Hemas Annual Report 2010 - 11

Enriching lives, embracing opportunities
Annual Report 2010/11
Enriching lives, embracing opportunities

The Hemas Group has been working in a wide range of industry sectors in Sri Lanka for over sixty years. From FMCG products to leisure, power generation, healthcare and transportation, our portfolio has been steadily growing and with it, the excellence and value creation we o er to every customer, business partner, supplier and shareholder we partner. Today, were growing even further, seeking new opportunities to enrich lives in households all across Sri Lanka, to improve lives and increase the quality of living of everyone we touch. The Hemas Group. Enriching lives, embracing opportunities
Contents
Financial Highlights Chairmans Review CEOs Review Financial Review Sector Review Sector Review Sector Review Sector Review Sector Review FMCG Health care Leisure Transportation Power 2 4 6 9 12 16 20 24 28 32 34 43 46 47 48 50 52 54 57 58 59 60 61 62 64 65 100 102 103 104 enclosed
Hemas Holdings PLC 1
Risk Management Sustainability Report Corporate Governance Principles Report of the Remuneration Committee Audit Committee Report Directors Interest in Contracts with the Company Board of Directors Senior Management Annual Report of the Board of Directors Financial Statements Statement of Directors Responsibilities Auditors Report Balance Sheet Income Statement Statement of Changes in Equity Cash Flow Statement Notes to the Financial Statements Share Information Five Year Summary Glossary Notice of Meeting Form of Proxy
Financial Highlights
Year Ended 31 March 2011 2010 Change % 2009
Rs.Mn. 20,000 15,000
Group Revenue
Operating Results Group Revenue Pro t Before Interest and Tax Pro t Before Taxation Pro t After Taxation Pro t Attributable to the Group Dividend Gross Cash from Operations Rs '000s Rs '000s Rs '000s Rs '000s Rs '000s Rs '000s Rs '000s 18,067,489 1,867,081 1,569,345 1,355,191 1,210,159 382,390 1,994,662 14,997,405 1,544,095 1,094,719 934,644 901,730 183,525 1,407,985 20.5 20.9 43.4 45.0 34.2 108.4 41.7 15,169,509 1,328,870 856,932 719,078 775,128 126,635 1,458,434
10,000 5,000 0 07 08 09 10 11
Rs.Mn. 1,500 1,200 900 600 300
Prot attributable to the Group
Balance Sheet Highlights Total Assets Total Shareholders' Funds No. of Shares Gearing Rs '000s Rs '000s '000s % 19,215,874 8,874,005 512,041 27.8 16,066,931 7,692,116 101,958 25.8 19.6 15.4 7.8 14,835,812 7,028,290 101,958
0 07 08 09 10 11
Rs.Mn.
Cash from Operations
32.9
2,000 1,500 1,000
Shareholder Information Return on Equity Earnings per Share* Dividend per Share* Dividend Payout Net Assets per Share* Market Capitalisation Price Earnings Ratio Market Price as at 31st March* % Rs. Rs. % Rs. Rs '000s Times Rs. 14.6 2.36 0.70 29.6 17.33 23,553,869 19.5 46.00 12.3 1.76 0.36 20.3 15.09 12,234,975 13.6 24.00 18.7 33.8 94.4 45.8 14.8 92.5 43.2 91.7 11.5 1.51 0.25 16.5 13.79 6,142,977 8.0 12.05
500 0 07 08 09 10 11
Rs.Mn. 10,000 8,000 6,000 4,000 2000
Shareholders Funds & ROE
* Comparative gures adjusted for sub division of ordinary shares in the proportion of 5:1
0 07 08 09 10 11
2 Hemas Holdings PLC
FMCG
Personal Care Home Care Food Paper Products
PROFIT AFTER TAX

Rs.Mn
636 534 519
TURNOVER
32%
08/09
09/10
10/11
HEALTHCARE
Pharmaceuticals Diagnostics & Surgical Hospitals
PROFIT AFTER TAX

Rs.Mn
232
TURNOVER
36% 68 15
08/09 09/10 10/11
LEISURE
Hotels Destination Management
PROFIT AFTER TAX

Rs.Mn
TURNOVER
6%
122 33 1
08/09 09/10 10/11
TRANSPORTATION
Aviation Maritime Freight & Logistics Courier Services
PROFIT AFTER TAX

Rs.Mn
224 163 181
TURNOVER
4%
08/09
09/10
10/11
POWER
Thermal Mini Hydro
PROFIT AFTER TAX

Rs.Mn
426 245 244
TURNOVER
19%
08/09
09/10
10/11
Chairmans Review
20% increase in
EBITDA
Rs. 1,569Mn
Profit Before Tax
The war is fast becoming a distant memory. The tranquillity of peace gives us the climate to plan for the future without apprehension. However the expectation that a great economic boom is the dividend of peace has not quite materialised. One requirement for an explosive economic boom is large infusions of foreign direct investment. This has not happened, although the world of private equity, hedge funds and sovereign funds are awash with funds, seeking opportunities outside the West now grappling with a recession. As an investment opportunity, tourism was perceived as a juicy red cherry that will attract massive in ows of investment. This has not happened. Foundations have so far been laid for only a fraction of the 15 to 20,000 rooms required to cater to an incremental million tourists. Our excellent GDP growth has not been strong enough to generate in ows of investment. Why? is the tantalising question that hangs in the air without a clear answer. There was an interesting comment by the country director of ADB that is certainly food for thought. As reported he said the World Bank has ranked the island 105th out of 183 countries in its ease of doing business classi cation. He therefore stressed the need to cut red tape, minimize bureaucracy, expedite approval processes, guarantee investment protection and have consistent policies in place to attract investments. Providers of funds are concerned with aspects outside monetary returns. Human rights, good governance and an atmosphere free of political interference are now becoming as important or possibly more important than good returns on investments. Importantly it is the perceptions that matter whatever the facts. Perceptions are reality and the real challenge is to manage perceptions. From the general macro picture I must now zoom into our world of Hemas. The business has moved on from a family business to become a major public quoted company following all the principles of good corporate governance . This has not dulled its spirit of entrepreneurship which is now entrenched in the genes of this business. Even during the days of war the company saw the opportunities and invested for the future. The sectors that bene ted from this bold approach: Hospitals, Power and Hotels, are showing a very promising pro le and the green shoots of cash and pro ts are now visible. The CEO in his report will deal in depth with the performance of the business. I will con ne myself to a few headline comments. The old heartland of the business continues to be a very strong base. FMCG had a slight blip due to changes in rates of duty that aected its major household product Diva. Remedial measures are already in place. Not withstanding this it produced a very impressive pro t number. Pharmaceuticals sustained its star performance. Aviation continued to provide good pro t growth. The Power portfolio has been restructured into a public quoted company which has an increasing emphasis in mini hydro power.
The Sector has turned in a good performance. One of the new sectors that is showing early signs of good pro tability is Shipping. The business is rapidly developing a better balance. The old core sectors are now being supported by new growth areas with very good long term potential. In terms of performance, the highlights are that sales increased by 20.5 % to Rs.18.1Bn, EBITDA increased by 19.9% to Rs. 2,493Mn. Through the re nancing of our US Dollar loans, the Group was able to reduce the nance costs from Rs.449Mn to Rs.298Mn. Pro t before tax was Rs. 1,569Mn which was a growth of 43.4%.There is a revaluation gain of Rs. 24Mn behind the pro t number. Earnings showed a growth of 34.2% to be Rs. 1,210Mn. A key feature of this business and one of its major strengths is its cash ow. Cash generated increased by 41.7% to Rs. 1,995Mn. Your Board has paid an interim dividend of Rs. 0.25 per share and proposed a nal dividend of Rs. 0.25 per share. As for the future, we have every reason to be optimistic. The emerging pro le has brought into focus the need to determine and design the best structures that will provide optimum corporate governance. This will be a key area of my focus in the coming year. I must congratulate the CEO and his team for a very good performance. I am particularly delighted with the energy and enthusiasm with which they have dealt with the challenges of growth in the new sectors. I thank my colleagues on the Board for their strong support. It was a challenging year for the Audit Committee with the growth of new business units and the resulting challenges of risk management. It was a great comfort to me that the Audit Committee was in the safe of hands of Maithri Wickremesinghe. Everything we have achieved is due to the ne contribution made by our employees at all levels of the business. My Board and I express our deep appreciation of their contribution to the results of this business.
Lalith De Mel Chairman 26th May 2011
CEOs Review
21% increase in
Revenue
Rs. 1,210Mn
Earnings
I take great pleasure in reporting the performance of Hemas Holdings PLC and its subsidiaries for the year ended 31 March 2011. For the year under review, your company has recorded a consolidated revenue of Rs.18.1Bn, a year-on-year growth of 20.5%, and earnings attributable to equity holders of Rs. 1,210Mn, a year-on-year growth of 34.2%. Our Hospitals, Hotels and the Pharmaceticals Distribution businesses have been the key drivers of revenue growth for the year with 45.4%, 32.6% and 24.2% growth rates respectively. With regard to growth in earnings, the businesses of Hotels, Power and Pharmaceuticals Distribution have led the way with growth rates of 105.9%, 74.4% and 23.7% respectively, whilst hospitals too contributed positively by reducing its startup losses by 49.0% during its second full year of operation. The past year turned out to be an important one for the company as well as the country as a whole. During 2010, the rst full calendar year in post-war Sri Lanka, the GDP grew by 8.0% in real terms vis-a-vis a real growth of 3.5% in 2009. The past year has seen a high level of interest in many sectors of the economy from both domestic and foreign investors in terms of direct and indirect investment. Both the primary and secondary equity markets remained buoyant throughout the year. The stock market witnessed many successful IPOs, with great enthusiasm on the part of both domestic and foreign investors. In the secondary market too, investor con dence and optimism continued to gather momentum as re ected in the 92.9% growth in the All Share Price Index during 2010, following up on the 127.1% growth recorded in the previous year. During the year under review, the share price of Hemas appreciated 91.7% (after adjusting for 5:1 split which took place in June 2010), and with the annual dividend payout of Rs. 0.70 per share, the total return generated by Hemas shares for the year was 94.6%. A year in which diversi cation paid o... This years Group performance was marked by a healthy growth in revenues and pro ts despite our biggest and most pro table business, FMCG posting a decline in pro ts. This was possible as a result of the strong performance of our Pharmaceuticals business, the steady build up of our Hospital revenues, the resurgence in our Hotels business and the excellent year enjoyed by our Renewable Energy business. It was a year in which our past investments in related diversi cations have brought about stability and growth to our business portfolio. Our FMCG business grew its revenues by 10.5% to close the year at Rs. 5.8Bn although pro ts declined by 18.4% to Rs. 519 Mn. This was mainly due to the introduction of a CESS on selected imports impacting our margins in the households category, together with the continuing upward momentum of palm oil prices which resulted in a sharp rise in raw material costs of our personal wash products. However, through timely management interventions the business was able to overcome these setbacks, and we expect that margins will be gradually restored over the coming year. On the other hand, it was encouraging that the underlying fundamentals of the business remained strong, with our key categories performing well in the market. Our agship brand, Baby Cheramy, continued to be the market leader in baby care and the brand had grown steadily in many of the baby care categories, on the back of its relaunch in 2009. Kumarika hair oil
introduced two new variants in January this year, oering the customer wider choice and increasing its shelf presence. Diva, was adversely impacted by the CESS on imports which resulted in some supply issues last year. The business responded positively by setting up local manufacturing arrangements and the product is now sourced locally thus restoring its competitive position and in fact being better placed to pursue its mission of bringing a superior solution for washing clothes to Sri Lankan consumers. Our toilet soap brand, Velvet, enjoyed a successful year following its relaunch in December 2009. Continuous brand building eorts led to a much strengthened market position, and Velvet has become the third strongest brand in the adult toilet soap category, outperforming most of its competitors. Our Pharmaceuticals Distribution business, which has been a steady performer over the past years, demonstrated a strong performance yet again with revenues growing by 24.2% and net pro ts growing by 23.7%. With a market share of 16.4% (source: IMS), the business continued its dominance as the leader in the domestic drug distribution market, which saw a rapid growth during the year. Thus far, the management team has proactively and successfully responded to the challenging industry dynamics. From a consumer standpoint, the market continues to shift away from branded products towards generics and branded generics. From a manufacturers standpoint, value additions by the Distributor in a multitude of aspects is essential for the sustainability of the business. From a competitive standpoint, the market oers an abundance of choice in terms of ecacy and aordability. We have addressed these factors successfully through our rich distribution portfolio that keeps evolving to address the changing market needs and our superior service oering that is customized to each principal. During the year under review, the business further enhanced its portfolio by securing a new agency, Mankind, which specializes in acute and chronic therapies. In an eort to expand our presence in the currently underserved health and wellness market, we have established a dedicated OTC division to provide strategic and operational focus in this area. We have already launched several new products in the market in partnership with overseas principals, and we believe this is the kind of related diversi cation that will augment the core business well in the long term. Hospitals, Hotels and Power in development mode... Our Hospitals business, which currently consists of a 100 bed hospital in Wattala and a 50 hospital in Galle, grew its top line by 45.4% and reduced its losses by 49.0% during the year under review. Within a mere two years of operation we are being recognized as one of the key industry players, and our consumer franchise is growing on a daily basis. Our unique oering in the market was complemented with the accreditation by the Australian Council of Hospital Standards Institute (ACHSI). With this, Hemas Hospitals in Wattala and Galle have become the only internationally accredited hospitals in the country. With the promising results of our unique healthcare delivery model, which has a singular focus on patient care, we have embarked on a new 50-bed project in Battaramulla. Whilst we anticipate the new hospital to be operational in mid 2012, we intend to expand our hospital network into key suburbs in Colombo and across key cities in the island in the years to come.
CEOs Review
Our Hotels business performed well to post a 32.6% growth in revenues and a 105.9% growth in pro ts for the year under review. During the rst half of the year, we invested Rs. 530Mn to renovate and upgrade Club Hotel Dolphin as a four star property. Subsequently, the hotel has managed to attract signi cantly higher yields without losing the high level of occupancies it used to enjoy in the past. On the back of the tourism resurgence, Hotel Serendib and Hotel Sigiriya too performed remarkably well, with higher rates and occupancies. The year under review also saw us partnering with the Minor Group in the acquisition of Kani Lanka Resort & Spa, where a stake of 19.9% was acquired by Serendib Hotels PLC with the balance being acquired by Minor. Serendib is also operating as the management company of the newly acquired Kani Lanka. A key priority for the coming year is the repositioning of Hotel Serendib as an upmarket 'design hotel'. We expect that the repositioning will enable us to target the product and service oering to a new and more sophisticated clientele, where we would be able to secure much higher yields. We have budgeted Rs. 650Mn for the project with Rs. 501Mn to be raised through a rights issue, which has already received the approval of shareholders. There will be more development activity in the coming years, as we intend converting our undeveloped leisure properties into unique propositions. Our Power business too enjoyed a successful year with pro ts growing by 74.4% although revenue growth was limited to 18.5%. The disproportionate growth in pro ts was a result of a debt restructuring in our Thermal Power business, Heladhanavi, leading to a signi cant reduction in the cost of borrowing. From an operational standpoint, growth was also driven by the Mini Hydro plants, which witnessed an unprecedented year in terms of rainfall. This, coupled with our increased investment into this sector, saw the pro t contribution of Renewable Energy to the Power business increasing to nearly 45.0% from 25.0% last year. This contribution is expected to increase even further over the coming years, as we increase our exposure to Renewable Energy through more and more investments. Our latest Mini Hydro project, Magal Ganga, which is currently under development, is expected to commence commercial operations in September this year, and this will add a capacity of 2.4MW to our portfolio. Going forward, we will pursue more renewable energy opportunities in line with the government's target of generating 15.0% of the national energy supply through non-conventional renewable energy sources by 2015. We will also look to diversify our investments outside Sri Lanka by focusing our competencies on pro table oshore opportunities. Our Transportation business, which consists of Aviation and Maritime, grew its top line by10.5 % and pro ts by 23.8% year-onyear. The Aviation arm, which experienced an ordinary year in 2009/10 with a pro t decline, recovered well during the year under review, on the back of an impressive performance by our GSAs. The Maritime arm largely consists of our ship agency business, which performed remarkably well during the year under review. Going forward, we intend expanding our scope in the maritime industry and establishing our presence in a more signi cant manner by exploring opportunities in areas such as asset ownership and port operations. Developing our talent for the next phase of growth... With the increasing pace of change in the business world, today's competencies that make us winners in the market place become
8 Hemas Holdings PLC Annual Report 2010/11
fast irrelevant for tomorrow's challenges. This is particularly true in the case of Sri Lanka, where the economy is expected to take o in light of the positive factors such as capital investment into infrastructure development and growth in the middle class segment. These new developments will present us new challenges and new opportunities. We have realized the need to keep our top leadership up-to-date with change and prepare our next levels to take on future challenges. Through timely and focused interventions in the form of leadership development, technical training and executive coaching we plan to build new relevant capabilities while enhancing our existing capabilities. By doing this we aim to have a pool of talent that will drive Hemas successfully in the next phase of growth. In line with our mission of Enriching Lives, we continue to place the highest emphasis on sustainability. As we grow in multiple directions, we recognise the need to have a strong system of Governance in place. Over the year we have strengthened board processes, improved our risk management capability and sharpened the quality of management information. One subject that has taken up the special attention of the Board is that of succession and a Board Nomination subcommittee was set up to deliberate on this. Whilst the year under review proved to be a decisive one for Hemas, the coming year is likely to be even more decisive in terms of executing our long-term growth plan. We have committed signi cant investments and resources behind the development plans of Hospitals, Hotels and Power, and I am con dent of the successful delivery of all these projects. We will also maintain a high degree of focus in growing the underlying earnings of FMCG and Pharmaceuticals, with renewed product oerings and expansion into new markets. As always, we will continue to keep a close eye on acquisition opportunities that will t in well with our business portfolio. In conclusion, I wish to thank the Board of Directors and the Chairman for the guidance and wisdom provided, in steering the Group forward whilst keeping an even keel. My congratulations and thanks as always to Team Hemas for their commitment and excellence in delivering this year's successful performance, and I count on their support as we strive to accelerate growth in the years ahead. Our business would not prosper if not for the enduring support of our customers and business partners, and to them I say a big, Thank You. Finally, my sincere thanks go out to all our shareholders for the con dence you have placed in Hemas and I can assure you of our best eorts to deliver superior business results in the years to come.
Husein Esufally Chief Executive Ocer 26th May 2011
Financial Review
Revenue For the year under review the Group recorded consolidated revenues of Rs.18.1Bn, re ecting a growth of 20.5% over the previous year. Revenue growth was driven by the Leisure and Healthcare sectors, which grew by 37.6% and 29.0% respectively. Leisure sector revenues were boosted by higher occupancies as well as increased room rates on the back of a post-war tourism revival. The Healthcare sector, which consists of Pharmaceuticals and Hospitals, enjoyed an excellent year, where our Pharmaceuticals turnover increased by 24.2% on the back of strong market growth and Hospitals turnover increased by 45.4% as a result of the successful build up of business volumes during its second year of operations. Revenue growth of 18.5% in the Power sector was driven largely by an increased energy output by our mini hydro power plants due to higher rainfall and upward revisions of fuel prices, which get passed through to the revenue of our thermal power plant. The Healthcare sector, which grew its revenues by 29.0%, which is well above the Group revenue growth of 20.5%, increased its revenue contribution to the Group from 33.7% to 36.1%, making it the largest revenue contributor for the year ended 31 March 2011. Moreover, the sector accounted for 47.7% of the growth in consolidated revenues. Our FMCG sector experienced a modest year in terms of revenue growth, posting a 10.5% increase for the year, but it was encouraging to see that revenue growth was almost entirely driven by volume growth, and we have managed to successfully defend our market positions in many categories. FMCG accounted for 18.0% of the growth in consolidated revenues, and as a result of its modest growth in turnover, the Sectors contribution to overall revenues have declined from 35.0% to 32.1%. Operating Pro t Operating Pro t of the Group increased by 26.1% over last year and the operating margin increased from 9.7% to 10.2%. Of the 0.5% improvement in operating margins, -0.2% is attributable to changes in revenue mix and 0.7% is attributable to changes in pro tability. The Leisure sector posted the largest increase in operating pro ts, driven by an excellent winter season enjoyed by all our hotels, and as a result the sector operating margins improved from 9.3% to 17.6%. The Transportation sector too, saw a healthy growth in operating margins, from 31.5% to 35.8%, as a result of increased business volumes on the back of higher passenger and cargo movements whilst successfully managing operating costs. On the other hand, FMCG suered a drop in margin of 3.5%, from 13.0% last year to 9.5% this year, due to the signi cant increase in raw material prices and the new CESS levied on certain imports. We expect the negative impact on FMCG margins due to the increase in input costs and CESS to be reversed during the course of the year through the corrective actions that we have already taken. Table 2: Operating Margin Analysis Revenue Mix Operating Margins Margin Impact 09/10 10/11 09/10 10/11 Mix Pro tability Total % % % % % % % FMCG 35.0 32.1 13.0 9.5 0.0 -1.2 -1.2 Healthcare 33.7 36.1 6.6 7.3 -0.1 0.2 0.2 Leisure 5.0 5.7 9.3 17.6 0.1 0.4 0.5 Transportation 4.4 4.1 31.5 35.8 -0.1 0.2 0.1 Power 19.0 18.7 14.8 15.1 0.0 0.1 0.1 Other 2.9 3.4 -58.1 -23.2 -0.2 1.0 0.9 Group 100.0 100.0 9.7 10.2 -0.2 0.7 0.5
Annual Report 2010/11 Hemas Holdings PLC 9
Group Revenue Break-up

Rs. Mn 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 % 50 40 30 20 10 0 -10
05/06 06/07 07/08 08/09 09/10 10/11 FMCG Healthcare Leisure Transportation Power Others
Group Revenue Growth
Operating Pro t
Rs. Mn 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 % 60 50 40 30 20 10 0 -10 -20 -30
05/06 06/07 07/08 08/09 09/10 10/11 Operating Pro t Operating Margin Operating Pro t Growth
Table 1: Revenue Analysis Revenue Mix 09/10 FMCG 35.0% Healthcare 33.7% Leisure 5.0% Transportation 4.4% Power 19.0% Other 2.9% Group 100.0%
Growth Contribution to Growth 10/11 10.5% 18.0% 29.0% 47.7% 37.6% 9.2% 10.5% 2.3% 18.5% 17.2% 39.4% 5.7% 20.5% 100.0%
Revenue Mix 10/11 32.1% 36.1% 5.7% 4.1% 18.7% 3.4% 100.0%
Financial Review
Finance Cost
Rs. Mn 500 400 300 200 100 0 20 16 12 8 4 0
Finance Costs Group nance costs declined 33.7% from Rs. 449Mn to Rs. 298Mn. This coupled with the increase in operating pro ts, has pushed the interest cover to 6.2 in comparison to 3.3 reported during the previous year. The overall drop in nance costs was largely attributable to the 53.6% drop in nance costs in the Power sector, which re nanced the working capital facilities of Heladhanavi through USD borrowings, to take advantage of favorable Dollar interest rates at a time when the Rupee remained strong. Our Healthcare sector too recorded a lower nance cost due to repayments of the long term loans of Hospitals and the overall drop in interest rates. The Leisure sector showed an increase in nance costs during the year under review mainly due to the increase in gearing levels at Serendib Hotels to fund the refurbishment of Hotel Dolphin and the acquisition of the Kani Lanka Resort and Spa. Overall borrowings of the Group increased to Rs. 4,080Mn from Rs.3,186Mn, increasing the gearing ratio to 27.8% from 25.8% in 2009/10. Additional borrowings were mainly used to fund the expansion plans of our Leisure sector.
05/06 06/07 07/08 08/09 09/10 10/11 Finance Cost Interest Cover
Taxation
Rs. Mn 450 360 270 180 90 0 % 30 24 18 12 6 0
Taxation With the improved performance of most of our businesses, the Group taxation increased to Rs. 214Mn from Rs. 160Mn recorded last year. However, the eective tax rate declined marginally to 13.6% from 14.6% recorded the previous year, as a result of the improved performances of low-tax paying and tax free businesses such as Hotels and Power. Net Pro t The Group achieved a commendable growth in net pro ts of 45.0% to record Rs. 1,355Mn for the year under review. The earnings attributable to the Group stood at Rs. 1,210Mn, in comparison to Rs. 902Mn posted in 09/10, a growth of 34.2% year-on-year. Due to the impact on sector margins, FMCG pro ts declined by 18.4% from last year. The buildup of our Hospitals business and the impressive performance of our Pharmaceutical business boosted the Healthcare sector pro ts by 239.2% to record Rs. 232Mn this year. The Leisure sector achieved a net pro t of Rs. 122Mn in comparison to Rs. 33Mn the previous year, a growth of 263.4% mainly driven by an excellent winter season. The reduction in nance costs and the increase in the hydro power performance, helped boost the Power sector pro tability by 74.4% over last year. Pro ts of Heladhanavi were marginally impaired by the drop in the nonescalable component of the revenue mix, which was however mitigated by the absence of a high maintenance cost for the year under review. Our Transportation sector too showed a growth in net pro t of 23.8% to record Rs. 224Mn for the year, while maintaining a net margin of 30.5%.
05/06 06/07 07/08 08/09 09/10 10/11 Taxes E ective Tax Rate
Pro t After Tax

Rs. Mn 1,500 1,200 900 600 300 0 % 60 45 30 15 0 -15 -30 -45 -60
05/06 06/07 07/08 08/09 09/10 10/11 Pro t After Tax Pro t Growth Net Margin
Table 3: Net Margin Analysis Revenue Mix PAT Margins Margin 09/10 10/11 09/10 10/11 Mix Pro tability Total FMCG Healthcare Leisure Transportation Power Other Group
35.0% 33.7% 5.0% 4.4% 19.0% 2.9%
32.1% 36.1% 5.7% 4.1% 18.7%
12.1% 1.4% 4.4% 27.2% 8.6% 6.2%
9.0% 3.6% 11.8% 30.5% 12.6% -27.3% 7.5%
-0.1% -0.1% 0.0% -0.1% 0.0% -0.2% -0.3%
-1.1% 0.7% 0.4% 0.1% 0.8% 0.7% 1.6%
-1.2% 0.7% 0.4% 0.1% 0.7% 0.6% 1.3%
3.4% -51.8%
100.0% 100.0%
The Group net margin stood at 7.5% in comparison to 6.2% recorded the previous year. The revenue mix during the year had a negative impact of 0.3% on net pro t margins, whilst the sector pro tability had a positive impact of 1.6% on the overall net margin. Cash Flow The Group net operating cash ow for the year under review stood at Rs. 1,995Mn, a growth of 41.7% year-on-year. The growth in pro tability was translated into a healthier growth in net operating cash ow, with the reduction in cash tied up in working capital. The net cash from investing activities increased to Rs. 1,245Mn from Rs. 650Mn last year, fuelled by our investments in Hotels and the Power sector. The year under review saw an increase in Rupee borrowings of Rs. 259Mn and an increase in Dollar borrowings equivalent to Rs. 229Mn. These increases are largely attributable to investments in the Leisure sector and the re nancing of Heladhanavi loans. A sum of Rs. 135Mn was raised by our Power sector in the form of a preference share issue. Net cash ow from nancing activities was Rs. 339Mn this year, vis--vis a cash out ow of Rs. 21Mn last year. Return on Capital Over the last three years the return on capital employed of the Group declined due to the high level of investments across the Group. This year the Group was able to improve its return on capital employed to 13.6% from 12.2% recorded last year, mainly due to the improvement in pro tability and asset utilization. With most of our businesses enjoying a good year, interest cover improved from 3.3 to 6.2, whereas the gearing ratio increased from 25.8% to 27.8%, contributing to a higher return on equity of 14.6% for the year under review, compared to 12.3% during the previous year. Stock Performance During the year the secondary market activity of Hemas shares improved signi cantly following the 5:1 stock split that took place in June 2010. Dividends of Rs. 0.70 per share were paid out to shareholders during the year and the total shareholder return for the year ended 31 March 2011 was 94.6%.
Cash Flow
Rs. Mn 2,500 2,000 1,500 200 1,000 500 0 0 % 600
400
-200
05/06 06/07 07/08 08/09 09/10 10/11 Operating Cash Flow Pro t after Tax Operating Cash Flow Growth
Table 4: Return on Capital Operating Margin Asset Turnover Assets / Capital Employed ROCE Interest Cover Eective Tax Rate Gearing ROE 06/07 12.8% 1.10 1.32 18.6% 5.5 27.5% 33.0% 21.0% 07/08 10.3% 1.15 1.29 15.4% 4.2 8.6% 31.4% 19.4% 08/09 8.8% 1.08 1.27 12.1% 2.8 16.1% 32.9% 11.5% 09/10 9.7% 0.97 1.29 12.2% 3.3 14.6% 25.8% 12.3% 10/11 10.2% 1.02 1.31 13.6% 6.2 13.6% 27.8% 14.6%
FMCG
Sector Review FMCG

The dedicated innovation centre works towards enhancing value oering in products and creating new additions to our existing product range.
The Fast Moving Consumer Goods (FMCG) sector strives to enrich the consumers lifestyle by manufacturing and marketing a wide range of products in the personal care, personal wash, home care and food market spaces. Sector revenue and net pro t stood at Rs. 5.8Bn and Rs. 519Mn respectively. This is an increase of 10.5% in terms of revenue and a reduction of 18.4% in terms of net pro t, when compared to the previous year. Reduction in pro tability was mainly due to the unfavorable CESS charged on key imported materials. When eliminating the CESS impact, the business showed steady growth in underlying pro tabilities. The overall FMCG market grew by 23.7% to Rs. 141Bn during the scal year.The key growth segments for the Industry were food and beverages segment, personal care segments and home care which grew by 16% , 9% and 5% respectively, against -4%, 13% and 10% growth posted the previous year (Source: LMRB). The year 2010 saw a higher growth in demand from urban markets, while the growth in rural markets, leveled o during the second half of 2010. Amidst strong competition and challenging market conditions, the sector maintained its market position through continuous eorts to oer trusted and exceptional products that oer greater satisfaction to consumers. Timely management intervention and a focus on basics enabled the company to overcome the challenging environment. Our FMCG product portfolio continues to evolve with the changing needs of the Sri Lankan consumer. Meeting the evolving needs of our consumers takes priority as the nation experiences the dividends of peace and records strong economic growth with corresponding developments in consumer behavior and life style. Our agship brand Baby Cheramy continued to maintain its stance as the market leader in the baby care category. Following the brand re-launch in 2009, Baby Cheramy has witnessed healthy growth in many of its product categories in 2010/11, in spite of continuous challenges faced by competition. Clogard our oral care brand, was re-launched in the month of September with a stronger positioning statement a unique combination of Clove Oil and Fluoride oering double protection
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from cavity causing germs. The brand continues to consolidate its footprint in the oral care segment with plans to further expand in the future. Kumarika, the market leader in the hair oil segment was successfully re-launched in January 2011 oering consumers natures goodness to beautiful hair through its range of hair care products. Our dedicated research and development team introduced three new variants in the herbal hair oil segment addressing speci c needs of the consumers. Following the re-launch, the category has seen a growth in its topline, and looks forward to maintaining this momentum. The year under review, saw the company in collaboration with renowned beauticians, further enriching the lives of its consumers, by conducting workshops on best practice in hair care . Diva detergent, our washing powder, continued to be market leader in terms of volume generated. During the nancial year, the margins of the brand were adversely aected by the CESS levied on certain imported materials. The company has taken measures to source the materials locally and commence manufacturing within our production facility at Dankotuwa. This would help negate the negative tax implications experienced during the year whilst restoring category margins in the years to come. Velvet marked a successful year in the personal wash category, following its re-launch in December 2009. The brand was able to strengthen its position in the market through continuous eorts in brand building and product improvement. The success of these eorts was evident with Velvet becoming the third strongest brand in the adult toilet soap category, outperforming most of its competitors. Fems, the sanitary napkins brand, was re-launched in the month of November with enhanced quality and product features aimed at oering a dierentiated product from the competition. Packaging was upgraded to be in line with the brands new positioning - Purity & Comfort. An integrated communication campaign covering all major media channels was launched to create awareness among consumers. The re-launch was well received by consumers and showed much growth potential in strengthening its market presence.
Mr. Pop is our key product in the food segment which is very popular among kids. Chatters our latest addition to the segment was introduced in 2011 to satisfy the taste buds of teenagers. Chatters made its entry with three key avours, namely BBQ, Chillie and Pizza. We will continue researching diverse target audiences, and focus on adding value to our products. During the year we commenced operations in Bangladesh with the launch of Kumarika hair oil. Encouraged by the positive response received in the market, we invested in a manufacturing facility in Bangladesh and are con dent that our investment will enable us to cater to the growing demand in the market, and open new opportunities. Our state of the art production facility at Dankotuwa continues to be recognized for its manufacturing excellence and has won several accolades making it one of the most ecient factories in Sri Lanka. Among the awards were the National Productivity Gold Award given by the National Productivity Secretariat, the bronze medal for National Safety, and the Ceylon National Chamber of Industries (CNCI) Achievers Gold award. The awards were earned by the sector under the National level Extra Large category in the manufacturing segment and were also able to secure First place in National Quality Award. During the last few years the modern trade channel has been growing at a steady pace and has grown three fold since 2000. Today the contribution of modern trade in Sri Lanka has grown to 16%. The Company also showed an increase in modern trade where it enjoyed a revenue increase of 23.9% through the modern trade channel. We have understood the importance of continuously revisiting our strategies to enhance our competitive edge in the market and would be reviewing our product oering and will focus on the consumers who patronize these channels. Our management team continues to work hard towards strengthening our existing product portfolio and identifying future business opportunities. The dedicated innovation centre works towards enhancing value oering in products and creating new additions to our existing product range. The company is con dent that this innovative culture would be the platform for a sustainable growth in the future.
HEALTHCARE
Sector Review HEALTHCARE

Hemas Hospitals became the rst group of hospitals in Sri Lanka to be awarded with an International Accreditation by the Australian Council on Health Standards International (ACHSI)
Hemas Healthcare Sector, which comprises pharmaceuticals distribution and hospitals, has grown to become one of the most sought after healthcare product and service providers of Sri Lanka. For the year under review, the sector posted revenues of Rs. 6.5Bn and a pro t of Rs. 232Mn. Compared to the previous year, sector revenues and pro ts have grown by 29.0% and 239.2% respectively. The steady buildup of our hospital patient volumes in Wattala and Galle has enabled us to signi cantly reduce startup losses during 2010/11 compared to 2009/10, leading to a disproportionately higher increase in sector pro ts compared to revenue growth. On the other hand, our pharmaceuticals business enjoyed one of its most successful years, posting a healthy growth in revenues and pro ts bene tting from eciencies in our integrated supply chain management and boosted by high growth in the industry. Over the years, the pharmaceuticals industry has seen a shift away from multinational brands to branded generics whilst experiencing an increase in the level of competitive intensity. In this challenging environment it was a creditable achievement by Hemas to retain its market leadership position with a share of 16.4% (source: IMS). Both revenues and pro ts of our Pharmaceuticals business grew in excess of 20.0% and the fact that such a high level of pro t growth was achieved in spite of incurring market development expenses to expand our over-thecounter (OTC) business is notworthy. The OTC Division, which was set up to provide greater focus in the rapidly growing health and wellness segment, is in the process of building an attractive and innovative portfolio of products catering to consumer segments with a clear need for eective solutions to their problems which would be freely available for purchase over the counter. The Company launched two new brands namely Solo, a low calorie non-nutritive sweetener and Reflex, a dietary supplement known to help alleviate symptoms associated with Osteoarthritis. Both categories have great market potential based on the growing incidence of diabetes and osteoarthritis, and the company believes that the two new brands will play an important role in enriching the lives of consumers who are deprived of a good quality of life. With regard to our core pharmaceuticals business, we managed to secure a new agency, Mankind, which specializes in Acute and Chronic therapies, in October 2010. With this new addition, our distribution portfolio now stands at 26 agencies. The implementation of our tailor-made redistribution system has facilitated faster decision making and tracking online sales information anywhere in the world. Deployment of palm top devices to our sales force has provided the organization with an ecient mechanism to reach customers faster. Our hospitals in Wattala and Galle, which completed two years of operations, experienced an impressive buildup of business volumes during the year, reaching positive EBITDA levels within a short span of time. During the year under review, Hemas Hospitals became the rst group of hospitals in Sri Lanka to be awarded with an International Accreditation. The Australian Council on Health Standards International (ACHSI), which awarded the accreditation, evaluated both our hospitals under three broad categories of clinical, support services and corporate. The fact that this was accomplished within a short period of two years is a great compliment and a re ection of the high standards we maintain.
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We at Hemas have taken measures to support the governments eorts in enriching lives of senior citizens during their golden years and have introduced Lengathu Sathkara, a loyalty scheme to ease nancial burdens of patients during times of illness. For the rst time in Sri Lanka, Hemas introduced Suwa Savi, a special health screening package for state sector employees. Another addition to our unique healthcare proposition is the Health Screening Unit, Suwatha Piyasa, which was established for early detection of diseases. Hemas also signed up for a bene t package together with Hatton National Bank to introduce Maathru Singithi Kiriketiyo, where both parties would contribute to a minors account at the birth of the child. Our xed priced packages Maathru and Suwa Sathkam continue to be popular among the local community as is evidenced by the continued increase in daily census numbers. Our state of the art laboratories were awarded ISO 15189 and ACHSI accreditation, which is a clear re ection of the high standards in quality and processes. We have recently commissioned a fully integrated bar-coding, inter-phasing and fully automated laboratory system at both Hospitals, the rst of its kind in Sri Lanka. Our new laboratory in Ragama that opened in September 2010 has performed very well during its rst six months of operation. This laboratory is equipped with automated biochemistry and haematology analyzers, providing speedy and accurate laboratory test reports round the clock. Hemas Hospitals continued its pioneering stance in its healthcare business by introducing Capsule Endoscopy, a revolutionary new diagnostic tool for the detection of small bowel disease, becoming the rst Sri Lankan hospital to provide this diagnostic tool in Sri Lanka.
The growing elderly population, changes in food habits and lifestyle have given rise to many non-communicable diseases (NCDs). Every year the Government spends approximately Rs. 900Mn to treat patients that suer from NCDs. In recognition of the growing importance of NCDs, the Government is hoping to implement a three-year, nation wide plan, to control the growth of Non Communicable Diseases. Hemas plans to invest in expanding its chain of hospitals. Two new hospitals will be built in Battaramulla and the Colombo South region, which are expected to be operational by late 2012. Our model in healthcare delivery is gaining wide acceptance, as Hemas is becoming a trend setter in the industry.
LEISURE
Sector Review LEISURE

Going forward, our hotel sector expects to enter a new era in the tourism industry with unbeaten service excellence and experiences, repositioning them with a distinctive edge in the hospitality industry.
The Leisure Sector constitutes the Serendib Group of Hotels and Diethelm Travels, a key inbound tour operator in Sri Lanka. The Serendib Group, which is a 51% owned subsidiary of Hemas Holdings, includes Hotel Serendib in Bentota, Club Hotel Dolphin in Waikkal and Hotel Sigiriya located within the cultural triangle. The year saw an addition to the Serendib familiy in the form of Kani Lanka Resort and Spa in Kalutara, increasing the total room strength of the group from 320 last year to 422. For the year under review, the leisure sector generated revenues of Rs. 1.0Bn, a 37.6% year-on year growth. Sector performance marked a good year recording a pro t attributable to the Group of Rs. 51Mn, compared to a loss of Rs 6Mn posted in 2009/10. SECTOR VS GROUP
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The tourism industry experienced remarkable growth of 46% in 2010 recording 654,476 tourist arrivals, the highest over the last decade (Source: SLTDA). The year saw improved yields with the end of the ethnic con ict which persisted over the last three decades. Overall occupancy rates increased by 22.0% recording an average of 70% and the industry is expected to grow considerably over the coming years. Our hotels recorded an impressive average occupancy in excess of 80% for the period under review. Club Hotel Dolphin was upgraded at a cost of Rs. 530Mn and reopened in October 2010 with the proposition "Best of Both Worlds". The Hotel experienced improved yields during the winter season and has been endowed with a dual personality of a vibrant and active PLAY area with one of the longest pools in South Asia that sharply contrasts with its peaceful and quiet PAUSE area that aords guests absolute calm and privacy delivering on the Best of Both Worlds proposition. Club Hotel Dolphin achieved an annual occupancy of 84% backed by an increased room strength of 150 which includes charming villas and suites. For the year under review, the hotel posted a revenue growth of 12%. The hotel won the ITS Red Star Award for the second consecutive year for outstanding standards & customer satisfaction from REWE group, one of Germanys largest tour

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operators and the Travellers Choice Award in the family hotel category in 2010 by Trip Advisor. Club Hotel Dolphin was also recognized by the British tour operator, Hayes & Jarvis which bestowed Hayes & Jarvis Unmistakable Value Preferred Partner Award for outstanding contribution and service excellence during the year. Hotel Serendib achieved a revenue growth of 52% whist maintaining a bottom line growth of 872%. The year saw the Hotel enjoy higher occupancy rates boosted by an excellent winter season enjoyed by most resort hotels and recorded a year round occupancy of 80%.The Group will upgrade and reposition Hotel Serendib and renovations have now commenced and are expected to be completed in time for the peak of the coming winter season, preserving the charm of the Bawa architecture of the hotel. Hotel Sigiriya posted a revenue growth of 66% and a bottom-line growth of 945%, whilst showing an average occupancy of 71% in comparison to 53% recorded the previous year. The year saw the completion of the refurbishment on hotel rooms which commenced in late 2009, upgrading all rooms to the superior category. The Serendib Group acquired a 19.9% stake and will manage the Kani Lanka Resort and Spa, a 105 room four star resort, adding a fourth resort to the Groups hotel arm. Under the management of Serendib Group, the hotel has maintained an average occupancy of 90%. A luxury hotel is also being developed adjacent to the current hotel, under the internationally acclaimed Anantara
branded resorts and would be among the rst few international luxury hotel chains to cross the threshold in post-con ict Sri Lanka. Diethelm Travels, a strategic partnership with Diethelm Group, enjoyed a good year with the positive outlook of the country enabling growth within the destination management market space. The notable volume increase in the German and Indian markets accelerated the revenue growth of the company. The year ahead would be part of a momentous phase for the tourism industry and the Government has declared 2011 as Visit Sri Lanka year, to position Sri Lanka as a premier tourist destination in Asia. The Sri Lankan tourism Industry anticipates an investment of USD 3Bn to increase the national room strength to 36,000. Going forward, our hotel sector expects to enter a new era in the tourism industry with unbeaten service excellence and experiences, repositioning them with a distinctive edge in the hospitality industry.
TRANSPORTATION
Hemas Holdings PLC
Hemas Holdings PLC
Sector Review TRANSPORTATION

Our Aviation businesses, which focus on delivering superior value to our customers and strategic partners, enjoyed higher volumes in passenger and cargo movement, resulting in revenue growth of 16.3%.
The Transportation Sector of the Group has business interests in the Aviation, Maritime and Integrated Logistics segments. With the expansion of the overall portfolio and strong relationships with our key strategic partners, the Sector posted overall revenues of Rs. 734Mn growing by 10.5% over last year, with the pro t after tax growing by 23.8% to Rs. 224Mn. From a national perspective, the transportation industry grew by 11.4% during the calendar year 2010 (Source: CBSL), the highest recorded growth over the last three years. Ongoing development of seaports and airports as well as road and rail networks will open up a plethora of opportunities for the industry as a whole. SECTOR VS GROUP
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Our Aviation segment comprises airline representation and the outbound travel business. The recovery of global economic conditions was re ected through higher passenger and cargo movements during the year. Our Aviation businesses, which focus on delivering superior value to our customers and strategic partners, enjoyed higher volumes in passenger and cargo movement, resulting in revenue growth of 16.3%. Hemas Travels and its leisure arm, Prime Destinations, performed satisfactorilyin a tough, competitive environment. The company continued its focus on developing value-added products and services to complement service oerings and was successful in attracting and retaining key customer accounts during the year. Our GSA division did well to enhance their business, with Malaysia Airlines enhancing frequencies out of Colombo with a daily service to Kuala Lumpur from March 2011 and Emirates enhancing their frequencies to 28 ights a week during the year. Our portfolio expanded to include Ukraine International Airlines which started operations to Colombo in December 2010. Other Sector GSAs which include Kenya Airlines, Alitalia, Druk Air, Maldivian and BMI together with the ground supervision services for Rossiya Airlines and Travel Service helped to further enhance our Aviation performance with strong cargo and passenger sales.
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The Maritime industry recovered globally during the year. Container handling at the Port of Colombo grew by 15% over last year, while transshipment cargo grew by 13% in the same period. Accordingly, our feeder agency business and maritime services division expanded its business despite price competition and ended the nacial year with a revenue growth of 25.2%. Our investment in Mercantile Shipping Company PLC (MSL) has given us the opportunity to participate in maritime asset ownership where two vessels have been chartered out internationally. Our Integrated Logistics segment exceeded expectations, boosted by the increase in cargo movements to and from Sri Lanka. Hellman Worldwide Logistics, our joint venture partner in cargo logistics experienced a good year. Taking into account the Governments commitment to infrastructure development plans which includes both seaport and airport development, we see considerable opportunity in the Sector and look forward to playing an active role in the growth plans for Sri Lanka in the years to come. Accordingly, we will seek to build our presence locally through strategic partnerships and our experienced team to further strengthen our position in the country.
POWER
Hemas Holdings PLC
Hemas Holdings PLC
Sector Review POWER

We continue to seek new opportunities to invest in suitable renewable energy projects and are currently exploring opportunities overseas, in addition to expanding the capacity in Sri Lanka.
The Power Sector comprises Heladhanavi Ltd., a 100MW thermal power plant, which is a joint venture between Lakdhanavi and Hemas Power PLC, and two mini hydro plants with a combined capacity of 4.6MW, located at Giddawa and Lindula. The third, 2.4MW mini hydro plant, Magal Ganga, is under construction and would enhance the companys renewable energy capacity to 7.0MW upon completion in September 2011. Hemas Power marked a commendable year, contributing 18.7% and 31.4% to Group revenue and pro tability respectively. The sector recorded a turnover of Rs. 3.4Bn during the year, which is a 18.5% increase compared to the previous year, with a net pro t of Rs. 426Mn, recording an increase of 74.4% over last year. The improved performance was mainly driven by healthy rainfall in the catchment areas around our hydro power plants throughout most of the year, along with a reduction in nance cost due to re nancing of borrowings for working capital. The thermal power plant, which contributed 636.2GWh to the national grid during the year, recorded an exceptional performance throughout the year and remained the main contributor towards the Sector bottom line. Revenue of Heladhanavi increased by 13.8% to close at Rs. 3.1Bn, mainly due to the recent upward revision of fuel prices. Thermal power pro tability increased by 29.4% to close at Rs. 238Mn for the period ending 31st March 2011, in uenced largely by the signi cant reduction in nance cost. The decrease in nance charges was primarily due to the conversion of the rupee working capital facilities to USD loans in September 2010, to take advantage of favorable interest rates, and the ongoing repayments of the companys long term loans. The hydro power segment recorded revenues of Rs. 240Mn and a net pro t of Rs. 181Mn, growing by 160.3% and 172.5% respectively compared to the previous year. The Upper Agra Oya plant completed its rst full year of operations under the Hemas management. The hydro power contribution to the Power Sector pro ts showed a signi cant increase to account for nearly 45.0% of sector pro ts in comparison to 25.0% recorded in the previous nancial year. This noteworthy performance was partly due to heavy rainfall witnessed across the year within the relevant catchment areas. This in turn led to the mini hydro plants recording high levels of plant eciency with plant factors in excess of 50%, generating 21.2GWh in total during the year under review. Revenue growth in 2010 was further boosted by higher tari rates enjoyed by the two plants from September 2010 onwards. Magal Ganga, the third hydro power plant is currently under construction, and is expected to be completed and commissioned in September 2011. With global focus on solving the energy puzzle, conventional energy sources such as coal reserves and fossil fuels continue to dwindle at a rapid pace. This has resulted in higher costs for the use of these resources in power generation and it has been recognised that use of these resources also contributes to pollution and global warming. With the current global developments, the Government's stance on energy, focuses more towards generating power through more sustainable renewable energy (RE) sources including hydro, biomass and wind.
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The Government successfully commissioned the rst coal power plant at Norochcholai in January 2011 which is expected to decrease the cost per unit but increase annual carbon emissions (Source: Lanka Business Online). Reinforcing the long term focus on sustainable energy, the Government has already taken steps to assist projects based on non-conventional RE sources and targets to increase the RE contribution to the national power supply to 15% by 2015. During the year, the Government continued to support biomass and wind power projects. The Government has also made plans to test the feasibility of Ocean Thermal Energy Conversion (OTEC), a technology that converts solar radiation to electricity using the oceans natural thermal gradient in the eastern sea waters of Trincomalee.
Under the Vidulamu Lanka project, the government intends to ensure that every Sri Lankan will have access to electricity by the end of year 2012. Currently, the national grid fails to cover about 12% of electricity distribution in the country, while per capita electricity consumption in Sri Lanka is amongst the lowest in South Asia. Thus, Hemas is ready to capitalize on the opportunities in the renewable energy space in order to enhance shareholder value while contributing to the development of the nation. We continue to seek new opportunities to invest in suitable renewable energy projects and are currently exploring opportunities overseas, in addition to expanding the capacity in Sri Lanka.
Risk Management
We believe that good risk management is fundamental to good business management and that our success as a diversi ed conglomerate depends on our ability in identifying and responding to key risks and opportunities faced by the Group. The comprehensive Enterprise Risk Management (ERM) Framework is designed to identify, assess, communicate, and develop apropriate Risk Managment responses to maintain risk exposure within the appetite of the Group and to mitigate risks in order to minimize their potential impact on the Group. The identi cation and management of risk is an integral part of the strategic management process and is essential in achieving longterm goals. The strategies are set based on the objectives and the risk pro le. Hemas Risk Management framework includes the following steps and processes:
Establish the context External Context Internal Context Risk Management Context Develop the risk evaluation criteria De ne the risk analysis criteria De ne the risk analysis structure
Risk Assessment Communication and Consultation Risk Identi cation External Risk Internal Risk Risk Analysis Determine the probability Determine the impact Monitoring and Review
Estimate the level of risk
Risk Evaluation Compare against the criteria Set the risk priorities
Risk Treatment Identify the treatment options Evaluate the treatment options select the treatment options Prepare the treatment plan Implement the plan
The above framework has been established at both Group and SBU level to enable the Hemas Group to achieve its corporate objectives within a well managed risk pro le. It elaborates on risk identi cation, risk assessment, risk response and risk reporting methodologies. The Group continuously reports on risk-related matters to the Audit Committee and the Board. The Board has the overall responsibility for the identi cation and management of risk. The Boards, through Committees where appropriate, regularly review signi cant risk areas and decisions that could have a material impact on the Hemas Group. These reviews consider severity and likelihood of the risk and recommend risk response plans. The risks that we consider the most relevant to our businesses are identi ed below. We have also commented on certain mitigating actions that we believe help us manage such risks.
BOARD OF DIRECTORS
GROUP AUDIT COMMITTEE
RISK MANAGEMENT AT GROUP LEVEL
RISK MANAGEMENT AT SBU LEVEL
Risk Exposure 1. Reputation Risk Adverse impact on the corporate image which is likely to impair stakeholder value. 2. Growth Risk Adverse impact on future earnings due to our key businesses entering a maturity or declining phase. 3. Business Partner Risk Losing the principals/business partners due to global mergers and acquisitions, intense competition, service level gaps.
Mitigating Actions Maintenance of the highest ethical standards at all times in all business activities. Continuous assessment of customer satisfaction and prompt follow up actions on complaints and/or suggestions. Proper adherence to the statutory and environmental regulations. Emphasis on identifying new business segments and supporting them with the required investment.
Relationships with principals/business partners are maintained in a manner that mutually bene ts all parties involved. Regular assessments of service levels in order to ensure business partner expectations are met. Consciously limit dependence on a single party to limit the impact arising from the potential loss of business partners. Continuous focus on innovation. Regular monitoring of customer /consumer trends.
4. Market Risk Adverse impact on business performance due to intense competition, new entrants, changes to customer attitudes and/or economic conditions. 5. In ation Risk Potential adverse impact on margins and cash ows as a result of increase in input cost and overhead cost. 6. Legal and Regulatory Risk Potential for losses arising due to changes to the existing regulations or the introduction of new regulations. 7. Operational Risk Potential losses as a result of inadequate internal controls, failures of internal processes, people and systems, natural and man made disasters. 8. Human Resources Risk Risk arising as a result of failure to attract, develop and retain a skilled workforce.
Continuous focus on lean management and the overall eciency of business processes. Periodic price reviews to ensure required margins.
The centralized legal division assists and advises the companies across the Group on legal matters. Proactive dissemination of regulatory information with regard to changes and new regulations. Business Continuity Plans are in place to ensure the smooth operation of the businesses even at a time of disaster. Internal audits are carried out following on internal controls and compliance, whilst ensuring independence and objectivity.
A well structured Talent Management process is in place to identify critical employees and retain them in the long term. Periodic salary surveys to ensure that remuneration is in line with the market. Investment in strengthening employee brand image. Centralized treasury management. Managing interest rate and foreign exchange exposure through appropriate nancial risk management techniques.
9. Interest Rate and Foreign Exchange Risk Potential losses as a result of adverse movement of interest rates and exchange rates.
10. Credit Risk Adverse impact on the liquidity position as a result of payment delays/ non payment by debtors.
Ecient follow up and collection practices at SBU level. Adherence to business speci c credit policies.
Sustainability Report
Our commitment to serving our community
At the heart of everything we do at Hemas Holdings is one question 'Will this make us good corporate citizens?. The answer must always be a resounding 'Yes!'. Engaging in sustainable community centric activity is a cornerstone of the Groups' values and traditions, and a vital element in any business objective. At the forefront of our eorts is Piyawara, our long term agship initiative undertaken in partnership with the Ministry of Child Development and Women's Aairs. Piyawara focuses on the establishment of Early Childhood Care and Development (ECCD) centres, thus providing a sound foundation for lifelong learning. Piyawara Primary Project in 2010/2011 In 2009 Piyawara set up temporary play areas and pre-schools for the IDPs at Menik farm. During the year under review our key objective was to build a model pre-schools in Jana, thus giving children whose lives had been overshadowed by war and violence the chance to receive high quality education and care in a conducive and positive environment. The school would be the rst ever model pre-schools to be set up in the area in the post war era. With the assistance of the Ministry of Child Development and the Education Ministry of the Northern Province, the Mayor of Jana allocated 60 perches at the Nallur municipality limits for the pre-schools. The construction was under taken by UNOPS, and was completed in November 2010 at a total cost of Rs.7,202,438/. The school was ocially handed over to the Mayor of Jana in January 2011. Minister Douglas Devananda and Minster of Child Development Mr. Tissa Karaliadda were among the dignitaries who graced the occasion. The school currently serves approximately 82 children with that number steadily increasing due to resettlement in the area. The project has been the focus of great hope and enthusiasm and Hemas Holdings is proud beyond measure to have had the opportunity to give the children of Jana their rst full edged pre-schools, a symbol of our country's hard won peace and bright future.
During the year under review our key objective was to build a model pre-school in Jana. The construction was undertaken in UNOPS, and was completed in November 2010 at a total cost of Rs.7,202,438/-. The school was ocially handed over to the Mayor of Jana in Janaury 2011.
Piyawara Secondary Projects in 2010/2011 Piyawara also focused on the Hambantota Special School which is managed by the Southern Youth Development Foundation in partnership with the Hambantota Municipal Council and Hemas Outreach Foundation. During the year under review Hemas provided every student with a set of uniforms, while Hemas sta made personal donations in order to purchase wheel chairs and other required essentials for the students. The schools annual concert was sponsored by the Foundation and a night camp was held for 3 days in Hambantota. The foundation was also a key sponsor of a 7 day residential training programme for teachers organised by the Education Ministry of the Southern Province. Hemas employees are dedicated to the school and its students, visiting them whenever possible. Some employees have also sponsored children at the school. These are voluntary individual sponsorships and are direct arrangements with the families involved. Piyawara has much more planned for the school in the year to come including further teacher training programmes and other special needs oriented facilities.
Other Piyawara Projects in 2010/2011 Annual Piyawara teacher training programme was held in August 2010. This 3 day residential programme in Galle catered to 75 teachers from all centres island wide, and was coordinated by the ocials of the Childrens' Secretariat. An educational tour of the Piyawara model schools in the Southern province was also included. Another noteworthy event was a visit to the special school in Hambantota where other teachers were encouraged to consider inclusive education in their respective areas. Popular TV programme 'Nuga Sevena' was chosen to conduct weekly shows on the importance of ECCD which included live talk show segments with Ms. Shiromi Masakorala and other professionals in ECCD. One of the key donors to the foundation, Rewe Touristik Germany showcased the Hemas Outreach work at their annual CSR event. The Rewe sta donated approx Euro 20,000/- to the foundation. Rewe Touristik is a key business partner of the Hemas Leisure Sector. The Galle Piyawara teacher was awarded the Best Pre-school Teacher award in Galle District. We congratulate her on this well deserved achievement. Annual parental awareness programs were conducted in the Piyawara schools. The Diriya program was introduced to low income parents at selected Piyawara schools.
media strategies help take our message to the district and national levels. The Piyawara Objectives are as follows: 1. Enhance and improve the psychosocial and cognitive development of young children through the addition of new pre-schools to the existing national network and upgrading established pre-schools to reach minimum standards. 2. Emergency intervention during national disaters (man made or otherwise) in managing temporary pre-schools or setting up play areas in makeshift camps. 3. Ful ll the training requirements of the preschool teachers. 4. Empower community led social development through island wide parental awareness programmes. 5. Improve childrens recreational facilities in disadvantaged communities. 6. Improve child protection legislations and provide publicity for childrens issues. 7. Empower children with Special Needs. Diriya : Empowering Rural Women Launched in September 2009, Diriya is a house to house selling operation designed to empower women in rural areas by making them self employed, independent and regular contributors to their household income. The programme also contributes to the upliftment of living and health standards in rural Sri Lanka, since Diriya entrepreneurs receive training in this regard which they in turn pass on to their customers. Diriya entrepreneurs purchase Hemas products at the wholesale price and sell them at the retail rate retaining the 10% pro t margin. Hemas Holdings is constantly working on special oers and deals that are exclusive to those in the Diriya network so that they have the maximum opportunity for success. Diriya entrepreneurs are females between 25-50 years of age who live in a rural or semi rural community and are able to walk or ride a bicycle or motorbike up to 20kms per day, six days a week. These women must also be motivated individuals who are able to work independently, possess basic accounting and selling abilities and excellent interpersonal skills.
Why choose a project of this nature? It all began with Baby Cheramy the Groups' leading brand. Childcare was the obvious compliment to the product range which had established itself as a rst choice among local mothers and we were eager to demonstrate that our interest went beyond infancy and that Hemas and Baby Cheramy were committed to making a positive long term impact on childrens' lives. Thus began the Piyawara journey into ECCD centres, and over the last 9 years the program has made a phenomenal contribution to the overall Government system of education, ful lling a critical national need. Hemas is responsible for supporting 33 ECCD centres. School based activities include teacher training and parental awareness programmes. Intelligent, interactive and target oriented mass
Diriya Today : Celebrating the Power of Women Following the pilot operation in Anuradhapura, Diriya has gone from strength to strength with 100 Diriya enterpreneurs now covering approximately 15 towns islandwide including Bible, Keenya (Trincomalee), Badulla, Hambantota and Kalutara. Redistribution sales have seen an amazing spike, rising from Rs.958, 607/- in January 2010 to Rs.13Mn at the close of the 2010/2011 nancial year. The success of the programme has encouraged us to look at taking it even further, with future expansion focused on the Uva and South Eastern Provinces. Leisure Sector The hotels within the Hemas Group are dedicated to giving back to the communities in which they operate and their outreach eorts in 2010/2011 were no exception to that commitment, demonstrating the sincere and focused participation of leisure sector sta and management. Hotel Sigiriya Set up a much needed pre-schools in Diyakepilla village with an initial investment of Rs.25,000/- and a running cost of Rs.1,500/- per month Undertook the maintainance of the Kimbissa Government hospital with a bi-annual 20 sta member eort to clean, paint and arrange all the wards in the hospital. Clean and maintain the area surrounding the Sigiriya rock. Engage in the following energy saving initiatives: Minimising the use of plastic water bottles and using glass bottles instead. Garbage separation. Maximum use of energy saving bulbs. Use of rewood instead of diesel to operate the boiler. Use of compost for plants. Developing a vegetable plot using carbonic manure for hotel use. Use of recycled water from the sewer plant to water the garden.
Hotel Serendib Responsible for maintaining the Bentota railway station in a clean and proper condition for a period of 3 years commencing August 2010. The station which was in an appalling condition was refurbished at a cost of Rs.850,000/in addition to continued monthy maintainance charges of over Rs.10,000/-. Commitment to conduct English language classes for the less auent children in the area. A teacher has been engaged to conduct classes 4 times per month at a cost of Rs.2,000/- per session of 2 hours. 25 students bene t and have all received uniforms at the cost of Rs.14,000/-. Engage in regular beach cleaning programmes. Undertaken the annual cleaning, painting and arranging of all wards in the Bentota government hospital.
Hotel Dolphin Kammala South (Village) community centre, kids park, volleyball court and library were developed and reopened on 3rd September 2010. A community project by Club Hotel Dolphin in liaison with Pradeshiya Sabha Wennappuwa with an investment of Rs.1.2 Mn which includes water & electricity supply to the building. One of the activities has been an English language teaching programme for village children at the community centre. Classes are conducted by professional instructors, who receive an allowance of Rs. 8,500/- per session borne by the hotel. Rewired and added lamp ttings to the Dummaladeniya temple at a cost of Rs.35,000/-. Provided wooden signage boards to the Kirimetiyana Ladies College. Engage in regular beach cleaning programmes.
Committed to developing our people

At Hemas, we believe that our employees are the very soul of our organisation. Thus, we place their development, empowerment and ful lment at the very top of our list of priorities. 2010/2011 saw the implementation of many programmes, policies, schemes and events designed to ensure that our people continue to grow with us, reaching their full potential and performing at the very top of their game. HEMAS HIGHER LEARNING ACADEMY The Hemas Higher Learning Academy (HHA) conducted several training programmes geared to add value to Hemas personnel and thus enhance the value we give our customers. Management Development Programme (MDP ) This Diploma level course was conducted for middle and junior level managers of Hemas SBUs and was designed to develop their managerial and leadership abilities. The third MDP course catered to a batch of 20 participants. Advanced English Programme (AEP) Focused on further enhancing communication skill of the middle and junior level managers of Hemas SBUs, the programme saw enthusiastic participation from 16 participants. Business English Course (BEC) This programme was aimed at helping junior level managers to develop their speech and language abilities in the English language within a business setting. The comprehensive 6 month programme included class room work and take home assignments that focused on the use of English as part of their day to day professional lives. Urban Challenge 1 and 2 30 Directors participated in this exciting programme that featured team building and leadership exercises set in a high pressure urban environment. Based on the success of the event a similar programme was subsequently carried out for the Hemas Corporate oce, Vishwa BPO and Group IT division.
FUTURE PLANS The HHA is determined to continue to provide eective, relevant and inspiring personal development programmes, and has outlined its goals for 2011/2012 as follows: a. Develop critical business competencies in Hemas Businesses. b. Establish aliations with local and foreign seats of learning. c. Establish a mentoring programme for middle and junior mangers.
d. Develop an e-learning portal. e. Develop a learning culture at Hemas. FMCG Sector The Sector experienced a busy year as the country enjoyed a new post-war con dence and optimism. Focussed on engaging in training programmes that would enhance their skill sets, the FMCG Sector carried out the following training and development initiatives: Development: Both Technical and Behavioral Technical Competency Pro ling for the Brands Function was introduced and individual assessment centers were completed. Emotional Intelligence for Coaching this programme was open to Manager and above categories. The comprehensive training focused on management techniques that would bring about the best results.
Awards and Recognitions National Productivity Award GOLD, presented by the National Productivity Secretariat under the Ministry of Labour Relations and Productivity Promotion. CNCI Industrial Excellence Award GOLD, presented by Ceylon Chamber of Commerce. National Quality Award GOLD, presented by the Sri Lanka Standards Institution.
Healthcare Sector Pharmaceuticals Education is the Key to Success In order to achieve our pharmaceutical arm's critical success factor that of demand creation, Hemas HR designed and developed a 5 month long learning programme entitled the Medical Delegates Professional Development Course. The programme covers Anatomy & Physiology, Pharmacology, Marketing, and Management. To date 85 Medical Delegates have successfully completed the programme and this value addition has been highly commended and appreciated by Principals and local Agency sta. Assessment for Personal Development HR formulated and established Assessment /Personal Development Centres and carried out 4 days of rigorous assessments for 18 Managers/Assistant Managers using conventionally accepted testing tools including group discussions, case studies, oral presentations, structured interviews, psychometric as well as numeric tests. Based on the outcome, a personalised Assessment Report was prepared and an individual development plan formulated for each manager thus ensuring transparency, clarity and career progression. Healthy Body Healthy Mind With a view to increasing the mental and physical well being of employees and thus the overall productivity of the company, a mini gymnasium was established within the Colpetty oce complex which included the services of a physical trainer. Hospitals Improved Employee Relations Hemas Hospitals takes a series of measures to ensure positive working relationships with employees. We set up Joint Consultative Committees at both hospitals, with representatives from the sta, departments and hospital administration. The committees are a tool to promote mutual understanding and create better working relationships between sta and management. It is also a mechanism through which employees can play a greater role within the company planning process. Furthermore we also formed a Hostel User Committee to enhance support for employees using the sta hostel facilities.
Employees are also kept abreast of the progress made in our business through Hospital Performance Review Sessions held with a wider forum of heads of departments, executive and above. Quarterly Sta Communication Sessions are also held to educate employees on company progress, challenges faced and future plans. The management also conducts quarterly performance review sessions with employees, to discuss their performance against objectives and goals, in a structured and transparent manner. Employee Credentialing The patient safety standards at Hemas Hospitals were further raised with an initiative to credential all sta directly involved in patient care delivery. For this purpose, the Central Credentialing Committee was set up in February 2011 and vested with the authority to credential healthcare workers on careful evaluation of recommendations forwarded by the Medical Advisory Committee and two other Credentialing Sub Committees (Nursing and Allied Healthcare Services). The quali cations and pre-conditions for credentialing are clearly de ned and approved by the board. Developing Future Nursing Talent We completed a recruitment drive to employ 250 trainee nurses to meet the future requirement of the Hemas Hospitals chain. The trainees are now undergoing a 3 year diploma programme conducted by Open University of Sri Lanka and Aquinas University College. Their clinical training will commence from July 2011. Focused Training and Development Sta at both hospitals underwent a series of mandatory training programmes as per the criteria set out by the accreditation by prestigious Australian Council on Health Standards International (ACHSI ) as well as requirements of ISO 15189 and ISO 9001:2008. The total number of training programmes conducted during the year totalled 217, which amounted to 1074 hours of training for the year. The programmes conducted included clinical programmes as well as management development and soft skills development sessions. External expertise was brought in wherever possible to support the training programmes.
Employee Welfare at Hemas Southern Hospital Hemas Southern Hospital organised 20 hours per nurse of training on fundamentals of nursing for the nursing sta in order update their knowledge with the latest developments of nursing profession. Hemas Southern Hospital also provided accommodation facilities to male employees. The Employee welfare society organised a talent show in August to showcase hidden talents of sta members in a bid uplift employee morale and team spirit. Transportation Sector The Transportation Sector held its Annual Associate of the Quarter awards ceremony at Excel World. The event was attended by all sta attached to the Sector and the Country Managers of both Emirates Airlines and Malaysia Airlines. The awards are presented to employees below Manager grade. The awards ceremony was followed by a bowling tournament and a karaoke competition. Leisure Sector Diethelm Travel Sri Lanka The year under review was a challenging one for the leisure industry as consistant team work and optimum performance levels were expected. Thus, motivation and team building were the order of the day and every employee at Diethelm Travel Sri Lanka was driven to play a key role thus increasing accountability, encouraging creativity and building trust and loyalty among personnel. A team was appointed for each quarter and were assigned a project that was in line with the company's business objectives. These were carried out with nesse, creativity and a de nite unifying and inspirational change was seen with marked improvements in employee perfromance and attitude. Q1: The Singing & Dancing competition served as the perfect ice breaker, encouraging a spirit of friendly competition and setting the right tone for the projects to come. Q2: Every member of the team joined hands to bene t the residents of the Borella Elders Home. A rewarding and unifying experience.
Q3: When the going gets tough the tough get going, and that's exactly what happened during the Decision Making programme conducted during this quarter. Q4: An outbound excursion provided the nale to a year of tremendous team work, memories were made, bonds forged and every member of the team determined to work towards the company's goal of delivering exceptional service and results with excellence and eciency. Educational Tours Two such tours were conducted for employees involved in sales and operations. These tours ful lled the desired objective by enhancing the participants' product knowledge as well as their interpersonal and customer service skills. Chaueur/Driver Training 25 new recruits were put through an intensive training programme that included a fascinating and educational familiarisation tour. Serendib Leisure Management Limited Investing in Future Generations In order to encourage sta members to focus on their children's education, a scholarship scheme is oered to children who pass the year 5 scholarship with high marks. Financial assistance is provided to the child who scores the highest marks and quali es to enter a popular school. The payment is made monthly until the child enters GCE Advanced Level.
Celebrations and Fellowship The company encourages work life balance by supporting an annual sta trip while also organising a christmas party for sta and their families, where all children are presented with gifts.
Dolphin Hotel Enhancing skills Eco Lab conducted food safety training programmes for the Kitchen and F&B sta. A tea tasting session was also held courtesy Dilmah
The Group Management Trainee Programme Hemas Group Management Trainee Programme was started more than 15 years ago. It is an opportunity for the best young talent of the country to be part of the Company and move up the career path. The programme has been successful throughout the years and has produced ne talent for the group who have come up to head functions. The group is planning a new intake this year. CEO's Awards The awards that are most looked forward to, the CEO's Awards are presented to Senior Managers and Managers who have made an outstanding contribution to the success of the company to which they belong within the Hemas Group. The annual event recognises excellence in every industry in which the Group operates. The Living Hemas Values Awards These awards are unique in that they are based on the nominations of sta members who feel that a fellow employee is deserving of the award since he or she embodies or exempli es one or more of the core values by which Hemas operates. These values include: passion for customers driven by innovation obsession for performance concern for people The awards are given on a quarterly basis with a 'Grand winner' selected annually. The Enriching Lives Awards
Sigiriya Hotel From excellent to exceptional Kitchen and F&B sta were exposed to several skill development programmes including training on Chocolate Creations. Kitchen Camaraderie The kitchen sta get together proved to be an enjoyable event and a vegetable carving competition also provided the opportunity for friendly competition and interaction.
All hotels within the Group provided the following in the year under review: Proactive Training and Development Department Heads conducted needs based training programmes under the guidance of the Manager Learning and Development. A guest feedback system, travel agent observations and internet reviews all formed the basis on which training sessions were conceived. Sta Security In addition to providing meals to all sta, accommodation is also provided for those residing in distant areas. A medical insurance scheme covering the sta member and his or her immediate family was introduced. Employee Awards At Hemas we believe that when you have the best personnel, you should celebrate them. Talent Management & Succession Planning A structured programme was carried out sector wise for the group to identify the stars and the critical talent from the employees who belong to the middle and senior /top management. For the identi ed stars, critical talent and successors individual development plans are designed and executed.
Presented at the CEO's Awards ceremony, this new award recognises the exceptional performance of a team that has developed or enhanced a product or service that enriches the lives of Hemas customers. Members of sta can nominate their preferred team or group of employees and a panel of judges will select the winning team.
Committed to protecting our planet

Hemas has always been committed to protecting our country's precious natural resources and has been steadfast when it comes to abiding by all laws and policies pertaining to the conservation of our environment. The Group lives by the tenet of the Hemas Green Pledge We take responsibility as individuals and collectively as part of the Hemas Group to minimise harmful practices and embrace emerging trends, that will help us leave a more gentle environmental footprint. The Green Pledge has enabled us to create an environmentally friendly mindset among our employees and within our operations, ensuring that the potential impact of our business decisions on the environment are always considered. While plans are in place to further ingrain and expand our green mindset during the coming year, we look back at the year under review and are proud of the achievements we have made in terms of keeping our companies green. Leisure Sector Hotel Sigiriya : Eco Champions Much before eco tourism was in vogue Hotel Sigiriya launched the country's rst greening project integrating environmental protection disciplines into the daily management of the hotel. These included energy and water conservation, waste and pollution minimisation, a proactive eort to reduce, reuse and recycle and use eco friendly materials while conserving biodiversity and indigenous ora. Half a decade later Hotel Sigiriya has set the standard when it comes to eco sensitive, nature friendly practices within the industry. The hotels achievements include: Over 100 species of indigenous ora grow unchecked within the hotel premises, while over 200 varieties of birds and a host of animals also make their home in the hotel environs. 194 mature and 359 semi-mature trees have been planted on the premises.
A self contained, non chemical biological sewerage plant is in operation and the 30,000 litres of discharge water produced is re-cycled and used for garden irrigation. Energy saving strategies include solar heating, card key switching for room air conditioning, scheduled light usage, water saving cisterns, use of CFL bulbs and the optional reuse of room linen. The hotel has its own organic vegetable garden. Compost and sludge from the sewerage plant is used as fertiliser. A biomass fueled gasi er has replaced the diesel boiler and the hotel has also halved its use of aerosols and plastics. 85% of wet and 75% of dry garbage is recycled. The sta at Hotel Sigiriya are 100% committed to its eco related goals. The considerable time and eort that went into training and sensitising our sta has ensured that all sta practice environmental management and have seamlessly integrated it into their day to day professional lives. Thus it is no surprise that Hotel Sigiriya won the Silver Award Asia Green Apple Award, presented by the Green Organisation UK for the second year in succession. It is a symbol of the hotels dedication, strength of purpose and determination to go the distance to preserve our planet. Environmental Achievements at Hotel Sigirya
2010/11 up to 71% occupancy Total carbon footprint (UNEP guidelines) 198.4MT Reduction in CO2 equivalent due to current interventions 12.9MT Reduction in CO2 equivalent due to proposed interventions 10.9MT Total reduction in CO2 equivalent 29.95MT Total nancial saving due to current interventions Rs 1,965Mn Total nancial saving estimated due to proposed intervention Rs. 2,908Mn Total nancial savings Rs 1,965Mn
Manufacturing Sector Dankotuwa Plant Bujjampola, 6km from Dankotuwa, is home to our main facility, and we place primary focus on ensuring that the environment within and surrounding our premises is protected and retains all its natural purity and beauty. This commitment is manifest in the Rs.8Mn investment we made to enhance the capacity of our waste water treatment plants, one of which deals with production euent and the other, human euent. This has enabled us to recycle almost 100% of our waste water, an achievement far above that stipulated within regulatory norms. This treated water is used for maintaining the garden. We recycle 80% of our solid waste including polythene, paper, glass, plastics, oil and metal. Our agreement with Geo Cycle (a subsidiary of Holcim Sri Lanka) is a symbol of our commitment to disposing of all solid waste in a completely eco friendly manner. The facility further underlined its dedication by beginning the stringent process of certi cation for ISO 14001:2004 which is expected to be achieved in 2011. The eorts made by the Dankotuwa facility were rewarded when the facility received the Geo Responsibility Award for the year 2011, organised by Geo Cycle and the Central Environmental Authority (CEA) with the participation of the University of Moratuwa Sri Lanka. The award recognises the facility's long term commitment to the protection of the environment, and the positive example it sets to those within the industry in which it operates. Power Sector Water conservation and the management of noise pollution are key areas of focus at Heladhanavi. The plant faces a rigorous annual assessment by the North Western Province Environmental Authority and is proud to have been able to obtain the required licensing with ease for yet another year in succession.
Rain water harvesting pools within the plants' premises aid the water conservation eort. Water that contains heavy oil components is treated prior to being released into the environment, thus ensuring that the delicate eco system of the area is completely unaected. 58 acres of plant site has been dedicated to the creation of a green belt, that aids in keeping noise levels to the regulatory minimum. Constant internal monitoring as well as independent assessments are made to ascertain that noise levels are managed and maintained. The Groups hydropower plants operate on the basis of minimum impact to the environment and are fully compliant with environmental regulations and standards stipulated by the Central Environmental Authority. The plants also take special measures to nurture and maintain the green environment within the plant premises, thereby contributing towards clean energy generation. Every company within the Group looks to the future and sees one key colour Green and it is our sworn commitment to continue focusing on enhancing our positive practices to ensure that our environmental footprint is negligible and that we lead by example in terms of eco sensitive practices and results.
Corporate Governance Principles

The Board of Directors of Hemas believes that sound corporate governance practices provide an important framework to assist the Board in ful lling its responsibilities. These Corporate Governance Principles have been approved by the Board. They will be reviewed annually, or more often if deemed necessary or appropriate. The business of Hemas is managed under the oversight of the Board, which is elected by the shareholders. The Hemas Board represents the shareholders interest in optimising long-term nancial returns while addressing, as appropriate, the concerns of other stakeholders and interested parties, including employees, customers, suppliers, government ocials and the public at large. Directors counsel Management and monitor its performance and adherence to corporate standards. Hemas businesses are conducted by its employees, managers and ocers under the direction of its Chief Executive Ocer. 1. Selection and Composition of the Board Board Membership Criteria The Board seeks to select as directors, individuals with skills and experience to assist management in operating Hemas businesses. The Board considers on an annual basis the perceived needs of the Board at that point in time. Board membership criteria include business experience, character, judgment, diversity of experience, skills and acumen, international background and other matters that are relevant to the Boards needs and objectives. Independence, nancial literacy and experience and ability to devote signi cant time to Board activities and to the enhancement of his knowledge of Hemas businesses are also factors considered for Board membership. Each director should devote the time and attention necessary to ful ll the obligations of a director, attend Board meetings and meetings of committees of which he is a member, and review material sent in advance of meetings. Directors should also attend annual meetings of shareholders. Board Membership Selection A Nominations Committee, recently established, comprising the Non-Executive Chairman of the Board, a Non-Executive director and the Chief Executive Ocer has the responsibility to nominate directors to ll new and existing Board positions within the group and, at the appropriate time, recommend nominees for election by the shareholders. Director Orientation and Continuing Education The Board and management will conduct orientation for new directors to become familiar with Hemas, its strategies, values, including ethics, nancial matters, corporate governance and other key policies and practices. New directors will review background material provided by management on the various businesses, meet with senior management and visit Hemas facilities. The Board also recognises the importance of continuing education for its members. It is the responsibility of management to advise directors about continuing education opportunities, and directors are encouraged to take advantage of these opportunities. 2. Board Functioning Board Leadership It is the policy of the Board that the role of the Chief Executive Ocer and the Chairman should be separate. The Non-Executive Chairman preserves order and facilitates the eective discharge of Board functions. The Boards Role The Board as a whole, is responsible for managing and for directing and supervising the management of the business and aairs of the company and the group, which inter alia include the following: discussion and approval of the Companys strategic direction, plans and objectives and the risks to achieving them; review and approval of budgets and forecasts, including both revenue and capital expenditure; regular reviews of the risks to achieving objectives and actions being taken to mitigate them; regular reviews by the Audit Committee of the scope and results of internal audit work across the Company and of the implementation of recommendations. The scope of the work covers all key activities of the Company and concentrates on higher risk areas; reviews of the scope of the work of the external auditors by the Audit Committee and any signi cant issues arising; reviews by the Audit Committee of accounting policies and levels of delegated authority; and consideration by the Board and by the Audit Committee of the major risks facing the Group and of the controls and procedures in place to manage them. The board delegates certain responsibilities to its principal committees. The Audit Committee ensures the integrity of nancial information, the eectiveness of the nancial controls and the internal control and risk management systems. The Remuneration Committee sets the remuneration policy for executive Directors and Senior Management and determines their individual remuneration arrangements. The Committee also rati es allocations in terms of the groups share schemes. The Nominations Committee, recently established, recommends suitable Candidates for appointment to the Board, as and when the need arises. The composition and responsibilities of the Remuneration and Audit Committees are given in detail on pages 46 and 47 of this Report. Size of the Board The Board currently comprises eight members. The names of the Board members who served during the year and their pro les are on page 50. Independence of Members One half of the directors are independent directors who have no material relationship with Hemas (either directly or as a partner, shareholder, or ocer of an organisation that has
Corporate Governance Principles
such a relationship with Hemas), as de ned under the listing rules of the Colombo Stock Exchange , which are incorporated into these Principles. Each director must notify the Board as soon as practicable of every situation or condition that may aect his independence. The names of the directors determined to be independent are disclosed in the Board of Directors on page 50. Code of Conduct It is of major importance to corporations and their leaders to create a "tone at the top" and a corporate culture that promotes ethical conduct on the part of those corporations and their employees. The single most important factor in creating such a culture is the quality of corporate leadership, especially the "tone at the top" set by Boards and Senior Management. We, the directors of Hemas, understand this responsibility and are committed to this responsibility. We believe that each Director, by agreeing to serve as Director, has agreed to read, understand and adhere to this Code of business Conduct and Ethics for Directors ( The Code). Retirement and Term Limits 1/3rd of the Directors will stand for re-election each year. A director should retire on reaching the age of 70 years and is eligible for re-appointment on a limited term renewable each year. Director Compensation The Board will periodically review director compensation in comparison with companies that are similarly situated to ensure that Board and committee compensation is reasonable and competitive. Compensation should fairly pay outside directors for work required in a company of Hemas size and scope; compensation should align Directors interests with the long-term interest of shareholders and the structure of the compensation should be transparent and easy for shareholders to understand. Loans to Directors It is the policy of Hemas not to make any personal loans to its Directors in compliance with the Companies Act. Stock Ownership of Directors Directors are encouraged to own an equity interest in Hemas within a reasonable period after initial election to the Board and to retain such equity interests while serving on the Board. Access to Outside Advisors The Board, as well as each committee, may retain at any time, at the expense of Hemas, outside nancial, legal, compensation or other advisors as it deems appropriate. Access to Management Board members have complete access to Hemas management and to the Company Secretary for any information or clari cation required on the business of the Company and the Group. Annual Performance Evaluation of the Board The Board performs a self-evaluation annually to determine
whether it and its committees are functioning eectively. The purpose of the evaluation is to increase the eectiveness of the Board and the committees, as well as the individual members. Board Interaction with Investors, the Press, Customers and Others Individual directors may, from time to time, meet or otherwise communicate with various constituencies that are involved with Hemas. However, it is expected that Board Members will speak for Hemas only with the knowledge and consent of the board. Transactions Between Directors and Hemas Any payments for any reason, including for goods or services, by Hemas or its subsidiaries to a Directors primary business aliation or that of an immediate family member of a Director must be made in the ordinary course of business and on the same terms prevailing at the time for comparable transactions with non-aliated persons. The term "primary business aliation" means an entity of which the director or an immediate family member is a principal or executive ocer or in which the director or an immediate family member holds at least 10% of the equity interests. 4. Committee Matters Types of Committees Standing Board Committees currently consist of the Audit and Remuneration Committees and a Nomination Committee appointed during the year. From time to time the Board may form a new Committee or disband a current Committee. Each standing Committee has a charter, which it will review annually. Independence of Members of Committees The Audit Committee, Nomination Committee and the Remuneration Committee are composed of a majority of independent directors, as de ned under applicable law and the listing standards of the Colombo Stock Exchange, adopted by the Board. Frequency and Length of Meetings Committee Chairpersons, in consultation with the Company Secretary, will determine the frequency of the meetings of the Committees. Audit Committee Financial Expert At least one member of the Audit Committee will be a person that the Board determines is an "Audit Committee Financial Expert" as de ned by the Code of Best Practice on Audit Committees issued by the Institute of Chartered Accountants of Sri Lanka and the Rules of the Colombo Stock Exchange, unless the Board otherwise determines. 5. Meeting Procedures Conduct of Meetings Board and Committee meetings will be conducted in a manner that ensures open communication, meaningful participation and timely resolution of issues. Whenever feasible, directors will receive material concerning matters to be acted upon well in advance of the applicable meeting to
allow Directors to prepare for discussions of items at the meeting. Presentations on speci c subjects are generally sent to the Board in advance to save time at board meetings and focus discussions on the Boards questions. When the subject matter is very sensitive, the presentation will be provided at the meeting. Selection of Agenda Items The Chairman, together with the Chief Executive Ocer/Managing Director, will establish the agenda for each Board Meeting. Board members may suggest the inclusion of items on the agenda for particular Board meetings. Certain agenda items will be recurring, such as Committee reports and a review of Hemas annual business plan, its long-term strategic plan and nancial goals. Attendance The table shows the attendance of Directors at scheduled Board and Committee meetings. The Board scheduled 5 meetings during the year. Board Audit Meetings Committee Meetings Mr. L.De Mel * 5/5 Mr. H.N. Esufally 5/5 4/4 Mr. A.N. Esufally 5/5 Mr. I.A.H. Esufally 5/5 Mr. M.E. Wickremesinghe ** 5/5 4/4 Mr. M.A.H. Esufally 5/5 Mr. P.K. Mohapatra 3/5 3/4 Mr. D. Bhatnagar 5/5 Name of Director Remuneration Committee Meetings 4/4 4/4
reviewed regularly by the Audit Committee which then reports to the Board. 8. Investor Relations The Company is committed to maintaining good communications with investors. Normal shareholder relationship is the responsibility of the Company Secretary. The Chairman and CEO are generally available to shareholders and meet with institutional and other large investors as required. The Company regularly meets with its large investors and institutional shareholders who, along with research analysts, are invited to presentations by the Company immediately after the announcement of the Companys interim and full year results. The content of these presentations are posted on the Companys website (www.hemas.com) so as to be available to all investors. Shareholders have the opportunity to meet and question the Board at the AGM, which this year will be held on Thursday, 30th June 2011. Each item of business to be considered at the AGM is included with the Notice of Meeting which will be sent to shareholders at least 15 working days before the meeting.
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* Chairman Hemas Holdings PLC / Remuneration Committee ** Chairman Audit Committee 6. Internal Control The Board has overall responsibility for the system of internal controls, which is fully embedded into the operations of the Company and includes risk management. Certain of these responsibilities have been delegated to the Audit Committee. The Audit Committee has reviewed the eectiveness of the system of internal control and has ensured that any required remedial action has been or is being taken on any identi ed weaknesses. The system of internal controls has been in place throughout the year. It is designed to manage the risk of failure to achieve the Companys business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss. It covers all controls including those in relation to nancial reporting processes (including the preparation of consolidated accounts), operational and compliance controls and risk management procedures. 7. Risk Management The risk management system has been in place throughout the year. Accepting that risk is an inherent part of doing business, the system is designed to identify key risks and provide assurance that these risks are fully understood and managed. It is also supported by a risk policy and guidelines on how to apply the policy, which are communicated throughout the Company. The eectiveness of the process is
Report of the Remuneration Committee

The Remuneration Committee is established to ensure that remuneration arrangements support the strategic aims of the business and enable the recruitment, motivation and retention of Senior Executives. It also sets the overall remuneration policy for the company. The following directors served on the Committee during the year: Mr. J.C. L. De Mel (Chairman) Mr. M.E. Wickremesinghe No member of the Committee has any personal nancial interest, other than as a shareholder (as disclosed in the Interest in shares table on page 101) in the matters to be decided by the Committee. The two independent members of the Committee have no con icts of interest arising from Committee members cross-directorships and none of the members of the Committee participate in any bonus schemes or any employee share schemes in respect of the Company. Members of the Committee have no day-to-day involvement in the running of the Company. The Companys Chief Executive attends Committee meetings by invitation. He does not attend where his individual remuneration is discussed and no director is involved in deciding his own remuneration. In 2010/11, the Committee met Four (04) times and details of attendance at these meetings are provided in the Corporate Governance Section. Activities In discharging its responsibilities, the Committee has, during the year, undertaken a thorough review of the Companys reward strategy. In doing so, the Committee considered the results of a Compensation Benchmark survey carried out by appropriate organisations. During the nancial year under review, the Committee also reviewed and rati ed the following: a policy guideline for approval of expenses of Executive Directors and Senior Managers of the group a succession management plan for Senior Managers. Remuneration Philosophy and Policy The groups philosophy is to remunerate its Directors, Executives and sta by paying them competitively structured packages. In determining the remuneration policy and the size of the awards, the Remuneration Committee takes account of structures and levels of remuneration for Executive Directors and Senior Managers in other substantial companies that it regards as appropriate comparators and of such companies stated remuneration policies. Lalith De Mel Chairman 26th May 2011 Advise The Committee recruited an Independent Advisor, Hewitt Associates, from whom they received assistance and advice on Job Evaluation and Grade structuring at Hemas. Incentive Scheme In addition to paying annual bonuses based on both individual and Group performance, the Group oers share incentive schemes to Senior Management and to sta who the group has identi ed as future leaders. A 2nd tranche of shares to key executives was approved by the Committee in November 2010 for allocation in terms of the Groups Employee share Ownership Scheme , which was established in 2008. Details of executive remuneration are included under Key Management Personnel compensation on page 96 of the Annual Report. The fees payable to the Non-Executive Directors for 2010 remain in place for the next year. On behalf of the Remuneration Committee.
Audit Committee Report

The Audit Committee of your Company consists of Maithri Wickremesinghe, Chairman and Pradipta Mohapatra, two directors who qualify as Independent Non-Executive Directors under the standards prescribed by the Colombo Stock Exchange. The main role and responsibilities of the Audit Committee include (a) exercising oversight responsibilities relating to the quality and integrity of the Companys nancial statements and nancial reporting process including the preparation, presentation and adequacy of disclosures in the nancial statements of Company in accordance with the Sri Lanka Accounting Standards; (b) exercising oversight responsibilities relating to the Companys compliance with nancial reporting and information requirements of the Companies Act No. 07 of 2007 and other relevant nancial reporting related regulations; (c) exercising responsibilities over processes to ensure that the Companys internal controls and risk management are adequate to meet the requirements of the Sri Lanka Auditing Standards; and compliance by the Company with legal and statutory requirements; (d) assessing the independence and performance of the Companys external auditors; (e) making recommendations to the Board pertaining to appointment re-appointment and in appropriate circumstances removal of the external auditors; (f ) considering (if appropriate) the degree of any work undertaken by the external auditor for the group other than the statutory audit; and (g) approving the remuneration and terms of engagement of the external auditors. The internal auditors report to the Audit Committee which meets with the internal auditors both with and without the Management present. The Audit Committee met four times during the nancial year ended 31st March 2011. The Audit Committee invited the Chief Executive Ocer and the Chief Financial Ocer of the Group to attend all its meetings although it reserved the right to request any of the individuals to withdraw. The Audit Committee inter alia engaged in the following activities during the nancial year under review. Review of the un-audited quarterly nancial statements and discussion of these nancial statements with management. Review of the audited nancial statements for the year and discussion of those nancial statements with the Management and external auditors. Discussion with the Companys external auditors the results of the external auditors examinations and the judgment of the external auditors concerning the quality as well as the acceptability of the Companys accounting principles. Discussion of the management letter issued by the external auditors and monitoring follow up action by the Management. Discussion with the external auditors of their independence from the Company and the Companys Management including a consideration of the compatibility of non-audit services provided by the external auditors with their independence. Review of the internal audit plan for the Company and unlisted subsidiaries and monitoring the performance of the internal auditors and their adherence to the internal audit plan. Review of the internal audit reports and monitoring follow up action by the management of the Company and its unlisted subsidiaries. Commissioning follow up reviews and reviewing the reports. Reviewing the report on compliance with statutory reporting and payment requirements submitted by the Company. The Committee reviewed the eectiveness of the external audit and to the Board the re-appointment of Messrs Ernst & Young Chartered Accountants as the external auditors of the Company for the ensuing nancial year, subject to the approval of the shareholders at the Annual General Meeting.
Maithri Wickremesinghe Chairman
Pradipta Mohapatra Director 26th May 2011
Directors Interest in Contracts with the Company

Related Party disclosures as required by the Sri Lanka Accounting Standards No. 30 on Related Party Disclosures is detailed in Note 35 to the nancial statements. In addition, the Company carried out transactions in the ordinary course of business with entities where the Directors of the Company are Directors of such entities. Value Nature of Transaction Bank Guarantee Charges Consultancy Fees IT Charges Interest Expense Dividend Income Consultancy Fees IT Charges Interest Income Bank Guarantee Charges Dividend Income Bank Guarantee Charges Consultancy Fees IT Charges Interest Income Interest Expense Bank Guarantee Charges IT Charges Rental Income IT Charges Interest Income Interest Income Dividend Income IT Charges Consultancy Fees Interest Income Transport and Accommodation Charges Interest Income IT Charges Interest Income Interest Expense Consultancy Fees IT Charges Dividend Income Interest Expense Consultancy Fees Interest Expense IT Charges Dividend Income Air Line Ticket Sales Bank Guarantee Charges Consultancy Fees IT Charges Dividend Income IT Charges Interest Income Consultancy Fees IT Charges Dividend Income Interest Income Value 2011 Rs. 437,024 64,500,000 18,896,554 (9,873,888) 43,373,632 100,000,000 26,888,592 15,894,493 183,633 43,508,675 1,028,293 246,790 4,074,306 12,025,350 565,561 890,035 226,802 5,923,506 6,750,000 2,829,717 246,790 663,744 (1,717,676) 17,099 2,887,492 (60,463) 53,300,000 281,043 8,640,000 (19,994,121) 8,000,000 (4,392,991) 1,585,304 3,240,000 (7,147,877) 1,000,000 3,243,813 4,230,000 1,082,489 901,108 3,949,521 533,041 2010 Rs. 328,606 68,401,960 24,548,015 (76,302,293) 19,746,664 116,391,400 15,359,561 9,836,768 457,471 23,815,072 923,532 247,004 2,573,671 (385,055) 567,006 794,541 206,184 19,221 93,486 5,290,663 3,375,000 3,353,818 247,004 1,424,646 (362,356) 232,542 59,463,800 255,778 6,198,901 (20,492,729) 9,092,760 (6,213,129) 1,536,897 2,877,655 (6,777,037) 36,083 9,092,760 3,502,548 2,877,655 493,526 1,744,191 13,961,498 790,384 3,673,831 -
Company
Directors
Hemas Manufacturing (Pvt) Ltd.
Mr. H. Esufally
Hemas Pharmaceuticals (Pvt) Ltd.
Mr. H. Esufally Mr. M. Esufally
Hemas Hospitals (Pvt) Ltd.
Mr. M. Esufally Mr. H. Esufally
Hemas Southern Hospitals (Pvt) Ltd.
Mr. M. Esufally
Hemas Clinical Research Services (Pvt) Ltd. Hemtours (Pvt) Ltd. Diethem Travel Lanka (Pvt) Ltd.
Mr. H. Esufally Mr. H. Esufally Mr. A. Esufally Mr. A. Esufally Mr. H. Esufally
Mowbray Hotels Ltd. Serendib Hotels PLC
Mr. A. Esufally Deshamanya Lalith De Mel Mr. H. Esufally Mr. A. Esufally Mr. H. Esufally Mr. A. Esufally Mr. I. Esufally Mr. M. Esufally Mr. H. Esufally Mr. I. Esufally
Forbes Air Services (Pvt) Ltd.
Hemas Air Services (Pvt) Ltd.
Hemas Travels (Pvt) Ltd.
Mr. H. Esufally Mr. I. Esufally
HIF Logistics (Pvt) Ltd. Far shipping Lanka (Pvt) Ltd.
Mr. I. Esufally Mr. I. Esufally
Company
Directors
Value Nature of Transaction Bank Guarantee Charges IT Charges IT Charges Interest Income Consultancy Fees Courier charges Interest Income IT Charges Dividend Income Bank Guarantee Charges Consultancy Fees IT Charges Interest Income Dividend Income IT Charges Interest Income Dividend Income Interest Expense Dividend Income Consultancy Fees Interest Expense IT Charges Dividend Income Shared Services Expenses Consultancy Fees IT Charges Interest Expense Dividend Income Centralised Coporate Services Consultancy Fees Bank Guarantee Charges Consultancy Fees Rental Income Interest Expense Interest Income
Value 2011 Rs. 468,481 3,251,244 182,488 663,267 (47,843) 87,768 6,257 51,415 308,488 717,193 174,646 122,070,000 35,170 52,516 2,047,809 (8,248,379) 5,630,455 463,283 (6,058,733) 68,788 18,000,000 (9,031,320) 370,185 755,734 (481,972) 434,414 (4,207,367) 25,707 123,395 925,463 2,652 4,516,977 2010 Rs. 6,443 442,923 710,123 310,841 (70,771) 189,681 37,242 308,756 453,392 3,235,811 2,778,427 33,452 1,417,366 4,169,589 (12,870,419) 39,413,187 617,511 (7,561,018) 37,874 9,000,001 (4,011,740) 710,086 4,618 (771,122) (2,184,008) 154,013 25,773 293,292 927,828 3,939,468
Exchange & Finance Investment (Pvt) Ltd. Hemas Aviation (Pvt) Ltd. ACX International (Pvt) Ltd.
Mr. I. Esufally Mr. H. Esufally Mr. I. Esufally Mr. H. Esufally Mr. I. Esufally
Hellman Worldwide Logistics (Pvt) Ltd. Mr. I. Esufally Discover the World Marketing (Pvt) Ltd. Mr. I. Esufally Hemas Power PLC Mr. H. Esufally Mr. I. Esufally
Giddawa Hydro Power (Pvt) Ltd.
Mr. H. Esufally
Peace Haven Resorts Ltd. Hemas Developments (Pvt) Ltd.
Mr. H. Esufally Mr. A. Esufally Mr. A. Esufally
Vishwa BPO (Pvt) Ltd.
Mr. H. Esufally
Hemas Corporate Services (Pvt) Ltd.
Mr. H. Esufally
N-able (Pvt) Ltd.
Mr. I. Esufally
Board of Directors
1. Mr. Lalith De Mel Independent Chairman Mr. Lalith De Mel has a Master of Arts Degree from Cambridge University, UK. and the AMP Harvard Business School USA. He counts over 40 years Board experience having served as a Director of several companies in Sri Lanka and abroad. He has served most of his career at Reckitt Benckiser PlC. UK and was a main Board Director. He was the Global Director Pharmaceuticals when he retired. He has served as the Chairman of the Board of Investment and the Chairman of Sri Lanka Telecom Limited, and was a Senior Advisor Ministry of Finance. He holds directorships in many other companies and is a Trustee of the Cambodia Trust UK. 2. Husein Esufally Chief Executive Ocer Mr. H. N. Esufally was appointed as the Chairman of Hemas Power PLC in 2009. He is also the Chief Executive Ocer of Hemas Holdings PLC. Mr. Esufally has over 28 years of management experience. Mr. Esufally holds a BSc (Honours) Degree in Electronics from the University of Sussex, UK. He is the founder member of the Association for Rehabilitation of Spinal Cord Injuries (ARSCI). 3. Abbas Esufally Non Executive Director Mr. A.N. Esufally is a Fellow of both the Institute of Chartered Accountants of England and Wales and the Institute of Chartered Accountants of Sri Lanka and is an all Island Justice of Peace. He serves as Chairman of Serendib Hotels PLC and Dolphin Hotels PLC. . He has experience of over 30 years in Sri Lanka and overseas and has been in the forefront of the leisure industry in Sri Lanka. He is the Honorary Consul General of Bhutan in Sri Lanka. 4. Imtiaz A H Esufally Executive Director Mr I A H Esufally holds a Bachelor of Arts (Honours) degree in Accounting and Economics from the University of Kent , UK. He heads the Transportation Sector and has over 20 years management experience in this eld and has been in the forefront of the aviation Industry. He was also past president of the IATA Agents Association of Sri Lanka.
5. Mr. Maithri Wickremesinghe Independent Director Mr. M.E. Wickremesinghe is an Honours Graduate in Law of the University of Colombo, an Attorney-at-Law of the Supreme Court of Sri Lanka and a Fellow of the Chartered Institute of Management Accountants of the United Kingdom. He is a practicing Attorney-at-Law specialising in Commercial, Corporate & Banking Law. He has previously lectured and examined at the Faculty of Laws of the University of Colombo, at the University of Moratuwa and at the Kotalawela Defense Academy. 6. Mr. Murtaza Esufally Executive Director Mr. M. A. H. Esufally holds a Bachelor of Law degree from the University of Essex, UK. He is a Barrister-at-Law (Lincolns Inn) and is an Attorney-at-Law of the Supreme Court of Sri Lanka. He has an Executive MBA from the Melbourne Business School. He has over 17 years of Senior Management experience. He is also the Chairman of Hemas Hospitals (Pvt) Ltd.
7. Mr. Divyaroop Bhatnagar Independent Director Mr. D. Bhatnagar is a Graduate in Mechanical Engineering from the Indian Institute of Technology, Kanpur, India with an MBA in Marketing from the Indian Institute of Management, Calcutta, India. He has over 25 years of experience with multinational companies such a Unilever, Benckiser, Phillips and ICI. 8. Mr. Pradipta Mohapatra Independent Director Pradipta K. Mohapatra sits on the Board of 15 publicly quoted as well as private companies in India, South Asia, USA and Europe. He had a long career, working as a Director on the main Board of US $4 Billion RPG Enterprises in India, providing oversight to a number of businesses. Mr. Mohapatra coaches many CEOs & CXOs. He is a Graduate in Chemical Engineering and Studied Management at the Harvard Business School. He was also invited to be a fellow of the Chartered Management Institute, UK.
Senior Management
The Senior Management of the Hemas Group consists of the Executive Directors of Hemas Holdings PLC, the Board of Management and the Group Operating Committee. The Board of Directors of Hemas Holdings PLC provides leadership for the aairs of the Company within the framework of prudent and eective risk management. It sets the strategic aims, ensuring that the necessary nancial and human resources are in place for the Company to meet its objectives. The Board reviews management performance, sets the Companys values and standards and makes sure that the obligations to its shareholders are understood and met.
The role of the Board of Management is to develop overall Group strategy and annual business plans, review business plans, evaluate investment proposals, design and review Group policies and controls and provide a forum for the Chief Executive Ocers to discuss ideas and issues. The Group Operating Committee provides a Forum for Senior Management to appraise Group performance, share business information and best practices, and implement decisions delegated by the Board. From time to time learning interventions by high-level resource personnel are provided to this Group.
Board of Management
1. Malinga Arsakularatne - Chief Financial Ocer 2. Kishan Nanayakkara - Managing Director, Hemas Power PLC 3. Imal Fonseka - Managing Director, Hemas Consumer Brands 4. Sanjeewa Samaranayake - Managing Director, Hemas Pharmaceuticals 5. Kasturi Chellaraja Wilson - Chief Process Ocer
Also in the Board of Management: Husein Esufally Imtiaz Esufally Murtaza Esufally
Group Operating Committee
1. Harith Perera - Managing Director, Diethelm Travels 2. Dr. Irshad Musheen - Director, Hemas Maritime 3. Roy Joseph - Director Finance, Hemas Consumer Brands 4. Indresh Fernando - Director Finance, Hemas Transportation 5. Riad Ameen - Legal Consultant 6. Dimuth De Alwis - Head of Group Human Resources 7. Dr. Aruna Rabel - Director Medical Services, Hemas Hospitals 8. Ranil De Silva - Managing Director, Serendib Hotels PLC
Also in the Group Operating Committee: Husein Esufally Kishan Nanayakkara Malinga Arsakularatne Imal Fonseka Kasturi Chellaraja Wilson Sanjeewa Samaranayake
Annual Report of the Board of Directors

Pricipal Activities Hemas Holdings Plc (the Company) is a holding company which owns, directly or indirectly, investments in the numerous companies constituting Hemas. Hemas is engaged in the principal aspects of the Fast Moving Consumer Goods and Healthcare industry and also has interests in the Transportation , Leisure and Energy-related businesses. Details of the Companys subsidiaries can be found in the Financial Review and Sector Reviews , which form part of this Report. Business Review The information that ful lls the requirements of the Business Review can be found in the Chairmans Review, the Chief Executive Ocers review , Sector Reviews and also in the Financial Review, all of which are incorporated in this Report of the Directors by way of reference. Throughout the Report of the Directors, the Board aims to present a balanced and understandable assessment of the Companys position and prospects in its nancial reporting to shareholders and other interested parties. Serendib Hotels PLC, the owning company of the Hotel Sector, together with the Minor group ,Thailand, acquired a 100% stake in Cyprea Lanka (Pvt) Ltd, owners of the Kani Lanka Resort & Spa, Kalutara, in August 2010. Cyprea Lanka (Pvt) Ltd subsequently changed its name to Jada Resort & Spa (Pvt) Ltd. Hemas Hospitals (Pvt) Ltd, a subsidiary of Hemas raised Rs.1.4 bn by way of a Rights Issue during March 2011. The issue was underwritten by Hemas as a result of which it increased its stake upto 81%. Accounting Policies The Company and the Group have adopted signi cant accounting policies in preparing the Financial Statements, which are stated in note 2. Post-Balance Sheet Events Post-balance sheet events are given in Note 32 to the Consolidated Financial Statements. Financial Statements and Dividends The Consolidated Balance Sheet and Consolidated Statement of Income are available on pages 60 and 61 under Consolidated Financial Statements. The Company paid an Interim dividend for the year ended 31st March 2011 of Rs.0.25 per share on 22nd November 2010 (2009/10: Rs.2.25) to Ordinary Shareholders whose names appeared in the Register at the close of business on 11th November 2010. The dividend payout for the year under review has been formulated in accordance with the Companys policy to pay sustainable dividend linked to long term performance, keeping in view the Companys need for capital for its growth plans and the intent to nance such plans through internal accruals to the maximum. Accordingly, shareholder approval will be sought to declare a nal dividend of Rs.0.25 per Ordinary share as recommended by the Board, for the year ended 31st March 2011. Board of Directors Mr. Lalith De Mel Chairman Mr. Husein Esufally CEO Mr. Abbas Esufally Mr. Imtiaz Esufally Mr. Maithri Wickremesinghe Mr. Murtaza Esufally Mr. Pradipta Mohapatra Mr. Divyaroop Bhatnangar Pro les of the directors who held oce at the end of the year are given in the directors' pro les section on pages 50 and 51. The Companys Articles of Association requires a director to stand for re-election once every 3 years. Accordingly, Messrs. M.E. Wickremesinghe and D. Bhatnagar will stand for re-election at the forthcoming Annual General Meeting. Mr. L .De Mel, the Independent Chairman, retires from Oce having served a term of 1 year from the date of his re-appointment at the last AGM. The Board, unanimously recommends his re-appointment for another term of 1 year and a resolution to this eect is included in the Notice of Meeting on page 104. Appointment and Re-Appointment of Non-Executive Directors The terms and conditions of appointment of Non-Executive Directors are set out in their letters of appointment with the Company. No director is, or was, materially interested in any contract subsisting during or at the end of the year that was signi cant in relation to the Companys business. See also Related party transactions under note 35. Qualifying Third-Party Indemnities The Company has indemni ed each of the directors, to the widest extent permitted by the applicable laws against any and all liability, howsoever caused (including by that Directors own negligence), suered or incurred in the course of acting as a Director or Employee of the Company or certain other entities. Directors Interests The interests (in shares or calculated equivalents) of the Directors in oce at the end of the nancial year, including any interests of a connected person (as de ned in the Rules and Regulations of the Colombo Stock Exchange) of the directors, and the Chief Executive Ocers holding in shares of the Company are set out on page 101 of this Report. An Interest Register is maintained by the Company as per the Companies Act No. 7 of 2007. All directors have made declarations as provided for in section 192(2) of the said Act and related entries were made in the Interest Register during the year under review. There were no changes in Directors share interests during the period under review other than as a result of the sub division carried out last year. Remuneration of Directors The fees payable to the Non-Executive Directors for 2010/2011 remain in place for the next year. The aggregate remuneration paid to the Directors who served during the year is included under Key Management Personnel Compensation on page 96 of this report.
Board Committees Audit Committee Mr. Maithri Wickremesinghe (Chairman) Mr. Pradipta Mohapatra Remuneration Committee Mr. Lalith De Mel (Chairman) Mr. Maithri Wickremesinghe Nominations Committee Mr. Lalith De Mel (Chairman) Mr. Pradipta Mohapatra Mr. Husein Esufally Operating Committees Board of Management Mr. Husein Esufally (Chairman) Mr. Imtiaz Esufally Mr. Murtaza Esufally Mr. Malinga Arsakularatne Mr. Kishan Nanayakkara Mr. Imal Fonseka Mr. Sanjeewa Samaranayake Ms. Kasturi Chellaraja Wilson Group Operating Committee Mr. Husein Esufally Mr. Kishan Nanayakkara Mr. Malinga Arsakularatne Mr. Imal Fonseka Ms, Kasturi Chellaraja Wilson Mr. Harith Perera Mr. Sanjeewa Samaranayake Dr. Irshad Musheen Mr. Roy Joseph Ms. Indresh Fernando Mr. Riad Ameen Mr. Dimuth De Alwis Dr. Aruna Rabel Mr. Ranil De Silva Share Capital Share Subdivision At the Annual General Meeting held on 2nd July 2010, shareholders approval was obtained to subdivide the Companys issued shares in the proportion of ve (5) new shares for every one (1) existing share held as at that date. Thus the ordinary shares in issue increased from 101,958,124 to 509,790,620. Share Ownership Scheme-2008 The Hemas Employee Share Ownership Scheme (ESOS) was established in 2008 to assist and enable its employees to obtain the bene ts from an appreciation in the value of shares in the Company. The maximum number of shares to be granted to eligible employees under this scheme shall not exceed 3% of the issued ordinary shares of the Company.
Jacey Trust Services (Pvt) Ltd were appointed Trustees to the ESOS. A rst tranche of 650,000 shares were allotted in February 2009 and vested in the eligible employees for a period of 3 years from that date. With the sub division of shares that was carried out by the Company in July 2010, these shares increased to 3,250,000 and are held in Trust for and on behalf of the eligible employees until the expiry of the vesting period. A total of 2,250,000 shares (post subdivision) were allotted under the 2nd tranche in December 2010 and is also held in trust with Jacey Trust Services (Pvt) Ltd. The new scheme shares allotted pursuant to the ESOS are listed and rank pari passu with the issued ordinary shares of the Company. Share Capital The Companys issued share capital as at 31st March, 2011, was Rs.1,468,425,034/- details of which are set out in Note 14th to the Company Financial Statements. Transfer of Securities There are no signi cant restrictions on the transfer of securities. Substantial Shareholdings As at 31st March 2011, the Company had been noti ed by the following investors of their interests in 10% or more of the Companys shares. These interests are noti ed to the Company pursuant to Rule 7.6 of the Regulations of the Colombo Stock Exchange. Name of Shareholder Number of shares held 90,762,875 86,396,035 85,781,250 85,780,665 Percentage holding 17.73% 16.87% 16.75% 16.75%
AZ Holdings (Pvt) Ltd Saraz Investments (Pvt) Ltd Blueberry Investments (Pvt) Ltd Amagroup (Pvt) Ltd
The names of the twenty major shareholders of the Company are indicated on page 101. The percentage of shares held by the public as at 31st March 2011 was 28.05% . Other Matters Financial Risk Management, Objectives and Policies Descriptions of the use of nancial instruments and nancial risk management objectives and policies are set out on pages 32 and 33. Related Party Transactions Other than disclosures given in Notes 35.1 and 35.2 to the Consolidated Financial Statements respectively, there were no transactions or proposed transactions that were material to either the Company or any related party. Nor were there any transactions that were unusual in their nature or conditions with any related party.
Annual Report of the Board of Directors
Charitable Contributions Hemas, through individual subsidiary companies, donated Rs 9,665,268 (2010 - Rs 1,544,983) during the year under review to charitable causes. Employee Communication and Involvement Detailed information can be found in the Sustainablity Report on page 37. Group Employment The number of persons in employment in the Company and its subsidiaries as at 31st March 2011 was 3,034 (2010 - 2585) Corporate Social Responsibility A summary of Hemas approach to corporate social responsibility is contained in the Chief Executive Ocers Review. Further details are available in the Sustainability Report on page 34. Contingent Liabilities and Capital Commitments Commitments made on capital expenditure and contingent liabilities as at the year end are disclosed in note 33 to the nancial statements. Capital Expenditure A sum of Rs. 1,095Mn (2010 Rs. 463 Mn) was capitalised by the group in property plant and equipment during the year under review. The movement in Property, Plant and Equipment for the year are given in note 3 to the nancial statements. Market Statistics Market statistics as at 31st March 2011 are indicated on page 101 of this report. Reserves Total reserves is the Company and the Group as at the close of the Financial year were Rs. 257Mn and Rs. 1,046Mn respectively. (2010 Rs. 257Mn and Rs. 806Mn) Investments Investment of the Company in subsidiaries, joint ventures, and external investments amounted to Rs. 5,849Mn (2010 Rs. 5,728Mn). A detailed description of the long term investments held as at the balance sheet date is given in notes 7 to 9 of the Financials statements. Statutory Payments The directors are satis ed that all statutory payments to the Government and other statutory institutions including employee related payments have been made in time to the best of their knowledge and belief. Auditors and Disclosure of Information to Auditors So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information, being information needed by the auditors in connection with preparing their report, of which the auditors are unaware. Each director has taken all the steps that he is obliged to take as a director in order to make him aware of any relevant audit information and to establish that the auditors are aware of that information. Ernst & Young, Chartered Accountants have signi ed their willingness to continue in oce, and a resolution for their re56 Hemas Holdings PLC Annual Report 2010/11
appointment and to authorise the directors to set their remuneration will be submitted to the AGM. Note 28 to the nancial statements sets out details of the auditors remuneration. Corporate Governance The Companys statement on Corporate Governance is included in the Corporate Governance Principles. Going Concern The Groups business activities, together with the factors likely to aect its future development, performance and position are set out in the business review. The nancial position of the Group, its cash ow, liquidity position, facilities and borrowing position are described in the Financial review and note 17 to the nancial statements provide further detail on the Groups borrowings and management of nancial risks. The business review includes an analysis of the key risks facing the Group and the Groups approach to risk management. After reviewing the Groups annual budget, liquidity requirements, plans and nancing arrangements, the directors are satis ed that the Company and the Group have adequate resources to continue to operate for the foreseeable future and con rm that the Company and the Group are going concerns. For this reason they continue to adopt the going concern basis in preparing the nancial statements. Annual General Meeting The AGM will take place on June 30, 2011, at the Auditoruim of the Chamber of Commerce, Navam Mawatha, Colombo 2. Details of the business to be put to shareholders at the AGM can be found in the Notice of the Annual General Meeting. Acknowledgement Your directors would like to express their appreciation for the assistance and co-operation received from nancial institutions, banks, Government authorities, customers, vendors and members during the year under review. Your directors also wish to place on record their appreciation of the committed services by the executives, sta and workers of the Company. Signed on behalf of the Board
Lalith de Mel Chairman
Husein Esufally CEO
Hemas Corporate Services (Pvt) Ltd. Secretaries 26th May 2011
Financial Statements
Statement of Directors Responsibilities in respect of the Annual Report and the Financial Statements
The directors are responsible for preparing the Annual Report and the Group and Company nancial statements in accordance with applicable laws and regulations. Company law requires the directors to prepare Group and Company nancial statements for each nancial year. The directors must not approve the nancial statements unless they are satis ed that they give a true and fair view of the state of aairs of the Group and Company and of their pro t or loss for that period. In preparing each of the Group and Company nancial statements, the directors are required to: select suitable accounting policies and then apply them consistently; make judgments and estimates that are reasonable and prudent; prepare the nancial statements on a going concern basis unless it is inappropriate to presume that the Group and the Company will continue in business. Hemas Corporate Services (Pvt) Ltd Secretaries 26th May 2011 Directors Responsibility Statement The directors con rm to the best of their knowledge, that:1. the nancial statements prepared in accordance with the applicable laws, give a true and fair view of the nancial position and pro t of the Company and the undertakings included in the consolidation as a whole. 2. the management reports, which are incorporated into the Report of the Directors, include a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation as a whole, together with the principal risks and uncertainties they face. By Order of the Board of Hemas Holdings PLC
The directors are responsible for keeping adequate accounting records that are sucient to show and explain the parent Company's transactions and disclose with reasonable accuracy at any time, the nancial position of the Company and enable them to ensure that its nancial statements comply with the Companies Act No. 7 of 2007. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities. Under applicable laws and regulations, the directors are also responsible for preparing a Report of the Directors, Directors' Remuneration report and Corporate Governance statement that complies with those laws and regulations. The directors are responsible for the maintenance and integrity of the corporate and nancial information included on the Company's website.
Auditors Report
INDEPENDENT AUDITORS REPORT TO THE SHAREHOLDERS OF HEMAS HOLDINGS PLC Report on the Financial Statements We have audited the accompanying nancial statements of Hemas Holdings PLC, the consolidated nancial statements of the Company and its subsidiaries which comprise the Balance Sheets as at March 31, 2011, and the Income Statements, Statements of Changes in Equity and Cash Flow Statements for the year then ended, and a summary of signi cant Accounting Policies and other explanatory notes. Managements Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these nancial statements in accordance with Sri Lanka Accounting Standards. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of nancial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate Accounting Policies, and making accounting estimates that are reasonable in the circumstances. Scope of Audit and Basis of Opinion Our responsibility is to express an opinion on these nancial statements based on our audit. We conducted our audit in accordance with Sri Lanka Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the nancial statements are free from material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the nancial statements. An audit also includes assessing the accounting principles used and signi cant estimates made by management, as well as evaluating the overall nancial statement presentation.
We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. We therefore believe that our audit provides a reasonable basis for our opinion. Opinion In our opinion, so far as appears from our examination, the Company maintained proper accounting records for the year ended March 31, 2011 and the nancial statements give a true and fair view of the Companys state of aairs as at March 31, 2011 and its Pro t and cash ows for the year then ended in accordance with Sri Lanka Accounting Standards. In our opinion, the consolidated nancial statements give a true and fair view of the state of aairs as at March 31, 2011 and the pro t and cash ows for the year then ended, in accordance with Sri Lanka Accounting Standards, of the Company and its subsidiaries dealt with thereby, so far as concerns the shareholders of the Company. Report on Other Legal and Regulatory Requirements In our opinion, these nancial statements also comply with the requirements of Section 151 (2) and Sections 153 (2) to 153 (7) of the Companies Act No. 07 of 2007.
Colombo May 26, 2011
Balance Sheet
Group As At 31 March Note ASSETS Non-Current Assets Property, Plant and Equipment Investment Properties Intangible Assets Leasehold Property Deferred Tax Assets Loans Due from Related Parties Investment in Subsidiaries Investment in Joint Ventures Other Long Term Receivables Other Investments Current Assets Inventories Trade and Other Receivables Loans Due from Related Parties Other Investments Tax Recoverable Amounts Due from Related Parties Short Term Cash Investments Cash and Cash Equivalents Total Assets EQUITY AND LIABILITIES Equity Attributable to Equity Holders of the Parent Stated Capital Reserves Retained Earnings Shareholders' Funds Minority Interests Total Shareholders' Funds and Minority Interests Non-Current Liabilities Other Borrowings Interest Bearing Loans and Borrowings Deferred Tax Liabilities Retirement Bene t Liability Current Liabilities Trade and Other Payables Dividends Payable Income Tax Liabilities Amounts Due to Related Parties Other Borrowings Interest Bearing Loans and Borrowings Total Shareholders' Funds, Minority Interests and Liabilities 2011 Rs. 2010 Rs. 2011 Rs. Company 2010 Rs.
3 4 5 6 18 12 7 8 9
7,457,601,494 1,309,965,000 323,894,824 58,779,136 25,488,978 43,318,140 433,661,251 9,652,708,823
7,033,615,456 1,261,409,950 333,073,487 61,844,853 22,805,294 43,318,140 64,498,596 8,820,565,776
105,305,439 309,965,000 15,000,000 5,696,001,377 38,519,264 114,008,371 6,278,799,451 176,187,120 519,271,564 48,642 130,726,193 210,023 23,678,870 850,122,412 7,128,921,863
59,682,782 330,409,950 21,937,369 5,574,780,994 38,519,264 114,248,398 6,139,578,757 116,826,379 268,621,260 48,642 4,436,091 214,091,394 50,141,052 27,994,605 682,159,423 6,821,738,180
10 11 12 9 13 22 22
1,680,771,785 1,544,559,296 4,575,929,336 3,933,326,303 67,694 67,694 148,020,028 116,532,983 2,025,096,612 1,258,993,053 1,133,279,596 392,885,938 9,563,165,051 7,246,365,267 19,215,873,874 16,066,931,043
14 15
1,468,425,034 1,045,977,220 6,359,602,547 8,874,004,801 1,701,634,732 10,575,639,533 10,242,872 1,700,040,360 123,609,201 230,298,404 2,064,190,837
1,369,222,534 805,982,557 5,516,910,931 7,692,116,022 1,488,104,391 9,180,220,413 8,790,222 1,231,529,708 145,146,554 184,963,092 1,570,429,576
1,468,425,034 257,032,425 4,077,851,368 5,803,308,827 5,803,308,827 686,502,490 42,021,818 18,675,791 747,200,099 40,140,391 1,931,630 13,384,601 167,811,718 355,144,597 578,412,937 7,128,921,863
1,369,222,534 257,032,425 4,096,385,205 5,722,640,164 5,722,640,164 425,709,598 60,197,984 17,025,408 502,932,990 41,390,249 1,563,715 7,807,835 116,941,470 428,461,757 596,165,026 6,821,738,180
16 17 18 19
20 21 16 17
4,091,885,147 3,286,857,966 12,797,877 4,204,888 89,890,069 69,044,426 1,207,000 1,207,000 2,380,263,411 1,954,966,774 6,576,043,504 5,316,281,054 19,215,873,874 16,066,931,043
These nancial statements are in compliance with the requirements of the Companies Act No. 07 of 2007.
Malinga Arsakularatne Chief Financial Ocer

The Board of Directors is responsible for the preparation and presentation of these nancial statements. Signed for and on behalf of the Board by,
Husein Esufally Chief Executive Ocer
Lalith De Mel Chairman
The Accounting Policies and Notes on pages 65 through 99 form an integral part of these nancial statements. Colombo May 26, 2011
Income Statement
Group Year ended 31st March Note Revenue Cost of Sales Gross Pro t Dividend Income Change in Fair Value of Investment Properties Other Income and Gains Gain/ (Loss) on Disposal of Investments Selling and Distribution Costs Administrative Expenses Finance Cost Finance Income Pro t Before Tax Income Tax Expenses Pro t for the Year 27 27 28 29 25 26 24 23 2011 Rs. 2010 Rs. 2011 Rs. 304,850,770 304,850,770 303,383,357 (20,444,950) 5,574,591 233,909 (241,135,848) (52,135,653) 47,362,725 347,688,901 (9,369,303) 338,319,598 Company 2010 Rs. 343,212,995 343,212,995 156,045,665 58,700,000 1,699,527 1,241,081,268 (215,934,394) (125,368,362) 30,298,791 1,489,735,490 (34,627,608) 1,455,107,882
18,067,489,191 14,997,404,705 (12,228,702,138) (9,894,199,801) 5,838,787,053 780,523 24,405,050 108,830,408 3,316,950 5,103,204,904 93,014 82,700,000 44,527,535 (1,600,000)
(1,443,188,719) (1,305,185,673) (2,792,087,364) (2,480,575,088) (297,736,772) 126,237,483 1,569,344,612 (214,153,945) 1,355,190,667 (449,375,718) 100,929,714 1,094,718,688 (160,074,742) 934,643,946
Attributable to: Equity Holders of the Parent Minority Interests 1,210,158,582 145,032,085 1,355,190,667 901,730,007 32,913,939 934,643,946 338,319,598 338,319,598 1,455,107,882 1,455,107,882
Earnings Per Share Dividends Per Share
30 31
2.36 0.70
1.76 0.36
The Accounting Policies and Notes on pages 65 through 99 form an integral part of these nancial statements.
Stated Capital Rs. Total Rs.
Attributable to Equity Holders of the Parent Revaluation Exchange and Other Retained Reserve Capital Reserve Earnings Rs. Rs. Rs. Minority Interests Rs. Total Equity Rs.
Group 1,369,222,534 1,369,222,534 99,202,500 1,468,425,034 42,140,353 (51,396,517) 109,133,027 101,250,000 1,210,158,582 (15,686,667) (356,853,435) (4,183,028) (42,140,353) 51,396,517 6,359,602,547 42,717,711 (29,970,549) 830,613 835,953,106 5,516,910,931 830,613 42,717,711 7,692,116,022 1,210,158,582 99,202,500 101,250,000 (15,686,667) (356,853,435) (4,183,028) 109,133,027 10,075,886 28,791,914 8,874,004,801 4,235,328 (48,742,570) (1,384,237) (29,349,131) 48,742,570 1,384,237 (73,176,683) (98,290,486) (165,172,161) (2,303,361) (165,172,161) (2,303,361) (6,825,936) (767,787) 643,892,692 (18,370,355) 199,776 1,488,104,391 145,032,085 33,750,000 (44,322,176) (1,394,343) 11,318,357 15,204,132 53,716,667 (76,923,588) 914,598,431 4,821,392,989 7,028,290,366 901,730,007 901,730,007 (15,686,667) (15,686,667) 837,062,062 32,913,939 7,865,352,428 934,643,946 (15,686,667) (171,998,097) (3,071,148) 643,892,692 (116,660,841) 1,030,389 42,717,711 9,180,220,413 1,355,190,667 99,202,500 135,000,000 (15,686,667) (401,175,611) (5,577,371) 120,451,384 15,204,132 53,716,667 225,619 10,301,505 28,791,914 1,701,634,732 10,575,639,533
Statement of Changes in Equity
As at 31 March 2009 Pro t for the Year Redemption of Preference Shares of Joint Venture Company Dividends Paid - Ordinary Shares (2009) - Preference Shares of Joint Venture Company Transfer to/from during the Year - Overhaul, Heat Rate and Lube Oil Reserves - Revaluation Reserve Shares Issued to Minority Shareholders Adjustment in respect of changes in Group Holding Net Gain/(Loss) Recognised Directly in Equity - Deferred Income Tax - Exchange Reserve As at 31 March 2010
Pro t for the Year Issue of ordinary shares under Employee Share Options Scheme Issue of Preference shares Redemption of Preference Shares of Joint Venture Company Dividends Paid - Ordinary Shares (2010) - Preference Shares Transfer to/from during the Year - Overhaul Reserve, Heat Rate and Lube Oil - Revaluation Reserve Surplus on revaluation Shares Issued to Minority Shareholders Adjustment in respect of changes in Group Holding Net Gain/(Loss) Recognised Directly in Equity - Deferred Income Tax - Exchange Reserve As at 31 March 2011 10,075,886 28,791,914 (1,178,635) 1,047,155,855
Statement of Changes in Equity

Stated Capital Rs. Company As at 31 March 2009 Pro t for the Year Final Dividends Paid - 2008/2009 Net Gain/ (Loss) directly recognised in Equity - Acqusition, Disposal and changes in Investments As at 31 March 2010 Pro t for the Year Final Dividends Paid - 2009/2010 Interim Dividends Paid - 2010/2011 Issue of ordinary shares under Employee Share Option Scheme As at 31 March 2011 99,202,500
1,468,425,034 1,369,222,534 368,073,839 2,695,408,070 4,432,704,444
Capital & Revenue Reserve Rs.
Retained Earnings Rs.
Total Rs.
1,455,107,882 (165,172,161)
1,455,107,882 (165,172,162)
1,369,222,534
(111,041,414)
257,032,425
111,041,414
4,096,385,205
5,722,640,164
338,319,598 (229,405,780) (127,447,655)
338,319,598 (229,405,780) (127,447,655) 99,202,500

5,803,308,827
257,032,425
4,077,851,368
Cash Flow Statement

Group Year ended 31st March Note Operating Activities Pro t Before Taxation Adjustments for Non Cash items Depreciation Pro t on Disposal of Property, Plant and Equipment Retirement Bene t Plan Finance Cost Investment Income Change in Fair Value of Investment Properties (Pro t)/ Loss on Sale of Investments Exchange (Gain)/Loss on USD Loan Amortisation/Impairment of Intangibles Amortisation of Leasehold Property Amortisation of Other Long Term Receivables Working Capital Adjustments (Increase)/Decrease in Trade and Other Receivables (Increase)/Decrease in Inventories (Increase)/Decrease in Amounts Due from Related Parties Increase/(Decrease) in Amounts Due to Related Parties Increase/(Decrease) in Trade and Other Payables Finance Cost Paid Income Tax Paid Gratuity Paid Net Cash from/(Used in) Operating Activities 2011 Rs. 2010 Rs. 2011 Rs. Company 2010 Rs.
1,569,344,612 3 19 27 24 619,975,894 (30,651,218) 65,553,839 297,736,772 (780,523) (24,405,050) (3,494,978) 18,655,896 10,119,432 3,065,717 -
1,094,718,688 522,605,675 4,828,403 64,771,707 449,375,718 (93,014) (82,700,000) 1,600,000 36,969,430 9,160,937 3,065,716 360,000
347,688,901
1,489,735,490
17 5 6
17,459,807 18,012,703 (3,560,177) (79,716) 3,523,133 4,624,701 52,135,653 125,368,362 (303,383,357) (156,045,665) 20,444,950 (58,700,000) (233,909) (1,241,081,268) -
29 19
(642,603,033) (136,212,489) 805,027,181 (297,736,772) (238,714,881) (20,218,527) 1,994,661,872
(355,629,889) (235,764,189) 510,073,378 (449,375,718) (145,416,246) (20,565,499) 1,407,985,097
(59,360,741) 83,365,201 50,870,248 (881,946) (52,135,653) (17,532,612) (1,872,750) 136,526,748
40,217,620 18,691,310 55,467,965 (3,531,013) (125,368,362) (9,140,014) (6,707,421) 151,464,692
Investing Activities Purchase of Property, Plant and Equipment 3 Acquisitions and Disposals of Subsidiaries Investment in Intangible Assets 5 Other Investments Proceeds from Disposal of Property, Plant and Equipment Proceeds from Disposal of Investments Redemption of Preference Shares of Joint Venture Company Investment Income Received 24 Net Cash from/(Used in) Investing Activities Financing Activities Interest Bearing Loans and Borrowings (Net) - Rupee Loan - USD Loan Proceeds from Issue of Preference Shares Proceeds from Issue of Ordinary shares under ESOS Proceeds from Minority Shareholders Dividends Paid - Ordinary Shares - Preference Shares Net Cash from/(Used in) Financing Activities Net Increase/(Decrease) in Cash and Cash Equivalents Exchange loss Cash and Cash Equivalents at the beginning of the Year Cash and Cash Equivalents at the end of the Year
(1,095,345,810) (940,769) (369,402,682) 178,336,482 57,451,672 (15,686,667) 780,523 (1,244,807,251)
(434,087,867) (268,791,801) 53,718,573 14,400,000 (15,686,667) 93,014 (650,354,748)
(71,467,835) (12,808,057) (121,220,383) (1,805,748,920) (25,000,000) 11,945,551 2,022,397 473,936 2,330,535,000 303,383,357 156,045,665 123,114,626 645,046,085
259,073,525 228,837,362 135,000,000 99,202,500 15,204,132 (393,976,965) (4,183,028) 339,157,526 1,089,012,147 (1,903,112) 682,269,858 1,769,378,893
(129,224,924) (373,118,293) 655,478,626 (170,928,413) (3,071,148) (20,864,152) 736,766,197 (54,496,339) 682,269,858
(88,188,543) 99,202,500 (356,853,435) (345,839,478) (86,198,104) 76,582,400 (9,615,704)
(577,640,300) (164,098,474) (741,738,774) 54,772,003 21,810,397 76,582,400
22 22
Notes to the Financial Statements

1 CORPORATE INFORMATION 1.1 GENERAL Hemas Holdings PLC is a public limited liability company listed on Colombo Stock Exchange incorporated and domiciled in Sri Lanka. The registered oce and the principal place of business are situated at No. 36, Bristol Street, Colombo 01. Hemas Holdings PLC does not have an identi able parent of its own. 1.2 CONSOLIDATED FINANCIAL STATEMENTS The Consolidated nancial statements of the Company for the year ended 31 March 2011 comprise the Hemas Holdings PLC (the Company) and all its Subsidiaries and Joint Ventures whose accounts have been consolidated therein (the Group). 1.3 PRINCIPAL ACTIVITIES AND NATURE OF OPERATIONS During the year, the principal activities of the Company were carrying out investment activities, and providing management and administration services to other Companies in the group and the principal activities of the Subsidiaries and Joint Ventures are disclosed in Note 37 to the nancial statements. 1.4 DATE OF AUTHORISATION FOR ISSUE The Consolidated nancial statements of Hemas Holdings PLC for the year ended 31 March 2011 were authorised for issue, in accordance with a resolution of the Board of Directors on 26 May 2011. 2 GENERAL POLICIES 2.1 BASIS OF PREPARATION The nancial statements of the Group have been prepared on an accrual basis and under the historical cost convention basis unless stated otherwise. The nancial statements are presented in Sri Lankan Rupees, which is the Groups functional and presentation currency. 2.1.1 STATEMENT OF COMPLIANCE The nancial statements of the Group have been prepared in compliance with the Sri Lanka Accounting Standards (SLAS) issued by the Institute of Chartered Accountants of Sri Lanka and the requirements of the Companies Act No.7 of 2007. 2.1.2 GOING CONCERN The Directors have made an assessment of the Companys ability to continue as a going concern and they do not intend either to liquidate or to cease trading. 2.1.3 BASIS OF CONSOLIDATION The nancial statements of the Group represent the (a) Subsidiaries Subsidiaries are fully consolidated from the date of acquisition or incorporation, being the date on which the group obtains control and continue to be consolidated until the date that such control ceases. Subsidiaries are those enterprises controlled by the parent. Control exists when the parent holds more than 50% of voting rights or otherwise has a controlling interest. Diethelm Travel The Maldives (Pvt) Ltd has been consolidated as a subsidiary based on the power to govern the nancial and operating policies by the parent. The following Subsidiaries have been incorporated outside Sri Lanka. Name Hemas Consumer Brands (Pvt) Ltd Country of Reporting Incorporation Currency Bangladesh Taka (BDT) US Dollar (USD) consolidation of the nancial statements of Hemas Holdings PLC and all its Subsidiaries and Joint Ventures as at 31 March 2011. The nancial statements of the Subsidiaries are prepared for the same reporting period as the parent company and in compliance with the Groups accounting policies unless speci cally stated. All intra-group balances, income and expenses and unrealised gains/losses resulting from intra-group transactions, are eliminated in full.
Diethelm Travel Republic of The Maldives (Pvt) Ltd Maldives
Minority Interests represent the portion of pro t or loss and net assets that is not held by the group and are presented separately in the Consolidated Income Statement and within equity in the consolidated Balance Sheet, separately from parent shareholders equity. (b) Joint Ventures The Group has an interest in joint ventures which are jointly controlled entities. A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control, and a jointly controlled entity is a joint venture that involves the establishment of a separate entity in which each venture has an interest. The Group recognises its interest in the joint venture using proportionate consolidation method. The Group combines its share of each of the assets, liabilities, income and expenses of the joint venture with the similar items, line by line, in its consolidated nancial statements. The nancial statements of the joint
ventures are prepared for the same reporting year as the parent company except for Hellman Worldwide Logistics (Pvt) Ltd. and HIF Logistics (Pvt) Ltd., where the nancial statements are prepared for the year ended 31 December 2010. All the material transactions are adjusted for the 3 months period ended 31 March 2011. Accounting policies of the joint ventures are consistent with the parent company. The following Joint Venture has been incorporated outside Sri Lanka. Country of Reporting incorporation Currency HIF Logistics (Pvt) Ltd Pakistan Pakistan Rupee (PKR) (c) Business Combination and Goodwill Business Combinations are accounted for using the purchase method. This involves recognising identi able assets (including previously unrecognised intangible assets) and liabilities (including contingent liabilities and excluding future restructuring) of the acquired business at fair value. Goodwill acquired in a business combination represents the excess of the cost of the business combination over the Groups interest in the net fair value of the acquirers identi able assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. 2.1.4 COMPARATIVE INFORMATION Previous years gures and phrases have been rearranged wherever necessary, to con rm to the current years presentation. 2.2 CHANGES IN ACCOUNTING POLICIES The Accounting Policies adopted are consistent with those used in the previous year. 2.3 SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS 2.3.1 JUDGEMENTS In the process of applying the Companys accounting policies, management has made the following judgments, apart from those involving estimations, which have the most signi cant eect on the amounts recognized in the nancial statements. Deferred Tax Assets Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable pro t will be available against which the losses can be utilised. Signi cant management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable pro ts together with future tax planning strategies.
Impairment of Goodwill The group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value in use of the cash generating units to which the goodwill is allocated. Estimating a value in use amount requires management to make an estimate of the expected future cash ows from the cash generating unit and also to choose a suitable discount rate in order to calculate present value of those cash ows. Fair Value of Unquoted Equity Investments The unquoted equity instruments have been valued based on the expected cash ows discounted at current rates applicable for items with similar terms and risk characteristics. This valuation requires the company to make estimates about expected future cash ows and discount rates, and hence they are subject to uncertainty. 2.3.2 ESTIMATES AND ASSUMPTIONS The key assumptions concerning the future and other key sources of estimation uncertainty at the Balance Sheet date, that have a signi cant risk of causing a material adjustments to the carrying amounts of assets and liabilities within the next nancial year are discussed below. The respective carrying amounts of assets and liabilities are given in related notes to the nancial statements. De ned Bene t Plans The cost of de ned bene t plans-gratuity is determined using actuarial valuations. The actuarial valuation involves making assumptions about discount rates, expected rates of returns on assets, futures salary increases morality rates. Due to the long term nature of these plans, such estimates are subject to signi cant uncertainty. All assumptions are reviewed at each reporting date. 2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.4.1 FOREIGN CURRENCY TRANSLATION AND HEDGING (a) Foreign currency transaction and balances All foreign exchange transactions are converted to functional currency, at the rates of exchange prevailing at the time the transactions are eected. Monetary assets and liabilities denominated in foreign currency are translated to functional currency equivalents at the exchange rate prevailing at the balance sheet date. Non-monetary assets and liabilities are translated using exchange rates that existed when the values were determined. The resulting gains and losses are accounted for in the income statement.
Name
(b) Foreign Operations The Balance sheet and income statement of overseas subsidiaries and joint ventures which are deemed to be foreign operations are translated to Sri Lankan rupees at the rate of exchange prevailing as at the balance sheet date and at the average annual rate of exchange for the period respectively. The exchange dierences arising on the translation are taken directly to a separate component of equity.On disposal of a foreign entity, the deferred cumulative amount recognized in equity relating to that particular foreign operation is recognised in the income statement. 2.4.2 TAXATION (a) Current Taxes Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the Commissioner General of Inland Revenue. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the Balance Sheet date. The provision for income tax is based on the elements of income and expenditure as reported in the nancial statements and computed in accordance with the provisions of the Inland Revenue Act. (b) Deferred Taxation Deferred income tax is provided, using the liability method, on all temporary dierences at the Balance Sheet date between the tax bases of assets and liabilities and their carrying amounts for nancial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary dierences except; Where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, aects neither the accounting pro t nor taxable pro t or loss; and In respect of taxable temporary dierences associated with investments in subsidiaries, associates and interests in joint ventures, except where the timing of the reversal of the temporary dierences can be controlled and it is probable that the temporary dierences will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary dierences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable pro t will be available against which the deductible temporary dierences, and the carry-forward of unused tax credits and unused tax losses can be utilised except:
Where the deferred income tax asset relating to the deductible temporary dierence arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, aects neither the accounting pro t nor taxable pro t or loss; and In respect of deductible temporary dierences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary dierences will reverse in the foreseeable future and taxable pro t will be available against which the temporary dierences can be utilised. The carrying amount of deferred income tax assets is reviewed at each Balance Sheet date and reduced to the extent that it is no longer probable that sucient taxable pro t will be available to allow all or part of the deferred income tax asset to be utilised. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted as at the Balance Sheet date. Deferred income tax relating to items recognised directly in equity is recognised in equity. The movement in the deferred tax assets and liabilities due to change in applicable rate have been charged to the income statements in the current year or to the equity when item is recognised directly in equity. Deferred tax assets and deferred tax liabilities are oset, if a legally enforceable right exists to set o current tax assets against current tax liabilities and when the deferred taxes relate to the same taxable entity and the same taxation authority. (c) Tax on dividend income Tax on dividend income from subsidiaries is recognised as an expense in the Consolidated Income Statement. 2.4.3 BORROWING COSTS Borrowing costs are recognised as an expense in the period in which they are incurred, except to the extent where borrowing costs that are directly attributable to the acquisition, construction, or production of an asset that takes a substantial period of time to get ready for its intended use or sale, are capitalised as part of that asset. 2.4.4 INTANGIBLE ASSETS OTHER THAN GOODWILL Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is fair value as at the
date of acquisition. Following the initial recognition of the intangible assets, the cost model is applied requiring the assets to be carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangible assets, excluding capitalised development costs are not capitalised and expenditure is re ected in the Income Statement in the year in which the expenditure is incurred. The useful lives of intangible assets are assessed to be either nite or inde nite. Intangible assets with nite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a nite useful life is reviewed at least at each nancial year end. Changes in the expected useful life or the expected pattern of consumption of future economic bene ts embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and treated as changes in accounting estimates. The amortisation expense on intangible assets with nite lives is recognised in the Income Statement in the expense category consistent with the function/nature of the intangible asset. Amortisation was commenced when the assets were available for use. Intangible assets with inde nite useful lives are tested for impairment annually either individually or at the cash generating unit level. Such intangibles are not amortised. The useful life of an intangible asset with an inde nite life is reviewed annually to determine whether inde nite life assessment continues to be supportable. If not, the change in the useful life assessment from inde nite to nite is made on a prospective basis. Intangible assets that are not yet available for sale are tested for impairments at each nancial year end, even if there is no indication that the asset is impaired. Gains or losses arising from derecognition of an intangible asset are measured as the dierence between the net disposal proceeds and the carrying amount of the asset and are recognised in the Income Statement when the asset is derecognised. Research and Development Costs Research costs are expensed as incurred. Intangible assets arising from development expenditure on an individual project is recognised only when the company can demonstrate the technical feasibility of completing the intangible assets so that it will be available for use or sale, its intention to complete and its ability to use or sell the assets, how the assets will generate future economic bene ts, the availability of resources to complete the assets and the ability to measure reliably the expenditure during the development.
During the period of development, the assets are tested for impairment annually. Following the initial recognition of the development expenditure, the cost model is applied requiring the assets to be carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the assets begins when development is completed and the asset is available for use. It is amortised over the period of expected future sales. During the period of which the asset is not yet in use it is tested for impairment annually. 2.4.5 INVENTORIES Inventories are valued at the lower of cost and net realisable value, after making due allowances for obsolete and slow moving items. Net realisable value is the price at which inventories can be sold in the ordinary course of business less the estimated cost of completion and the estimated cost necessary to make the sale. The cost incurred in bringing inventories to its present location and conditions are accounted using the following cost formulae:Raw Materials Foods and Beverages Stocks - At actual cost on rst-in- rst out/weighted average basis. - At actual cost on weighted average basis.
Finished Goods - At cost of direct materials, direct and Work-in- Progress labour and an appropriate proportion of xed production overheads based on normal operating capacity. Consumables and Spares Goods-in-Transit and Other Stocks Medical Supplies - At actual cost on rst-in- rst out basis. - At actual cost. - At actual cost on rst-in- rst out basis.
2.4.6 TRADE AND OTHER RECEIVABLES Trade receivables are stated at the amounts they are estimated to realise net of allowances for bad and doubtful receivables. Other receivables and dues from Related Parties are recognised at cost less allowance for bad and doubtful receivables. 2.4.7 CASH AND CASH EQUIVALENTS Cash and cash equivalents are de ned as cash in hand, demand deposits and short term highly liquid investments, readily convertible to known amounts of cash and subject to insigni cant risk of changes in value.
For the purpose of cash ow statement, cash and cash equivalents consist of cash in hand and deposits in banks net of outstanding bank overdrafts. Investments with short maturities i.e. three months or less from the date of acquisition are also treated as cash equivalents. 2.4.8 PROPERTY, PLANT AND EQUIPMENT (a) 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. Revaluations are made with sucient regularity to ensure that their carrying amounts do not dier materially from their fair values at the Balance Sheet date. Subsequent to the initial recognition as an asset at cost, revalued Property, Plant and Equipment are carried at revalued amounts less any subsequent depreciation thereon. All other Property, Plant and Equipment are stated at historical cost less accumulated depreciation and less accumulated impairment in value. 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 recognised as an expense. In these circumstances the increase is recognised as income to the extent of the previous write down. When an assets carrying amount is decreased as a result of a revaluation, the decrease is recognised 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 retained earnings on retirement or disposal of the asset. (b) Restoration Costs Expenditure incurred on repairs or maintenance of Property, Plant and Equipment in order to restore or maintain the future economic bene ts expected from originally assessed standard of performance, is recognised as an expense when incurred. (c) Depreciation Depreciation is calculated on a straight line method over the useful life of all Property, Plant and Equipment other than freehold land. The principal annual rates used by the companies in the Group are as follows: Freehold Buildings Plant and Machinery Power Plant Furniture and Fittings Oce and Factory Equipments Computer Hardware and Software 1.5% - 10% 6% - 25% Over 180 months 7% - 25% 10% - 33.33% 25% - 33.33 %
Motor Vehicles Crockery and Cutlery Soil Erosion Prevention Buildings on Leasehold Land
16.66% - 25% 50% - 100% 5% - 10% Over the remaining lease period
(d) Derecognition An item of Property, Plant and Equipment is derecognised upon disposal or when no future economic bene ts are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the dierence between the net disposal proceeds and the carrying amount of the asset) is included in the Income Statement in the year the asset is derecognised. 2.4.9 LEASED PROPERTY Leasehold property comprising of land use rights obtained on a long term basis, is stated at the recorded carrying values as at the eective date of Sri Lanka Accounting Standard 19 Leases in line with Ruling of the Urgent Issues Task Force of The Institute of Chartered Accountants of Sri Lanka. Such carrying amounts are amortised over the remaining lease term or useful life of the leased property whichever is shorter. 2.4.10 LEASES (a) Finance Leases Property, Plant and Equipment on nance leases, which eectively transfer to the Group substantially all of the risk and bene ts incidental to ownership of the leased item are capitalised at the inception of the lease at the fair value of leased property or, if lower, at the present value of minimum lease payments. Capitalised leased assets are disclosed as Finance Leases under Property, Plant and Equipment and depreciated over the period the Group is expected to bene t from the use of the leased assets. The corresponding principal amount payable to the lessor together with interest payable over the period of lease is shown as a liability. Lease payments are apportioned between the nance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. The interest payable over the period is transferred to an interest in suspense account. The interest element of the rental obligations pertaining to each nancial year is charged to Income Statement over the period of lease. (b) Operating Leases Leases where the lessor eectively retains substantially all the risks and bene ts of ownership over the leased term, are classi ed as operating leases. Lease rentals paid under operating leases are recognised as an expense in the Income Statement on a straight-line basis over the lease term.
2.4.11 INVESTMENTS Initial Recognition Cost of investment includes purchase cost and acquisition charges such as brokerages, fees, duties and bank regulatory fees. The company distinguishes and presents current and non current investment in the Balance Sheet. Measurement (a) Current Investments Current investments are stated at lower of cost and market value determined on an aggregate portfolio basis.The cost of an investment is the cost of acquisition inclusive of brokerage fees and stamp duty. Unrealised gains and losses on current investments carried at market value i.e. reduction to market value and reversals of such reductions required to re ect current investments at the lower of cost and market value, are credited or charged to Income Statement. (b) Long Term Investments Quoted and unquoted investments in shares held on a long term basis are stated at cost. The cost of the investment is the cost of acquisition inclusive of brokerage fees, stamp duties and bank fees. The carrying amount of long term investments is reduced to recognise a decline other than temporary in the value of investments, determined on an individual investment basis. In the Companies nancial statements, investments in subsidiaries were accounted for in the equity method until 31 March 2006. With eect from 1 April 2006 in accordance with the revised SLAS 26 the investment in Subsidiaries are accounted at the carrying value as that date and any investment made after 1 April 2006 are carried at cost, net of any provision for other than temporary diminution in value. In the Companys nancial statements, investments in subsidiaries were carried at fair value and associates were carried at cost, net of any provision for other than temporary diminution in value. (c) Other Investments Treasury bills and other interest bearing securities held for resale in the near future to bene t from short term market movements are accounted for at cost plus relevant proportion of the discounts or premiums. (d) Disposal of Investments On disposal of an investment, the dierent between net disposals and proceed and the carrying amounts is recognised as income or expense. Any revaluation surplus related to disposed investments are transferred to retained earnings.
2.4.12 INVESTMENT PROPERTY Investment properties are measured initially at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met; and excludes the costs of day to day servicing of an investment property. Subsequent to initial recognition, investment properties are stated at fair value, which re ects market conditions at the Balance Sheet date. Gains or losses arising from changes in the fair values of investment properties are included in the Income Statement in the year in which they arise. Investment properties are derecognised when either they have been disposed o or when the investment property is permanently withdrawn from use and no future economic bene t is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in the Income Statement in the year of retirement or disposal. Transfers are made to investment property when, and only when, there is a change in use, evidenced by the end of owner occupation, commencement of an operating lease to another party or completion of construction or development. Transfers are made from investment property when, and only when, there is a change in use, evidenced by commencement of owner occupation or commencement of development with a view to sale. When the property occupied by the Group as an owner occupied property becomes an investment property, the group accounts for such property in accordance with the policy stated under Property, Plant and Equipment up to the date of change in use. 2.4.13 IMPAIRMENT OF ASSETS The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the assets recoverable amount. An assets recoverable amount is the higher of an assets or cashgenerating units fair value less costs to sell and its value in use and is determined for an individual asset or cashgenerating unit, unless the asset or cash-generating unit does not generate cash in ows that are largely independent of those from other assets or cashgenerating units. 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 ows are discounted to their present value using a pre-tax discount rate that re ects current market assessments of the time value of money and the risks speci c to the asset. In determining fair value less costs to sell, an appropriate valuation model is used. These calculations are corroborated by
valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators. Impairment losses of continuing operations are recognised in the Income Statement in those expense categories consistent with the function of the impaired asset, except for property previously revalued and investment accounted for in the equity method, where the revaluation was taken to equity. In this case the impairment is also recognised 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 recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group makes an estimate of recoverable amount. A previously recognised 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 recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the Income Statement unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of the cash-generating unit (or group of cash-generating units), to which the goodwill relates. Where the recoverable amount of the cashgenerating unit (or group of cash-generating units) is less than the carrying amount of the cash-generating unit (group of cash-generating units) to which goodwill has been allocated, an impairment loss is recognised. Impairment losses relating to Goodwill cannot be reversed in future periods. 2.4.14 PROVISIONS Provisions are recognised when the company has a present obligation (legal or constructive) as a result of a past event, where it is probable that an out ow of resources embodying economic bene ts will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the eect of the time value of money is material, provisions are determined by discounting the expected future cash ows at a pre-tax rate that re ects current market assessments of the time value of money and, where appropriate, the risks speci c to the liability.
2.4.15 RETIREMENT BENEFIT LIABILITY (a) De ned Bene t Plan Gratuity The Group measures the present value of the promised retirement bene ts of gratuity which is a de ned bene t plan with the advice of an actuary using the Projected Unit Credit Method. Actuarial gains and losses are recognised as income or expenses over the expected average remaining working lives of the participants of the plan. However, as per the payment of Gratuity Act No. 12 of 1983 this liability only arises upon completion of 5 years of continued service. (b) De ned Contribution Plans Employees Provident Fund and Employees Trust Fund Employees are eligible for Employees Provident Fund Contributions and Employees Trust Fund Contributions in line with the respective statutes and regulations. The Company contributes 12% and 3% of gross emoluments of employees to Employees Provident Fund and Employees Trust Fund respectively. Some employees of the group are eligible for Mercantile Services Provident Society Fund, for which the group contributes 12% of gross emoluments of employees. 2.4.16 INCOME STATEMENT Revenue Recognition Revenue is recognised to the extent that it is probable that the economic bene ts will ow to the Company and the revenue and associated costs incurred or to be incurred can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable net of trade discounts, value added taxes, and other sales taxes and after eliminating intra-group sales. The following speci c criteria are used for the purpose of recognition of revenue. (a) Sale of Goods Revenue from sale of goods is recognised when the signi cant risks and rewards of ownership of the goods have passed to buyer; with the Group retaining neither continuing managerial involvement to the degree usually associated with ownership, nor eective control over the goods sold. (b) Rendering of Services Revenue from rendering of services is recognised in the accounting period in which the services are rendered or performed. (c) Energy Supplied Revenue from energy supplied is recognised, upon delivery of energy to Ceylon Electricity Board and will be adjusted for capacity charge for Minimum Guaranteed Energy Amount (MGEA) at the end of the
calendar year if there has been a curtailment. (Delivery of electrical energy shall be completed when electrical energy meets the speci cations as set out in Power Purchase Agreement (PPA) is received at the metering point.) (d) Apartment and Food and Beverages Sales Apartment revenue is recognised on the rooms occupied on a daily basis, and food and beverages sales are accounted for at the time of sales. (e) Interest Interest Income is recognised on an accrual basis. (f) Dividends Dividend income is recognised on a cash basis (net of dividend tax). (g) Rental Income Rental income is recognised on an accrual basis. Rental income arising on investment properties is accounted for on a straight line basis over the lease terms. (h) Others Other income is recognised on an accrual basis. 2.5 BUSINESS SEGMENT REPORTING A business segment is a distinguishable component of an enterprise that is engaged in providing an individual product or service or a group of related products or services that is subject to risk and returns that are dierent from those of other business segments. The accounting policies adopted for segment reporting are the same accounting policies adopted for preparing and presenting consolidated nancial statements of the Group.Inter Segment transfers are based on fair market prices. 2.6 EMPLOYEES SHARE OPTION PLAN (ESOP)/SHARE OPTION SCHEME (ESOS) The Employee Share Option Plans (ESOP) were approved by the shareholders of the Company in the years 2003 and 2006, whereby the Company issued a total of 4,468,699 Ordinary Shares to the senior management and employees based on performance. The options were required to be exercised between the period 01 April 2004 and 31 March 2009. The two schemes have however since lapsed . In the year 2008, the Board recommended a further 3,000,000 shares by way of an Employee Share Ownership Scheme (ESOS). The new scheme was approved by the Members and came into eect on 9 December 2008. The 1 tranche of 650,000 shares were issued to the Trustees on 6 February 2009 at Rs. 62/- per share, to key Senior Management. These shares will be held in trust
for the eligible employees unit such time as the shares are transferred to them in terms of the ESOS Trust 2008. These shares increased to 3,250,000 by way of a sub division of shares carried out by Hemas on 2nd July 2010. The 2nd tranche of 2,250,000 shares were issued to the trustees on 27 December 2010 at Rs. 44.09 per share, to the senior executives of the group. These shares will also be held in trust for the eligible employees until such time as the shares are transferred to them in terms of the ESOS Trust -2008. 2.7 EFFECT OF SRI LANKA ACCOUNTING STANDARD ISSUED BUT NOT YET EFFECTIVE: The following Accounting Standards have been issued by the Institute of Chartered Accountants of Sri Lanka to be eective for the nancial periods beginning on or after 1 January 2012. - Sri Lanka Accounting Standard SLAS 44 on Financial Instruments; Presentation - Sri Lanka Accounting Standard SLAS 45 on Financial Instruments; Recognition and Measurement - Sri Lanka Accounting Standard - SLAS 46 on Financial Instruments; Disclosures - Sri Lanka Accounting Standard - SLAS 39 on Sharebased Payment Following the convergence of Sri Lanka Accounting Standards with the International Financial Reporting Standards, all existing Sri Lanka Accounting Standards will be pre xed as SLFRS or LKAS which refer to Sri Lanka Accounting Standards corresponding to IFRS or IAS, respectively. The Council of the Institute of Chartered Accountants of Sri Lanka has mandated all speci ed business enterprises to adopt these new Accounting Standards eective for nancial periods beginning on or after 1 January 2012. The eect of application of these new Accounting Standards will be substantially dierent to the eect of application of existing Accounting Standards.
Balance As at 01.04.2010 Rs. 3 3.1 PROPERTY, PLANT AND EQUIPMENT Group Gross Carrying Amount At Cost/ Cost incurred since last Revaluation Freehold Land Freehold Buildings Buildings on Leasehold Land Plant and Machinery Furniture and Fittings Oce and Factory Equipment Computer Hardware and Software Motor Vehicles Revertment At Valuation Freehold Land Freehold Buildings Buildings on Leasehold Land Assets on Finance Lease Motor Vehicles Total Value of Assets Capital Work-In-Progress At Cost At Valuation
Additions/ Transfers/ Acquisitions Rs.
Disposals/ Transfers Rs.
Balance As at 31.03.2011 Rs.
184,353,107 2,190,443,163 100,677,295 3,713,987,615 398,031,061 744,322,144 378,071,544 421,440,714 19,108,922 8,150,435,565 434,266,370 641,412,150 239,629,015 1,315,307,535 14,411,743 14,411,743 9,480,154,843
10,082,534 481,796,443 3,892,599 99,366,210 119,515,964 55,465,839 37,332,742 91,187,679 898,640,010 74,687,600 440,084,860 698,000 515,470,460 1,414,110,470
194,435,641 (501,244,215) 2,170,995,391 104,569,894 (29,588,500) 3,783,765,325 (13,032,732) 504,514,293 (3,943,144) 795,844,839 (9,873,676) 405,530,610 (37,624,934) 475,003,459 19,108,922 (595,307,201) 8,453,768,374 (35,272,571) 473,681,399 (90,389,499) 991,107,511 240,327,015 (125,662,070) 1,705,115,925 (351,550) 14,060,193 (351,550) 14,060,193 (721,320,821) 10,172,944,492
45,675,372 17,500,000 63,175,372 Balance As at 01.04.2010 Rs.
672,966,292 18,612,400 691,578,692 Charge for the year Rs.
(476,343,668) (476,343,668) Disposals / Transfers Rs.
242,297,996 36,112,400 278,410,396 Balance As at 31.03.2011 Rs.
Depreciation At Cost Freehold Buildings Plant and Machinery Furniture and Fittings Oce and Factory Equipment Computer Hardware and Software Motor Vehicles Revertment At Valuation Freehold Buildings Buildings on Leasehold Land Assets on Finance Lease Motor Vehicles Total Depreciation
94,040,784 1,361,108,076 204,169,581 172,594,755 317,693,131 216,053,454 11,330,110 2,376,989,891 76,934,503 45,181,610 122,116,113 10,608,755 10,608,755 2,509,714,759
63,709,580 278,535,449 55,023,870 89,479,778 37,924,515 65,031,597 847,110 590,551,899 18,684,415 9,047,379 27,731,794 1,692,201 1,692,201 619,975,894
(34,791) 157,715,573 (7,520,946) 1,632,122,579 (11,887,751) 247,305,700 (2,737,179) 259,337,354 (9,310,082) 346,307,564 (27,000,051) 254,085,000 12,177,220 (58,490,800) 2,909,050,990 (77,185,712) 90,803 (77,094,909) 18,433,206 54,319,792 72,752,998
(351,550) 11,949,406 (351,550) 11,949,406 (135,937,259) 2,993,753,394
2011 Rs. Net Book Values At Cost At Valuation Assets on Finance Lease Total Carrying Amount
2010 Rs.
5,787,015,380 1,668,475,327 2,110,787 7,457,601,494
5,819,121,046 1,210,691,422 3,802,988 7,033,615,456
3.1.1 Following companies have stated their Land and Building at revalued amounts.The surplus arising from the revaluation was transferred to revaluation reserve. Company 2010/2011 Mowbray Hotels Ltd. Dolphin Hotels PLC Miami Beach Hotels Ltd. 2009/2010 Hemas Manufacturing (Pvt) Ltd. 2008/2009 Serendib Hotels PLC Hotel Sigiriya PLC 2006/2007 Peace Haven Resorts Ltd. Valuer Mr. K.Arthur Perera (A.M.I.V) Mr. A.R.Ajith Fernando Mr. A.R.Ajith Fernando Mr. K.Arthur Perera (A.M.I.V) Mr. A.R.Ajith Fernando Mr. A.R.Ajith Fernando Mr. K.Arthur Perera (A.M.I.V) Valuation Basis Open market value for existing use basis Pro t basis Pro t basis Open market value for existing use basis Open market value for existing use basis Open market value for existing use basis Open market value for existing use basis
3.1.2 During the nancial year, the Group acquired Property, Plant and Equipment to the aggregate value of Rs.1,095,345,810/(2010 - Rs.462,645,330/-) of which Rs.1,095,345,810/- (2010 - Rs.434,087,866/-) were paid in cash. Balance As At 01.04.2010 Rs. 3.2 Company At Cost Roadways Furniture and Fittings Oce Equipment Computer Hardware and Software Motor Vehicles Total Value of Assets Additions/ Transfers/ Acquisitions Rs. Disposal/ Transfers Rs. Balance As at 31.03.2011 Rs.
6,975,688 17,181,394 11,398,081 81,735,786 44,477,782 161,768,731 Balance As at 01.04.2010 Rs.
69,500 165,005 5,963,914 65,269,416 71,467,835 Charge For the Year Rs.
(57,846) (513,507) (3,485,814) (17,975,000) (22,032,167) Disposals/ Transfers Rs.
6,975,688 17,193,048 11,049,579 84,213,886 91,772,198 211,204,399 Balance As at 31.03.2011 Rs.
Depreciation At Cost Furniture and Fittings Oce Equipment Computer Hardware and Software Motor Vehicles Total Depreciation
5,321,144 7,797,401 72,280,294 16,687,110 102,085,949
2,104,814 718,317 5,918,188 8,718,488 17,459,807
(28,923) (466,104) (3,432,925) (9,718,844) (13,646,796) 2011 Rs.
7,397,035 8,049,614 74,765,557 15,686,754 105,898,960 2010 Rs.
Net Book Values At Cost
105,305,439
59,682,782
3.2.1 During the nancial year, the Company acquired Property, Plant and Equipment to the aggregate value of Rs.71,467,835 /- (2010 Rs. 12,808,057/-) by means of cash.
Group 2011 Rs. 4 INVESTMENT PROPERTIES Fair Value at the Beginning of the Year Change in Fair Value during the Year Fair Value at the End of the Year 2010 Rs. 2011 Rs.
Company 2010 Rs. 271,709,950 58,700,000 330,409,950
1,261,409,950 1,178,709,950 48,555,050 82,700,000 1,309,965,000 1,261,409,950
330,409,950 (20,444,950) 309,965,000
The fair value of the investment property of Hemas Holdings PLC as at 31 March 2011 is ascertained by an independent valuation carried out by Mr. K.Arthur Perera (A.M.I.V), an independent valuer on an open market value for exisiting use basis. In determining the fair value of the investment property of Hemas Developments (Pvt) Ltd., the capitalisation of net income method and the discounting of future cash ows to their present value have been used which are based upon assumptions including future rental income, anticipated maintenance costs, appropriate discount rate and make reference to market evidence of transaction prices for similar properties, with appropriate adjustments for size and location. The appraised fair values are approximated within appropriate range of values. Investment Property was appraised in accordance with SLAS 40 and the resulting surplus/defecit in fair values is included in the Income Statement. The signi cant assumptions used by the valuer are as follows: Growth in future rentals : 12% in 3rd & 5th year Anticipated maintenance cost : 40% of rentals Discount rate : 11% p.a. Group 2011 Rs. 5 5.1 INTANGIBLE ASSETS Non Current Goodwill Brands Development Expenses 2010 Rs.
201,194,204 119,863,991 2,836,629 323,894,824
201,194,204 126,657,895 5,221,388 333,073,487
5.1.1 Goodwill Balance at the Beginning of the Year Acquired during the Year Impairment during the Year Balance at the End of the Year 5.1.2 Brands Balance at the Beginning of the Year Impairment/Written O during the Year Balance at the End of the Year 5.1.3 Development Expenses Balance at the Beginning of the Year Acquired during the Year Amortisation during the Year Balance at the End of the Year
201,194,204 201,194,204
50,174,272 151,019,932 201,194,204
126,657,895 (6,793,904) 119,863,991
132,521,739 (5,863,844) 126,657,895
5,221,388 940,769 (3,325,528) 2,836,629
8,518,482 (3,297,094) 5,221,388
Hemas Group and its Subsidiaries annually carry out an impairment test on all its intangible assets. Impairment tests are carried out as follows: Goodwill Brands Development Expenses - The business acquisition to which the goodwill is attributable is valued based on the earnings growth method. Assumptions applied in such computations are reviewed each year. - Brands are valued based on the earnings growth method, and assumptions applied are reviewed each year. - These include all expenditure attributable to the intangible asset during its development stage. The technical feasibility of completing the project/ product and the business case for future economic bene ts are reassessed each year.
Group 2011 Rs. 6 LEASEHOLD PROPERTY Cost/Valuation Balance at the Beginning of the Year Balance at the End of the Year Amortisation Balance at the Beginning of the Year Amortised during the Year Balance at the End of the Year Carrying Value at the End of the Year 2010 Rs.
76,838,370 76,838,370
76,838,370 76,838,370
14,993,517 3,065,717 18,059,234 58,779,136
11,927,801 3,065,716 14,993,517 61,844,853
Serendib Hotels PLC has obtained leasehold rights to two lots of land situated in Bentota from The Sri Lanka Tourist Board by the agreement dated 19/02/1969 and 28/02/1973 respectively (the lease expires on 01/02/2019 and 28/02/2033 respectively) and Hotel Sigiriya PLC has obtained leasehold rights to land situated at Sigiriya from The Sri Lanka Tourist Board by the agreement dated 25/07/1974. Based on the Ruling 11 of Urgent Issues Task Force (UITF) of The Institute of Chartered Accountants of Sri Lanka , it was stated at revalued amounts. As a result of a revision to said ruling, the Company now carries such leasehold rights to land, at the values recorded in the Balance Sheet as at the eective date of SLAS 19 - Leases. The revised UITF ruling does not permit further revaluation of Leasehold Property. An amount of Rs.42,542,432/- and Rs.3,148,141/in Serendib Hotels PLC and Hotel Sigiriya PLC respectively is remaining in equity under Revaluation Surplus relating to previous revaluation of Leasehold rights to land. Hemas Manufacturing (Pvt) Ltd. has acquired a leasehold right of a land on operating lease from "Nimesha Enterprises" with regard to the "Nimex " operations. This will be amortised over the lease term which is 21 years. Group Holding 2011 2010 % % 7 7.1 INVESTMENT IN SUBSIDIARIES Non-Quoted Investments Hemas Corporate Services (Pvt) Ltd. Hemas Developments (Pvt) Ltd. Hemas Manufacturing (Pvt) Ltd. Hemas Marketing (Pvt) Ltd. Hemas Trading (Pvt) Ltd. Hemas Pharmaceuticals (Pvt) Ltd. Hemas Surgicals and Diagnostics (Pvt) Ltd. Hemas Travels (Pvt) Ltd. Hemas Air Services (Pvt) Ltd. Forbes Air Services (Pvt) Ltd. Discover the World Marketing (Pvt) Ltd. Hemas Aviation (Pvt) Ltd. Exchange & Finance Investment (Pvt) Ltd. Hemtours (Pvt) Ltd. Leisure Asia Investments Ltd. Peace Haven Resorts Ltd. Hemas Transportation (Pvt) Ltd. ACX International (Pvt) Ltd. Mowbray Hotels Ltd. Far Shipping Lanka (Pvt) Ltd. Hemas Hospitals (Pvt) Ltd. Vishwa BPO (Pvt) Ltd. Quoted Investments Serendib Hotels PLC Hemas Power PLC Company Holding 2011 2010 % % Company 2011 Rs. 2010 Rs.
100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 95 100 100 89 100 81 100
100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 95 100 100 89 100 70 100
100 73 100 100 100 100 100 100 100 100 100 100 100 100 100 95 100 100 89 100 74 100
100 73 100 100 100 100 100 100 100 100 100 100 100 100 100 95 100 100 89 100 63 100
39,890,699 632,316,443 509,904,546 192,599,742 24,845,575 213,330,657 23,956,545 91,358,852 64,687,574 62,452,297 4,665,732 1,909,963 9,411,793 209,911,882 257,559,015 336,454,612 300,000 21,788,300 46,201,442 3,000,000 877,563,828 10,000,000 3,634,109,497 120,755,299 1,941,136,581 5,696,001,377
39,890,699 632,316,443 509,904,546 192,599,742 24,845,575 213,330,657 23,956,545 91,358,852 64,687,574 62,452,297 4,665,732 1,909,963 9,411,793 209,911,882 257,559,015 336,454,612 300,000 21,788,300 46,201,442 3,000,000 756,343,445 10,000,000 3,512,889,114 120,755,299 1,941,136,581 5,574,780,994
7.2
51 75
51 75
22 75
22 75
Group Holding 2011 2010 % % 8 INVESTMENT IN JOINT VENTURES Hellmann Worldwide Logistics (Pvt) Ltd. HIF Logistics (Pvt) Ltd.
Company Holding 2011 2010 % %
Company 2011 Rs. 2010 Rs.
49 49
49 49
49 49
49 49
8,474,920 30,044,344 38,519,264
8,474,920 30,044,344 38,519,264
8.1
PROPORTIONATE INTEREST IN JOINT VENTURES Aggregate amounts of Group's proportionate share of Heladhanavi Ltd. (47%), HIF Logistics (Pvt) Ltd. (49%) , Skynet Worldwide Express (Pvt) Ltd. (49%) and Hellmann Worldwide Logistics (Pvt) Ltd. (49%) included in the Group nancial statements are as follows: Group 2011 2010 Rs. Rs. (a) Balance Sheet Current Assets Non Current Assets Current Liabilities Non Current Liabilities (b) Income Statement Revenue Net Pro t Group 2011 Rs. 2010 Rs. 2011 Rs.
1,247,403,244 1,578,191,501 1,325,816,391 360,758,623 3,238,913,824 244,925,233
1,089,104,363 1,761,995,084 1,335,687,895 59,462,126 2,849,185,913 186,015,068 Company 2010 Rs.
OTHER INVESTMENTS Non-current Investments in Equity Securities (Note: 9.1/9.2) Investment In Treasury Bonds Current Investment in Equity Securities (Note: 9.1.2/9.2.1)
384,112,547 49,548,704 433,661,251 67,694 433,728,945
64,498,596 64,498,596 67,694 64,566,290
114,008,371 114,008,371 48,642 114,057,013 Carrying Value 2010 Rs.
114,248,398 114,248,398 48,642 114,297,040 Market Value 2010 Rs.
No. of Shares 2011 2010
Carrying Value 2011 Rs.
Market Value 2011 Rs.
9.1 Group 9.1.1 Investments in Equity Securities - Non-current (a) Quoted Overseas Realty (Ceylon) PLC Eden Hotels Lanka PLC Galadari Hotels PLC Blue Diamond Jewellers PLC Royal Palm Beach Hotels PLC Kotmale Holdings PLC Mercantile Shipping PLC
1,000 127 2,000 1,300 85 40,000 424,323
1,000 127 2,000 1,300 85 40,000 426,223
10,000 15,750 861 4,286 18,750 44,000 3,900 2,470 676 5,525 400,000 990,000 53,603,271 48,797,145 54,037,458 49,859,176
10,000 861 18,750 3,900 676 400,000 53,843,298 54,277,485
15,750 4,286 44,000 2,470 5,525 990,000 49,015,645 50,077,676
Carrying Value 2011 Rs. (b) Non-quoted Rainforest Ecology (Pvt) Ltd. SLFFA Cargo Services Ltd. Jada Resorts and Spa (Pvt) Ltd
Directors' Value 2011 Rs.
10,000,000 201,119 319,873,970 330,075,089 384,112,547 Carrying Value 2011 Rs.
10,000,000 201,119 319,873,970 330,075,089
10,020,000 201,111 10,221,111 64,498,596
10,020,000 201,111 10,221,111
Total Equity Investments (Group - Non Current)
No. of Shares 2011 2010 9.1.2 Investments in Equity Securities - Current (a) Quoted John Keells Holdings PLC Ceylon Theatres PLC Lankem Ceylon PLC Less: Provision for fall in Value
726 1,500
726 143 1,500
48,642 14,500 63,142 63,142 Carrying Value 2011 Rs.
207,346 602,250 809,596 809,596 Directors' Value 2011 Rs.
48,642 24,000 14,500 87,142 (30,823) 56,319 Carrying Value 2010 Rs.
133,584 7,714 97,500 238,798 238,798 Directors' Value 2010 Rs.
(b)
Non-quoted Coca Cola Beverages Sri Lanka Ltd. Glaxo Ceylon Ltd. Carsons Marketing Ltd. Millers Ltd. Less: Provision for fall in Value
100 150 100 500
100 150 100 -
5,275 4,500 1,600 24,000 (30,823) 4,552 67,694
5,275 4,500 1,600 24,000 (30,823) 4,552
5,275 4,500 1,600 11,375 67,694
5,275 4,500 1,600 11,375
Total Equity Investments (Group- Current)
9.2 Company 9.2.1 Investment in Equity Securities - Non Current (a) Quoted Overseas Realty (Ceylon) PLC Kotmale Holdings PLC Mercantile Shipping PLC
500 500 40,000 40,000 424,323 426,223
5,000 400,000 53,603,271 54,008,271
7,500 2,140,000 80,621,370 82,768,870
5,000 400,000 53,843,298 54,248,298
7,875 990,000 49,015,645 50,013,520
(b)
Non-quoted Giddawa Hydro Power (Pvt) Ltd.
600,001 600,001
60,000,100 60,000,100 114,008,371 Carrying Value 2011 Rs.
60,000,100 60,000,100
60,000,100 60,000,100 114,248,398
60,000,100 60,000,100
Total Equity Investment (Company-Non Current)
9.2.2 Investment in Equity Securities - Current Company Quoted John Keells Holdings PLC Total Equity Investment (Company-Current)
726
726
48,642 48,642
207,346 207,346
48,642 48,642
133,584 133,584
The market value of the Company's investment portfolio has been obtained from the ocial price list as at 31 March published by the Colombo Stock Exchange. Provision has not been made for temporary uctuations in market prices of long term investments. Group 2011 Rs. 10 INVENTORIES Raw Materials Work in Progress Finished Goods and Other Stocks Goods in Transit Less: Provision for Obsolete Stocks 2010 Rs.
312,797,978 241,056,935 37,800,829 38,129,326 1,406,401,412 1,304,823,798 5,652,847 1,757,000,219 1,589,662,906 (76,228,434) (45,103,610) 1,680,771,785 1,544,559,296 Group 2011 Rs. 2010 Rs. 2011 Rs. Company 2010 Rs.
11
TRADE AND OTHER RECEIVABLES Trade Debtors Related Parties (11.1) Others Ceylon Electricity Board Less: Provision for Doubtful Debts Other Debtors Related Parties (11.2) Others Advances and Prepayments Less: Provision for Doubtful Debts Loans to Company Ocers (11.3)
2,901,321,690 2,573,817,703 603,957,896 614,051,111 (50,448,799) (39,871,579) 3,454,830,787 3,147,997,235
81,784,640 2,170,800 (500,000) 83,455,440
59,025,697 1,569,642 (2,300,000) 58,295,339 7,855,278 32,335,482 10,614,195 109,100,294 7,726,085 116,826,379
8,152,940 805,758,809 490,525,305 65,912,369 299,868,746 261,031,736 11,475,540 (45,300,647) (29,779,723) 4,515,157,695 3,869,774,553 168,996,289 60,771,641 63,551,750 7,190,831 4,575,929,336 3,933,326,303 176,187,120
Company Relationship 11.1 Trade Dues from Related Parties Hemas Pharmaceuticals (Pvt) Ltd. Hemas Corporate Services (Pvt) Ltd. HIF Logistics (Pvt) Ltd. Hemas Travels (Pvt) Ltd. Hemas Power PLC Hemas Air Services (Pvt) Ltd. Hemtours (Pvt) Ltd. Hemas Southern Hospitals (Pvt) Ltd. Hemas Hospitals (Pvt) Ltd. Hemas Aviation (Pvt) Ltd. Hemas Manufacturing (Pvt) Ltd. Forbes Air Services (Pvt) Ltd. ACX International (Pvt) Ltd. Hemas Developments (Pvt) Ltd. Diethelm Travel Lanka (Pvt) Ltd. Heladhanavi Ltd. Giddawa Hydro Power (Pvt) Ltd. Serendib Leisure Management Ltd. Serendib Hotels PLC Hellmann Worldwide Logistics (Pvt) Ltd. Far Shipping Lanka (Pvt) Ltd. N-able (Pvt) Ltd. Sky Net Worldwide Express (Pvt) Ltd. Okanda Power Grid (Pvt) Ltd. 2011 Rs. 2010 Rs.
Subsidiary Subsidiary Joint Venture Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Joint Venture Subsidiary Subsidiary Subsidiary Joint Venture Subsidiary Subsidiary Joint Venture Subsidiary
19,567,275 465,972 1,577,954 804,661 466,575 26,636 3,575,861 4,191,015 43,772 7,282,782 34,761,446 67,930 90,000 385,978 90,399 3,257 3,717,874 87,815 113,766 877,698 3,533,285 52,689 81,784,640
12,901,122 35,970 150,927 398,520 370,499 668,879 26,638 2,067,934 741,294 44,236 3,032,916 32,379,311 740,770 61,946 444,806 1,741,385 3,406 1,792,753 1,325,780 84,346 12,259 59,025,697 Company
Relationship 11.2 Other Dues from Related Parties Hemas Manufacturing (Pvt) Ltd. Hemtours (Pvt) Ltd. HIF Logistics (Pvt) Ltd. Hemas Development (Pvt) Ltd. Far Shipping Lanka (Pvt) Ltd. Hemas Corporate Services (Pvt) Ltd. Forbes Air Services (Pvt) Ltd. Hemas Travels (Pvt) Ltd. Diethelm Travel Lanka (Pvt) Ltd. Vishwa BPO (Pvt) Ltd. Hemas Surgicals and Diagnostics (Pvt) Ltd. Hemas Hospitals (Pvt) Ltd. Hemas Power PLC N-able (Pvt) Ltd. ACX International (Pvt) Ltd. Hemas Air Services (Pvt) Ltd. Hemas Pharmaceuticals (Pvt) Ltd.
2011 Rs.
2010 Rs.
Subsidiary Subsidiary Joint Venture Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary
971,510 992 328,460 812,121 511,257 1,035,050 250,723 8,317 727,877 745,245 2,761,388 8,152,940
924,651 992 26,594 98,174 505,148 2,201,533 86,128 515,286 342,994 233,678 8,317 672,434 243,820 921,388 12,000 341,654 720,487 7,855,278
Group 2011 Rs. 11.3 Loans to Company Ocers: Balance at the Beginning of the Year Loans Granted During the Year Less: Repayments 2010 Rs. 2011 Rs.
Company 2010 Rs.
63,551,750 47,688,794 (50,468,903) 60,771,641
66,622,944 36,185,503 (39,256,697) 63,551,750
7,726,085 6,362,944 (6,898,198) 7,190,831
10,478,541 2,749,403 (5,501,859) 7,726,085
Company Relationship 12 LOANS DUE FROM RELATED PARTIES Non-Current Hemas Corporate Services (Pvt) Ltd . Mowbray Hotels Ltd. 2011 Rs. 2010 Rs.
Subsidiary Subsidiary
15,000,000 15,000,000
19,202,439 2,734,930 21,937,369
Current Hemas Pharmaceuticals (Pvt) Ltd. Hemas Power PLC HIF Logistics (Pvt) Ltd. Hemas Surgical and Diagnostics (Pvt) Ltd. ACX International (Pvt) Ltd. Hemas Hospitals (Pvt) Ltd. Hemas Clinical Research Services (Pvt) Ltd. Giddawa Hydro Power (Pvt) Ltd. Diethelm Travel Lanka (Pvt) Ltd Hemtours (Pvt) Ltd. N-able (Pvt) Ltd. Serendib Hotels PLC Leisure Asia Investments Ltd. Less: Provision for Doubtful Debts
Subsidiary Subsidiary Joint Venture Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary
98,716,260 6,000,000 1,000,000 237,895,000 10,000,000 65,000,000 47,000,000 53,510,304 150,000 519,271,564
153,716,260 7,250,000 12,000,000 1,000,000 2,600,000 2,296,235 2,055,000 50,000,000 40,000,000 (2,296,235) 268,621,260 Company
Relationship 13 AMOUNTS DUE FROM RELATED PARTIES Hemtours (Pvt) Ltd. Diethelm Travel Lanka (Pvt) Ltd. HIF Logistics (Pvt) Ltd. Hemas Pharmaceuticals (Pvt) Ltd. Hemas Surgicals & Diagnostics (Pvt) Ltd. Hemas Air Services (Pvt) Ltd. Hemas Travels (Pvt) Ltd. Hemas Power PLC Forbes Air Services (Pvt) Ltd. Vishwa BPO (Pvt) Ltd. Hellmann Worldwide Logistics (Pvt) Ltd. Far Shipping Lanka (Pvt) Ltd. Hemas Clinical Research Services (Pvt) Ltd. Hemas Hospitals (Pvt) Ltd. Hemas Aviation (Pvt) Ltd. N-able (Pvt) Ltd. Exchange & Finance Investment (Pvt) Ltd. Giddawa Hydro Power (Pvt) Ltd. Mowbray Hotels Ltd. Serendib Hotels PLC Less: Provision for Doubtful Debts
2011 Rs.
2010 Rs.
Subsidiary Subsidiary Joint Venture Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Joint Venture Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary
16,852,337 74,564 40,939 794,777 20,107 12,538,950 48,009,417 3,027 2,129,562 3,496,235 42,532,152 3,356,051 3,585,681 788,629 (3,496,235) 130,726,193
16,630,546 74,942 85,573,192 39,734 12,527,337 1,775,881 3,619,631 47,234,952 4,549,427 3,027 1,596,520 1,200,000 40,000,000 2,415 447,340 3,594 12,856 (1,200,000) 214,091,394
2011 Number 14 STATED CAPITAL
2011 Rs.
2010 Number
2010 Rs.
14.1 Fully Paid Ordinary Shares (14.1.1) 14.1.1Fully Paid Ordinary Shares Balance at the Beginning of the Year Sub division of Shares Issue of Shares under Employee Shares Ownership Plan Balance at the End of the Year
512,040,620 1,468,425,034
101,958,124 1,369,222,534
101,958,124 1,369,222,534 407,832,496 2,250,000 99,202,500 512,040,620 1,468,425,034
101,958,124 1,369,222,534 101,958,124 1,369,222,534
The company exercised a sub division of ordinary shares in the proportion of 5:1 on 2 July 2010. 14.2 Rights, Preferences and Restrictions of Classes of Capital The holders of Ordinary Shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at a meeting of the Company. Group 2011 Rs. 15 (a) RESERVES Revaluation and Other Capital Reserve Balance at the Beginning of the Year Preference share issue/Adjustment on share transfers Transferred during the Year Net Gain/(Loss) recognised directly in Equity Balance at the End of the Year Exchange Reserve Balance at the Beginning of the Year Transfer from/(to) Retained Earnings Balance at the End of the Year Total Reserves 2010 Rs. 2011 Rs. Company 2010 Rs.
835,953,106 101,250,000 (9,256,164) 119,208,913 1,047,155,855
914,598,431 257,032,425 (79,475,938) 830,613 835,953,106 257,032,425
368,073,839 (111,041,414) 257,032,425
(b)
(29,970,549) 28,791,914 (1,178,635) 1,045,977,220
(76,923,588) 46,953,039 (29,970,549) 805,982,557
257,032,425
257,032,425
2011 Amount Repayable Within 1 Year Rs. 16 OTHER BORROWINGS Group Rent Deposits/ Advances Non Interest Bearing Loans
2011 Amount Repayable After 1 Year Rs.
2011 Total Rs.
2010 Amount Repayable Within 1 Year Rs.
2010 Total Rs.
1,207,000 1,207,000
10,242,872 10,242,872
10,242,872 1,207,000 11,449,872
1,207,000 1,207,000
8,790,222 8,790,222
8,790,222 1,207,000 9,997,222
2011 Total Rs.
2010 Total Rs.
17 INTEREST BEARING LOANS AND BORROWINGS 17.1 Group 3,551,097 4,723,043 5,607,057 7,850,366 Finance Leases 1,171,946 2,243,309 Bank Loans - Rupee Loans (17.1.1) 790,085,473 1,344,493,516 2,134,578,989 599,429,377 1,177,984,141 1,777,413,518 - USD Syndicate Loan (17.1.2) 287,267,682 47,938,510 335,206,192 - USD Term Loan (17.1.3) 200,008,677 351,995,747 552,004,424 Debentures (17.1.4) 6,417,273 6,417,273 Trust Receipt Loan - Standard Chartered Bank 90,000,000 90,000,000 Bank Overdrafts 1,388,997,315 - 1,388,997,315 969,609,133 969,609,133 2,380,263,411 1,700,040,360 4,080,303,771 1,954,966,774 1,231,529,708 3,186,496,482 As at 01.04.2010 Rs. 17.1.1 Rupee Loans Bank Loans As at 01.04.2010 Rs. 17.1.2 USD Syndicate Loan Syndicate Loan Loans Obtained Rs. As at 31.03.2011 Rs.
Repayments Rs.
1,777,413,518 1,550,513,484 (1,193,348,013) 2,134,578,989 Loans Obtained Rs. Exchange Gain/(Loss) Rs. As at 31.03.2011 Rs.
Repayments Rs.
335,206,192
(330,704,820)
(4,501,372)
The USD 39 Mn (Group Share - USD 18.35 Mn) syndicate loan facility was obtained from Hatton National Bank PLC, Commercial Bank of Ceylon PLC, Peoples' Bank, Bank of Ceylon, Seylan Bank PLC , Sampath Bank PLC , DFCC Bank PLC to nance the thermal power project of Heladhanavi Ltd. In September 2010, Heladhanavi Ltd., re nanced the total outstanding balance of this syndicated loan by USD term loans obtained from Hongkong & Shanghai Banking Corporation Limited (HSBC) and Standared Chartered Bank PLC (SCB). As at 01.04.2010 Rs. 17.1.3 USD Term Loan Long Term USD Loan - HSBC Long Term USD Loan - SCB Loans Obtained Rs. Exchange Gain/(Loss) Rs. As at 31.03.2011 Rs.
Repayments Rs.
337,250,784 315,396,120 652,646,904
(55,795,592) (37,309,130) (93,104,722)
(4,215,321) 277,239,871 (3,322,437) 274,764,553 (7,537,758) 552,004,424
HELADHANAVI LTD Long Term USD Loan - HongKong & Shanghai Banking Corp. Ltd. (a) Rate of Interest 1 Month LIBOR + 3% p.a. (b) (c) Security Registered Undertaking to Mortgage over project Assets ( Land, Building, Plant and Machinery ) for USD 6,400,000. Facility The USD 6.4 Mn Term Loan facility was obtained in order to settle the existing syndicate loan balance & to replace Rupee working capital loan by USD borrowings. Terms of Repayments Term Loan to be repaid in 36 equal monthly instalments of USD 177,778.
(d)
Long Term USD Loan - Standard Chartered Bank PLC (a) Rate of Interest 1 Month LIBOR + 3% p.a. re-priced quarterly. (b) Security Registered Undertaking to Mortgage over project Assets (Land, Building, Plant and Machinery ) for USD 6,000,000. Facility The USD 6 Mn Term Loan facility was obtained to settle the existing syndicate loan balance & to replace Rupee working capital loan by USD borrowings. Terms of Repayments Term Loan to be repaid in 42 equal monthly instalments of USD 142,857. As at 01.04.2010 Rs. 17.1.4 Debentures 15.75% Unsecured Subordinated Redeemable Fixed Rate Debenture 2011 Amount Repayable Within 1 Year Rs. 17.2 Company Loans due to Related Parties (17.2.1) 321,640,000 Bank Overdrafts 33,504,597 355,144,597 2011 Amount Repayable After 1 Year Rs. As at 31.03.2011 Rs.
(c)
(d)
New Issues Rs.
Redemption Rs.
6,409,091
(6,409,091) 2010 Amount Repayable After 1 Year Rs.
2011 Total Rs.
2010 Total Rs.
686,502,490 1,008,142,490 33,504,597 686,502,490 1,041,647,087 As at 01.04.2010 Rs.
426,908,500 1,553,257 428,461,757 Loans Obtained Rs.
425,709,598 425,709,598 Repayment/ Transfer Rs.
852,618,098 1,553,257 854,171,355 As at 31.03.2011 Rs.
Relationship 17.2.1 Loans due to Related Parties Hemas Air Services (Pvt) Ltd. Hemas Developments (Pvt) Ltd. Hemas Manufacturing (Pvt) Ltd. Peace Haven Resorts Ltd. Vishwa BPO (Pvt) Ltd. Forbes Air Services (Pvt) Ltd. Hemtours (Pvt) Ltd.
Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary
85,168,597 130,967,548 70,000,000 220,194,998 18,000,000 197,666,960 130,619,995 852,618,098
59,300,000 92,000,000 345,595,100 496,895,100
(8,000,000) 77,168,597 (58,100,000) 132,167,548 (16,725,608) 145,274,392 (6,000,000) 214,194,998 (10,000,000) 8,000,000 (242,545,100) 300,716,960 - 130,619,995 (98,825,608) 1,008,142,490
Terms and Conditions (a) Treasury Loans (Current) Security - Unsecured Repayment - Within 3 months Interest - Based on market rates (b) Other Loans (Non Current) Security - Unsecured Repayments - Grace Period of 4 Years (29/04/2008 - 30/04/2012) and thereafter repayable over 3 years Interest - Grace Period of 4 Years (29/04/2008 - 30/04/2012) and thereafter interest chargeable based on Market Rates
Group 2011 Rs. 18 DEFERRED INCOME TAX 2010 Rs. 2011 Rs.
Company 2010 Rs.
18.1 DEFERRED TAX ASSETS Balance as at Beginning of the Year Income/(Expense) arising during the Year Balance at the End of the Year 18.2 DEFERRED TAX LIABILITIES Balance as at Beginning of the Year Provision/(Release) - Directly to Income Statement - Directly to Equity Balance at the End of the Year
22,805,294 2,683,684 25,488,978
21,832,128 973,166 22,805,294
145,146,554 (11,235,849) (10,301,504) 123,609,201
136,307,726 9,419,558 (580,730) 145,146,554 Group
60,197,984 (18,176,166) 42,021,818
38,979,758 21,218,226 60,197,984
Company 2010 Rs. 2011 Rs. 2010 Rs.
2011 Rs. 19 RETIREMENT BENEFIT LIABILITY Retirement Bene t Obligation - Gratuity Balance as at Beginning of the Year Interest cost Current service cost Bene ts paid Actuarial (Gain) \Loss Balance as at the End of the Year
184,963,092 18,683,895 31,210,352 (20,218,527) 15,659,592 230,298,404
140,756,884 14,353,377 20,828,580 (20,565,499) 29,589,750 184,963,092
17,025,408 1,872,795 1,586,339 (1,872,750) 63,999 18,675,791
19,108,128 2,292,975 1,575,041 (6,707,421) 756,685 17,025,408
19.1 Messrs. K.A. Pandit Consultants and Actuaries, carried out an actuarial valuation of the de ned bene t plan gratuity on 31/03/2011. Appropriate and compatible assumptions were used in determining the cost of retirement bene ts. The principal assumptions used for Group and Company are as follows: 2011 10% 9% 50 - 60 Years 2010 11% 10% 50 - 60 Years
Discount rate assumed (%) Further salary increase (%) Retirement Age
Group 2011 Rs. 20 TRADE AND OTHER PAYABLES Trade Payables Related Parties (20.1) Others Other Payables Related Parties (20.2) Others Sundry Creditors including Accrued Expenses 2010 Rs. 2011 Rs.
Company 2010 Rs.
2,815,496,147 2,475,713,016 557,389,312 276,617,217 718,999,688 534,527,733 4,091,885,147 3,286,857,966
584,604 5,464,604 10,507,481 23,583,702 40,140,391
108,650 346,613 4,057,419 11,466,067 25,411,500 41,390,249
Company Relationship 20.1 Trade Dues to Related Parties Hemas Travels (Pvt) Ltd. Diethelm Travel Lanka (Pvt) Ltd. 2011 Rs. 2010 Rs.
Subsidiary Subsidiary
56,900 51,750 108,650
20.2 Non Trade Dues to Related Parties Hemas Corporate Services (Pvt) Ltd. Forbes Air Services (Pvt) Ltd. Hemas Pharmaceuticals (Pvt) Ltd. ACX International (Pvt) Ltd. Hemas Manufacturing (Pvt) Ltd. Hemtours (Pvt) Ltd. Vishwa BPO (Pvt) Ltd. Diethelm Travel Lanka (Pvt) Ltd. N-Able (Pvt) Ltd. HIF Logistics (Pvt) Ltd. Hemas Travels (Pvt) Ltd.
Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Joint Venture Subsidiary
458,112 70,000 2,806,239 104,328 44,785 167,023 1,354,814 38,743 420,560 5,464,604
692,250 70,000 2,812,500 162 3,000 71,928 65,729 341,850 4,057,419 Company
Relationship 21 AMOUNTS DUE TO RELATED PARTIES Peace Haven Resorts Ltd. Hemas Power PLC Vishwa BPO (Pvt) Ltd. Hemas Manufacturing (Pvt) Ltd. Hemas Pharmaceuticals (Pvt) Ltd. Hemtours (Pvt) Ltd. Hemas Aviation (Pvt) Ltd. Exchange & Finance Investment (Pvt) Ltd. Discover the World Marketing (Pvt) Ltd. Hemas Air Services (Pvt) Ltd. Hemas Travels (Pvt) Ltd. Forbes Air Services (Pvt) Ltd. Hemas Developments (Pvt) Ltd. ACX International (Pvt) Ltd. Far Shipping Lanka (Pvt) Ltd.
2011 Rs.
2010 Rs.
Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary
9,602,000 14,680,298 25,110,604 14,225,000 5,397,585 3,751,724 3,320,001 50,453,502 7,840,000 22,670,865 5,160,139 5,600,000 167,811,718
458,489 13,175,400 5,221,073 831,736 10,985,000 5,400,001 3,755,318 3,320,001 49,924,034 1,775,881 13,046,706 1,074,986 7,972,845 116,941,470
Group 2011 Rs. 22 CASH AND CASH EQUIVALENTS IN CASH FLOW STATEMENT 2010 Rs. 2011 Rs.
Company 2010 Rs.
Components of Cash and Cash Equivalents 22.1 Favourable Cash and Cash Equivalent Balances Cash & Bank Balances Fixed Deposits, Treasury Bills and Repo Investments 22.2 Unfavourable Cash and Cash Equivalent Balances Bank Overdraft Total Cash and Cash Equivalents for the Purpose of Cash Flow Statement
1,133,279,596 392,885,938 2,025,096,612 1,258,993,053 3,158,376,208 1,651,878,991 (1,388,997,315) (969,609,133) 1,769,378,893 682,269,858
23,678,870 210,023 23,888,893 (33,504,597) (9,615,704)
27,994,605 50,141,052 78,135,657 (1,553,257) 76,582,400
Group 2011 Rs. 23 REVENUE Sales of Goods Rendering of Services 2010 Rs. 2011 Rs.
Company 2010 Rs.
11,444,147,421 9,794,718,534 6,623,341,770 5,202,686,171 18,067,489,191 14,997,404,705
304,850,770 304,850,770
343,212,995 343,212,995
Segment information is given in Note 36 to these nancial statements. Group 2011 Rs. 24 DIVIDEND INCOME Income from Investments - Related Parties - Others 2010 Rs. 2011 Rs. Company 2010 Rs.
780,523 780,523
93,014 93,014 Group
303,296,875 86,482 303,383,357
155,962,343 83,322 156,045,665 Company
2011 Rs. 25 OTHER INCOME AND GAINS Gain on Disposal and Acquisition Rental Income Commission Income Exchange Gain Sundry Income
2010 Rs.
2011 Rs.
2010 Rs.
30,651,219 9,369,508 9,306,683 30,750,276 28,752,722 108,830,408
2,451,226 1,252,018 7,232,511 17,163,064 16,428,716 44,527,535 Group
3,560,177 1,390,000 624,414 5,574,591
1,100,000 599,527 1,699,527 Company
2011 Rs. 26 GAIN/ (LOSS) ON DISPOSAL OF INVESTMENTS Gain on Share Buy Back Pro t/(Loss) on Disposal of Investment
2010 Rs.
2011 Rs.
2010 Rs.
3,316,950 3,316,950
(1,600,000) (1,600,000)
- 1,242,681,268 233,909 (1,600,000) 233,909 1,241,081,268
In the year 2009/10 the Boards of Hemas Manufacturing (Pvt) Ltd., Hemas Marketing (Pvt) Ltd., Hemas Pharmaceuticals (Pvt) Ltd., Forbes Air Services (Pvt) Ltd. and Hemas Travels (Pvt) Ltd. oered to repurchase its own shares held by Hemas Holdings PLC. A gain of Rs. 1,242,681,268/- was made by Hemas Holdings PLC by accepting this oer. Group 2011 Rs. 27 FINANCE COST AND INCOME 27.1 Finance Cost Interest Expense on Overdrafts Interest Expense on Loans and Borrowings Debenture Interest Finance Charges on Lease Liabilities 2010 Rs. 2011 Rs. Company 2010 Rs.
- Rupee - USD
64,756,693 219,093,180 13,461,432 393,379 32,088 297,736,772
130,159,200 266,296,311 51,142,616 1,715,355 62,236 449,375,718
242,662 51,892,991 52,135,653
296,565 125,071,797 125,368,362
27.2 Finance Income Interest Income
- Related Parties - Others
126,237,483 126,237,483
100,929,714 100,929,714
43,936,742 3,425,983 47,362,725
28,735,369 1,563,422 30,298,791
Group 2011 Rs. 28 PROFIT BEFORE TAX Stated after Charging/(Crediting) Included in Cost of Sales Depreciation Provision for obsolete stock Included in Administrative Expenses Employees Bene ts including the following De ned Bene t Plan Cost - Gratuity De ned Contribution Plan Cost - MSPS/EPF/ETF Depreciation Exchange Loss Amortisation/ Impairment of Intangibles Pro t/ (Loss) on Disposal of Property, Plant and Equipment Auditors' Fees and Expenses Legal Fees Donations Bad Debts Written - o Provision for Doubtful Debts Included in Selling & Distribution Cost Transport Cost Advertising Cost 2010 Rs. 2011 Rs.
Company 2010 Rs.
335,425,221 31,124,824
193,300,165 14,518,634
65,553,839 107,778,506 284,550,674 22,967,722 10,119,432 7,759,620 1,491,142 9,665,268 321,603 26,098,144 75,354,824 299,967,035
64,771,707 97,282,366 329,305,510 48,287,966 9,160,937 4,828,403 7,330,870 697,341 1,544,983 6,833,185 33,788,971 35,650,293 318,156,095
3,523,133 8,202,133 17,459,807 980,300 8,500 116,947 (1,645,643) 144,032
4,624,701 7,479,555 18,012,703 (79,716) 1,091,396 59,000 11,200 5,796,235 -
Group 2011 Rs. 29 INCOME TAX EXPENSE Current Income Tax Current Tax Expense on Ordinary Activities for the Year (29.1) Under/(Over) Provision of Current Taxes in respect of prior years Tax on Dividends Deferred Income Tax Deferred Tax Expense/(Income) arising due to - Origination and Reversal of Timing Dierences 2010 Rs. 2011 Rs.
Company 2010 Rs.
200,411,275 6,151,976 21,510,222
145,294,975 (4,319,542) 10,135,366
27,545,469 -
13,409,382 -
(13,919,528) 214,153,945
8,963,943 160,074,742
(18,176,166) 9,369,303
21,218,226 34,627,608
29.1 Reconciliation between Income Tax Expenses and the Accounting Pro t Accounting Pro t Before Tax 1,569,344,612 Intra Group Adjustment/Share of Pro ts of Subsidiaries 910,603,952 Income not subject to Income Tax (943,205,642) Exempt pro t (794,363,896) Aggregate Disallowed Expenses 257,741,391 Aggregate Allowable Expenses (251,782,820) Aggregate Disallowable income 85,662,661 Adjustment for tax losses (5,290,396) Taxable Pro t 828,709,862 Income tax at 35% Income tax at 15% Income Tax at other rates Social Responsibility levy
Current Income Tax Expense
1,094,718,688 347,688,901 1,489,735,490 397,573,200 - (1,241,081,268) (494,717,251) (283,172,316) (213,062,343) (658,714,584) 293,452,409 35,381,698 39,577,153 (383,591,394) (17,942,296) (16,813,091) 66,716,761 34,552,409 (4,651,629) (20,424,579) 349,990,238 77,304,358 37,931,362 119,186,235 22,477,313 1,478,596 143,142,144 2,152,831 145,294,975 27,138,394 27,138,394 407,076 27,545,469 13,211,214 13,211,214 198,168 13,409,382
164,738,517 26,380,686 6,431,017 197,550,220 2,861,055 200,411,275
29.2 Applicable Tax Rates As per the Inland Revenue Act No. 10 of 2006, all resident companies are liable to eective Income Tax of 35% (2009 - 35%), with the exception of the companies stated below: Hemas Developments (Pvt) Ltd., has obtained BOI approval under Section 17 and it enjoys a tax rate of 2% on Revenue. Pursuant to the agreement dated 28 August 2003, entered into with BOI under Section 17 of the Board of Investment Law, Heladhanavi Ltd., is exempt from Income Tax for a period of 10 years from the year in which the Company commences to make pro ts or any year of assessment not later than 2 years from the date of commencement of commercial operations of the enterprise, whichever is earlier. As per the Section 23 of Inland Revenue Act No.10 of 2006, Hemas Power PLC is classi ed as a venture capital Company. Accordingly the company enjoyed a 5 year tax holiday period. After expiration of aforesaid tax exemption period in terms of Section 48 of Inland Revenue (Amendment) Act No 09 of 2008, the Company is liable for tax for the rst 3 years at 5%, 10% & 15% respectively. However, expiration of above 3 years concessionary tax period, the company is liable for income tax at the rate of 20% as per the part A of the second schedule of the Inland Revenue Act No. 10 of 2006. Accordingly, the Company is liable for income tax at 15% for 2010/2011. Pursuant to the agreement entered with BOI, Okanda Power Grid (Pvt) Ltd s pro t is exempt from Income Tax for a period of 5 years reckoned from the year of assessment as may be determined by the Board, in which the company commences to make pro ts or any year of assessment not later than 2 years from the date of commencement of commercial operations of the Company, which ever is earlier. After the expiration of aforesaid tax exemption period, the pro t of the Company shall be charged at the rate of 10% for a period of 2 years immediately succeeding the last date of the tax exemption period and 20% thereafter. Pursuant to the agreement entered with BOI, Upper Agra Oya Hydro Power (Pvt) Ltd s pro t is exempt from Income Tax for a period of 5 years reckoned from the year of assessment as may be determined by the Board, in which the Company commences to make pro ts or any year of assessment not later than 2 years from the date of commencement of commercial operations of the Company, which ever is earlier. After the expiration of aforesaid tax exemption period, the pro t of the Company shall be charged at the rate of 10% for a period of 2 years immediately succeeding the last date of the tax exemption period and 20% thereafter. Pursuant to the agreement entered with BOI, pro t of Giddawa Hydro Power (Pvt) Ltd is exempt from Income Tax for a period of 5 years reckoned from the year of assessment as may be determined by the Board, in which the Company commences to make pro ts or any year of assessment not later than 2 years from the date of commencement of commercial operations of the Company, which ever is earlier. After the expiration of the aforesaid tax exemption period, the pro t of the Company shall be charged at the rate of 10% for a period of 2 years immediately succeeding the last date of the tax exemption period and 20%, thereafter. As per the Section 17 of Inland Revenue Act No.10 of 2006, N-able (Pvt) Ltd is exempt from income tax for a period of 3 years. After the expiration of the aforesaid tax exemption period, pro ts of the Company shall be charged at 5% for the rst year, 10% in the second year and 15% thereafter. Pursuant to the agreement entered into with BOI under Section 17 of the Board of Investment Law, Hemas Hospitals (Pvt) Ltd and Hemas Southern Hospitals (Pvt) Ltd are exempt from Income Tax for a period of 5 years, reckoned from the year of assessment, in which the companies commences to make pro ts or any year of assessment not later than 2 years from the date of commencement of commercial operations of the companies, whichever is earlier. After the expiration of the aforesaid tax exemption period, pro ts are charged at 10% for the next 2 years and 20% thereafter. Pursuant to the agreement entered into with BOI under Section 17 of the Board of Investment Law, Vishwa BPO (Pvt) Ltd is exempt from Income Tax for a period of 3 years reckoned from the year of assessment, in which the Company commences to make pro ts or any year of assessment not later than two years from the date of commencement of commercial operations of the Company, whichever is earlier. After the expiration of the aforesaid tax exemption period, pro ts are charged at 10% for the next 2 years and 20% thereafter. Pursuant to the agreement entered into with BOI under Section 17 of the Board of Investment Law, for the business of Hemas Manufacturing (Pvt) Ltd for manufacturing and / or marketing of soap, personal care items and other fast moving consumer goods at its relocated factory in Dankotuwa under 300 Enterprises programme, Inland Revenue Act relating to the imposition, payment and recovery of income tax shall not apply for a period of 5 years from the year in which the Company commences commercial operations at the relocated factory. After the expiration of aforesaid tax exemption period, the pro ts are charged at 10% for a period of 2 years and 20% thereafter.
Trading income of Serendib Hotels PLC, Hotel Sigiriya PLC, Dolphin Hotels PLC, Miami Beach Hotels Ltd., Serendib Leisure Management (Pvt) Ltd., Hemas Travels (Pvt) Ltd. Far Shipping Lanka (Pvt) Ltd and Hemtours (Pvt) Ltd. is taxed at 15%. As per SRO No 172-Law / Income Tax/ 2009 dated 30 June 2009 Hemas Consumer Brands Private Ltd is entitled to pay tax at reduce rate on income. As the Company incurred a loss during the period, maximum tax of Taka 5,000 has been made as a provision for Income Tax in line with the provisions of the ITO-1984. 30 EARNINGS PER SHARE 30.1 Basic Earnings Per Share is calculated by dividing the net pro t for the year attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year. The weighted average number of ordinary shares outstanding during the year and the previous year are adjusted for events that have changed the number of ordinary shares outstanding, without a corresponding change in the resources such as a bonus issue. 30.2 The following re ects the income and share data used in the Basic Earnings Per Share computation. Group 2011 Rs. Amount Used as the Numerator: Pro t for the Year Less: Preference Dividends Net Pro t Attributable to Ordinary Shareholders for Basic Earnings Per Share 2010 Rs.
1,210,158,582 (4,183,028) 1,205,975,554 2011 Number
901,730,007 (2,303,361) 899,426,646 2010 Number
Number of Ordinary Shares Used as Denominator: Number of shares at the beginning of the year Sub division of shares Eect of Issue of shares under ESOS Weighted Average number of Ordinary Shares in issue applicable to Basic Earnings Per Share 30.3 There were no potentially dilutive ordinary shares outstanding at any time during the year. 31 DIVIDENDS PER SHARE
101,958,124 407,832,496 509,790,620 562,500 510,353,120
101,958,124 407,832,496 509,790,620 509,790,620
Company 2011 Rs. 31.1 Dividends Paid Final out of 2009/2010 (2010-2008/2009) pro ts Net Dividends paid to ordinary shareholders WHT deducted at source from Dividends out of Pro ts Gross Ordinary Dividend paid Interim out of 2010/2011 pro ts Net Dividends paid to ordinary shareholders WHT deducted at source from Dividends out of Dividends received Dividend paid to Ordinary share holders 31.2 Dividends Per Share Final out of 2008/2009 pro ts (Adjusted for subdivision of shares) Final out of 2009/2010 pro ts Interim out of 2010/2011 pro ts 2010 Rs.
216,703,055 12,702,724 229,405,779 127,447,655 356,853,434 25,536,244 382,389,678
165,172,161 165,172,161 165,172,161 18,352,462 183,524,623
0.45 0.25
0.36 -
31.3 The Final Dividends for 2009/2010 has been paid on 28 July 2010 and Interim Dividends for 2010/2011 on 22 November 2010.
32
EVENTS OCCURRING AFTER THE BALANCE SHEET DATE The Board of Directors of the company has proposed a Final Dividend of Rs.0.25 per share for the nancial year ended 31 March 2010 as required by Section 56(2) of the Companies Act No 07 of 2007 , the Board of Directors has con rmed that the company satis es the solvency test in accordance with Section 57 of the said act, the company has obtained a certi cate from the Auditors, prior to declaring the Final Dividend which is to be paid on 11 July 2011. In accordance with the Sri Lanka Accounting Standard 12 (Revised 2005) - Events after the Balance Sheet date, the proposed Final Dividend has not been recognised as a liability in the nancial statements as at 31 March 2011.
33
COMMITMENTS & CONTINGENCIES
33.1 CAPITAL COMMITMENTS Group 2011 Rs. SERENDIB HOTELS PLC Contracted but not provided for Authorised by the Board, but not contracted for 2010 Rs.
650,000,000 650,000,000
34,428,166 469,800,000 504,228,166
33.2 CONTINGENCIES (a) HEMAS HOLDINGS PLC The contingent liability as at 31 March 2011 on Guarantees given by Hemas Holdings PLC, to banks on behalf of Subsidiaries & Joint Ventures relating to facilities obtained, are as follows: 2011 Rs. Hemas Pharmaceuticals (Pvt) Ltd. Hemas Travels (Pvt) Ltd. Hemas Corporate Services (Pvt) Ltd. Hemas Southern Hospitals (Pvt) Ltd. Exchange & Finance Investment (Pvt) Ltd. Hemas Manufacturing (Pvt) Ltd. Heladhanavi Ltd. Hemas Power PLC Forbes Air Services (Pvt) Ltd. Hemas Hospitals (Pvt) Ltd. Serendib Hotels PLC 22,000,000 5,000,000 110,000,000 2,500,000 85,000,000 300,000,000 10,000,000 150,000,000 200,000,000 200,000,000 1,084,500,000 2010 Rs. 88,750,000 22,000,000 5,000,000 110,000,000 2,500,000 85,000,000 300,000,000 10,000,000 150,000,000 200,000,000 973,250,000
(b)
HEMAS MANUFACTURING PVT LTD. A Civil Case has been led against the Company by Colgate Palmolive Company, seeking a declaration that the Company's Registered Trade Mark No. 74941 is null and void and of no force of eect in law from the date of registration of the said mark. Both parties have led written submissions as per the Supreme Court rules and the Supreme Court Registry will notify the date of hearing in due course. HEMAS MARKETING PVT LTD. The Company has given Guarantees to Banks on behalf of Hemas Manufacturing (Pvt) Ltd amounting to Rs. 150,000,000/-. HEMAS TRAVELS PVT LTD. 1 The Company has obtained Guarantees from Standard Chartered Bank PLC favouring foreign tours and hotel suppliers amounting to EURO 10,000 and USD 40,000. 2 The Company has obtained Guarantees from Standard Chartered Bank PLC favouring Airline Operators amounting to Rs.147,800,000/- and USD 10,000. 3 The Company has obtained a guarantee from Standard Chartered Bank PLC favouring The Commissioner General of Inland Revenue amounting to Rs.1,476,406/-.
(c)
(d)
(e)
HEMAS AIR SERVICES PVT LTD. 1 The Company has obtained Guarantees from Standard Chartered Bank PLC favouring Heavyweight Air Express and Malaysian Airlines amounting to USD 15,000 and USD 610,000 respectively. 2 The Company has obtained Guarantees from Standard Chartered Bank PLC favouring Airport & Aviation Services (Pvt) Ltd and Director General of Civil Aviation amounting to Rs.5,201,450/- and Rs. 1,134,000/-. 3 The Company has obtained Guarantees from Standard Chartered Bank PLC on behalf of Hemas Aviation (Pvt) Ltd., favouring Sri Lankan Airline Ltd, Drukair Corporation Ltd and Discover Momentum LLC., amounting to USD 30,000, USD 20,000 and USD 50,000 respectively.
(f)
FORBES AIR SERVICES PVT LTD. 1 The Company has obtained Guarantee from Standard Chartered Bank PLC favouring Emirates - Dubai amounting to Rs. 906,300,000/-. 2 The Company has obtained a Guarantee from Standard Chartered Bank PLC favouring The Commissioner General of Inland Revenue amounting to Rs.2,205,100/-.
(g)
EXCHANGE & FINANCE INVESTMENTS PVT LTD. 1 The Company has obtained Guarantees from Nations Trust Bank PLC favouring Kenya Airways amounting to Rs.4,000,000/-. 2 Mr. K.T.D Samarasinghe has led a case against the Company claiming damages for Rs. 5,000,000/- and the trial is still being continued.
DISCOVER THE WORLD MARKETING PVT LTD. The Company has given a Guarantee amounting to USD 50,000 to its principal "Discover Momentum" in relation to the credit facilities obtained by the principal. The Company has given a Guarantee through Hemas Air Services (Pvt) Ltd in favor of Director General of Civil Aviation and amounting to Rs.1,134,000/-.
33.3 LEASE COMMITMENTS HEMAS HOSPITALS PVT LTD. Operating Lease Commitments - Company as Lessee The Company has entered into an operating lease agreement to lease a land from Nihila Garments (Pvt) Ltd with a lease period of 30 years with no renewal option. There are no restrictions placed upon the lessee when entering into this lease agreement. 2011 Rs. Future minimum rentals payable Within 1 Year After 1 Year but not more than 5 Years More than 5 Years 2010 Rs.
18,750,000 84,750,000 502,494,000 605,994,000
18,750,000 84,750,000 524,244,000 627,744,000
33.4 COMMITMENTS AND CONTINGENCIES OF THE JOINTLY CONTROLLED ENTITIES The Group has its Proportionate Share of following: HELADHANAVI LTD.
1 Operations and Maintenance Agreement with Lakdhanavi Ltd.
(a)
According to this agreement, the xed fee payable after the nal completion date is USD 625,000 per annum paid in equal monthly installments. Heladhanavi Ltd. is liable to pay Lakdhanavi Ltd. an additional sum of USD 2,000,000 for each remaining year of the term or pro rata for part of term upon the early termination of this agreement.
2 Fuel Transport Agreement with LTL Projects (Pvt) Ltd. Heladhanavi Ltd. has entered into a contract during the period with LTL Projects (Pvt) Ltd., for the transportation of fuel. According to the arrangement the company needs to pay a xed charge of USD 10,500 per month from the date of commencement of power generation in the plant. 3 Fuel Supply Agreement with Ceylon Petroleum Corporation If the company is unable to accept fuel under supply schedule (subject to change) and/or comply with its obligations under this agreement and costs,expenses,damages & losses incurred as a direct and exclusive result of such failure or inability should be paid by the company within 30 days. However, company's liability under this agreement is limited to a maximum of USD 500,000 per annum. According to the clause 3.5 (C) of fuel supply agreement, company has established a Letter of Credit at Hatton National Bank PLC in favour of Ceylon Petroleum Corporation to the value of Rs. 280,000,000/-. 4 Power Purchase Agreement with Ceylon Electricity Board If the company fails to supply Minimum Guaranteed Energy Amount (MGEA), which is 698,417,280 kwh per year, the Company would be liable for liquidated damages. Shortfall Exceeding 10% of MGEA up to 25% of MGEA Exceeding 25% of MGEA Amount of liquidated damages for each kwh of shortfall 15% of capacity charges 25% of capacity charges
5 Eligibility to apply for a Generation Licence As per the Sri Lanka Electricity Act No.20 of 2009, for a company to be eligible to obtain the generation license for generation capacity over and above 25MW, the company must be incorporated under the Companies Act No. 7 of 2007, in which the government, a public corporation, a company in which the government holds more than fty per centum of the shares or a subsidiary of such a company, holds such number of shares as may be determined by the Secretary to the Treasury with the concurrence of the Minister in charge of the subject of Finance. However no such determination of shares was made by the Secretery to the Treasury at the point of application of the generation license. It was revealed that the Government of Sri Lanka is in the process of amending the Electricity Act to exempt the existing independent power procedures (including the Company) from this requirement. The Company is currently supplying power to the Ceylon Electricity Board based on a generation license validly obtained on 26 September 2003. A legal opinion was sought by the Company in this regard which states that in the absence of the determination of the xed number of shares by the secretary to the treasury as required under section 9 (1) (c) of the Sri Lanka Electricity Act No 20 of 2009, the company is entitled to apply for a generation license.
(b)
HIF LOGISTICS PVT LTD. The Company has obtained Guarantees from Standard Chartered Bank PLC favouring Sri Lankan Airlines Ltd., Green Lanka Shipping Ltd., Atiken Spence Aviation ( Pvt) Ltd. and MAC Holdings ( Pvt) Ltd. amounting to Rs.2,000,000/-, Rs.4,000,000/Rs.2,000,000/- and Rs.1,000,000/- respectively. HELLMAN WORLDWIDE LOGISTICS PVT LTD. The Company has obtained corporate guarantees from Hellman Worldwide Logistics Ltd (Hong Kong) for Hong Kong Dollars equivalent to Rs.31,900,000/-.
34.
ASSETS PLEDGED The following assets have been pledged as security for liabilities as at the Balance Sheet date. Name of The Company Nature of Assets Nature of Liability Carrying Amount of the Assets Pledged 2011 2010 Rs. Rs. 22,500,000 22,500,000 Included Under
Hemas Manufacturing (Pvt) Ltd.
Inventories and Trade Receivables
Land & Building of Dankotuwa state, existing Machinery, proposed Plant & Machinery, Equipment and Furniture & Fittings of Dankotuwa state. Heladhanavi Ltd. (The Group has its proportionate share of the assets pledged) Immovable Assets
Concurrent Mortgage to the extent of bank facility obtained from HNB and HSBC Primary Mortgage for the Bank loan obtained from NDB
Inventories and Trade Receivable
788,280,121
788,280,121
Property , Plant and Equipment
USD 4,000,000 & USD 12,600,000 (Term Loan Facility)
10,884,270
10,884,270
Mortgage of all movable assets and assignment of book debts of the company. Share certi cates of the Company. Assignment of project documents. Immovable Assets. Rs. 30,769,230 (Rupee Loan Facility) USD 35,000,000 (Syndicated Loan Facility)
7,377,091,249
Property, Plant and Equipment
1,200,000,070
Stated Capital
10,884,270
Mortgage of all movable assets and assignment of book debts of the company. Share certi cates of the company. Assignment of project documents. Hemas Hospitals (Pvt) Ltd. Leasehold right to the Leasehold Land Land and Building
Rs. 269,230,769 (Rupee Loan Facility)
7,377,091,249
Rs. 400,000,000 (Working Capital Loan)
1,200,000,070
Stated Capital
Primary Mortgage up to the value of Rs.750,000,000 to DFCC Bank PLC Concurrent Mortgage to the extent of Bank facility obtained from Sampath Bank PLC
1,364,269,325 1,453,727,473
Hemas Southern Hospitals (Pvt) Ltd.
353,200,000
354,400,000
Name of The Company
Nature of Assets Nature of Liability
Carrying Amount of the Assets Pledged 2011 2010 Rs. Rs. 205,513,217 214,851,556
Included Under
Serendib Hotels PLC Leasehold Land and Buildings
Primary Mortgage up to the value of Rs..48,000,000 to Seylan Bank PLC
Leasehold Property Property, Plant & Equipment
Secondary Mortgage up to the value of Rs.20,000,000 to Seylan Bank PLC Corporate Guarantee from Hemas Holdings PLC for Rs.200,000,000 & Indemnity of the Company, in favour of Hatton National Bank PLC
Dolphin Hotels PLC
Freehold Land and Buildings
Primary Mortgage upto the value of Rs. 126,300,000 to Commercial Bank of Ceylon (EIB Loan)
565,125,901
412,513,870
Primary Mortgage up to the value of Rs. 20,000,000 to Commercial Bank of Ceylon PLC (Overdraft Facility of Rs.20 Mn)
Plant, Machinery and Equipment
Primary Mortgage over existing movable items up to the value of Rs.5,000,000 to DFCC Bank PLC
34,962,409
Miami Beach . Hotels Ltd
Freehold Land and Buildings
Primary Mortgage up to the value of Rs.65,000,000 to Seylan Bank PLC Secondary Mortgage up to value of Rs.15,000,000 to DFCC Bank PLC
464,775,856
165,304,509
Primary Mortgage over existing movable items up to the value of Rs. 5,000,000 to DFCC Bank PLC Primary Mortgage up to the value of Rs.30,000,000 to Commercial Bank of Ceylon PLC Primary Mortgage up to the value of Rs. 1,750,000 to Commercial Bank of Ceylon PLC
17,092,261
Hotel Sigiriya PLC
Leasehold Land and Buildings
110,894,935
108,958,795
2,925,770
3,159,832
35.
RELATED PARTY DISCLOSURES Details of signi cant related party disclosures are as follows:
35.1 Transaction with related entities Subsidiaries 2011 2010 Rs. Rs. Nature of Transaction Consultancy Fees Receivable Bank Guarantee Fees Receivable IT Charges Receivable Rent Receivable Loan Interest Income Receivable Dividend Income Treasury Loans Granted Loan Interest Expense Payable Receipt of Services Shared Service Fee Payable Purchase of Air Tickets/ Foreign Currency Treasury Loans Obtained Repayment of Loans (Net) Others 2011 Rs. 2010 Rs. 2011 Rs. Total 2010 Rs.
229,222,198 2,291,632 64,904,181 1,152,266 42,854,253 303,296,876 (605,153,852) (49,112,854) (5,696,128) (9,031,320) (7,711,295) 496,995,600 15,328,575 479,340,132
278,981,844 2,382,156 54,416,815 1,134,012 27,898,277 155,962,343 (635,895,906) (124,971,287) (2,617,135) (4,011,740) (6,777,037) 523,959,583 465,047,610 735,509,536
(1,505,456) 87,768 1,082,489 (335,200)
773,190 493,526 192,708 1,459,424
229,222,198 786,176 64,991,949 1,152,266 43,936,742 303,296,876 (605,153,852) (49,112,854) (5,696,128) (9,031,320) (7,711,295) 496,995,600 15,328,575 479,004,933
278,981,844 3,155,346 54,910,341 1,134,012 28,090,985 155,962,343 (635,895,906) (124,971,287) (2,617,135) (4,011,740) (6,777,037) 523,959,583 465,047,610 736,968,960
O Balance Sheet items Guarantees given by the Company to banks on behalf of related parties are disclosed in Note 33.2 to these nancial statements. Terms and Conditions: - Sales and purchase of goods and/or services to related parties were made at on the basis of the price lists in force with non related parties , but subject to approved discounts. Fees relating to rendering of services were made at agreed prices. Settlement will take place in cash. Terms and Conditions on loans obtained from related parties are disclosed in Note 17 to these nancial statements.
35.2 Transactions with Key Management Personnel The key management personnel are the members of its Board of Directors of Hemas Holdings PLC. 2011 Rs. (a) Key Management Personnel Compensation Short Term Bene ts Transactions, arrangements and agreements involving Key Management Personnel Purchase of Air Tickets 2010 Rs.
36,474,240
32,749,294
(b)
515,200 515,200
No other signi cant transactions had taken place involving Key Management Personnel & their Close Family Members.
36. Healthcare 2011 2010 Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. 2010 2010 2010 2010 2010 Rs. 2011 2011 2011 2011 2011 Rs. Leisure Transportation Power Others Group
SEGMENTAL INFORMATION
Information based on the Primary Segments (Business Segment)
FMCG
As at 31 March
2011
2010
Rs.
Assets and Liabilities Non Current Assets Property, Plant and Equipment Investment Property Other Non Current Assets 43,863,147 67,164,456 48,713,637 2,469,577,177 2,430,280,989 353,339,895 313,149,301 - 1,309,965,000 1,261,409,950 64,714,417 1,311,288,104 1,126,739,400 6,239,891,740 6,006,127,933 7,470,422,470 1,309,965,000 9,161,898,742
960,597,656 1,119,998,075 1,926,872,678 1,998,487,174 1,716,171,917 1,135,807,242 346,265,143 166,760,250 568,976,757 505,648,842 628,312,542 182,050,958
7,046,436,418 1,261,409,950 8,052,041,800
Segmental Non Current Assets Deferred Tax Assets Eliminations/Adjustments Total Non Current Assets
1,306,862,799 1,286,758,325 2,495,849,435 2,504,136,016 2,344,484,459 1,317,858,200 111,027,603
113,428,054 3,780,865,281 3,557,020,389 7,903,196,635 7,580,687,184 17,942,286,212 16,359,888,168 25,488,978 22,805,294 (8,315,066,367) (7,562,127,686) 9,652,708,823 8,820,565,776
Segmental Current Assets Current Assets Tax Refunds Eliminations/Adjustments Total Current Assets
2,484,255,581 2,229,996,795 2,707,256,359 2,199,531,881 -
950,320,163 524,242,156 1,949,600,071 1,734,145,359 2,423,237,111 1,560,689,915 1,382,771,729 1,037,996,455 11,897,441,014 9,286,602,561 148,020,028 116,532,983 - (2,482,295,991) (2,156,770,277) 9,563,165,051 7,246,365,267 19,215,873,874 16,066,931,043
Total Assets
Non Current Liabilities Segmental Non Current Liabilities Deferred Tax Liability Eliminations/Adjustments Total Non Current Liabilities 501,291,348 59,522,668 39,568,886 44,230,644 489,619,568
199,936,704
327,804,169 1,210,827,457 1,034,130,696
51,844,226
743,156,903
476,673,714
3,189,062,624 1,989,544,359 123,609,201 145,146,554 (1,248,480,988) (564,261,337) 2,064,190,837 1,570,429,576
Current Liabilities Segmental Current Liabilities Income Tax Liability Eliminations/Adjustments Total Current Liabilities
1,322,364,982 1,312,586,757 2,183,422,475 2,041,448,568 1,152,050,727 384,604,226 1,426,492,363 1,326,842,157 1,747,001,988 1,483,538,592
908,023,438
720,718,526
8,739,355,973 7,269,738,826 89,890,069 69,044,426 (2,253,202,538) (2,022,502,198) 6,576,043,504 5,316,281,054 8,640,234,341 6,886,710,630
Total Liabilities

76,796,62 146,286,631 20,439,834 184,494,667 132,322,783 17,716,476 588,711,236 78,750,602 10,478,536 3,325,528 74,035,771 62,500,097 2,482,932 3,297,093
Total Segmental Assets Total Segmental Liabilities
3,791,118,380 3,516,755,120 5,203,105,794 4,703,667,897 3,294,804,622 1,842,100,356 2,060,627,674 1,847,573,413 6,204,102,392 5,117,710,304 9,285,968,364 8,618,683,639 29,839,727,226 25,646,490,729 1,522,301,686 1,640,390,926 3,394,249,932 3,075,579,264 1,653,342,075 444,126,894 1,470,723,007 1,366,411,043 2,236,621,556 1,535,382,818 1,651,180,341 1,197,392,240 11,928,418,597 9,259,283,185
Other Segmental Information Acquisition Cost of Property, Plant and Equipment Depreciation of Segmental assets Provision for Retiring Gratuity Amortisation/Impairment of Intangibles
99,711,138 147,976,197 16,980,668 6,793,904
45,071,846 142,211,927 27,036,184 5,863,844
8,398,668 13,213,901 8,671,927 -
13,647,604 14,828,406 7,752,987 -
242,997,677 203,701,489 1,070,405 -
131,908,294 139,795,673 1,074,676 -
78,730,466 30,047,074 7,912,469 -
13,487,148 30,946,789 8,708,452 -
1,095,345,810 619,975,894 65,553,839 10,119,432
462,645,330 522,605,675 64,771,707 9,160,937
Information based on the Primary Segments (Business Segment) Healthcare 2011 2010 Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. 2010 2010 2010 2010 2010 Rs. 2011 2011 2011 2011 2011 Rs. Leisure Transportation Power Others Group
FMCG
For the year ended 31 March
2011
2010
Rs.

734,279,331 664,230,384 3,370,395,079 2,843,809,089 1,038,111,171 664,230,384 3,370,395,079 2,843,809,089 614,286,217 - (423,824,954) (449,218,490) (424,989,255) (15,017,354) 734,279,331 734,279,331 (43,097,635) (99,929,302) 664,230,384 3,370,395,079 2,843,809,089 1,081,208,806 904,819,346 18,592,407,748 15,504,597,549 (57,974,354) (449,218,490) 889,801,992 18,492,478,446 15,446,623,195 440,583,502 18,067,489,191 14,997,404,705 (1,164,301) (56,831,667) (42,957,000) 471,625,260 332,028,122 (35,485,314) (19,803,660) (7,990,929) 19,314,129 201,182,191 (20,301,748) 180,880,443 425,641,449 (2,516,170) (42,615) 428,157,619 24,405,050 (45,235,994) 52,340,097 34,442,181 7,384,785 1,347,975 10,099,277 50,359,506 (27,562,128) 223,909,034 33,468,114 251,471,162 146,969,512 (25,350,416) (16,891,392) 121,619,096 14,401,042 (11,449,461) (81,374,958) (175,421,888) (4,404,965) 1,759,252 156,661,942 (88,154,551) 68,507,391 60,063,889 189,858,991 (131,231,372) (177,125,432) 4,823,529 345,217,417 (112,829,288) 232,388,129 181,106,851 248,519,581 457,192,480 385,092,279 (149,710,411) (258,717,636) (3,790,631) 2,897,457 82,700,000 (51,407,580) 1,716,438,851 (297,736,772) 126,237,483 24,405,050 1,569,344,612 (214,153,945) 1,355,190,667 1,360,464,692 (449,375,718) 100,929,714 82,700,000 1,094,718,688 (160,074,742) 934,643,946
Revenue
Segmental Revenue - Gross
5,799,255,473 5,247,238,975 6,572,180,421 5,092,165,215 1,035,088,638 752,334,540
Intra Segmental Revenue
Segmental Revenue
5,799,255,473 5,247,238,975 6,515,348,754 5,049,208,215 1,035,088,638 752,334,540
Inter Segmental Revenue
Total Revenue
5,799,255,473 5,247,238,975 6,514,184,453 5,049,208,215 1,035,088,638 752,334,540

244,112,572 (122,325,541) (176,910,810) 244,069,957 (167,561,535) (228,318,390) 264,873,094 138,580,696 (70,073,305) 68,507,391 121,619,096 33,468,114 180,880,443 223,909,034 71,042,274 39,873,566 106,340,953 425,641,449 180,880,443 (32,484,965) 232,388,129 50,576,822 (6,405,452) 223,909,034 319,300,496 181,232,341 (167,695,358) (228,594,452) 62,837,616 133,823 276,062 244,069,957 (167,561,535) (228,318,390) 1,210,158,582 145,032,085 1,355,190,667 -
Results
Segmental Results
507,705,090
652,139,047
Finance Cost
(33,790,702)
(65,243,178)
Finance Income
45,940,055
32,417,418
Change in Fair Value of
Investment Properties
Pro t/(Loss) before Tax
519,854,443
619,313,287
Income Tax
(659,949)
16,723,144
Pro t/(Loss) for the Year
519,194,494
636,036,431
Attributable to: 901,730,007 32,913,939 934,643,946
Equity Holders of the Parent
519,194,494
636,036,431
Minority Interests
519,194,494
636,036,431
37
GROUP COMPANIES Proportion of Ownership Interest as at 31.03.2011 Subsidiaries Hemas Manufacturing (Pvt) Ltd. Hemas Marketing (Pvt) Ltd. Voting Power as at 31.03.2011 Ownership Interest as at 31.03.2010 Voting Power as at 31.03.2010 Principal Activities
100% 100%
100% 100% 100% 100% 100% 100% 81% 81% 100% 80% 66% 100% 100% 89% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 75% 75% 75% 75% 100% 100% 100% 95% 100% 100% 51% 62% 65% 65% 100%
100% 100% 100% 100% 100% 100% 70% 70% 100% 80% 100% 100% 89% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 75% 100% 100% 100% 95% 100% 100% 51% 76% 65% 65% 100%
100% 100% 100% 100% 100% 100% 70% 70% 100% 80% 100% 100% 89% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 75% 100% 100% 100% 95% 100% 100% 51% 76% 65% 65% 100%
Hemas Trading (Pvt) Ltd. 100% (Formerly known as Hemas Foods (Pvt) Ltd.) Hemas Consumer Brands Private Ltd. 100% Hemas Pharmaceuticals (Pvt) Ltd. 100% Hemas Surgical & Diagnostics (Pvt) Ltd. Hemas Hospitals (Pvt) Ltd. Hemas Southern Hospitals (Pvt) Ltd. Hemas Clinical Research Services (Pvt) Ltd. Diethelm Travel Lanka (Pvt) Ltd. Diethelm Travel The Maldives (Pvt) Ltd. Hemtours (Pvt) Ltd. Conventions Asia (Pvt) Ltd. Mowbray Hotels Ltd. Forbes Air Services (Pvt) Ltd. Hemas Air Services (Pvt) Ltd. Hemas Travels (Pvt) Ltd. Hemas Aviation (Pvt) Ltd. Go Asia Air Lines (Pvt) Ltd. Exchange & Finance Investment (Pvt) Ltd. Discover the World Marketing (Pvt) Ltd ACX International (Pvt) Ltd. Far Shipping Lanka (Pvt) Ltd. Hemas Transportation (Pvt) Ltd. Solas Lanka (Pvt) Ltd. Hemas Power PLC Giddawa Hydro Power (Pvt) Ltd. Okanda Power Grid (Pvt) Ltd. Upper Agra Oya Hydro Power (Pvt) Ltd Hemas Corporate Services (Pvt) Ltd. Hemas Developments (Pvt) Ltd. Vishwa BPO (Pvt) Ltd. Peace Haven Resorts Ltd. N-able (Pvt) Ltd. Leisure Asia Investments Ltd. Serendib Hotels PLC (Group) Hotel Sigiriya PLC Dolphin Hotels PLC Miami Beach Hotels Ltd. Serendib Leisure Management Ltd. Jointly Controlled Entity Heladhanavi Ltd. Hellman Worldwide Logistics (Pvt) Ltd. HIF Logistics (Pvt) Ltd. (Formerly known as Hemas International Freight (Pvt) Ltd.) Skynet Worldwide Express (Pvt) Ltd. 100% 81% 81% 100% 80% 100% 100% 89% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 75% 75% 75% 75% 100% 100% 100% 95% 100% 100% 51% 62% 65% 65% 100%
Manufacture of FMCG Products Trading & Distribution of FMCG Products Import and sale of Food Products Trading of FMCG Products Distribution of Pharmaceutical Products Distribution of Healthcare Products Hospital Services Hospital Services Support Services of Clinical Trials Destination Management Services Destination Management Services Destination Management Services Event Management Hotel Property GSA Emirates Airline GSA Malaysian Airline Travel Agent Airline Presentation Airline Presentation Airline Presentation Airline Presentation Courier Services Shipping Agents Shipping Agents Shipping Agents Venture Capital Company Mini Hydro Power Plant Mini Hydro Power Plant (under constructions) Mini Hydro Power Plant Corporate Secretaries Property Development Financial & Accounting BPO Hotel Property Enabling Information & Technology Solutions Investment Holding Company Leisure Investments Operating a Tourist Hotel Operating a Tourist Hotel Operating a Tourist Hotel Hotel Management Services
47% 49% 49%
50% 49% 49%
47% 49% 49%
50% 49% 49%
Thermal Power Plant Freight Forwarders Freight Forwarders
49%
49%
49%
49%
Courier Services
Share Information
ANALYSIS OF SHAREHOLDERS ACCORDING TO THE NUMBER OF SHARES AS AT 31-MAR-2011 RESIDENT No. of Shares 2,238,383 8,002,743 NON-RESIDENT No.of No. of Percentage No.of Shareholders Shares (%) Shareholders 24 42 14,080 212,425 0.00 0.04 0.23 0.71 5.76 6.74 TOTAL No. of Percentage Shares (%) 0.44 1.6 2.72 4.63 90.61 100.00
Shareholdings
No.of Shareholders 1000 Shares 10,000 Shares 100,000 Shares 4,433 2,207
Percentage (%) 0.44 1.56 2.49 3.92 84.85 93.26
1 to 1001 to 10,001 to
4,457 2,252,463 2,249 8,215,168 477 13,913,600 82 23,704,510 31 463,954,879 7,296 512,040,620
449 12,750,250 72 20,076,410 24 434,456,940 7,185 477,524,726
28 1,163,350 10 3,628,100 7 29,497,939 111 34,515,894
100,001 to 1000,000 Shares Over 1,000,000 Shares
Categories of Shareholders Individual Institutional
No.of Shareholders 6,910 386 7,296
No. of Shares 52,846,141 459,194,479 512,040,620
COMPUTATION OF PUBLIC SHAREHOLDING As at 31March
2011 No of shares
2010 No of shares
Over 10% holding SARAZ INVESTMENTS (PRIVATE) LIMITED A Z HOLDINGS (PRIVATE) LIMITED AMAGROUP (PRIVATE) LIMITED BLUEBERRY INVESTMENTS (PRIVATE) LIMITED Directors' shareholding MR. A. N. ESUFALLY MR. H. N. ESUFALLY MR. I. A. H. ESUFALLY MR. M. A. H. ESUFALLY MR J. C. L. DE MEL MR D. BHATNAGAR MR M. E. WICKREMESINGHE
86,396,035 90,762,875 85,780,665 85,781,250
17,279,207 18,152,575 17,156,133 17,156,250
1,992,085 5,795,205 6,132,500 5,655,000 87,500 150 11,250 368,394,515 512,040,620 368,394,515 143,646,105 28.05%
398,417 1,159,041 1,226,500 1,131,000 17,500 30 2,250 73,678,903 101,958,124 73,678,903 28,279,221 27.74%
Issued share capital Less : director' shareholding and shareholders over 10% Public holding Public holding as a % of issued share capital
SHARE TRADING 2011 Market Price Highest (Rs.) Lowest (Rs.) As at year ended (Rs.) No. of Trades No. of Shares Traded Value of Shares Traded (Rs. Mn.) Market Capitalisation (Rs. Mn.) 2010
53.5 23.6 46 38,097 116,074,600 5,973 23,554
(23.09.10) (06.04.10) (07.04.10)
27 12 24 2,705 9,407,474 1,114 12,235
(20.01.10) (23.09.09) (01.04.09)
MAJOR SHAREHOLDERS LIST OF 20 MAJOR SHAREHOLDERS AS AT 31ST MARCH 2011 No of Shares 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 A Z HOLDINGS (PRIVATE) LIMITED SARAZ INVESTMENTS (PRIVATE) LIMITED BLUEBERRY INVESTMENTS (PRIVATE) LIMITED AMAGROUP (PRIVATE) LIMITED EMPLOYEES PROVIDENT FUND HSBC INTL NOM LTD-SSBT-THE RBS AS DEP OF FS INDIA SUBCONTINENT FUND AS S/F OF FIRST STATE INVESTMENT SRI LANKA INSURANCE CORPORATION LTD-LIFE FUND HSBC INTL NOM LTD-SSBT-THE RBS PLC AS DEP FOR FIRST STATE ASIA PACIFIC SUSTAINABILITY FUND S/F OF FS MR I.A.H. ESUFALLY HSBC INTL NOMINEES LTD-HSBC BANK PLC-CMG FIRST STATE GLOBAL UMBRELLA FUND PLC-CMG FIRST STATE INDIAN CMG FIRST STATE INDIAN- SUBCONTINENT MR H.N. ESUFALLY MR.M.A.H. ESUFALLY JACEY TRUST SERVICES (PRIVATE) LIMITED-ACCOUNT NO-02 LEXINTON HOLDINGS (PVT) LIMITED JACEY TRUST SERVICES (PRIVATE)LIMITED HSBC INTL NOM LTD-JPMCB-PACIFIC ASSETS TRUST PLC COCOSHELL ACTIVATED CARBON COMPANY LIMITED ANVERALLY AND SONS (PVT) LTD A/C NO 01 MR.M.M. UDESHI MR.A.N. ESUFALLY Total 90,762,875 86,396,035 85,781,250 85,780,665 27,125,875 9,732,370 6,635,700 6,272,899 6,132,500 5,825,500 5,795,205 5,655,000 5,500,000 4,738,200 4,613,750 3,051,800 2,940,875 2,646,200 2,150,825 1,992,085 449,529,609 2010 No of Shares 18,152,575 17,279,207 17,156,250 17,156,133 5,344,275 Nil 3,008,800 Nil 1,226,500 1,165,100 1,159,041 1,131,000 650,000 Nil 922,750 Nil 407,675 751,200 Nil 398,417
% 17.73 16.87 16.75 16.75 5.30 1.90 1.30 1.23 1.20 1.14 1.13 1.10 1.07 0.93 0.90 0.60 0.57 0.52 0.42 0.39 87.80
DIRECTORS' SHAREHOLDING MR. A. N. ESUFALLY MR. H. N. ESUFALLY MR. I. A. H. ESUFALLY MR. M. A. H. ESUFALLY MR J. C. L. DE MEL MR D. BHATNAGAR MR M. E. WICKREMESINGHE
31 March 2011 1,992,085 5,795,205 6,132,500 5,655,000 87,500 150 11,250 368,394,515
1 April 2010 398,417 1,159,041 1,226,500 1,131,000 17,500 30 2,250 73,678,903
31 March 2010 398,417 1,159,041 1,226,500 1,131,000 17,500 30 2,250 73,678,903
Five Year Summary

Year Ended 31st March Rs '000 Operating Results Group Revenue Pro t Before Taxtaion Taxation Pro t After Taxation Pro t Attributable to Hemas Group Equity & Liabilities Stated and Preference Shares Reserves Retained Earnings Minority Interest Non-Current Liabilities Current Liabilities 2011 2010 2009 2008 2007
18,067,489 1,569,345 214,154 1,355,191 1,210,159
14,997,405 1,094,719 160,075 934,644 901,730
15,169,509 856,932 137,854 719,078 775,128
14,163,805 1,259,455 108,625 1,150,830 1,135,419
11,778,136 1,407,185 387,648 1,019,537 1,005,727
1,468,425 1,045,977 6,359,603 1,701,635 2,064,191 6,576,044 19,215,874
1,369,223 805,983 5,516,910 1,488,104 1,570,430 5,316,281 16,066,931
1,369,223 837,675 4,821,392 837,062 2,000,989 4,969,471 14,835,812
1,329,013 856,452 4,248,232 604,967 1,155,771 4,936,190 13,130,625
1,329,013 693,777 3,251,349 588,527 1,597,455 3,935,734 11,395,855
Assets Property, Plant & Equipment Investment Property Leasehold Property Intangible Assets Investments (Associate & Others) Deferred Tax Assets Current Assets
7,457,601 1,309,965 58,779 323,895 476,979 25,489 9,563,165 19,215,874
7,033,615 1,261,410 61,845 333,074 107,817 22,805 7,246,365 16,066,931
7,180,680 1,178,710 64,911 191,214 124,177 21,832 6,074,288 14,835,812
5,182,389 1,178,710 67,976 173,622 278,559 18,482 6,230,887 13,130,625
4,704,921 963,710 71,042 155,563 66,751 5,433,868 11,395,855
Key Indicators Earnings Per Share (Rs.)* Dividends Per Share (Rs.)* Dividend Cover (No. of Times) Interest Cover (No. of Times) Net Asset Per Share (Rs.)* Cash from Operating Activities (Rs.' 000) Current Ratio (No. of Times) Gearing (%) ROE (%)
2.36 0.70 3.4 6.2 17.3 1,994,662 1.5 27.8 14.6
1.76 0.36 4.9 3.3 15.1 1,407,985 1.4 25.8 12.3
1.51 0.25 6.0 2.8 13.8 1,458,434 1.2 32.9 11.5
2.23 0.25 8.9 4.2 12.7 929,277 1.3 31.4 19.4
1.98 0.50 0.4 5.5 10.5 176,992 1.4 33.0 21.0
* Comparative gures adjusted for sub division of ordinary shares in the propotion of 5:1
Glossary
CAPITAL EMPLOYED Total shareholders funds plus debt and minority interest. CAPITAL RESERVES Reserves identi ed for speci c purposes and considered not available for distribution. CURRENT RATIO Current assets divided by current liabilities. MARKET CAPITALISATION CONTINGENT LIABILITIES Conditions or situations at the Balance Sheet date, the nancial eect of which are to be determined by future events which may or may not occur. DEBT The sum of interest bearing long-term and short-term loans and overdrafts. DEFERRED INCOME TAX The net tax eect on items which have been included in the Income Statement, which would only qualify for inclusion on a tax return at a future date. DIVIDEND COVER Net pro t attributable to the ordinary shareholders divided by the total dividend paid and proposed. EARNINGS Pro t after tax less minority interest. REVENUE RESERVES EARNINGS PER SHARE Pro t attributable to ordinary shareholders divided by the weighted average number of ordinary shares in issue during the year. EBIT Earnings before interest and tax. EBITDA Earnings before interest, tax, depreciation and amortisation. EFFECTIVE RATE OF TAXATION Income tax over pro t before tax. SEGMENT Constituent business units grouped in terms of similarity of operations and strategy. Reserves set aside for future distributions and Investments. RETURN ON CAPITAL EMPLOYED Earnings before interest and tax divided by average capital employed. RETURN ON EQUITY Pro t after tax, minority interest and extraordinary items divided by average shareholders funds at the beginning and end of the year. The number of ordinary shares in issue multiplied by the market price per share as at the reported date. MINORITY INTEREST Part of the net results of operations and of net assets of a subsidiary attributable to interests which are not owned, directly or indirectly, through Subsidiaries, by the Parent. NET ASSETS PER SHARE Shareholders funds divided by the number of ordinary shares in issue as at the end of the year. PRICE EARNINGS RATIO Market price per share divided by the earnings per share. EQUITY Total shareholders funds. GEARING Debt divided by the sum of equity, minority interest and debt. INTEREST COVER Earnings before interest and tax divided by the total nance cost.
Notice of Meeting
NOTICE IS HEREBY GIVEN that the Eighth Annual General Meeting of Hemas Holdings PLC will be held at the Auditorium of the Ceylon Chamber of Commerce, No. 50, Nawam Mawatha, Colombo 2 on Thursday the 30th day of June 2011 at 3.30 PM for the following purpose:AGENDA 1. To receive and consider the Statements of Accounts of the Company and of the Group for the year ended 31st March 2011 , together with the Reports of the Directors and Auditors thereon. 2. To re-elect as Director, Mr. M.E. Wickremesinghe retiring in terms of the Articles of Association of the Company 3. To re-elect as Director, Mr. Divyaroop Bhatnagar retiring in terms of the Articles of Association of the Company 4. To pass the ordinary resolution set out below to re-appoint as a director Mr. J.C.L De Mel who has reached the age of 74 years and vacates oce as a director of the Company in terms of Section 210 (2) (a) of the CompaniesAct-7 of 2007:"RESOLVED that Mr. J.C.L. De Mel who has reached the age of 74 years on 6th May 2011 be and is hereby re-appointed a director of the company and it is hereby declared as provided for in Section 211 (1) of the Companies Act No. 07 of 2007 that the age limit of 70 years referred to in Section 210 of the said Companies Act shall not apply to Mr. J.C.L.De Mel." 5. To declare a nal dividend of Rs.0.25 per Ordinary share as recommended by the Board. 6. To re-appoint Messrs Ernst & Young, Chartered Accountants as Auditors for the ensuing year and to authorise the Directors to determine their remuneration. 7. To authorise the Directors to determine and make donations to Charity. Note: A member entitled to attend and vote is entitled to appoint a Proxy to attend and vote in his/her place. A Proxy need not be a Member of the Company. A Form of Proxy accompanies this Notice
By Order of the Board of HEMAS HOLDINGS PLC
HEMAS CORPORATE SERVICES PRIVATE LIMITED Secretaries 3rd June 2011
Form of Proxy
I/We ......................................................................................................................................................................................................................................................................... of .............................................................................................................................................................................................................................................................................. being a Member/s of Hemas Holdings PLC do hereby appoint one of the following directors of the Company, Mr. Lalith De Mel Mr. Husein.Esufally Mr. Abbas Esufally Mr. Imtiaz Esufally Mr. Divyaroop Bhatnagar Mr. Murtaza Esufally Mr. Maithri Wickremesinghe Mr. Pradipta Mohapatra or failing him or failing him or failing him or failing him or failing him or failing him or failing him or failing him
Mr./Mrs. .................................................................................................................................................................................................................................................................. of .............................................................................................................................................................................................................................................................................. as my/our Proxy to speak and /to vote for *me/us on *my/our behalf at the Eighth Annual General Meeting of Hemas Holdings PLC to be held at 3.30 p.m. on Thursday 30th June 2011 at the Auditorium of the Ceylon Chamber of Commerce, No 50, Nawam Mawatha, Colombo 2 and at any adjournment thereof. For 1. To receive and consider the Statements of Accounts of the Company and of the Group for the year ended 31.03.2011 together with the Reports of the Directors and Auditors thereon. 2. To re-elect as Director, Mr. M.E. Wickremesinghe. retiring by rotation in terms of the Articles of Association of the Company 3. To re-elect as Director, Mr. Divyaroop Bhatnagar retiring by rotation in terms of the Articles of Association of the Company. 4. To re-appoint Mr. J.C.L. De Mel as a Director of the Company in terms of Section 211 (1) of the Companies Act-7 of 2007. Against
5. To declare a nal dividend of Rs.0.25 per share as recommended by the Board.
6. To re-appoint M/s Ernst & Young, Chartered Accountants, as auditors of the Company and to authorise the directors to determine their remuneration. 7. To authorise the directors to determine and make donations to Charity.
*The Proxy may vote as he/she thinks t on any other resolution brought before this meeting
.................................. Signature/s
Date:
Note: 1. Please delete the inappropriate words. 2. Instructions as to completion are noted on the reverse hereof.
INSTRUCTIONS AS TO COMPLETION OF FORM OF PROXY 1. Kindly perfect the Form of Proxy after lling in legibly your full name and address and by signing in the space provided. Please ll in the date of signature. 2. A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote instead of him/her. 3. In the case of Corporate Members, the Form of Proxy must be completed under the Common Seal, which should be axed and attested in the manner prescribed by the Articles of Association /Statutes. 4. If the Form of Proxy is signed by an Attorney, the relevant Power of Attorney should also accompany the completed Form of Proxy. 5. the completed Form of Proxy should be deposited at No. 36, Bristol Street, Colombo 1 not less than Forty Eight (48) hours before the time appointed for the meeting.
Corporate Information
Legal Form Quoted Public Company with limited Liability listed on the Colombo Stock Exchange on 15th October 2003. Date of Incorporation 10th December 1948 Date of Re-Registration 30th May 2007 New Registration Number PQ6 Accounting year end 31st March Registered O ce Hemas Building No. 36, Bristol Street, Colombo 01. Website: www.hemas.com Auditors Ernst & Young Chartered Accountants No. 201, De Saram Place, Colombo 10. Bankers Commercial Bank of Ceylon Ltd Deutsche Bank AG Hongkong & Shanghai Banking Corp. Ltd Hatton National Bank Ltd Standard Chartered Bank Nations Trust Bank PLC Peoples Bank Bank of Ceylon DFCC Bank PLC Lawyers to the Company D.L.& F De Saram No. 47, Alexandra Place, Colombo 07. Directors Lalith De Mel Husein Esufally Imtiaz Esufally Murtaza Esufally Abbas Esufally Maithri Wickremesinghe Praditpa Mohapatra Divyaroop Bhatnagar Secretaries & Registrars Hemas Corporate Services (Pvt) Ltd No. 36, Bristol Street, Colombo 01 Telephone: 4 731731 (hunting) Facsimile: 4 731777 (Chairman) (CEO)

Hemas Annual Report 2010 - 11

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Hemas Annual Report 2010 - 11

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Enriching lives, embracing opportunities

Annual Report 2010/11

Enriching lives, embracing opportunities

Rs.Mn. 1,500 1,200 900 600 300

Prot attributable to the Group

Cash from Operations

2,000 1,500 1,000

Rs.Mn. 10,000 8,000 6,000 4,000 2000

Shareholders Funds & ROE

2 Hemas Holdings PLC

Annual Report 2010/11

PROFIT AFTER TAX

PROFIT AFTER TAX

PROFIT AFTER TAX

PROFIT AFTER TAX

PROFIT AFTER TAX

Annual Report 2010/11

Hemas Holdings PLC 3

4 Hemas Holdings PLC

Annual Report 2010/11

Lalith De Mel Chairman 26th May 2011

Annual Report 2010/11

Hemas Holdings PLC 5

6 Hemas Holdings PLC

Annual Report 2010/11

Annual Report 2010/11

Hemas Holdings PLC 7

Husein Esufally Chief Executive Ocer 26th May 2011

Group Revenue Break-up

Group Revenue Growth

Pro t After Tax

35.0% 33.7% 5.0% 4.4% 19.0% 2.9%

32.1% 36.1% 5.7% 4.1% 18.7%

12.1% 1.4% 4.4% 27.2% 8.6% 6.2%

9.0% 3.6% 11.8% 30.5% 12.6% -27.3% 7.5%

-0.1% -0.1% 0.0% -0.1% 0.0% -0.2% -0.3%

-1.1% 0.7% 0.4% 0.1% 0.8% 0.7% 1.6%

-1.2% 0.7% 0.4% 0.1% 0.7% 0.6% 1.3%

12 Hemas Holdings PLC

Annual Report 2010/11

Annual Report 2010/11

Hemas Holdings PLC 13

Sector Review FMCG

REVENUE AND PROFIT AFTER TAX

06/07 07/08 08/09 09/10 10/11 REVENUE PROFIT AFTER TAX

14 Hemas Holdings PLC

Annual Report 2010/11

Annual Report 2010/11

Hemas Holdings PLC 15

16 Hemas Holdings PLC

Annual Report 2010/11

Annual Report 2010/11

Hemas Holdings PLC 17

Sector Review HEALTHCARE

REVENUE AND PROFIT AFTER TAX

06/07 07/08 08/09 09/10 10/11 REVENUE PROFIT AFTER TAX

18 Hemas Holdings PLC

Annual Report 2010/11