Metropolitan Resource Holdings - 2008-09

Metropolitan Resource Holdings PLC
ANNUAL REPORT
2008/2009
CONTENTS
Page Nos Notice of meeting Corporate Information Investor information Chairmans Review Board of Directors Report of the Audit Committee Report of Directors Corporate Governance Statement of Directors Responsibility Report of the Auditors Financial Statements Form of Proxy

01 02 03 05 06 08 09 12 16 17 19
METROPOLITANRESOURCEHOLDINGSPLC NOTICE IS HEREBY GIVEN that the Fifteenth Annual General Meeting of Metropolitan Resource Holdings PLC will be held at the Committee Room E, BMICH, Colombo 07 on Wednesday 30th September 2009 at 9.00 a.m. for the following purposes: 1. To receive and consider the Annual Report of the Board of Directors on the affairs of the Company and the Statement of Accounts for the year ended 31st Mach 2009 with the Report of the Auditors thereon. 2. To re-elect Mr. Collin William Kingsnorth who retires by rotation in terms of Article 93 and 94 of the Articles of Association of the Company. 3. To re-elect Dr. Romesh Dias Bandaranaike who retires by rotation in terms of Article 93 and 94 of the Articles of Association of the Company. 4. To re-elect Mr. Gerard Victor Maurice Nanayakkara who retires in terms of Article 99 of the Articles of Association of the Company. 5. To re-elect Mr. Jayampathy Molligoda who retires in terms of Article 99 of the Articles of Association of the Company. 6. To re-elect Mr. Arya Keerthi Kumarasena who retires in terms of Article 99 of the Articles of Association of the Company. 7. To re-elect Mr. Amarasinghe Arachchige Douglas Senaka Saparamadu who retires in terms of Article 99 of the Articles of Association of the Company. 8. To re-appoint Messrs B D O Burah Hathy Chartered Accountants as Auditors of the Company for the ensuing year and to authorize the Directors to determine their remuneration. 9. To authorize the directors to determine donations for the year ending 31st March 2010 and up to the date of the next Annual General Meeting. ByorderoftheBoard METROPOLITAN RESOURCE HOLDINGS PLC
(Sgd.) S I de Silva Esjay Corporate Services (Private) Limited Secretaries 3rd September 2009
Notes: 1. A member is entitled to appoint a Proxy to attend and vote instead of himself and a Proxy need not be a member of the Company. A Form of Proxy is enclosed for this purpose. The completed Form of Proxy should be deposited at the Registered Office of the Company, No. 30/1, Bagatalle Road, Colombo 03. not less than 45 hours before the time fixed for the commencement of the meeting.
2. The shareholders and the proxy holders attending the meeting are kindly requested to bring this Report and their National Identity Card / Passport.
Page 01
CORPORATEINFORMATION
COMPANY REGISTERED OFFICE MAILING ADDRESS LEGAL FORM DIRECTORS : : : : : Metropolitan Resource Holdings PLC 30/1, Bagatalle Road, Colombo 03. 30/1, Bagatalle Road, Colombo 03. Public Quoted Company
Mr. Dinesh Jamnadas Ambani Mr. Lalith Jamnadas Ambani Mr. Collin William Kingsnorth Mr. David Edward Howard Panter (Alternate to C W Kingsnorth) Mr. Carl Michael Oscarsson Haglind Dr. Romesh Dias Bandaranaike Mr. Magage Sarath Wimal Fernando Mr. Gerard Victor Maurice Nanayakkara (Appointed w.e.f. 16th January 2009) Mr.Jayampathy Molligoda (Appointed w.e.f. 16th January 2009) Mr. Arya Keerthi Kumarasena (Appointed w.e.f. 16th January 2009) Mr.Amarasinghe Arachchige Douglas Senaka Saparamadu (Appointed w.e.f. 16th March 2009) Esjay Corporate Services (Private) Limited Level 04, No. 02, Castle Lane, Colombo 04. Messrs B D O Burah Hathy, Chartered Accountants, P.O Box 962, Charter House, Colombo 02.
Commercial Bank of Ceylon PLC
SECRETARIES
AUDITORS
BANKERS
SUBSIDIARIES
Bogawantalawa Tea Estates PLC BPL Teas (Private) Limited Ceylon Tea Gardens Limited
Page 02
INVESTORINFORMATION
1. Stock Exchange Listing
The Ordinary shares of the Company are listed on the Diri Savi Board of the Colombo Stock Exchange in Sri Lanka.
OrdinaryShares
Issued and fully paid capital as at 31st March 2009 2. Major Shareholders as at 31st March 2009
D J Ambani Ocema Investment Company (Pvt) Ltd. HSBC International Nominees Ltd. Kelmarsh Investments Ltd. L T C Murman C M O Haglind Metrocorp (Pvt) Ltd Sealbe Holding AG Trapez Corporation Panama Ameco Limited R D Bandaranaike Carnehall Ltd. A V R de S Jayatilleke L Soderberg Laxey Partners Ltd. C/o HSBC Dag de Meo AB Causidicus Konsult AB Christoffer Hammilton AB C Haglind G H Samarakoon No. of shares 3,942,019 22.83% 3,046,875 17.65% 2,481,027 14.37% 2,341,702 13.56% 1,313,951 7.61% 1,161,537 6.73% 746,435 4.32% 719,878 4.17% 460,378 2.67% 457,030 2.65% 198,046 1.15% 145,074 0.84% 65,507 0.38% 36,562 0.21% 26,637 0.15% 21,762 0.13% 21,762 0.13% 21,762 0.13% 14,799 0.09% 13,058 0.08%
Rs. 172,648,020/-
2008
No. of shares 3,942,019 3,046,875 2,481,027 2,341,702 1,313,951 1,161,537 746,435 719,878 460,378 457,030 198,046 145,074 65,507 36,562 26,637 21,762 21,762 21,762 14,799 13,058 22.83% 17.65% 14.37% 13.56% 7.61% 6.73% 4.32% 4.17% 2.67% 2.65% 1.15% 0.84% 0.38% 0.21% 0.15% 0.13% 0.13% 0.13% 0.09% 0.08%
3. Categories of Shareholders Resident/Non Resident

No. of Holders 156 10 04 08 178 2009 No. of Shares 4,244,898 6,303,707 2,526,849 4,189,348 17,264,802 % 24.58 36.51 14.63 24.27 100.00 No. of Holders 138 10 04 08 160 2008 No. of Shares 4,244,898 6,303,707 2,526,849 4,189,348 17,264,802 % 24.58 36.51 14.63 24.27 100.00
Local Individuals Local Institutions Foreign Individual Foreign Institutions Total
Percentage of shares held by the public 23.62% (4,078,797 shares) Page 03
4. Distribution of Ordinary Shareholders FromTo

1 1,000 1,001 5,000 5,001 10,000 10,001 50,000 50,001 100,000 100,001 - 500,000 500,001 - 1,000,000 Over 1,000,000 No. of Holders 154 2 2 7 1 4 2 6 178 2009 No. of Shares 10,935 5,658 12,408 156,342 65,507 1,260,528 1,466,313 14,287,111 17,264,802 % 0.06 0.03 0.07 0.91 0.38 7.30 8.49 82.75 100.00 No. of Holders 136 2 2 7 1 4 2 6 160 2008 No. of Shares 10,935 5,658 12,408 156,342 65,507 1,260,528 1,466,313 14,287,111 17,264,802 % 0.06 0.03 0.07 0.91 0.38 7.30 8.49 82.75 100.00
5. Other Information OtherInformation

Earning per share (Rs.) (0.51) Dividend per share (Rs.) Net asset per share (Rs. Return on capital employed 31.26 (18.4%) (1.21) 15.30 (3.4%) (0.51) 37.89 7.42% (0.01) 15.81 0.10%l As at 31/03/2009 Group Company As at 31/03/2008 Group Company
Market value of shares (Rs.) Highest Lowest Year End 54.00 54.00 54.00 88.00 56.00 56.00
Page 04
CHAIRMANS REVIEW On behalf of the Board of Directors of the Metropolitan Resource Holdings PLC (MRH), I have pleasure in presenting to you the Annual Report and the Financial Statement of the Company for the year ended 31st March 2009. Operational Performance of the Company MRH earned a post tax loss of Rs. 6.6 million in the year under review compared to a post tax profit of Rs. 276,692/- in the previous year. Operational Performance of the Group and its Subsidiaries The MRH Group ended the year with a loss of Rs. 131.4 million compared to a profit of Rs 69.1 million in the previous year. MRH is the holding company of Bogawantalawa Tea Estates PLC (BTE) and Ceylon Tea Gardens Ltd (CTG) holding 70.75% and 100% stakes respectively of these companies. The main income of MRH is the dividends received from BTE. BTE PLC BTE ended the year with a loss before tax of Rs. 227.9 million compared to a profit of Rs 82.78 million earned in the previous year. A detailed analysis of the performance of BTE and the subsidiary is given in its Annual Report for the year 2008/2009, which is freely available since BTE is a public quoted company. CTG CTG is a non operative Company for the last four years with all of its physical assets being taken over by BTE.
Conclusion On behalf of the Board of Directors of the Company, I wish to place on record my sincere appreciation to the shareholders, employees, suppliers and customers of the company and the subsidiaries for the support extended over the year. Sgd. Mr D J Ambani Chairman 3rd September 2009 Page 05
BOARD OF DIRECTORS
Mr D J Ambani Mr Dinesh Jamnadas Ambani is the present Chairman of the following companies. - Metropolitan Resource Holdings PLC and its subsidiary Ceylon Tea Gardens Ltd, - Bogawantalawa Tea Estates PLC and its 100% owned subsidiary BPL Teas (Pvt) Ltd - Metrocorp (Pvt) Ltd holding company of MG Consultants (Pvt) Ltd. / Engineering Consultants Ltd. and Megatec (Pvt) Ltd. - Eco Power (Pvt) Ltd - Skills International Private Ltd and - Vice Chairman of Suntel Ltd Mr L J Ambani Mr Lalithkumar Jamnadas Ambani is a fellow Member of the Chartered Institute of Management Accountants (FCMA) and an Associate member of the Sri Lanka Institute of Chartered Accountants (ACA). He is presently the Director of the Metropolitan Group of Companies. Dr R D Bandaranaike Dr. Romesh Dias Bandaranaike has a B.Sc. (1st Class Honours) in Physics from the University of Colombo and a M.S. in Physics and a Ph.D. in Economics, both from the University of Maryland, USA. He has been a Director and the Chief Executive Officer of the Eco Power group of companies for the past 10 years, since its inception. Prior to this he was the head of the government unit which privatized the plantation sector. His previous employment includes as Executive Director/Sri Lanka Business Development Centre for five years and four years in the USA where he was Project Manager for a large energy consulting firm. Dr. Bandaranaike has also been an international economic and financial consultant for 25 years, working for the World Bank, the Asian Development Bank, UNDP, USAID and a number of other organisations. Mr M S W Fernando Mr Magage Sarath Wimal Fernando FCMA, MBA (Sri J) has over 20 years experience in Senior management level in Finance, Administration, Manufacturing and IT fields. He has working experience in England, Belgium and in Sweden. He is a Fellow Member of the Chartered Institute of Management Accountants UK , and holds an MBA from the Post Graduate Institute of Management Sri Jayewardenepura University. He is a Visiting Senior Academic at the Faculty of Graduate Studies, University of Colombo and a Visiting Lecturer at the University of Moratuwa. At present he is the Director/CEO of Bogawantalawa Tea Estates PLC and Director/CEO of BPL Teas (pvt) Ltd. Formerly he was a Director of Royal Ceramics Lanka Limited and General Manager Finance and Administration at Trelleborg Lanka Pvt Limited. Mr Fernando has held the following positions : - President : PIM Alumni Association Post Graduate Institute of Management - Chairman : The Management Club - Warden : Child Protection Society of Sri Lanka- CPS Boys Home, Maharagama - Vice President: Thomian Society of Colombo - Director : Lanka Humanitarian & Development Foundation. Mr C M O Haglind Mr Carl Michael Oscarsson Haglind has a MBA from Stockholm School of Economics. He is a Founder and President of Teamwork Technology. He is also a Director of Eco Power, BPL Teas (Pvt) Ltd, Suntel Ltd and Gourmet Teas. Prior to this he was the Vice President of Manpower in Sweden.
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Mr C W Kingsnorth Mr Colin William Kingsnorth is a Director of Laxey Partners (UK) Limited the Investment Manager to Laxey Investment PLC. He was the Chief Executive Officer of Regent Fund Management (UK) Ltd the previous investment manager, from 1995 to January 1999. He holds a BSc in Economics and is an Associate member of the Institute of Investment Management and Research. Mr D E H Panter ( Alternate to Mr C W Kingsnorth ) Mr David Panter, Chairman of Laxey Investment PLC has spent over 40 years in the tea industry. He retired in 1996 as a consultant to Thompson Lloyd & Ewart, one of the largest and oldest tea broking firms in London. Prior to this he was the chairman of Geo. White & Company Limited, which was merged into Thompson Lloyd & Ewart Limited in 1993. He spent 25 years as a tea broker in London and as a consultant to the World Bank, Overseas Development Authority, and to various plantation projects. Previously he had 16 years service in India where he was chairman of Carritt Moran & Company Limited and a director of a number of tea plantation companies. Mr. G V M Nanayakkara Mr. Gerald Vincent Morris Nanayakkara is a Fellow of the Institute of Chartered Accountants of Sri Lanka and a Fellow of the Chartered Institute of Management Accountants United Kingdom. He has over 25 years experience in Finance and Administrative functions as Head of Finance in large commercial & industrial establishments in Sri Lanka, both in private (Metropolitan Agencies Ltd) and state sector (Coconut Development Authority & Colombo Commercial Co. Ltd.) He engages in financial consultancies specialist in corporate restructure and project financing as well as involvement in strategic planning and business development operations, including work in the structuring, evaluation and execution of restructuring/financing transactions. Mr. J Molligoda Mr Jayampathy Molligoda studied at Ananda College, Colombo and is a fellow member of the Institute of Chartered Accountants of Sri Lanka and obtained his Masters of Business Administration from Postgraduate Institute of Management, University of Sri Jayawardenapura. He has also completed the Executive Strategy Programme at Victoria University, Melbourne, Australia. and a fellow member of the Society of Certified Management Accountants of Sri Lanka. He counts over twenty eight years of experience in the fields of, human resource development, financial management and strategic planning. At present, employed at Bogawantalawa Tea Estates PLC, as Director, Strategic Planning & Projects and Non-Executive Director of Hapugastenne Plantations PLC/Udapussellawa Plantations PLC. Life member of the Organization of Professional Association and founder member of the Institute of Directors, Sri Lanka. Written & published Books, Articles and Policy papers of National importance in print media and academic journals. Mr. A K Kumaresena Mr. Arya Keerthi Kumarasena a past pupil of the Ananda College Colombo. Currently he is a Consultant and a Director of the Metropolitan Group of Companies. He holds a Bachelor of Science (Honors) in Engineering and has over 35 years of work experience in the field of engineering. Mr. D S Saparamadu Mr. Douglas Senaka Saparamadu is an Associate member of the Chartered Institute of Management Accountants United Kingdom and holds a BA in Business Studies and a Masters in Finance. At present he is the Business Controller at Metrocorp (Pvt) Ltd. Prior to this he was a Vice President at Amba Research Lanka (Pvt) Ltd and was attached to a team of investment analysts that conducted investment research of the global oil and gas equities.
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Report of the Audit Committee

The Audit Committee consists of the following Non Executive Directors Mr G V M Nanayakkara-Chairman Mr A K Kumarasena Mr J Molligoda- Secretary Mr A A D S Saparamadu The Audit Committee of the parent company, Metropolitan Resource Holdings PLC also acts as the Audit Committee of Bogawantalawa Tea Estates PLC. The functions of the Audit Committee among others, are; 1. 2. 3. 4. 5. review the system of internal control and risk management monitor the effectiveness of the internal audit function review the Companys process for monitoring compliance with laws and regulations. review the independence and performance of the external auditors to make recommendations to the board on the appointment of external auditors and recommend their remuneration and terms of engagement. 6. assist the Board of Directors in fulfilling its overall responsibilities for the financial reporting process
The Audit Committee held three meetings during the year under review. The Group Chief Financial Controller, Head of Monitoring, sector Senior Accountants and Chief Executive Officer of Bogawantalawa Tea Estates PLC were invited for Audit Committee meetings. A comprehensive set of Management report and accounts is produced on a quarterly basis highlighting all key performance indications and reviewed by the Senior Management. The Board of Directors reviews performance at the management meetings followed by the Board Meetings held quarterly. At the meetings, the Committee reviewed the effectiveness of the internal control systems and the Groups approach to its exposure to the business and financial risks. The Internal Audit functions were reviewed by the Committee to ensure that it covered the operations of major business units and its transactions of the Group. The committee also reviewed the processes that were placed to safeguard the assets of the organization and to ensure that the financial reporting system can be relied upon in the preparation and presentation of financial statements.
Sgd. G V M Nanayakkara Chairman-Audit Committee 3rd September 2009
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ANNUALREPORTOFTHEDIRECTORS The Directors of Metropolitan Resource Holding PLC have pleasure in presenting their report and the Audited Accounts for the year ended 31st March 2009. Principal Activities:
Management of plantation continued to be the principal activity of Metropolitan Resource Holding PLC. The Company has majority equity investment in Bogawantalawa Tea Estates PLC (BTEL). It also has majority equity investment in BPL Teas (Pvt) Ltd. (BPLT) through BTEL. The company also holds 100% of the shareholding of Ceylon Tea Gardens Ltd. (CTG) which is a company which has no operations and only owns the brand name Ceylon Tea Gardens.
The Principal activities of the subsidiaries as at balance sheet date are set out below: Bogawantalawa Tea Estates PLC cultivation and processing of tea BPL Teas (Pvt) Ltd Export of Tea. Ceylon Tea Gardens Ltd currently a non-operative company. Financial Result
The Financial result of the company and the Group for the current year and the previous year are summarised as follows:
Company 2007/2008 Rs.Mn 0.027 (0.058) (0.058) 273.0 (0.03) 15.81 Group 2007/2008 Rs.Mn 3,240.9 78.4 69.1 48.6 654.2 2.82 37.89
2008/2009 Rs.Mn Turnover Profit /(Loss) before Tax Profit /(Loss) after tax Profit /(Loss) attributable to ordinary shareholders Net Assets (as at 31st March) Earning per share (Rs.) Net Assets per share (Rs.) Share capital of the Company Issue and paid up capital as at 31.03.2009 3.8 (6.6) (8.8) (8.8) 264.1 (0.51) 15.30
2008/2009 Rs.Mn 2,858.2 (129.2) (131.44) (94.4) 544.6 (5.47) 31.26
No of Ordinary Shares 17,264,802
Amount (Rs.) 172,648,020/-
Fixed Assets and Investments The Company did not invest in property plant and equipment during the year under review whilst the Group invested 186.5. in the equipment and in immature plantations. The details of the classes acquired and their movement are disclosed in Note 13 and 14.
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Donations The Company has not made any donations during the year under review Dividends The directors have not recommended a final dividend for the year 2008 /2009. Directors The following served as the Directors of the Company during the year under review:
Mr. Dinesh Jamnadas Ambani Mr. Lalith Jamnadas Ambani Mr. Collin William Kingsnorth Mr. David Edward Howard Panter (Alternate to C W Kingsnorth) Mr. Michael Haglind Dr. Romesh Dias Bandaranaike Mr. Magage Sarath Wimal Fernando Mr. Gerard Victor Maurice Nanayakkara (Appointed w.e.f. 16th January 2009) Mr.Jayampathy Molligoda (Appointed w.e.f. 16th January 2009) Mr. Arya Keerthi Kumarasena (Appointed w.e.f. 16th January 2009) Mr.Amarasinghe Arachchige Douglas Senaka Saparamadu (Appointed w.e.f. 16th March 2009)
Directors interests in Contracts Directors interest in contracts with the company and related party transaction are disclosed in terms No.30.3 of the Notes to the Accounts, which have been declared by the Directors. The Directors have no direct or indirect interest in any other contracts or proposed contracts of the company. Directors Share Holdings As at 31/3/2009 Mr.D.J. Ambani Mr.L.J. Ambani Mr.C.W. Kingsnorth Mr.C.M.O Haglind Dr.R.D Bandaranaike Mr.J.H.Hertzberg Mr. M S W Fernando 3,942,019 Nil Nil 1,161,537 198,046 Nil Nil As at 31/03/2008 3,942,019 Nil Nil 1,161,537 198,046 Nil Nil
Mr. J Molligoda
6,967
6,967
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Public Share Holding as at 31st March 2009 The Public shareholding of the Company was 23.62%. Post Balance sheet: Events Post Balance Sheet Events have been disclosed as per note 31 of the Notes to the Accounts. Directors Responsibility in Financial Statements The financial statements have been prepared and presented by the Directors in conformity with the Sri Lanka Accounting Standards and provide the information required by the Companies Act No.17 of 1982 and requirements of the Colombo Stock Exchange. The Directors continue to adopt the going concern basis in preparing financial statements. Having scrutinized Groups plans, the current year budgets and other relevant document the Directors consider that the Group has adequate resources to continue in operations.
Corporative Governance The Directors of the Board are responsible for the formulation of overall business strategies and policies and setting standards and ensuring implementation of them. The Board of Directors review the progress quarterly. Auditors Messrs BDO Burah,Hathy, Chartered Accountants served as the Auditors during the year under review.
For and on behalf of the board
Sgd Mr. D.J.Ambani Chairman
Sgd Mr M.S W. Fernando Director
ESJAY Corporate Services (Pvt) Limited
Sgd Secretaries Date 3rd September.2009
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CORPORATE GOVERNANCE
Metropolitan Resource Holdings PLC is committed to upholding high standards of ethics, social responsibility and corporate governance in conducting business. Our Corporate Governance practices are described below with reference to the Code of Best Practice on Corporate Governance published by the Institute of Chartered Accountants of Sri Lanka, Listing Rules of the Colombo Stock Exchange (CSE). THE BOARD OF DIRECTORS Board Responsibility The Board of Directors is responsible for the Companys performance and Governance. The Board is responsible to (a) Enhance shareholder value. (b) Formulate and communicate business policy and strategy to assure sustained growth and to monitor its implementation. (c) Approve any change in the Companys business portfolio and sanction major investments and disinvestments in accordance with parameters set. (d) Ensure Executive Directors have the skills and knowledge to implement strategy effectively, and proper succession arrangements are in focus. (e) Ensure effective remuneration, reward and recognition policies are in place to help employees give of their best. (f) Set and communicate values/ standards, with adequate attention being paid to accounting policies/practices. (g) Ensure effective information, control, risk management and audit systems are in place. (h) Ensure compliance with laws and ethical standards. (i) Approve annual budgets and monitor performance against these. (j) Adopt annual and interim results before these are published. In discharging their duties, the Directors: Bring independents judgment to bear and consider foremost the interest of the Company as a whole. Stay abreast of developments in management practice, the world and domestic economy and other matters relevant to the Company. May convey concerns to the Chairman, or to a non-executive Director, if and when a need arises. May, where necessary and with the concurrence of the Chairman, consult and consider inputs from experts in relevant areas. Declare their interests in contracts under discussion at a Board meeting, and refrain from participating in such discussion. Possessing price-sensitive information concerning the Company should not trade in the companys shares until such information has been adequately disseminated in the market. Directors are provided with quarterly reports on performance and such other reports and documents as necessary. The Chairman ensures that all Directors are adequately briefed on issues arising at meetings. Composition During the year Board comprised of Eleven Directors - Ten non-Executive Directors including the Chairman and One an Alternate Director for a non-Executive Director. The Directors are named below and a short profile of each is given in page 06 of this Annual Report.
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The Board meets quarterly as a matter of routine and additional meetings are held where necessary. During the year the Board met Four (4) times and attendance at these meetings are given below. Name of Director Mr. Dinesh Jamnadas Ambani Mr. Lalith Jamnadas Ambani Mr. Collin William Kingsnorth Mr. David Edward Howard Panter (Alternate to C W Kingsnorth) Mr. Michael Haglind Dr. Romesh Dias Bandaranaike Mr. Magage Sarath Wimal Fernando Mr. Gerard Victor Maurice Nanayakkara Mr.Jayampathy Molligoda Mr. Arya Keerthi Kumarasena Mr.Amarasinghe Arachchige Douglas Senaka Saparamadu Executive / non-Executive / Independent Non-Executive non-Executive non-Executive non-Executive non-Executive non-Executive non-Executive non-Executive non-Executive Independent Non-Executive Independent Non-Executive Independent Non-Executive Attendance 4 4 4 4 1 1
The composition of Executive, Non-Executive and independent Non-Executive Directors satisfies the requirements set down in the Listing Rules of the CSE. Three of the Non-Executive Directors are also independent Directors while eight Directors are Non-Executive Directors of Metropolitan Resource Holdings PLC Financial Acumen The Board, including the Alternate Director includes 4 senior accountants 2 chartered accountants who possess the necessary expertise to offer guidance to the Board on matters of finance. One of them serves as Chairman of the Audit Committee. Appointment to the Board and Election of Directors The Board of Directors considers and decides on appointment of Directors. The Companys Articles of Association provides that a Director nominated by the Board may hold office until the next Annual General Meeting and seek reappointment by the shareholders at that meeting. The articles call for one third of the Directors to retire at the Annual General Meeting whereby those longest in office since their appointment / reappointment retire. Retiring Directors are generally eligible for re-election. The Chief Executive Officer does not retire by rotation.
BOARD COMMITTEES Remuneration Committee Since there are no paid employees of Metropolitan Resource Holdings PLC, a remuneration committee has not been set up. Audit Committee The Audit Committee constituted in 2009 comprises of three Non-Executive Independent Directors and is chaired by a senior chartered accountant. The Audit Committee has written terms of references and is empowered to examine any matters relating to the financial affairs of the Group and its internal and external audits. The committee reviewed the financial statements, internal control procedures, accounting policies, compliance with accounting standards, emerging accounting issues and other related functions that the Board required. It reviews the adequacy of systems for compliance with relevant legal, regulatory and ethical requirements. Significant issues discussed by the committee at the reviews were communicated to the Board of Directors for their consideration and action. The Audit Committees Report including names of the members of the Audit Committee appears on page 09 of this Annual Report.
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Communication with shareholders and Annual General Meeting (AGM) The Notice of Meeting containing the agenda and instructions on voting, including appointment of proxies is enclosed with this Annual Report. The shareholders are provided with six monthly Financial Statements. This is the principal communication with shareholders and other stakeholders during the year. These reports are also provided to the Colombo Stock Exchange. The Board strives to enhance shareholder value and provide a total return in excess of the market return. The Board policy is to distribute a reasonable dividend to the shareholders whilst considering funding requirements of future capital expenditure and new projects. Major Transactions There were no transactions during the year under review, which falls within the definition of Major Transactions in terms of the Companies Act. ACCOUNTABILITY AND AUDIT Internal control The Board of Directors is responsible for the Companys system of internal financial controls. The system is designed to safeguard assets against unauthorized use or disposition and to ensure that accurate records are maintained and reliable financial information is generated. However, there are limits to which nay system can ensure that errors and irregularities are prevented or detected within a reasonable period. The important procedures are in place to discharge this responsibility are as follows: The Directors are responsible for the establishment and monitoring of financial controls appropriate for the operation within the overall Group policies. The Board reviews the strategies of the divisions and constituent Companies. Annual budgeting and regular forecasting processes are in place and the Directors review performance. The Board has established policies in areas of investment and treasury management and does not permit employment of complex risk management mechanism. The Group is subjected to regular internal audits and systems reviews. The Audit Committee reviews the plans and activities of the internal audits and the management letters of External Auditors. The Group carefully selects and trains employees and provided appropriate channels of communication to foster a control conscious environment. The Board has reviewed the effectiveness of the system of financial control for the period up to the date of signing the accounts. Disclosure of information The Board places emphasis on complete disclosure of both financial and Non-financial information within the bounds of commercial reality and the early adoption of sound reporting practices. Due care is exercised with respect to price sensitive information. The statements of Directors Responsibilities for the preparation of Financial Statements are giving in page 16 of this Annual Report. Going concern The Directors believe, after reviewing the financial position and the cash flow of the Group, that the Group has adequate resources to continue operation well into the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the Financial Statements. Level of compliance with Section 6 of the CSE Listing Rules on Corporate Governance is given in the following table.
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Rule No. 6.1 (a) 6.2 (a)
Subject Non-Executive Directors Independent Directors
Applicable Requirement At least one-third of the total number of Directors should be Non-Executive Directors At least one-third of Non-Executive Directors, whichever is higher should be independent Each Non-Executive Director should submit a declaration of independence / nonindependence in the prescribed format Names of independent Directors should be disclosed in the Annual Report The basis for Board to determine a Director as independent, if specified criteria for independence is not met A brief resume of each Director should be included in the Annual Report including the areas of Expertise Forthwith provide a brief resume of new Directors appointed to the Board with details specified in 6.3 (d) to the Exchange A listed Company shall have a Remuneration Committee Shall comprise of Non-Executive Directors a majority of whom will be independent The Remuneration Committee shall recommend the remuneration of Chief Executive Officer and Executive Directors The Annual Report should set out; Name of Directors remuneration Committee comprising the
Complianc e Status Compliant Compliant
Details All Directors are Non-Executive Directors Three of the Eleven Non-Executive Directors are Independent 7 Non-Executive Directors submitted the declaration Please refer page 13 Given in page 12 under the heading of Board Balance Please refer page 6 have
6.2 (b)
Independent Directors
Compliant
6.3 (a) 6.3 (b)
Disclosure relating to Directors Disclosure relating to Directors Disclosure relating to Directors Disclosure relating to Directors Remuneration Committee Composition of Remuneration Committee Functions of Remuneration Committee Disclosure in the Annual Report relating to Remuneration Committee
Compliant Compliant
6.3 (c)
Compliant
6.3 (d)
Compliant
Four (4) new Directors were appointed during the year under review No paid employees in the Company. Therefore a remuneration committee has not been set up.
6.5 6.5 (a)
N/A N/A
6.5 (b)
N/A
6.5 (c)
N/A
Statement of Remuneration Policy Aggregated remuneration paid to Executive and non-Executive Directors The Company shall have a Audit Committee Shall comprise of Non-Executive Directors a majority of whom will be independent Non-Executive Directors shall be appointed as the Chairman of the committee Chief Executive Officer and the Chief Financial Officer should attend Audit Committee Meetings The Chairman of the Audit Committee or one member should be a member of a professional accounting body Should be as outlined in the Section 6 of the Listing Rules (a) Names of Directors comprising the Audit Committee (b) The Audit Committee shall make a determination of the independence of the Auditors and disclose the basis for such determination (c) The Annual Report shall contain a Report of the Audit Committee setting out of the manner of compliance of the functions
N/A N/A Compliant Compliant Compliant Non Compliant Compliant
No payments made to the Directors No payments made to the Directors 4 Non executive directors Audit Committee consists of three Independent Non-Executive Directors
6.6 6.6 (a)
Audit Committee Composition of Audit Committee
Chairman of the Audit Committee is a Chartered Accountant The terms of reference of the Audit Committee is disclosed in page 09. Please refer Audit Committee Report Page 08 Please refer Audit Committee Report Page 08 Please refer Audit Committee Report Page 08
6.6 (b)
Audit Committee functions Disclosure in the Annual Report relating to Audit Committee
Compliant Compliant
Compliant
Compliant
Page 15
STATEMENT OF DIRECTORS RESPONSIBILITY The Directors are responsible, under Sections 150(1), 151, 152(1) 153(1) and (153(2) of the Companies Act No.7 of 2007, to ensure compliance with the requirements set out therein to prepare Financial Statements for each financial year giving a true and fair view of the state of affairs of the Company as at the end of the financial year and of the profit and loss of the Company and the Group for the financial year. The Directors are also responsible, under Section 148 for ensuring that proper accounting records are kept disclose, with reasonable accuracy, the financial position and enable preparation of the Financial Statements. The Directors confirm that in preparing the Financial Statements, appropriate accounting policies have been selected and applied consistently while reasonable and prudent judgments have been made so that the form and substance of transactions are properly reflected. They also confirm that the Financial Statements have been prepared and presented in accordance with the Sri Lanka Accounting Standards. The Financial Statements provide the information required by the Companies Act and the listing rules of the Colombo Stock Exchange. The external auditors, Messrs B D O Burah Hathy, Chartered Accountants are deemed reappointed in terms of Section 158 of the Companies Act No.7 of 2007 were provided with every opportunity to undertake the inspections they considered appropriate to enable tem to form their opinion on the Financial Statements. The report of the auditors, shown on page 17 Sets out their responsibilities in relation to the Financial Statements. COMPLIANCE REPORT The Directors confirm that to the best of their knowledge, all statutory payments relating to employees and the Government that were due in respect of the Company and its subsidiaries as at the Balance Sheet date have been paid or where relevant, provided for.
ByorderoftheBoard METROPOLITAN RESOURCE HOLDINGS PLC
(Sgd.) S I de Silva Esjay Corporate Services (Private) Limited
Secretaries
Page 16
METROPOLITAN RESOURCE HOLDINGS PLC INCOME STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2009 Group Notes Revenue Cost of Sales Gross Profit Other Income Administration Expenses Other Expenses Finance Cost Profit/(Loss) Before Taxation Income Tax Expenses Profit/(Loss) for the Year Attributable to Equity Share Holders of the Company Minority Interests 5 3 4 2008/2009 Rs. 2,858,284,000 (2,722,136,094) 136,147,906 122,430,136 (275,522,624) (112,294,016) (129,238,598) (2,210,701) (131,449,299) 2007/2008 Rs. 3,240,937,175 (2,927,000,172) 313,937,003 146,413,231 (235,083,846) (146,838,651) 78,427,737 (9,320,869) 69,106,868
Page 1
Company 2008/2009 2007/2008 Rs. Rs. 3,827,456 3,827,456 16,823,421 (27,323,380) (6,672,503) (2,210,701) (8,883,204) 3,268,114 (2,991,422) 276,692 (860,804) (584,112)
6 7 8
(94,477,237) (36,972,062) (131,449,299) 9 10 (5.47) -
48,622,671 20,484,197 69,106,868 2.82 -
(8,883,204) (8,883,204) (0.51) -
(584,112) (584,112) (0.03) -
Earnings Per Share - Basic Dividend Per Share
The Accounting Policies and Notes from pages 07 to 39 form an integral part of these financial statements. Colombo 3rd September' 2009
METROPOLITAN RESOURCE HOLDINGS PLC BALANCE SHEET AS AT 31ST MARCH, 2009 Group Notes ASSETS Non-current Assets Leasehold Right to Bare Land (JEDB/SLSPC) Immovable (JEDB/SLSPC) Estate Assets on Finance Lease (other than Bare Land) Property, Plant & Equipment other than Immature Mature Plantations Immature/Mature Plantations Biological Assets Capital Work-in-Progress 12 293,362,628 314,603,334 2008/2009 Rs. 2007/2008 Rs.
Page 2
Company 2008/2009 2007/2008 Rs. Rs.
11
310,905,360
319,365,348
13 14 14.1 15
663,240,280 827,398,321 224,724,506 6,374,140 2,326,005,235 5,708,384 22,594,761 2,354,308,380 460,543,533 585,564,761 1,018,490 26,962,404 61,574,638 1,135,663,827 3,489,972,207
799,605,649 778,211,571 197,769,867 8,409,042 2,417,964,811 5,708,384 24,113,712 2,447,786,907 590,433,610 516,884,703 2,535,946 53,099,417 18,627,558 1,181,581,234 3,629,368,141
97,010 97,010 237,000,000 237,097,010 888,269 6,400,385 26,962,404 308,593 34,559,651 271,656,661
1,475,747 1,475,747 259,722,404 261,198,151 1,408,347 2,007,140 14,417,304 158,880 17,991,671 279,189,822
Goodwill on Acquisition Investment Current Assets Inventories Trade and Other Receivables Amount Due from Related Companies Short Term Investments Cash at Banks and in Hand
16 17
18 19 20 21
Total Assets
METROPOLITAN RESOURCE HOLDINGS PLC BALANCE SHEET AS AT 31ST MARCH, 2009 Notes EQUITY AND LIABILITIES Stated Capital and Reserves Stated Capital Capital Reserves General Reserve Retained Earnings Shareholders' Fund Minority Interest Total Equity Non Current Liabilities Interest Bearing Borrowings Retirement Benefit Obligations Deferred Income Net Liability to Lessor of JEDB/SLSPC Estates Current Liabilities Trade and Other Payables Amounts D t R l t d C A t Due to Related Companies i Current Portion of Interest Bearing Borrowings Unclaimed Dividends Net Liability to Lessor of JEDB/SLSPC Estates Short Term Borrowings Income Tax Liability Bank overdrafts Total Equity and Liabilities 2008/2009 Rs. 2007/2008 Rs. 2008/2009 Rs.
Page 3
2007/2008 Rs.
22
265,308,222 23,500 27,250,000 252,072,114 544,653,836 238,897,425 783,551,261 320,057,921 491,825,484 395,960,194 550,984,591 1,758,828,190 479,712,463 6,000,001 6 000 001 130,043,281 3,383,270
265,308,222 23,500 27,250,000 361,624,351 654,206,073 258,281,987 912,488,060 199,766,919 472,142,981 383,093,428 558,087,370 1,613,090,698 650,785,039 13,662,868 13 662 868 63,950,608 2,700,312 6,829,489 230,974,452 1,129,232 133,757,383 1,103,789,383 3,629,368,141
265,308,222 23,500 (1,211,779) 264,119,943 264,119,943 471,483 5,074,171 5 074 171 1,991,064 7,536,718 271,656,661
265,308,222 23,500 7,671,425 273,003,147 273,003,147 67,037 5 074 171 5,074,171 1,045,467 6,186,675 279,189,822
23 24 25 26
27 28 23
26
7,102,669 210,136,379 1,991,064 109,049,772 947,418,899 3,489,798,350
The Accounting Policies and Notes from pages 07 to 39 form an integral part of these financial statements. It is certified that the Financial Statements have been prepared in compliance with the requirements of the Companies Act No. 07 of 2007 Sgd Mrs. Chamari Wahalathanthri Financial Controller (FC) The Board of Directors is responsible for the preparation and presentation of these financial statements. Approved and signed for and on behalf of the Board of Directors. Sgd Mr. D.J.Ambani Chairman Colombo 3rd September' 2009 Sgd Mr. M. S. W. Fernando Director
METROPOLITAN RESOURCE HOLDINGS PLC STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31ST MARCH, 2009 Stated Capital Rs. 265,308,222 265,308,222 265,308,222 Stated Capital Rs. General Reserve Rs. 27,250,000 27,250,000 27,250,000 General Reserve Rs. Capital Reserve Rs. 23,500 23,500 23,500 Capital Reserve Rs. Retained Earnings Rs. 313,001,680 48,622,671 361,624,351 (94,477,237) (15,075,000) 252,072,114 Retained Earnings Rs.
Page 4
GROUP Balance as at 1st April,2007 Loss for the Year Balance as at 31st March,2008 Loss for the year Adjustment on Over-statement Dividend Paid Balance as at 31st March,2009
Total Rs. 605,583,402 48,622,671 654,206,073 (94,477,237) (15,075,000) 544,653,836
COMPANY
Total Rs.
Balance as at 31st March, 2007 Net Profit / (Loss) for the Period Balance as at 31st March,2008 Net Profit / (Loss) for the Period Balance as at 31st March,2009
265,308,222 265,308,222 265,308,222 -
23,500 -
8,255,537 (584,112) 7,671,425 (8,883,204) (1,211,779)
273,587,259 (584,112) 273,003,147 (8,883,204) 264,119,943
23,500 -
23,500
The Accounting Policies and Notes from pages 07 to 39 form an integral part of these financial statements.
Colombo 3rd September' 2009
METROPOLITAN RESOURCE HOLDINGS PLC CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2009 Group 2008/2009 2007/2008 Rs. Rs. Cash Flows From Operating Activities Profit / (loss) before taxation Adjustment for Depreciation/Amortisation Profit on dispsal of property plant & equipment Loss on Disposal of Brombill Factory Interest Income Lease Interest in Suspense Written Off Interest Expense Dividend Received Provision for Fall in Value of Investments Provision for Retirement Benefit Obligations-Gratuity Amortization of Grants and Subsidiaries Change in fair value of Biological Assets Given to LRL Given to ASPIC Amortisation of Brand Development Cost Provision for JEDB Lease Rentals Operating profit/(loss) before working capital changes (Increase)/Decrease in Inventories (Increase)/Decrease in Trade and Other Receivables Increase/(Decrease) in Due From Related Parties Increase/(Decrease) in Trade and Other Payables Increase/(Decrease) in Due To Related Parties Cash generated from/(used in) operating activities Interest Paid Gratuity Paid Grants Received Income Tax Paid Net cash generated from/(used in) operating activities (129,238,598) 127,240,238 (7,374,544) 36,516,912 (2,226,162) 2,663,851 103,135,046 9,600,000 22,722,404 59,266,278 (6,985,547) (26,954,640) (6,325,755) (416,335) 1,518,951 183,142,099 129,890,077 (68,891,371) (6,207,445) (104,380,418) (4,642,372) 128,910,570 (80,538,375) (39,460,815) 26,594,403 (1,349,194) 34,156,589 78,427,737 116,542,770 (4,823,382) (7,852,663) 146,838,651 107,752,931 (6,404,623) (42,296,599) (6,325,757) (416,335) 1,556,041 18,226,344 401,225,115 (203,701,580) 19,249,635 632,251 199,821,694 13,468,865 430,695,980 (144,774,542) (38,210,177) 15,801,516 (8,942,089) 254,570,688
Page 5
Company 2008/2009 2007/2008 Rs. Rs. (6,672,503) 1,378,737 (2,862,692) 3,720,113 9,600,000 22,722,404 27,886,059 520,078 (4,393,245) 404,446 24,417,338 (1,265,104) 23,152,234 276,692 1,393,591 1,670,283 50,377 (626,688) (197,501) (271,482) 624,989 (4,574) 620,415
Cash Flows From Investment Activities Investment In Immature Plantations Acquisition of Property, Plant and Equipment Proceeds from Disposal of Property, Plant and Equipment Proceeds from Disposal of Brombill Tea Factory Interest Received Net Investment in Government & Short Term Securities
(65,159,096) (115,590,518) 8,226,631 69,385,666 2,226,162 (12,545,100)
(41,710,058) (149,362,319) 5,532,056 7,852,663 (1,283,033)
2,862,692 (3,720,113) (12,545,100)
(1,274,417)
Net cash from/(used in) investing activities
(113,456,255)
(178,970,691)
(13,402,521)
(1,274,417)
METROPOLITAN RESOURCE HOLDINGS PLC CASH FLOW STATEMENT (Cont.) FOR THE YEAR ENDED 31ST MARCH, 2009 Group 2008/2009 2007/2008 Rs. Rs. Cash Flow From Financing Activities Payments of Finance Lease Rental Payments to Lessor on Leased Rights Amounts Received from Lalan Rubbers (Pvt) Ltd. Amounts Received from ASPIC Corporation Ltd. Long Term Borrowings-net Dividends Received Receipts From of Interest Borrowings Borrowings Payments of Long Term Borrowings Short Term Loans - net Dividends paid Net cash from / ( used in) financing activities Net increase/ (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year ( Note A ) (A) Cash & Cash Equivalents at the end of the year Cash & bank balances Bank overdrafts 61,574,638 (109,049,772) (47,475,134) 18,627,558 (133,757,383) (115,129,825) 308,593 308,593 (11,977,851) (29,426,160) (9,600,000) 290,317,558 (95,811,188) (20,838,070) (14,392,043) 108,272,246 28,972,580 (76,447,714) (47,475,134) (16,433,051) (29,263,145) 6,195,546 4,018,433 13,459,060 (137,596,838) (458,984) (160,078,979) (84,478,982) (30,650,843) (115,129,825) (9,600,000) (9,600,000) 149,713 158,880 308,593
Page 6
Company 2008/2009 2007/2008 Rs. Rs.
(654,002) 812,882 158,880
158,880 158,880
The Accounting Policies and Notes from pages 07 to 39 form an integral part of these financial statements. Colombo 3rd September' 2009
METROPOLITAN RESOURCE HOLDINGS PLC
Page
SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS 1. 1.1 CORPORATE INFORMATION General Metropolitan Resource Holdings PLC is a Quoted Public Company incorporated and domiciled in Sri Lanka., registered under the companies Act No. 7 of 2007. The Registered Office of the Company is located at No. 30/1, Bagattale Road, Colombo 03. Principal Activities and Nature of Operations During the year, the principal activities of the Company were to provide plantation management services to its subsidiary companies. Parent Enterprise The Company does not have a parent enterprise. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES GENERAL ACCOUNTING POLICIES Basis of Preparation These financial statements presented in Sri Lanka Rupees have been prepared under the historical cost basis except for certain Property, Plant and Equipment which are stated at revalued amounts, in accordance with generally accepted accounting principles and the standards laid down by the Institute of Chartered Accountants of Sri Lanka. Statement of Compliance The balance sheet, statement of income, changes in equity and cash flows, together with Accounting Policies and Notes (Financial Statements) of Metropolitan Resource Holdings PLC, comply with the Sri Lanka Accounting Standards. Going Concern The directors have made an assessment of the Metropolitan Resource Holdings PLCs ability to continue as going concern and they do not intend either to liquidate or to cease operations. Basis of Consolidation The consolidated financial statements comprise of the financial statements of Metropolitan Resource Holdings PLC and its subsidiaries as at 31st March 2008.The financial statements of the subsidiaries are prepared for the same reporting year as the parent company using consistent accounting policies.
1.2
1.3
2. 2.1 2.1.1
2.1.2
2.1.3
2.1.4
Page
SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS All intra-group balances, transactions, incomes and expenses and profits and losses resulting from intra-group transactions that are recognized in assets, are eliminated in full. Subsidiaries are consolidated from the date the Parent obtains control until such time the control ceases. Goodwill arising on the acquisition represents the excess of the cost of the acquisition over the Groups interest in the net fair value of the acquirees identifiable assets, liabilities and contingent liabilities at the date of acquisition. Upon transition to revised Sri Lanka Accounting Standard 25 Business Combinations, goodwill will no longer be amortized. Instead, goodwill will be tested for impairment annually and assessed for any indication of impairment at each reporting date to ensure that its carrying amount does not exceed its recoverable amount. If an impairment loss is identified, it will be recognized immediately in the Income Statement. Negative goodwill arising on acquisition represents the excess of the fair value of the net assets acquired over the cost of acquisition. Any remaining balance of negative goodwill as at 1 April 2006 is transferred to opening balance of retained earnings in accordance with the SLAS 25 Business Combinations (revised 2005). The total profits and losses for the period of the Company and of its subsidiaries included in consolidation are shown in the Consolidated Income Statement. Minority Interest represents the portion of profit or loss and net assets held by the group and presents separately in the Income Statement within Equity in the Consolidated Balance Sheet, separately from parents share holders equity. 2.1.5 Comparative Information The accounting policies have been consistently applied by the company and it is consistent with those of the previous year. The previous years figures and phrases have been re-arranged wherever necessary to conform to the current years presentation. Segment Reporting Segment information has been disclosed in the financial statement in respect of the identifiable operating segments of the company on a consolidated basis.
2.1.6
Page
SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS 2.1.7 Foreign Currency Translation All foreign exchange transactions are converted to Sri Lanka Rupees, which is the reporting currency, at the rates of exchange prevailing at the time the translations were effected. Monetary assets and liabilities denominated in foreign currencies are translated to Sri Lanka Rupee equivalents using year end spot foreign exchange rates. The resulting gain or losses are accounted in the income statement. Non monetary assets and liabilities are translated using exchange rates that existed when the values were determined. The resulting gain or losses are accounted in the Income Statement. 2.1.8 Materiality and aggregation Each material class of similar items is presented separately in the financial statements. Items of a dissimilar nature or function are presented separately unless they are immaterial. Significant Accounting Judgements, Estimates and Assumptions i) Judgements In the process of applying the accounting policies, management has made the following judgement, apart from those involving estimations which has most significant effect on the amounts recognized in the financial statements. Inventory valuation produce stock Bogawantalawa Tea Estates Plc and its subsidiary have valued the unsold produce stock as at the Balance Sheet date based on most recent selling prices available subsequent to the year end. ii) Estimates and Assumptions The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustments to the carrying amounts of assets and liabilities within the next financial year, have been considered. Defined Benefit Plans The cost of defined benefit plan is determined using actuarial valuations. The actuarial valuation involves making assumptions about discount rates, expected rates of return on assets, future salary increases, and mortality rates and future increases. Due to the long term nature of these plans such estimates are subject to significant uncertainty. Further, details are given in Note No.24.
2.1.9
Page 10
SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS 2.2 2.2.1 ASSETS & BASES OF THEIR VALUATION Property, Plant & Equipment a) Cost Property, plant and equipment is recorded at cost less accumulated depreciation and less any impairment in value. b) Cost and Valuation All items of property, plant and equipment are initially recorded at cost. Where items of property, plant and equipment are subsequently revalued, the entire class of such assets is revalued. When an asset is revalued any increase in the carrying amount is credited directly to a revaluation surplus unless it reverses a previous revaluation decrease relating to the same asset which was previously recognized as an expense. In these circumstances the increase is recognised as income to the extent of the previous written down value. When assets carrying amount is decreased as a result of a revaluation, the decrease is recognized as an expense unless it reverses a previous increment relating to that asset, in which case it is charged against any related revaluation surplus, to the extent that the decrease does not exceed the amount held in the revaluation surplus in respect of that same asset. Any balance remaining in the revaluation surplus in respect of an asset is transferred directly to accumulated profit or loss on retirement or disposal of the asset. c) Depreciation / Amortization Provision for depreciation is calculated by using straight line on the cost or valuation of all property, plant and equipment other than freehold land, in order to write off such amounts over the estimated useful lives of such assets. Improvements to Bare Land Plant & Machinery Office Equipment Furniture & Fittings Motor Vehicles Water Project & Sanitation 40 years 13 1/3 years 08 years 10 years 05 years 20 years
Page 11
SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS The leased hold rights are being amortized in equal amounts over the shorter of following periods. a) The lease term and b) The expected useful life of the assets. Bare Land Mature Plantation Water Supply Scheme Buildings Plant & Machinery
53 years 30 years 20 years 25 years 15 years
The cost of area coming into bearing are transferred to mature plantations and depreciated as follows, Tea Rubber Coconut 33 1/3 years 20 years 50 years
Depreciation of assets begins when it is available for use. The assets residual values, useful lives and methods of depreciation are reviewed and adjusted if appropriate at each financial year. d) Restoration Costs Expenditure incurred on repairs or maintenance of property, plant and equipment in order to restore or maintain the future economic benefits expected from originally assessed standard of performance is recognized as an expense when incurred. e) Derecognition An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset calculated as the difference between the net disposal proceeds and the carrying amount.
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SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS 2.2.2 Immature and Mature Plantations The cost of replanting and new planting are classified as immature plantations up to the time of harvesting the crop. Further, the general charges 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 portion of the general charges is expensed in the accounting period in which it is incurred. The cost of areas coming into bearing are transferred to mature plantations and depreciated over their useful life period. 2.2.3 Infilling Cost Where infilling results in an increase in the economic life of the relevant field beyond its previously assessed standard of performance, the cost are capitalized in accordance with Sri Lanka Accounting Standard No. 32 and depreciated over the useful life at rates applicable to mature plantation. Infilling cost that are not capitalized have been charged to the income statement in the year in which they are incurred. 2.2.4 Biological Assets Biological assets represent Eucalyptus Grandis Immature timber trees that Bogawantalawa Tea Estates PLC grows and manage in its plantations. The Eucalyptus Grandis timber tree mature after 17 years and as per best harvesting practice, the trees can be harvested when they are 20 years old. In the absence of a relevant Sri Lanka Accounting Standard, International Standard 41 Agriculture has been used for the recognition, measurement and presentation of biological assets. Grandis Trees are measured at the Directors assessment of their fair value at each reporting date, after considering and making necessary adjustment to the independent valuers report to reflect the requirement of the accounting standard with respect to valuation. In the absence of market based valuation measures the fair value of biological assets has been determined using the net present value of expected future cash flows (discount at a risk adjustment rate). The increment or decrement in fair value of Grandis timber trees is recognized revenue or expense in the period which occurs. The increment or decrement is determined as the difference between the fair value of the Grandis timber plantation recognized as at the beginning of the financial year and the fair value of the plantation recognized as at the reporting date.
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SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS 2.2.5 Leases a) Finance Leases where the company is the lessee Property, plant and equipment on finance leases (which effectively transfer to the company substantially all the risks and rewards incidental to ownership of the leased item) are capitalized at their cash price and depreciated or amortised 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 finance charges allocated to future periods are separately disclosed in the notes. The interest element of the rental obligation applicable to each financial year is charged to the income statement 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. b) 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 (excluding cost of service such as insurance and maintenance) paid under operating leases are recognized as an expense in the income statement. 2.2.6 Impairment of Assets The company assesses at each reporting date whether there is an indication that an asset may be impaired. If such indication exists or when annual impairment testing for an asset is required the company makes an estimate of the assets recoverable amount. An assets recoverable amount is the higher of an assets or cash generating units fair value less costs to sell and its value in use and determined for an individual asset, unless the assets 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 risk specific to the asset. These calculations are collaborated by valuation multiples, quoted share prices or other available fair value indicators.
Page 14
SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS Impairment losses of continuing operations are recognized in the income statement in those expense categories consistent with the function of the impaired asset, except for property previously revalued where the revaluation was taken to equity. In this case the impairment is also recognized in equity up to the amount of any previous revaluation. For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recongnised impairment losses may no longer exist or may have decreased. If such indication exists, the company makes an estimate of recoverable amount. A previously recongnised impairment loss is reversed only if there has been a change in the estimates used to determine the assets recoverable amount since the last impairment loss was recognized. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation had, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the income statement unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. The following criteria are applied in assessing impairment of Goodwill. Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. 2.2.7 Capital Work in Progress Capital work in progress is transferred to the respective asset accounts at the time of the first utilization of the asset. Inventories Inventories other than produced stocks are valued at the lower of cost and net realizable value, after making due allowances for obsolete and slow moving items. Net realizable value is price at which inventories can be sold in the ordinary course of business less the estimated cost of completion and estimated cost necessary to make the sale. The cost incurred in bringing inventories to its present location and condition is accounted using the following cost formula. Input Materials At average cost
2.2.8
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SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS Growing Crop Nurseries At the cost of direct material, direct labour and appropriate proportion of directly attributable overheads. Produce Stock Valued at estimated selling prices or since realized value. Spares and Consumables At the actual cost 2.2.9 Trade and Other Receivables Trade and other receivables are stated at the amounts they are estimated to realize net of provisions for bad and doubtful receivables. Other receivables and dues from related parties are recongised at cost less provision for bad and doubtful receivables. 2.2.10 Cash and Cash Equivalents Cash and cash equivalents are defined as cash in hand, demand deposits and short term highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of changes in value. For the purpose of cash flow statement, cash & cash equivalent consists of cash in hand and deposits in banks net of outstanding bank overdrafts. Investments with short term maturities i.e. three months or less from the date of acquisitions are also treated as cash equivalents. The cash flow statement has been prepared based on the indirect method. 2.2.11 Investments Investments in subsidiaries are carried at cost.
Page 16
SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS 2.3 2.3.1 LIABILITIES & PROVISIONS Liabilities Liabilities stated under current liabilities in the balance sheet are those expected to fall due within one year from the balance sheet date. Items stated as long term liabilities are those expected to fall due at point of time after one year from the balance sheet date. Trade and Other Payables Trade creditors and other payables are stated at their book values. 2.3.2 Provisions Provisions are recognized when the company has a present obligations (legal & constructive) as a result of a past event, where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
2.3.2.1 Retirement Benefit Obligations 2.3.2.1.1 Defined Benefit Plans Gratuity Provision has been made for retirement gratuities, in conformity with SLAS 16 /gratuity Act No.12 1983. The liability is not externally funded. Bogawantalawa Tea Estates Plc measures the present value of the promised retirement benefits of gratuity which is a defined benefit plan with the advice of an actuary firm as at 31st March 2007. Provision for gratuity for all employees is on an actuarial basis, using Projected Unit Credit (PUC) method as recommended by SLAS 16. The key assumptions used by the actuary include the following. i. Rate of Interest 10%P.A ii. Rate of Salary Increases of Worker 11% every two Years iii. Retirement Age - Workers 60 years - Staff 60 years iv. The company will continue as a going concern
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SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS 2.3.2.1.2 Defined Contribution Plans EPF, ETF & ESPS Employees are eligible for Employees Provident Fund Contributions and Employees Trust Fund Contributions in line with respective statutes and regulations. The Group contributes 12% and 3% of gross emoluments of employees to the Employees Provident Fund and to the Employees Trust Fund respectively 2.3.2.2 Taxation a) Current Taxes Current income tax assets & 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. 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 provision of the Inland Revenue Act No. 10 of 2006. b) Deferred Taxation Deferred income tax is provided in full using the liability method, for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Tax rates enacted at the balance sheet date are used to determine deferred income tax. 2.3.3 Grants and Subsidies Grants and subsidies are credited to the income statement over the period necessary to match them with related cost, which they are intended to compensate on a systematic basis. Grants related to assets, including non-monetary grants at fair value, are deferred in the balance sheet and credited to the income statement over the useful life of the related asset. Grants related to income are recognized in the income statement in the period in which they are receivable.
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SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS 2.4 2.4.1 INCOME STATEMENT Revenue Recognition a) Sale of Goods 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. b) Interest Interest income is recognized as the interest accrued on a time basis (taking into account the effective yield on the asset) unless collectibility is in doubt. c) Dividends Dividend income is recognized when the shareholders right to receive payment has been established. d) Rental Income Rental income is recognized on an accrual basis. e) Others Other income is recognized on an accrual basis. Net profits and losses of a revenue nature on the disposal of property, plant and equipment and other non current assets including investments have been accounted for in the income statement having deducted from proceeds on disposal, the carrying amount of the assets and related property, plant and equipment amount remaining in revaluation reserve relating to that asset is transferred directly to retained earnings. 2.4.2 Expenditure Recognition a) Expenses are recognized in the income statement on the basis of a direct association between the cost incurred and the earning of specific items of income. All the expenditure incurred in the running of the business and in maintaining the property, plant and equipment in a state of efficiency has been charged to income in arriving at the profit/(Loss) for the year.
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SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS b) For the purpose of presentation of the income statement the directors are of the opinion that function of expenses method presents fairly the elements of the companys performance and hence such presentation method is adopted. c) Borrowing Costs Borrowing costs are recognised as an expense in the period in which they are incurred, except to the extent where borrowing costs are directly attributable to the acquisition, construction or production of a qualifying assets which are assets that necessarily takes a substantial period of time to get ready for its intended use or sale are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing cost eligible for capitalisation. The amount of borrowing costs eligible for capitalization is determined in accordance with the Sri Lanka Accounting Standard 20, Borrowing Costs allowed alternative treatment. 2.5 2.5.1 OFF BALANCE SHEET AND INCOME STATEMENT ITEMS Events Occurring after the Balance Sheet All material events occurring after the balance sheet date have been considered and where necessary adjustments to or disclosures have been made in the respective notes to the accounts. Contingencies and Unrecognized Contractual Commitments Contingencies are possible assets or obligation that arise from past event and would be confirmed only on the occurrence or non occurrence of uncertain future events, which are beyond the companys control.
2.5.2
METROPOLITAN RESOURCE HOLDINGS PLC SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS Group 3. REVENUE Tea Rubber Tea Sales-Local Operations Management Fees 2008/2009 Rs. 2,857,180,609 1,103,391 2,858,284,000 2007/2008 Rs. 3,155,472,502 729,466 84,735,207 3,240,937,175
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Company 2008/2009 2007/2008 Rs. Rs. 3,827,456 3,827,456 -
4.
COST OF SALES Tea Rubber Tea Sales-Local Operations 2,720,887,578 1,248,516 2,722,136,094 2,852,121,112 1,434,390 73,444,670 2,927,000,172 -
5.
OTHER INCOME Income Share Interest Income Dividend Income - Quoted Rental Income Income from Leasing of Bungalows Profit on Sale of Property, Plant and Equipment Profit on Sale of Timber Amortisation of Grants (Note 25.1) Amortisation of Net Income from Operating Rights Given to LRL (Note 25.2) Amortisation of Net Income from Operating Rights Given to ASPIC (Note 25.3) Sundry Income Exchange Gain/(Loss) upcountry Central Workshop Income Profit Share of Tea Trial (Pvt) Ltd. Change in FairValue of Biological Assets Reprocessed Tea Sale of Refused Tea Saw Mill Project 654,087 9,666,388 9,600,000 640,616 5,312,223 7,374,544 6,985,547 6,325,755 416,335 2,849,218 366,474 1,040,598 26,954,639 14,530,814 27,969,852 1,743,046 122,430,136 115,000 7,852,663 540,000 4,566,246 4,823,382 1,532,888 6,404,623 6,325,757 416,335 9,594,111 10,231,805 42,296,599 35,588,427 9,143,855 6,981,540 146,413,231 3,720,113 9,600,000 640,616 2,862,692 16,823,421 2,124,418 1,143,696 3,268,114
METROPOLITAN RESOURCE HOLDINGS PLC SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS Group 2008/2009 Rs. 6. FINANCE COSTS Broker Interest Interest on Finance Lease Interest on Overdraft Lease Interest to JEDB / SLSPC Interest on Long Term Loans Interest on Short Term Borrowings 32,909,961 2,953,779 20,125,065 10,648,439 42,099,167 3,557,605 112,294,016 31,858,080 4,864,377 20,488,973 11,659,481 43,215,841 34,751,899 146,838,651 2007/2008 Rs.
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Company 2008/2009 2007/2008 Rs. Rs.
7. PROFIT/(LOSS) BEFORE TAXATION Profit before taxation is stated after charging all expenses/income including the following. Directors' Emoluments Auditor's Remuneration Depreciation / Amortisation - Leasehold Right to Bare Land - Immovable Leased Assets - Property, Plant and Equipment - Mature Plantation Staff Costs - Defined Benefit Plan Cost - Salaries and Wages Loss on Disposal of Brombill Tea Factory Amortization of Intangible Assets 6,160,000 1,593,750 8,459,987 21,240,704 81,567,200 15,972,346 59,266,278 869,999,461 36,516,912 1,518,951 5,660,815 1,382,500 8,459,864 22,197,089 70,368,521 15,517,166 107,752,931 844,659,671 1,556,041 143,750 1,378,737 137,500 1,393,591 -
METROPOLITAN RESOURCE HOLDINGS PLC SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS Group 2008/2009 2007/2008 Rs. Rs.
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8.
INCOME TAX EXPENSES
Company 2008/2009 2007/2008 Rs. Rs.
8.1 Current Income Tax Expense Income Tax on Current Year Profits Under/(Over) Provision in Previous Year Tax on Dividends 2,210,701 2,210,701 9,320,869 9,320,869 2,210,701 2,210,701 860,804 860,804
8.2 Reconciliation between Current Tax Expense / (Income) and the product of Accounting Profit Accounting Profit/(Loss) Before Tax Intra Group Adjustments Aggregate Disallowables Aggregate Allowables Total Statutory Income Exempt in terms of section 16 of the Inland Revenue Act Statutory Loss from Business Non Business Income Tax Loss set off Taxable Income Income Tax @ 35% Income Tax @ 15% S.R.L Current Income Tax Expense 8.3 Taxation Company The company is liable for income tax at the rate of 35% in terms of Inland Revenue Act No. 10 of 2006. Subsidiaries Bogawantalawa Tea Estates PLC In terms of Inland Revenue Act No.10 of 2006, Profit from any agricultural undertaking would be exempt from income tax for a period of five years reckoned from the Year of assessment 2006/2007. The corporate tax rate applicable to the other income would be at 35%. BPL Teas (Pvt) Ltd The income generated by the company from exports is liable to income tax at a concessionery rate of 15% and other income is taxed at 35%. (129,238,598) 78,427,737 21,042 (48,522,106) 265,901,184 47,779,830 (246,169,595) (129,980,874) 98,180,368 (89,956,277) 1,585,251 (218,351,900) 767,454 1,410,577 32,670 2,210,701 (66,373,138) 152,086 7,708,909 (12,886,618) 26,781,607 9,119,848 108,735 92,286.00 9,320,869 (6,672,503) 27,971,671 (16,182,805) 5,116,363 4,030,192 9,146,555 767,454 1,410,577 32,670 2,210,701 276,692 2,572,623 (2,124,418) 724,897 2,124,418 2,849,315 743,546 108,735 8,523.00 860,804
METROPOLITAN RESOURCE HOLDINGS PLC SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS 8.3 Taxation (Contd..)
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Ceylon Tea Gardens Ltd. In terms of the Inland Revenue Act No 10 of 2006, corporate tax rate of 35% has been used in computing the taxation of Ceylon Tea Gardens Ltd. However, no provision has been made in the accounts due to the availability of tax losses for the current financial year. 8.4 Deferred Taxation The deferred tax (asset) / liability on each temporary differrences which were not recognised in the financial statements are disclosed below. Group 31.03.2009 31.03.2008 Rs. Rs. On Temporary Differences of PPE On Retirement Gratuity On Tax Loss Carried Forward 354,172,656 298,239,833 (491,825,484) (472,142,981) (39,671,663) (609,216,153) (177,324,490) (783,119,301) 231,160,435 (240,285,539)
Tax effect 9. EARNINGS/(LOSS) PER SHARE
The calculation of the earnings / (loss) per share is based on profit or loss attributable to ordinary shareholders for the year divided by the weighted average number of ordinary shares on issue during the year ended 31st March 2009 and calculated as follows: Group 2008/2009 2007/2008 Company 2008/2009 2007/2008
Net Profit / (Loss) Attributable to Ordinary Shareholder (Rs.) Weighted Average Number of Ordinary Shares in Issue (Nos) Basic earnings / (Loss) per share (Rs.) 10. DIVIDEND PER SHARE Interim dividend paid (Rs.) Number of Ordinary Shares Dividend per Share (Rs.)
(94,477,237) 17,264,802 (5.47)
48,622,671 17,264,802 2.82
(8,883,204) 17,264,802 (0.51)
(584,112) 17,264,802 (0.03)
METROPOLITAN RESOURCE HOLDINGS PLC SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS
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11. LEASEHOLD RIGHT TO BARE LAND JEDB/SLSPC ESTATES - (Group) The leasehold rights to bare land on all 28 estates have been taken into the books of Bogawantalawa Tea Estates PLC as at 22nd June, 1992 immediately after formation of Bogawantalawa Tea Estates PLC in terms of the ruling obtained from the Urgent Issue Task Force (UITF) of the Institute of Chartered Accountants of Sri Lanka. For this purpose the Board decided at its meeting held on 8th March,1995 that these bare lands would be revalued, at the value established for these lands, by the Valuation Specialist Mr. D.R. Wickramasinghe, just prior to the formation of Bogawantalawa Tea Estates PLC. The value taken into the 22nd June,1992, Balance Sheet and the amortisation of leasehold rights upto 31st March, 2009 are disclosed in this note. 2008/2009 Rs. Leasehold Value of Bare Land of JEDB/SLPC Estates Balance as at 31.03.2009 Accumulated Amortisation Balance as at the beginning Amortisation for the year Balance as at the end Written down value The leasehold values of bare land are being amortised in equal annual amounts over the 53 years lease period. 12. IMMOVABLE JEDB/SLSPC ESTATE ASSETS ON FINANCE LEASE (OTHER THAN BARE LAND) - (Group) COST / VALUATION AMORTISATION Balance as at Written Balance as at Balance as at Charge for Written Balance as at 01.04.2008 Off 31.03.09 01.04.2008 the year Off 31.03.09 Rs. Rs. Rs. Rs. Rs. Rs. Rs. 555,387,492 64,948,134 13,272,826 633,608,452 263,333,908 42,085,646 13,585,564 319,005,118 18,463,576 3,093,166 (316,037) 21,240,705 281,797,484 45,178,812 13,269,527 340,245,823 W.D.V as at 31.03.09 Rs. 273,590,008 19,769,322 3,299 293,362,629 W.D.V as at 31.03.08 Rs. 292,053,584 22,862,488 (312,738) 314,603,334 129,014,652 8,459,988 137,474,640 310,905,360 120,554,668 8,459,984 129,014,652 319,365,348 448,380,000 448,380,000 2007/2008 Rs.
DESCRIPTION
Mature Plantation 555,387,492 Immature Plantations Buildings 64,948,134 Plant & Machinery 13,272,826 633,608,452
Assets are being depreciated in equal annual amounts over the following periods:Mature Plantations/Improvements to Land Buildings Plant & Machinery - 30 Years - 25 Years - 15 Years
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13. PROPERTY PLANT AND EQUIPMENT OTHER THAN IMMATURE / MATURE PLANTATION - (GROUP COST OR VALUATION Balance as at 01.04.2008 Rs. 270,511,315 641,411,292 86,426,390 244,750,691 22,635,681 1,265,735,369 Additions for the year Rs. 33,111,216 44,660,535 19,953,318 29,419,196 1,191,304 128,335,569 Disposals During the Year Rs. (104,353,209) (110,768,525) (3,375,000) (3,616,008) (2,600,000) (224,712,742) Balance as at 31.03.2009 Rs. 199,269,322 570,636,179 82,525,683 270,553,879 46,373,133 1,169,358,196
Description Buildings Plant and Machinery Motor Vehicles Others Assets on Finance Lease
DEPRECIATION Balance as at 01.04.2008 Rs. 30,835,079 262,588,004 65,505,693 104,138,237 3,062,707 466,129,720 799,605,649 Charge for the Year Rs. 6,869,228 45,539,689 7,841,762 15,328,669 5,987,852 81,567,200 Accumulated Depreciation on Disposals Rs. (9,468,651) (25,761,780) (2,990,583) (1,277,990) (2,080,000) (41,579,004) Balance as at 31.03.2009 Rs. 28,235,656 281,810,951 60,610,298 118,188,916 17,272,095 506,117,916 663,240,280
Description Buildings Plant and Machinery Motor Vehicles Others Assets on Finance Lease
Written Down Value
PROPERTY PLANT AND EQUIPMENT OTHER THAN IMMATURE / MATURE PLANTATION - (COMPA COST OR VALUATION Balance as at 01.04.2008 Rs. 15,442,926 1,096,066 16,538,992 Additions for the year Rs. Disposals During the Year Rs. (2,600,000) (2,600,000) Balance as at 31.03.2009 Rs. 12,842,926 1,096,066 13,938,992
Description Buildings Plant and Machinery Motor Vehicles Others
DEPRECIATION Balance as at 01.04.2008 Rs. 14,118,820 944,425 15,063,245 1,475,747 Charge for the Year Rs. 1,324,106 54,631 1,378,737 Accumulated Depreciation on Disposals Rs. (2,600,000) (2,600,000) Balance as at 31.03.2009 Rs. 12,842,926 999,056 13,841,982 97,010
Description Buildings Plant and Machinery Motor Vehicles Others
Written Down Value
METROPOLITAN RESOURCE HOLDINGS PLC SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS 14. IMMATURE/MATURE PLANTATIONS - (GROUP) COST Balance as at 01.04.2008 Rs. Additions for the Year Rs.
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Description
Transfers Rs.
Balance as at 31.03.2009 Rs.
Mature Plantations Immature Plantations
489,867,907 403,154,257 893,022,164
65,159,096 65,159,096
3,066,941 (3,066,941) -
406,221,198 551,960,062 958,181,260
DEPRECIATION Balance as at 01.04.2008 Rs. 114,810,593 114,810,593 778,211,571 Charge for the Year Rs. 15,972,346 15,972,346 Balance as at 31.03.2009 Rs. 130,782,939 130,782,939 827,398,321
Description
Transfers Rs. -
Mature Plantations Immature Plantations
Written Down Value
These are investments in immature/ mature plantations since the formation of Bogawantalawa Tea Estates PLC. The assets (including plantations assets) taken over by way of estate leases are set out in notes 11 & 12. Further investment in immature plantations taken over by way of these leases are shown in the above note. When such plantations become mature, the additional investments since taken over to bring them to maturity will be moved from immature to mature under this note. A corresponding movement from immature to mature of the investment undertaken by JEDB/SLSPC on the same plantation prior to the leases are shown under note No. 12.
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14.1 Biological Assets The biological assets, Eucalyptus Grandis Immature Timber Trees of the company were inspected and valued by M/s.Ariyatileka & Co (Pvt) Ltd., independent Chartered Valuers (UK). Based on the Valuation Reports dated 29th Febryary 2008 and 24th July 2009, the Immature Eucalyptus Grandis Tree Plantations were valued as at 31st March 2008 and 31st March 2009 as Rs.351,881,256/= and Rs.453,266,796/= respectively. However, the directors have determined the fair value as Rs.197,769,967/= and Rs.224,724,506/= respectively, after making adjustments for the discounting rate to reflect the requirement of the Accounting Standard.
Eucalyptus Grandis Immature Timber Trees are measured at the directors' assessment of their value at each reporting date. The fair value is determined as being the net percent value of expected future cash flows (discounted at a risk adjustment rate) significant assumption used as follows. a) Trees will reach maturity 20 years after planting and further 40% of the existing inventory of trees will be thinned out during the next 2 to 5 years with clear fell at 20 years.
b) Trees have been valued as per the current timber prices in the domestic market based on the price list of 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. c) Timber yields have been adjusted to reflect volumes as reported by independent valuers contracted by Bogawantalawa Tea Estates PLC. Plantations have been independently inspected by the valuers and assessed in order to make this determination.
d) Future cash flows are determined by reference to current timber prices without considering the inflationary effect. e) The ongoing costs of growing the trees which are deducted in determining the net cash flows are constant in real terms. A nominal discounting rate of 19% per annum comprising of a 15 years risk free rate of 14% and a risk premium of 5%,is applied to the estimated cash flows. The risk premium was determined having regard to the following. * * * * The illiquid nature of the plantations prior to maturity. A lack of market evidence as to the value of biological assets through their life cycle. Risk relations to deceases and fire affecting the Biological Assets Adoption of conservative valuation approach
f)
METROPOLITAN RESOURCE HOLDINGS PLC SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS Group 2008/2009 2007/2008 Rs. Rs. 8,409,042 91,703,213 100,112,255 (91,952,994) (1,785,121) 6,374,140 33,420,913 55,643,928 89,064,841 (80,655,799) 8,409,042
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15.
CAPITAL WORK IN PROGRESS Balance as at 01.04.2008 Additions During the Year Capitalised During the Year Amount Charge to Revenue
Company 2008/2009 2007/2008 Rs. Rs. -
16.
GOODWILL ON ACQUISITION Gross Amount Balance as at the beginning of the year Accumulated Amortisation Balance as at the beginning of the year Amortisation during the year Balance as at the End of the Year 49,043,437 49,043,437 5,708,384 49,043,437 49,043,437 5,708,384 54,751,821 54,751,821 -
17.
INVESTMENTS Investments made in Tea Trails (Pvt) Ltd Brand Development Cost (Note 17.1) Investments in Subsidiaries No of Shares % Holding 24,113,712 237,000,000 83,000,000 83,000,000 (83,000,000) 237,000,000 237,000,000 237,000,000 83,000,000 83,000,000 (60,277,596) 259,722,404 259,722,404 15,000,000 7,594,761 22,594,761 15,000,000 9,113,712 24,113,712 -
Investments in Quoted Subsidiaries Bogawantalawa Tea Estates PLC
35,550,000 70.75%
Investments in Unquoted Subsidiaries Ceylon Tea Gardens Ltd 14,548,703 99.99% BPL Teas (Pvt) Ltd Indirect shareholding 70.75% Less: Provision for diminution in value
Total 17.1 BRAND DEVELOPMENT COST
22,594,761
This represents the investments made in brand developments, acquiring marketing rights and legal protections for the brands which will result in future economic benefits. The costs relating to Investment in Brand aquiring, acquiring of marketing rights and leagal protection will be amortised over a period of ten years commencing from 2004/2005. Balance at the beginning of the year Amortization during the Year Balance at the end of the year 9,113,712 (1,518,951) 7,594,761 10,669,753 (1,556,041) 9,113,712 -
METROPOLITAN RESOURCE HOLDINGS PLC SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS Group 2008/2009 2007/2008 Rs. Rs. 18. INVENTORIES Input Materials Less: Provision for obsolete and damaged items Company 2008/2009 Rs.
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2007/2008 Rs.
205,361,970 (9,626,379) 195,735,591 12,548,435 (1,496,532) 11,051,903 206,879,968 2,434,160 44,441,911 460,543,533
187,184,173 (10,555,010) 176,629,163 8,021,437 (904,137) 7,117,300 361,950,495 1,243,400 43,493,252 590,433,610
Growing Crop Nurseries Provision for over grown plants
Harvested Crops Goods in Transit Finish Goods and Work in Progress
19.
TRADE AND OTHER RECEIVABLES Trade Receivables 206,662,053 Deposits, Prepayments and Other Receivables 85,867,273 Economic Service Charge Recoverable 43,041,367 VAT Receivable 62,978,702 128,139,184 Amount Receivable from-Lalan Rubbers (Pvt) Ltd. (Note 17.1) 8,115,745 Amount Receivable from-ASPIC Corporation (Pvt) Ltd.(Note 17.2 Advance Company Tax Recoverable 17,926,245 Staff Loans 44,916,170 Tax Receivables 182,293 Lalan rubber Interest 6,388,872 Withholding Tax Recoverable 3,373,692 607,591,596 Provision for Bad Debtors/Losses (22,026,835) 585,564,761 AMOUNT RECEIVABLE FROM LALAN RUBBERS (PVT) LTD
175,517,932 49,554,421 35,397,474 66,304,414 128,386,196 12,000,000 36,695,725 18,108,538 13,588,872 3,021,728 538,575,300 (21,690,597) 516,884,703
553,856 -
1,073,934 -
152,120 182,293 888,269 888,269
152,120 182,293 1,408,347 1,408,347
19.1
This includes the amount recievable for the following liabilities of the Rubber Division taken over by Lalan Rubbers (Pvt) Ltd. (LRL), in terms of the Operating Agreement signed by Bogawantalawa Tea Estate Plc and LRL on 19th March 2003 and the amount receivable in instalments as part payments for giving up operating rights and transfer of movable assets. Group 2008/2009 2007/2008 Rs. Rs. Retiring Gratuity Liability (Note 19.1.i) Long Term Loans (Note 19.1.ii) 78,446,325 49,692,859 128,139,184 67,414,387 60,971,809 128,386,196 Company 2008/2009 2007/2008 Rs. Rs. -
The above balance remains as a liabilty of Bogawantalawa Tea Estates PLC (BTE) since the legal obligation of these remains with BTE and it will be changed annually in accordance with the settlements of loans and movements of gratuity liability.
METROPOLITAN RESOURCE HOLDINGS PLC SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS Group 2008/2009 2007/2008 Rs. Rs. 19.1.i Retiring Gratuity Liability Balance at the beginning of the year Amount receivable for the provision made on behalf of Rubber Division Payments made during the year Balance at the end of the year 67,414,387 11,031,938 78,446,325 78,446,325 62,322,435 11,660,563 73,982,998 (6,568,611) 67,414,387
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Company 2008/2009 2007/2008 Rs. Rs. -
Group 2008/2009 2007/2008 Rs. Rs. 19.1.ii Long Term Loans Balance at the beginning of the year Payments made during the year Balance at the end of the year 19.2 60,971,809 (11,278,950) 49,692,859 72,259,307 (11,287,498) 60,971,809
Company 2008/2009 2007/2008 Rs. Rs.
AMOUNT RECEIVABLE FROM ASPIC CORPORATION (PVT) LTD. This represents the amount receivable from ASPIC Corporation (Pvt) Ltd as part of consideration for giving up of all of the operating rights relating to coconut cultivation of the Maliboda Estate and Noori Estate excluding an extent of approximately 152.32 hectares covered by foresty and timber planted and to be planted under ADB projects and an extent of approximately 2 hectares there of the Noori Estate, Interests and transfer of movable assets. Group 2008/2009 2007/2008 Rs. Rs. Consideration for the Operating Right given Balance as at the beginning of the year Telephone Charges LessPayments made during the year Balance at the end of the year 12,000,000 (3,884,255) 8,115,745 16,018,433 (18,433) (4,000,000) 12,000,000 Company 2008/2009 2007/2008 Rs. Rs. -
As per the Operating Agreement, ASPIC Corporation (Pvt) Limited is required to pay a sum of Rs.20 million in six installments as f Initial payment of Rs.500,000 /- at the time of execution of the agreement and a payment of Rs.3.5 million on or before 31st January 2007 and four equal instalments of Rs.4 million each on or before 31st January 2008, 2009, 2010 and 2011. In addittion ASPIC is required to pay 25% share of profits from the 5th year to the 40th year. As per the Ammendment to the Operating Agreement, dated 11th January 2008, the above installment payments were amended as follows Three minimum paymentas of Rs. 4 million each on or before 31st January 2009, 31st January 2001 and 31st January 2011 or 10% of the turnover of the Company whichever is higher
METROPOLITAN RESOURCE HOLDINGS PLC SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS Group 2008/2009 2007/2008 Rs. Rs. 20. AMOUNT DUE FROM RELATED PARTIES Bogawantalawa Tea Estates Plc. BPL Teas ( Pvt) Ltd. Eco Power Construction (Pvt) Ltd Eco Products (Pvt) Ltd Eco Power (Pvt) Ltd BPL Rubbers (Pvt) Ltd. Ceylon Tea Gardens Ltd. Symbio (Pvt.) Ltd. Metropolitan Resource Holdings Ltd. MG Consultants (Pvt) Ltd Tea Trails (Pvt) Ltd Less: Provision for doubtful debts Total 21. SHORT TERM INVESTMENTS Treasury Bills Fixed Deposits Call Deposits 20,374,098 6,266,210 322,096 26,962,404 9,080,495 44,018,922 53,099,417 20,374,098 6,266,210 322,096 26,962,404 98,455 29,479 3,965 75,800 92,850 544,084 844,633 844,633 98,455 29,479 75,800 92,850 282 2,239,080 2,535,946 2,535,946
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Company 2008/2009 2007/2008 Rs. Rs.
6,297,966 4,870,834 98,455 29,479 3,965 11,300,699 (4,900,314) 6,400,385
1,908,686 4,870,834 98,455 29,479 6,907,454 (4,900,314) 2,007,140
9,080,495 5,336,809 14,417,304
22.
STATED CAPITAL Nos. Number of shares Ordinary 17,264,802 Rs. Value Ordinary Shares Share Premium 172,648,020 92,660,202 265,308,222 Nos. 17,264,802 Rs. 172,648,020 92,660,202 265,308,222 Nos. 17,264,802 Rs. 172,648,020 92,660,202 265,308,222 Nos. 17,264,802 Rs. 172,648,020 92,660,202 265,308,222
In accordance with Section 58 of Companies Act No.7 of 2007, which become effective from 3 May, 2007 share capital and share premium have been reclassified as stated capital. The comparative information has been reclassified accordingly.
METROPOLITAN RESOURCE HOLDINGS PLC SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS 23. INTEREST BEARING BORROWINGS- (GROUP) Payable Within one Year Rs. 93,709,543 2,070,396 13,083,691 10,496,088 7,700,278 2,983,285 130,043,281 2008/2009 Payable Payable Within After 02 - 05 Years 05 Years Rs. Rs. 154,200,096 958,608 7,005,892 60,091,596 68,208,107 5,732,361 9,262,918 14,598,343 250,891,206 69,166,715 Balance As At 31.03.2009 Rs. 248,868,247 9,076,288 141,383,394 16,228,449 16,963,196 17,581,628 450,101,202 31.03.2009 Rs. 23.1 National Development Bank Purchase of Tea Bagging Machine Factory Development Factory Development and Purchase of Agriculture Equipment Field Developments and Process Improvements Energy Saving Project Kotiyagala,Loinorn & Wanarajah Energy Saving Plant to Norwood Estate Working Capital Requirement 23.2 DFCC Bank Field Developments and Purchase of Agriculture Equipment Field Developments and Purchase of Agriculture Equipment 3,999,999 1,263,300 1,901,940 3,693,504 1,450,800 81,400,000 93,709,543 7,958,332 2,513,441 6,788,140 14,372,306 3,967,877 118,600,000 154,200,096 958,608 958,608 11,958,331 3,776,741 8,690,080 19,024,418 5,418,677 200,000,000 248,868,247 Payable Within one Year Rs. 12,343,922 2,242,926 19,521,148 20,100,000 9,742,612 63,950,608 31.03.2008 Rs. 15,624,996 4,934,766 10,433,525 22,410,131 6,748,577 34,360 60,186,355 2007/2008 Payable More than One Year Rs. 47,842,433 8,903,758 72,678,045 36,350,000 18,649,400 15,343,283 199,766,919 Rate of Interest 16% 16% 12% 13% Interest free 17%
Page 32
23.1 23.2 23.3 23.4 23.5 23.6 23.7
National Development Bank DFCC Bank Cmmercial Bank of Ceylon Plc Hatton National Bank People's Leasing Co Ltd Finance Leases ICICI Bank
Balance As At 31.03.2008 Rs. 60,186,355 11,146,684 92,199,193 56,450,000 18,649,400 25,085,895 263,717,527
702,624 1,367,772 2,070,396
1,990,768 5,015,124 7,005,892
2,693,392 6,382,896 9,076,288
3,396,016 7,750,668 11,146,684
17% 11.7%
METROPOLITAN RESOURCE HOLDINGS PLC SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS Payable Within one Year Rs. 23.3 Commercial Bank of Ceylon Plc Field Development and Purchase of Agricultural Equipment Field Development Purchase of Vehicle and Equipment Field Development Purchase of Vehicle and Equipment Field Development Field Development To meet the working capital requirements of the Company For Timber harvesting equipment,Timber & forest planting & Brand marketing For Tea factory modernisation - Maliboda Working Capital Requirement Payable Within 02 - 05 Years Rs. Payable After 05 Years Rs.
Page 33
31.03.2009 Rs.
31.03.2008 Rs.
Rate of Interest
1,594,800 2,535,420 2,862,840 371,491 3,722,100 223,080 273,960 1,500,000 13,083,691
3,609,379 8,194,474 11,830,708 14,888,400 892,320 14,676,315 6,000,000 60,091,596
6,468,242 13,003,700 12,736,165 36,000,000 68,208,107
5,204,179 10,729,894 14,693,548 371,491 25,078,742 14,119,100 27,686,440 43,500,000 141,383,394
6,907,518 1,293,863 13,265,314 17,748,025 1,438,719 23,835,160 4,963,882 6,250,000 14,305,000 2,191,712 92,199,193
11.5% 11.5% 11.5% 11.5% 11.5% 11.5% 11.5% Prevailing AWDR+3.5% AWDR+3.5%
23.4
Hatton National Bank Working Capital Requirement People's Leasing Co Ltd Purchase of solid fuel boiler-Wanarajah Purchase of solid fuel boiler-Kotiyagala
56,450,000
10.75%
23.5
5,060,124 5,435,964 10,496,088
3,999,816 1,732,545 5,732,361
9,059,940 7,168,509 16,228,449
9,658,600 8,990,800 18,649,400
23.5% 21%
METROPOLITAN RESOURCE HOLDINGS PLC SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS Payable Within one Year Rs. 23.6 Finance Leases - Net Liability Seylan Bank Ltd. Motor Vehicle ( HZ 4050 ) Motor Vehicle 2 Nos ( WPJF 4344 ) Motor Vehicle (WP JI 7864,7868) 2 Nos. Lorries (WPLA 0287,0614) Hatton National Bank Motor Vehicle (WPJM 0808) Stalk Extractor Commercial Bank Electric Saw Mill Machinery IMA C23 Machinery IMA C21 Motor Vehicle Central Finance Co Motor Vehicle (KC 2246) Vanik Corporation Motor Vehicle - CTG Payable Within 02 - 05 Years Rs. Payable After 05 Years Rs.
Page 34
31.03.2009 Rs.
31.03.2008 Rs.
200,612 650,783 287,000 191,733 424,459 652,328 1,727,703 2,799,834 397,101 180,400 188,325 7,700,278
649,058 358,535 2,146,822 5,049,610 728,019 330,874 9,262,918
200,612 650,783 287,000 191,733 1,073,517 1,010,863 3,874,525 7,849,444 1,125,120 511,274 188,325 16,963,196
663,244 876,822 1,491,935 1,347,246 611,737 1,362,502 1,628,251 5,601,828 10,649,278 664,727 188,325 25,085,895
23.7
ICICI Bank Purchase of Motor Vehicle
2,983,285 2,983,285
14,598,343 14,598,343
17,581,628 17,581,628
METROPOLITAN RESOURCE HOLDINGS PLC SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS Group 2008/2009 Rs. 24. RETIREMENT BENEFIT OBLIGATIONS Balance at the Beginning of the Year Provision for the Period Paid During the Year Brombil factory provision Balance at the End of the Year 472,142,981 59,266,278 531,409,259 (39,460,815) (122,960) 491,825,484 402,600,227 107,752,931 510,353,158 (38,210,177) 472,142,981 2007/2008 Rs.
Page 35
Company 2008/2009 2007/2008 Rs. Rs.
25.
DEFERRED INCOME - (Group) Grants and Subsidies Net Income from Operating Rights Given to (25.2) Lalan Rubbers (Pvt) Ltd. Net Income from Operating Rights Given to (25.3) ASPIC Corporation (Pvt) Ltd 152,828,564 227,727,217 15,404,413 395,960,194 133,219,708 234,052,972 15,820,748 383,093,428 -
25.1 GRANTS AND SUBSIDIES Balance at the beginning of the year Received during the year Total grants available for amortisation Amortisation for the year Balance at the end of the year 133,219,708 26,594,403 159,814,111 (6,985,547) 152,828,564 123,822,815 15,801,516 139,624,331 (6,404,623) 133,219,708 -
25.2 NET INCOME FROM OPERATING RIGHTS GIVEN TO LALAN RUBBERS (PVT) LTD. Gross carrying amount at the beginning of the year Amortisation for the year Net carrying amount at the end of the year 234,052,972 (6,325,755) 227,727,217 240,378,729 (6,325,757) 234,052,972 -
25.3 NET INCOME FROM OPERATING RIGHTS GIVEN TO ASPIC CORPORATION (PVT) LTD. Gross carrying amount at the beginning of the year Amortisation for the year Net carrying amount at the end of the year 15,820,748 (416,335) 15,404,413 16,237,083 (416,335) 15,820,748 -
Page 36
26. NET LIABILITY TO LESSOR OF JEDB/SLSPC ESTATES - (Group) Repayable within 1 year Rs. Gross Liability Interest in Suspense Net Liability Repayable after 1 year Rs. Balance as at 31.03.2009 Rs. 1,066,698,300 (508,611,040) 558,087,260 Balance as at 31.03.2008 Rs. 1,096,124,460 (531,207,711) 564,916,749
29,426,160 1,037,272,140 (22,323,491) (486,287,549) 7,102,669 550,984,591
Group 2008/2009 2007/2008 Rs. Rs. 27. TRADE AND OTHER PAYABLES Trade Creditors Accruals and other payables Rental Payable - JEDB / SLSPC 284,252,929 166,183,047 29,276,487 479,712,463 213,195,473 427,025,167 10,564,399 650,785,039
Company 2008/2009 2007/2008 Rs. Rs.
471,483 471,483
67,037 67,037
28. AMOUNTS DUE TO RELATED COMPANIES
Ceylon Tea Gardens Ltd. Eco Power (Pvt) Limited Metrocorp (Pvt) Ltd
6,000,001 6,000,001
248,399 13,414,469 13,662,868
5,074,171 5,074,171
5,074,171 5,074,171
29. CONTINGENT LIABILITIES There were no contingent liabilities as at the balance sheet date.
Page 37
30 30.1
RELATED PARTY DISCLOSURES Key Management Personnel Information The Directors of the company have Interest in the transactions detailed below and some directors held the post of Directors of such related companies during the year. The transactions listed below have been carried out under normal commercial terms. Mr. D.J. Ambani, Dr. D.R. Bandaranaike, Mr. C.M.O. Haglind, Mr. L.J. Ambani, Mr. M.S.W. Fernando, Mr. C.W. Kingsnorth and Mr. D.E.H. Panter the directors of the company are also directors of following companies and has had transactions as disclosed in Note 30.2 below.
30.1.1 New Appointments The following Directors were appointed to the Board of the Company Mr G V M Nanayakkara, Mr J Molligoda and Mr A K Kumarasena w.e.f. 16th January 2009 and Mr A D D S Saparamadu w.e.f. 16th March 200 30.2 Related Party Transactions The company has a related party relationship with its related group companies as disclosed in Note 30.1. The following transactions have been carried out with related parties during the year ended 31st March 2009 under normal commercial terms. 30.3 Transactions with Companies in which Directors of the Company hold Other Directorships The Company has carried out transactions with entities where the Chairman or a Director of the Company is the Chairman or a Director of such entities as detailed below. Name of the Related Party Company Bogawantalawa Tea Estates PLC. (BTE). Name of Director Mr. D.J.Ambani Mr. L.J.Ambani Dr. R.D. Bandaranaike Mr. M.S.W. Fernando Mr. C.M.O. Haglind Relationship Nature of Transaction Chairman Director Director Director Director Company has earned Rs.4,401,578/= ( Previous Year Rs.1,545,000/= ) as Management Fees for providing management services to BTE. Company has earned Rs.115,708/= ( Previous Year - Nil ) for Hiring Vehicles to BTE. Company has incurred Rs.105,955/= ( Previous Year - Nil ) for Printing and Stationary charges from BTE. Group BPL Teas ( Pvt.) Limited ( BPL ). Mr.D.J. Ambani Mr. C.M.O. Haglind Mr. M.S.W. Fernando Mr.D.J.Ambani Dr.R.D. Bandaranaike Mr.M.S.W. Fernando Mr.D.J.Ambani Chairman Director Director Chairman Director Director Chairman Group has earned Rs. 1,466,734/= ( Previous Year 1,206,334/= ) as reimbursement of rent, telephone and other expenses met on behalf of BPL. Group has earned Rs.134,650/= ( Previous Year -Nil ) as reimbursement of expenses met on behalf of CTGL. Group has incurred Rs.180,000/= ( Previous Year Rs.180,000/= ) as Service Charges for obtaining services from MPL. Group has incurred Rs.2,279,544/= ( Previous Year Rs.3,895,013/= ) as Telephone Charges for obtaining Telephone Services from SPL. Group has incurred Rs.1,096,850/= ( Previous Year Rs.1,368,500/= ) as Service Charges for obtaining services from FTS. Group has earned Rs.654,087/= ( Previous Year Rs.115,000/= ) as Rent Income from EPL. Group has incurred Rs.167,071/= ( Previous Year Rs.359,318/= ) for purchase of Stationary and Furniture from MOPL. Group has incurred Rs.20,160/= ( Previous Year Rs.28,889/= ) for purchase of Computer Accessories and related services from MCPL. Group has incurred Rs.17,169/= ( Previous Year Rs.43,,355/= ) for service obtained for the maintenance of Photo Copy Machines from ONPL.
Ceylon Tea Gardens Limited. (CTGL). Metrocorp (Pvt) Ltd. ( MPL ).
Suntel (Pvt) Ltd., (SPL ).
Mr.D.J.Ambani
Director
FT Services (Pvt) Ltd., ( FTS).
Mr.M.S.W.Fernando
Director
Eco Power (Pvt.) Ltd/., (EPL ).
Mr.D.J.Ambani Dr.R.D.Bandaranaike Mr.L.J.Ambani
Chairman Director Director
Metropolitan Office (Pvt) Ltd., ( MOPL ). Metropolitan Computers (Pvt) Ltd., ( MCPL ). Office Network (Pvt) Ltd., ( ONPL
Mr.L.J.Ambani
Director
Mr.L.J.Ambani
Director
30.3.2 Transactions with Key Management Personnel ( KMP ) of the Company or Parent Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the company as well as its related parties, directly or indirectly, including any director (whether executive or otherwise) of the company. a) b) Loans to Directors No loans have been given to directors of the company and its parent company. Compensations to Key Management Personnel of the Company and its Parent Company Short-Term Employment Benefits c) 2008/2009 Rs. 6,340,000
Group has not incurred any amount as Termination Benefits or Post Employment Benefits on account of the Key Managerial Personnel during
30.3.3 Amounts receivable and payable to related parties are disclosed in Notes 20 and 28 to the financial statements. 31. EVENTS OCCURRING AFTER THE BALANCE SHEET There has been no material event occurring after the balance sheet date that require adjustment or disclosure in the financial statement 32. UNRECOGNISED CONTRACTUAL COMMITMENTS There were no material capital commitments as at the balance sheet date.
METROPOLITAN RESOURCE HOLDINGS PLC SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS 33. MORTGAGE UNDERTAKING
Page 38
The following assets have been pledged as security for overdraft facilities and Loans of Bogawantalawa Tea Esates PLC. Facility Amount Rs. Bank Commercial Bank Sampath Bank Nature of Facility
Mortgage Details
10,000,000 Overdraft 25,000,000 Overdraft
Seylan Bank- Millenium Branch National Development Bank Limited. Purpose Purchase of tea bagging machine
30,000,000 Overdraft
Mortgage over stock and book debts. Forbes and Walker Tea Brokers (Pvt) Ltd has agreed to remit proceeds from sale of produce tea stock of the Company direct to Sampath Bank PLC Fixed Deposit Rs. 30 Million
40,000,000 Term Loan Primary mortgage over the tea bagging machine 12,632,909 Term Loan Primary mortgage over the leasehold rights of Loinorn and Sapumalkanda Estates 19,019,403 Term Loan Secondary mortgage over the leasehold rights of Loinorn & Sapumalkanda Estates 36,935,218 Term Loan Mortgage over Property of Sapumalkanda
Factory Development
Factory Development and purchase of Agriculture Equipment Field Developments and process improvements Energy Saving Project Kotiyagala, Loinorn & Wanarajah Energy Saving Plant to Norwood estate
7,976,930 Term Loan Fifth mortgage over the lease hold Mortgage over Property of Sapumalkanda Estate & right of the Supumalkanda Estate. 7,250,000 Term Loan Primary Mortgage over project assets Further Mortgage over Leasehold Rights of three estates namely Loinorn, Bogawantalawa & Sapumalkanda already mortgage to the bank. Further mortgage over IMA C23 Tea Bagging Machine located at Welisara
DFCC Bank Purpose Field Developments and purchase of agriculture equipment
7,026,250 Term Loan Primary mortgage over the leasehold rights of Bogawana Estate
Field Developments and purchase of agriculture equipment Commercial Bank of Ceylon Ltd Purpose Field Development and purchase of agricultural equipment Field Development Purchase of Vehicle and Equipment
13,677,680 Term Loan Primary mortgage over the leasehold rights of Bogawana Estate
15,944,718 Term Loan Primary mortgage over the leasehold rights of Wanarajah Estate 13,623,926 Term Loan Primary mortgage over the leasehold rights of Wanarajah Estate 25,354,399 Term Loan Primary mortgage over the leasehold rights of Wanarajah Estate
METROPOLITAN RESOURCE HOLDINGS PLC SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS 33. MORTGAGE UNDERTAKING (Contd..) Facility Amount Rs. Mn Nature of Facility
Page 39
Mortgage Details
Bank Commercial Bank of Ceylon Ltd Purpose Field Development
28,628,375
Mortgage over Property of Wanarajah, Pitiyakanda, Mahaoya & Udabage Estates Mortgage over Property of Wanarajah, Pitiyakanda, Mahaoya & Udabage Estates
Purchase of Vehicle and Equipment
7,470,498
Field Development Field Development
31,088,960 Term Loan Mortgage over Norwood Estate 6,140,907 Term Loan Further mortgage over property of Norwood Estate 45,000,000 Term Loan No such security since a 50 million OD facilities transferred to a 45 million Term loan 14,305,000 Term Loan Leeway of Rs.36,748,000/- available in the existing mortgage over leasehold rights over Wanarajah & Norwood estates. 2,191,712 Term Loan Leeway of Rs.36,748,000/- available in the existing mortgage over leasehold rights over Wanarajah & Norwood estates.
To meet the working capital requirements of the Company For Timber harvesting equipment,Timber forest planting & Brand marketing
For Tea factory modernisation - Maliboda
Hatton National Bank Ltd. Purpose Working Capital Requirement
120,000,000 Term Loan Primary mortgage over the leasehold right of Brombil Tea factory property and Fettereso Estate
People's Leasing Co Ltd Purpose Purchase of solid fuel boiler-Wanarajah Purchase of solid fuel boiler-Kotiyagala
9,658,600 Term Loan Primary mortgage over the boiler 8,990,800 Term Loan Primary mortgage over the boiler , Circular Saw, Woodspliter
FORM OF PROXY
I /We ..(NIC No:...) of being a member/s* of METROPOLITAN RESOURCE HOLDINGS PLC, hereby appoint; of ........ or failing him/her* Mr. Dinesh Jamnadas Ambani Mr. Lalith Jamnadas Ambani Mr. Collin William Kingsnorth Mr. David Edward Howard Mr. Michael Haglind Dr. Romesh Dias Bandaranaike Mr. Magage Sarath Wimal Fernando Mr. Gerard Victor Maurice Nanayakkara Mr.Jayampathy Molligoda Mr. Arya Keerthi Kumarasena Mr.A A Douglas Senaka Saparamadu
of of of of of of of of of of of
Colombo, or failing him Colombo, or failing him United Kingdom, or failing him United Kingdom, or failing him Dtursholm, or failing him Colombo, or failing him Colombo, or failing him Colombo, or failing him Colombo, or failing him Colombo, or failing him Colombo, or failing him
as my/our* proxy to represent me/us* and to speak and vote for me/us* and on my/our* behalf at the Fourteenth Annual General Meeting of the Company to be held on Wednesday, 30th September 2009 and at every poll which may be taken in consequence of the aforesaid meeting and at any adjournment thereof. Signed this.day of 2009 . Signature of the shareholder
* Please delete what is inapplicable.
Instructions as to the completion of Proxy Form

This form of Proxy must be deposited at No. 30/1, Bagatalle Road, Colombo 03. not less than forty Five (45) hours before the time fixed for the Meeting. 2. In perfecting the Form of Proxy please ensure that all details are legible. 3. If you wish to appoint a person other than a Director of the Company as your proxy,. Please insert the relevant details in the space provided. 4. 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. 5. In the case of joint holders the form of Proxy must be signed by the first holder. 1.

Metropolitan Resource Holdings - 2008-09

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Metropolitan Resource Holdings PLC

3. Categories of Shareholders Resident/Non Resident

Local Individuals Local Institutions Foreign Individual Foreign Institutions Total

Percentage of shares held by the public 23.62% (4,078,797 shares) Page 03

4. Distribution of Ordinary Shareholders FromTo

5. Other Information OtherInformation

Report of the Audit Committee

Sgd. G V M Nanayakkara Chairman-Audit Committee 3rd September 2009

2008/2009 Rs.Mn 2,858.2 (129.2) (131.44) (94.4) 544.6 (5.47) 31.26

No of Ordinary Shares 17,264,802

Amount (Rs.) 172,648,020/-

For and on behalf of the board

Sgd Mr. D.J.Ambani Chairman

Sgd Mr M.S W. Fernando Director

ESJAY Corporate Services (Pvt) Limited

Sgd Secretaries Date 3rd September.2009

Rule No. 6.1 (a) 6.2 (a)

Subject Non-Executive Directors Independent Directors

Complianc e Status Compliant Compliant

6.3 (a) 6.3 (b)

6.5 6.5 (a)

N/A N/A Compliant Compliant Compliant Non Compliant Compliant

6.6 6.6 (a)

Audit Committee Composition of Audit Committee

(Sgd.) S I de Silva Esjay Corporate Services (Private) Limited

(94,477,237) (36,972,062) (131,449,299) 9 10 (5.47) -

48,622,671 20,484,197 69,106,868 2.82 -

(8,883,204) (8,883,204) (0.51) -

(584,112) (584,112) (0.03) -

Earnings Per Share - Basic Dividend Per Share

Company 2008/2009 2007/2008 Rs. Rs.

7,102,669 210,136,379 1,991,064 109,049,772 947,418,899 3,489,798,350

Total Rs. 605,583,402 48,622,671 654,206,073 (94,477,237) (15,075,000) 544,653,836

265,308,222 265,308,222 265,308,222 -

8,255,537 (584,112) 7,671,425 (8,883,204) (1,211,779)

273,587,259 (584,112) 273,003,147 (8,883,204) 264,119,943

Colombo 3rd September' 2009

(65,159,096) (115,590,518) 8,226,631 69,385,666 2,226,162 (12,545,100)

(41,710,058) (149,362,319) 5,532,056 7,852,663 (1,283,033)

2,862,692 (3,720,113) (12,545,100)

Net cash from/(used in) investing activities

Company 2008/2009 2007/2008 Rs. Rs.

(654,002) 812,882 158,880

METROPOLITAN RESOURCE HOLDINGS PLC

METROPOLITAN RESOURCE HOLDINGS PLC

METROPOLITAN RESOURCE HOLDINGS PLC

METROPOLITAN RESOURCE HOLDINGS PLC

METROPOLITAN RESOURCE HOLDINGS PLC

53 years 30 years 20 years 25 years 15 years

METROPOLITAN RESOURCE HOLDINGS PLC

METROPOLITAN RESOURCE HOLDINGS PLC

METROPOLITAN RESOURCE HOLDINGS PLC

METROPOLITAN RESOURCE HOLDINGS PLC

METROPOLITAN RESOURCE HOLDINGS PLC

METROPOLITAN RESOURCE HOLDINGS PLC

METROPOLITAN RESOURCE HOLDINGS PLC

METROPOLITAN RESOURCE HOLDINGS PLC

Company 2008/2009 2007/2008 Rs. Rs. 3,827,456 3,827,456 -

Company 2008/2009 2007/2008 Rs. Rs.

INCOME TAX EXPENSES

Company 2008/2009 2007/2008 Rs. Rs.

Tax effect 9. EARNINGS/(LOSS) PER SHARE