On'ally Holdings PLC Annual Report 2014/2015

VisionBuilding Growth

Mission To build growth by being the most desired business venue in the city. To enhance shareholder value by satisfying our customers with modern facilities and quality service by dedicated professionals.

ON’ALLY HOLDINGS PLC

TABLE OF CONTENTS Page

Corporate Information 1

Notice of Annual General Meeting 2-3

Managing Director’s Review 4

Board of Directors - Profile 5-6

Highlights 7

Annual Report of the Board of Directors on the affairs of the Company 8-12

Audit Committee Report 13

Remuneration Committee Report 14

Statement of the Directors’ Responsibility 15

Report of the Auditors 16

Statement of Comprehensive Income 17

Statement of Financial Position 18

Statement of Changes in Equity 19

Statement of Cash Flow 20

Notes to the Financial Statements 21-44

Six year Review 45

Information to Investors 46

Major Shareholders of the Company 47

Form of Proxy Enclosed

Instruction for Completion of Proxy Enclosed

1 ON’ALLY HOLDINGS PLCAnnual Report 2014/2015

CORPORATE INFORMATION

Directors : Mr. B.V. Selvanayagam (Managing Director) Dr. S.A. Gulamhusein Mrs. Tharsini Sarveshwarn (Deputy Managing Director) Mr. G.T. Fazleabas Mr. M.I.R. Zahir Mr. Nayana Nadeesha Mawilmada Mr. Aboobucker Mohamed Rakeeb Mr. Abdul Careem Yahiyakhan Mr. S. Selvanayagam (Alternate Director to Mr. B.V. Selvanayagam) Mr. Iqbal Cassim (Alternate Director to Mr. M.I.R. Zahir)

Registered Office : Unit 603, 4th Floor, Unity Plaza Building, No. 2, Galle Road, Colombo 4, Tel: 011 2501622

Secretaries : P W Corporate Secretarial (Pvt) Ltd 3/17, Kynsey Road, Colombo 8. Tel: 011 4640360-3

Auditors : Messrs PricewaterhouseCoopers Chartered Accountants 100, Braybrooke place, Colombo 2.

Bankers : Bank of Ceylon

Legal Advisors : D M Swaminathan Associates

2ON’ALLY HOLDINGS PLCAnnual Report 2014/2015

NOTICE OF ANNUAL GENERAL MEETING

80(A)

NOTICE IS HEREBY GIVEN that the Twenty Eighth (28th) Annual General Meeting of the Company will be held at the Galle Face Hotel, Colombo 3 on Thursday, 17th September 2015 at 11.30 a.m. for the following purposes;

1. ROUTINE BUSINESS

1.1 To receive and consider the Annual Report of the Board of Directors on the affairs of the Company and the Statement of Accounts for the year ended 31st March 2015 with the Report of the Auditors thereon.

1.2 To re-elect Mr. Gulamhussein Turabally Fazleabas who retires in terms of Article 95 of the Articles of Association of the Company, as a Director.

1.3. To re-elect Mr. Mohamed Imran Rasheed Zahir who retires in terms of Article 95 of the Articles of Association of the Company, as a Director

1.4. To re-elect Mr. Nayana Nadeesha Mawilmada who retires in terms of Article 95 of the Articles of Association of the Company, as a Director.

1.5. To re-elect Mr. Abdul Careem Yahiyakhan who retires in terms of Article 95 of the Articles of Association of the Company, as a Director.

1.6. To re-elect Mr. Aboobucker Mohamed Rakeeb who retires in terms of Article 95 of the Articles of Association of the Company, as a Director.

1.7 To re-appoint Messrs PricewaterhouseCoopers, Chartered Accountants, as the Auditors of the Company and to authorize the Directors to fix their remuneration.

1.8 To authorize the Directors to determine donations for the year ending 31st March 2016 and up to the date of the next Annual General Meeting.

2. SPECIAL BUSINESS

2.1 To appoint as a Director, Mr. Ranjith Michael Samuel Fernando who is 72 years of age, in terms of Section 211 of the Companies Act No. 7 of 2007 by passing the following as an Ordinary Resolution:

"IT IS HEREBY RESOLVED THAT Mr. Ranjith Michael Samuel Fernando who is 72 years of age be and is hereby appointed a Director of the Company and it is hereby declared as provided for in Section 211(1) of the Companies Act No. 07 of 2007 that the age limit of 70 years referred to in Section 210 of the Companies Act shall not apply to Mr. Ranjith Michael Samuel Fernando."

2.2 To consider and if thought fit to pass the following as a Special Resolution:

"IT IS HEREBY RESOLVED THAT the Articles of Association of the Company be amended:

(a) by the deletion of existing Articles 80(A); and

(b) by inserting the following new Article as Article 80(A)

(i) So long as the Urban Development Authority [an authority established by Urban Development Authority Law No.41 of 1978 (as amended) and hereinafter referred to as the UDA] holds not less than 40% of the shares representing the Stated Capital of the Company for the time being, UDA shall be entitled to nominate and appoint upto four (04) Directors to the Board of Directors of the Company.


NOTICE OF ANNUAL GENERAL MEETING (Contd.)(ii) All nominations/ appointments and removals in terms of the preceding paragraph

(i) of Article 80(A) shall be effected by the UDA by a resolution duly adopted by the Board of Management of the UDA.

(iii) The Appointments / removals aforesaid shall take effect immediately upon the Company receiving at its Registered Office, a written notification of such appointment / removal signed by the Secretary of the Board of Management to the UDA together with an extract of the relevant Board Resolution of the UDA, subject however to the provisions of Sections 202, 203, 210 and 211 of the Companies Act No. 7 of 2007."

By order of the BoardON'ALLY HOLDINGS PLC

P W CORPORATE SECRETARIAL (PVT) LTDSecretaries

14 August 2015Colombo

Notes

1. A Shareholder entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote on behalf of him/her.

2. A proxy need not be a Shareholder of the Company.

3. The Form of Proxy is enclosed for this purpose.

4. The completed Form of Proxy must be deposited at the Registered Office of the Company, Unit 603, 4th Floor, Unity Plaza Building, No. 2, Galle Road, Colombo 04 not later than forty seven (47) hours prior to the time appointed for the Meeting.


MANAGING DIRECTOR’S REVIEWI take great pleasure in welcoming you all to the 28th Annual General Meeting of the On'ally Holdings PLC and to present the Annual Report and the Financial Statements for the financial year ended 31st March 2015. In the midst of a challenging business environment, your company has performed remarkably well.

FINANCIAL PERFORMANCE

Your Company achieved a revenue of Rs. 117 million which is a 11% increase over last year. Operating Profit improved by 24% to Rs. 83 million on the back of higher rental and income earned on service charges for central services provided by the Company. The profit for the year excluding fair value gain has improved and is reflective in the earning per share of Rs. 4.98 for the year as opposed to Rs. 4.58 last year. Taking cognizance of this fact, a higher final dividend of Rs. 1.85 per share has been declared.

FUTURE OUTLOOK

In order for the Company to maintain its competitive edge, we will be required to invest towards the Unity Plaza Building to ensure the building is modernized to international standards. To this end we have engaged the services of Jones Lang LaSalle, an internationally renowned real estate company to advise us on this process. I am confident that this modernization process will result in an improved performance of your company.

APPRECIATION

I would also like to take this opportunity to pay tribute to Mr. Onally Gulamhusein, who passed away on the 1st of May 2015. Mr. Gulamhusein was the founding Managing Director of this company who had the vision and the determination to see the establishment of the Unity Plaza Building and take the Company to its present position. He was well respected and admired by all who knew and interacted with him and will be greatly missed.

Let me conclude by thanking the Board of Directors including the former Chairman Mr. Nimal Perera, and the outgoing Board of Directors of Dr. D.C. Gunesekera, Mr. Nihal Fernando, Mr. Priya Jayawardena and Mr. Lakshman Hulugalle for their guidance and support exercised during the financial year under review. Thank you to our valued shareholders, Tenants, Bankers, Auditors, Company Secretaries and each and every individual staff member of On'ally Holdings PLC for their dedication to assist the Company achieve its current performance.

Brian SelvanayagamManaging Director14 August 2015


BOARD OF DIRECTORS

Mr. Brian V SelvanayagamManaging DirectorMr. Brian V Selvanayagam was appointed to the Board of On’ally Holdings PLC on 1st November 2008.

He is an Associate Member of the Chartered Institute of Management Accountants (UK), Associate Member of the Institute of Chartered Accountants of Sri Lanka, Chartered Marketers and Member of the Chartered Institute of Marketing (UK), Fellow Member of the Certified Management Accountants of Sri Lanka and Member of the Chartered Institute for Securities & Investment.

He is experienced in the fields of banking, finance, corporate finance and marketing and had served at Ernst & Young, DFCC Bank PLC, Hongkong and Shanghai Banking Corporation, and Kshathriya Holdings PLC

He is a member of the Audit & Risk Committee of the Chartered Institute of Marketing and is also the Vice Chairman of the Chartered Institute of Marketing Sri Lanka Region. He is also the Country Manager - Sri Lanka for the Chartered Institute for Securities & Investment.Dr Shabbir A GulamhuseinDirectorDr Shabbir A. Gulamhusein was appointed to the Board of On’ally Holdings PLC in March 2003.

He is the Chairman of Ceylon and Foreign Trades PLC, Chairman of Business Chamber of Commerce and the Chairman/Chief Executive of the family owned Adam Group of Companies.Mrs. Tharsini SarveshwaranDeputy Managing DirectorMrs. T Sarveshwaran is a full member of the Association of Business Executives (UK) and she has obtained an Executive Diploma in Accounting and Finance from the Institute of Chartered Accountants of Sri Lanka

Mrs. Sarveshwaran possesses 17 years experience in the fields of Accounting and Administration at On’ally Holdings PLC.Mr. Imran ZahirDirectorImran Zahir is a professional with experience in Islamic Banking, Asset Management, Venture Capital and Business. Presently he is a Director of Biotech Group Germany, Orchard Capital Sri Lanka and Orchard Consultancy Germany. Prior to which he was the Founder-Head of Islamic Banking of HBL Bank and NDB Bank Sri Lanka. He serves on the Boards of several public and private companies in Sri Lanka and Europe, as well as functioning as a consultant on Islamic banking, business and corporate governance to several companies in Europe and Sri Lanka.Mr. Gulamhussein T FazleabasDirectorMr. Gulamhussein Fazleabas is a Chartered Engineer by profession and holds a BS in Civil Engineering from the University of Louisiana in Lafayette (USA) and a MS also in Civil Engineering from the University of North Carolina in Charlotte (USA).

He is a Member of the Institute of Engineers Sri Lanka and a licensed Professional Engineer in Louisiana and North Carolina, USA.

He has 30 years private sector design engineering and project management experience in both Sri Lanka and USA and is presently the Chairman/Managing Director of Perigon Lanka Private Limited, a company carrying out Project Management, Structural Engineering and Cost Consultancy Services.


BOARD OF DIRECTORS (Contd)

Mr. Nayana Nadeesha MawilmadaDirectorMr. Nayana Nadeesha Mawilmada is the newly appointed Director General of Urban Development Authority. He is an Urban Development Specialist with extensive experience planning, facilitating, and managing large scale urban development, real estate and infrastructure projects across 15 countries. His diverse experience ranges from advising the Parliament of East Timor to leading numerous urban sector investments for the Asian Development Bank throughout Asia. Immediately prior to joining UDA, Mr. Mawilmada was the Managing Director at York Street Partners (Pvt) Ltd, a Boutique Investment Bank and Total Management Solutions Company (Private) Limited, a development focused consulting firm. His academic training includes MBA from Harvard Business School, a Master of City Planning from Massachusetts Institute of Technology (MIT), and a Bachelor of Architecture from Hampton University in the USA.Mr. Aboobucker Mohamed RakeebDirectorMr. Aboobucker Mohamed Rakeeb is a Law Graduate (LL.B) from University of Colombo and professionally he is an Attorney-at-Law practicing actively in the field of Civil law, Administrative law and Banking law for more than 16 years.Mr Abdul Careem Yahiyakhan [Dip. Sys. Eng, Pg.Dip (India) BA (UK)]DirectorMr. A C Yahiyakhan holds a Bachelor of Arts Degree from the United Kingdom, Post Graduate Diploma in Personnel Management from India and a Diploma in Computer Software Engineering.

He is experienced in the fields of administration in computer center management, foreign employment supplier services and was an Advisor to Hon. Mohamed Musthaffa, Deputy Minister of Higher Education in Sri Lanka.

He has over 20 years experience in the private sector as a Director and Managing Director both in Sri Lanka and Abroad and is presently the Chairman / Managing Director of M R S Group (Hazmea) providing Computer Centres and Foreign employment Services.Mr. S Selvanayagam(Alternate Director to Mr. B V Selvanayagam)Mr. Shehan Selvanayagam is currently a Director of Loops Solutions (Pvt) Ltd which is a leading Digital Agency in Sri Lanka working with over 45 leading brands in Sri Lanka as well as clients in the Middle East, Europe and Australia

Shehan who hails from an e-commerce background was previously employed at Sri Lankan Airlines handling the online marketing aspects of the Airline, where he was responsible for setting up and running the E-Commerce operation of the airline, from there he joined Nations Trust Bank and was handling the Alternate Channels of Banking within the Bank.

He has a Degree in Business Management from the University of Wales, a graduate from the Chartered Institute of Marketing (UK) and holds a Masters in Information Technology from the University of Keele (UK).

He regularly conducts seminars on Digital Media for companies as well as functions as a Marketing Consultant for several organizations in Sri Lanka.Profile of Mr. Iqbal Cassim(Alternate Director to Mr. M I R Zahir)Mr. Iqbal Cassim served with PwC in Singapore and London and subsequently worked as a financial consultant in Singapore and Sri Lanka. Currently he is involved in two very diverse projects- one in construction with a Korean Principal, utilizing an energy efficient construction technology (www.dsignovation.com) and the other project being a Financial Technology (FinTec) platform servicing B2B credit transactions (www.seacx.com)

Mr. Cassim serves on the Board of On’ally Holdings PLC as the Alternate Director to Mr. Imran Zahir with effect from 12th February 2015.


HIGHLIGHTS

OPERATING RESULTS 2014/15 2013/14 Increased (Rs.000’) (Rs.000’) (Decreased) %

Turnover 116,957 105,388 10.98

Operating Profit 82,844 66,895 23.84Interest income 15,015 21,970 (31.66)Fair value gain on investment properties 3,641 235,489 (98.45)

Profit before tax 101,500 324,354 (68.71)Tax (11,794) (58,527) (79.85)

Profit after tax 89,706 265,827 (66.25)Other comprehensive income - net of tax 345 (1,469) (123.49)Profit brought forward 1,077,295 857,981 25.56

Profit available for appropriation 1,167,346 1,122,339 4.01Transfer from reserve 2,397 458 423.36Dividends paid (49,002) (45,502) 7.69

Profit carried forward 1,120,741 1,077,295 4.03

KEY INDICATORS

Earnings per share (Rs) 5.13 15.19 (66.23)Earnings per share(exclusive fair value gain) (Rs) 4.98 4.58 8.73Dividend per share (Rs) 2.80 2.60 7.69Net assets per share (Rs) 75.58 73.15 3.32Market price per share as at 31 March (Rs) 64.00 46.20 38.53

75.5

734

.61

31.5

0

82.4

884

.37

34.3

0

88.7

114

5.38

36.4

0

98.3

665

.03

42.8

8

105.

39

45.5

026

5.83

116.

9689

.71

49.0

0

020

140

40

160

60

180

80

200

100

220

260

120

240

280

Valu

e (R

s Mill

ion)

2009/2010 2010/2011 2011/2012 2012/2013 2013/2014 2014/2015Year

Turnover Profit After Taxtation Dividends


ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANYThe Directors of On'ally Holdings PLC have pleasure in presenting their Annual Report with the Audited Financial Statements of the Company for the year ended 31st March 2015.

General

On'ally Holdings PLC is a public limited liability Company which was incorporated under the Companies Ordinance No.51 of 1938 as a public limited company on the 25th June 1982 which obtained the certificate to commence business on 20th August 1982, listed on the Colombo Stock Exchange on 25th April 1991 and re-registered as per the Companies Act, No 7 of 2007 on 13th December 2007 under the new Number PQ 107.

Principal activities of the Company and review of performance during the year

The Company's principal activities, which remained unchanged during the year, are Property Development / Real Estate.

A review of the business of the Company, its performance during the year and its future prospects

are contained in the Managing Director's Review, which forms and integral part of this Report.

This Report and the Financial Statements reflect the state of affairs of the Company.

Financial Statements

The complete Financial Statements of the Company, duly signed by two Directors on behalf of the Board of Directors are given on pages 17 to 44.

Accounting Policies

The accounting policies adopted by the Company in the preparation of the Financial Statements are given on pages 21 to 30 which are consistent with those of the previous period.

Board of Directors and Relevant Interest in Shares

The Board consists of eight Directors, comprising of two Executive Directors and six Non Executive Directors, four of whom are Independent Directors.

The Names of the Directors and their relevant interests in shares are given below.

} }Mr. B V Selvanayagam Executive Director 125 125

* shares held jointly with Mr. S G Selvanayagam & Mrs.L Selvanayagam 937,500 1,131,181 937,500 1,131,181

Shares hld by Mrs. L Selvanayagam 193,556 193,556

} }Dr. Shabbir Abbas Non ExecutiveGulamhusein Director

shares held in the following manner

Dr. S A Gulamhusein 31,250 32,125

Waldock Mackenzie Ltd/Dr. S A Gulamhusein 463,427 504,739 468,806 510,993

Pan Asia Banking Corporation PLC/Dr.S A Gulamhusein - 10,062

Commercial Bank of Ceylon PLC/ 10,062 -Dr. S A Gulamhusein

Names of Directors Designation No. of No. of shares as at shares as at 31.03.2015 31.03.2014


ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANY

Mrs. T Sarveshwaran Executive Director 57,316 Nil

Mr. G T Fazleabas Independent Non Executive Director 374 374

Mr. M I R Zahir Independent Non Executive Director Nil -

Mr Nayana Nadeesha Non ExecutiveMawilmada Director - - Mr. Aboobucker Mohamed IndependentRakeeb Non Executive Director - - Mr Abdul Careem IndependentYahiyakhan Non Executive Director - - Mr. Shehan Selvanayagam - (Alternate Director to Mr.B V Selvanayagam ) Alternate Director Nil -

Mr. Iqbal Cassim - (Alternate Director to Mr M I R Zahir) Alternate Director Nil -

Names of Directors Designation No. of No. of shares as at shares as at 31.03.2015 31.03.2014

The profiles of all the Directors detailing their areas of expertise, are included on pages 5 to 6 of the Annual Report.

Retirement of Directors

In terms of Article 95 of the Articles of Association of the Company, Mr. Gulamhussein Turabally Fazleabas, Mr. Mohamed Imran Rasheed Zahir, Mr. Nayana Nadeesha Mawilmada, Mr. Abdul Careem Yahiyakhan and Mr. Aboobucker Mohamed Rakeeb retire and being eligible are recommended for re-election.

Changes in the Directorate

Mr.Onally Gulamhusein, a founder member who served as the Managing Director of the Company since its inception in June 1982, passed away on 1st May 2015.

During the period under review and upto the date of

this Report the following resignations / cessation of office of Directors were effected:

Dr. D C Gunesekera and Alternate Director Mr. A Y Tyebkhan on 31st August 2014, Mr. P A I S Perera on 13th January 2015, Mr. L. Hulugalle on 31st May 2015, Mr. K E V N Fernando on 18th June 2015 and Mr. W L D P V Jayawardene on 25th June 2015.

Mr. M I R Zahir was appointed to the Board on 20th October 2014.

Mr. G T Fazleabas who was a Non Executive Director nominated by Mr.Onally Gulamhusein ceased to be a Director on the demise of Mr. Gulamhusein on 1st May 2015 and consequent thereto, was appointed a Director on the same day in terms of Article 95 of the Articles of Association of the Company.

Mr. N N Mawilmada, Mr. A M Rakeeb and Mr. A C Yahiyakhan were appointed to the Board in terms of Article 95 of the Articles of Association of the Company with effect from 10th June 2015.


Independence of Directors

The Independence of the Non Executive Directors was determined according to the Listing Rules of the Colombo Stock Exchange and each of the Directors has declared their independence and submitted signed declarations to that effect.

Declaration of Interests of Directors

The Company maintains an interest Register in terms of the Companies Act No. 7 of 2007 which is deemed to form part of this Annual Report and is available for inspection upon request.

All related party transactions which encompass the transactions of Directors who were directly or indirectly interested in a contract or a related party transaction with the Company during the accounting period is recorded in the Interest Register in compliance with the applicable law.

The Directors have declared their interests in contracts and their relevant interests in shares, at meetings of the Directors.

Remuneration of Directors

The total remuneration paid to the Directors for the financial year was Rs.7,447,941/-.

Corporate Governance

The Board of Directors is committed to the highest standards of governance designed to protect the interest of the shareholders while promoting integrity, transparency and accountability. The Board ensures that the Company is in compliance with applicable legal and regulatory requirements including meeting the requirements of the Listing Rules of the Colombo Stock Exchange, The Companies Act No. 7 of 2007 and all other applicable laws and regulations.

Duties of the Board

The Board is responsible for the formulation and implementation of the Company's short term, medium term and long term strategies. The Board also ensures that the Senior Management team has the requisite skills, expertise and knowledge to implement these strategies.

The Board ensures that all Company decisions are in compliance with laws and regulations of the country and that each decision meets the ethical standards.

The Board through the Audit Committee ensures that the Company follows accounting standards as set out by the Sri Lanka Financial Reporting Standards (SLFRS) and all financial statements are in compliance with financial regulations.

The Board, in addition to keeping all shareholder interests a priority when considering corporate decisions, also keeps the Colombo Stock Exchange and the public informed of all significant decisions.

Delegation of Authority

The Board has delegated the authority of the day to day management of the Company to the Managing Director who is responsible for delivering services according to the strategic plan, within the policies and budgets approved by the Board.

Delegation to Board Members

The Board has delegated certain functions and duties to sub committees that comprises of Board members. The functions and duties of each subcommittee namely, the Audit Committee and Remuneration Committee are detailed in the respective reports.

The Board is also encouraged to seek independent professional advice when necessary, at the Company's expense and also have access to the Company Secretary to obtain advice and services as necessary.

Appraisal of Board Performance

The Board is aware that appraising their own performance periodically would enhance the understanding of individual performance of the Board as a whole. However, though there is no formal system in place, the Board members ensure that Board responsibilities are satisfactorily discharged.

Remuneration Committee

The Remuneration Committee consists of the following Non Executive Directors;

Dr. S A Gulamhusein (Chairman)Mr. A C YahiyakhanMr. A M Rakeeb



The Remuneration Committee is responsible to ensure that the Company's remuneration policies are adequate to attract and retain top talent. The aggregated remuneration of the Board of Directors is disclosed in the notes to the financial statements and in this Report on page 10.

Audit Committee

The Audit Committee consists of the following Non Executive Directors;

Mr. M I R Zahir (Chairman)Mr. G T FazleabasMr. N N Mawilmada

The Report of the Audit Committee is given separately in the Annual Report detailing the functions and duties of the Committee and the specific objectives met in the financial year under review.

Internal Controls

The Board through delegation to the Audit Committee ensures that the Company maintains a sound system of Internal Controls to safeguard investments and Company assets. Therefore, the Audit Committee conducts a review of the effectiveness of the Company's system of internal controls.

Company Secretary

The Company Secretary ensures that Board procedures are followed and that applicable rules and regulations are complied with. The Company Secretary also liaises with the CSE on all of the Company's communications. The Company Secretary is also responsible for informing of the General Meetings to the Shareholders and for accurate recording of proxy voting.

Major Transactions

The Board of Directors is required to act in accordance with section 185 of the Companies Act in regard to 'major transactions' as per the said section 185. There were no major transactions entered into by the Company, during the year.

Dividends

A final dividend of Rs. 1/85 per share was approved by the Directors for the year under review and the

said dividend would be paid on the 2nd September 2015.

An interim dividend of Rs 1/10 per share was paid on 15th December 2014.

Accordingly, the total dividend for the year under review amounts to Rs. 2/95 per share (Rs. 2.80 per share for the year ended 31st March 2014).

Auditors

Messrs. PriceawaterhouseCoopers, Chartered Accountants served as the Auditors during the year under review and being eligible are recommended for re-appointment as the Auditors of the Company, at the Annual General Meeting. The Auditors do not have any other relationship with the Company other than as Auditors of the Company who have also provided certain non audit services.

A total amount of Rs.343,300/-is payable by the Company to the auditors for the year under review. The details of the fee payable to the Auditors have been set out under the Note 7 to the financial statements.

Donations

During the year under review, the Company did not make any donations.

Statutory Payments

The Directors confirm that, to the best of their knowledge, all taxes, duties and levies payable by the company, all contribution, levies and taxes payable on behalf of and in respect of the employees of the company and all other known statutory dues as at the reporting period have been paid or, were relevantly provided for.

Contingent Liabilities

There were no material contingent liabilities as at the reporting period, except as disclosed in note 25 to financial statements on page 42.

Events occurring after the reporting period

No event has occurred since the reporting date which would require adjustment to, or disclosure in the financial statements, except as disclosed under Note 29 to the financial statements on page 44.



Special Business to be transacted at the Annual General Meeting

Appointment of a Director

Mr. Ranjith Michael Samuel Fernando, who is 72 years of age, has been recommended for appointment as a Director by the Urban Development of Authority. In terms of Section 211 of the Companies Act No. 7 of 2007 a resolution will be placed before the shareholders at the forthcoming Annual General Meeting seeking their approval for Mr. R M S Fernando's appointment to the Board.

Amendments to the Articles of Association

A resolution will be placed before the shareholders to amend the Articles of Association in the manner set out in item 2.2 of the Notice of Annual General Meeting.

Annual General Meeting

The Annual General Meeting of the Company will be held on 17th September 2015 at 11.30 am. The notice of the Annual General Meeting appears on page 2-3.

Brian Selvanayagam T SarveshwaranManaging Director Deputy Managing Director

P W Corporate Secretarial (Pvt) Ltd.,Secretaries14 August 2015



AUDIT COMMITTEE REPORT

The composition of the Audit Committee during the year and upto to 1st May 2015 was as follows:

Mr. W L D P V Jayawardene, Chairman- Non Executive DirectorMr. B V Selvanayagam- Independent Non Executive DirectorMr. Lakshman Hulugalle- Independent Non executive Director

Mr. W L D P V Jayawardene who functioned as the Chairman of the Audit Committee upto 1st May 2015, is a Member of the Institute of Chartered Accountants of Sri Lanka.

The Audit Committee was reconstituted on 12th August 2015 and the Committee now comprise of the following:

Mr. Imran Zahir - Chairman- Independent Non Executive DirectorMr. Nayana Nadeesha Mawilmada- Non Executive DirectorMr. Gulamhussein T. Fazleabas- Independent Non executive Director

Mr. Imran Zahir is a Member of the Chartered Institute of Management Accountants, U.K

The Managing Director, Deputy Managing Director together with the Accountant attend the meetings of the Committee by invitation. The External Auditors are requested to be present when required.

Financial Reporting

The Committee oversees the Company’s financial reporting on behalf of the Board of Directors as part of its responsibility and have reviewed the Annual Financial Statements and recommended them to the Board prior to their issuance. The management ensures compliance with relevant Accounting Standards when preparing the Financial Statements.

Compliance with Laws & Regulations

The Committee has reviewed the reports submitted by the management on the state of compliance with applicable laws and regulations and statutory payments made by the Company and ensured that all requirements are adhered to.

External Auditors

The Committee held meetings with the External Auditors to discuss the nature, scope and the approach of the annual audit. The Committee also held discussions on matters raised through the management letter issued by the Auditors. Necessary actions have been taken by the Company in response to the issues raised through the Auditors. The Committee has also reviewed the other services provided by the Auditors to ensure that the independence of the Auditors has not been impaired.

Risk Management

The Committee has held discussions with the Sectional Heads to discuss the policies and practices related to risk management. The Committee has also reviewed different types of risks attached to the Company’s business and its operations during the year under consideration with a view to taking appropriate corrective action.

Re-appointment of Auditors

The Committee has recommended to the Board of Directors that Messrs PricewaterhouseCoopers be re-appointed the Auditors for the year ending 31st March 2016 subject to the approval of the shareholders at the Annual General Meeting. The Audit Committee has also made its recommendations to the Board of Directors on the fees payable to the Auditors for approval by the Board.

Imran ZahirChairman - Audit Committee14 August 2015


REMUNERATION COMMITTEE REPORT

The composition of the Remuneration Committee during the year and upto 1st May 2015 was:

Mr. Brian V Selvanayagam, Chairman - Independent Non Executive DirectorDr. Darin Gunesekera - Independent Non Executive Director (resigned on 31.8.2014)Mr. W L D P V Jayawardene - Non Executive Director

The Remuneration Committee was reconstituted on 12th August 2015 and consists of the following members;

Dr. Shabbir A Gulamhusein - Chairman - Non Executive DirectorMr. Abdul Careem Yahiyakhan - Independent Non Executive DirectorMr. Aboobucker Mohamed Rakeeb - Independent Non Executive Director

The Company's remuneration policy is an indiscriminative policy irrespective of race, religion or gender which has been developed to attract, motivate and retain good qualitative staff to achieve the goals and objectives of the Company.

During the year the committee carried out the following functions:

* Reviewing and making recommendations on the remuneration of the Executive and, Non-Executive Directors.

* Evaluating the performance of key positions of the senior management against set goals and determining the basis for revising remuneration and other benefits.

* Recommending the policy governing annual increments to staff.

Shabbir A GulamhuseinChairman - Remuneration Committee14 August 2015


STATEMENT OF DIRECTORS’ RESPONSIBILITY FOR PREPARATION OF FINANCIAL STATEMENTSThe Directors are required by the Companies Act, No.7 of 2007 to prepare financial statements for each financial year, which give a true and fair view of the state of affairs of the Company as at the end of the financial year and the income and expenditure of the Company for the financial year.

The Directors are also responsible to ensure that the financial statements comply with the regulations made under the Companies Act, which specifies the form and content of financial statements and any other requirements which apply to the Company's financial statements under any other law.

The Directors ensure that the financial statements presented in this Annual Report have been prepared using appropriate accounting policies, consistently applied and supported by reasonable and prudent judgments and estimates and is in compliance with the Sri Lanka Accounting Standards (SLFRS and LKAS) issued by the Institute of Chartered Accountants of Sri Lanka, Companies Act, No.7 of 2007 and the Sri Lanka Accounting and Auditing Standards Act No.15 of 1995.

The Directors are responsible for ensuring that the Company keeps sufficient accounting records, which disclose the financial position of the Company with reasonable accuracy, which will enable them to have the financial statements prepared and presented as aforesaid.

They are also responsible for taking measures to safeguard the assets of the Company and in that context to have proper regard to the establishment of appropriate systems of internal control with a view to prevent and detect frauds and other irregularities.

The Board of Directors is of the opinion that it has discharged its responsibilities as set out above.

The Directors are also confident that the Company has adequate resources to continue in operation and have applied the going concern basis in preparing the financial statements.

By Order of the BoardON'ALLY HOLDINGS PLC

Brian SelvanayagamManaging Director

14 August, 2015Colombo


Independent Auditor's ReportTo the shareholders of On'ally Holdings PLCReport on the financial statements

1 We have audited the accompanying financial statements of On’ally Holdings PLC , which comprise the statement of financial position as at 31 March 2015, and the statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information as set out in pages 17 to 44.

Management Responsibility for the Financial Statements

2 Management is responsible for the preparation of financial statements that give a true and fair view in accordance with Sri Lanka Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

3 Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Sri Lanka Auditing Standards. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

4 In our opinion the financial statements give a true and fair view of the financial position of On’ally Holdings PLC as at 31 March 2015, and of its financial performance and its cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

Report on other Legal and Regulatory Requirements

These financial statements also comply with the requirements of Section 151 (2) of the Companies Act, No. 07 of 2007.

13 August 2015 CHARTERED ACCOUNTANTS COLOMBO


STATEMENT OF COMPREHENSIVE INCOME

As at 31 March Notes Year ended 31 March 2015 2014

Revenue 5 116,957,020 105,387,820

Other operating income 6 23,426,560 15,298,895

Operating expenses 7 (57,539,821) (53,792,104)

Operating profit 82,843,759 66,894,611

Finance income 8 15,014,931 21,970,169

Fair value gain on investment property 13 3,640,563 235,489,597

Profit before tax 101,499,253 324,354,377

Tax 9 (11,793,721) (58,527,468)

Profit for the year 89,705,532 265,826,909

Items that will not be subsequently reclassified to profit or loss

Actuarial gain / (loss) on post employment benefit

obligation 22 392,319 (1,668,906)

Gains on revaluation of building 20 1,783,660 10,285,233

Tax on other comprehensive income 9 (261,117) (1,033,959)

Total other comprehensive income for the year - net of tax 1,914,862 7,582,368

Total comprehensive income for the year 91,620,394 273,409,277

Earnings per share - basic 10 5.13 15.19

Earnings per share - basic (exclusive of fair value gain) 10 4.98 4.58

The Notes on pages 21 to 44 form an integral part of these financial statements.

Report of the Independent Auditors’ on page 16.

(all amounts in Sri Lanka Rupees)


STATEMENT OF FINANCIAL POSITION

ASSETS Non-current assetsProperty, plant and equipment 12 32,084,614 32,682,708Investment property 13 1,298,154,296 1,294,406,443 1,330,238,910 1,327,089,151

Current assetsInventories 15 8,883 666,672Trade and other receivables 16 9,749,534 11,858,860Short term Investments 17 197,630,699 163,891,218Cash and cash equivalents 18 27,173,151 8,463,738 234,562,267 184,880,488Total assets 1,564,801,177 1,511,969,639

EQUITY AND LIABILITIESCapital and reservesStated capital 19 175,007,700 175,007,700Revaluation reserve 20 27,054,828 27,882,263Retained earnings 1,120,741,585 1,077,295,912 1,322,804,113 1,280,185,875

Non-current liabilitiesTrade and other payables 21 24,481,302 36,267,786Retirement benefit obligation 22 7,096,129 6,474,463Deferred income tax liability 23 158,367,606 157,332,963 189,945,037 200,075,212

Current liabilitiesTrade and other payables 21 48,881,003 31,259,652Income tax payable 24 3,171,024 448,900 52,052,027 31,708,552Total liabilities 241,997,064 231,783,764Total equity and liabilities 1,564,801,177 1,511,969,639

(all amounts in Sri Lanka Rupees)

As at 31 March Notes Year ended 31 March 2015 2014

The Board of Directors is responsible for the preparation and presentation of these financial statements. These financial statements were authorised for issue by Board of Directors on 12 August 2015.

The Notes on pages 21 to 44 form an integral part of these financial statements.Report of the Independent Auditors’ on page 16.

Managing Director Deputy Managing Director 12 August 2015 12 August 2015

I certify that these financial statements have been prepared in compliance with the requirements of the Companies Act, No. 07 of 2007.

Accountant 12 August 2015


STATEMENT OF CHANGES IN EQUITY(all amounts in Sri Lanka Rupees)

Note Stated Revaluation Retained Total capital reserve earnings

Balance at 1 April 2013 175,007,700 19,289,303 857,981,597 1,052,278,600

Profit for the year - - 265,826,909 265,826,909

Other comprehensiveincome / (loss) for the year - 9,051,005 (1,468,637) 7,582,368

Total comprehensiveincome for the year - 9,051,005 264,358,272 273,409,277

Depreciation transfer 20 - (458,045) 458,045 -

Dividends paid

- 2013 11 - - (26,251,155) (26,251,155) - 2014 11 - - (19,250,847) (19,250,847)

Balance as at 31 March 2014 175,007,700 27,882,263 1,077,295,912 1,280,185,875

Balance at 1 April 2014 175,007,700 27,882,263 1,077,295,912 1,280,185,875

Profit for the year - - 89,705,532 89,705,532

Other comprehensiveincome for the year - 1,569,621 345,241 1,914,862

Total comprehensiveincome for the year - 1,569,621 90,050,773 91,620,394

Depreciation transfer 20 - (2,397,056) 2,397,056 -

Dividends paid

- 2014 11 - - (29,751,309) (29,751,309) - 2015 11 - - (19,250,847) (19,250,847)

Balance at 31 March 2015 175,007,700 27,054,828 1,120,741,585 1,322,804,113

The Notes on pages 21 to 44 form an integral part of these financial statements.Report of the Independent Auditors' on page 16.


STATEMENT OF CASH FLOW(all amounts in Sri Lanka Rupees)

31 March Notes 2015 2014

Cash flows from operating activities

Cash generated from operations 27 92,476,344 74,956,439Interest received 17,557,295 17,517,184Tax paid 24 (8,298,071) (9,278,701)Gratuity paid 22 (67,500) (130,097)

Net cash generated from operating activities 101,668,068 83,064,825

Cash flows from investing activities

Purchase of property, plant and equipment 12 (109,728) (258,943)Upgrading expenses of investment property 13 (107,290) (5,801,192)Net investments in fixed deposits (33,739,481) (58,953,616)

Net cash used in investing activities (33,956,499) (65,013,751)

Cash flows from financing activities

Dividends paid 11 (49,002,156) (45,502,002)

Net cash used in financing activities (49,002,156) (45,502,002)

Increase / (decrease) in cash and cash equivalents 18,709,413 (27,450,928)

Movement in cash and cash equivalents

At beginning of the year 8,463,738 35,914,666Increase / (decrease) 18,709,413 (27,450,928)

At end of the year 18 27,173,151 8,463,738

The Notes on pages 21 to 44 form an integral part of these financial statements.Report of the Independent Auditors’ on page 16.


NOTES TO THE FINANCIAL STATEMENTS(In the notes all amounts are shown in Sri Lanka Rupees unless otherwise stated)

1 General information

The Company is a public limited liability Company which was incorporated under the Companies Ordinance No.51 of 1938 as a public limited Company on the 25th June 1982 which obtained the certificate to commence business on 25 th August 1982 , listed on the Colombo Stock Exchange on 25th April 1991 and re-registered as per the Companies Act, No7 of 2007 on 13th December 2007 under the new number PQ 107. The registered office of the Company is situated at Unit 603, 4th Floor, No. 02, Galle Road, Colombo 4.

The principal activity of the Company is property development / real estate.

2 Summary of significant accounting policies

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented unless otherwise stated.

2.1 Basis of preparation

The financial statements of the Company have been prepared in accordance with Sri Lanka Accounting Standards (SLFRS), which comprises Sri Lanka Financial Reporting Standards (SLFRSs), Sri Lanka Accounting Standards (LKASs), relevant interpretations of the Standards Interpretations Committee (SIC) and International Financial Reporting Interpretations which are collectively referred to as SLFRSs. The Company has consistently applied the accounting policies throughout all periods presented, as if these policies had always been in effect.

These financial statements have been prepared under the historical cost convention, except for the measurement of investment property and the building under property, plant and equipment at fair value and retirement benefit obligation at the present value of the obligation.

2.2 Changes in accounting policy and disclosures

(a) New and amended standards adopted by the Company

The following standards have been adopted by the Company for the first time with effect

from financial year beginning on 1 April 2014. These new amended standards did not have a significant impact on the financial statements.

(i) SLFRS 13 ‘Fair Value Measurement’, aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across Sri Lanka Accounting Standards.

(ii) International Financial Reporting Interpretations Committee’s (IFRIC) interpretation number 21 ‘Levies’, establishes the accounting for an obligation to pay a levy if that liability is within the scope of LKAS 37 ‘Provisions’. The interpretation addresses what the obligating event which gives rise to pay a levy and when a liability should be recognised.

(iii) Amendments to LKAS 32 ‘Financial Instruments: Presentation’, with regard to offsetting financial assets and financial liabilities. This amendment clarifies that the right of set-off must not be contingent on a future event. It must also be legally enforceable for all counterparties in the normal course of business, as well as in the event of default, insolvency or bankruptcy. The amendment also considers settlement mechanisms.

(iv) Amendments to LKAS 36 ‘Impairment of Assets’, regarding recoverable amount disclosures for non-financial assets. This amendment removed certain disclosures of the recoverable amount of ‘Cash-Generating Units’(CGUs) which had been included in LKAS 36 by the issue of SLFRS 13.

(v) Amendments to LKAS 39 ‘Financial Instruments: Recognition and Measurement’, on novation of derivatives and the continuation of hedge accounting. This amendment considers legislative changes to ‘over-the-counter’ derivatives and the establishment of central counterparties. Under LKAS 39 novation of derivatives


NOTES TO THE FINANCIAL STATEMENTS (Contd.)

to central counterparties would result in discontinuance of hedge accounting. The amendment provides relief from discontinuing hedge accounting when novation of a hedging instrument meets specified criteria.

(b) New standards, amendments and interpretations issued but not effective for the financial year beginning 1 April 2014 and not early adopted.

(i) SLFRS 9, ‘Financial instruments’, addresses the classification, measurement and recognition of financial assets and Financial liabilities. SLFRS 9 replaces the parts of LKAS 39 that relate to the classification and measurement of financial instruments. SLFRS 9 requires financial assets to be classified into two measurement categories: those measured at fair value and those measured at amortised cost. The determination is made at initial recognition. The classification depends on the entity’s business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. For financial liabilities, the standard retains most of the LKAS 39 requirements. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity’s own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch. The company is yet to assess SLFRS 9’s full impact and intends to adopt SLFRS 9 no later than the accounting period beginning on or after 1 January 2015.

(ii) SLFRS 15, ‘Revenue from Contracts with Customers’, deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and

obtain the benefits from the good or service. The standard replaces LKAS 18 and LKAS 11 and related interpretations. This standard will be effective for annual periods beginning on or after 1 April 2017 and earlier application is permitted.

There are no other standards or IFRIC interpretations that are not yet effective that would be expected to have a material impact to the Company.

2.3 Foreign currencies

(a) Functional and presentation currency

Items included in the financial statements of the Company is measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The financial statements are presented in Sri Lankan Rupees, which is the Company’s functional and presentation currency.

2.4 Property, plant and equipment

2.4.1 Recognition and measurement

Property, plant and equipment are recognised if it is probable that future economic benefits associated with the assets will flow to the Company and the cost of the asset can be measured reliably. All property, plant and equipment are initially recorded at cost. The cost includes expenditure that is directly attributable to the acquisition of assets. Buildings are subsequently shown at market value, based on valuation done by an external independent valuer, less subsequent depreciation for such property. Valuations are performed with sufficient regularity to ensure that the fair value of a revalued asset does not differ materially from its carrying amount. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset, and the net amount is restated to the revalued amount of the asset. The self-constructed assets includes the cost of materials, direct labour and any other costs directly attributable to bringing the asset to a working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located.



Increases in the carrying amount arising on revaluation of land and buildings are credited to other comprehensive income and shown as other reserves in shareholders’ equity. Decreases that offset previous increases of the same asset are charged in other comprehensive income and debited against other reserves directly in equity; all other decreases are charged to the income statement. Each year the difference between depreciation based on the revalued carrying amount of the asset charged to the income statement, and depreciation based on the asset’s original cost is transferred from ‘other reserves’ to ‘retained earnings’.

2.4.2 Subsequent costs

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

2.4.3 Derecognition

The carrying amount of an item of property, plant and equipment is derecognised on disposal or when no future economic benefits are expected from its use or disposal. Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in operating profit. When revalued assets are sold, the amounts included in other reserves are transferred to retained earnings.

2.4.4 Depreciation

Depreciation is calculated on the straight-line method to write off the cost of each asset to their residual values over their estimated useful lives.

Depreciation of an asset begins when it is available for use and ceases at the earlier of the date that the asset is classified as held for sale and the date that the asset is discontinued.

Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost or revalued amounts to their residual values over their estimated useful lives, as follows:

Buildings 8 - 25 years Machinery 4 - 12 years Office equipment and tools 4 years Furniture and fittings 4 years Motor vehicles 4 years

These assets’ residual values and useful lives are reviewed and adjusted if appropriate. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount.

2.5 Investment property Property that is held for long-term rental

yields or for capital appreciation or both, and that is not occupied by the Company, is classified as investment property.

Investment property is measured initially at its cost, including related transaction costs. After initial recognition, investment property is carried at fair value, based on active market prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset, determined annually by the Board of Directors with the assistance of an independent qualified valuer. The fair value of investment property reflects, among other things, rental income from current leases and assumptions about rental income from future leases in the light of current market conditions.

Subsequent expenditure is capitalised to the asset’s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred.

Changes in fair values are recognised in the comprehensive income. Investment properties are derecognised when they have



been disposed. Any gain or loss arising from a change in fair value or from the retirement or disposal of an investment property is recognised in the Comprehensive income. Rental income from investment property is accounted for as described in note 2.19 (a).

When an item of property, plant and equipment is transferred to investment property following a change in its use, any differences between the carrying amount and the fair value of the item arising at the date of transfer is recognised directly in equity if it is a gain. Upon disposal of the item, the gain is transferred to retained earnings. Any loss arising in this manner is recognised immediately in the income statement.

If an investment property becomes owner-occupied, it is reclassified as property, plant and equipment and its fair value at the date of reclassification becomes its cost for accounting purposes. Investment property that is being redeveloped for continued future use as investment property continues to be measured at fair value and is not reclassified as property, plant and equipment during the redevelopment.

2.6 Impairment of non-financial assets

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less cost to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).

2.7 Financial assets

2.7.1 Classification

The Company classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, available for sale and held to maturity. The classification

depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition and re-evaluates this designation at every reporting date. At the reporting date there were no financial assets at fair value through profit or loss and available for sale investments.

a. Loans and receivables Loans and receivables are non-derivative

financial assets with fixed or determinable payments that are not quoted in an active market. The Company’s financial assets consist of loans and receivables. Financial assets recognised in the statement of financial position as trade and other receivables, investments in fixed deposits with maturity of more than three months and less than twelve months are classified as loans and receivables. They are recognised initially at fair value and subsequently measured at amortised cost less provision for impairment.

2.7.2 Recognition and measurement of financial asset

Regular purchases and sales of financial assets are recognised on the trade-date, i.e. the date on which the Company commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. Loans and receivables are subsequently carried at amortised cost using the effective interest method.

2.7.3 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

2.7.4 Impairment of financial assets

Assets carried at amortised cost



The Company assesses at the end of each reporting period whether there is an objective evidence that financial assets are impaired. A financial asset is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset that can be reliably estimated.

Evidence of impairment may include indications that the debtor is experiencing significant financial difficulty, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

For loans and receivables category, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the income statement.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the reversal of the previously recognised impairment loss is recognised in the income statement.

2.8 Financial liabilities

The Company’s financial liabilities consist of trade and other payables. Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

All financial liabilities are recognised initially at their fair values and subsequently measured at amortised cost, using the effective interest method, unless the effect of discounting would be insignificant, in which case they are stated at cost.

2.9 Inventories

Inventories are stated at the lower of cost or net realisable value. Cost is determined by the first-in, first- out (FIFO) method. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

2.10 Trade receivables

Trade receivables mainly consist of rental amounts due from customers in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

2.11 Cash and cash equivalents

In the statement of cash flows, cash and cash equivalents includes cash in hand, deposits held with banks and other short-term highly liquid investments with original maturities of three months or less and bank overdrafts. In the statement of financial position, bank overdrafts are shown within borrowings in current liabilities.

2.12 Share capital

Ordinary shares are classified as equity. Dividend distributed to the Company’s shareholders is recognised as a liability in the period in which the dividends are approved by the Company’s directors as empowered by the Articles of Association of the Company.

2.13 Trade payables

Trade and other payables are recognised



initially at fair value and subsequently measured at amortised cost using the effective interest method.

Company obtains deposits from tenants as a guarantee for returning the property at the end of the lease term in a specified good condition amounting to rental payments for a period of 6 months. Such deposits are treated as financial liabilities in accordance with LKAS 39, and they are initially recognized at fair value. The deposit is subsequently measured at amortised cost.

2.14 Provisions

Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made.

2.15 Current income tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the statement of financial position date in the country where the Company operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions here appropriate on the basis of amounts expected to be paid to the tax authorities.

2.16 Deferred tax

Deferred income tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements.

However, deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

2.17 Employee benefits

2.17.1 Defined contribution plans

Defined contribution plan is a post employment plan under which an entity pays fixed contribution into a separate entity and will have no legal or constructive obligation to pay a further amount. Obligations for contributions to defined contribution plans are recognised as an expense in the income statement as and when they are due.(i) Provident fund contributions All employees of the Company are

members of the Employees’ Provident Fund to which the Company contributes 15% of the salary of each employee.

(ii) Trust fund contributions The Company contributes 3% of the

salary of each employee to the Employee Trust Fund.

2.17.2 Defined benefit plan - Gratuity

Defined benefit plans define an amount of



benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.

The Company has adopted a defined benefit plan as required under the Payment of Gratuity Act No. 12 of 1983 for all eligible employees.

The liability recognised in the statement of financial position in respect of defined benefit plans is the present value of the defined benefit obligation at the statement of financial position date. The defined benefit obligation is calculated annually by the Company using the projected unit credit method prescribed in Sri Lanka Accounting Standard 19; Employee Benefits. The present value of the defined benefit obligation is determined by discounting the estimated future cash flows using the interest rates of Government bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability.

Gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to other comprehensive income in the period in which they arise.

Past service costs are recognised immediately in the income statement.

Under the Payment of Gratuity Act No.12 of 1983, the liability to an employee arises only on completion of 5 years of continued service.

2.18 Segment information

Management has determined renting of investment property as one whole operating segment, and accordingly these financial statements do not provide information by segment.

2.19 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable, and represents an amount receivable for goods supplied, services performed and stated net

of discounts, taxes and levies. The Company recognises revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity and when specific criteria have been met for Company’s activities as described below:

(a) Rental and other income Rental income earned from commercial

units rented to tenants are recognised on an accrual basis.

(b) Interest income Interest income is recognised as it

accrues unless collectability is in doubt.

(c) Other income Other income is recognised on an accrual

basis.

2.20 Dividend

Dividends are recognised when they become legally payable. Dividend distribution to the Company’s shareholders is recognised as a liability in the Company’s financial statements in the period in which the dividends are approved by the Company’s directors as empowered by the Articles of Association of the Company. If the dividends are declared after the reporting period but before the financial statements are authorised for issue, the dividends are not recognised as a liability at the end of the reporting period. The details of dividends are detailed in Note 11.

2.21 Comparatives

Where necessary, comparative figures have been adjusted to conform with change in presentation in the current year.

3 Critical Accounting Estimates and judgments

The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are discussed below.



3.1 Income taxes

The Company is subject to income taxes in Sri Lanka. Significant judgment is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made.

3.2 Defined benefit obligations

The present value of the pension obligations depends on a number of factors that are determined on the projected unit credit method using a number of assumptions. The assumption used in determining the net cost (income) for pensions include the discount rate. Any change in this assumption will impact the carrying amount of pension obligations.

The Company determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, the Company considers the interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension liability.

Other key assumptions for pension obligations are based in part on current market conditions. Additional information is disclosed in Note 22.

3.3 Management’s estimation of fair value

The valuation was determined principally using discounted cash flow projections based on estimates of future cash flows, supported by the terms of any existing lease and other contracts and by external evidence such as current market rents for similar properties in the same location and condition, and using

discount rates that reflect current market assessments of the uncertainty in the amount and timing of the cash flows. The future rental rates were estimated depending on the actual location, type and quality of the properties, and taking into account market data and projections at the valuation date. Investment properties do not include the investment properties under construction or development and no such estimations were made.

4 Financial Risk Management

4.1 Financial risks factors

The risk management function within the Company is carried out in respect of financial risks. Financial risks are risks arising from financial instruments to which the Company is exposed during or at the end of the reporting period. Financial risk comprises market risk arising from interest rate risk, credit risk and liquidity risk. The primary objectives of the financial risk management function are to establish risk limits, and then ensure that exposure to risks stays within these limits.

The Board of Directors involve in the risk management and provides the principles for overall risk management covering specific areas, such as interest rate risk, credit risk and investing excess liquidity.

4.1.1 Market risks

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The Company’s market risks arise only from the open positions in interest-bearing assets, to the extent that these are exposed to general and specific market movements.

Management sets limits on the exposure to interest rate risk that may be accepted, which are monitored on a monthly basis. However, the use of this approach does not prevent losses outside of these limits in the event of more significant market movements.

Sensitivities to interest risks included below are based on a change in one factor while



holding all other factors constant. In practice, this is unlikely to occur, and changes in some of the factors may be correlated.

(i) Foreign exchange risk

The Company has no exposure to foreign exchange risk as it does not hold any foreign currency denominated assets or liabilities.

(ii) Price risk

The Company has no exposure to price risk as it does not hold any equity securities or commodities.

(iii) Cash flow and fair value interest rate risk

As the Company’s interest-bearing assets generate significant amounts of interest, changes in market interest rates have significant direct effect on the Company’s income.

The Company’s interest rate risk principally arises from the fixed interest bearing investments in fixed deposits.

The Company does not have any interest bearing borrowings. At 31 March 2015, if market interest rates had been higher/lower by 1% with all other variables held constant, post-tax profit for the year would have been Rs 2,949,700 (2014 - Rs 1,744,819) higher/lower mainly as a result of fixed interest bearing investments in fixed deposits.

4.1.2 Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Company has significant concentrations of credit risk in relation to the receivables from IT tenants. Credit risk arises from cash and cash equivalents and fixed deposits held at banks and trade receivables, including rental receivables. Credit risk arising from the rent receivables is subject to monthly review and also to minimize the exposure to risk of default, a refundable deposit is taken at the award of the contract. The Company has policies in place to ensure

that rental contracts are entered into only with tenants with an appropriate credit history, and the Company monitors the credit quality of receivables on an ongoing basis. Cash balances are held and investments in fixed deposits are agreed only with financial institutions with a credit rating’s of A or better. The credit quality is further analysed in Note 14.

4.1.3 Liquidity risks

Prudent liquidity risk management implies maintaining sufficient cash to meet the financial commitments. The table below analyses the company’s financial liabilities into relevant maturity groupings based on the remaining period at the statement of financial position date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.



The maturity analysis of financial liabilities at 31 March 2015 and 2014 are as follows:

At 31 March 2015 From 1 Less than month to From 3 to 12 1 month 3 months months 1 to 2 years 2 to 5 yearsRental deposits - - 42,069,721 24,481,302 -Trade andother payables [ excludingstatutory liabilities] 2,048,328 - 3,303,108 - - 2,048,328 - 45,372,829 24,481,302 -

At 31 March 2014 From 1 Less than month to From 3 to 12 1 month 3 months months 1 to 2 years 2 to 5 yearsRental deposits - - 23,932,919 36,267,786 -Trade andother payables [ excludingstatutory liabilities] 1,983,173 584,695 3,462,700 - - 1,983,173 584,695 27,395,619 36,267,786 -

4.1.4 Capital risk management

The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

Consistent with others in the industry, the company monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including ‘current and non current borrowings’ as shown in the statement of financial position) less cash and cash equivalents. Total capital is calculated as ‘equity’ as shown in the statement of financial position plus net debt.

The Company was operated as a non geared company in the financial year 2014 and 2015.

31 March 2015 2014

Total borrowings - -Less - investments in fixed deposits [Note 17] (197,630,699) (163,891,218)Less - cash and cash equivalents [Note 18] (27,173,151) (8,463,738)Net debt - -Total equity 1,322,804,113 1,280,185,875Total capital 1,322,804,113 1,280,185,875Gearing ratio 0% 0%



5 Revenue Revenue solely consists of rental income and is shown net of taxes.

6 Other operating income

Year ended 31 March 2015 2014

Rental on hoardings and sign boards 9,562,070 8,984,219 Hire of premises 2,092,875 1,930,200 Electricity fee 1,494,344 798,307 Other miscellaneous income 1,904,206 1,258,699 Maintenance services 360,000 325,000 Service charges 8,013,065 2,002,470 23,426,560 15,298,895

7 Operating expenses by nature

The following items have been charged in arriving at operating profit:

Year ended 31 March 2015 2014 Directors’ emoluments [Note 28 (iv)] 7,447,941 6,196,061 Depreciation on property, plant and equipment [Note 12] 2,410,195 2,125,392 Auditors’ remuneration

- Audit fee 270,000 250,000 - Certification fee 73,300 71,400

Electricity charges 8,302,601 8,726,006 Janitorial services 6,358,798 6,263,604 Management fees [Note 28 (ii)] 1,224,480 734,688 Repairs and maintenance expenditure

- Investment property 2,133,092 1,881,695 - Building and office equipment 740,021 398,405

Security services 5,701,760 5,678,249 Staff costs [Note 7 (ii)] 15,625,835 13,305,922 Other expenses 7,251,798 8,160,682 Total 57,539,821 53,792,104

(ii) Staff cost

Salaries and wages 9,981,500 8,175,756 Staff bonus 2,960,960 3,054,820 Defined contribution plan 1,601,890 1,280,774 Retirement benefit obligation [Note 22] 1,081,485 794,572 15,625,835 13,305,922 Average monthly number of persons employed during the year: Full time 25 24



8 Finance income

Year ended 31 March 2015 2014 Interest income 15,014,931 21,970,169 Interest income consists of interest on investments made in short term fixed deposits made in the course

of the business of the Company out of:

(a) Rent deposits held by the Company payable on the termination of tenancy; and

(b) Balance profits after distribution of dividends invested for the future maintenance and development of the assets of the Company.

9 Income tax expense The charge for income tax recognised in statement of income consists of:

Year ended 31 March 2015 2014 Current tax Current tax on profits for the year 11,020,195 8,526,936 Deferred tax recognised in the income statement [Note 23] 773,526 50,000,532 Taxes included in income for the year 11,793,721 58,527,468 Deferred tax charged to other comprehensive Income [Note 23] 261,117 1,033,959 12,054,838 59,561,427 Tax is calculated using tax rates enacted for the year of assessment. The profits are taxed at a principle

rate of 12%.

Reconciliation between current tax expenses and the accounting profit:

Year ended 31 March 2015 2014 Profit before tax 101,499,253 324,354,377 Tax calculated - on profit and income at a tax rate of 12% (2014 - 10%) 12,179,911 32,435,438 12,179,911 32,435,438 Income not subject to tax (305,195) - Expenses not deductible for tax purposes (80,995) 23,778 Impact of increase in tax rate - 26,068,252 Deferred tax charged to other comprehensive Income [Note 23] 261,117 1,033,959 Tax charge 12,054,838 59,561,427

According to Section 59B (1), item 33 of the fifth schedule to the Inland Revenue (Amendment) Act No. 22 of 2011, the Company is liable to pay income tax at the rate of 12%, based on lower turnover threshold, effec-tive year of assessment 2014 / 2015.



10 Earnings per share

Basic earnings per share is calculated by dividing the net profit attributable to the shareholders of the com-pany by the weighted average number of shares in issue during the year.

Year ended 31 March 2015 2014 Net profit attributable to shareholders 89,705,532 265,826,909 Weighted average number of shares in issue 17,500,770 17,500,770 Earnings per share (Rs) 5.13 15.19 Earnings per share (Rs - exclusive of fair value gain) 4.98 4.58

11 Dividends

(a) During the year the Directors paid a final dividend of Rs 1.70 per share amounting to Rs 29,751,309 in respect of 2014 (the final dividend paid during the year ended 31 March 2014 amounting to Rs 26,251,155 at 1.50 per share was in respect of 2013).

(b) The Directors paid an interim dividend of Rs 1.10 per share amounting to Rs 19,250,847 for the year ended 31 March 2015 (interim dividend of Rs 1.10 per share amounting to Rs 19,250,847 was paid for the year ended 31 March 2014 during that period).

(c) The Directors have approved a final dividend of Rs.1.85 per share amounting to Rs 32,376,425 for the year ended 31 March 2015 on 12 August 2015.


12

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12 Property, plant and equipment (contd)

(ii) If the building was stated on the historical cost basis, the amounts would be as follows:

Year ended 31 March 2015 2014 Cost 12,544,615 12,544,615 Accumulated depreciation (5,785,945) (5,285,406) 6,758,670 7,259,209

13 Investment property

As per Sri Lanka Accounting Standards (LKAS 40), Investment Property, the directors have adopted the fair value model for accounting for investment property as at 1 April 2005.

Based on active market prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset and / or with the assistance of independent qualified valuers, fair value of the invest-ment property is determined annually by the Board of Directors.

Investment property was valued by Mr C S G Atukorala an independent professionally qualified valuer hav-ing recent experience in the location and category of the investment property being valued. As at 31 March 2015, the investment property was revalued for Rs 1,298,154,296 (31 March 2014- Rs 1,294,406,443) and the resulting gain was recognised in the income statement.

Year ended 31 March 2015 2014 At beginning of year 1,294,406,443 1,053,115,654 Upgrading expenses 107,290 5,801,192 Change in fair value during the year 3,640,563 235,489,597 At 31 March 1,298,154,296 1,294,406,443 The investment property of the Company is the Unity Plaza building situated at No. 02, Galle Road, Co-

lombo 4. The floor area of the Unity Plaza building (excluding Bank of Ceylon premises) is in the extent of 125,616

Sq.ft. Land extent (excluding Bank of Ceylon premises) is 78.56 perches. Income earned from investment property Total rent income earned by the Company from the investment property during the year was Rs

116,957,020 (2014 - Rs105,387,820). Expenses incurred on investment property Total repair and maintenance expenses incurred on the investment property was Rs 2,133,092 (2014 - Rs

1,881,695).



14 Financial instruments by category

In accordance with the LKAS 39 on "Financial Instruments Recognition and Measurement" financial assets have been classified as follows:

Year ended 31 March 2015 2014 Assets as per statement of financial position Loan and receivables Trade and other receivables 5,825,109 8,326,444 (excluding prepayments and deposits) Investment in fixed deposits [Note 17] 197,630,699 163,891,218 Cash and cash equivalents [Note 18] 27,173,151 8,463,738 Total loan and receivables 230,628,959 180,681,400 Total financial assets 230,628,959 180,681,400


In accordance with the LKAS 39 on "Financial Instruments Recognition and Measurement" financial liabili-ties have been classified as follows:

Year ended 31 March 2015 2014 Liabilities as per statement of financial position Other financial liabilities at amortised cost Trade and other payables 71,902,459 66,231,273 (excluding non financial liabilities) Total other financial liabilities at amortised cost 71,902,459 66,231,273 Total financial liabilities 71,902,459 66,231,273 Credit quality of financial assets The credit quality of financial assets that are neither past due nor impaired can be assessed by reference

to external credit ratings (if available) or to historical information about counterparty default rates;

(i) Cash at bank Year ended 31 March Rating 2015 2014 Investments in fixed deposits, call deposits and treasury bills Bank of Ceylon AA + 197,630,699 - People’s Bank AA + - 15,360,617 People’s Leasing and finance PLC AA - - 148,530,601 Total fixed deposits, call deposits and treasury bills 197,630,699 163,891,218

Cash at bank Standard chartered bank AAA - 100,960 Hong Kong and shanghai bank AAA - 1,036,261 Bank of Ceylon AA + 15,148,152 7,301,517 Risk free 12,024,999 25,000 Total cash at bank 27,173,151 8,463,738 Total fixed deposits and cash and cash equivalents 224,803,850 172,354,956



14 Financial instruments by category (contd)

(ii) Trade receivable

Year ended 31 March 2015 2014 New customers and related parties - - Existing customers and related - - parties more than 6 months Existing customers with no default history 517,041 174,360 Existing customers with default listing - - 517,041 174,360 The age analysis of the past due but not impaired trade receivables are as follows;

Year ended 31 March 2015 2014 - less than 30 days overdue 517,041 87,180 - 30 to 90 days overdue - 87,180 - 90 to 180 days overdue - - - more than 180 days - - Total past due but not impaired 517,041 174,360

Above related to a number of independent customers for whom there is no recent history of credit default and the total trade receivables were fully performing.

15 Inventories Inventories consist of consumables.

16 Trade and other receivables

Year ended 31 March 2015 2014 Trade receivables 517,041 174,360 Other receivables and deposits [Note (i) below] 8,034,190 10,924,803 Prepayments [Note (ii) below] 1,198,303 759,697 9,749,534 11,858,860

(i) Other receivables mainly consist of interest receivable on treasury bills of Rs 2,850,773 (2014 - NIL), deposits for services of Rs 1,649,268 (2014 - Rs 1,649,268) and interest receivable on fixed deposits of Rs 828,210 (2014- Rs 6,264,259 )

(ii) Pre-payments mainly comprise insurance pre-paid expenses of Rs 929,182 (2014 - Rs 543,779).



17 Short term Investments

Year ended 31 March 2015 2014 Treasury bills 162,130,699 - Fixed deposit 34,000,000 163,891,218 Call deposits 1,500,000 - 197,630,699 163,891,218

18 Cash and cash equivalents

Year ended 31 March 2015 2014 Cash at bank and in hand 15,173,152 8,463,738 Short term fixed deposits 11,999,999 - 27,173,151 8,463,738

For the purposes of the cash flow statement, the year end cash and cash equivalents comprise only the above.

19 Stated capital

Number of Value shares (Rs) At 1 April 2014 17,500,770 175,007,700 At 31 March 2015 17,500,770 175,007,700

20 Revaluation reserve

Year ended 31 March 2015 2014 At beginning of year 27,882,263 19,289,303 Revaluation surplus 1,783,660 10,285,233 Deferred tax on revaluation (214,039) (1,234,228) Depreciation transfer (2,397,056) (458,045) At end of year 27,054,828 27,882,263



21 Trade and other payables

Year ended 31 March 2015 2014 Non-current Rental deposits payable to outside parties [Note (i) below] 23,653,482 35,797,446 Rental deposit payable to related parties [Note 28 (iii)] 827,820 470,340 24,481,302 36,267,786

Current Rental deposits payable to outside parties [Note (i) below] 41,599,381 21,770,015 Rental deposit payable to related party [Note 28 (iii)] 470,340 2,162,904 Other payable [Note (ii) below] 3,085,781 3,065,983 Accruals and provisions [Note (iii) below] 3,725,501 4,260,750 48,881,003 31,259,652 73,362,305 67,527,438

(i) As per rent agreements, the Company obtains rental deposits of 3 to 6 months as security. Based on the remaining agreement period as at the statement of financial position date, rental deposits are clas-sified as current liabilities if deposits are due within one year or less. If not they are presented as non - current liabilities.

(ii) Other payable mainly consist of Value Added Tax (VAT) payable of Rs 1,226,997 (2014 - Rs 1,063,156) and unclaimed dividend payable of Rs 1,359,757 ( 2014-1,030,279).

(iii) Accrual and provisions mainly consist of professional fees payable of Rs 268,026 (2014 - Rs 264,953) and miscellaneous accruals amounting to Rs 3,182,791 (2014- 3,154,318).

22 Retirement benefit obligation

The amounts recognised in the statement of financial position are determined as follows:

Year ended 31 March 2015 2014 Present value of unfunded obligation 7,096,129 6,474,463 Liability in the statement of financial position 7,096,129 6,474,463

The movement in the defined benefit obligation over the year is as follows: Year ended 31 March 2015 2014 At beginning of year 6,474,463 4,141,082 Current service cost 432,697 416,636 Interest cost 648,788 377,936 Actuarial (gain) / loss (392,319) 1,668,906 Benefits paid (67,500) (130,097) At the end of the year 7,096,129 6,474,463



22 Retirement benefit obligation (Contd)

The amounts recognised in statement of comprehensive income are as follows:

Year ended 31 March 2015 2014 Current service cost 432,697 416,636 Interest cost 648,788 377,936 Total included in the staff costs [Note 7 (ii)] 1,081,485 794,572

Actuarial (gain) / loss on post employment benefit obligation (392,319) 1,668,906 Total recognised in the comprehensive income 689,166 2,463,478

The following assumptions and data were used in valuing the defined benefit obligation by the actuarial valuer:

Year ended 31 March 2015 2014 Discount rate 10.14% 9.45% Future salary increases 10% 10% Retiring age 60 years 60 years

Sensitivity analysis

In order to illustrate the significance of the salary /wage escalation rate and the discount rate assumed in this valuation as at 31 March 2015, a sensitivity analysis was carried out for all employees assuming the following salary/wage escalation rate and discount rate.

Present value of defined Change in the benefit obligation assumption Increase in Decrease in assumption assumption

Discount rate 1% Decreased by Increased by 7.89 % 8.76% Salary growth rate 1% Increased by Decreased by 8.69% 7.97% Staff turn over rate 1% Increased by Decreased by 0.07% 0.08%



23 Deferred income tax liability Deferred income taxes are calculated on all temporary differences under the liability method using a

principal tax rate of 12% (2014 - 12%). The movement in deferred income tax account is as follows:

Year ended 31 March 2015 2014 At beginning of year 157,332,963 106,298,472 Recognised in income statement [Note 9] 773,526 50,000,532 Recognised in other comprehensive income [Note 9] 261,117 1,033,959 At the end of the year 158,367,606 157,332,963

Deferred tax is calculated on temporary differences between carrying value of fixed assets and tax written down value of such assets, as analysed by each taxable activity.

The reconciliation of tax effect arising from the timing differences related to carrying amounts of assets and liabilities of the statement of financial position is as follows:

Deferred Deferred Net tax tax deferred asset liability tax Property plant and equipment - (3,770,413) (3,770,413) Investment property - (155,448,728) (155,448,728) Retirement benefit obligations 851,535 - 851,535 Asset / (liability) as at 31 March 2015 851,535 (159,219,141) (158,367,606)

Deferred Deferred Net tax tax deferred asset liability tax Property plant and equipment - (3,811,915) (3,811,915) Investment property - (154,297,984) (154,297,984) Retirement benefit obligations 776,936 - 776,936 Asset / (liability) as at 31 March 2014 776,936 (158,109,899) (157,332,963)

24 Current tax payable

Year ended 31 March 2015 2014 At beginning 448,900 1,200,665 Provision for the year [Note 9] 11,020,195 8,526,936 Settlements during the year (8,298,071) (9,278,701) Balance at the end 3,171,024 448,900



25 Contingencies

The Company has contingencies in respect of the legal proceeding initiated by a former employee of the Company and an appeal made by the Company against the Department of Inland Revenue, as follows;

a) A former employee of the Company has filed a complaint in the Department of Labour alleging, inter alia, that the Company had failed to implement the Order of the Labour Tribunal case which was concluded in 2005. The Commissioner of Labour has referred this matter to an arbitrator to be resolved by arbitration. The arbitration proceeding have not been concluded.

It is not anticipated that any material liability will arise from the above legal claim.

b) Contingent liability amounting to Rs.10,711,367 on the outcome of the appeal against the assessment for the year 2011/ 12, separately charging income tax at 28% on the interest income of the Company may arise on respect of the subsequent years of assessments:

Financial year

2011 / 2012 1,391,181 2012 / 2013 2,884,518 2013 / 2014 3,957,343 2014 / 2015 2,478,325 10,711,367

The Company has appealed against the assessment on the basis that it is chargeable on the aggregate "profits and income" of its business undertaking at the rate at which it is chargeable under section 59B of the Inland Revenue Act and that there is no provision to apply different rates of tax on the its "profits" and of its "income".

26 Commitments

(a) Capital commitments As per the service agreement entered into with Jones Lang Lasalle Property Consultants (India)

Private Limited for obtaining the services of Retail Advisory for Unity Plaza subsequent to the year end, the commitment to pay professional fees of US Dollar 25,000 and out of pocket expenses with a maximum limit which is US Dollar 5,500 through out the service period.

(b) Financial commitments The Company pays management fees of Rs 1,224,480 annually for the services rendered by the Urban

Development Authority ("UDA"). UDA reserves the right to revise the management fees.



27 Cash generated from operations Reconciliation of profit before tax to cash generated from operations :

Year ended 31 March 2015 2014 Profit before tax 101,499,253 324,354,377 Adjustments for: Depreciation [Note 12] 2,410,195 2,125,392 Interest income [Note 8] (15,014,931) (21,970,169) Fair value gain [Note 13] (3,640,563) (235,489,597) Loss on disposal of property, plant and equipment 81,287 13,555 Movement in rental deposits - non current portion [Note 21] (11,786,484) 12,984,162 Changes in working capital:

- inventory 657,789 163,880 - trade and other receivables (433,038) (1,595,747) - trade and other payables 17,621,351 (6,423,986)

Retirement benefit obligation [Note 22] 1,081,485 794,572

Cash generated from operations 92,476,344 74,956,439

28 Related party transactions

Urban Development Authority and Ceylon and Foreign Trades PLC had shareholding of 48% and 24% respectively of the Company, during the year and as at the date of the statement of financial position.

The following Directors of Urban Development Authority were also the Directors of On’ally Holdings PLC as at the Statement of Financial Position date.

Mr P A I S Perera was the Former Chairman ( resigned on 13 January 2015) , Mr K E V Nihal Fernando was the Deputy Director General and Mr Priya Jayawardene was the Deputy Director General (Finance and Commerce) of the Urban Development Authority as at the Statement of Financial Position date.

Dr S A Gulamhusein, Director and Shareholder of the Company is also the Chairman of Ceylon and Foreign Trades PLC, with whom no transactions had been entered into by the Company during the year.

The Company has a lease agreement with Network Communications (Private) Limited which occupies premises rented by the Company. Dr A A Shabbir, son of Dr S A Gulamhusein is a Director of Network Communications (Private) Limited.



28 Related party transactions (contd)

The Company has carried out the following transactions during the year with related parties:

Year ended 31 March 2015 2014

(i) Rent income received from Network Communications (Private) Limited 3,676,055 5,032,279(ii) Management fees paid to Urban Development Authority 1,224,480 734,688Outstanding balances arising from above transactions;

(iii) Rental deposit payable to Network Communications (Private) Limited [Note 21]

- Current 470,340 2,162,904 - Non-current 827,820 470,340

1,298,160 2,633,244

The Directors who have an interest in contracts with the Company have disclosed the nature of their interests in contracts at the meetings of Directors.

(iv) Key management compensation Key management includes directors (executive and non executive). The compensation paid or pay-

able to key management for employee services is shown below:

Year ended 31 March 2015 2014 Salaries and other short-term employee benefits 7,447,941 6,196,061 7,447,941 6,196,061

There were no other related party transactions during the year other than those disclosed above in these financial statements.

29 Events after the reporting period

The following events have occurred after the reporting period;

1) Changes in composition of the Board of Directors

Mr.Onally Gulamhusein who served as the Managing Director of the Company since its inception in June 1982 passed away on 01 May 2015.

The Board appointed Mr.Brian Vinod Selvanayagam as the Managing Director of On’ally Holdings PLC with effect from 12 August 2015.

Mr.N.M.Mawilmada ,Mr.A.C.Yahiyakan and Mr.A.M.Rakeeb were appointed Directors of the Company with effect from 10 June 2015.

The following resignations of Directors were effected; Mr.L.Hulugalle on 31 May 2015, Mr.K.E.V.N.Fernando on 18 June 2015 and Mr.W.L.D.P.V.Jayawardene on 25 June 2015.

2) The Directors have approved a final dividend of Rs.1.85 per share amounting to Rs 32,376,425 for the year ended 31 March 2015 on 12 August 2015.

No other events have occurred except to the above since the statement of financial position date which require adjustment to, or disclosure in, the financial statements.


SIX YEAR REVIEW

Year ended 31 March 2010 2011 2012 2013 2014 2015 Rs. Rs. Rs. Rs. Rs. Rs.OPERATING RESULTS

Turnover 75,568,485 82,478,010 88,705,349 98,356,729 105,387,820 116,957,020

Operating profit 43,849,252 50,542,138 56,022,537 62,233,131 66,894,611 82,843,759Interest income 9,225,919 6,639,742 7,047,351 15,995,112 21,970,169 15,014,931Loss on disposal of fixed assets Nil Nil Nil (6,554,000) Nil NilFair value gain on investment properties Nil 47,211,507 100,558,461 Nil 235,489,597 3,640,563

Profit before Tax 53,075,171 104,393,387 163,628,349 71,674,243 324,354,377 101,499,253Tax (18,469,086) (20,022,636) (18,246,647) (6,647,736) (58,527,468) (11,793,721)

Profit after tax 34,606,085 84,370,751 145,381,702 65,026,507 265,826,909 89,705,532Other comprehensive income -net of tax Nil Nil 107,637 450,292 (1,468,637) 345,241Profit brought forward 778,000,243 784,344,408 758,103,146 833,846,923 857,981,597 1,077,295,912Profit available for appropriation 812,606,328 868,715,159 903,592,485 899,323,722 1,122,339,869 1,167,346,685Transfer (to)/from reserves 3,239,466 (76,310,504) 3,147,794 1,534,761 458,045 2,397,056Capitalization of Reserves and related direct cost Nil Nil (36,491,754) Nil Nil NilDividends paid (31,501,386) (34,301,509) (36,401,602) (42,876,886) (45,502,002) (49,002,156)

Profit carried forward 784,344,408 758,103,146 833,846,923 857,981,597 1,077,295,912 1,120,741,585

ASSETS

Non-current assetsProperty, plant & equipment 20,313,282 25,133,219 25,832,687 24,277,479 32,682,708 32,084,614Investment properties 894,897,604 942,109,111 1,050,917,229 1,053,115,654 1,294,406,443 1,298,154,296Deffered tax assets 1,170,853 Nil Nil Nil Nil Nil

Current assets 95,174,775 105,644,320 121,653,220 147,492,948 184,880,488 234,562,267

Total assets 1,011,556,514 1,072,886,650 1,198,403,136 1,224,886,081 1,511,969,639 1,564,801,177

EQUITY AND LIABILITIES

Capital & reservesStated capital 140,006,160 140,006,160 175,007,700 175,007,700 175,007,700 175,007,700Repairs & maintenance reserve 17,434,364 Nil Nil Nil Nil NilRevaluation reserve 18,445,959 23,572,551 20,824,064 19,289,303 27,882,263 27,054,828Retained earnings 784,344,408 758,103,146 833,846,923 857,981,597 1,077,295,912 1,120,741,585

Non - current liabilities 29,942,810 113,241,490 144,518,264 133,723,178 200,075,212 189,945,037current liabilities 21,382,813 37,963,303 24,206,185 38,884,303 31,708,552 52,052,027

Total equity & liabilities 1,011,556,514 1,072,886,650 1,198,403,136 1,224,886,081 1,511,969,639 1,564,801,177

KEY INDICATORS

Earnings per share 2.47 6.03 8.31 3.72 15.19 5.13Earnings per share(exclusive fair value gain) 2.47 2.65 2.56 3.72 4.58 4.98Dividend per share 2.25 2.45 2.35 2.45 2.60 2.80Net Assets per share 68.58 65.83 58.84 60.13 73.15 75.58Market price per share 42.00 72.40 59.00 48.00 46.20 64.00

OTHERS

Number of shareholders 585 613 841 809 801 808Dividend cover (Times) 1.10 2.46 3.53 1.52 5.84 1.83Dividend cover((Times)exclusive of fair value gain)) 1.10 1.08 1.09 1.52 1.76 1.78Dividend pay out ratio 0.91 0.41 0.28 0.66 0.17 0.55Dividend pay out ratio(exclusive of fair value gain) 0.91 0.92 0.92 0.66 0.57 0.56


INFORMATION TO INVESTORS

DISTRIBUTION OF SHAREHOLDINGS AS AT 31ST MARCH 2015

From To No. of Holders No. of Shares % 1 - 1,000 660 97,810 0.56 1,001 - 10,000 114 302,606 1.73 10,001 - 100,000 27 824,579 4.71 100,001 - 1,000,000 3 1,594,483 9.11 Over 1,000,000 4 14,681,292 83.89 808 17,500,770 100.00

ANALYSIS OF SHAREHOLDERS AS AT 31ST MARCH 2015

Category No. of Shareholders No. of Shares % Local Individuals 745 4,034,157 23.05 Local Institutions 57 13,416,762 76.66 Foreign Individuals 5 9,851 0.06 Foreign Institutions 1 40,000 0.23 Total 808 17,500,770 100.00

31.03.2015 31.03.2014 Rs. Rs.Market price per shareHighest during the period Rs.72.50 (02/10/2014) Rs.59.70 (16/05/2013)Lowest during the period Rs.45.00 (17/04/2014) Rs.36.20 (05/04/2013)As at end of the period Rs.64.00 Rs.46.20

PUBLIC HOLDINGThe percentage of shares held by the public as at 31st March 2015 is 6.4107% comprising of 795 shareholders.

PER SHARE DATA AS AT 31 MARCH

2015 2014Earnings per share (Rs) 5.13 15.19Earnings per share(exclusive fair value gain) (Rs) 4.98 4.58Dividend per share (Rs) 2.80 * 2.60 **Net assets per share (Rs) 75.58 73.15Market price per share as at 31 March (Rs) 64.00 46.20

* Final dividend of Rs 1.70 per share paid for the year ended 31/03/2014 and interim dividend of Rs 1.10 per share paid for the year ended 31/03/2015.

** Final dividend of Rs 1.50 per share paid for the year ended 31/03/2013 and interim dividend of Rs 1.10 per share paid for the year ended 31/03/2014.


MAJOR SHAREHOLDERS OF THE COMPANY

Name As at 31/03/2015 As at 31/03/2014 No. of Shares (%) No. of Shares (%)

1 Urban Development Authority 8,333,332 47.617 8,333,332 47.617 2 Pan Asia Banking Corporation PLC/Ceylon and Foreign Trades PLC 2,799,450 15.996 2,799,450 15.996 3 Estate of the late Mr. O Gulamhusein 2,143,035 12.245 2,257,667 12.900 4 Commercial Bank of Ceylon PLC/Ceylon and Foreign Trades PLC 1,405,475 8.031 1,405,475 8.031 5 Mr.B V Selvanayagam , Mr.S G Selvanayagam & Mrs.L Selvanayagam 937,500 5.357 937,500 5.357 6 Waldock Mackenzie Ltd/ Mr S A Gulamhusein 463,427 Commercial Bank of Ceylon PLC/ Dr. S A Gulamhusein 10,062 Dr. S H A Gulamhusein 31,250 504,739 2.884 510,993 2.290 7 Mrs. L Selvanayagam 193,556 1.106 193,556 1.106 8 Majestic Investments (Pvt) Ltd 72,336 0.413 69,462 0.397 9 Nanayakkara Management Services (Private) Limited 65,247 0.373 50,537 0.289 10 Mr.W R H Perera 63,843 0.365 63,843 0.365 11 Mrs. T Sarveshwaran 57,316 0.328 - - 12 Pan Asia Banking Corporation PLC/ Mr.G H A A Shabbir 55,930 0.320 - - Mr.G H A A Shabbir - - 55,930 0.320 13 Dee Sanda Holdings Private Limited 51,476 0.294 14 Merrill J Fernando & Sons (Pvt) Limited 49,040 0.280 49,040 0.280 15 Mrs.K S Cooray 41,665 0.238 41,665 0.238 16 Tranz Dominion,L L C 40,000 0.229 40,000 0.229 17 Asha Financial Services Limited/Mr. C N Pakianathan 35,841 0.205 - - Mr. C N Pakianathan - - 26,425 0.151 18 Mr.K Gnanenthiran 31,250 0.179 31,250 0.179 19 Mr.A A Noordeen 27,375 0.156 27,375 0.156 20 Mr. D P C Lawrence 22,750 0.130 22,750 0.130 16,931,156 96.746 16,916,250 96.031 569,614 3.254 584,520 3.969 17,500,770 100.000 17,500,770 100.000

FORM OF PROXY

I/We..………………………………………………………………………(NIC No. ……………………) of .………………………………………………………………………………………………….. being a Shareholder/Shareholders of ON’ALLY HOLDINGS PLC hereby appoint .........…………………………………………………………………………………………………………………………………………………………………………………………………(NIC No.……………………………. )of ….…..………………………………………………………………………………………………(or failing him/her).

Mr. B V Selvanayagam or failing him* Dr. S A Gulamhusein or failing him* Mrs.T Sarveshwaran or failing her* Mr. G T Fazleabas or failing him* Mr. M I R Zahir or failing him* Mr. N N Mawilmada or failing him* Mr. A M Rakeeb or failing him* Mr. A C Yahiyakhan

as my/our* proxy to represent and speak and vote for me/us* and on my/our* behalf at the Twenty Eighth (28th) Annual General Meeting of the Company to be held on 17th September 2015 and at any adjournment thereof and every poll which may be taken in consequence of the aforesaid meeting.

I/We,* the undersigned, hereby authorize my/our proxy to speak and vote for me/us* and on my /our* behalf in accordance with the preference as indicated below;

1. ROUTINE BUSINESS

For Against

1.1 To receive and consider the Annual Report of the Board of Directors and the Statements of Accounts for the year ended 31st March 2015 with the Report of the Auditors thereon

1.2 To re-elect Mr. G T Fazleabas, who retires in terms of Article 95 of the Articles of Association of the Company, as a Director

1.3 To re-elect Mr. M I R Zahir who retires in terms of Article 95 of the Article of Association of the Company, as a Director

1.4. To re-elect Mr. N N Mawilmada who retires in terms of Article 95 of the Articles of Association of the Company, as a Director.

1.5 To re-elect Mr. A C Yahiyakhan who retires in terms of Article 95 of the Articles of Association of the Company, as a Director.

1.6 To re-elect Mr. A M Rakeeb who retires in terms of Article 95 of the Articles of Association of the Company, as a Director.

1.7 To re-appoint Messrs PricewaterhouseCoopers, Chartered Accountants, as Auditors of the Company and to authorize the Directors to fix their remuneration.

1.8 To authorize the Directors to determine donations for the year ending 31st March 2016 and up to the date of the next Annual General Meeting.

On’ally Holdings Plc

FORM OF PROXY (Contd.)

INSTRUCTIONS FOR COMPLETION

1. Kindly perfect the Form of Proxy by filling in legibly your full name address and the National Identity Card number and signing in the space provided and filling in the date of signature.

2. The completed Form of Proxy should be deposited at the Registered Office of the Company, Unit 603, 4th Floor, Unity Plaza Building, No. 2, Galle Road, Colombo 04 not later than forty seven (47) hours prior to the time appointed for the Meeting.

3. If you wish to appoint a person other than the Chairman or a Director of the Company as your Proxy, please insert the relevant details in the space provided (above the names of the Board of Directors) on the Proxy Form.

4. If the Form of Proxy is signed by an Attorney, the relative Power of Attorney should accompany the Form of Proxy for registration if such Power of Attorney has not already been registered with the Company.

5. If the appointer is a Company / Incorporated body this Form must be executed in accordance with the Articles of Association / Statute.

2. SPECIAL BUSINESS

2.1 To pass the Ordinary Resolution as set out in Item 2.1 of the Notice of Meeting to appoint Mr. Ranjith Michael Samuel Fernando as a Director of the Company.

2.2 To pass the Special Resolution as set out in Item 2.2 of the Notice of Meeting to amend the Articles of Association of the Company.

In witness my/our* hands this ……………. day of ……………. Two Thousand and Fifteen *Please delete as appropriate

…………………………….. Signature of Shareholder/s

Notes: 1. A proxy need not be a Shareholder of the Company. 2. Instructions as to completion appear below.

Des

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PLC

Unit 603, 4th Floor, Unity Plaza Building ,No: 2, Galle Road, Colombo 4.

On’ally Holdings PLC(Reg. No. PQ107)

On'ally Holdings PLC Annual Report 2014/2015

Documents

Transcript of On'ally Holdings PLC Annual Report 2014/2015