1. |
ACCOUNTING POLICIES |
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John Keells Holdings PLC. is a public limited liability company incorporated and domiciled in Sri Lanka and listed on the Colombo Stock Exchange. The registered office and principal place of business of the company is located at 130, Glennie Street, Colombo 2.
Ordinary shares of the company are listed on the Colombo Stock Exchange. Global depository receipts (GDRs) of John Keells Holdings PLC. are listed on the Luxembourg Stock Exchange.
In the annual report of the Board of directors and in the financial statements, ”the company” refers to John Keells Holdings PLC. as the holding company and ”the group” refers to the companies whose accounts have been consolidated therein. The financial statements for the year ended 31 March 2008 were authorised for issue by the directors on 22 May 2008.
John Keells Holdings PLC. became the holding company of the group during the financial year ended 31 March 1986. The principal activities of the group are stated in the annual report of the Board of directors.
All values presented in the financial statements are in Sri Lanka rupees thousands (Rs.'000s) unless otherwise indicated. The significant accounting policies are being discussed below. |
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1.1. |
GENERAL POLICIES |
1.1.1. |
Statement of compliance |
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The balance sheet, statement of income, statement of changes in equity and the cash flow statement, together with the accounting policies and notes (the ”financial statements”) have been prepared in compliance with the Sri Lanka Accounting Standards (SLAS) issued by the Institute of Chartered Accountants of Sri Lanka. |
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1.1.2. |
Basis of preparation |
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The financial statements, presented in Sri Lanka rupees, have been prepared on an accrual basis and under the historical cost convention unless stated otherwise. |
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1.1.3. |
Changes in accounting policies and adoption of new and revised Sri Lanka Accounting Standards during the year. |
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The accounting policies adopted are consistent with those of the previous financial year except for the adoption of SLAS 16 (Revised 2006)Employee Benefits.
The group has elected to early adopt SLAS 16 (Revised 2006) on Employee Benefits, which requires the group to recognize a liability when an employee has provided a service in exchange for benefits to be paid in the future; and recognise an expense when the entity consumes the economic benefit arising from the service provided by an employee in exchange for employee benefits. |
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1.1.4. |
Comparative information |
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The accounting policies applied by the group are, unless otherwise stated, consistent with those used in the previous year. Previous year’s figures and phrases have been rearranged, wherever necessary, to conform to the current year's presentation. |
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1.1.5. |
Events after the balance sheet date |
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All material post balance sheet events have been considered and appropriate adjustments or disclosures have been made in the respective notes to the financial statements. |
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1.2. |
CONSOLIDATION POLICY |
1.2.1. |
Basis of consolidation |
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The consolidated financial statements include the financial statements of the company, its subsidiaries and other companies over which it has control.
The group's financial statements comprise of the consolidated financial statements of the company and the group which have been prepared in compliance with the group's accounting policies.
All intra group balances, income and expenses and profits and losses resulting from intra group transactions are eliminated in full. |
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1.2.2. |
Acquisitions and divestments |
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Acquisitions of subsidiaries are accounted for using the purchase method of accounting. The results of subsidiaries, joint ventures and associates acquired or incorporated during the year have been included from the date of acquisition, or incorporation while results of subsidiaries, joint ventures and associates disposed have been included up to the date of disposal. |
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1.2.3. |
Subsidiaries |
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Subsidiaries are those enterprises controlled by the parent. Control exists when the parent holds more than 50% of the voting rights or otherwise has a controlling interest.
Subsidiaries are consolidated from the date the parent obtains control until the date that control ceases.
Subsidiaries consolidated have been listed in the group directory.
The following subsidiaries have been incorporated outside Sri Lanka:
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| Name |
Country of incorporation |
| Matheson Keells Air Services (Pvt) Limited |
India |
| Matheson Keells Enterprises (Pvt) Limited |
India |
| Auxicogent Alpha (Pvt) Limited |
Mauritius |
| Auxicogent Holdings (Pvt) Limited |
Mauritius |
| Auxicogent International (Pvt) Limited |
Mauritius |
| Auxicogent Investments
Mauritius (Pvt) Limited |
Mauritius |
| Auxicogent US Inc. |
USA |
| John Keells Maldivian
Resorts (Pte) Limited |
Republic of Maldives |
| Serene Holidays (Pvt) Limited. |
India |
| Travel Club (Pte) Limited |
Republic of Maldives |
| Tranquility (Pte) Limited. |
Republic of Maldives |
| Fantasea World Investments
(Pte) Limited |
Republic of Maldives |
| Mack Air Services Maldives
(Pte) Limited |
Republic of Maldives |
| John Keells Singapore (Pte) Limited |
Singapore |
| John Keells Business Systems
(UK) Limited |
United Kingdom |
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The total profits and losses for the period, of the company and of its subsidiaries included in consolidation and all assets and liabilities of the company and of its subsidiaries included in consolidation are shown in the consolidated income statement and balance sheet respectively.
Minority interests which represents the portion of profit or loss and net assets not held by the group, are shown as a component of profit for the period in the income statement and as a component of equity in the consolidated balance sheet, separately from parent shareholders' equity.
The consolidated cash flow statement includes the cash flows of the company and its subsidiaries.
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1.2.4. |
Joint venture |
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A joint venture is a contractual arrangement, whereby the group and other parties undertake an economic activity that is subject to joint control. The group recognises its interest in the joint venture using the proportionate consolidation method. The group's share of each of the assets, liabilities, income and expenses of the joint venture are combined with the similar items, line by line, in the consolidated financial statements.
Information Systems Associates (a joint venture) has been incorporated in United Arab Emirates. |
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1.2.5. |
Associates |
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Associates are those investments over which the group has significant influence and holds 20% to 50% of the equity and which are neither subsidiaries nor joint ventures of the group.
Associate companies of the group which have been accounted for under the equity method of accounting are:
Associated Motorways PLC.
Auxicogent BPO Solutions (Pvt) Ltd.
Maersk Lanka (Pvt) Ltd. Nations Trust Bank PLC.
South Asia Gateway Terminals (Pvt) Ltd.
Union Assurance PLC.
All associates are incorporated in Sri Lanka, except for Auxicogent BPO Solutions (Pvt) Ltd. which is incorporated in India.
The investments in associates are carried in the balance sheet at cost plus post acquisition changes in the group's share of net assets of the associates. Goodwill relating to an associate is included in the carrying amount of the investment. After application of the equity method, the group determines whether it is necessary to recognise any additional impairment loss with respect to the group's net investment in the associate. The income statement reflects the share of the results of operations of the associate. Where there has been a change recognised directly in the equity of the associate, the group recognises its share of any changes in the statement of changes in equity.
When the group's share of losses in an associate equals or exceeds the interest in the undertaking, the group does not recognise further losses unless it has incurred obligations or made payments on behalf of the entity.
The group ceases to use the equity method of accounting on the date from which it no longer has significant influence in the associate.
The accounting policies of associate companies conform to those used for similar transactions of the group. Accounting policies that are specific to the business of associate companies are discussed in note 1.8. |
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1.2.6. |
Goodwill |
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Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the business combination over the group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to groups of cashgenerating units that are expected to benefit from the synergies of the combination.
Impairment is determined by assessing the recoverable amount of the cashgenerating unit to which the goodwill relates. Where the recoverable amount of the cash generating unit is less than the carrying amount, an impairment loss is recognised. The impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets prorata to the carrying amount of each asset in the unit.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.
Where goodwill forms part of a cashgenerating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. |
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1.2.7. |
Financial year |
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As per the group policy, results of all subsidiaries, joint ventures and associates with alternate year ends are treated as follows:
Subsidiaries: 12 month period drawn up to 31 March
Joint ventures and associates: 12 month period using the associate's or joint venture's year end
In the case of joint ventures and associates, where the reporting dates are different to group reporting dates, adjustments are made for any significant transactions or events upto 31 March. |
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1.3. |
FOREIGN CURRENCY TRANSLATION |
1.3.1. |
Foreign currency transactions |
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The consolidated financial statements are presented in Sri Lanka rupees, which is the company's functional and presentation currency.
The functional currency is the currency of the primary economic environment in which the entities of the group operate.
All foreign exchange transactions are converted to Sri Lanka rupees, at the rates of exchange prevailing at the time the transactions are effected.
Monetary assets and liabilities denominated in foreign currency are retranslated to Sri Lanka rupee equivalents at the exchange rate prevailing at the balance sheet date. Nonmonetary assets and liabilities are translated using exchange rates that existed when the values were determined. The resulting gains and losses are accounted for in the income statement. |
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1.3.2. |
Foreign operations |
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The balance sheet and income statement of overseas subsidiaries and joint ventures which are deemed to be foreign operations are translated to Sri Lanka rupees at the rate of exchange prevailing as at the balance sheet date and at the average annual rate of exchange for the period respectively.
The exchange differences arising on the translation are taken directly to a separate component of equity. On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in the income statement.
The exchange rates applicable during the period were as follows: |
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Balance
sheet |
Income
statement
average rate |
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2007/08
Rs. |
2006/07
Rs. |
2007/08
Rs. |
2006/07
Rs. |
| Singapore dollar |
78.16 |
71.99 |
74.84 |
67.47 |
| Pound sterling |
215.01 |
214.32 |
220.74 |
199.82 |
| US dollar |
107.78 |
109.20 |
110.30 |
105.51 |
| Indian rupee |
2.72 |
2.52 |
2.75 |
2.34 |
| UAE dhiram |
29.35 |
29.74 |
30.03 |
28.73 |
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1.4. |
TAX |
1.4.1. |
Current tax |
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Provision for income tax is based on the elements of income and expenditure as reported in the financial statements and is computed in accordance with the provisions of the relevant tax statutes. |
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1.4.2. |
Deferred tax |
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Deferred taxation is the tax attributable to the temporary differences that arise when taxation authorities recognize and measure assets and liabilities with rules, that differ from those of the consolidated financial statements.
Deferred tax is provided using the liability method on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax assets are recognised for all deductible temporary differences, carryforward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carryforward of unused tax credits and unused tax losses can be utilized.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at tax rates that are expected to apply to the year when the asset is realised or liability is settled, based on the tax rates and tax laws that have been enacted or substantively enacted as at the balance sheet date.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same taxable entity and the same taxation authority.
Deferred tax relating to items recognised directly in equity is recognised in equity. |
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1.5. |
VALUATION OF ASSETS AND THEIR BASES OF MEASUREMENT |
1.5.1. |
Property, plant and equipment |
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Property, plant and equipment is stated at cost or fair value less accumulated depreciation and any accumulated impairment in value.
The carrying values of property plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.
All items of property, plant and equipment are initially recorded at cost. Where items of property, plant and equipment are subsequently revalued, the entire class of such assets are revalued at fair value. The group has adopted a policy of revaluing assets every 5 years, except for properties held for rental and occupied mainly by group companies, which are revalued every 3 years.
When an asset is revalued, any increase in the carrying amount is credited directly to a revaluation reserve, except to the extent that it reverses a revaluation decrease of the same asset previously recognised in the income statement, in which case the increase is recognised in the income statement. Any revaluation deficit that offsets a previous surplus in the same asset is directly offset against the surplus in the revaluation reserve and any excess recognised as an expense. Upon disposal, any revaluation reserve relating to the asset sold is transferred to retained earnings.
Items of property, plant and equipment are derecognized upon replacement, disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset is included in the income statement in the year the asset is derecognised. |
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Depreciation |
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Provision for depreciation is calculated by using a straight line method on the cost or valuation of all property, plant and equipment, other than freehold land, in order to write off such amounts over the estimated useful economic life of such assets.
The estimated useful life of assets are as follows:
| Assets |
Years |
| Buildings (other than hotels) |
50 |
| Hotel buildings |
60-75 |
| Plant and machinery |
10-20 |
| Equipment |
3-8 |
| Furniture and fittings |
8-15 |
| Motor vehicles |
5-10 |
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The useful life and residual value of assets are reviewed, and adjusted if required, at the end of each financial year. |
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| b) |
Finance leases |
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Property, plant and equipment on finance leases, which effectively transfer to the group substantially all the risk and benefits incidental to ownership of the leased items, are capitalised and disclosed as finance leases at their cash price and depreciated over the period the group is expected to benefit from the use of the leased assets.
The corresponding principal amount payable to the lessor is shown as a liability. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the outstanding balance of the liability. The interest payable over the period of the lease is transferred to an interest in suspense account. The interest element of the rental obligations pertaining to each financial year is charged to the income statement over the period of lease.
The cost of improvements to leasehold property is capitalised, disclosed as leasehold improvements, and depreciated over the unexpired period of the lease or the estimated useful life of the improvements, whichever is shorter. |
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| c) |
Operating leases |
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Leases, where the lessor effectively retains substantially all of the risks and benefits of ownership over the term of the lease, are classified as operating leases.
Lease payments are recognised as an expense in the income statement over the term of the lease. |
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1.5.2. |
Leasehold property |
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Prepaid lease rentals paid to acquire land use rights are amortised over the lease term in accordance with the pattern of benefits provided. Leasehold property are tested for impairment annually and is written down where applicable. The impairment loss if any, is recognised in the income statement. |
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1.5.3. |
Investment property |
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Properties held to earn rental income, and properties held for capital appreciation have been classified as investment property.
Investment properties are initially recognised at cost. Subsequent to initial recognition the investment properties are stated at fair values, which reflect market conditions at the balance sheet date.
Gains or losses arising from changes in fair value are included in the income statement in the year in which they arise.
Investment properties are derecognised when disposed, or permanently withdrawn from use because no future economic benefits are expected. Any gains or losses on retirement or disposal are recognised in the income statement in the year of retirement or disposal.
Transfers are made to investment property, when there is a change in use, evidenced by ending of owneroccupation, commencement of an operating lease to another party or ending of construction or development. Transfers are made from investment property, when there is a change in use, evidenced by commencement of owneroccupation or commencement of development with a view to sale.
Where group companies occupy a significant portion of the investment property of a subsidiary, such investment properties are treated as property, plant and equipment in the consolidated financial statements, and accounted for as per SLAS 18 (revised) Property, Plant and Equipment. |
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1.5.4. |
Intangible assets |
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An intangible asset is initially recognised at cost, if it is probable that future economic benefit will flow to the enterprise, and the cost of the asset can be measured reliably.
Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed at least at each financial yearend.
Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cashgenerating unit level. |
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1.5.5 |
Investments |
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All quoted and unquoted securities, which are held as noncurrent investments, are valued at cost. The cost of the investment is the cost of acquisition inclusive of brokerage and costs of transaction. The carrying amounts of long term investments are reduced to recognise a decline which is considered other than temporary, in the value of investments, determined on an individual investment basis.
In the company's financial statements, investments in subsidiaries, joint ventures and associate companies have been accounted for at cost, net of any impairment losses which are charged to the income statement. Income from these investments are recognised only to the extent of dividends received. |
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1.5.6. |
Impairment of assets |
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The group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the group makes an estimate of the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash generating unit's fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
Impairment losses are recognised in the income statement except for impairment losses in respect of property, plant and equipment which are recognised against the revaluation reserve to the extent that it reverses a previous revaluation surplus.
An assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. Previously recognised impairment losses other than in respect of goodwill, are reversed only if there has been an increase in the recoverable amount of the asset. Such increase is recognised to the extent of the carrying amount had no impairment losses been recognised previously. |
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1.5.7. |
Other noncurrent assets |
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Bottle depreciation of Ceylon Cold Stores PLC.
Returnable glass bottles are reflected under noncurrent assets at cost less depreciation. Depreciation is provided over its useful life of 5 years up to the net realisable value. The net realisable value of returnable glass bottles equals to the deposits received by the company or cost whichever is lower.
The written down value of bottle breakages during the financial year is written off to the income statement.
Upon termination of dealership, the weighted average cost of bottles not returned less the deposit is written off to the income statement. |
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1.5.8. |
Inventories |
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Inventories are valued at the lower of cost and net realizable value. Net realisable value is the estimated selling price less estimated costs of completion and the estimated costs necessary to make the sale.
The costs incurred in bringing inventories to its present location and condition, are accounted for as follows:
| Raw materials |
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On a weighted average basis |
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| Finished goods and
work-in-progress |
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At the cost of direct materials
direct labour and an appropriate
proportion of fixed production
overheads based on normal
operating capacity; |
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| Produce inventories |
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At since realised price; |
| Other inventories |
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At actual cost. |
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1.5.9. |
Trade and other receivables |
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Trade and other receivables are stated at the amounts they are estimated to realise, net of provisions for bad and doubtful receivables.
A provision for doubtful debts is made when the debt exceeds 180 days, and collection of the full amount is no longer probable. Bad debts are written off when identified. |
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1.5.10. |
Short-term investments |
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Treasury bills and other interest bearing securities held for resale in the near future to benefit from shortterm market movements are accounted for at cost plus the relevant proportion of the discounts or premiums. |
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| 1.5.11. |
Cash and cash equivalents |
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Cash and cash equivalents in the cash flow statement comprise cash at bank and in hand and short term deposits with a maturity of 3 months or less, net of outstanding bank overdrafts. |
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1.6. |
LIABILITIES AND PROVISIONS |
1.6.1. |
Defined benefit plan gratuity |
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The liability recognized in the balance present value of the defined benefit obligbalance sheet date using the projected method.
sheet ation unit
is the at the credit method. |
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1.6.2. |
Defined contribution plan Employees' Provident Fund and Employees' Trust Fund |
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Employees are eligible for Employees' Provident Fund contributions and Employees' Trust Fund contributions in line with respective statutes and regulations. The companies contribute the defined percentages of gross emoluments of employees to an approved Employees' Provident Fund and to the Employees' Trust Fund respectively, which are externally funded. |
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1.6.3. |
Grants and subsidies |
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Grants and subsidies are recognised at their fair value. A grant received to compensate an expense is credited to the income statement on a systematic basis to match the related costs. Grants and subsidies related to assets are deferred and credited to the income statement over the useful life of the asset. |
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1.6.4. |
Provisions, contingent assets and contingent liabilities |
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Provisions are made for all obligations existing as at the balance sheet date when it is probable that such an obligation will result in an outflow of resources and a reliable estimate can be made of the quantum of the outflow.
All contingent liabilities are disclosed as a note to the financial statements unless the outflow of resources is remote.
Contingent assets are disclosed, where inflow of economic benefit is probable. |
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1.7. |
INCOME STATEMENT |
1.7.1. |
Revenue recognition |
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Revenue is recognised to the extent that it is probable that the economic benefits will flow to the group, and the revenue and associated costs incurred or to be incurred can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable, net of trade discounts and value added taxes, after eliminating sales within the group.
The following specific criteria are used for recognition of revenue: |
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a) |
Sale of goods |
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Revenue from the sale of goods is recognised when the significant risk and rewards of ownership of the goods have passed to the buyer with the group retaining neither a continuing managerial involvement to the degree usually associated with ownership, nor an effective control over the goods sold. |
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b) |
Rendering of services |
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Revenue from rendering of services is recognised in the accounting period in which the services are rendered or performed. |
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c) |
Turnover based taxes |
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Turnover based taxes include value added tax, economic service charge, turnover tax and tourism development levy. Companies in the group pay such taxes in accordance with the respective statutes. |
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1.7.2. |
Dividend |
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Dividend income is recognised on a cash basis. |
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1.7.3. |
Rental income
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Rental income is recognised on an accrual basis over the term of the lease. |
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1.7.4. |
Gains and losses |
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Net gains and losses of a revenue nature arising from the disposal of property, plant and equipment and other noncurrent assets, including investments, are accounted for in the income statement, after deducting from the proceeds on disposal, the carrying amount of such assets and the related selling expenses.
Gains and losses arising from activities incidental to the main revenue generating activities and those arising from a group of similar transactions which are not material, are aggregated, reported and presented on a net basis.
Any losses arising from guaranteed rentals are accounted for in the year of incurring the same. A provision is recognised if the best estimate indicates a loss. |
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1.7.5. |
Other income |
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Other income is recognised on an accrual basis. |
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1.7.6. |
Expenditure recognition |
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Expenses are recognised in the income statement on the basis of a direct association between the cost incurred and the earning of specific items of income. All expenditure incurred in the running of the business and in maintaining the property, plant and equipment in a state of efficiency has been charged to the income statement.
For the purpose of presentation of the income statement, the “function of expenses” method has been adopted, on the basis that it presents fairly the elements of the company and group's performance. |
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1.7.7. |
Borrowing costs |
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Borrowing costs are recognised as an expense in the period in which they are incurred, unless they are incurred in respect of qualifying assets in which case it is capitalised. |
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1.8. |
SIGNIFICANT ACCOUNTING POLICIES THAT ARE SPECIFIC TO THE BUSINESS OF ASSOCIATE COMPANIES |
1.8.1. |
Union Assurance PLC |
a) |
General Insurance Business Gross Written Premium |
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Gross written premium is generally recognised as written upon inception of the policy. Upon inception of the contract, premiums are recorded as written and are earned primarily on a prorata basis over the term of the related policy coverage. However, for those contracts for which the period of risk differs significantly from the contract period, premiums are earned over the period of risk in proportion to the amount of insurance protection provided. Earned premiums are computed on the 24th basis except for marine business, which is computed on a 6040 basis. |
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b) |
Life Insurance Business Gross Written Premium |
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Premiums from traditional life insurance contracts, including participating contracts and non participating contracts, are recognised as revenue when cash is received from the policyholder. |
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1.8.2. |
Nations Trust Bank PLC |
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Revenue Recognition |
(a) |
Interest Income from Customer Advances |
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In terms of the provisions of the Sri Lanka Accounting Standard No. 23 on Revenue Recognition and Disclosures in the Financial Statements of banks and the guidelines issued by the Central Bank of Sri Lanka, interest receivable is recognised on an accrual basis. Interest ceases to be taken into revenue when the recovery of interest or principal is in arrears for over three (3) months and interest accrued until such advances being classified as nonperforming are also eliminated from interest income and transferred to interest in suspense. The interest income on nonperforming advances is recognised on a cash basis. |
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(b) |
Income on Discounting of Bills of Exchange |
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Income from discounting of Bills of Exchange is recognized proportionately over the period of the instrument. |
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(c) |
Income from Government and Other Discounted Securities |
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Discounts on Treasury Bills, Treasury Bonds and Commercial Papers are recognised on a straightline basis over the period to maturity as income. Premium on Treasury Bonds are accounted for on a similar basis. The discount and the premium are dealt within the Income Statement.
Income from all other interestbearing investments is recognised as revenue on an accrual basis. |
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(d) |
Fees and Commission Income |
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Fees and commission income comprise mainly of fees receivable from customers for guarantees, factoring, credit cards and other services provided by the Bank together with foreign and domestic tariff. Such income is recognised as revenue as the services are provided. |
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(e) |
Profit or Loss on Sale of Securities |
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Profit or loss arising from the sale of marketable securities is accounted for on a cash basis and is categorised under other income. |
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(f) |
Lease Income |
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The Bank follows the finance method of accounting for lease income. |
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1.8.3. |
South Asia Gateway Terminals (Pvt) Ltd. |
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Revenue Recognition
Stevedoring revenue is recognised on the berthing time of the vessel. Storage revenue is recognised on the issue of delivery advice. |
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1.9. |
EMPLOYEE SHARE OPTION PLAN |
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On 29 June 2001, shareholders approved a second plan, whereby the company could issue annually, nontransferable call share options, not exceeding in aggregate 2% of the total issued capital of the company as at the date of granting every award under this plan, to a total of 5% of the total issued share capital as at the date of the last award. Approvals of the CSE and the SEC have been obtained for this plan. As at 31 March 2008, the total number of options granted under this plan, after allowing for bonus issues and rights issues, was 11,939,726 of which 8,731,170 have been exercised, 246,533 have lapsed and 2,962,023 remained unexercised.
On 28 June 2004, shareholders approved a third plan, whereby the company could issue annually nontransferable call share options, not exceeding in aggregate 2% of the total issued capital of the company as at the date of granting every award under this plan, to a total of 5% of the total issued share capital as at the date of the last award. Approvals of the CSE and SEC have been obtained for this plan. As at 31 March 2008, the total number of options granted under this plan, after allowing for bonus issues and rights issues, was 30,599,744 of which 2,749,813 have been exercised, 1,355,471 have lapsed and 26,494,460 remain unexercised.
On 13 December 2007, shareholders approved a fourth plan, whereby the company could issue nontransferable call share options, not exceeding in aggregate 0.85% of the shares in issue of the company as at the date of granting the award. Approvals of the CSE and SEC have been obtained for this plan. As at 31 March 2008, the total number of options granted under this plan, was 5,405,945. All of the options under this award remain unexercised.
As at 31 March 2008, the total number of options granted under the second, third and fourth plans, after allowing for bonus issues and rights issues, was 47,945,415. Of this total, 11,480,983 options have been exercised, 1,602,004 options have lapsed and 34,862,428 remain unexercised.
Of the 34,862,428 options unexercised and outstanding as at 31 March 2008 (2007 23,874,575), 2,962,023 are exercisable before 22 January 2009, 7,111,424 are exercisable before 28 March 2010, 9,280,494 are exercisable before 9 April 2011, 10,102,542 are exercisable before 27 May 2012 and 5,405,945 are exercisable before 24 March 2013. |
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1.10. |
SEGMENT INFORMATION |
1.10.1. |
Reporting segments |
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The group's internal organisation and management is structured based on individual products and services which are similar in nature and process and where the risk and return are similar. The primary segments represent this business structure.
The secondary segments are determined based on the group's geographical spread of operations. The geographical analysis of turnover and profits are based on location of customers and assets respectively.
The activities of each of the reported business segments of the group are detailed in the group directory. |
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1.10.2. |
Segment information |
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Segment information has been prepared in conformity with the accounting policies adopted for preparing and presenting the consolidated financial statements of the group. |
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