Chairman s Message. Dear Stakeholder,

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3 Chairman s Message Financial Information Dear Stakeholder, The profit before tax at Rs billion was an increase of 42 per cent above the Rs billion in the corresponding period in the previous year while the profit attributable to equity holders for the quarter at Rs billion reflects an increase of 34 per cent over the Rs billion in the same period in the previous year. The revenue at Rs billion in the first quarter of the financial year 2012/13 was 26 per cent above the Rs billion recorded in the corresponding period in the previous year. The Company PBT of Rs billion for the quarter was significantly above the Rs billion recorded in the corresponding period in the previous year. Although the performance of the Group in the first quarter is encouraging, its sustenance in the immediate future will be challenging as the increased input costs emanating mainly from the impact of the depreciation of the Rupee, higher duties and tariffs on imported items and the increase in fuel and electricity tariffs begin to take effect. A variety of steps, and measures, have been taken to mitigate these impacts. IFRS Convergence The financial statements for the quarter ended 30 June 2012 have been prepared and presented in accordance with Sri Lanka Accounting Standards (SLFRS/LKAS) which have materially converged with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). This interim report is our first published under the new IFRS guidelines and the previous year s financials have been restated for comparative purposes. The report also covers the key policy changes as required for first time adoption. The effect of the transition from SLASs to SLFRSs has also been presented in the reconciliation statements and accompanying notes to the reconciliation. Transportation The Transportation industry group PBT of Rs. 957 million was an increase of 33 per cent over the first quarter of the financial year 2011/12 [2011/12 Q1: Rs. 718 million]. The increase in profitability was primarily driven by the bunkering business. The Group signed a share sale agreement with Norbert Dentressangle S.A to divest a share of its freight forwarding businesses in India and Sri Lanka as a part of the continuous portfolio review of the Group. In May 2012, South Asia Gateway Terminals installed and commissioned two new Ship to Shore cranes. Leisure The Leisure industry group PBT of Rs. 648 million was an increase of 73 per cent over the first quarter of 2011/12 [2011/12 Q1: Rs. 374 million]. The enhanced PBT of the Leisure group was primarily driven by the performance of the City Hotels and Maldivian Resorts sectors. The performance of the City Hotels sector was strong with both Cinnamon Grand and Cinnamon Lakeside witnessing continued growth. The occupancies of Sri Lankan Resorts were below expectations. However, this fall was compensated to a certain extent by higher average room rates. We continue to reiterate the need for a concerted marketing campaign to create greater awareness of the destination to support the medium to long term sustainability of the industry. In the Maldivian Resorts, higher occupancies coupled with cost saving initiatives resulted in improved results. Property The Property industry group PBT of Rs. 65 million was 24 per cent below that recorded in the first quarter of 2011/12 [2011/12 Q1: Rs. 85 million]. The OnThree20 project is on schedule with over 30 per cent of the construction completed as at 30th June Construction of a mall in Kapuwatta, Ja-Ela commenced in June 2012 and it is expected to be completed, and ready for occupation, by December Consumer Foods & Retail The Consumer Foods and Retail industry group PBT of Rs. 393 million was an increase of 92 per cent over the first quarter of 2011/12 [2011/12 Q1: Rs. 204 million]. While the ice cream business recorded a growth in volumes compared to the corresponding period last year, the carbonated soft drinks business volumes were maintained in a market which showed little or no real growth. The processed meats business is close to finalising the acquisition of the production facility of D&W Foods Limited. Keells Food Products PLC has announced a 2 for 1 rights issue at Rs. 60/- per share, with the intention of raising Rs billion which will be used for the D&W acquisition and in financing the increased working capital. During the quarter under review, the Retail business was profitable compared with a loss in the corresponding period last year, primarily as a result of higher footfalls.. Financial Services The Financial Services industry group PBT of Rs. 257 million was a marginal increase of 5 per cent over the first quarter of 2011/12 [2011/12 Q1: Rs. 245 million]. During the quarter, Nations Trust Bank achieved strong profit growth and continued to be the primary contributor to the Financial Interim Financial Statements 1

4 John Keells Holdings PLC Services industry group. The PBT of the Insurance business saw steady growth during the quarter under review. The Stock Brokering business was significantly impacted as a result of the lower level of activity which prevailed at the Colombo Stock Exchange. Information Technology The Information Technology Services industry group consolidated its position by achieving a PBT of Rs. 6 million over the first quarter of 2011/12 following two consecutive years of losses [2011/12 Q1: loss of Rs. 20 million]. The Office Automation business (JKOA) remained as the major contributor to the IT industry group profits, although profits did see a decline as compared to the corresponding period in the previous year. Sales were adversely affected due to the increased product cost. The Business Process Outsourcing business in India expanded its volumes through the acquisition of new customers and as a result achieved higher revenues as compared to the corresponding period of the previous year. Other including Plantation Services Other, comprising of Plantation Services, John Keells Capital and the Corporate Centre, recorded a profit of Rs. 72 million for the quarter ended 30 June 2012 [2011/12 Q1: Rs. 78 million] The contribution from the Plantation Services business improved on account of higher average sales price for tea. Sustainability initiatives In keeping with our triple bottom line approach, the Group has continued to integrate sustainability development in its pursuance of strategic and financial goals. The Group s robust, internal quarterly sustainability reporting framework has enabled tracking of sustainability performance against key performance indicators and global benchmarks. The Group continues to measure and track its sustainability performance on a quarterly basis covering vital aspects such as the carbon footprint, water usage, waste management and employee health and safety. The Group s carbon footprint for the first quarter amounted to 19,303 MT as against 17,967 MT in the previous year which translated into 0.96 MT per one million rupees of revenue as against 1.13 MT in the corresponding period in the previous year, reflecting a reduction of 15 per cent. The Group s water usage amounted to 407,893 cubic meters in the first quarter as against 465,035 cubic meters in the corresponding period of the previous year, with the total waste generated amounting to 1,533 MT as against 1,951 MT in the previous year. While the Group continues to benefit from innovative initiatives such as renewable energy lighting, co-generation, utilisation of waste heat of generators which were introduced in the previous financial year, the Group also launched a Group-wide e-waste management initiative this quarter to better manage the disposal of e-waste. The Group continued with its environmental conservation and community development projects such as recycling of plastic containers and rainwater harvesting, amongst others. I am pleased to state that a majority of these initiatives are spear-headed and developed by the people at JKH, further reaffirming the entrenchment of a culture of sustainable development across the Group. Corporate Social Responsibility Initiatives The John Keells HIV AIDS awareness campaign educated 2,944 persons during the quarter through 37 sessions. In addition to the staff of the Group, other corporate individuals and members of the Sri Lanka Army benefited from the programme. During the quarter, the John Keells Foundation took the initiative of training 11 new master trainers as a part of its mission of spreading awareness. Plans for 2012/13 in respect of the English Language Scholarship Programme and the Vision Project have been finalized and will be implemented shortly. Village Adoption Project Mangalagama, a project covering 20 household water tanks and 03 community water tanks (in the temple, school and dispensary) was inaugurated. Additional needs assessment is planned to ascertain families in need of water resources in the village. The Mahavilachchiya based BPO operation continued to expand through a healthy participation of rural youth while the Seenigama based BPO operation continued to contribute to transaction processing. Project Leopard which is a partnership between the John Keells Foundation and Chaaya Wild involves the provision of steel pens to herd the cattle of villagers within the locality of the Yala National Park. The total number of cattle pens donated under this project by end June was 15. Various other CSR Initiatives ranging from University Soft Skills development to Neighbourhood Schools development and Nature Field Centre, Rumassala, Galle will continue. Susantha Ratnayake Chairman 26 July

5 Consolidated Income Statement Financial Information For the three months ended 30th June Change % Revenue 20,012,882 15,880, Cost of sales (15,469,055) (12,665,752) 22 Gross profit 4,543,827 3,214, Other operating income 175, ,590 (15) Distribution expenses (735,308) (559,291) 31 Administrative expenses (2,467,344) (1,964,735) 26 Other operating expenses (611,430) (390,515) 57 Results from operating activities 905, , Finance costs (232,643) (159,514) 46 Finance income 930, , Net finance income 698, , Share of results of equity-accounted investees 792, , Profit before tax 2,396,585 1,683, Tax expense (540,025) (333,082) 62 Profit for the period 1,856,560 1,350, Attributable to : Equity holders of the parent 1,658,718 1,238, Non-controlling interests 197, , ,856,560 1,350, Rs. Rs. Earnings per share Basic Diluted Dividend per share Note : All values are in Rupees 000s, unless otherwise stated. Figures in brackets indicate deductions. The above figures are not audited. Interim Financial Statements 3

6 John Keells Holdings PLC Consolidated Statement of Comprehensive Income For the three months ended 30th June Profit for the period 1,856,560 1,350,820 Other comprehensive income Currency translation of foreign operations 280,110 (44,187) Share of other comprehensive income of equity-accounted investees 316,106 71,283 Net (loss)/gain on available-for-sale financial assets (371,558) 775,795 Write off / transfer - (1,877) Income tax on other comprehensive income - (307) Other comprehensive income for the period, net of tax 224, ,707 Total comprehensive income for the period, net of tax 2,081,218 2,151,527 Attributable to : Equity holders of the parent 1,827,700 2,060,039 Non-controlling interests 253,518 91,488 2,081,218 2,151,527 Note : As required by SLFRS/LKAS, the Other Comprehensive Income includes movements in currency translation of foreign operations, gains/losses on fair valuation of available for sale financial assets, share of other comprehensive income of equity accounted investees etc. Transactions of similar nature were routed directly through the Equity Statement under SLAS. All values are in Rupees 000s, unless otherwise stated. Figures in brackets indicate deductions. The above figures are not audited. 4

7 Consolidated Statement of Financial Position Financial Information As at 30th June As at As at ASSETS Non-current assets Property, plant and equipment 34,903,827 29,348,083 34,290,012 28,627,982 Lease rentals paid in advance 10,524,149 9,314,978 10,278,349 9,512,117 Investment property 7,730,366 5,908,526 7,631,494 5,386,166 Intangible assets 2,574,018 2,780,153 2,633,073 2,631,950 Investments in associates 16,640,319 14,688,688 15,731,347 14,718,555 Other non-current financial assets 12,631,155 14,449,194 13,690,137 13,144,582 Deferred tax assets 163, , , ,850 Other non-current assets 2,581, ,209 2,405,197 2,265,984 87,749,247 77,654,292 86,789,087 76,490,186 Current assets Inventories 3,511,143 4,933,264 4,372,348 3,152,870 Trade and other receivables 9,215,412 7,925,877 9,915,048 8,710,917 Amounts due from related parties 15,868 6,294 10,715 18,520 Other current assets 3,833,557 4,030,290 4,088,257 3,400,869 Other investments 25,195,498 16,129,734 24,765,556 16,879,567 Cash in hand and at bank 3,095,993 2,692,974 4,267,175 2,112,626 44,867,471 35,718,433 47,419,099 34,275,369 Total assets 132,616, ,372, ,208, ,765,555 EQUITY AND LIABILITIES Equity attributable to equity holders of the parent Stated capital 25,832,107 24,676,476 25,110,528 24,611,507 Capital reserves 428, , , ,365 Revenue reserves 33,524,281 26,086,480 33,092,550 25,315,285 Other components of equity 12,967,239 10,356,678 12,798,257 9,645,729 72,751,992 61,547,999 71,429,700 60,000,886 Non-controlling interests 8,463,748 7,487,479 8,884,252 7,641,596 Total equity 81,215,740 69,035,478 80,313,952 67,642,482 Non-current liabilities Insurance provisions 15,342,848 13,228,419 14,744,712 12,662,500 Borrowings 11,057,012 7,884,051 12,284,414 8,352,587 Deferred tax liabilities 733, , , ,960 Employee benefit liabilities 1,413,570 1,266,994 1,372,161 1,215,597 Other deferred liabilities 21,627 4,094 3,631 3,460 Other non-current liabilities 862, , , ,938 29,431,080 23,956,763 29,886,772 23,629,042 Current liabilities Trade and other payables 13,953,937 11,397,185 14,530,653 11,177,305 Amounts due to related parties 92 2,024 1,650 2,237 Income tax payable 945, , , ,606 Short term borrowings 80, ,358 1,009, ,000 Borrowings 3,380,026 2,092,173 2,408,740 2,134,418 Other current liabilities 904,688 1,348, ,705 1,252,349 Bank overdrafts 2,705,159 4,468,329 4,347,354 3,904,116 21,969,898 20,380,484 24,007,462 19,494,031 Total equity and liabilities 132,616, ,372, ,208, ,765,555 Rs. Rs. Rs. Rs. Net assets per share Note : All values are in Rupees 000s, unless otherwise stated. The above figures are not audited. I certify that the financial statements comply with the requirements of the Companies Act No.7 of M J S Rajakariar Group Financial Controller The Board of Directors is responsible for the preparation and presentation of these financial statements. S C Ratnayake Chairman 26 July 2012 J R F Peiris Group Finance Director Interim Financial Statements 5

8 John Keells Holdings PLC Consolidated Cash Flow Statement For the three months ended 30th June Note CASH FLOWS FROM OPERATING ACTIVITIES Profit before working capital changes A 2,588,028 1,257,972 (Increase) / Decrease in inventories 1,347,793 (425,540) (Increase) / Decrease in trade and other receivables 526,244 (52,557) (Increase) / Decrease in other current assets 229, ,421 (Increase) / Decrease in other non-current assets (662,910) (98,095) Increase / (Decrease) in trade and other payables (471,994) 140,972 Increase / (Decrease) in other current liabilities 14,136 95,908 Increase / (Decrease) in insurance provision 598, ,919 Cash generated from operations 4,169,121 2,114,000 Finance income received 924, ,628 Finance costs paid (232,643) (159,514) Dividend received 131, ,501 Tax paid (299,624) (226,791) Gratuity paid (14,681) (16,498) Net cash flow from operating activities 4,678,319 2,509,326 CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES Purchase and construction of property, plant and equipment (1,057,500) (1,001,222) Purchase of intangible assets (3,238) (225) Addition to investment property (98,872) (522,360) Acquisition of subsidiary, net of cash acquired - 126,719 Increase in interest in associates (28,390) (76,755) Proceeds from sale of property, plant and equipment and intangible assets 12,841 13,006 Proceeds from sale of financial instruments-fair valued through profit or loss 52,590 55,029 Purchase of financial instruments-fair valued through profit or loss (444,455) (431,554) (Purchase) / disposal of other financial assets (net) (516,203) (9,098,991) Net cash flow from / (used in) investing activities (2,083,227) (10,936,353) CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES Proceeds from issue of shares 721,579 64,969 Dividend paid to equity holders of parent (1,275,977) (629,833) Dividend paid to non-controlling interests (624,516) (204,593) Acquisition of non-controlling interest (516) - Proceeds from long term borrowings 193, ,796 Repayment of long term borrowings (875,654) (750,025) Proceeds from / (repayment of) other financial liabilities (net) (929,057) 29,358 Net cash flow from / (used in) financing activities (2,790,243) (1,186,328) NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS (195,151) (9,613,355) CASH AND CASH EQUIVALENTS AT THE BEGINNING 21,518,594 12,016,844 CASH AND CASH EQUIVALENTS AT THE END 21,323,443 2,403,489 ANALYSIS OF CASH AND CASH EQUIVALENTS Favourable balances Other investments 20,932,609 4,178,844 Cash in hand and at bank 3,095,993 2,692,974 Unfavourable balances Bank overdrafts (2,705,159) (4,468,329) Cash and cash equivalents 21,323,443 2,403,489 Note : All values are in Rupees 000s, unless otherwise stated. Figures in brackets indicate deductions. The above figures are not audited. 6

9 Financial Information For the three months ended 30th June A. Profit before working capital changes Profit before tax 2,396,585 1,683,902 Adjustments for: Finance income (930,900) (671,500) Finance costs 232, ,514 Share of results of equity-accounted investees (792,917) (664,037) Depreciation of property, plant and equipment 523, ,594 Provision for impairment losses 99,769 9,085 (Profit) / loss on sale of property, plant and equipment and intangible assets (11,233) (3,135) Amortisation of lease rentals paid in advance 170, ,618 Amortisation of intangible assets 62,293 63,036 Amortisation of other deferred liabilities (128) (128) Gratuity provision and related costs 56,609 63,169 (Gain) / loss on disposal of financial instruments 150,297 (38,738) (Increase) / decrease in fair value of financial instruments 355, ,775 Unrealised (gain) / loss on foreign exchange (net) 276,060 (33,183) 2,588,028 1,257,972 Note : All values are in Rupees 000s, unless otherwise stated. Figures in brackets indicate deductions. The above figures are not audited. Interim Financial Statements 7

10 John Keells Holdings PLC CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Attributable to equity holders of parent Stated Revaluation Foreign currency Other Available for Revenue Total Non-controlling Total capital reserve translation capital sale reserve reserves interest Equity reserve reserves As at 1 April ,110,528 9,487,794 2,987, , ,987 33,092,550 71,429,700 8,884,252 80,313,952 Profit for the period ,658,718 1,658, ,842 1,856,560 Other comprehensive income ,788 - (368,806) - 168,982 55, ,658 Total comprehensive income ,788 - (368,806) 1,658,718 1,827, ,518 2,081,218 Exercise of share option 721, , ,579 Final dividend paid / (1,275,977) (1,275,977) - (1,275,977) Subsidiary dividend to non-controlling interest ,151 48,151 (672,667) (624,516) Acquisition of non-controlling interests (1,355) (516) As at 30 June ,832,107 9,487,794 3,525, ,365 (45,819) 33,524,281 72,751,992 8,463,748 81,215,740 As at 1 April ,611,507 8,110,642 1,021, , ,026 25,315,285 60,000,886 7,641,596 67,642,482 Profit for the period ,238,082 1,238, ,738 1,350,820 Other comprehensive income - (486) (77,184) - 788, , ,958 (21,250) 800,708 Total comprehensive income - (486) (77,184) - 788,619 1,349,091 2,060,040 91,488 2,151,528 Exercise of share option 64, ,969-64,969 Final dividend paid / (629,833) (629,833) - (629,833) Subsidiary dividend to non-controlling interest ,012 41,012 (245,605) (204,593) Acquisition of non-controlling interests ,925 10,925-10,925 As at 30 June ,676,476 8,110, , ,365 1,302,645 26,086,480 61,547,999 7,487,479 69,035,478 Note : All values are in Rupees 000s, unless otherwise stated. Figures in brackets indicate deductions. The above figures are not audited. 8

11 Financial Information Company Income Statement For the three months ended 30th June Change % Revenue 141, ,849 1 Cost of sales (85,378) (65,564) 30 Gross profit 55,736 74,285 (25) Dividend income 2,369, , Other operating income 14,509 76,231 (81) Administrative expenses (292,176) (206,227) 42 Other operating expenses (96,597) (8,776) 1,001 Results from operating activities 2,050, , Finance costs (64,430) (52,618) 22 Finance income 256, , Net finance income 192, , Profit before tax 2,243,028 1,017, Tax expense (4,752) (18,171) (74) Profit for the period 2,238, , Rs. Rs. Dividend per share Note : All values are in Rupees 000s, unless otherwise stated. Figures in brackets indicate deductions. The above figures are not audited. Interim Financial Statements 9

12 John Keells Holdings PLC Company Statement of Comprehensive Income For the three months ended 30th June Profit for the period 2,238, ,388 Other comprehensive income Net (loss)/gain on available for sale financial assets (314,681) 1,070,359 Income tax on other comprehensive income - - Other comprehensive income for the period, net of tax (314,681) 1,070,359 Total comprehensive income for the period, net of tax 1,923,595 2,069,747 Note : All values are in Rupees 000s, unless otherwise stated. Figures in brackets indicate deductions. The above figures are not audited. 10

13 Company Statement of Financial Position Financial Information As at 30th June As at As at ASSETS Non-current assets Property, plant and equipment 79,841 61,684 89,559 73,543 Intangible assets 43,765 40,315 48,141 43,724 Investments in subsidiaries and joint ventures 24,697,796 23,500,113 24,682,271 23,500,112 Investments in associates 9,513,920 9,257,569 9,485,530 9,257,569 Other non-current financial assets 1,707,405 2,571,740 2,025, ,742 Deferred tax assets - 40,198-54,198 36,042,727 35,471,619 36,330,972 33,463,888 Current assets Inventories Trade and other receivables 399, , , ,586 Amounts due from related parties 570,826 1,099, , ,073 Other current assets 428, , , ,429 Other investments 11,452,640 8,481,313 10,102,198 10,071,249 Cash in hand and at bank 61,594 29, ,495 19,382 12,912,726 10,151,190 12,312,720 11,292,479 Total assets 48,955,453 45,622,809 48,643,692 44,756,367 EQUITY AND LIABILITIES Stated capital 25,832,107 24,676,476 25,110,528 24,611,507 Revenue reserves 16,716,516 13,808,815 15,754,217 13,439,260 Other components of equity (85,086) 782, ,595 (287,603) Total equity 42,463,537 39,268,047 41,094,340 37,763,164 Non-current liabilities Borrowings 4,686,500 4,927,500 5,124,000 5,520,000 Employee benefit liabilities 130, , , ,752 4,816,532 5,036,569 5,250,864 5,624,752 Current liabilities Trade and other payables 278, , , ,667 Amounts due to related parties 8,530 4,934 6,926 9,274 Borrowings 1,339,000 1,095,000 1,281,000 1,104,000 Bank overdrafts 49,233 15, ,037 34,510 1,675,384 1,318,193 2,298,488 1,368,451 Total equity and liabilities 48,955,453 45,622,809 48,643,692 44,756,367 Rs. Rs. Rs. Rs. Net assets per share Note : All values are in Rupees 000s, unless otherwise stated. The above figures are not audited. I certify that the financial statements comply with the requirements of the Companies Act No.7 of M J S Rajakariar Group Financial Controller The Board of Directors is responsible for the preparation and presentation of these financial statements. S C Ratnayake Chairman 26 July 2012 J R F Peiris Group Finance Director Interim Financial Statements 11

14 John Keells Holdings PLC Company Cash Flow Statement For the three months ended 30th June CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax 2,243,028 1,017,559 Adjustments for: Finance income (256,541) (163,194) Dividend income (2,369,445) (971,470) Finance costs 64,430 52,618 Depreciation of property, plant and equipment 6,520 8,645 Profit on sale of property, plant and equipment (2,696) (2,712) Amortisation of intangible assets 4,376 3,409 Provision for impairment losses 99,769 - Gratuity provision and related costs 5,686 4,962 Unrealised (gain) / loss on foreign exchange (net) 277,519 (53,482) Profit before working capital changes 72,646 (103,665) (Increase) / Decrease in inventories (Increase) / Decrease in trade and other receivables 271,884 (403,205) Increase / (Decrease) in creditors and accruals (46,120) (22,955) Cash generated from operations 298,410 (529,065) Finance income received 255, ,327 Finance expenses paid (64,430) (52,618) Dividend received 2,369, ,470 Tax paid (12,946) (5,472) Gratuity paid (2,518) (644) Net cash flow from operating activities 2,843, ,998 CASH FLOWS FROM / (USED IN) INVESTING ACTIVITIES Purchase and construction of property, plant and equipment (804) (1,031) Increase in interest in subsidiaries (15,526) - Acquisition of associates (28,389) - Proceeds from sale of property, plant and equipment 6,696 6,956 Purchase of other investments - (1,000,700) (Purchase) / disposal of other investments (net) (1,510,948) 663,010 Net cash flow from / (used in) investing activities (1,548,971) (331,765) CASH FLOWS FROM / (USED IN) FINANCING ACTIVITIES Proceeds from issue of shares 721,579 64,969 Dividend paid (1,275,977) (629,833) Repayment of long term borrowings (664,176) (547,500) Net cash flow from / (used in) financing activities (1,218,574) (1,112,364) NET (DECREASE) / INCREASE IN CASH AND CASH EQUIVALENTS 76,397 (898,131) CASH AND CASH EQUIVALENTS AT THE BEGINNING 8,919,099 9,393,111 CASH AND CASH EQUIVALENTS AT THE END 8,995,496 8,494,980 ANALYSIS OF CASH & CASH EQUIVALENTS Favourable balances Other investments 8,983,135 8,481,313 Cash in hand and at bank 61,594 29,656 Unfavourable balances Bank overdrafts (49,233) (15,989) 8,995,496 8,494,980 Note : All values are in Rupees 000s, unless otherwise stated. Figures in brackets indicate deductions. The above figures are not audited. 12

15 Financial Information Company Statement of Changes In Equity Stated Available for Revenue Total capital sale reserve reserves Equity As at 1 April ,110, ,595 15,754,217 41,094,340 Profit for the period - - 2,238,276 2,238,276 Other comprehensive income - (314,681) - (314,681) Total comprehensive income 25,110,528 (85,086) 17,992,493 43,017,935 Exercise of share option 721, ,579 Final dividend paid / (1,275,977) (1,275,977) As at 30th June ,832,107 (85,086) 16,716,516 42,463,537 As at 1 April ,611,507 (287,603) 13,439,260 37,763,164 Profit for the period , ,388 Other comprehensive income - 1,070,359-1,070,359 Total comprehensive income 24,611, ,756 14,438,648 39,832,911 Exercise of share option 64, ,969 Final dividend paid / (629,833) (629,833) As at 30th June ,676, ,756 13,808,815 39,268,047 Note : All values are in Rupees 000s, unless otherwise stated. Figures in brackets indicate deductions. The above figures are not audited. Interim Financial Statements 13

16 John Keells Holdings PLC Operating Segment Information OPERATING SEGMENTS The following tables present revenue, profit information and segment assets regarding the Group s operating segments. Transportation Leisure Property For the three months ended 30th June External Revenue 5,307,450 3,976,628 3,912,911 3,028, , ,322 Inter segment revenue 92,194 93,284 11,649 10,507 68,528 60,297 Segment Revenue 5,399,644 4,069,912 3,924,560 3,038, , ,619 Eliminations Revenue Segment Profit / (loss) before tax 337, , , ,597 30,809 88,769 Finance costs (23,906) (1,963) (103,570) (59,602) (2,674) (11,145) Finance income 52,417 19,338 68,101 16,949 38,978 9,619 Share of results of equity - accounted investees 590, , Eliminations / adjustments (588) (2,427) (2,346) Profit / (loss) before tax 956, , , ,944 64,686 84,897 Tax expense (71,189) (38,141) (45,006) (24,643) (22,617) (11,256) Profit / (loss) for the period 885, , , ,301 42,069 73,641 Segment assets 8,137,942 6,101,607 50,021,694 43,822,758 11,136,074 8,986,377 Investments in associates Deferred tax assets Goodwill Tax refunds Eliminations / adjustments Total Assets Note : All values are in Rupees 000s, unless otherwise stated. Figures in brackets indicate deductions. The above figures are not audited. 14

17 Financial Information Consumer Foods & Retail Financial Services Information Technology Others Group Total ,986,843 5,247,991 1,997,392 1,728,375 1,431, , , ,242 20,012,882 15,880,582 14,997 14,671 24,449 84,411 72,736 61, , , , ,713 6,001,840 5,262,662 2,021,841 1,812,786 1,504, , , ,997 20,442,148 16,330,295 (429,266) (449,713) 20,012,882 15,880, , ,155 29,074 81,006 29,581 21,607 (111,674) (20,736) 1,407, ,812 (20,445) (36,771) (3) (66) (15,492) (2,918) (66,553) (47,049) (232,643) (159,514) 7,815 1,937 12,819 8,872 1, , , , , , ,386 (9,979) (40,138) (3,391) (6,491) 792, ,037 (3,000) (3,000) (15,791) (11,715) (21,806) (17,061) 392, , , ,198 5,647 (20,461) 71,591 77,934 2,396,585 1,683,902 (128,172) (69,698) (85,027) (80,434) (5,385) (15,223) (182,629) (93,687) (540,025) (333,082) 264, , , , (35,684) (111,038) (15,753) 1,856,560 1,350,820 12,768,537 10,250,711 23,378,562 20,868,766 3,283,744 1,945,427 19,860,912 16,644, ,587, ,620,144 16,640,319 14,688, , , , ,900 1,708,244 1,582,072 (15,201,104) (12,437,540) 132,616, ,372,725 Interim Financial Statements 15

18 John Keells Holdings PLC Notes to the interim condensed financial statements 1 CORPORATE INFORMATION John Keells Holdings PLC, is a public limited company incorporated and domiciled in Sri Lanka and listed on the Colombo Stock Exchange. Ordinary shares of the company are listed on the Colombo Stock Exchange and Global Depository Receipts (GDRs) are listed on the Luxembourg Stock Exchange. 2 INTERIM CONDENSED FINANCIAL STATEMENTS The financial statements for the period ended 30 June 2012, includes the Company referring to John Keells Holdings PLC, as the holding company and the Group referring to the companies whose accounts have been consolidated therein. 3 APPROVAL OF FINANCIAL STATEMENTS The interim condensed financial statements of the Group and the Company for the 3 months ended 30 June 2012 were authorised for issue by the Board of Directors on 26 July BASIS OF PREPARATION The interim condensed financial statements have been prepared in compliance with Sri Lanka Accounting Standard (SLAS) LKAS 34 - Interim Financial Reporting. These interim condensed financial statements should be read in conjunction with the annual financial statements for the year ended 31 March 2012, and changes to the accounting policies as given in Note 6 to these financial statements. For all periods up to and including the year ended 31 March 2012, the Group prepared its financial statements in accordance with SLAS which were effective up to 31 March The financial statements for the quarter ended 30 June 2012 are the first financial statements prepared and presented in accordance with Sri Lanka Accounting Standards (SLFRS/LKAS) immediately effective from 1 April These SLFRS/LKASs have materially converged with the International Financial Reporting Standards (SLFRS) as issued by the International Accounting Standards Board (IASB). The effect of the transition to SLFRS/LKAS on previously reported financial positions, financial performances and cash flows of the Group and the Company is given in Notes to the financial statements. The interim condensed financial statements have been prepared on a historical cost basis, except for investment properties, land and buildings and financial instruments. The interim condensed financial statements are presented in Sri Lankan Rupees and all values are rounded to the nearest thousand except when otherwise indicated. 5 BASIS OF CONSOLIDATION The interim condensed consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at each reporting date. Effective from 1st April 2012 the basis of consolidation will include the following changes; 5.1 Losses within a subsidiary are attributed to the non-controlling interest even if that results in a deficit balance. 16

19 Financial Information 5.2 A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. 5.3 If the Group loses control over a subsidiary, it: Derecognises the assets (including goodwill) and liabilities of the subsidiary Derecognises the carrying amount of any non-controlling interest Derecognises the cumulative translation differences, recorded in equity Recognises the fair value of the consideration received Recognises the fair value of any investment retained Recognises any surplus or deficit in profit or loss Reclassifies the parent s share of components previously recognised in other comprehensive income to profit or loss or retained earnings, as appropriate. 5.4 The Group measures goodwill at the acquisition date as the fair value of the consideration transferred including the recognised amount of any non-controlling interests in the acquiree, less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed, all measured as of the acquisition date. When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss. The Group elects on a transaction-by-transaction basis whether to measure non-controlling interests at fair value, or at their proportionate share of the recognised amount of the identifiable net assets, at the acquisition date. Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred. 5.5 In a business combination achieved in stages, the Group remeasures its previously held equity interest at fair value in the acquiree at each acquisition-date and recognise the resulting gain or loss, if any, in profit or loss. 5.6 Upon loss of joint control the Group measures and recognises its remaining investment at its fair value. Any difference between the carrying amount of the former joint controlled entity upon loss of joint control and the fair value of the remaining investment and proceeds from disposal are recognised in profit or loss. When the remaining investment constitutes significant influence, it is accounted for as investment in an associate. 5.7 Upon loss of significant influence over the associate, the Group measures and recognises any retaining investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the retaining investment and proceeds from disposal is recognised in profit or loss. 6 SIGNIFICANT ACCOUNTING POLICIES The changes to accounting policies set out below have been applied consistently to all periods presented in these interim condensed financial statements and in preparing the opening SLFRS/LKAS statement of financial position as at 1 April 2011 for the purpose of the transition to SLFRS/LKAS, unless otherwise indicated. The presentation and classification of the financial statements of the previous year have been amended, where relevant, for better presentation and to be comparable with those of the current year. Interim Financial Statements 17

20 John Keells Holdings PLC Notes to the interim condensed financial statements 6.1 Customer Loyalty program The Group has a customer loyalty programme whereby customers are awarded credits known as Nexus points entitling customers to the right to purchase goods & services at a discount from the Group and out side registered retailers. The fair value of the consideration received or receivable in respect of the initial sale is allocated between the points and the other components of the sale. The amount allocated to the points is estimated by reference to the fair value of the right to purchase goods and services at a discount. Such amount is deferred and revenue is recognised when the points are redeemed and the Group has fulfilled its obligations to supply the discounted products. The amount of revenue recognised in those circumstances is based on the number of points that have been redeemed in exchange for discounted products, relative to the total number of points that is expected to be redeemed. Deferred revenue is also released to income when it is no longer considered probable that the points will be redeemed. 6.2 Finance income and finance costs Finance income comprises interest income on funds invested (including available-for-sale financial assets), dividend income, gains on the disposal of available-for-sale financial assets, fair value gains on financial assets at fair value through profit or loss, gains on the remeasurement to fair value of any pre-existing interest in an acquiree, and gains on hedging instruments that are recognised in profit or loss. Interest income is recognised as it accrues in profit or loss, using the effective interest method. Dividend income is recognised in profit or loss on the date that the Group s right to receive payment is established, which in the case of quoted securities is normally the ex-dividend date. Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions, losses on disposal of available-for-sale financial assets, fair value losses on financial assets at fair value through profit or loss, impairment losses recognised on financial assets (other than trade receivables), and losses on hedging instruments that are recognised in profit or loss. 6.3 Leases The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception date, whether fulfillment of the arrangement is dependent on the use of a specific asset or the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement. At inception or upon reassessment of the arrangement, the Group separates payments and other consideration required by such an arrangement into those for the lease and those for other elements on the basis of their relative fair values. If the Group concludes for a finance lease that it is impracticable to separate the payments reliably, then an asset and a liability are recognised at an amount equal to the fair value of the underlying asset. Subsequently the liability is reduced as payments are made and an imputed finance charge on the liability is recognised using the Group s incremental borrowing rate. 18

21 Financial Information 6.4 Financial assets Initial recognition and measurement Financial assets within the scope of LKAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets, as appropriate and determines the classification of its financial assets at initial recognition. All financial assets are recognised initially at fair value plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs. The Group account for the fair value changes between trade date and settlement date. The financial assets include cash and short-term deposits, trade and other receivables, loans and other receivables, quoted and unquoted financial instruments and derivative financial instruments. Subsequent measurement The subsequent measurement of financial assets depends on their classification as follows: Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss includes financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Financial assets at fair value through profit and loss are carried in the statement of financial position at fair value with changes in fair value recognised in the income statement. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate method (EIR), less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the income statement. The losses arising from impairment are recognised in the income statement. Held-to-maturity investments Non-derivative financial assets with fixed or determinable payments and fixed maturities are classified as heldto-maturity when the Group has the positive intention and ability to hold it to maturity. After initial measurement, held-to-maturity investments are measured at amortised cost using the effective interest method, less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the income statement. The losses arising from impairment are recognised as finance cost in the income statement. Interim Financial Statements 19

22 John Keells Holdings PLC Notes to the interim condensed financial statements Available-for-sale financial investments Available-for-sale financial investments include equity and debt securities. Equity investments classified as availablefor-sale are those, which are neither classified as held for trading nor designated at fair value through profit or loss. Debt securities in this category are those which are intended to be held for an indefinite period of time and which may be sold in response to needs for liquidity or in response to changes in the market conditions. After initial measurement, available-for-sale financial investments are subsequently measured at fair value with unrealised gains or losses recognised as other comprehensive income in the available-for-sale reserve until the investment is derecognised, at which time the cumulative gain or loss is recognised in other operating income, or determined to be impaired, at which time the cumulative loss is reclassified to the income statement in finance costs and removed from the available-for-sale reserve. Derecognition A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised when: The rights to receive cash flows from the asset have expired The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a pass-through arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, and has neither transferred nor retained substantially all of the risks and rewards of the asset nor transferred control of it, the asset is recognised to the extent of the Group s continuing involvement in it. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay. Impairment of financial assets The Group assesses at each reporting date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, 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. 20

23 Financial Information 6.5 Financial liabilities Initial recognition and measurement Financial liabilities within the scope of LKAS 39 are classified as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives as appropriate and determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognised initially at fair value and in the case of loans and borrowings, plus directly attributable transaction costs. The financial liabilities include trade and other payables, bank overdrafts, loans and borrowings, financial guarantee contracts, and derivative financial instruments. Subsequent measurement The subsequent measurement of financial liabilities depends on their classification as follows: Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Gains or losses on liabilities held for trading are recognised in the income statement. The Group has not designated any financial liabilities upon initial recognition as at fair value through profit or loss. Borrowings After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in the income statement when the liabilities are derecognised as well as through the effective interest rate method (EIR) amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs in the income statement. Financial guarantee contracts Financial guarantee contracts issued by the Group are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount recognised less cumulative amortisation. Offsetting of financial instruments Financial assets and financial liabilities are offset and the net amount reported in the consolidated statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously. Interim Financial Statements 21

24 John Keells Holdings PLC Notes to the interim condensed financial statements Fair value of financial instruments The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices or dealer price quotations, without any deduction for transaction costs. For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques may include using recent arm s length market transactions; reference to the current fair value of another instrument that is substantially the same; a discounted cash flow analysis or other valuation models. Derivative financial instruments Initial recognition and subsequent measurement The Group uses derivative financial instruments such as forward currency contracts, interest rate swaps and forward commodity contracts to hedge its foreign currency risks, interest rate risks and commodity price risks, respectively. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. The fair value of commodity contracts that meet the definition of a derivative as defined by LKAS 39 but are entered into in accordance with the Group s expected purchase requirements are recognised in the income statement in cost of sales. Any gains or losses arising from changes in the fair value of derivatives are taken directly to the income statement. Derecognition A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the income statement. 6.6 Insurance operations Product classification Insurance contracts are contracts under which one party (the Insurer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder. Significant insurance risk exists if an insured event could cause an insurer to pay significant additional benefits in any scenario, excluding scenarios that lack commercial substance (i.e. have no discernible effect on the economics of the transaction). The classification of contracts identifies both the insurance contracts that issues and reinsurance contracts that holds. (SLFRS 4 appendix a) 22