o
n t
he
re
cord
ed
fai
r va
lue
th
at a
re n
ot
bas
ed
on
ob
serv
able
mar
ket
dat
a
Met
hod
s an
d as
sum
ptio
ns
use
d to
det
erm
ine
fair
val
ues
The
me
tho
ds
and
ass
um
pti
on
s u
sed
by
the
man
age
me
nt
to d
ete
rmin
e t
he
fai
r va
lue
s o
f fi
nan
cial
inst
rum
en
ts o
the
r th
an t
ho
se c
arry
ing
am
ou
nts
re
aso
nab
ly a
pp
roxi
mat
e t
he
ir f
air
valu
es
as m
en
tio
ne
d in
No
te a
re a
s fo
llow
s;
Inst
rum
en
t C
ate
go
ry
Fair
Va
lue
Ba
sis
Fair
Va
lue
Hie
rarc
hy
Inve
stm
en
t in
Lis
ted
Sh
are
s P
ub
lish
ed
Vo
lum
e W
eig
hte
d A
vera
ge
(V
WA
) p
rice
s Le
vel 1
Fair
val
ue
of
fin
anci
al in
stru
me
nts
by
clas
ses
that
are
no
t ca
rrie
d a
t fa
ir v
alu
e a
nd
of
wh
ich
car
ryin
g a
mo
un
ts a
re r
eas
on
able
ap
pro
xim
atio
n o
f fa
ir v
alu
e a
re c
urr
en
t tr
ade
an
d o
the
r
fin
anci
al r
ece
ivab
les
and
pay
able
s, c
urr
en
t an
d n
on
-cu
rre
nt
loan
s an
d b
orr
ow
ing
s at
flo
atin
g r
ate,
oth
er
ban
k d
ep
osi
ts a
nd
cas
h a
nd
ban
k b
alan
ces.
The
car
ryin
g a
mo
un
ts o
f th
ese
fin
anci
al a
sse
ts a
nd
liab
iliti
es
are
a r
eas
on
able
ap
pro
xim
atio
n o
f fa
ir v
alu
e, e
ith
er
du
e t
o t
he
ir s
ho
rt-t
erm
nat
ure
or
that
th
ey
are
flo
atin
g r
ate
inst
rum
en
ts
that
are
re
-pri
ced
to
mar
ket
inte
rest
rat
es
on
or
ne
ar t
he
Bal
ance
Sh
ee
t d
ate.
The
Gro
up
he
ld t
he
follo
win
g fi
nan
cial
inst
rum
en
ts c
arri
ed
at
fair
val
ue
in t
he
sta
tem
en
t o
f fi
nan
cial
po
siti
on
:
L
ev
el
1
Le
ve
l 2
L
ev
el
3
A
s a
t
As
at
As
at
As
at
A
s a
t A
s a
t A
s a
t
As
at
As
at
3
1st
Ma
rch
3
1st
Ma
rch
1
st A
pri
l 3
1st
Ma
rch
3
1st
Ma
rch
1
st A
pri
l 3
1st
Ma
rch
3
1st
Ma
rch
1
st A
pri
l In
Rs.
‘00
0
20
13
2
01
2
20
11
2
01
3
20
12
2
01
1
20
13
2
01
2
20
11
Fin
an
cia
l Ass
ets
Fair
val
ue
th
rou
gh
pro
fit
or
loss
3
,39
2,5
05
3
,44
1,6
52
2
,36
3,9
17
6
44
,05
4
53
9,1
59
5
66
,07
4
- -
-
Fin
anci
al a
sse
ts h
eld
for
trad
ing
-
- -
- -
- -
- -
De
sig
nat
ed
at
fair
val
ue
th
rou
gh
pro
fit
or
loss
-
- -
- -
- -
- -
Fore
ign
exc
han
ge
forw
ard
co
ntr
acts
-
- -
- -
- -
- -
Ava
ilab
le fo
r sa
le
3,7
06
,98
8
3,3
95
,60
0
5,0
19
,61
3
- -
- -
- -
Tota
l 7
,09
9,4
93
6
,83
7,2
52
7
,38
3,5
30
6
44
,05
4
53
9,1
59
5
66
,07
4
- -
-
Fin
an
cia
l Lia
bil
itie
s
Fair
val
ue
th
rou
gh
pro
fit
or
loss
-
- -
- -
- -
- -
Fore
ign
exc
han
ge
forw
ard
co
ntr
acts
-
- -
- -
- -
- -
Tota
l -
- -
- -
- -
- -
210 | Brown & Company PLC
45
FIN
AN
CIA
L R
ISK
MA
NA
GE
ME
NT
OB
JEC
TIV
ES
AN
D P
OLI
CIE
S C
ON
TD
.
45.4
.4
Fin
anci
al A
sset
s an
d Li
abil
itie
s by
Fai
r Va
lue
Hie
rarc
hy
- C
ompa
ny
The
Co
mp
any
use
s th
e fo
llow
ing
hie
rarc
hy
for
de
term
inin
g a
nd
dis
clo
sin
g t
he
fai
r va
lue
of
fin
anci
al in
stru
me
nts
by
valu
atio
n t
ech
niq
ue
:
Leve
l 1: q
uo
ted
(u
nad
just
ed
) p
rice
s in
act
ive
mar
kets
for
ide
nti
cal a
sse
ts o
r lia
bili
tie
s;
Leve
l 2: o
the
r te
chn
iqu
es
for
wh
ich
all
inp
uts
wit
h s
ign
ifica
nt
eff
ect
on
th
e r
eco
rde
d f
air
valu
es
are
ob
serv
able
, eit
he
r d
ire
ctly
or
ind
ire
ctly
;
Leve
l 3: t
ech
niq
ue
s th
at u
se in
pu
ts t
hat
hav
e a
sig
nifi
can
t e
ffe
ct o
n t
he
re
cord
ed
fai
r va
lue
th
at a
re n
ot
bas
ed
on
ob
serv
able
mar
ket
dat
a
The
Co
mp
any
he
ld t
he
follo
win
g fi
nan
cial
inst
rum
en
ts c
arri
ed
at
fair
val
ue
in t
he
sta
tem
en
t o
f fi
nan
cial
po
siti
on
:
L
ev
el
1
Le
ve
l 2
L
ev
el
3
A
s a
t
As
at
As
at
As
at
A
s a
t A
s a
t A
s a
t
As
at
As
at
3
1st
Ma
rch
3
1st
Ma
rch
1
st A
pri
l 3
1st
Ma
rch
3
1st
Ma
rch
1
st A
pri
l 3
1st
Ma
rch
3
1st
Ma
rch
1
st A
pri
l In
Rs.
‘00
0
20
13
2
01
2
20
11
2
01
3
20
12
2
01
1
20
13
2
01
2
20
11
Fin
an
cia
l Ass
ets
Fair
val
ue
th
rou
gh
pro
fit
or
loss
1
,68
5,7
69
1
,68
7,5
28
1
,04
3,8
57
-
- -
- -
-
Fin
anci
al a
sse
ts h
eld
for
trad
ing
-
- -
- -
- -
- -
De
sig
nat
ed
at
fair
val
ue
th
rou
gh
pro
fit
or
loss
-
- -
- -
- -
- -
Fore
ign
exc
han
ge
forw
ard
co
ntr
acts
-
- -
- -
- -
- -
Ava
ilab
le fo
r sa
le
3,7
05
,08
3
3,3
94
,47
7
5,0
17
,98
7
- -
- -
- -
5
,39
0,8
52
5
,08
2,0
05
6
,06
1,8
44
-
- -
- -
-
Fin
an
cia
l lia
bil
itie
s
Fair
val
ue
th
rou
gh
pro
fit
or
loss
-
- -
- -
- -
- -
Fore
ign
exc
han
ge
forw
ard
co
ntr
acts
-
- -
- -
- -
- -
-
- -
- -
- -
- -
46
CA
PIT
AL
CO
MM
ITM
EN
TS
AN
D C
ON
TIN
GE
NT
LIA
BIL
ITIE
S
46.1
C
apit
al C
omm
itm
ents
No
cap
ital
co
mm
itm
en
ts t
hat
co
uld
hav
e a
mat
eri
al im
pac
t o
n t
he
fin
anci
al p
osi
tio
n o
f th
e c
om
pan
y o
r w
hic
h w
ou
ld le
ad t
o a
dis
clo
sure
in t
he
Fin
anci
al S
tate
me
nts
for
the
ye
ar e
nd
ed
31
st M
arch
20
13
.
46.2
C
onti
nge
nt
Liab
ilit
ies
The
Co
mp
any
has
en
tere
d in
to
th
e u
nd
er
me
nti
on
ed
arr
ang
em
en
ts fo
r th
e G
rou
p C
om
pan
ies:
a.
A c
orp
ora
te g
uar
ante
e h
as b
ee
n is
sue
d t
o B
ank
of
Ce
ylo
n fo
r a
sum
of
Rs.
25
7.2
3 M
n, f
or
the
Ban
kin
g f
acili
tie
s o
bta
ine
d b
y B
row
ns
Ind
ust
rial
Par
k (P
vt)
Ltd
.
b.
A c
orp
ora
te g
uar
ante
e h
as b
ee
n is
sue
d t
o T
he
Ho
ng
kon
g &
Sh
ang
hai
Ban
kin
g C
orp
ora
tio
n L
td. f
or
a su
m o
f R
s. 2
4 M
n, f
or
the
Ban
kin
g f
acili
tie
s o
bta
ine
d b
y A
sso
ciat
ed
Bat
tery
Man
ufa
ctu
res
(Ce
y) L
td.
c.
A c
orp
ora
te g
uar
ante
e h
as b
ee
n is
sue
d t
o L
anka
Ori
x Fa
cto
rs L
td. f
or
a su
m o
f R
s. 5
0 M
n a
nd
Rs.
75
0 m
n fo
r th
e B
anki
ng
fac
iliti
es
ob
tain
ed
by
Gal
oya
Pla
nta
tio
ns
(Pvt
) Lt
d. F
urt
he
r
Co
rpo
rate
Gu
aran
tee
issu
ed
to
Pe
op
les
Ban
k fo
r a
sum
of
Rs.
30
0m
n fo
r th
e f
acili
tie
s o
bta
ine
d b
y G
alo
ya P
lan
tati
on
s (P
vt)L
.td
Notes to the Financial Statements
Annual Report 2012/2013 | 211
d. A corporate guarantee has been issued to Lanka Orix Leasing Company PLC for cheque discounting facilities obtained by Engineering
Services (Pvt) Ltd.
e. Debenture issued by Maturata Plantations Ltd on 19th June 1997 to the value of Rs. 150 Mn has been converted to ordinary shares on
22nd June 2002 as stipulated in the agreement. The basis and/or ratio of conversion has been contested by the Golden Shareholder in
year 2008.
f. Forest Department has imposed Rs. 50.8 Mn as the stumpage payable to the Government by Pussellawa Plantations Ltd for harvesting of
Forest Department’s Pinus Trees at Delta Estate by the Timber Lake Company. However, the Company has requested Forest Department
to re-consider the sumpage calculation, as the said fee is more than the market value of the Timber and is not keeping in line with the
Supreme Court judgement. Therefore, the amount of liability and the date of liability are uncertain and will depend on the response of the
Forest Department.
g. A corporate guarantee has been issued to Commercial Leasing & Finance PLC for cheque discounting facilities obtained by Browns Health
Care (Pvt) Ltd.
46.3 Litigation and ClaimsThere are no material litigations or claims that could have a material impact on the financial position of the Company, or which would lead to a
disclosure in the Financial Statements for the year ended 31st March 2013.
47 COMPARATIVE INFORMATION
Comparative information has been reclassified to conform to the current year’s classification and presentation where necessary.
48 NUMBER OF EMPLOYEES
The number of employees of the Group as at end of the year was 760 (2012 - 724 ). The number of employees of the Company at end of the year
was 534 (2012 - 535).
49 SUBSEQUENT EVENTS
Subsequent to the Balance Sheet date, no circumstances have arisen which would require adjustments to or disclosure in the Financial
Statements other than the following.
49 .1 Brown Investments PLC has acquired 51% of the shareholding of Green Paradise Resorts (Pvt) Ltd which operates hotel in Dambulla on 5th
April 2013 for a consideration of Rs.500 Mn.
49.2 The name of the following Companies have been changed during the year.
Previous Name New Name
Standard Finance (Pvt) Ltd S F L Services (Pvt) Ltd
Free Lanka Power Holdings (Pvt) Ltd F L C Power Holdings (Pvt) Ltd
Free Lanka Power3 (Pvt) Ltd Enselwatte Power (Pvt) Ltd
Free Lanka Power2 (Pvt) Ltd Dolekanda Power (Pvt) Ltd
Free Lanka Capital Properties (Pvt) Ltd F L C Properties (Pvt) Ltd
Free Lanka Capital HoldingsPLC F L C Holdings PLC
Hydro Power Free Lanka PLC F L C Hydro Power PLC
Free Lanka Power 1 (Pvt) Ltd Halgranoya Hydro Power (Pvt) Ltd
Hydro Power Free Lanka 2 (Pvt) Ltd Thebuwana Hydro Power (Pvt) Ltd
Hydro Power Free Lanka 3 (Pvt) Ltd Stellenberg Hydro Power (Pvt) Ltd
Free Lanka Capital (Pvt) Ltd F L C Joint Venture (Pvt) Ltd
Free Lanka Estate Bungalows (Pvt) Ltd F L C Estate Bungalows (Pvt) Ltd
212 | Brown & Company PLC
50 SEGMENT INFORMATION - BUSINESS SEGMENTS
Trading Manufacturing Travel & Tours
As at 31st March 2013 2012 2011 2013 2012 2011 2013 2012
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
Property, Plant and Equipment 4,449,669 4,027,406 3,711,935 35,534 112,475 110,329 4,610 5,245
Investment Properties 1,683,991 713,971 713,747 63,269 - - - -
Prepaid Lease Rentals 54,326 57,569 46,250 - - - - -
Other Long Term Investments 3,707,008 3,395,619 5,019,631 180 152 222 6,192 5,256
Intangible Assets 72,871 14,745 21,825 5,169 0 (0) 81 183
Capital Work in Progress 25,130 66,960 1,660 - - - - -
Consumer Bilogical Assets - - - - - - - -
Beare Bilogical Assets - - - - - - - -
Inter Company Lending - - - - - - - -
Segment Non-Current Assets 9,992,994 8,276,270 9,515,049 104,152 112,627 110,552 10,883 10,683
Investments in Equity Accounted Investees - - - 214,270 198,442 191,117 - -
Investments in Joint Venture - - - - - - - -
Deferred Tax Asset - - - - - - - -
Goodwill - - - - - - - -
Eliminations/ Adjustments - - - - - - - -
Total Non-Current Assets - - - 214,270 198,442 191,117 - -
Inventories 1,483,169 1,987,120 741,436 271,596 425,693 330,265 - -
Trade and other Receivable 2,214,165 1,415,519 1,038,911 197,238 228,024 144,831 57,415 31,544
Inter Company Lending 948,391 544,373 74,930 45,478 43,981 6,356 10,954 9,339
Deposits and Prepayments 74,809 121,738 187,675 13,948 7,733 7,117 1,609 1,911
Short Term Investments 1,687,908 1,719,724 1,079,354 12,222 15,077 21,858 52,202 37,913
Cash at Bank and in Hand 305,920 227,811 749,651 52,321 70,503 66,152 1,097 4,032
Segment Current Assets 6,714,362 6,016,285 3,871,957 592,804 791,011 576,580 123,276 84,739
Tax recoverable - - - - - - - -
Eliminations/ Adjustments - - - - - - - -
Total Current Assets - - - - - - - -
Total Assets - - - - - - - -
Interest Bearing Borrowings 1,108,417 1,643,811 886,436 - - - - -
Retirement Benefit Obligations 88,855 70,766 49,856 8,627 5,968 - 2,758 2,820
Deferred Income 33,006 25,439 19,061 - - - - -
Inter Company Borrowing 1,767,413 770,580 614,705 90,000 - - - -
Segment Non-Current liabilities 2,997,692 2,510,596 1,570,058 98,627 5,968 - 2,758 2,820
Deferred Tax liability - - - - - - - -
Eliminations/ Adjustments - - - - - - - -
Total Non-Current Liabilities - - - - - - - -
Accounts Payable and Accrued Expenses 1,639,495 2,054,367 1,211,164 139,273 412,135 303,241 25,126 26,187
Interest Bearing Borrowings due within one year 548,493 634,900 360,956 - - - - -
Other Payables 1,081,702 1,114,807 1,778,346 302,904 156,574 110,861 58,382 40,824
Short Term Interest Bearing Borrowings 3,148,949 1,508,058 500,000 - - - - -
Bank Overdraft 1,131,625 196,631 54,893 - 5 1 14,630 -
Segment Current Liabilities 7,550,264 5,508,763 3,905,359 442,177 568,714 414,103 98,138 67,011
Income Tax Payable 11,112 63,946 108,500 1,640 8,194 14,163 915 310
Eliminations/ Adjustments - - - - - - - -
Total Current Liabilities - - - - - - - -
Total Liabilities - - - - - - - -
Total Segment Assets 15,758,965 13,748,182 13,312,075 651,478 859,657 680,776 123,205 86,083
Total Segment Liabilities 8,656,556 7,163,719 4,771,580 450,803 574,683 414,103 100,895 69,831
Notes to the Financial Statements
Annual Report 2012/2013 | 213
Finance Plantation Investments Group Total
2011 2013 2012 2011 2013 2012 2011 2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
5,371 80,028 116,506 40,720 1,653,441 1,570,221 500,838 605,817 677,585 358,497 6,829,098 6,509,437 4,727,690
- 182,698 172,050 63,000 3,792,256 3,799,597 49,597 135,000 - - 5,857,212 4,685,617 826,344
- - - - 133,529 138,903 143,087 1,189 - - 189,044 196,472 189,337
7,631 2,042 1,922 2,617 15,417 12,199 9,014 987,939 934,388 911,832 4,718,776 4,349,537 5,950,949
305 725 - - 49,888 48,446 2,865 - - - 128,735 63,374 24,995
- - - - 625,221 68,490 20,339 - - - 650,350 135,450 21,999
- - - - 1,567,671 1,514,295 1,630,001 - - - 1,567,671 1,514,295 1,630,000
- - - - 1,975,422 1,842,608 1,600,287 - - - 1,975,422 1,842,608 1,600,287
- - 751,708 429,294 - - - - - - - 751,708 429,294
13,308 265,493 1,042,187 535,631 9,812,843 8,994,759 3,956,028 1,729,945 1,611,973 1,270,329 21,916,310 20,048,498 15,400,896
- - - - 69,608 186,651 206,730 1,146,580 1,322,215 1,051,110 1,430,458 1,707,308 1,448,957
- - - - - - - - - - 13,000 10,000 10,000
- - - - - - - - - - 281,490 189,703 274,812
- - - - - - - - - - 104,721 104,721 40,853
- - - - - - - - - - 3,357,874 1,202,118 980,697
- - - - 69,608 186,651 226,730 1,146,580 1,322,215 1,051,110 23,736,145 21,302,448 16,758,844
- - - - 454,966 324,190 189,900 - - - 2,209,731 2,737,002 1,261,602
14,626 29,178 28,140 5,320 171,158 197,842 (423) 23,428 81,753 96,310 2,692,582 1,982,823 1,299,576
11,656 355,625 577,597 325,185 (979,270) (281,059) (182,762) 163,672 237,436 13,207 1,524,120 1,412,727 431,334
2,068 14,615 2,615 9,500 312,039 69,620 116,206 - - - 417,020 203,617 322,566
39,444 4,121 48,436 328,465 272,943 297,760 74,014 1,366,259 2,011,990 4,002,641 3,395,655 4,130,900 5,545,776
3,989 3,849 53,355 7,964 268,637 359,516 533,424 2,896 38,360 3,734 634,720 753,577 1,364,914
71,783 407,388 710,144 676,433 500,471 967,869 730,359 1,556,255 2,369,539 4,115,892 10,873,828 11,220,646 10,225,767
- - - - - - - - - - 59,646 4,298 202
- - - - - - - - - - (1,954,531) (1,905,626) (2,786,084)
- - - - - - - - - - 10,805,771 11,528,468 10,523,062
- - - - - - - - - - 34,541,916 32,830,916 27,281,905
- - - - 497,243 568,308 253,634 771,000 128,000 - 2,376,660 2,340,119 1,140,070
2,358 25 11 76 417,431 403,935 377,783 - - - 517,695 483,500 430,072
- - - - 142,465 147,576 133,692 - - - 175,471 173,015 152,753
- - - - 50,000 - 738,298 - - - 1,907,413 770,580 1,353,003
2,358 25 11 76 1,107,138 1,119,819 1,503,407 771,000 128,000 - 4,977,239 3,767,214 3,075,899
- - - - - - - - - 295,098 282,037 258,890
- - - - - - - - - 89,085 85,058 92,680
- - - - - - - - - 3,364,925 3,278,669 2,013,998
15,544 17,354 9,564 61,582 508,114 381,836 256,449 1,852 40,168 44,859 2,331,213 2,924,257 1,892,839
- - - - 76,000 150,565 44,302 175,000 384,000 - 799,493 1,169,465 405,258
35,795 105,138 106,102 27,682 284,859 255,024 (525,155) 74,772 618,411 815,451 1,907,756 2,291,743 2,242,980
- - - - 115,310 35,955 16,380 - - - 3,264,259 1,544,013 516,380
- - 2,509 - 111,523 82,030 24,554 26,669 - - 1,284,448 281,176 79,449
51,339 122,492 118,176 89,264 1,095,806 905,411 (183,470) 278,293 1,042,579 860,310 9,587,170 8,210,654 5,136,906
787 31,124 8,332 19,077 22,128 18,058 14,267 - 48,809 1,645 66,919 147,647 158,438
- - - - - - - - - - (1,491,176) (1,959,047) (1,864,868)
- - - - - - - - - - 8,172,639 6,399,258 3,426,927
- - - - - - - - - - 11,527,837 9,677,925 5,440,927
73,435 317,256 1,174,733 886,880 11,292,585 10,243,687 4,869,149 3,122,528 3,744,076 5,373,014 27,740,033 28,100,407 23,670,938
53,697 122,517 118,186 118,005 2,152,944 2,025,230 581,638 1,049,293 1,170,579 860,310 14,564,409 11,977,867 8,212,804
214 | Brown & Company PLC
Trading Manufacturing Travel & Tours
As at 31st March 2013 2012 2011 2013 2012 2011 2013 2012
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
Revenue 10,708,439 11,136,906 8,473,176 909,050 1,225,239 1,245,560 37,764 24,592
Inter Segment Revenue (3,766) (36,739) (4,907) (164,704) (59,071) (17,211) (5,974) (4,257)
Segment Revenue 10,704,673 11,100,167 8,468,269 744,346 1,166,168 1,228,349 31,790 20,335
Segment Results 120,173 1,051,155 992,134 (28,540) 104,872 67,326 7,421 (127)
Eliminations/ Unallocated 20,042 (102,577) 141,141 (26) (43,908) (23,174) 174,263 (157)
Finance Cost (740,773) (221,402) (152,767) (50,313) (5,068) (7,147) (3,596) (2,108)
Change in Fair Value of Investment Properties 859,743 (30,113) 1,715 - - - - -
Share of Profit of Equity Accounted Investees (58,607) 6,134 18,488 - - - - -
Negative Goodwill - - - - - - - -
Profit before Taxation 210,613 669,634 1,000,710 (78,880) 55,895 37,005 178,088 (2,392)
Taxation 76,743 (206,580) (268,357) (3,554) (23,070) (46,882) (1,888) (404)
Profit for the Year 287,355 463,454 732,353 (82,433) 32,825 (9,876) 176,200 (2,796)
Attributable to:
Equity holders of the Company 273,789 353,969 758,570 (74,628) 14,853 (16,965) 176,175 (2,796)
Non - Controlling Interests 13,566 109,485 (26,216) (7,805) 17,972 7,089 25 -
287,355 463,454 732,353 (82,433) 32,825 (9,876) 176,200 (2,796)
Depreciation for the Year 87,140 62,240 70,842 6,190 6,983 11,555 1,078 937
Purchase of Property, Plant and Equipment 382,827 328,628 82,953 7,677 6,642 4,584 443 811
50 SEGMENT INFORMATION - BUSINESS SEGMENTS CONTD.
Notes to the Financial Statements
Annual Report 2012/2013 | 215
Finance Plantation Investments Group Total
2011 2013 2012 2011 2013 2012 2011 2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
20,960 298,250 238,030 152,649 2,553,652 1,844,163 1,773,076 71,168 212,386 1,243,001 14,578,322 14,681,316 12,908,422
(2,332) (220,078) (193,895) (135,522) - - - - (653,350) (394,521) (293,962) (813,321)
18,629 78,172 44,135 17,127 2,553,652 1,844,163 1,773,076 71,168 212,386 589,652 14,183,801 14,387,354 12,095,101
4,410 193,495 203,283 1,222,544 575,420 2,910,108 782,702 (128,100) (2,799,583) 1,348,289 739,868 1,469,708 4,417,405
(2,332) (182) (193,895) (135,522) - - - 13,107 (11,501) (653,350) 207,204 (352,039) (673,236)
(904) - - - (190,962) (105,648) (52,753) (84,730) (84,730) (78,034) (1,070,375) (418,956) (291,605)
- 10,773 - - (795) 250,000 - - - - 869,721 219,887 1,715
- - - - (243,182) (101,065) 131,059 - - - (301,790) (94,931) 149,548
- - - - - - - - 2,671,483 - - 2,671,483 -
1,174 204,085 9,388 1,087,023 140,481 2,953,395 861,009 (199,723) (224,330) 616,905 454,664 3,461,989 3,603,827
(1,609) (68,868) (31,989) 26,141 3,311 (73,788) (29,886) (48,808) (48,808) (1,645) (43,063) (384,638) (322,238)
(435) 135,218 (22,601) 1,113,163 143,792 2,879,607 831,122 (248,531) (273,138) 615,260 411,601 3,077,351 3,281,588
(435) 135,218 (22,601) 1,113,163 (54,459) 2,828,597 166,536 (96,132) (2,001,146) 167,351 359,963 1,170,876 2,188,219
- - - - 198,251 51,010 664,587 (152,399) 1,728,007 447,910 51,638 1,906,475 1,093,369
(435) 135,218 (22,601) 1,113,163 143,792 2,879,607 831,122 (248,531) (273,138) 615,260 411,601 3,077,351 3,281,588
909 36,603 28,563 1,995 2,049 7,084 73,023 124,233 117,650 - 257,292 223,457 158,324
586 - 200,797 41,430 3,283 277,108 174,863 90,588 319,088 313,497 484,818 1,133,074 617,913
216 | Brown & Company PLC
Economic Value Statement
Trading Manufacturing Travel & Tours
As at 31st March 2013 2012 2011 2013 2012 2011 2013 2012 2011 2013
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
Direct Economic Value Generated
Revenue 10,708,439 11,136,906 8,473,176 909,050 1,225,239 1,245,560 37,763 24,592 20,960 298,250
Interest Income 109,075 46,344 62,244 4,318 2,817 4,148 5,041 4,200 3,019 -
Dividend Income 219,719 216,207 566,873 2,010 954 - 180 29 - 14,527
Share of Results of Associates (58,607) 6,134 18,488 - - - - - - -
Profit on Sale of Assets Other Income 2,303 43,559 210,008 856.33 22,452 20,661 - 771 3,066 -
Valuation gain on IP - (30,113) 1,715 - - - - - - -
10,980,928 11,419,036 9,332,504 916,234 1,251,462 1,270,369 42,984 29,592 27,045 312,777
Economic Value Distributed
Operating Costs 9,011,466 10,112,846 8,175,994 841,281 1,089,151 1,144,368 24,370 16,946 13,283 95,374
Employee Wages and Benefits 319,300 282,439 212,426 129,735 48,954 50,188 9,849 10,824 8,564 476
Payments to Providers of Funds 993,102 554,841 397,852 17,251 5,617 6,668 3,596 2,108 681 -
Payments to Governments 33,968 135,474 128,236 3,525 23,592 44,248 2,054 1,168 1,614 44,733
10,357,835 11,085,600 8,914,508 991,792 1,167,688 1,245,472 39,868 31,170 24,142 137,709
Economic Value Retained
Depreciation 87,140 62,240 70,842 6,190 6,983 11,555 1,078 937 909 36,603
Amortization 26,076 7,839 7,932 659 57 43 102 123 97 191
Profit After Dividend 509,877 263,357 339,221 (82,407) 76,733 13,298 1,937 (2,639) 1,897 135,400
623,093 333,436 417,995 (75,558) 83,774 24,896 3,116 (1,578) 2,903 172,194
Distribution of Value Added - Group 2012
To EmployeesTo Government
To Providers of fundsTo Expansion and growth
560 3,215
1,235
244
To EmployeesTo Government
To Providers of fundsTo Expansion and growth
122
1,302
660
1,553
Distribution of Value Added - Group 2013
Annual Report 2012/2013 | 217
Finance Plantation Investments Eliminations Group Total
2012 2011 2013 2012 2011 2013 2012 2011 2013 2012 2011 2013 2012 2011
Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000
238,030 152,649 2,553,652 1,844,163 1,773,076 71,168 212,386 1,243,001 (394,521) (293,962) (813,321) 14,183,801 14,387,354 12,095,101
- - 52,618 51,857 8,236 167,812 134,616 18,081 (28,312) (13,974) (22,915) 310,553 225,860 72,813
44,949 23,174 226 - - - - - (52,634) (156,274) (528,086) 184,028 105,865 61,961
- - (243,182) (101,065) 131,059 - - - - - - (301,790) (94,931) 149,547
1,006 1,103,748 (166,875) 2,757,669 505,857 167,517 50,507 128,120 - (31,405) 321,485 3,801 2,844,559 2,292,945
- - (3,521) 250,000 - 156,561 - - - - - 153,040 219,887 1,715
283,985 1,279,571 2,192,919 4,802,624 2,418,228 563,058 397,509 1,389,202 (475,467) (495,615) (1,042,837) 14,533,434 17,688,593 14,674,082
70,863 3,368 1,327,491 933,713 622,702 (108,571) 353,791 63,933 (475,467) (143,576) (369,602) 10,895,338 12,433,234 9,654,046
451 745 1,090,909 891,028 784,655 2,515 1,671 - - - - 1,552,784 1,235,367 1,056,578
- - 118,557 127,714 52,824 169,870 77,963 77,963 - (207,869) (158,437) 1,302,375 560,374 377,551
12,817 24,777 38,175 22,488 32,598 - 48,808 - - - - 122,454 244,347 231,473
84,131 28,890 2,575,132 1,974,943 1,492,779 63,814 481,233 141,896 (475,467) (351,445) (528,039) 13,872,952 14,473,322 11,319,648
28,563 1,995 2,049 7,084 73,023 124,233 117,650 - - - - 257,292 223,457 158,324
- - - - - - - - - - - 27,028 8,019 8,072
171,290 1,248,685 (563,655) 2,820,597 852,426 375,011 (201,374) 1,247,306 - (144,170) (514,799) 376,162 2,983,795 3,188,034
199,853 1,250,680 (561,607) 2,827,681 925,449 499,244 (83,724) 1,247,306 - (144,170) (514,799) 660,482 3,215,271 3,354,430
Distribution of Value Added - Company 2012
To EmployeesTo Government
To Providers of fundsTo Expansion and growth
290
204
447
547
Distribution of Value Added - Company 2013
To EmployeesTo Government
To Providers of fundsTo Expansion and growth
(494)
987
326
229
218 | Brown & Company PLC
Ten Year Summary
2013 2012 2011 2010 2009 2008 2007 2006 2005 2004
Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000
Group revenue 14,183,801 14,387,354 12,095,101 8,952,613 6,815,976 5,796,748 5,085,390 4,513,164 3,791,168 3,344,808
EBIT 1,525,039 3,880,945 3,895,431 1,741,717 882,064 693,118 589,397 495,590 445,337 560,090
Finance expenses (1,070,375) (418,956) (291,605) (473,551) (418,116) (429,157) (185,160) (151,905) (163,919) (207,064)
Share of results of Associates (301,790) (94,931) 149,548 44,274 24,006 19,782 21,381 (11,217) 148,851 352,344
Profit before tax 454,664 3,461,989 3,603,827 1,268,166 463,948 263,961 404,237 343,685 281,418 353,026
Tax expense (43,063) (384,638) (322,238) (120,203) (50,710) 146,189 119,542 (44,205) (50,485) (27,993)
Profit for the year 411,601 3,077,351 3,281,588 1,147,963 413,238 410,150 523,779 299,480 230,933 325,033
Attributable to:
Equity holders of the parent 359,963 1,170,876 2,188,219 1,013,665 425,597 419,237 526,258 297,592 230,197 324,388
Non-Controling Interest 51,638 1,906,475 1,093,369 134,298 (12,359) (9,087) (2,479) 1,888 736 645
411,601 3,077,351 3,281,588 1,147,963 413,238 410,150 523,779 299,480 230,933 325,033
CAPITAL EMPLOYED
Stated capital 2,005,601 2,005,601 2,005,601 2,005,601 2,005,601 21,101 21,101 21,000 21,000 21,000
Capital reserves 3,987,572 3,465,922 5,401,247 4,495,526 2,715,232 907,023 4,733,031 2,590,534 1,322,519 1,179,448
Revenue reserves 9,102,591 8,409,224 7,507,046 3,103,269 1,329,875 6,154,142 528,023 (153,424) 211,908 256,135
Share holders fund 15,095,764 13,880,747 14,913,894 9,604,396 6,050,708 7,082,266 5,282,155 2,458,110 1,555,427 1,456,583
Non-Controling Interest 7,918,315 9,272,244 6,927,084 3,853,502 3,280,220 5,611 16,265 12,807 9,733 5,784
Total equity 23,014,079 23,152,990 21,840,978 13,457,898 9,330,928 7,087,877 5,298,420 2,470,917 1,565,160 1,462,367
Total debt 7,730,670 5,340,827 4,009,995 2,372,992 3,473,014 2,245,283 1,936,774 1,344,877 1,382,588 1,623,828
30,744,749 28,493,817 25,850,976 15,830,890 12,803,942 9,333,160 7,235,194 3,815,794 2,947,748 3,086,195
ASSETS EMPLOYED
Property, plant and
equipment (PP&E) 6,829,098 6,509,437 4,727,690 7,041,027 5,982,663 3,247,298 2,476,543 1,634,157 950,261 867,274
Non-current assets other
than PP&E 16,907,047 14,793,014 12,031,158 8,347,073 6,366,473 4,425,766 3,311,798 1,424,220 1,369,475 1,495,172
Current assets 10,805,770 11,528,466 10,523,057 3,203,089 3,357,331 3,093,472 2,743,307 1,444,521 1,104,205 1,232,084
Liabilities net of debt (3,797,167) (4,337,098) (1,430,932) (2,760,298) (2,902,525) (1,433,376) (1,296,454) (687,104) (476,193) (508,335)
30,744,749 28,493,817 25,850,976 15,830,890 12,803,942 9,333,160 7,235,194 3,815,794 2,947,748 3,086,195
CASH FLOW
Net cash flows from
operating activities (1,355,187) (588,276) 1,092,449 (297,565) 734,453 (251,184) (519,410) 90,161 166,128 149,980
Net cash flows from / (used in)
investing activities (1,118,345) (2,076,461) (2,075,835) 841,490 (541,611) (46,017) 64,005 (92,232) 91,261 213,652
Net cashflows from / (used in)
financing activities 1,351,402 1,851,675 4,539,135 (48,303) (376,572) 275,722 353,637 (9,617) (114,376) (68,912)
Net increase / (decrease) in
cash and cash equivalents (1,122,130) (813,063) 3,555,749 495,623 (183,730) (21,479) (101,768) (11,688) 143,013 294,720
KEY INDICATORS
Earnings per Share (Rs.)* 5.08 16.52 30.87 14.30 6.00 5.92 7.43 4.20 3.25 4.58
Net Assets per Share (Rs.)** 212.99 195.85 210.43 135.51 85.37 99.93 74.53 34.68 21.95 20.55
Market Price per Share (Rs.) 117.90 155.10 289.80 87.75 18.00 925.50 630.00 530.00 251.00 150.00
Market Capitalization 8,356,163 10,992,713 20,539,575 6,219,281 1,275,750 2,429,438 1,653,750 1,391,250 658,875 393,750
Return on Shareholders’ funds (%) 2.38 8.44 14.67 10.55 7.03 5.92 9.96 12.11 14.80 22.27
Return on Capital Employed (%) 4.96 13.62 15.07 11.00 6.89 7.43 8.15 12.99 15.11 18.15
Price Earnings Ratio (times) 23.82 9.39 9.39 6.14 3.00 156.46 84.85 126.23 77.28 32.77
Interest Cover (times covered) 1.42 9.26 13.36 3.68 2.11 1.62 3.18 3.26 2.72 2.70
Current Ratio (times) 1.32 1.80 3.07 1.12 0.79 1.13 1.08 1.01 0.91 0.89
Debt to Equity Ratio (%) 33.59 34.66 18.36 17.63 37.22 31.68 36.55 54.43 88.34 111.04
Dividend per Share 0.50 1.32 1.32 - - 17.20 1.60 1.60 0.80 -
Number of Employees 760 724 653 824 888 881 877 813 955 988
Number of Shares 70,875 70,875 70,875 70,875 70,875 2,625 2,625 2,625 2,625 2,625
* Earnings per share has been adjusted for weighted average number of shares outstanding during the year (has been adjusted for previous years).
** Net Assets per share has been computed for the total number of shares issued as at 31st March 2013.
Annual Report 2012/2013 | 219
Share Information
Share Price information on ordinary shares of the Company
2012/2013 2011/2012 2010/2011 2009/2010 2008/2009
Share information
High 195.90 404.90 308.00 103.00 1,200.00*
Low 103.00 149.00 86.00 17.00 17.50
Close 117.90 155.10 289.80 87.75 18.00
* During the year 2008/2009, the Company has subdivided ordinary shares in the ratio of nine for one and has also, capitalized reserves in the
ratio of two for one.
Distribution of Shareholders
Number of 31.03.2013 (%)
shareholders Number of
No of shares
1 to 1,000 shares 1,488 466,973 0.66
1,001 to 10,000 shares 610 2,427,488 3.42
10,001 to 100,000 shares 343 9,538,850 13.46
100,001 to 1000,000 shares 19 6,130,271 8.65
Over 1,000,001 shares 10 52,311,418 73.81
TOTAL 2,470 70,875,000 100
Categories of Shareholders
No of shareholders No of shares held %
Individual 2,321 17,609,970 24.85
Institutional 149 53,265,030 75.15
Total 2,470 70,875,000 100
Resident 2,221 64,193,777 90.57
Non-Resident 249 6,681,223 9.43
Total 2,470 70,875,000 100
Directors’ shareholdings
31st March 2013 31st March 2012
No. of shares No. of shares
Mrs. R. L. Nanayakkara (Resigned on 28/02/2013) Nil Nil
Mr. I. C. Nanayakkara 99,900 99,900
Mr. A. L. Devasurendra (Resigned on 15/07/2013) 1,098,900 1,098,900
Mr. N. M. Prakash - Margin Trading 35,100 35,100
Mr. S. V. Somasunderam - Individual 3,027,400 2,877,400
- Margin Trading Nil 150,000
Mr. H. P. J. de Silva Nil Nil
Mr. W. D. K.Jayawardena Nil Nil
Mrs. K. U. Amarasinghe Nil Nil
220 | Brown & Company PLC
Twenty Largest Shareholders of the Company
31.03.2013 31.03.2012
NAME & ADDRESS No. of shares % NAME & ADDRESS No. of shares %
1 ENGINEERING SERVICES (PVT) LTD 16,588,962 23.41 1 ENGINEERING SERVICES (PVT) LTD 16,588,962 23.41
2 MASONS MIXTURE LIMITED 13,732,632 19.38 2 MASONS MIXTURE LIMITED 13,732,632 19.38
3 EMPLOYEES PROVIDENT FUND 6,621,645 9.34 3 EMPLOYEES PROVIDENT FUND 6,427,435 9.07
4 LANKA ORIX LEASING COMPANY PLC 3,382,800 4.77 4 LANKA ORIX LEASING COMPANY PLC 3,382,800 4.77
5 MR. SHANKER VARADANANDA 5 MUTUGALA ESTATES (PVT) LIMITED 2,986,524 4.21
SOMASUNDERAM 3,027,400 4.27
6 MUTUGALA ESTATES (PVT) LIMITED 2,986,524 4.21 6 MR. SHANKER VARADANANDA
SOMASUNDERAM 2,877,400 4.06
7 PATHREGALLA ESTATES (PVT) LIMITED 1,961,658 2.77 7 PATHREGALLA ESTATES (PVT) LIMITED 1,961,658 2.77
8 ACE BONUS INVESTMENTS LIMITED 1,755,000 2.48 8 ACE BONUS INVESTMENTS LIMITED 1,755,000 2.48
9 VYJAYANTHI & COMPANY LTD. 1,155,897 1.63 9 VYJAYANTHI & COMPANY LTD. 1,155,897 1.63
10 MR. AJITH LASANTHA DEVASURENDRA 1,098,900 1.55 10 MR. AJITH LASANTHA DEVASURENDRA 1,098,900 1.55
11 NATIONAL SAVINGS BANK 1,000,000 1.41 11 SRI LANKA INSURANCE CORPORATION
LTD- LIFE FUND 1,069,600 1.51
12 SRI LANKA INSURANCE CORPORATION
LTD- LIFE FUND 906,990 1.28 12 NATIONAL SAVINGS BANK 1,000,000 1.41
13 PAN ASIA BANKING CORPORATION PLC. / 781,646 1.10 13 PAN ASIA BANKING CORPORATION PLC./ 781,646 1.10
MR. SHABBIR ABBAS GULAMHUSEIN MR. SHABBIR ABBAS GULAMHUSEIN
14 EST. OF LATE MR. MARIAPILLAI 14 MR. MARIAPILLAI RADHAKRISHNAN 575,640 0.81
RADHAKRISHNAN(DECD) 575,640 0.81
15 MRS. PAMELA CHRISTINE COORAY 506,408 0.71 15 MRS. PAMELA CHRISTINE COORAY 506,408 0.71
16 EMPLOYEES TRUST FUND BOARD 478,500 0.68 16 EMPLOYEES TRUST FUND BOARD 478,500 0.68
17 BANK OF CEYLON NO. 1 ACCOUNT 289,700 0.41 17 BANK OF CEYLON NO. 1 ACCOUNT 189,700 0.27
18 DR. IAM DAVID GILCHRIST DONALDSON 160,380 0.23 18 FIRST CAPITAL LIMITED 161,600 0.23
19 MR. PAUL CARTER 160,380 0.23 19 DR. IAM DAVID GILCHRIST DONALDSON 160,380 0.23
20 MR. BRUCE DAVID DONALDSON 160,380 0.23 20 MR. PAUL CARTER 160,380 0.23
Total 57,331,442 80.89 Total 57,051,062 80.5
No. of shares held by public 36,292,106
Percentage of shares held by public 51.20%
Distribution of Shareholders
1-1000To 1001-10000
100001-1000000Over 1,000,001
10001-100000
6,130,271
9,538,850
52,311,418
466,973 2,427,488
12/1311/1210/1109/10
Share Price InformationRs. (Mn)
High Low Close
Share Information
Annual Report 2012/2013 | 221
Subsidiaries & Associates
Subsidiaries & Associates Directors
Browns Group Industries (Pvt) Ltd Mrs. R. L. Nanayakkara Reg No. PV 1917 N. M. Prakash S. V. Somasunderam Mrs. R. N. A. Nanayakkara I. C. Nanayakkara (Alternate Director to Mrs. R.N.A. Nanayakkara) W. M. N. Canisius Fernando Browns Tours (Pvt) Ltd Mrs. R. L. Nanayakkara Reg No. PV 1242 N. M. Prakash S. V. Somasunderam R. B. Seneviratne Mrs. R. N. A. Nanayakkara I. C. Nanayakkara (Alternate Director to Mrs. R. N. A. Nanayakkara) P. Weerasinghe
S.F.L. Services (Pvt) Ltd Mrs. R. L. Nanayakkara(Formerly known as Standard Finance (Pvt) Ltd) N. M. PrakashReg No. PV 1463 S. V. Somasunderam Mrs. R. N. A. Nanayakkara I. C. Nanayakkara (Alternate Director to Mrs. R. N. A. Nanayakkara) The Hatton Transport & Agency Mrs. R. L. Nanayakkara Company (Pvt) Ltd N. M. Prakash Reg No. PV 2833 S. V. Somasunderam(is not operational) Mrs. R. N. A. Nanayakkara I. C. Nanayakkara (Alternate Director to Mrs. R. N. A. Nanayakkara) Snowcem Products Lanka (Pvt) Ltd S. V. SomasunderamReg. No. PV 5900 N. M. Prakash Mrs. R. N. A. Nanayakkara Mr. I. C. Nanayakkara (Alternate Director to Mrs. R. N. A. Nanayakkara)
Browns Group Motels Ltd Mrs. R. L. Nanayakkara Reg No. PB 167 N. M. Prakash (is not operational) S. V. Somasunderam Mrs. R. N. A. Nanayakkara I. C. Nanayakkara (Alternate Director to Mrs. R. N. A. Nanayakkara) *C.F.T. Engineering Ltd Mrs. R. L. NanayakkaraReg No. PB 318 N. M. Prakash S. V. Somasunderam Mrs. R. N. A. Nanayakkara I. C. Nanayakkara (Alternate Director to Mrs. R. N. A. Nanayakkara)
BG. Air Services (Pvt) Ltd Mrs. R. L. Nanayakkara Reg No. PV 1807 N. M. Prakash S. V. Somasunderam Mrs. R. N. A. Nanayakkara I. C. Nanayakkara (Alternate Director to Mrs. R. N. A. Nanayakkara) P. Weerasinghe
*Klevenberg (Pvt) Ltd M. BalasubramaniamReg. No. PV 5697 P. Balasubramaniam N. M. Prakash S. V. Somasunderam Mrs. R. N. A. Nanayakkara I. C. Nanayakkara (Alternate Director to Mrs. R. N. A. Nanayakkara) M. Wijemanne
222 | Brown & Company PLC
Subsidiaries & Associates Directors
* Associated Battery P. K. Kataky (Resigned on 11th June 2013)Manufacturers (Ceylon) Ltd W. Wong, Reg No. PB 240 A. K. Mukherjee K. Ganesan Saha Arnab N. M. Prakash S. V. Somasunderam P. Weerasinghe G. Chatterjee I.G. Browns Rubber (Pvt) Industries Ltd Mrs. R. Nanayakkara Reg. No. PV 11481 N. M. Prakash Browns Thermal Engineering (Pvt) Ltd Mrs. R. L. NanayakkaraReg No. PV 5001 N. M. Prakash K. D. P. Fernando A. K. D. Munidasa, S. V. Somasunderam W. M. N. Canisius Fernando
Browns Motors (Pvt) Ltd R. M. NanayakkaraReg. No. PV 65726 Mrs. Indra Nanayakkara Mrs. R. N. A. Nanayakkara I. C. Nanayakkara (Alternate Director to Mrs. R. N. A. Nanayakkara)
*Browns Investments PLC I. C. Nanayakkara Reg No.PV66136PB/PQ P. R. Saldin N. M. Prakash A. G. Weerasinghe D. S. K. Amarasekera Stefan Furkhan R. P. Sugathadasa S. V. Somasunderam W. D. K. Jayawardena Mrs. K. U. Amarasinghe *Sifang Lanka (Pvt) Ltd Zhou HaifengReg No. PV 7481 Huang Yilin Mrs. R. L. Nanayakkara N. M. Prakash S. V. Somasunderam Mrs. R. N. A. Nanayakkara Mr. I. C. Nanayakkara (Alternate Director to Mrs. R. N. A. Nanayakkara) C. Ediriwickrema
*Sifang Lanka Trading (Pvt) Ltd Mrs. R. L. NanayakkaraReg No. PV 7363 N. M. Prakash S. V. Somasunderam Mrs. R. N. A. Nanayakkara I. C. Nanayakkara (Alternate Director to Mrs. R. N. A. Nanayakkara) C. Ediriwickrema
*Browns Industrial Park Ltd Mrs. R. L. NanayakkaraReg. No. PB 1100 N. M. Prakash W. M. N. Canisius Fernando S. V. Somasunderam
Subsidiaries & Associates
Annual Report 2012/2013 | 223
Subsidiaries & Associates Directors
*Walker & Greig (Pvt) Ltd Mrs. R. L. Nanayakkara Reg. No. PV 66042 N. M. Prakash S. V. Somasunderam Mrs. R. N. A. Nanayakkara I. C. Nanayakkara (Alternate Director to Mrs. R. N. A. Nanayakkara)
*Gal-Oya Holdings(Pvt) Ltd N. M. PrakashReg. No. PV 7182 W. G. L. Dharmakeerthi N. T. K. A. Adikarama P. R. Saldin R. M. G. K. B. Ratnayake Ms. M. Anoma Nandani
*Gal-Oya Plantations (Pvt) Ltd Dr. W. GamageReg. No. PV 7601 P. R. Saldin W. G. L. Dharmakeerthi N. T. K. A. Adikarama K. A. K. P. Gunawardena S. G. Senarathna R. A. S. Kolitha De Alwis T. P. G. Neil De Alwis Ms. M. Anoma Nandani
Browns Health Care (Pvt) Ltd Mr. R. L. NanayakkaraReg No. PV 77421 N. M. Prakash S. V. Somasunderam Dr. K. S. Narangoda
Browns Real Estates (Pvt) Ltd Mrs. R. L. NanayakkaraReg. No. PV 79609 N. M. Prakash S. V. Somasunderam Mrs. R. N. A. Nanayakkara I. C. Nanayakkara (Alternate Director to Mrs. R. N. A. Nanayakkara) P. Weerasinghe
Browns Health Care North Colombo (Pvt) Ltd Mrs. R. L. NanayakkaraReg. No. PV 89856 N. M. Prakash Dr. K. S. Narangoda S. V. Somasunderam
Samudra Beach Resorts (Pvt) Ltd Mrs. R. L. NanayakkaraReg. No. PV 78179 N. M. Prakash D. S. K. Amarasekera P. R. Saldin R. P. Sugathadasa S. V. Somasunderam
Browns Global Farm (Pvt) Ltd Mrs. R. L. NanayakkaraReg. No. PV 92172 N. M. PrakashIncorporated on 22/04/2013 S. V. Somasunderam C. D. Ediriwickrema
*Indicate the Companies whose accounts are audited by a Auditors other than KPMG who are the Auditors of Brown & Company PLC
224 | Brown & Company PLC
Glossary
ACCRUAL BASIS
Recognizing the effects of transactions and other events when
they occur without waiting for receipt or payment of cash or cash
equivalent.
CASH EQUIVALENTS
Cash equivalents are short-term, highly liquid investments that are
readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value.
CONTINGENT LIABILITIES
Conditions or situations at the balance sheet date, the financial effect
of which are to be determined by the future events which may or
may not occur.
FOREIGN CURRENCY TRANSACTION
The realized gain recorded when assets or liabilities denominated
in foreign currencies are translated into Sri Lankan Rupees on the
balance sheet date at prevailing rates which differ from those rates in
force at inception or on the previous balance sheet date.
IMPAIRMENT
This occurs when recoverable amount of an asset is less than its
carrying amount.
GROUP
A group is a parent and all its subsidiaries.
PARENT
A parent is an entity that has one or more subsidiaries.
SUBSIDIARY
A subsidiary is an entity, including an unincorporated entity such
as a partnership, that is controlled by another entity (known as the
parent).
JOINT CONTROL
Joint control is the contractually agreed sharing of the control over
an economic activity, and exists only when the strategic financial and
operating decisions relating to the activity require the unanimous
consent of the parties sharing control.
JOINT VENTURE
A joint venture is a contractual arrangement whereby two or more
parties undertake an economic activity that is subject to joint control.
ASSOCIATE
An associate is an entity, including an unincorporated entity such as a
partnership, over which the investor has significant influence and that
is neither a subsidiary nor an interest in a joint venture.
COST METHOD
Cost method is a method of accounting for an investment whereby
the investment is recognised at cost. The investor recognizes income
from the investment only to the extent that the investor receives
distributions from accumulated profits of the investee arising after
the date of acquisition. Distributions received in excess of such profits
are regarded as a recovery of investment and are recognised as a
reduction of the cost of the investment.
EQUITY METHOD
The equity method is a method of accounting whereby the
investment is initially recognised at cost and adjusted thereafter for
the post-acquisition changes in the investor’s share of net assets of
the investee. The profit or loss of the investor includes the investor’s
share of the profit or loss of the investee.
SIGNIFICANT ACCOUNTING POLICIES
The specific principles, bases, conventions, rules and practices
adopted by an enterprise in preparing and presenting Financial
Statements.
MARKET CAPITALISATION
Number of ordinary shares in issue multiplied by the market value of
each share at the year end.
NET ASSETS
Total assets minus current liabilities minus long term liabilities minus
minority interest.
NET ASSET VALUE PER SHARE
Shareholders’ Funds divided by the number of ordinary shares in issue.
CAPITAL EMPLOYED
Shareholders’ funds plus minority interest and debt.
MARKET VALUE ADDED
Market capitalization minus shareholder’s funds.
NET PROFIT MARGIN
Profit after tax divided by turnover inclusive of share of associate
company turnover.
Annual Report 2012/2013 | 225
SHAREHOLDERS’ FUND
Total of issued and fully paid share capital, capital reserves and
revenue reserves.
TOTAL DEBT
Long term loans plus short term loans and overdrafts.
EBITDA
Abbreviation for Earnings before Interest, Tax, Depreciation and
Amortization.
RETURN ON AVERAGE EQUITY (ROE)
Net income, less preferred share dividends if any, expressed as a
percentage of average ordinary shareholders’ equity.
RETURN ON AVERAGE ASSETS (ROA)
Net income expressed as a percentage of average total assets, used
along with ROE, as a measure of profitability and as a basis of intra-
industry performance comparison.
EARNINGS PER SHARE (EPS)
Profits attributable to ordinary shareholders divided by the weighted
average number of ordinary shares in issue during the period.
PRICE EARNINGS RATIO (P/E RATIO)
Market price of an ordinary share divided by earnings per share (EPS).
TOTAL EQUITY
Shareholders’ funds plus minority interest.
CAPITAL RESERVES
Reserves identified for specific purposes and considered not available
for distribution.
REVENUE RESERVES
Reserves considered as being available for distributions and
investments.
WORKING CAPITAL
Capital required financing day to day operations computed as the
excess of current assets over current liabilities.
INTEREST COVER
Profit before tax plus net finance cost divided by net finance cost.
Measure of an entity’s debt service ability.
DEFERRED TAX
Sum set aside in the Financial Statements for taxation that may
become payable/ receivable in a financial year other than the current
financial year.
EFFECTIVE TAX RATE
Provision for taxation excluding deferred taxation divided by the
profit before tax.
INTANGIBLE ASSET
An identifiable non-monetary asset without physical substance held
for use in the production / supply of goods / services or for rental to
others or for administrative purposes.
AMORTIZATION
The systematic allocation of the depreciable amount of an intangible
asset over its useful life.
FAIR VALUE
Fair Value is the amount for which an asset could be exchanged
between a knowledgeable, willing buyer and a knowledgeable,
willing seller in an arm’s length transaction.
GENERAL PROVISIONS
General provisions are established for Trading transactions and others
for anticipated losses.
PROVISION FOR BAD AND DOUBTFUL DEBTS
Provisions are established to reduce the book value of specific assets
(primarily debtors) to estimated realizable values.
KEY MANAGEMENT PERSONNEL
Key Management Personnel are those persons having authority and
responsibility for planning, directing and controlling the activities of
the entity, directly or indirectly.
RELATED PARTIES
Parties who could control or significantly influence the financial and
operating policies of the business.
VALUE ADDITION
The quantum of wealth generated by the activities of the Group
measured as the difference between turnover and the cost of
materials and services bought in.
226 | Brown & Company PLC
RETIREMENT BENEFITS
Present value of a defined benefit obligation
Is the present value of expected future payments required to settle
the obligation resulting from employee service in the current and
prior periods.
Current Service Cost Is the increase in the present value of the defined benefit obligation
resulting from employee service in the current period.
Interest Cost Is the increase during a period in the present value of a defined
benefit obligation which arises because of the benefits are one period
closer to settlement.
Actuarial gains and losses Is the effects of difference between the previous actuarial
assumptions and what has actually occurred and the effects of
changes in actuarial assumptions.
MARKET RISK
This refers to the possibility of loss arising from changes in the value
of a financial instrument as a result of changes in market variables
such as interest rates, exchange rates, credit spreads and other asset
prices.
SEGMENT REPORTING
Segment reporting indicates the contribution to the revenue derived
from business segments such as Trading, Manufacturing, Travel &
Tours, Finance and Plantation.
CONTINGENT LIABILITY
A possible obligation that arises from past events whose existence
will be confirmed only by the occurrence or non-occurrence of one
or more uncertain future events not wholly within the control of the
enterprise.
Glossary
Annual Report 2012/2013 | 227
Brown and Company PLC - Reg. No. PQ 25
Notice of the Annual General Meeting
NOTICE IS HEREBY GIVEN that the One Hundred and Twenty First
ANNUAL GENERAL MEETING of the Company will be held at Park
Premier, Excel World, No 338, T. B. Jayah Mawatha, Colombo 10 on
Twenty Fourth day of September 2013 at 10.30 a. m.
The business to be brought before the meeting will be:
To receive and consider the Report of the Directors and
Statement of Accounts and the Balance Sheet of the Company
for the Financial Year ended 31st March 2013 with the Auditors’
Report thereon.
To re-elect Mr. H. P. J. De Silva as an Independent Non-
Executive Director, who retires by rotation in accordance with
Article 24(6) of the Articles of Association of the Company.
To re-elect Mr. R. M. Nanayakkara as a Non-Executive Director
in terms of Section 210 of the Companies Act No. 7 of 2007.
Special notice has been received from a shareholder, pursuant
to Sections 145 and 211 of the Companies Act No. 7 of 2007
of the intention to propose the following resolution as an
ordinary resolution.
RESOLUTION
“That Mr. R. M. Nanayakkara who reached the age of 73 years
on 26th February 2013 be and is hereby re-elected as a Non-
Executive Director of the Company and it is hereby declared
that the age limit of 70 years referred to in Section 210 of
the Companies Act No. 7 of 2007 shall not apply to the said
Director.”
To re-appoint M/s. KPMG, Chartered Accountants, as Auditors
of the Company for the ensuing year.
To authorize the Directors to fix the remuneration of the
Auditors.
BY ORDER OF THE BOARD
S. F. L. SERVICES (PVT) LTD
(FORMERLY KNOWN AS STANDARD FINANCE (PVT) LIMITED
SECRETARIES
Colombo, 30th July 2013
Notes: 1 A member entitled to attend and vote at the Meeting may
appoint a proxy to attend and vote in his stead
2 A proxy need not be a member of the Company. A Form of
Proxy is found at the end of this Annual Report.
3 The instrument appointing such a proxy must be deposited at
the Business office of the Company before 10.30 a. m. on 22nd
September 2013.
228 | Brown & Company PLC
Notes
Annual Report 2012/2013 | 229
230 | Brown & Company PLC
Notes
Annual Report 2012/2013 | 231
Form of Proxy
I / We ........................................................................................................................................................................................................................................................................................................................ of
...................................................................................................................................................................................................... being a member/members of the above named Company
hereby appoint
Ishara Chinthaka Nanayakkara or failing him
Nadarajah Murali Prakash or failing him,
Shanker Varadananda Somasunderam or failing him,
Herbert Poshitha Janaka de Silva or failing him
Waduthanthri Darshan Kapila Jayawardena or failing him
Mrs. Kalsha Upekha Amarasinghe or failing her
Rajah Mahinda Nanayakkara of failing him
Mr/ Mrs/Miss ....................................................................................................................................................................................................................................................................................................... of
.............................................................................................................................................. as my/our proxy to represent me/us and to vote for me/us and on my/our behalf
at the One Hundred and Twenty First Annual General Meeting of the Company to be held on the Twenty Fourth day of September 2013 and at
any adjournment thereof and at every poll which may be taken in consequence thereof.
Signed this .................................................... day of ..................................... 2013
...........................................................
Signature/s
Please provide the following details:
Shareholder’s NIC No. : ........................................................................................
No. of shares held : ........................................................................................
Proxy holder’s NIC No. : ........................................................................................
(if not a Director of this Company)
Brown and Company PLC - Reg. No. PQ 25
232 | Brown & Company PLC
Notes:
1 The full name and the registered address of the shareholder
appointing the proxy should be legibly entered in the form of proxy.
2 If the Form of Proxy is signed by an Attorney, the relative Power of
Attorney should accompany the Form of Proxy for registration, if such
Power of Attorney has not been registered with the company.
3 In the case of a company/corporation, the proxy must be under its
common seal which should be affixed and attested in the manner
prescribed by its Articles of Association.
4 In the case of joint-holders, the senior should sign this form. Seniority
shall be determined by the order in which names stand in the
Register of Members in respect of the joint holding.
5 Every alteration or addition to the form of proxy must be duly
authenticated by the full signature of the person signing on the form
of proxy.
6 To be valid the completed Form of Proxy should be deposited with
the Secretaries at No.34, Sir Mohamed Macan Markar Mawatha,
Colombo 3, not less than 48 hours before the time appointed for the
holding of the meeting.
Form of Proxy
Corporate Information
Brown & Company PLC
Legal Form
A Public Limited Liability Company quoted on the Colombo Stock
Exchange on 25th April 1991 and incorporated in Sri Lanka on 17th
August 1892
Company No.
PQ 25
Directors
I. C. NanayakkaraExecutive Chairman/Executive Director (Appointed as the Executive
Chairman on 1/3/2013)
Mrs. R. L. NanayakkaraNon-Executive Chairperson (Resigned on 28/2/2013)
A. L. DevasurendraDeputy Chairman / Non-Executive Director (Resigned on 15/07/2013)
N. M. PrakashExecutive Group Managing Director/CEO
S. V. SomasunderamNon-Executive Director
H. P. J. de SilvaIndependent Non-Executive Director
W. D. K. JayawardenaNon-Executive Director
Mrs. K. U. AmarasingheNon-Executive Director
R. M. NanayakkaraNon-Executive Director (Appointed on 15/07/2013)
Secretaries
S. F. L. Services (Pvt) Ltd
(Formerly known as Standard Finance (Pvt) Limited)
No. 481, T B Jayah Mawatha,
Colombo 10.
Registered Office
No. 481, T B Jayah Mawatha, (Darley Road),
P O Box 200, Colombo 10.
Fax No. 2307380
Tel. 2663000
Website: www.brownsgroup.com
Business Office
No. 34, Sir Mohamed Macan Markar Mawatha,
Colombo 3.
Fax No. 2307380
Tel. 2663000
Website: www.brownsgroup.com
Auditors
Messrs KPMG Chartered Accountants
No. 32A, Sir Mohamed Macan Markar Mawatha
Colombo 3.
Bankers
Hatton National Bank PLC
Commercial Bank of Ceylon PLC
Sampath Bank PLC
Hongkong & Shanghai Banking Corporation Ltd.
Peoples Bank
ICICI Bank Ltd.
National Development Bank PLC
DFCC Varadhana Bank PLC
DFCC Bank
Seylan Bank PLC
Standard Chartered Bank Ltd.