annual t 2013/2014 · statement of financial position 21 statement of changes in equity 22-23 ......

REPORTANNUALANNUAL

F L C Hydro Power PLC

2013/2014

Management Reports 02-09

Financial Highlights - Group 02Five Year Summary - Group 03Investors Information 04-05Chairman's Statement 06Managing Director / CEO's Review 07Board of Directors 08-09

Corporate Governance 10-16

Corporate Governance 10-12Annual Report of the Board of Directors on the Affairs of the Company 13-14 Statement of Directors' Responsibilities 15Audit Committee Report and Remuneration Committee Report 16

Risk Management 17-18

Financial Statements and Audit Report 19-51

Independent Auditors' Report 19Statement of Comprehensive Income 20Statement of Financial Position 21Statement of Changes in Equity 22-23Statement of Cash Flow 24Notes to the Financial Statements 25-51

Subsidiaries 52Glossary 53-54Notice of the Annual General Meeting 55Form of Proxy 57-58Corporate Information 59

Contents

To be a valuable stakeholder

in the Sri Lankan Renewable

Energy Industry by supplying Green

Energy while safeguarding the Environment.

Vision &Mission

Management Reports 02-09

Financial Highlights - Group 02Five Year Summary - Group 03Investors Information 04-05Chairman's Statement 06Managing Director / CEO's Review 07Board of Directors 08-09

Corporate Governance 10-16

Corporate Governance 10-12Annual Report of the Board of Directors on the Affairs of the Company 13-14 Statement of Directors' Responsibilities 15Audit Committee Report and Remuneration Committee Report 16

Risk Management 17-18

Financial Statements and Audit Report 19-51

Independent Auditors' Report 19Statement of Comprehensive Income 20Statement of Financial Position 21Statement of Changes in Equity 22-23Statement of Cash Flow 24Notes to the Financial Statements 25-51

Subsidiaries 52Glossary 53-54Notice of the Annual General Meeting 55Form of Proxy 57-58Corporate Information 59

Contents

FINANCIAL HIGHLIGHTS - GROUP

Year ended 31st March, 2014 2013 Change 2012Rs. Rs. % Rs.

Group revenue 87,270,121 51,370,938 69.88 56,415,717 Profit /(loss) before taxation 8,848,622 (23,214,342) (138.12) (850,659)Profit /(loss) after taxation 5,461,052 (29,917,459) (118.25) 6,004,212 Other comprehensive income 652,818 (68,567) (1,052.09) - Profit /(loss) attributable to shareholders 6,113,870 (29,986,026) (120.39) 6,004,212

2014 2013 Change % 2012

Earnings per share (Rs.) 0.05 (0.27) (118.52) 0.06 Return on equity ( % ) 0.81 (3.98) (120.35) 0.76 Net asset per share (Rs.) 6.96 6.90 0.87 7.22 Current ratio (Times) 0.71 1.53 (53.59) 15.81 Dividend payout ratio ( % ) - - - 833 Market price per share as at 31st March (Rs.) 4.80 5.70 (15.79) 7.20 Market capitalisation (Rs.) 523,622,938 621,802,238 (15.79) 785,434,406

As at 31st March, 2014 2013 Change % 2012Total Shareholder’s Funds (Rs.) 758,817,750 752,703,880 0.81 787,527,205 Total assets (Rs.) 922,533,886 819,936,053 12.51 843,144,960 No of Ordinary Shares 109,088,112 109,088,112 - 109,088,112

Financial Position Highlights

Operating Results

Shareholders Information

Annua l Repor t 2013/2014

2

F L C HYDRO POWER PLC

FIVE YEAR SUMMARY - GROUP

2010 2011 2012 2013 2014

Rs. Rs. Rs. Rs. Rs.

A) SUMMARY OF OPERATIONS

Turnover 114,919,294 135,188,722 56,415,717 51,370,938 87,270,121

Gross profit 89,754,534 97,917,647 16,233,995 9,185,241 37,414,218

Profit / (loss) before taxation 75,171,485 74,166,711 20,924,129 (23,214,342) 8,848,622

Taxation (18,376,923) (28,480,247) 6,854,871 (6,703,117) (3,387,570)

Profit / (loss) attributable to shareholders 56,794,562 45,686,464 6,004,212 (29,986,026) 6,113,870

B) SUMMARY OF FINANCIAL POSITION

Capital and reserve

Stated capital 132,300,200 482,300,200 482,300,200 482,300,200 482,300,200

Reserves 286,543,393 206,339,748 260,763,650 257,326,351 252,170,402

Retained earnings 47,316,735 93,003,199 44,463,355 13,077,329 24,347,148

Total equity 466,160,328 781,643,147 787,527,205 752,703,880 758,817,750

Assets and liabilities

Current assets 47,203,458 405,893,725 246,227,432 35,822,495 39,138,232

Current liabilities 65,164,569 26,031,006 15,569,993 23,350,356 55,130,562

Net current assets /(liabilities) (17,961,111) 379,862,719 230,657,439 12,472,139 (15,992,330)

Property, plant and equipment 499,780,568 489,937,248 463,682,964 435,887,620 665,757,719

Intangible assets - - - - 74,723

Other non-current assets 10,428,463 16,889,510 133,234,564 348,225,938 217,563,212

Non current liabilities (26,087,592) (105,046,330) (40,047,762) (43,881,817) (108,585,574)

Net assets 466,160,328 781,643,147 787,527,205 752,703,880 758,817,750

Key indicators

Earnings per share (Rs.) 0.77 0.52 0.06 (0.27) 0.05

Dividends per share (Rs.) 0.59 - 0.50 - -

Net asset per share (Rs.) 6.29 7.17 7.22 6.90 6.96

Current ratio (times) 0.72 15.59 15.81 1.53 0.71

For the year ended 31st March extracts of the financial statements and significant financial ratios can be summarised as follows.


3


INVESTOR INFORMATION

As at 31st March, 2014 2013

LIST OF 20 MAJOR SHAREHOLDERSNo. of Shares

Percentage %

No. of Shares

Percentage %

01. Pussellawa Plantations Limited 37,044,056 33.96 37,044,056 33.96

02. F L C Power Holdings (Pvt) Ltd 37,044,056 33.96 37,044,056 33.96

03. Dr. T . Senthilverl 12,243,100 11.22 12,243,100 11.22

04. F L M C Plantations (Pvt) Ltd 3,625,400 3.32 3,625,400 3.32

05. Lanka Orix Leasing Company PLC 976,700 0.90 976,700 0.90

06. Pan Asia Banking Corporation PLC / Mr. S Gobinath 920,000 0.84 736,999 0.68

07. People’s Leasing Finance PLC / Carlines Holdings (Pvt) Ltd 867,424 0.80 643,508 0.59

08. Seylan Bank PLC / ARC Capital (Pvt) Ltd 839,020 0.77 - -

09. Mr. H G N U Chinthaka Wijayaweera 475,970 0.44 - -

10. Mr. Senthinandhanan Senthilverl 469,200 0.43 469,200 0.43

11. Mr. Senthimaaran Senthilverl 469,200 0.43 469,200 0.43

12. Mr. P P Thevarajah 463,423 0.42 295,900 0.27

13. Mr. M H M Nazeer 369,200 0.34 369,200 0.34

14. Mr. Gobinath Selladurai 343,001 0.31 258,001 0.24

15. Confifi Capital ( Pvt) Ltd 315,000 0.29 315,000 0.29

16. DPMC Assetline Holdings (Pvt) Ltd –A/C No. 02 285,742 0.26 285,742 0.26

17. K. M. S. M. Razeek 284,958 0.26 284,958 0.26

18. Mrs. Uduwela Mahesika Nilmini 250,100 0.23 250,100 0.23

19. Mrs. Vasunthara Gnanasekara Iyer 246,438 0.23 308,416 0.28

20. Bank of Ceylon No. 1 Account ,the trustee ,c/o BOC inv centre , 23rd floor , BOC H/O BOC MW, COLOMBO 01

223,194 0.20 - -

TOTAL 97,755,182 89.61 95,619,536 87.66

SHAREHOLDINGResident Non- resident Total

No. of shareholders

No. ofshares

% No. of shareholders

No. of shares

% No. of shareholders

No. ofshares

%

1 to 1,000 Shares 1,423 891,574 0.82 2 2,000 0.00 1,425 893,574 0.821,001 to 10,000 Shares 1,040 3,460,933 3.17 6 16,900 0.02 1,046 3,477,833 3.1910,001 to 100,000 Shares 162 4,080,350 3.74 3 76,000 0.07 165 4,156,350 3.81100,001 to 1,000,000 Shares 34 10,603,743 9.72 - - 0 34 10,603,743 9.72Over 1,000,000 Shares 4 89,956,612 82.46 - - 0 4 89,956,612 82.46TOTAL 2,663 108,993,212 99.91 11 94,900 0.09 2,674 109,088,112 100

CATEGORIES OF SHAREHOLDERS No. of shareholders No. of shares

Individual 2,582 24,695,142Institutional 92 84,392,970TOTAL 2,674 109,088,112

** Comparative shareholdings as at 31st March 2013 of twenty largest shareholders as at 31st March 2014


4


INVESTOR INFORMATION CONTD.

As at 31st March, 2014 No of shares

2013 No of shares

Over 10% holding

F L C Power Holdings (Pvt) Ltd 37,044,056 37,044,056

Pussellawa Plantations Ltd 37,044,056 37,044,056

74,088,112 74,088,112

Associate of the parent company

F L M C Plantations (Pvt) Ltd 3,625,400 3,625,400

3,625,400 3,625,400

Directors’ direct shareholding

Mr. G. A. Aloysius (Managing Director) 107,300 107,300

Dr. T. Senthilverl 12,243,100 12,243,100

Mr. J. M.S.de Mel 1,500 1,500

Mr. N. M.Prakash - 43,600

12,351,900 12,395,500

Shareholding of Directors ‘ spouses / children below 18 years

Ms. R N Y Aloysius 2,500 2,500

Issued No.of shares as at 31 March 109,088,112 109,088,112

Less :

Subsidiaries or associate of parent 74,088,112 74,088,112

F L M C Plantations (Pvt) Ltd 3,625,400 3,625,400

Directors’ Direct Shareholding 12,351,900 12,395,500

Shareholding of Directors ‘ Spouses / Children Below 18 Years 2,500 2,500

Public holding 19,020,200 18,976,600

Public holding as a % of total No. of shares issued 17.44 % 17.40 %

MARKET PRICE2014 2013

Highest (Rs.) 6.80 (19/04/2013) 8.90 (17/09/2012)Lowest (Rs.) 4.10 (26/02/2014) 4.90 (07/06/2012)As at year ended (Rs.) 4.80 (31/03/2014) 5.70 (31/03/2013)

COMPUTATION OF % OF PUBLIC SHAREHOLDING AS AT 31ST MARCH


5


It is my pleasure to welcome you all to the Annual General Meeting of F L C Hydro Power PLC on behalf of the Board of Directors of the Company. We present you the Annual Report along with the Audited Financial Statements for the year 2013/14. With Sri Lanka’s vision to be portrayed as the energy Hub of Asia, we at F L C Hydro Power have contributed this endeavour by producing energy through renewable energy sources. This is carried out in a manner that minimises disturbance to the natural environment whilst endeavouring to nurture it.

Before we review our company and industry performances, we acknowledge the demise of our founder Chairman, Mr. K. Aloysius. As the founder member of this institution, it was his vision of developing renewable energy on our sister Companies’ plantation water resources that gave us an unparalleled advantage against the competition, as the hydro plants were within related party lands, minimising possible delays in the standard approval process which looks into various stakeholder concerns.

Delivery of IPO objectives Based on the IPO objectives, your Company is on course to fulfill its promise of adding 2 additional hydro plants to its existing 3.2 Mw installed capacity. The Company successfully commissioned the Stellenberg Mini Hydro Plant with an installed capacity of 0.9 Mw on 10th January 2014. The plant is running with available water throughout, and this will no doubt contribute to current revenues of the Group. We wish to express our gratitude towards our contractors, consultants, Government officials and other suppliers who had helped us to successfully commission this plant.

The second plant, the Thebuwana Mini Hydro Project is nearing completion, and once in operation will contribute another 0.8 Mw to our total energy production. With an unusual high plant factor, we are confident the delay experienced in its execution will be more than compensated by a constant revenue stream, which is set to beat the performances of our other plants.

Sri Lankan renewable energy industry and economyDuring the year under review, we have experienced favourable rainfall, resulting in an increased electricity generation on both mini and large hydro energy projects. With the Government’s agenda giving a high priority to achieve 100% nationwide electrification by 2015, your Company is deemed to reap benefits by this policy decision at various levels. F L C Hydro Power is confident in taking advantage of this favourable market and industry condition to further execute its mandate of utilising all available water resources within the plantations in converting it into revenue streams for the Company. It is expected

CHAIRMAN’S STATEMENT

that the Renewable energy sector would grow to contribute at least 10% of the energy requirement of our market. Lobbying against fossil based energy sources should be further promoted due to the negative impact it brings to the Country by way of the environment and other costs.

The support given by the Sri Lanka Sustainable Energy Authority (SLSEA) in obtaining various approvals is greatly appreciated. The SLSEA could further improve its support by allowing capable developers, willing to develop available water resources, which are otherwise abandoned or unused. Due to various issues between Public Utilities Commission of Sri Lanka and Ceylon Electricity Board, signing of the Standard Power Purchase Agreements for new projects were delayed until the proposed tariff was finalised by the two parties.

Whilst appreciating the scope of the Ceylon Electricity Board, there could be further improvements in developing existing and new 33 KV grid lines, so that energy losses are minimised. This would encourage new private investments, further developing the industry which will benefit the public and investors alike.

Company overviewOur company has recorded a profit after tax of Rs15.83 mn. for the year 2013/14 against a net loss of Rs. 26.86 mn in the last financial year. This increase was contributed by an increase in the CEB tariff, as well as an increase in production. With the completion of our Stellenberg Plant, the total generation capacity of our Group has risen to 4.1Mw. With new additions in the pipeline, we are hopeful that this upward trend in revenue and profit would continue giving shareholders a further return on their investment.

AcknowledgementI take this opportunity to convey my gratitude to my fellow board members for the support extended, and the management and staff for their commitment and dedication. We wish to thank all our shareholders for their continued support and faith in the Company despite the dismal performances in the past, whilst looking ahead to a bright future that is beaconing with the completion of the projects that were stipulated in our Initial Public Offer. We are confident in our resolve to make F L C Hydro Power one of the sector’s benchmarks.

G. J. Aloysius29th July 2014


6


I have pleasure in presenting the performance review of your Company and the Group for the year ended 31st March 2014. We have managed to reverse the financial performance after a very challenging 2012/13 financial year, where performance was adversely affected by weather, reduction in the CEB tariff and a global price drop in Certified Emission Reduction (CER) units. We have managed to successfully commission the Stellenberg Mini Hydro Plant in January 2014 and we are expecting to commission the Thebuwana Mini Hydro Plant in the current financial year. With the commissioning of Stellenberg Mini Hydro Plant, installed capacity of our Group stands at 4.1 Mw and will near 5 Mw once both plants are operative.

Performance of the company

Total Revenue of the Company for this financial year reported to Rs.86.82 million, which is a year on year increase of Rs. 35.45 million. An increase in production, as well as the increase in the Tariff rates were contributory factors for the increase in revenue. The Sanquhar Plant, which is oldest in the Group was shut down for an extensive maintenance overhaul which was unavoidable. The Company profit after tax has increased to Rs.15.83 Million against a year on year net loss of Rs.26.86 million. On the Group performance net profit after tax amounts to Rs.5.46 million. During this financial year we have produced 7.2 million units which is 34 % increase from the previous year.

New projects

We are pleased to have successfully commissioned the Stellenberg Mini Hydro plant on 10th January 2014, which has an installed capacity of 0.9 Mw, which brought our Group total installed capacity to 4.1 Mw. This project along with the Thebuwana Mini Hydro Plant was proposed during our initial public offer.Thebuwana Mini Hydro Project was delayed but is planned for completion in the current financial year, as the designs needed to be further improved to keep to the overall budgets to achieve the necessary ROIs, originally envisaged. We maintain that Thebuwana Mini Hydro plant will be one of the best in the industry with an enviable plant factor. In addition to this, we have obtained the energy permit to develop 0.65 Mw of the total 3.2 Mw Halgranoya project in Ragalla, where signing of Standard Power Purchase Agreement was delayed due to an issue between Ceylon Electricity Board and Public Utilities Commission on the proposed Tariff, which was resolved only recently. The additional stages of the total 3.2 Mw Halgranoya project is due for approval once the CEB confirms the 33 kv Grid Line can accept the supply.

Environment and community

With our Group’s focus in safeguarding the environment, all our business activities reflect the culture of a conscious Green Environment. We have therefore contributed wherever possible towards sustainability in our business models, working hand in hand with the environment and stakeholder concerns to build better cohabitation. As an island nation which practices soil conservation, replanting of trees etc. we have enjoyed good weather patterns in the past. But recently with the increase in population and other development projects, concern on the Environment has been given lesser importance, invariably causing the consequence of adverse weather conditions. More recently we have witnessed prolonged drought and floods, which was rare in yesteryear. We as a group have understood the importance of the environment, and from the outset put in place firm policies to avoid environmental deterioration or pollution when undertaking any development work. We continue our work in soil conservation and replanting at our hydro sites. The estate community through our sister companies, are educated on water management in reducing wastage. We maintain a close rapport with the estate and village community to maintain the harmony and co-existence for all stakeholders to benefit from our activities, be it in social service or employment.

Appreciation

We acknowledge with gratitude the great contribution made by our late Chairman Mr. Kattar Aloysius, who was also the founder of our Group. In following his role model, we shall strive to perform extraordinarily in all our endeavors. Further, I take this opportunity to convey our appreciation for the services rendered by Mr. U K Devasurendra and Mr. N M Prakash, who had resigned from the Board in the year under review.

I would like to convey a sincere thank you to the Management and the staff at all levels for their commitment, dedication and loyalty. I also take this opportunity in conveying my sincere appreciation to the Board for their support and guidance.

MANAGING DIRECTOR / CEO’S REVIEW

G A AloysiusManaging Director / CEO29th July 2014


7


BOARD OF DIRECTORS

Mr. G. J. AloysiusChairman (Executive Director)

Mr. G J Aloysius holds a BSc. in Business Administration (USA) and started his career in 1981.

He is the Chairman of Pussellawa Plantations Ltd., F L M C Plantations (Pvt) Ltd., F L C Holdings PLC, F L C Properties (Pvt) Ltd., Free Lanka Trading Co. (Pvt) Ltd., Free Lanka Granite & Marbel Exports (Pvt) Ltd. and a Director of Sri Lanka Tea Board. He is serving on the Board of a number of subsidiary Companies of the Group.

Mr. G. J Aloysius was appointed – Honorary Consul for Romania last year.

Mr. G. A. Aloysius Managing Director / CEO (Executive Director)

Mr. G A Aloysius started his career in 1995 as a Director of Free Lanka Group and presently he is the Chairman of Maturata Plantations Ltd., Deputy Chairman of Pussellawa Plantations Ltd. and F L M C Plantations (Pvt) Ltd. He is the Joint Managing Director of F L P C Management (Pvt) Ltd. and Melfort Green Teas (Pvt) Ltd. and the Managing Director/CEO of F L C Holdings PLC and F L C Properties (Pvt) Ltd. He is serving on the Board of a number of Subsidiary Companies of the Group.

He holds a Bachelor’s Degree in Finance from Northeastern University, Boston, Massachusetts and a MBA from Brunel University, West London.

Mr. J. M. S. de Mel (Executive Director)

Mr. Manik de Mel is a Fellow of the Institute of Chartered Management Accountants, UK and holds a MBA from the Post Graduate Institute of Management [ PIM ] of the University of Sri Jayawardenapura. He is also a Fellow of the Association of Public Finance Accountants [SL].

Mr. de Mel functioned as the Finance Director of Sri Lanka State Plantations Corporation and Janatha Estates Development Board [ JEDB ] prior to privatizations of state owned plantations.

He joined the Free Lanka Group in 1992 and has held several key positions, initially as the Finance Director and thereafter as the Managing Director / CEO of Pussellawa Plantations Ltd. Currently Mr. de Mel is the Managing Director of Maturata Plantations Ltd. and F L M C Plantations (Pvt) Ltd., the Jt. Managing Director of F L P C Management (Pvt) Ltd. and an Executive Director of Pussellawa Plantations Ltd. and F L C Holdings PLC.

In addition, he functions as the Finance Director of the Free Lanka Group and is serving on the Boards of a number of subsidiaries in the Group.


8


Mr. D. S. K. AmarasekeraNon-Executive Director

Mr. Amarasekera is a member of the Institute of Chartered Accountants of Sri Lanka and is an Attorney-at-Law of the Supreme Court of Sri Lanka. He also holds a degree in Business Administration from the University of Sri Jayawardenapura and began his career in the year 1998.

Mr. Amarasekera is an eminent Tax Consultant and the Senior Tax and Legal Partner of Amarasekera & Company, a leading tax consultancy firm in the country. He is serving on the Boards of a number of listed companies including Kelani Tyres PLC, Browns Investments PLC, F L C Holdings PLC, Lanka Milk Foods (CWE) PLC, Madulsima Plantations PLC, Balangoda Plantations PLC, Eden Hotel Lanka PLC, Ceylon Hotel Corporation PLC, Palm Garden Hotels PLC, Environmental Resource PLC, Agstar Fertilizer PLC etc.

Dr. T. SenthilverlNon - Executive Director

Dr. Senthilverl was appointed to the Board of Directors of F L C Hydro Power PLC in 2010 as a Non-Executive Director. For over 4 decades he has been actively engaged in Manufacturing, Trading, Land Development, Health, Insurance, Finance, Power and Energy sectors and in Industrial Turnkey Projections. At present Dr. Senthilverl serves as a Director on the Boards of Amana Takaful Insurance PLC, CT Land Development PLC, CW Mackie PLC, Nawaloka Hospitals PLC, SMB Leasing PLC, The Finance Company PLC, Vidullanka PLC, Vidul Engineering Ltd.

Mr. U. H. Palihakkara(Non – Executive Independent Director)

Mr. U. H. Palihakkara is a Fellow member of Institute of Chartered Accountants of Sri Lanka, Chartered Institute of Management Accountants of UK and Chartered Institute of Certified Accountant of UK. Further to this he is a member of Professional Association of Bankers in Sri Lanka and Fellow of the Institute Management of Sri Lanka.

Mr. Palihakkara previously worked as former Vice Chairman of Ceylon Electricity Board, Chairman of Lanka Transformers (Pvt.) Ltd, Director /General Manager of Peoples’ Merchant Bank and as Chief Executive Officer of SME Bank. Currently Mr. U. H. Palihakkara is the Consultant of Nations Lanka Finance PLC and Director of Millennium Housing Development Group and Octagen Investment Trust & Asset Management Services (Pvt.) Ltd

BOARD OF DIRECTORS CONTD.


9


CORPORATE GOVERNANCE

Name Directorship StatusBoard

MeetingAudit Committee

MeetingRemuneration

Committee Meeting

Mr. G. J. Aloysius Chairman – W.e.f. 19/11/2013 0/1 N/A N/A

Mr. G. A. Aloysius Managing Director 1/1 4/5 N/A

Mr. J. M. S. de Mel Executive Director 1/1 5/5 N/A

Mr. N. M. Prakash Non - Executive Director Resigned W. e. f. 08/01/2014 0/1 N/A N/A

Mr. U. K. Devasurendra Non - Executive Director Resigned W. e. f 01/02/2014 0/1 N/A N/A

Mr. D. S. K. Amarasekera Non - Executive Director 1/1 4/5 N/A

Dr. T. Senthilverl Non - Executive Director 1/1 N/A N/A

Mr. U. H. Palihakkara Independent Non-Executive Director 1/1 N/A N/A

Note

Mr. K. Aloysius - Demised on 05th September 2013

Mr. N. M. Prakash - Resigned on 08th January 2014

Mr. U. K. Devasurendra - Resigned on 01st February 2014.

Governance is a responsibility of the Board of Directors for competent and ethical operations of the business on day to day basis.

F L C Hydro Power PLC understands the paramount importance on practicing Corporate Governance where non adherence would leads to severe penalties. We understand that it is essential to disclose Corporate Governance where it reflects the way company carried out its business in transparent and accountable passion.

ATTENDANCE OF DIRECTORS ON COMMITTEE MEETINGS


10


Rule Requirement Compliance Notes

Directors

7.10.1 (a) Non – Executive Directors

At least 1/3 of total Directors should be Non – Executive Yes Out of 6 Directors as at 31/03/2014 3 directors

are Non-Executive which is complies with the Rule.

7.10.2 (b) Independent DirectorsNon – Executive Directors should submit declaration of independence or non – independence

Yes

Audit Committee of F L C Holdings PLC being the parent entity represents the F L C Hydro Power PLC as per the listing rule of 7.10.6 (a) where they have forwarded the declaration of independence.

7.10.3 (a) Disclosure Regarding the Directors

Board to determine independence and non-independence of each non – executive directors

Yes

Directors Report of the Company is given in Page13-14

7.10.3 (b) Disclosure Regarding the Directors

If Director does not qualify as independent but board views that Director as independent, to specify the criteria not met and basis of determination in the Annual Report.

Yes

7.10.3 (c) Disclosure Regarding the Directors

Brief resume on Directors Yes Refer Board of Directors in page 8 - 9

7.10.3 (c) Disclosure Regarding the Directors

Upon new appointment of Director to the Board, Brief resume to be forwarded to CSE

YesMr. U. H. Palihakkara was appointed during this Financial Period and notice along with his resume forwarded to CSE on 30th September 2013.

Remuneration Committee

7.10.5 Remuneration CommitteeA listed Company shall have a Remuneration Committee. Yes

Report of Remuneration Committee is given in page 16

7.10.5.(a) Composition of Remuneration Committee

Shall Comprise Non- Executive Directors majority of whom shall be Independent

Yes

7.10.5.(b) Report of Remuneration Committee

Remuneration Committee shall recommend the remuneration of CEO and the Executive Directors

Yes

7.10.5 (c) Disclosure related to Remuneration Committee in Annual Report

Directors names in remuneration committee and statement of remuneration policy and aggregate remuneration to executive and Non-executive to be disclosed

Yes

Remuneration Committee Report is given in page16Aggregate Salary was given in the notes of Financial Statements in page 35

CORPORATE GOVERNANCE CONTD.


11


Audit Committee

7.10.6 Audit Committee The Company have an Audit Committee Yes

Report of Audit Committee is given in page 16

7.10.6 (a) The Composition of Audit Committee

The CEO & CFO Should attend Audit Committee meeting Yes

Shall Compromise Non – Executive Directors and majority to be independent

Yes

The Chairman of the Audit Committee or one member should be member of professional accountancy body

Yes Parent company audit committee Chairman is a member of CA Sri Lanka.

7.10.6 (b) The Audit Committee Functions

Overseeing the,

Preparation & presenting Financial Statements in accordance with Sri Lanka Accounting Standards. (SLFRS & LKRS)

Compliance with Financial reporting requirements and other related regulations and requirements.

Process to ensure the internal controls and risk management as per the Sri Lankan reporting standards.

Assessment of the performance & inde pendence of the external auditors.

Recommendation to the board on appointment, re – appointment and removal of external auditors and there remuneration.

Yes Report of audit committee is given in page 16

CORPORATE GOVERNANCE CONTD.


12


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

The Directors of F L C Hydro Power PLC are pleased to present their Annual Report together with the Audited Financial Statements of the Company for the year ended 31st March 2014.

Principal activitiesPrincipal activities of the Company are to build, own, operate and maintain power generating facilities.

DirectorateThe names and brief profile of each Director who served as Directors of the Company during the year under review are given on pages 8 to 9.

The Board of Directors appreciates the valuable contribution made to the Group by Mr. K Aloysius who held office as the Chairman of the Company until his demise on 04th September 2013. The Board of Directors appointed Mr. G J Aloysius as the Chairman of the Company.

Re – election of Directors in terms of Section 211To re – appoint as a Director Mr. Jayasiri Manik Sumithra de Mel who has attained the age of 72 years. The Company has received notice of intention to pass as an Ordinary Resolution in compliance with Section 211 of the Companies Act No 07 of 2007.

To re – appoint as a Director Mr. Uditha Harilal Palihakkara who has attained the age of 71 years. The Company has received notice of intention to pass as an Ordinary Resolution in compliance with Section 211 of the Companies Act No 07 of 2007.

Retirement of Directors by rotationTo re – elect as a Director Mr. Godfrey Anton Aloysius who retires by rotation in Terms of Article 24 (6) of the Articles of Association of the Company.

Stated capital and reserveThe Stated capital of the Company as at 31st March 2014 was Rs.482,300,200 /- which consisted of 109,088,112 Ordinary Shares.

ShareholdingThere were 2674 registered shareholders as at 31st March 2014

Name Status

Mr. G. J. Aloysius Chairman / Executive DirectorMr. G. A. Aloysius Managing Director/ Executive DirectorMr. J. M. S de Mel Executive DirectorMr. D. S. K. Amarasekera Non-Executive DirectorDr. T. Senthilverl Non-Executive DirectorMr. U. H. Palihakkara Non – Executive Independent Director

NameFinancial year ending

31st March 2014 31st March 2013

Mr. G. J. Aloysius Nil NilMr. G. A. Aloysius 107,300 107,300Mr. J. M. S. de Mel 1,500 1,500Mr. D. S. K. Amarasekera Nil NilDr. T. Senthirlverl 12,243,100 12,243,100Mr. U. H. Palihakkara Nil Nil

Year ended 31st March

2014 2013Rs. Rs.

Revenue 87,270,121 51,370,938Profit / (loss) before taxation 8,848,622 (23,214,342)Income tax expense (3,387,570) (6,703,117)Net profit /(loss) for the year 5,461,052 (29,917,459)Profit carried forward 24,347,148 13,077,329

Directors’ interest registerThe Company maintains the Directors’ interest register conforming to the provisions of the Companies Act. The Directors of the Company have disclosed their interests in other companies to the Board and those interests are recorded in the Interest register confirming to the provisions to the Companies Act.

The Shareholding of the Directors during the financial year was as follows.

Property, plant and equipmentThe total capital expenditure incurred by the Group during this year under review was Rs. 1,546,393 (2013 – Rs 498,493/-). Details are given in Notes 9 to the Accounts.

TaxationAccording to the Section 16 of the Inland Revenue Act No. 10 of 2006 and amendments there to, all the activities except of CER Income and interest income taxed at the rate of 12%. Detailed information relating to company taxation is given in Note 7 to the Financial Statements.

Share informationThe earnings/(loss) per share for the year under review was Rs 0.05. (2013 – Rs (0.27)). The Net assets per share for the year under review was Rs. 6.96 (2013 – Rs 6.90). The investors Information are given on Page 4-5

Statutory paymentsThe Director’s to the best of their knowledge and belief is satisfied that all statutory payments in relation to the government and the employees have been made on time.

REVIEW OF THE YEAR - GROUPFinancial performance is given below.

The bord of directos of company


13


Corporate governanceThe Corporate governance practice followed by the Group is set out in the Corporate governance Statement on page 10 .

The Board of Directors’ has ensured that the Company has complied with the Listing rules of the Colombo Stock Exchange and the Code of Best Practices on Corporate Governance issued by the Securities and Exchange Commission and the Institute of Chartered Accountants of Sri Lanka.

The Board of Directors commitments in maintaining effective corporate governance practice are given in the corporate governance Report on pages 11 to 12.

Board committeesThe following members serve on the two sub committees that have been appointed by the Board.

Audit committeeF L C Holdings PLC Audit Committee is acting on behalf of F L C Hydro Power PLC.

Mr. A. I. Fernando – Chairman Mr. D. C. Wimalasena Mr. D. S. K. Amarasekera

Remuneration committeeF L C Holdings PLC remuneration committee is acting on behalf of F L C Hydro Power PLC.

Mr. A. I. Fernando – Chairman Mr. D. C.Wimalasena

DonationsDonations made during the year amounted to Rs 226,000./- (2013 – Rs 113,698/-)

Events after the reporting dateEvents after the reporting date have been disclosed in note 26 to the financial statements.

Subsidiaries and its directorsThe Directors of Subsidiaries as at 31st March 2014 are given on page 52 of the Annual Report.

Going concernThe Directors are satisfied the Company and its subsidiaries have adequate resources to continue in operational existence for the foreseeable future to justify adopting the going concern basis in preparing the financial statements.

Annual reportThe Board of Directors approved the consolidated financial statements on 29th July 2014. The appropriate number of copies of this report will be submitted to Colombo Stock Exchange and to the Sri Lanka

Accounting and Auditing Standards Monitoring Board on or before 31st August 2014.

Annual general meetingThe Thirteenth Annual General Meeting will be held on 29th September 2014 at 10.30 am at Park Premier Banquet Hall, Excel World, No. 338, T B Jayah Mawatha, Colombo 10. The Notice of Meeting appears on page 55.

Contingent liabilities The details of contingent liabilities are given in Note 23 to the Financial Statements.

Accounting policiesThe Financial Statements for the year ended 31st March 2014 and its comparatives have been prepared in accordance with the Sri Lanka Accounting Standards (SLFRS/LKAS) and in compliance with the Companies Act No. 07 of 2007.

AuditorsIn accordance with Section 154(1) of the Companies Act No. 7 of 2007 a resolution proposing the re-appointment of Messrs. KPMG, Chartered Accountants as auditors of the Company for the ensuing year will be proposed at the Annual General Meeting. In terms of Section 155(a) of the Companies Act No. 7 of 2007 a resolution authorising the Directors to fix the remuneration of the Auditors Messrs. KPMG, Chartered Accountants for the ensuing year will be proposed at the Annual General Meeting.

The Audit report is found in the financial report section of the Annual Report. The involvements of the Audit Committee with the work of the Auditors are set out in the Audit Committee Report.

The fees paid to Auditors are disclosed in Note 6 to the Financial Statements. As far as the Directors are aware, the Auditors do not have any relationship with the Company or any of its Subsidiaries other than that of an Auditor. The Auditors also do not have any interest in the Company or any of its Group Companies.

Mr. G. A. AloysiusManaging Director / CEO

S S P Corporate Services (Pvt) LtdSecretaries29th July 2014Colombo

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

Mr. J. M. S de MelDirector


14


In accordance with the Companies Act No. 7 of 2007, the directors are required to prepare Financial Statements which give a true and fair view of the state of affairs of the Company and of the Group as at end of the financial year and the profit and cash flows of the Company and the Group for the financial year.

The accompanying financial statements have been prepared in conformity with The Sri Lanka Accounting Standards (SLFRS / LKAS) and provide the information required by the Companies Act No. 7 of 2007 and the Listing Rules of the Colombo Stock Exchange. The directors have selected appropriate Accounting Policies and Standards in preparing the financial statements of the Group and the Company.

The directors have also taken reasonable steps to safeguard the assets of the Company and of the Group and to establish proper systems of internal control with a view to detect and prevent any irregularities.

Compliance report

The directors confirm that to the best of their knowledge, all statutory payments relating to employees and the Government that were due in respect of the Company and its subsidiaries as at the reporting date have been paid or where relevant provided for in the financial statements.

By order of the Board of F L C Hydro Power PLC

Mr. G. A. AloysiusManaging Director / CEO29th July 2014

Colombo

STATEMENT OF DIRECTORS’ RESPONSIBILITIES


15


AUDIT COMMITTEE REPORT AND REMUNERATION COMMITTEE REPORT

REMUNERATION COMMITTEE REPORT

1. Remuneration Committee of F L C Holdings PLC Comprising Mr. A I . Fernando and Mr. D C Wimalasena functioned during the year 2013/2014.

2. Remuneration Committee recommended and forwarded for Approval of the Board of Directors the Remuneration Packages, bonuses and annual increments of the CEO and Executive Directors. The Committee was guided by the necessity to retain

A I Fernando Chairman Remuneration Committee29th July 2014Colombo

AUDIT COMMITTEE REPORT

1. The Audit committee of F L C Holdings PLC comprising Mr. A. I. Fernando, Mr. D.C.Wimalasena and Mr D. S. K Amarasekera functions as the Audit Committee of F L C Hydro Power P L C w.e.f 21st May 2013.

2. Mr. A. I. Fernando and Mr. D. C.Wimalasena are Independent Non-Executive Directors of F L C Holdings PLC. Accordingly the Committee Members are,

Mr. A. I. Fernando – Chairman

Mr. D.C. Wimalasena

Mr. D.S.K. Amarasekera

Directors, Finance Manager and Chief Executive Officer attend the Audit Committee Meetings by invitation. Chief Financial Officer of F L C Holdings P L C functions as the Secretary to the Audit Committee.

The proceedings of the Audit Committee are regularly reported to the Board of Directors.

3. Meetings

The Audit Committee meetings are held each quarter and during this year the committee met five times.

4. Financial Reporting, Corporate Governance and Controls

Main function of the Audit Committee was to discuss the Company’s Financial Statements prior to Publication, with relevant officials of the Company including the extent of compliance with Sri Lankan Accounting Standards (SLFRS & LKAS) and adequacy of the disclosures required by other applicable laws.

The Committee also reviewed the status of the independence and performance of External Auditors.

The Audit Committee also discussed current and future operations of the company and put forward the recommendations to the Board about the risk and controls needed to ensure smooth functioning of the company activities.

New directions issued by CSE and SEC in respect of maintaining minimum public holding of 20% were discussed and committee informed the Management to take necessary steps to comply with the regulators requirement.

S J M S continued to act as Internal Auditors of the company. They were entrusted to review Internal Control procedures. Their findings were discussed and quarterly report was forwarded and discussed at the Audit Committee meetings.

5. External Audit

KPMG acted as External Auditors for the period under review. . The Audit Committee is satisfied with the status of the independence and performance of the External Auditors.

A I Fernando

ChairmanAudit Committee29th July 2014Colombo

in our services competent Professionals who will continue in our services over a long period of time.


16


IDENTIFYING RISKS AND MANAGEMENT

We could define “Risk” as a Situation involving exposure to Danger and Risk Management could be identified as the process of identification, analysis, assessment, control, and avoidance, minimization, or elimination of unacceptable risks.

We at F L C Hydro Power PLC carefully analysed the Risk involved with our Industry and always take necessary precautions to safe guard itself against possible adverse impact from these.

We should identify the potential sources of risk during Risk Identification Process and take measures before potential risk events are developed. We could identify various Sources of Risks such as Social, Technological, Financial, Environmental, etc.

During risk analysis, each risk should be analyzed for the probability that the risk will occur, and the impact if it does. Need to precise on this as there are qualitative as well as quantitative risks involved.

In planning stage strategies developed to minimize the effects of the risk to a point where the risk can be controlled and managed since there is less or zero probability where we could completely mitigate the Risk. Higher priority should be given to risks which impact is higher and lessor priority to risks which impact is less. We could plan to transfer, mitigate or ignore the relevant Risks at this Stage.

Most important facet of this exercise is monitoring the risks. Looking for new or changed risks, tracking identified risks to see if they have occurred yet, reviewing the effectiveness of the execution of risk responses, and ensuring that proper risk management policies and procedures are being followed.

IDENTITY

PLAN

ANALYZE

MONITOR & CONTROL

RISK IDENTIFICATION PROCESS

Higher priority should be given to risks

which impact is higher and lessor priority to risks which impact is

less.


17


RISK MANGEMNT ADAPTATION

Risk identification Risk analysis / assessment

Risk treatment / Management strategy

Monitoring and review

Type of risk Description Impact Likelihood

Economic

Policy decisions of governing agencies such as Public Utilities of Commission, Ceylon Electricity Board and Sustainable Energy Authority.

High HighAll the new projects as well as commissioned projects would be affected by these Policies.

Periodic Audit Committee discussion would focus on the recent trends Risk mitigation strategies and adaptation of them. Internal Auditors would submit periodic reviews to audit Committee and they would report to the Board. With assistance of Small Hydro Association lobby for policy changes which is betterment of the Industry.

OperationalRisks arising from day to day operation of the Company

High Medium

Procedures and controls which is practiced from the inception of the Plants and new inputs where it necessary.

Periodic reporting by Internal Auditors and performance review on Board of Directors. Scheduled maintenance are carried out at every plant.

FinancialChanges in Lending Institution Rates and terms

High Medium Pre-arranged terms and Rates are negotiated to have the best offer.

Funds collection, allocation and distribution is carried out to the point of project delivery and close supervision by Audit Committee and Board of Directors.

CreditCEB who is our only customer. High Low

This is based on Standard Power Purchase Agreement we have signed with them.

We have good rapport with CEB officials to ensure smooth transactions.

EnvironmentalEffect on the environment. High Medium

Comprehensive and continuous environmental investigations carried out during the project construction and implementation.

Central environmental authority guidelines have been adhered.

SocialAdverse effect and negative response from the public.

High MediumWe always try to blend with Village where they treat project as one of them

Open and cordial discussions with villagers are encouraged.

IDENTIFYING RISKS AND MANAGEMENT CONTD.


18


We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit. We therefore believe that our audit provides a reasonable basis for our opinion.

OpinionIn our opinion, so far as appears from our examination, the Company maintained proper accounting records for the year ended March 31, 2014 and the financial statements give a true and fair view of the financial position of the Company as at March 31, 2014 and of its financial performance and its cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Company and its subsidiaries dealt with thereby as at March 31, 2014 and of its financial performance and its cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

Other MatterThe financial statements of F L C Hydro Power PLC for the year ended March 31, 2013, were audited by another auditor who expressed an unmodified opinion on those statements on August 03, 2013.

Report on Other Legal and Regulatory RequirementsThese financial statements also comply with the requirements of Sections 153 (2) to 153 (7) of the Companies Act No. 07 of 2007.

CHARTERED ACCOUNTANTSColomboJuly 29, 2014

Report on the Financial StatementsWe have audited the accompanying financial statements of F L C Hydro Power PLC (“the Company”), and consolidated financial statements of the Company and its subsidiaries (“the Group”) which comprise the statement of financial position as at March 31, 2014, the statement of comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information set out on pages 20 to 51 of Anual Report.

Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance with Sri Lanka Accounting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.

Scope of Audit and Basis of OpinionOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Sri Lanka Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting policies used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

INDEPENDENT AUDITORS’ REPORT

TO THE SHAREHOLDERS OF F L C HYDRO POWER PLC


19


STATEMENT OF COMPREHENSIVE INCOME

Group Company

For the year ended 31st March, 2014 2013 2014 2013Note Rs. Rs. Rs. Rs.

Revenue 4 87,270,121 51,370,938 86,820,111 51,370,938

Cost of electricity generated (49,855,903) (42,185,697) (45,453,787) (42,185,697)

Gross profit 37,414,218 9,185,241 41,366,324 9,185,241

Administrative expenses (28,309,376) (25,181,192) (23,732,219) (20,927,014)

Other expenses (320,064) (321,719) (320,064) (321,719)

Finance income 2,580,621 14,395,812 2,551,202 12,733,355

Finance cost (2,189,538) (592,464) (322,738) (592,414)

Net finance income 5 391,083 13,803,348 2,228,464 12,140,941

CER - Fall in value 6.1 (327,239) (20,700,020) (327,239) (20,700,020)

Profit / (loss) before tax 6 8,848,622 (23,214,342) 19,215,266 (20,622,571)

Income tax expense 7.2 (3,387,570) (6,703,117) (3,381,496) (6,237,630)

Profit / (loss) for the year 5,461,052 (29,917,459) 15,833,770 (26,860,201)

Other comprehensive income

Acturial gain/ (loss) on defined benefit plan 652,818 (68,567) 649,665 (68,567)

Other comprehensive income for the year, net of tax 652,818 (68,567) 649,665 (68,567)

Total comprehensive income for the year attributableto the equity holders of the Parent 6,113,870 (29,986,026) 16,483,435 (26,928,768)

Earnings / (loss) per share 8

- Basic 0.05 (0.27) 0.15 (0.25)

- Diluted 0.05 (0.27) 0.15 (0.25)

Figures in brackets indicate deductions. The notes on pages 25 to 51 form an integral part of these financial statements.


20


The board of directors are responsible for the preparation and presentation of these financial statements. Approved and signed for and on behalf of the board of directors of F L C Hydro Power PLC.

STATEMENT OF FINANCIAL POSITIONGroup Company

As at 31st March, 2014 2013 2014 2013

Note Rs. Rs. Rs. Rs.ASSETS

Non-current assets

Property, plant and equipment 9 660,746,744 430,694,437 403,232,129 430,337,798Leasehold properties 10 5,010,975 5,193,183 5,010,975 5,193,183Capital work-in-progress 11 217,563,212 348,225,938 - - Intangible assets - Computer software 74,723 - 33,791 - Investments in subsidiaries 12 - - 310,000,000 310,000,000Total non-current assets 883,395,654 784,113,558 718,276,895 745,530,981Current Assets

Inventories 13 6,697,279 2,041,451 2,570,413 2,041,451Trade and other receivables 14 9,497,189 14,267,734 7,327,985 12,944,638Amounts due from related parties 15 - - 73,208,410 37,634,520Cash and cash equivalents 16 22,943,764 19,513,310 21,751,237 18,889,913Total current assets 39,138,232 35,822,495 104,858,045 71,510,522Total assets 922,533,886 819,936,053 823,134,940 817,041,503EQUITY AND LIABILITIES

Equity

Stated capital 17 482,300,200 482,300,200 482,300,200 482,300,200Revaluation reserve 252,068,600 257,224,549 252,068,600 257,224,549Reserves 101,802 101,802 101,802 101,802Retained earnings 24,347,148 13,077,329 41,690,617 20,051,233 Total equity attributable to the equity holders of the parent 758,817,750 752,703,880 776,161,219 759,677,784

Liabilities

Non current liabilities

Deferred tax liabilities 18 37,797,772 39,181,252 37,797,772 39,181,252Loans and borrowings 19 67,790,000 1,692,603 - 1,692,603Retirement benefit obligations 20 2,997,802 3,007,962 2,951,509 2,977,180Total Non current liabilities 108,585,574 43,881,817 40,749,281 43,851,035Current liabilities

Other payables 21 39,865,097 12,206,753 3,172,107 2,490,508Amounts due to related parties 22 34,866 36,807 34,866 29,261Income tax payable 1,327,996 1,564,751 1,324,864 1,450,870Loans and borrowings 19 13,902,603 2,316,327 1,692,603 2,316,327Bank Overdraft 16 - 7,225,718 - 7,225,718Total Current liabilities 55,130,562 23,350,356 6,224,440 13,512,684Total liabilities 163,716,136 67,232,173 46,973,721 57,363,719Total equity and liabilities 922,533,886 819,936,053 823,134,940 817,041,503

Net assets per ordinary shere (Rs.) 6.96 6.90 7.11 6.96

Figures in brackets indicate deductions. The notes on pages 25 to 51 form an integral part of these financial statements. I certify that the financial statments for the year ended 31st March are in compliance with the requirements of the companies Act No. 07 of 2007.

………………………………

G. A. Aloysius (Director)

………………………………………..

Ms. D. P. Lokugalappaththi(Manager - Finance)

………………………………

Mr. J. M. S. de Mel (Director)Colombo 29th July, 2014


21


STATEMENT OF CHANGES IN EQUITY

GROUPStated capital

Rs.

Revaluation reserve

Rs.

Reserves**

Rs.

Retained earnings

Rs.

Total

Rs.

Balance as at 1st April 2012 482,300,200 260,661,848 101,802 44,463,355 787,527,205

Total comprehensive income for the year

Profit or (loss) - - - (29,917,459) (29,917,459)

Other comprehensive income - - - (68,567) (68,567)

(29,986,026) (29,986,026)Transactions with owners, recorded directly in equity

- Expenses incurred for share issue - - - (1,400,000) (1,400,000)

Transfer of deferred tax liability in respect of revaluation of property ,plant and equipment - (3,437,299) - - (3,437,299)

Balance as at 31st March, 2013 482,300,200 257,224,549 101,802 13,077,329 752,703,880


Profit or (loss) - - - 5,461,052 5,461,052

Other comprehensive income - - - 652,818 652,818

6,113,870 6,113,870

Transfer of deferred tax liability in respect of revaluation of property ,plant and equipment to retained earnings - (5,155,949) - 5,155,949 -


During the year the Company has transferred deferred tax an amount of Rs. 5,155,949/- from revaluation reserve to retained earnings.

** This balance include favorable exchange difference transferred during the allotment of shares.

Figures in brackets indicate deductions. The notes on pages 25 to 51 form an integral part of these financial statements


22


STATEMENT OF CHANGES IN EQUITY

COMPANY

Stated capital

Rs.

Revaluation reserve

Rs.

Reserves**

Rs.

Retained earnings

Rs.

Total

Rs.

Balance as at 1st April 2012 482,300,200 260,661,848 101,802 46,980,001 790,043,851


Profit or (loss) - - - (26,860,201) (26,860,201)

Other comprehensive income - - - (68,567) (68,567)

- - - (26,928,768) (26,928,768)

Transfer of deferred tax liability inrespect of revaluation of property ,

plant and equipment - (3,437,299) - - (3,437,299)



Profit or (loss) - - - 15,833,770 15,833,770

Other comprehensive income - - - 649,665 649,665

Transfer of deferred tax liability inrespect of revaluation of property , 16,483,435 16,483,435

plant and equipment to retained earnings - (5,155,949) - 5,155,949 -


During the year the company has transferred deferred tax an amount of Rs. 5,155,949/- from revaluation reserve to retained earnings.

** This balance include favorable exchange difference transferred during the allotment of shares.



23


STATEMENT OF CASH FLOWS

Group Company

For the year ended 31st March , 2014

Rs.

2013

Rs.

2014

Rs.

2013

Rs.

Cash flows from operating activities

Profit/(loss) before income tax expense 8,848,622 (23,214,342) 19,215,266 (20,622,571)

Adjustments for:

Depreciation of property, plant and equipment 31,089,524 28,111,629 27,977,418 28,062,719

Amortisation of leasehold properties 182,208 182,208 182,208 182,208

Amortisation of intangible asset 23,677 - 13,909 -

Provision for fall in value of CER 327,239 20,700,020 327,239 20,700,020

Provision for retiring gratuity 678,158 662,725 659,494 631,943

Interest income (2,580,621) (14,395,812) (2,551,202) (12,733,355)

Interest expense 2,189,538 592,464 322,738 592,414

Operating profit before working capital changes 40,758,345 12,638,892 46,147,070 16,813,378

Working capital changes

Decrease/(increase) in inventories (4,983,067) (194,682) (856,201) (194,682)

Decrease/(increase) in trade and other receivables 4,770,545 59,786,345 5,616,653 (5,040,761)

Increase/(decrease) in amounts due to related parties (1,941) (4,514) 5,605 (10,012,060)

Increase/(decrease) in other payables (503,581) (1,850,311) 681,599 (698,141)

(718,044) 57,736,838 5,447,656 (15,945,644)

Cash generated from/(used in) operations 40,040,301 70,375,730 51,594,726 867,734

Interest paid (1,866,800) (2,635) - (2,585)

Income tax paid (4,757,423) (2,508,473) (4,643,542) (1,828,904)

Retiring gratuity paid (35,500) - (35,500) -

Net cash flow from/(used in) operating activities 33,380,578 67,864,622 46,915,684 (963,755)

Cash flow from investing activities

Purchase of property, plant and equipment (1,546,393) (498,493) (871,749) (95,528)

Purchase of computer software (98,400) - (47,700) -

Interest received 2,330,238 12,950,091 2,303,761 11,482,303

Investment in capital work in progress net of payables (100,770,787) (214,991,374) - -

Net cash (used in) / from investing activities (100,085,342) (202,539,776) 1,384,312 11,386,775

Cash flow from financing activities

Repayment of finance lease liabilities (2,639,064) (2,639,063) (2,639,064) (2,639,063)

Proceeds from interest bearing loans 80,000,000 - - -

Proceeds/(Repayments) for project related expenses - - (35,573,890) (145,527,622)

Net cash from/(used) in financing activities 77,360,936 (2,639,063) (38,212,954) (148,166,685)

Net increase/(decrease) in cash and cash equivalents 10,656,172 (137,314,217) 10,087,042 (137,743,665)

Cash and cash equivalents at the beginning of the year 12,287,592 149,601,809 11,664,195 149,407,860

Cash and cash equivalents at the end of the year (Note 16) 22,943,764 12,287,592 21,751,237 11,664,195



24


1. Corporate information

1.1 Domicile and legal form of reporting entity

The F L C Hydro Power PLC is a BOI approved quoted public company incorporated and domiciled in Sri Lanka; under the Companies Act No. 07 of 2007 and listed in the Colombo Stock Exchange. The registered office of the Company is located at Level 3, Prince Alfred Tower, No.10, Alfred House Gardens, Colombo - 03.

The Consolidated financial statements of the Company for the year ended 31st March 2014 include the Company and its fully owned subsidiaries (together referred to as the “Group”). Companies in the Group are limited liability companies incorporated and domiciled in Sri Lanka and their financial statements are prepared for a common financial year, April to March. 1.2 Principal activities and nature of operationsThe Company was established for building, owning, operating and maintaining power generation facilities at Sanquhar and Delta Estates in Pussellawa Plantations Limited (PPL). The commercial production has been commenced in December, 2003.

1.3 Date of authorisation for issueThe financial statements of F L C Hydro Power PLC., for the year ended 31st March, 2014 were authorised for issue on 29th July, 2014 in accordance with a resolution of the board of directors.

1.4 Name of immediate and ultimate parent enterpriseIn the opinion of the Directors, the Company’s immediate parent undertaking is F L C Holdings PLC and ultimate parent company is F L C Joint Venture Co. (Pvt) Ltd which is a joint venture.

2. Basis of preparation2.1 Statement of complianceThe financial statements which comprise the statement of comprehensive income, statement of financial position, statement of changes in equity and the statement of cash flow, together with the accounting policies and notes (“financial statements”) have been prepared in accordance with Sri Lanka Accounting Standards (SLFRS / LKAS) as issued by the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) and in compliance with the requirement of the Companies Act No. 07 of 2007.

2.2 Basis of measurement These consolidated financial statements presented in Sri Lankan rupees have been prepared under on an accrual basis and the historical cost convention except for assets electro mechanical equipment, Buildings (power house) and penstock including in property, plant and equipment, financial instrument. certified emission reduction that have been measured at fair value.

The financial statements of the Company are presented in Sri Lankan Rupees, and all values are rounded up to nearest rupee.

2.3 Use of estimates and judgementsThe preparation of financial statements in conformity with Sri Lanka Accounting Standards (LKAS / SLFRS) requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results form the basis of making the judgements about the carrying amount of assets and liabilities that are not readily apparent from other sources.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates are recognised in the period in which the estimate is revised and in any future period affected.

Information about critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the Group’s financial statements are included in the following notes;

Inventory valuationInventories (Carbon Credit Units) as at the reporting date have been valued at their estimated net realisable value and disclosed in the financial statements as certified emission reduction.

CER represent units of greenhouse gas reduction that has been generated certified by the United Nations under the Cleaned Development Mechanism (CDM) provision of the Kyoto Protocol. These CERs can be traded and sold, and used by industrialised countries to meet part of their emission reduction targets.

According to the ruling issued by Sri Lanka Accounting and Auditing Standards Monitoring Board (SLAASMB), CER units have been recognised as an asset and disclosed under inventories. These inventories have been measured at Net Realisable Value (NRV) and any changes in value as at the reporting date is recognised in the statement of comprehensive income.

2.3.1 Judgements In the process of applying the Group’s / Company’s accounting policies, management has made the following judgements, apart from those involving estimations, which has the most significant effect on the amounts recognised in the financial statements.

NOTES TO THE FINANCIAL STATEMENTS


25


2.3.2 Estimates and assumptions

2.3.2.1 Useful lives and residual values appropriate for property, plant and equipment

The Group / Company tests annually whether, the useful life and residual value estimates were appropriate and in accordance with its accounting policy. Useful lives and residual values of property, plant and equipment have been determined by professional valuers.

2.3.2.2 Impairment loss on trade receivablesThe Group / Company review its debtors to assess impairment on a regular basis. In determining whether an impairment loss should be recorded in the statement of comprehensive income, the Group /company makes judgements as to whether there is any observable data indicating that there is a measurable decrease in estimated cash flows from a portfolio of debtors.

Management uses estimates based on historical loss experience of assets. The assumptions used for estimating the amount and timing of cash flows are reviewed regularly to reduce any differences between loss estimates and actual loss experience.

2.4 Comparative informationThe accounting policies have been consistently applied by the Group /Company and are consistent with those used in the previous year. The previous year’s figures and phrases have been re-arranged wherever necessary to conform to the current year’s presentation / classification.

2.5 Materiality and aggregationEach material class of similar items is presented separately in the financial statements. Items of a dissimilar nature or function are presented separately unless they are immaterial.

2.6 OffsettingAssets and liabilities and income and expenses, are not offset unless required or permitted by SLFRSs.

2.7 Going concern The directors have made an assessment of the Group’s / Company’s ability to continue as a going concern in the foreseeable future and they do not intend either to liquidate or to cease trading.

2.8 Directors’ responsibilities for the financial statementsThe Board of Directors is responsible for the preparation and fair presentation of these financial statements in accordance with Sri Lanka Accounting and Auditing Standards Act. No 15 of 1995 and as per the provisions of the Companies Act No. 07 of 2007. Those responsibilities include: designing implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

2.9 New accounting standards issued but not effective at the reporting date

The Institute of Chartered Accountants of Sri Lanka has issued the following new Sri Lanka Accounting Standards which will become effective for annual periods beginning after the current financial. Accordingly, these standards have not been applied in preparing these financial statements. The Group expects that these standards when applied will have substantial impact on the financial performance, financial position and disclosures. The Group will be adopting these standards when become effective.

The International Accounting Standard Boards has issued standards of SLFRS 9 - Financial instruments, SLFRS 10 - Consolidated financial statements, SLFRS 11 - Joint arrangements, SLFRS 12 - Disclosure of Interest in other entities and SLFRS 13 - Fair value measurement with effect from 01st January, 2014.

The Institute of Chartered Accountants of Sri Lanka decided to defer the application of above standards.

SLFRS 9 – Financial instruments SLFRS 11 – Joint arrangement SLFRS 12 – Disclosure of interest in other entities SLFRS 13 – Fair value measurement

2.9.1 SLFRS 9 - Financial instrumentsICASL published SLFRS 9 - Financial instruments, which will supersede the provisions of LKAS 39 - Financial instruments: Recognition and measurement on classification and measurement of financial assets and requirements with respect to the classification and measurement of financial liabilities, the de-recognition of financial assets and financial liabilities and how to measure fair value were added to SLFRS 9. Most of these requirements have been carried forward without substantive amendment from LKAS 39.

2.9.2 SLFRS 10 - Consolidated financial statementsICASL published SLFRS 10 Consolidated financial statements, which supersedes LKAS 27 Consolidated and separate financial statements and SIC - 12 Consolidation-special purpose Entities. Additionally, the ICASL published SLFRS - 12 Disclosure of interests in other entities and LKAS 27 Separate financial statements.

The following are the main changes from LKAS 27 and SIC - 12.

A single control model is applied to determine whether an investee should be consolidated.

De facto control is explicitly included in the model.

Control involves power over the relevant activities of the investee, exposure to variability of returns, and a link between power and returns.

Guidance is provided for assessing whether the investor is a principal or an agent in respect of its relationship with the investee. A principal could consolidate an investee whereas an agent would not because the linkage between power and returns is not present.

NOTES TO THE FINANCIAL STATEMENTS CONTD.


26


Control assessment includes consideration of substantive potential voting rights as opposed to currently exercisable potential voting rights.

Exposure or right to variability in returns replaces and is broader than the concept of benefits.

Protective rights are defined and explicit guidance on ‘kick-out’ rights is introduced.

Enhanced disclosures about involvement with consolidated and unconsolidated entities are required.

SLFRS 10 is effective for annual periods beginning on or after 01st January 2014. Early adoption is permitted provided that the entire suite of consolidation standards is adopted at the same time. However, an entity is permitted to provide the additional information required by SLFRS 12 without having to early adopt the remaining standards.

2.9.3 SLFRS 11- Joint arrangementsSLFRS 11 replaces LKAS 31 Interests in joint ventures and SIC on jointly-controlled entities and non-monetary contributions by ventures. SLFRS 11 removes the option to account for Jointly Controlled Entities (JCEs) using proportionate consolidation. Instead, JCEs that meet the definition of a joint venture must be accounted for using the equity method. The application of this new standard will impact the financial position of the Group. This is due to the cessation proportionate consolidating of joint ventures being changed to equity accounting. This standard becomes effective for annual periods beginning on or after 01st January, 2014.

2.9.4 SLFRS 12 Disclosure of interests in other entitiesSLFRS 12 includes all of the disclosures that were previously in LKAS 27 related to consolidated financial statements, as well as all of the disclosures that were previously included in LKAS 31 and LKAS 28. These disclosures relate to an entity’s interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are also required. This standard becomes effective for annual periods beginning on or after 01st January, 2014.

2.9.5 SLFRS 13 - Fair value measurement SLFRS 13 establishes a single source of guidance under SLFRS for all fair value measurements. SLFRS 13 does not state when an entity is required to use fair value, but rather provides guidance on how to measure fair value under SLFRS when fair value is required or permitted. The Group is currently assessing the impact that this standard will have on the financial position and performance. This standard becomes effective for annual periods beginning on or after 01st January, 2014.

Valuation of financial instrumentsThe group measures the fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements.

Level 1 – Quoted market price (unadjusted) in an active market of an identical instrument.

Level 2 – Valuation techniques based on observable inputs, either directly (i.e. as prices) or indirectly (i.e.) derived from prices), this category included instruments valued using: quoted market prices in active markets similar instruments; quoted prices for identical or similar instruments in markets are considered less than active: or other valuation techniques where all significant inputs are directly observable from market data.

Level 3 – Valuation techniques use significant unobservable inputs. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument’s valuation.

This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments.

Fair values of financial assets and financial liabilities that are traded in active markets are based on quoted market prices or dealer price quotations. For all other financial instruments the Group determines fair values using valuation techniques.

Valuation techniques include comparison of similar instruments for which market observable prices exist, other equity pricing models and other valuation models.

The objective of valuation techniques is to arrive at a fair value determination that reflects the price of the financial instruments at the reporting date that would have been determined by market participants acting at arm’s length.

The group widely recognised valuation models for determining fair value of common and more simple financial instruments. Observable prices and model inputs are usually available in the market for listed debt and equity securities. Availability of observable market inputs reduces the need for management judgement and estimation and also reduces the uncertainty associated with determination of fair values. Availability of observable market prices and inputs varies depending on the products and markets are is prone to changes based on specific events and general conditions in the financial markets.

3. Significant accounting policies The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements unless otherwise indicated.

3.1 Business combinationsBusiness combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each business combination, the Group / Company elects whether it measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. acquisition costs incurred are expensed and included in administrative expenses.



27


When the Group / Company acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date through profit or loss.

After the control of an entity is obtained, changes in ownership interest that do not result in a loss of control are accounted as equity transactions and gain or loss from these changes are not recognised in statement of comprehensive of income.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes in the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognised in accordance with LKAS 39 either in profit or loss or as a change to other comprehensive income.

3.1.1 SubsidiariesSubsidiaries are those entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities which is evident when the Group controls the composition of the Board of Directors of the entity or holds more than 50% of the issued shares of the entity or 50% of the voting rights of the entity or entitled to receive more than half of every dividend from shares carrying unlimited right to participate in distribution of profits or capital.

The Financial statements of subsidiaries are included in the consolidated financial statements from the date on which control effectively commences, until the date that control effectively ceases.

income. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to groups of cash-generating units that are expected to benefit from the synergies of the combination.

The impairment loss is allocated first to reduce from the carrying amount of any goodwill allocated to the unit and then to the other assets pro-rata to the carrying amount of each asset in the unit.Where goodwill forms part of a cash-generating unit and part of the operation within that unit isdisposed of, the goodwill associated with the operation disposed of is included in the carryingamount of the operation when determining the gain or loss on disposal of the operation.Carrying amount of the goodwill arising on acquisition of subsidiaries is presented as an intangible and the goodwill on an acquisition of an equity accounted investment is included in the carrying value of the investment.

However, at present the group does not record any goodwill as at the reporting date.

3.2 Assets and bases of their valuation 3.2.1 Property, Plant and Equipment

3.2.1.1 CostProperty, plant and equipment is recorded at cost, excluding the cost of day to day servicing, less accumulated depreciation and accumulated impairment in value.

3.2.1.2 Cost and valuationAll 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 asset is revalued. Revaluations are made with sufficient intervals to ensure that their carrying amounts do not differ materially from their values at the reporting date. Subsequent to the initial recognition as an asset at cost, revalued property, plant and equipment are carried at revalued amounts any subsequent depreciation thereon. All other property, plant and equipment are stated at historical cost less depreciation.

When an asset is revalued any increase in the carrying amount is credited directly to a revaluation surplus unless it reverses a previous revaluation decrease relating to the same asset which was previously recognized as an expense. In these circumstances, the increase is recognized as income to the extent of the previous written down value. When asset’s carrying amount is decreased as a result of a revaluation, the decrease is recognized as an expense unless it reverses a previous increment relating to that asset, in which case it is charged against any related revaluation surplus, to the extent that the decrease does not exceed the amount held in the revaluation surplus in respect of that asset. Any balance remaining in the revaluation surplus in respect of an asset is transferred directly to retained earnings on retirement or disposal of such asset.

3.2.1.3 Subsequent costsThe cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount of

Subsidiary Percentage of Holding

Thebuwana Hydro Power (Pvt) Ltd 100Stellenberg Hydro Power (Pvt) Ltd 100Halgranoya Hydro Power (Pvt) Ltd 100


3.1.2 Goodwill on acquisitionGoodwill represents the excess of the cost of any acquisition of a subsidiary or an associate over the group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities acquired. Goodwill arising on an acquisition of a non-controlling interest in a subsidiary represents the excess of the cost of the additional investment over the carrying amount of the interest in the net assets acquired at the date of exchange.

The group will test the goodwill for impairment annually and assess for any indication of impairment to ensure that its carrying amount does not exceed the recoverable amount. If an impairment loss is identified, it is recognised immediately to the consolidated statement of comprehensive

Subsidiaries are disclosed in the financial statements.


28


the replaced part is de-recognised. The costs of the day-to-day servicing of property, plant and equipment are recognized in profit or loss as incurred.

3.2.1.4 Depreciation/ amortisation Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed and if a component has a useful life that is different from the remainder of that asset, that component is depreciated separately.

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful life of each component of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the group will obtain ownership by the end of the lease term. Lands are not depreciated.

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

3.2.2 Capital work-in-progressCapital work-in-progress is stated at cost.These are expenses of capital nature, incurred in construction of Hydro Power Plants.

Capital work in progress is transferred to the respective asset accounts at the time of the first utilisation.

3.2.3 Borrowing costBorrowing costs that are directly attributable to acquisition, construction or production of a qualifying asset, which takes a substantial period of time to get ready for its intended use or sale, are capitalised as a part of the asset.

Borrowing costs that are not capitalised are recognised as expenses in the period in which they are incurred and charged to the statement of comprehensive income.

The amounts of the borrowing costs which are eligible for capitalisation are determined in accordance with LKAS 23 - ‘Borrowing Costs’.

The amount so capitalised and the capitalisation rates are disclosed in the notes to the financial statements.

3.2.4 Permanent land development costs Permanent land development costs are those costs incurred making significant infrastructure development and building new access roads on leasehold lands.

These costs have been capitalised and amortised over the remaining lease period.

3.2.5 Intangible assets Intangible asset is an identifiable non-monetary asset without physical substance held for use in the production or supply of goods or services, for rental or for administrative purpose.

An intangible asset is recognised if it is probable that future economic benefits that are attributable to the assets will flow to the entity and the cost of the assets can be measured reliably in accordance with LKAS 38 on ‘Intangible Assets’.

3.2.6 Leasehold property, plant and equipment

3.2.6.1 Finance leases – where the Company is the lessee Property, plant and equipment obtained under the finance lease, which effectively transfer to the company substantially the entire risk and rewards incidental to ownership of the leased assets, are treated as if they have been purchased outright and are capitalised at their cash price.

Assets held under finance lease are amortised over the shorter of the lease period or the useful lives of equivalent owned assets, unless ownership is not transferred at the end of the lease period.

The corresponding principal / capital elements payable to the lessor are shown as a liability / obligation. The lease rentals are treated as consisting

Class of assets Depreciation rate

Buildings (power house) 5%Computers 50%Electrical equipment 5%Furniture and fittings 20%Office equipment 20% Motor vehicles 25%Tools 50%Penstock pipes 5%Improvements to land 5%

The asset’s residual values, useful lives and methods of depreciation are reviewed and adjusted if appropriate at each financial year end.

Amortisation The leasehold rights of assets taken over from Pussellawa Plantations Ltd amortised in equal amounts over the lower of lease period and economic useful life.

Class of Asset No. of Years Rate

Delta 41 years 2.44%Sanquhar 40 years 2.50%


3.2.1.5 De-recognition An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset calculated as the difference between the net disposal proceeds and the carrying amount. The gain or losses on de-recognition are not classified as revenue.

The estimated useful lives for the current year are as follows:

Amortisation rates used for the purpose is as follows.


29


of capital and interest elements. The capital element in the rental that is applied to reduce the outstanding obligation and interest element is charged against profit, in proportion to the reducing capital element outstanding.

The finance charges allocated to future periods are separately disclosed in the notes.

The cost of improvements to or on leased property is capitalised, disclosed as improvements to leasehold property and depreciated over the unexpired period of the lease or the estimated useful lives of the improvements, whichever is shorter.

3.2.6.2 Leaseholds rights to bare land of JEDB/SLSPC estate assets and immovable (JEDB/SLSPC) estate assets on finance leaseThe institute of Chartered Accountants of Sri Lanka has issued a statement of recommended practice (SORP) with effect from 01st January, 2012 for right – to – use of land on lease on 19th December, 2012. Since the SORP issued by the ICASL has not been finalized, the Company have not completed with the SORP issued by the Institute of Chartered Accountants of Sri Lanka.

As the current practice, the company followed the “Urgent Issue Task Force” (UITF) ruling issued prior to 01st January, 2012 which has been superseded by the Sri Lanka accounting framework with effect from 01st January, 2012.

Prepaid lease rentals paid to acquire land use rights are amortised over the lease term in accordance with the pattern of benefits provided.

Leasehold properties are tested for impairment annually and are written down where applicable. The impairment loss, if any, is recognised in the statement of comprehensive income.

3.2.6.3 Operating leasesLeases where the lessor effectively retains substantially all the risks and benefits of ownership over the leased term are classified as operating leases.Lease payments paid under operating leases are recognised as an expense in the statement of comprehensive income.

3.2.7 Foreign currency transactionsAll foreign exchange transactions are converted to Sri Lankan Rupees, which is the reporting currency, at the rates of exchange prevailing at the time the transactions were effected.

Monetary assets and liabilities denominated in foreign currencies are translated into Sri Lankan Rupees, at the rates of exchange prevailing at reporting date while non-monetary assets and liabilities are translated at the rate prevailing at the time the transactions are effected. The exchange difference arising there from is dealt with in the statement of comprehensive income.

3.3 Financial instruments3.3.1 Non derivative financial assets

3.3.1.1 Initial recognition and measurement Financial assets within the scope of LKAS 39 are classified as financial assets at Fair value through profit or loss (FVTPL), Loans and receivables (L&R), Held-to-maturity investments (HTM), Available-for-sale financial assets (AFS), at its initial recognition.

All financial assets are recognized initially at fair value plus, in the case of assets not at fair value through profit or loss, directly attributable transaction costs.

The group’s financial assets include cash and short-term deposits, trade and other receivables, loans and other receivables, quoted and unquoted financial instruments.

3.3.1.2 Identification and measurement of impairmentAt each reporting date the Group/ Company assesses whether there is objective evidence that financial assets not carried at fair value through profit or loss are impaired. A financial asset or a group of financial assets is (are) impaired when objective evidence demonstrates that a loss event has occurred after the initial recognition of the asset(s), and that the loss event has an impact on the future cash flows of the asset(s) that can be estimated reliably.

Objective evidence that financial assets are impaired can include significant financial difficulty of the debtors or a group of debtors, default or delinquency by a borrower, indications 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.

Impairment losses on assets carried at amortised cost are measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. Impairment losses are recognised in profit or loss. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

Impairment losses on available-for-sale investment securities are recognised by transferring the cumulative loss that has been recognised in other comprehensive income to profit or loss as a reclassification adjustment. The cumulative loss that is reclassified from other comprehensive income to profit or loss is the difference between the acquisition cost, net of any principal repayment and amortisation, and the current fair value, less any impairment loss previously recognised in profit or loss. Changes in impairment provisions attributable to time value are reflected as a component of interest income. Any subsequent recovery in the fair value of an impaired available-for-sale equity security is recognised in other comprehensive income.

3.3.2 Financial assetsFinancial assets are within the scope of LKAS 39 are classified appropriately as Fair value through profit or loss (FVTPL), loans and receivables (L&R), held to maturity (HTM), available-for-sale (AFS) at its initial recognition.

All the financial assets are recognised at fair value at its initial recognition.



30


3.3.2.1 Financial assets at fair value through profit or lossA financial asset is classified at fair value through profit or loss if it is classified as held for trading or is designated as such upon initial recognition. Financial assets are designated at fair value through profit or loss if the Group / Company manages such investments and makes purchase and sale decisions based on their fair value in accordance with the company’s documented risk management or investment strategy. Upon initial recognition, transaction costs are recognised in profit or loss as incurred.

Financial assets at fair value through profit or loss are measured at fair value, and subsequent therein are recognised in profit or loss.

3.3.2.2 Loans and receivablesLoans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses.

Loans and receivables of the Group / Company comprise of the following,

Trade and other receivables 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 where as there is objective evidence that the Group / Company will not be able to recover all amounts due according to the original terms of receivables. Bad debts are written-off when identified.

Other receivable balances are stated at estimated amounts receivable after providing for doubtful receivables.

3.3.2.3 Held-to-maturity financial assetsIf the Group / Company has the positive intent and ability to hold debt securities to maturity, then such financial assets are classified as held-to-maturity. Held-to-maturity financial assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition held-to-maturity financial assets are measured at amortised cost using the effective interest method, less any impairment losses.

Any sale or reclassification of a more than insignificant amount of held-to-maturity investments not close to their maturity would result in the reclassification of all held-to-maturity investments as available-for-sale, and prevent the Group / Company from classifying investment securities as held-to-maturity for the current and the following two financial years.

3.3.2.4 Available-for sale financial assetsAvailable-for-sale financial assets are non-derivative financial assets that are designated as available for- sale and that are not classified in any of the previous categories.

Subsequent to initial recognition, these are measured at fair value and changes therein, other than impairment losses are recognised in other comprehensive income and presented within equity in the fair value reserve. When an investment is derecognised, the cumulative gain or loss in other comprehensive income is transferred to profit or loss.

3.3.3 Financial liabilitiesThe Group/ Company initially recognize debt securities and Loans & Borrowings on the date that they are originated. All other financial liabilities are recognized at initially on the trade date, which is the date that the Group/ Company become party to the contractual provisions of the instruments.

The Group/Company derecognizes a financial liability when its contractual obligations are discharged, cancelled or expired.

The Group/Company classifies non-derivative financial liabilities into the other financial liabilities category. Such financial liabilities are recognized initially at fair value plus any directly attributable transaction cost. Subsequent to initial recognition, these financial liabilities are measured at amortized cost using effective interest rate method.

Other financial liabilities comprise of loans and borrowings and bank overdraft.

3.4 Current assetsAssets classified as current assets in the statement of financial position are those expected to realise during the normal operating cycle of business or within one year from the reporting date and cash balances. Assets other than current assets are those which the Group / Company intends to hold beyond the one year period from the Statement of Financial Position date.

3.4.1 Inventories – certified emission reduction Carbon credit units as at the reporting date date have been valued at their estimated net realisable value as inventories and disclosed in the financial statements as Certified Emission Reduction. 3.4.2 Cash and cash equivalents Cash and cash equivalents comprise of cash in hand and cash at banks and other highly liquid financial assets which are held for the purpose of meeting short-term cash commitments with original maturities of less than three months which are subject to insignificant risk of changes in their fair value.

Bank overdrafts that are repayable on demand and form an integral part of the Group’s /Company’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

3.5 Liabilities and provisions 3.5.1GeneralLiabilities classified as current liabilities on the statement of financial position are those which fall due for payment on demand or within one year from the reporting date. Non-current liabilities are those balances that fall due for payment after one year from the date of the statement of financial position. All known liabilities have been accounted for in preparing these financial statements. Provisions and liabilities are recognised when the group has a legal or constructive obligation as a result of past events and it is probable that an outflow of economic benefits will be required to settle the obligation.



31


3.5.2 Retirement benefit obligations 3.5.2.1 Defined contribution plans – provident and trust fundA defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. obligations for contributions to defined contribution Plans are recognised as an employee benefit expense in the Statement of comprehensive Income in the periods during which services are rendered by employees.

3.5.2.2 Employees’ Provident Fund (EPF)The Group/Company contributes 12% on the salary of each employee to the above mentioned fund.

3.5.2.3 Employees’ Trust Fund (ETF)The Group / Company contributes 3% of the salary of each employee to the Employees’ Trust Fund.

3.5.2.4 Defined benefit plans – Retiring gratuityA defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Group’s / Company’s net obligation in respect of defined benefit pension plans is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. Any unrecognised past service costs are deducted.

During the current year the Group is measured the present value of the define benefit obligation using the projected unit credit method.

The key assumptions used for the calculations are as following:

i) Rate of discount 10.5% per annumii) Rate of salary and wage increase 10 % per annumiii) Retirement age 55 yearsiv) Staff turnover factor 5%v) The Group will continue as a going concern

When the benefits of a plan are improved, the portion of the increased benefit related to past service by employees is recognised in profit or loss on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognised immediately in profit or loss. The retaring gratuity liability is not externally funded. This item is grouped under “Retirement Benefit Liability” in the Statement of Financial Position.

With the adoption of revised LKAS19 - employee benefits, the Group recognises all acturial gains and losser arising from defined benefit plans immediately in the other comprehensive income as they occur. This has been adopted by the Group with retrospective effect.

3.6 Government grants and subsidiesGovernment grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be compiled with. When the grant relates to an expense item, it is recognise as income over the period necessary to match the grant on a systematic basis to the costs that it is intended to compensate. Where the grant relates to an asset, it is recognised as deferred income and released to income in equal amounts over the expected useful life of the related asset.

Where the group receives non-monitory grants, the asset and the grant are recorded gross at nominal amounts and released to the statement of comprehensive income over the expected useful life and pattern of consumption of the benefit of the underlying asset by equal annual installments. Where loans or similar assistance are provided by governments or related institutions with an interest rate below the current applicable market rate, the effect of this favourable interest is regarded as additional government grant.

3.7 ProvisionsAccounts payable and accrued expensesProvisions are made for all obligations existing as at the date of Statement of financial position 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.

3.8 Statement of Comprehensive Income3.8.1 Revenue

The net Group / Company turnover excludes turnover taxes, and trade discounts. The gross turnover represents the invoiced value of goods and services to customers outside the Group / Company.

3.8.1.1 Revenue recognitionRevenue is recognised to the extent that it is probable that the economic benefits will flow to the group / company, and the revenue and associated costs incurred or to be incurred can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable, net of trade discounts and value added taxes, net of sales within the Group.

The following specific criteria have been used to recognise revenue.

3.8.1.2 Sale of electrical energyRevenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue and associated costs incurred can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable net of trade discounts and sales taxes.

3.8.1.3 CER incomeCER Income is recognised on an accrual basis.

3.8.1.4 Interest Interest income is recognised as the interest accrued (taking into account the effective yield on the asset) unless collectability is in doubt.

3.8.1.5 Gains and losseson disposal of property, plant and equipmentGains and losses of a revenue nature on the disposal of property, plant and equipment and other non-current assets including investments have been accounted for in the statement of comprehensive income having deducted from proceeds on disposal, the carrying amount of the assets and related property, plant and equipment amount remaining in revaluation reserve relating to that asset is transferred directly to accumulated profit/ (loss).


NOTES TO THE FINANCIAL STATEMENTS CNTD.


32


3.8.1.6 Other incomeOther income is recognized on an accrual basis. Gain and losses arising from incidental activities to main revenue generating activities and those arising from a Group / Company of similar transactions, which are not material, are aggregated, reported and presented on a net basis.

3.8.1.7 Dividend incomeDividend income is recognised in the statement of comprehensive income on the date the entity’s right to receive payment is established.

3.9 Expenditure recognition Expenses are recognised in the statement of comprehensive income 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 income in arriving at the profit / (loss) for the year.

For the purpose of presentation of the statement of comprehensive income the Directors are of the opinion that function of expenses method presents fairly the elements of the company’s performance and hence, such presentation method is adopted.

Preliminary and pre-operational expenditure is recognised in the statement of comprehensive Income.

Repairs and renewals are charged to the statement of comprehensive income in the year in which the expenditure is incurred. 3.10 Income tax expense3.10.1 Tax expense

Tax expense comprises of current tax, deferred tax and other statutory taxes. Income tax expense is recognised in statement of comprehensive income except to the extent that it relates to items recognised directly in the statement of changes in equity.

3.10.1.1 Current taxCurrent tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Current tax payable also includes any tax liability arising from the tax on dividend income.

The provision for income tax is based on the elements of income and expenditure as reported in the financial statements and computed in accordance with the provisions of the Inland Revenue Act. No 10 of 2006 and subsequent amendments thereto.

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the Commissioner General of Inland Revenue.

Stellenberg Hydro Power (Pvt) Ltd and Thebuwana Hydro Power (Pvt) LtdPursuant to agreement entered into with the Board of Investments (BOI), profit of Stellenberg Hydro Power (Pvt) Ltd and Thebuwana Hydro Power (Pvt) Ltd are exempted from Income tax for a period of five years reckoned from the year of assessment as may be determined by the board (the tax exempt period) provision of the BOI Law Sec.17

For the above purpose the year of assessment shall be reckoned from the year in which the company commences to make profits or any year of assessment not later than two (02) years reckoned from the date of commencement of commercial operations or production whichever year is earlier

After the expiration of aforesaid tax exemption period, the profit of the Company shall be charged at the rate of 10% for a period of two (2) years immediately succeeding the last date of the tax exemption period during which the profits and income of the Company is exempted from the income tax

After the expiration of the aforesaid concessionary tax rate of 10%, the profits of the Company shall for any year of assessment be charged at the rate of 20%.

Accordingly, the business income of Stellenberg Hydro Power (Pvt) Ltd and Thebuwana Hydro Power (pvt) Ltd were exempted from income tax for 2013/2014. However, the other income was liable for income tax at 28%.

3.10.1.2 Deferred taxDeferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes using liability method. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefits will be realised.

Deferred tax assets and liabilities are not discounted.The net increase in the carrying amount of deferred tax liability net of deferred tax asset is recognised as deferred tax expense and conversely any net decrease is recognised as reversal to deferred tax expense, in the statement of comprehensive income.

3.11 The Group and company profits are stated after:

Providing for all impairment losses and depreciation of property, plant and equipment.

Charging all expenses incurred in the day-to-day operations of the business and in maintaining the property, plant and equipment in a state of efficiency.


NOTES TO THE FINANCIAL STATEMENTS CNTD.


33


3.12 Earnings per shareEarnings per share represent basic and diluted earnings per share data for its ordinary shares. Basic earnings per share is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, for the effects of all dilutive potential ordinary shares.

3.13 Gain on bargain purchase If the group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities exceeds the cost of the acquisition of the entity, the group will reassess the measurement of the acquiree’s identifiable assets and liabilities and the measurement of the cost and recognise the difference immediately in the consolidated statement of comprehensive income.

3.14 Transactions eliminated on consolidationIntra-group balances, transactions and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the group’s interest in the investee. unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

3.15 Statement of cash flow The Statement of cash flow has been prepared using the ‘Indirect Method’ of preparing Cash Flows in accordance with the LKAS 7 - ‘Statement of cash flow’.

3.16 Related party disclosures3.16.1 Transactions with related partiesThe Company carries out transactions in the ordinary course of its business with parties who are defined as related parties in LKAS 24. The pricing applicable to such transactions is based on the assessment of the risk and pricing model of the Company and is comparable with what is applied to transactions between the Company and its unrelated Customers.

3.16.2 Transactions with key management personnelAccording to LKAS 24 “Related party disclosures”, Key management personnel, are those having authority and responsibility for planning, directing and controlling the activities of the entity. Accordingly, the Board of Directors (including executive and non-executive Directors) and their immediate family member have been classified as key management personnel of the Company.

The immediate family member is defined as spouse or dependent. Dependent is defined as anyone who depends on the respective Director for more than 50% of his / her financial needs.

3.17 Events after reporting dateAll material events since the reporting date have been considered and where appropriate adjustments or disclosures have been made in the respective notes to the financial statements.

3.18 Contractual commitments and contingenciesAll discernible risks are accounted for in determining the amount of all known liabilities. Contingent liabilities are possible obligations whose existence will be confirmed only by uncertain future events or present obligations where the transfer of economic benefit is not probable or cannot be reliably measured. Contingent Liabilities are kot recognised in the statement of financial position but are disclosed unless they are remote.

3.19 Financial risk management 3.19.1 OverviewThe Group/Company has exposure to the following risks from its use of financial instruments:

Credit risk Liquidity risk Market risk Operational risk

This note presents information about the Group/Company’s exposure to each of the above risks, the Group’s / Company’s objectives, policies and processes for measuring and managing risk, and the Group’s / Company’s management of capital.Further quantitative disclosures are included throughout these financial statements.

3.19.2 Risk management frameworkThe board of directors has overall responsibility for the establishment and oversight of the Group’s /Company’s risk management framework. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities.

3.19.3 Credit riskCredit risk is the risk of financial loss to the Group / Company if a customer or counterparty to financial instruments fails to meet its contractual obligations. Credit risk is mainly arising from Group’s /Company’s receivable from customers.

3.19.4 Liquidity riskLiquidity risk is the risk that the Group / Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset.

The Group’s / Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due without incurring unacceptable losses or risking financial position of the Group’s / Company while maintaining regulatory requirements and debt covenants agreed with the fund providers. The Company treasury manages the liquidity position as per the treasury policies and procedures.

3.19.5 Market risk The Group / Company exposes to the market risk due to changes in market risk such as foreign exchange rates and interest rates.



34


Group Company

For the year ended 31st March, 2014 2013 2014 2013Rs. Rs. Rs. Rs.

4 Revenue

Supply of electricity Sanquhar plant 41,545,940 21,047,614 41,545,940 21,047,614

Delta plant 45,011,080 30,087,342 45,011,080 30,087,342

Stellenberg plant 450,010 - - -Income from Certified Emission Reduction 263,091 235,982 263,091 235,982

87,270,121 51,370,938 86,820,111 51,370,9385 Net finance income

Finance income

Interest income-Repo 121,460 1,007,171 92,041 1,007,171Investment income - Commercial paper 2,382,359 11,665,849 2,382,359 11,665,849Interest on FCBU account 3,235 3,060 3,235 3,060Interest on L / C margin investment - 1,662,457 - -Interest on saving account 33 38 33 38

Exchange gain / (loss) (on FCBU account) 31,851 (15,397) 31,851 (15,397)

Interest on staff loan 41,683 72,634 41,683 72,634

2,580,621 14,395,812 2,551,202 12,733,355

Finance cost

Interest on term loan 1,866,800 - - -Interest on finance lease 322,738 589,829 322,738 589,829Interest on overdraft - 2,635 - 2,585

2,189,538 592,464 322,738 592,414

Net finance income 391,083 13,803,348 2,228,464 12,140,941

6 Profit/ (loss) before taxation

Stated after charging all expenses including following :

Independent Directors' fee 600,000 420,000 600,000 420,000

Auditors remuneration

Audit services 520,000 634,462 330,000 384,184

Depreciation on property, plant and equipment 31,089,524 28,111,629 27,977,418 28,062,719

Amortisation of leasehold properties 182,208 182,208 182,208 182,208

Amortisation of intangible assets 23,677 - 13,909 -

Charity and donations 226,000 113,698 15,000 72,100

Legal expenses and professional fee 645,121 1,519,394 593,415 888,655

Provision for CER fall in value (Note 6.1) 327,239 20,700,020 327,239 20,700,020

Staff costs

Salaries, incentives and wages 12,264,722 12,173,787 10,615,268 11,116,852

Defined contribution plan costs - EPF / ETF 1,310,520 798,697 1,131,462 689,003

Staff / labour overtime 1,453,369 1,487,742 1,453,369 1,487,742

Defined benefit plan costs - Retiring gratuity 678,158 662,725 659,494 631,943



35


6.1 Certified Emission Reduction

CER units have been valued at net realisable value as at reporting date. Any gain / (loss) resulting on change in value is charged to statement of comprehensive income.

7 Income tax expense

Provision for income tax is based on the elements of income and expenditure as reported in the financial statements and computed in accordance with the provisions of the Inland Revenue Act No. 10 of 2006, and amendment thereto.

7.2 Tax recognised in the statement of comprehensive income

Group Company

For the year ended 31st March, 2014 2013 2014 2013

Rs. Rs. Rs. Rs.

Current tax expense

Taxation on profit for the year (Note 7.3) 4,771,050 4,722,383 4,764,976 4,256,896

Over provision in respect of previous year - (1,057) - (1,057) 4,771,050 4,721,326 4,764,976 4,255,839

Deferred tax expense

Origination / (reversal) of temporary differences 7. 2.1 (1,383,480) 1,981,791 (1,383,480) 1,981,791

Income tax expences 3,387,570 6,703,117 3,381,496 6,237,630

7.2.1 Deferred tax expense / (reversal)

Statement of comprehensive income

Deferred tax expense / (reversal) (1,383,480) 1,981,791 (1,383,480) 1,981,791


7.1 Companies exempt from income tax / liable to tax at concessionary rate

Company Statute Period

Thebuwana Hydro Power (Pvt) Ltd Section 17 of BOI law No.4 of 1978Note 7.1.1

Stellenberg Hydro Power (Pvt) Ltd Section 17 of BOI law No.4 of 1978F L C Hydro Power PLC 12% under Section 59 E of the Inland Revenue (Amenmend) Act No. 18 of 2013

(Mini Hydro Power Project) indefinite

7.1.1 Pursuant to agreements entered into with the Board of Investment of Sri Lanka , the profits and income of the above companies from income tax for a period of 5 years reckoned from the year of assessment as may be determined by the Board. Period of Five years shall be reckoned from the year in which the Company commences to make profits or any year of assessment not later than two (02) years reckoned from the date of commencement of commercial operations or production whichever year is earlier.


36


7.3 Reconciliation between the accounting profit / (loss) and tax on current year

Numerical reconciliation between the tax expense/(income) and the product of accounting profit/(loss) multiplied by the applicable tax rate disclosing the basis on which the applicable tax rate is computed are given below.

Group Company

For the year ended 31st March, 2014 2013 2014 2013Rs. Rs. Rs. Rs.

Profit / (loss) before income tax expense 8,848,622 (23,214,342) 19,215,266 (20,622,571)Adjustment for : CER income (263,091) (235,982) (263,091) (235,982)

Interest income from foreign currency (3,235) (3,060) (3,235) (3,060)

CER -fall in value 327,239 20,700,020 327,239 20,700,020 8,909,535 (2,753,364) 19,276,179 (161,593)

Aggregate disallowable expenses 30,989,316 30,423,092 30,989,316 30,423,092Aggregate allowable expenses (13,912,186) (15,058,298) (13,912,186) (15,058,298)Interest income considered separately (2,545,535) (14,408,149) (2,516,116) (12,745,692)Aggregate loss from the business 10,396,063 4,254,228 - -Adjusted profit from the business 33,837,193 2,457,509 33,837,193 2,457,509

Aggregate interest income 2,545,535 14,408,149 2,516,116 12,745,692Aggregate deductions under Section 32 (7,727) - - -Taxable income 36,375,001 16,865,658 36,353,309 15,203,201

Taxable income

Taxable income at 12% 33,837,193 - 33,837,193 -

Taxable income at 28% 2,537,808 16,865,658 2,516,116 15,203,201 36,375,001 16,865,658 36,353,309 15,203,201

Income tax charged at ;

Concessionary rate at 12% 4,060,464 - 4,060,464 -

Standard rate at 28% 710,586 4,722,383 704,512 4,256,896Tax on profit for the year 4,771,050 4,722,383 4,764,976 4,256,896

8 Earning / (loss) per share - Basic / diluted

The computation of the earnings / (loss) per share has been done based on net profit / (loss) attributable to ordinary shareholders for the year divided by weighted average number of ordinary shares in issue as at reporting date.


Group Company

For year ended 31st March 2014 2013 2014 2013Net profit / (loss) attributable to ordinary shareholders (Rs.) 5,461,052 (29,917,459) 15,833,770 (26,860,201)Weighted average number of ordinary shares in issue (Nos.) 109,088,112 109,088,112 109,088,112 109,088,112Earnings / (loss) per share (Rs.) 0.05 (0.27) 0.15 (0.25)There were no potentially dilutive ordinary shares outstanding at any time during the year, hence diluted earnings per share is equal to the basic earnings per share.


37


9 9.1Pr

oper

ty, p

lant

and

equ

ipm

ent

Gro

up

Impr

ovem

ent

to la

nd

Build

ing

(Pow

er h

ouse

)

Elec

tric

al

equi

pmen

ts

Pens

tock

pipe

line

Mot

or

vehi

cles

Tool

sPl

ant

and

mac

hine

ry

Offi

ce

equi

pmen

ts

Furn

iture

and

fittin

gs

Com

pute

rs

and

acce

ssor

ies

Leas

ehol

d

mot

or

vehi

cle

Tota

l

Cos

t / v

alua

tion

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Bala

nce

as a

t 1st

April

201

2 -

132,0

04,97

0 2

14,50

0,060

15

3,312

,150

477

,036

2,24

8,804

-

360

,824

564

,382

822

,775

10,3

75,00

0 5

14,66

6,001

Add

itions

-

- -

- 2

34,78

0 -

- 9

2,550

1

60,26

3 1

0,900

-

498

,493

Bala

nce

as a

t 31st M

arch

201

3 -

132,0

04,97

0 21

4,500

,060

153,3

12,15

0 7

11,81

6 2

,248,8

04

- 4

53,37

4 72

4,645

8

33,67

5 10

,375,0

00

515,1

64,49

4

Add

itions

-

- -

- 5

66,79

9 2

83,15

5 5

2,990

6

8,500

1

84,74

9 3

90,20

0 -

1,54

6,393

Tran

sfer i

n 1,1

47,90

8 9

8,888

,731

58,4

63,72

0 10

1,095

,079

- -

- -

- -

- 2

59,59

5,438

Bal

ance

as

at 3

1st M

arch

201

4 1,

147,

908

230,

893,

701

272,

963,

780

254,

407,

229

1,27

8,61

5 2

,531

,959

5

2,99

0 5

21,8

74

909,

394

1,2

23,8

75

10,3

75,0

00

776,

306,

325

Acc

umul

ated

dep

reci

atio

n an

d im

pair

men

t

Bala

nce

as a

t 1st

April

201

2 -

13,0

58,57

3 2

1,372

,636

15,2

21,86

9 1

97,38

7 2

,238,9

57

- 2

96,55

9 1

26,80

4 5

48,38

3 3

,297,2

60

56,3

58,42

8

Dep

recia

tion

for t

he ye

ar

- 6

,600,2

50

10,7

25,00

0 7

,665,6

08

137

,923

9,84

7 -

33,9

01

109

,586

235

,764

2,59

3,750

2

8,111

,629

Bala

nce

as a

t 31st M

arch

201

3 -

19,6

58,82

3 3

2,097

,636

22,8

87,47

7 3

35,31

0 2

,248,8

04

- 3

30,46

0 23

6,390

7

84,14

7 5

,891,0

10

84,4

70,05

7

Dep

recia

tion

for t

he ye

ar

13,0

25

7,72

2,343

1

1,388

,390

8,81

2,737

1

86,70

2 3

5,892

9

,486

44,1

04

141

,030

142

,065

2,59

3,750

3

1,089

,524

Bal

ance

as

at 3

1st M

arch

201

4 1

3,02

5 2

7,38

1,16

6 4

3,48

6,02

6 3

1,70

0,21

4 5

22,0

12

2,2

84,6

96

9,4

86

374

,564

37

7,42

0 9

26,2

12

8,4

84,7

60

115,

559,

581

Wri

tten

dow

n va

lue

A

s at

31st

Mar

ch 2

014

1,13

4,88

320

3,51

2,53

5 22

9,47

7,75

422

2,70

7,01

5 7

56,6

03 2

47,2

63 4

3,50

4 1

47,3

1053

1,97

4 2

97,6

63 1

,890

,240

660,

746,

744

A

s at 3

1st Mar

ch 2

013

-11

2,346

,147

182,4

02,42

413

0,424

,673

376

,506

--

122

,914

488,2

55 4

9,528

4,48

3,990

430,6

94,43

7

NO

TES

TO

TH

E FI

NA

NC

IAL

STA

TEM

ENT

S CO

NTD

.

Dur

ing th

e ye

ar S

telle

nber

g H

ydro

Pow

er (P

vt) L

td o

btain

ed a

loan

of R

s. 80

,000,0

00/-

and

inter

est c

ost o

f Rs.

4,054

,569/

- has

bee

n ca

pita

lised

.

38

9.2

Com

pany

Build

ing

(Pow

er h

ouse

)

Elec

tric

al

equi

pmen

tsPe

nsto

ck

pipe

line

Mot

orve

hicl

esTo

ols

Plan

t an

d m

achi

nery

Offi

ce

equi

pmen

ts

Furn

iture

an

dfit

tings

Com

pute

rs

and

acce

ssor

ies

Leas

ehol

dm

otor

veh

icle

Tota

l

Cos

t / v

alua

tion

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Bala

nce

as a

t 1st

April

201

2 13

2,004

,970

214

,500,0

60

153,3

12,15

0 4

77,03

6 2

,248,8

04

- 3

60,82

4 5

64,38

2 7

60,77

5 1

0,375

,000

514

,604,0

01

Add

itions

-

- -

- -

- 4

8,570

3

6,058

1

0,900

-

95,5

28

Bala

nce

as a

t 31st M

arch

201

3 13

2,004

,970

214,5

00,06

0 15

3,312

,150

477

,036

2,24

8,804

-

409

,394

600

,440

771

,675

10,3

75,00

0 51

4,699

,529

Add

itions

-

- -

566

,799

109

,850

- -

- 1

95,10

0 -

871

,749

Bal

ance

as

at 3

1st M

arch

201

4 13

2,00

4,97

0 21

4,50

0,06

0 15

3,31

2,15

0 1,

043,

835

2,3

58,6

54

-

409

,394

6

00,4

40

966

,775

10

,375

,000

51

5,57

1,27

8

Acc

umul

ated

dep

reci

atio

n an

d im

pair

men

t B

alanc

e as

at 1

st Ap

ril 2

012

13,0

58,57

3 2

1,372

,636

15,2

21,86

9 1

97,38

7 2

,238,9

57

- 2

96,55

9 1

26,80

4 4

88,96

7 3

,297,2

60

56,2

99,01

2 D

epre

ciatio

n fo

r the

year

6

,600,2

50

10,7

25,00

0 7

,665,6

08

100

,509

9,84

7 -

30,4

29

104

,146

233

,180

2,59

3,750

2

8,062

,719

Bala

nce

as a

t 31st M

arch

201

3 1

9,658

,823

32,0

97,63

6 2

2,887

,477

297

,896

2,24

8,804

-

326

,988

230

,950

722

,147

5,89

1,010

8

4,361

,731

Dep

recia

tion

for t

he ye

ar

6,60

0,249

1

0,725

,000

7,66

5,608

1

28,00

7 2

8,058

-

30,1

90

102

,081

104

,475

2,59

3,750

2

7,977

,418

Bal

ance

as

at 3

1st M

arch

201

4 2

6,25

9,07

2 4

2,82

2,63

6 3

0,55

3,08

5 4

25,9

03

2,2

76,8

62

- 3

57,1

78

333

,031

8

26,6

22

8,4

84,7

60

112,

339,

149

Wri

tten

dow

n va

lue

A

s at

31st

Mar

ch 2

014

105,

745,

898

171,

677,

424

122,

759,

065

617

,932

81,

792

-

52,

216

267

,409

140

,153

1,8

90,2

4040

3,23

2,12

9

A

s at 3

1st Mar

ch 2

013

112,3

46,14

718

2,402

,424

130,4

24,67

3 1

79,14

0-

- 8

2,406

3

69,49

0 4

9,528

4,48

3,990

430,3

37,79

8

Fully

dep

reci

ated

ass

ets

A

s at

31st

Mar

ch 2

014

-

-

-

75,

000

2,2

48,8

04-

258

,444

132

,986

415

,275

- 3

,130

,509

A

s at 3

1st Mar

ch 2

013

- -

- 7

5,000

2,24

8,804

- 2

58,44

4 1

32,98

6 4

15,27

5 -

3,13

0,509

9.3

Car

ring

am

ount

of r

eval

ued

prop

erty

, pl

ant

and

equi

pmen

t at

cos

t -

as a

t 31

st M

arch

201

4C

lass

of a

sset

sG

roup

Com

pany

Cost

Accu

mula

ted

depr

eciat

ion

WD

VCo

stAc

cum

ulate

d de

prec

iatio

nW

DV

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Build

ing (

Pow

er h

ouse

)23

9,778

,172

54,2

83,07

9 1

85,49

5,093

140

,889,4

41 5

3,160

,985

87,7

28,45

6Ele

ctric

al eq

uipm

ent

164,2

14,01

5 4

8,049

,772

116

,164,2

43 1

05,75

0,295

47,3

86,38

2 5

8,363

,913

Pens

tock

125,4

70,11

4 1

2,113

,254

113

,356,8

60 2

4,375

,035

10,9

66,12

5 1

3,408

,910

Tota

l52

9,46

2,30

111

4,44

6,10

541

5,01

6,19

6 2

71,0

14,7

71 1

11,5

13,4

92 1

59,5

01,2

79

9

Pro

pert

y, pl

ant

and

equi

pmen

t (c

ontd

.)

Rev

alua

tion

Pow

er h

ouse

, elec

trica

l equ

ipm

ent a

nd p

ensto

ck p

ipe

lines

ow

ned

by th

e Co

mpa

ny a

s at 3

1st Mar

ch .2

010

wer

e re

value

d by

an

indep

ende

nt v

aluer

, Mr. K

. T. T

isser

a Ch

arte

red V

aluat

ion

Surv

eyor

. Th

e cu

rren

t mar

ket v

alue

of th

e re

value

d as

sets

as a

t 31st M

arch

201

0 w

as a

rrive

d by

dep

recia

ting

the

estim

ated

cur

rent

cos

ts of

sim

ilar i

tem

s. In

the

abse

nce

of si

mila

r ite

ms i

n th

e m

arke

t the

orig

inal

costs

hav

e be

en a

djus

ted

takin

g int

o ac

coun

t the

esc

alatio

n of

the

price

s and

the

depr

eciat

ion

of th

e ru

pee.

Ther

e is

no ta

x ef

fect

aris

ing o

n th

e ab

ove

reva

luatio

n.

NO

TES

TO

TH

E FI

NA

NC

IAL

STA

TEM

ENT

S CO

NTD

.

39

Group Company

As at 31st March 2014 2013 2014 2013

10 Leasehold propertiesRs. Rs. Rs. Rs.

Cost

Balance at the beginning of the year 6,636,787 6,636,787 6,636,787 6,636,787 Additions during the year - - - - Balance at the end of the year 6,636,787 6,636,787 6,636,787 6,636,787 Amortisation

Balance at the beginning of the year 1,443,604 1,261,396 1,443,604 1,261,396 Amortisation charge for the year 182,208 182,208 182,208 182,208 Balance at the end of the year 1,625,812 1,443,604 1,625,812 1,443,604 Carrying value

- As at 31st March 5,010,975 5,193,183 5,010,975 5,193,183

Group Company

As at 31st March, 2014 2013 2014 2013Rs. Rs. Rs. Rs.

11 Capital work in progress

Balance at the begining of the year 348,225,938 133,234,564 - - Additions during the year 128,932,712 214,991,374 - - Amount capitalised during the year (259,595,438) - - - Balance at the end of the year 217,563,212 348,225,938 - -

11.1 Class of asset -wise break-up

Hydro Power 217,563,212 340,096,771 - - Building - 8,129,167 - -

217,563,212 348,225,938 - -

12 Investment in subsidiaries Holding

Thebuwana Hydro Power (Pvt) Ltd 100% - - 150,000,000 150,000,000 Stellenberg Hydro Power (Pvt) Ltd 100% - - 150,000,000 150,000,000 Halgranoya Hydro Power (Pvt) Ltd 100% - - 10,000,000 10,000,000

- - 310,000,000 310,000,000 13 Inventories

Certified Emission Reduction (CER) 2,201,592 22,638,521 2,201,592 22,638,521 Less : Provision for fall in value of CER (327,239) (20,700,020) (327,239) (20,700,020)

1,874,353 1,938,501 1,874,353 1,938,501 Consumable and spare parts 4,822,926 102,950 696,060 102,950

6,697,279 2,041,451 2,570,413 2,041,451 13.1 Valuation of CER

CER has been valued at 0/30 Euro at the prevaling rate of exchange at Rs. 179.67 as at 31st March 2014.

Leasehold land of the Company is amortised over the lease period as below:Leasehold lands No. of years Rate

Delta 41 years 2.44%

Sanquhar 40 years 2.50%



40


Group Company

As at 31st March 2014 2013 2014 2013Rs. Rs. Rs. Rs.

14 Trade and other receivables

Trade receivables 3,496,966 7,247,646 3,046,956 7,247,646 Deposits, prepayments and advances 3,252,064 3,864,664 1,721,366 2,730,064 Other receivables 2,748,159 3,155,424 2,559,663 2,966,928

9,497,189 14,267,734 7,327,985 12,944,638

15 Amounts due from related parties

Thebuwana Hydro Power (Pvt) Ltd - - 53,592,699 16,727,355 Stellenberg Hydro Power (Pvt) Ltd - - 17,472,562 20,864,936 Halgranoya Hydro Power (Pvt) Ltd - - 2,143,149 42,229

- - 73,208,410 37,634,520

16 Cash and cash equivalents

Favourable cash and cash equivalents

Term deposit 17,152,433 18,321,431 17,152,433 18,321,431 Cash at bank 5,626,322 1,044,561 4,457,639 421,164 Cash in hand 165,009 147,318 141,165 147,318

22,943,764 19,513,310 21,751,237 18,889,913 Unfavourable cash and cash equivalents

Bank overdraft - 7,225,718 - 7,225,718Cash and cash equivalents for the purpose of cash flow statement 22,943,764 12,287,592 21,751,237 11,664,195

17 Stated capital

Issued and fully paid ordinary shares

109,088,112 ordinary shares 482,300,200 482,300,200 482,300,200 482,300,200

Rights, preference and restrictions of classes of capital

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at the meetings of the Company.

18 Deferred tax liabilities

Balance at the beginning of the year 39,181,252 33,762,162 39,181,252 33,762,162 Origination / (reversal) of temporary difference (1,383,480) 1,981,791 (1,383,480) 1,981,791 Liability in respect of revaluation of property, plant and equipment - 3,437,299 - 3,437,299 Balance at the end of the year 37,797,772 39,181,252 37,797,772 39,181,252

18.1 The closing deferred tax liability relates to the followings:

Accelerated depreciation for tax purposes 10,653,561 10,321,472 10,653,561 10,321,472 Revaluation of property , plant and equipment to fair value 27,498,392 29,217,042 27,498,392 29,217,042 Retirement benefit obligation (354,181) (357,262) (354,181) (357,262)Balance at the end of the year 37,797,772 39,181,252 37,797,772 39,181,252



41


Group Company

As at 31st March 2014 2013 2014 2013Rs. Rs. Rs. Rs.

19 Loans and borrowings

Finance lease obligation 19.1 1,692,603 4,008,930 1,692,603 4,008,930 Term loan 19.2 80,000,000 - - -

81,692,603 4,008,930 1,692,603 4,008,930

Amount payable within one year

Finance lease obligation 19.1.1 1,692,603 2,316,327 1,692,603 2,316,327 Term loan 19.2.1 12,210,000 - - -

13,902,603 2,316,327 1,692,603 2,316,327

Amount payable after one year

Finance lease obligation 19.1.1 - 1,692,603 - 1,692,603 Term loan 19.2.1 67,790,000 - - -

67,790,000 1,692,603 - 1,692,603

Group / company

As at 31st March 2014 2013Rs. Rs.

19.1 Finance lease obligation

Gross liability

Balance at the beginning of the year 4,398,440 7,037,504 Less : Repayments during the year (2,639,064) (2,639,064)Balance at the end of the year 1,759,376 4,398,440 Finance charges allocated to future periods

Balance at the beginning of the year 389,510 979,339 Less : Finance charges written off during the year (322,737) (589,829)Balance at the end of the year 66,773 389,510 Net liability as at 31st March 1,692,603 4,008,930

19.1.1 Maturity analysis

Lease payable within one year

Amount payable 1,759,376 2,639,064 Less : Finance charges written off during the year (66,773) (322,737)Net liability as at 31st March 1,692,603 2,316,327 Lease payable two to five years

Amount payable - 1,759,376 Less : Finance charges written off during the year - (66,773)Net liability as at 31st March - 1,692,603 Lender - wise summary

Gross liability

Hatton National Bank PLC 1,759,376 4,398,440Finance charges allocated to future periods

Hatton National Bank PLC (66,773) (389,510)Net liability as at 31st March 1,692,603 4,008,930



42


Group Company


19.2 Term loan

Balance at the beginning of the year - - - - Add : Loans obtained during the year 80,000,000 - - -

80,000,000 - - - Less : Repayments during the year - - - - Balance at the end of the year 80,000,000 - - -

19.2.1 Maturity analysis

Amount payable within one year 12,210,000 - - - Amount payable after one year and within six year 67,790,000 - - -

80,000,000 - - -

Group Company


20 Retirement benefit obligations

Present value of unfunded obligations 2,997,802 3,007,962 2,951,509 2,977,180

20.1 Movement in present value defined benefit obligation

Balance at the beginning of the year 3,007,962 2,276,670 2,977,180 2,276,670 Current service cost 367,612 426,748 352,181 395,966 Interest on obligation 310,546 235,977 307,313 235,977 Acturial (gain) / loss on obligation (652,818) 68,567 (649,665) 68,567

3,033,302 3,007,962 2,987,009 2,977,180 Benefits paid during the year (35,500) - (35,500) - Balance at the end of the year 2,997,802 3,007,962 2,951,509 2,977,180

20.2 Provision for retiring gratuity for the year is recognised in the following line items in the statement of comprehensive income.

Cost of sales 309,562 281,099 290,899 281,099 Administrative expenses 368,596 350,844 368,595 350,844 Others - 30,782 - - Total comprehensive income 678,158 662,725 659,494 631,943 Other comprehensive income (652,818) 68,567 (649,665) 68,567 Total 25,340 731,292 9,829 700,510

Above loan has been obtained in two facilities amounting as Rs 70 mn and Rs 10 mn respectively at an interest rate of AWPLR+2% subject to rivision quarterly. The loan is granted with one year grace period.


Balance appearing in the financial position are very sensitive to the market interest rate. Simulations made for market interest rate on term loan obligation show that a rise or decrease by 1% of the interest rate.

The following effects on the finance cost in income statement as follows, Group

Variance

-1% +1%

(800,000) 800,000 Interest expens - term loan

19.2.2 Sensitivity analysis

As at 31st March,


43


Group Company


21 Other payable

Accrued expenes 3,947,009 3,650,001 3,172,107 2,490,508 Payable to contractors 35,918,088 8,556,752 - -

39,865,097 12,206,753 3,172,107 2,490,508

22 Amounts due to related companiesPussellawa Plantations Ltd 34,866 36,807 34,866 29,261

34,866 36,807 34,866 29,261

23 Contingent liabilities and contingent assetsContingent liabilitiesThe Company does not anticipate any contingent liabilities to arise out of any contingent event as at the reporting date.

20.3 Sensitivity analysis

Sensitivity variation on rate of salaries / wages increment

Value appearing in the financial statements are sensitive to the changes of financial and non-financial assumptions used.Simulations made for retirement obligation show that a rise or decrease by 1% of the rate of salary / wage increment has the following effects on the retirement benefit obligation.

Group Company

Variance Variance Variance Variance

-1% +1% -1% +1%

As as 31st March 2014

Staff / Workers ( Rs.) (36,300) 40,232 (34,692) 38,448

Sensitivity variation on discount rate

Simulations made for retirement obligation show that a rise or decrease by 1% of the estimated discount rate has the following effects on the retirement benefit obligation.

Group Company

Variance Variance Variance Variance

-1% +1% -1% +1%

As as 31st March 2014

Staff / Workers ( Rs.) 10,849 (6,261) 9,365 (4,981)

20 Retirement benefit obligations (Contd.)

The company has adopted projected unit credit method in accordance wih LKAS 19- "Employee Benefits". The key assumptions used for the calculation are as following;

2014 2013

Rate of discount 10.50% 10.50%

Rate of salary increment 10% 12%

Retirement age 55 years 55 Years

Staff turnover factor 5% 5%

The Company will continue as a going concern.The Gratuity liability is not externally funded.



44


24 Contractual commitments

Group has entered into various contract to construct the Mini Hydro Power Projects referred under Note 11. According to those contracts the Company has following commitments as at the reporting date.

Group Company


24.1 Thebuwana Hydro Power (Pvt) Ltd.

Commitment on ;

Civil construction 579,945 7,096,551 - -

Purchase installation of electromechanical equipment 4,349,772 4,349,772 - -

Installation of penstock 24,472,030 34,025,570 - -

Construction of power house 29,973,501 39,742,260 - -

25 Related party transactions

(a) Identify of the related parties

The Company has a related party relationship with its affiliate companies. (b) Transactions with key management personnel

Key management personnel comprise of directors of the Company. (Ref note 25.1)

(i) Loans given to directors

No loans have been given to directors of the company.

(ii) Key management personnel compensation

No compensation has been given to key management personnel of the Company.

(iii) Transactions with related companies

The Company has related party relationship with its affiliate companies. The following transactions were carried out with related party during the year ended 31st March, 2014.



45


Amount due from/(to)

Name of the Company Relationship Nature oftransaction

Amount

Rs.

31st March, 2014 Rs.

31st March, 2013 Rs.

Thebuwana Hydro Power (Pvt) Ltd

Subsidiary Expenses incurred (Project related)

36,865,344 53,592,699 16,727,355

Stellenberg Hydro Power (Pvt) Ltd Subsidiary Expenses incurred 12,594,545 17,472,562 20,864,936 Expenses reimbursed (15,986,919)

Halgranoya Hydro Power (Pvt) Ltd Subsidiary Expenses incurred 2,100,919 2,143,149 42,229Dolekanda Power (Pvt) Ltd Affiliate Expenses incurred 58,400 - -

Expenses reimbursed 58,400 - -Ensellwatte Power (Pvt) Ltd Affiliate Expenses incurred 132,575 - -

Expenses reimbursed (132,575) - -F L C Power Holdings (Pvt) Ltd Affiliate Expenses incurred 1,800 - -

Expenses reimbursed (1,800) - -Pussellawa Plantations Ltd Affiliate Expenses incurred 1,028,270 (34,866) (29,261)

Expenses reimbursed (1,022,666) - -

Name of the Director FLCH FLCPH Thebuwana Stellenberg Halgranoya DP EP PPL MPL

Mr. G. A. Aloysius √ √ √ √ √ √ √ √ √

Mr. J. M. S. de Mel √ √ √ √ √ √ √ √ √

Mr. D. S. K. Amarasekera √ √ √ √ √ √ √ - √

Mr. G. J. Aloysius √ √ √ √ √ √ √ √ -

Name of the Company Abbreviations Nature of relationship

F L C Holdings PLC FLCH Ultimate parentF L C Power Holdings (Pvt) Ltd FLCPH AffiliateThebuwana Hydro Power (Pvt) Ltd Thebuwana SubsidiaryStellenberg Hydro Power (Pvt) Ltd Stellenberg SubsidiaryHalgranoya Hydro Power (Pvt) Ltd Halgranoya SubsidiaryDolekanda Power (Pvt) Ltd DP AffiliateEnselwatte Power (Pvt) Ltd EP AffiliatePussellawa Plantations Ltd PPL AffiliateMaturata Plantations Ltd MPL Affiliate

26 Events after the reporting date

Thebuwana Hydro Power (Pvt) Ltd has entered in to an agreement to obtain Rs. 100,000,000/- loan from Sampath Bank on 6th June, 2014 to complete the balance construction of power plant. There have been no material events other than as disclosed above occurred between the reporting date on which the financial statements are authorised for issue that require adjustments to or disclosures in the financial statements.

This note should be read in conjunction with amount due to related parties shown in the notes 15 and 22 to the financial statements respectively.


25.1 The directors of F L C Hydro Power PLC are also the directors of following companies ;


46


27 Assets pledged as collaterals - Company

Name of the financial institutionNature of the

facilityFacility granted

Rs.

Balance outstanding as at 31st March

2014 Rs.

Securities pledged

Hatton National Bank PLC Finance leased 8,375,000 1,692,603Absolute ownership

of the asset on finance lease.

28 Comparative information

Comparative figures have been re-classified where necessary in line with the presentation requirements for the current year.

29 Segmental information

The Company is engaged in generation of hydro power thereby segmental analysis information is not applicable.

30 Director’s responsibility

Directors of the Company are responsible for the preparation and presentation of these financial statements.

31 Financial instruments Fair values of financial instruments. The fair value of a financial instrument is the amount at which the instrument could be exchanged or settled between knowledgeable and willing

parties in an arm’s length transaction, other than in a forced liquidation or sale.

The Group measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements.

Level I: Quoted market price (unadjusted) in an active market for an identical instrument. Level II: Valuation techniques based on observable inputs, either directly – i.e. as prices or indirectly – i.e. derived from prices. This category

includes instruments valued using: quoted market prices in active markets for similar instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data.

Level III: Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument’s valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments.

Fair values of financial assets and financial liabilities that are traded in active markets are based on quoted market prices or dealer price quotations. For all other financial instruments the Group determines fair values using valuation techniques.

Valuation techniques include net present value and discounted cash flow models, comparison to similar instruments for which market observable

prices exist. Assumptions and inputs used in valuation techniques include risk-free and benchmark interest rates, credit spreads and other premia used in estimating discount rates. The objective of the valuation technique is to arrive at a fair value determination that reflect the price of the financial instrument at the reporting date, that would have determined by the market participants acting at the arms length.



47


Group CompanyAs at 31st March, 2014 2013 2014 2013

Carrying

amount

Rs.

Fair value

Rs.

Carrying amount

Rs.

Fair value Rs.

Carrying

amount

Rs.

Fair value

Rs.

Carrying amount

Rs.

Fair value Rs.

Financial assetsTrade and other receivables

6,245,125 6,245,125 10,403,070 10,403,070 5,606,619 5,606,619 10,214,574 10,214,574

Amounts due from related parties

- - - - 73,208,410 73,208,410 37,634,520 37,634,520

Cash in hand and at bank

22,943,764 22,943,764 19,513,310 19,513,310 21,751,237 21,751,237 18,889,913 18,889,913

Total 29,188,889 29,188,889 29,916,380 29,916,380 100,566,266 100,566,266 66,739,007 66,739,007

Financial liabilitiesLoans and borrowings - Lease creditors

13,902,603 13,902,603 4,008,930 4,008,930 1,692,603 1,692,603 4,008,930 4,008,930

Trade and other payables

39,865,097 39,865,097 12,206,753 12,206,753 3,172,107 3,172,107 2,490,508 2,490,508

Amounts due to related parties

34,866 34,866 36,807 36,807 34,866 34,866 29,261 29,261

Bank overdrafts - - 7,225,718 7,225,718 - - 7,225,718 7,225,718 Total 53,802,566 53,802,566 23,478,208 23,478,208 4,899,576 4,899,576 13,754,417 13,754,417

As at 31st March 2014,Company

Level I

Rs.

Level II

Rs.

Level III

Rs.

Total

Rs.Current assets carried at amortised cost - 78,815,029 - 78,815,029Current liabilities carried at amortised cost - 4,899,576 - 4,899,576

GroupLevel I

Rs.

Level II

Rs.

Level III

Rs.

Total

Rs.Current assets carried at amortised cost - 6,245,125 - 6,245,125Current liabilities carried at amortised cost - 53,802,566 - 53,802,566

32 Financial risk management objectives and policies The Group has trade and other receivables, cash and short term deposits that arise directly from its operations. The Group's principle financial

liabilities, comprise of loans and borrowings, other payables. The main purpose of these financial liabilities is to finance the Group's operations. The Group is exposed to market risk, credit risk and liquidity risk.

32.1 Credit risk Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a

financial loss. The Group is exposed to credit risk from its operating activities (primarily for trade receivables) ,other advances including loans and advances to staff / workers and from its financing activities, including deposits with banks and financial institutions and other financial instruments.

The Group trades only with recognised, creditworthy third parties. It is the Group’s policy that all clients who wish to trade on credit terms are

subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the results that the group's exposure to bad debts is not significant.

With respect to credit risk arising from the other financial assets of the Group / Company, such as cash and cash equivalents and short term investments, the Company’s exposure to credit risk from default of the counter party.

Carrying value and fair values of financial instruments - Company The fair values of financial assets and liabilities, together with the carrying amounts shown in the statement of financial position, are as follow;



48


As at, 31st March 2014 31st March 2013 Note Amount Exposure Amount Exposure

Trade and other receivables 14 6,245,125 21.40% 10,403,070 34.77%Cash in hand and at bank 16 22,943,764 78.60% 19,513,310 65.23%Total 29,188,889 100.00% 29,916,380 100.00%

As at, 31st March 2014 31st March 2013Amount Exposure Amount Exposure

Trade and other receivables 14 5,606,619 5.58% 10,214,574 15.31%Amounts due from related parties 15 73,208,410 72.80% 37,634,520 56.39%Cash in hand and at bank 16 21,751,237 21.63% 18,889,913 28.30%Total 100,566,266 100.00% 66,739,007 100.00%

32.3 Trade and other receivables Group Company

As at 31st March, 2014 Rs.

2013 Rs.

2014 Rs.

2013 Rs.

Past due but not impaired - 0-90 Days 6,245,125 10,403,070 5,606,619 10,214,574 - 90-365 days - - - - - > 365 days - - - - Total gross trade receivables 6,245,125 10,403,070 5,606,619 10,214,574 Impairment of trade receivable - - - - Total net trade receivables 6,245,125 10,403,070 5,606,619 10,214,574

32.2 Risk exposure The maximum risk positions of financial assets which are generally subject to credit risk are equal to their carrying amounts. Following table shows the maximum risk positions.

32.4 Amounts due from related parties The group’s amounts due from related parties mainly consist of balances due from companies under common control and from affiliate

companies.

32.5 Liquidity risk The Group’s policy is to hold cash and undrawn committed facilities at a level sufficient to ensure that the Group has available funds to meet its short and medium term capital and funding obligations, including organic growth and acquisition activities, and to meet any unforeseen obligations and opportunities. The Group holds cash and undraws committed facilities to enable the Group to manage its liquidity risk.

The Group monitors its risk to a shortage of funds using a daily cash management process. This process considers the maturity of both the Group’s financial investments and financial assets (e.g. accounts receivable, other financial assets) and project.

The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of multiple sources of funding including bank loans and overdrafts.


Group

Company


49


32.5.1 Liquity positionGroup Company

As at 31 st March, 2014 Rs.

2013 Rs.

2014 Rs.

2013 Rs.

Commercial papers 17,152,433 18,321,431 17,152,433 18,321,431 Cash in hand and at bank 5,791,331 1,191,879 4,598,804 568,482 Liquid assets 22,943,764 19,513,310 21,751,237 18,889,913

Loans and borrowings 3,673,315 554,042 620,815 554,042Bank overdrafts - 7,225,718 - 7,225,718 Amount due to related parties 34,866 36,807 34,866 29,261Other payables 2,330,469 2,243,385 1,555,567 1,083,892Liquid liabilities 6,038,650 10,059,952 2,211,248 8,892,913Net cash 16,905,114 9,453,358 19,539,989 9,997,000

CompanyAs at 31st March 2014

Less than 3 months Rs.

3 to 12 Months Rs.

More than 12 Months Rs.

Total Rs.

Other payables 1,555,567 1,616,540 - 3,172,107 Amounts due to related parties 34,866 - - 34,866 Loans and borrowings 620,815 1,071,788 - 1,692,603 Total 2,211,248 2,688,328 - 4,899,576

GroupAs at 31st March 2014

Less than 3 months Rs.

3 to 12 Months Rs.


Total Rs.

Other payables 2,330,469 37,534,628 - 39,865,097Amounts due to related parties 34,866 - - 34,866 Loans and borrowings 3,673,315 10,229,288 67,790,000 81,692,603 Total 6,038,650 47,763,916 67,790,000 121,592,566

As at 31st March 2013 Less than 3 months Rs.

3 to 12 Months Rs.


Total Rs.

Other payables 1,083,892 1,406,616 - 2,490,508Amounts due to related parties 29,261 - - 29,261 Loans and borrowings 554,042 1,762,285 1,692,603 4,008,930Bank overdrafts 7,225,718 - - 7,225,718 Total 8,892,913 3,168,901 1,692,603 13,754,417

As at 31st March 2013 Less than 3 months Rs.

3 to 12 Months Rs.


Total Rs.

Other payables 2,243,385 9,963,368 - 12,206,753Amounts due to related parties 36,807 - - 36,807Loans and borrowings 554,042 1,762,285 1,692,603 4,008,930Bank overdrafts 7,225,718 - - 7,225,718 Total 10,059,952 11,725,653 1,692,603 23,478,208

Liquidity risk management The mixed approach combines elements of the cash flow matching approach and the liquid assets approach. The business units attempt to match cash outflows in each time bucket against a combination of contractual cash inflows plus other inflows that can be generated through the sale of assets or other secured borrowings.

Maturity analysis The table below summarises the maturity profile of the Group / company’s financial liabilities based on contractual undiscounted payments.



50


32.6 Market risk Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprise of the following types of risk:

Interest rate risk Currency risk Commodity price risk Equity price risk

The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the

return.

Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the deposits and borrowings.

Profile At the reporting date the interest rate profile of the Company's interest bearing financial instruments was ;

Carrying value

As at 31st March, 2014 Rs.

2013 Rs.

Fixed rate instruments

Loans and borrowings 1,692,603 4,008,930



51


SUBSIDIARIES

Name of Company Relationship Directors as at 31st March 2014

Halgranoya Hydro Power (Pvt) LtdReg . No PV 68774

Fully ownedSubsidiary

Mr. G J Aloysius Mr. G A Aloysius Mr. J M S de Mel Mr. D S K Amarasekera

Thebuwana Hydro Power (Pvt) LtdReg.No PV 70022



Stellenberg Hydro Power (Pvt) LtdReg.No PV 70024




52


Accounting policies The specific principles, bases, conventions, rules and practices adopted by an enterprise in preparing and presenting financial statements.

Accrual basisRecognising the effects of transactions and other events when they occur without waiting for receipt or payment of cash or cash equivalent.

AmortisationThe systematic allocation of the depreciable amount of an intangible asset over its useful life.

Basic earnings per share (EPS)Profits attributable to ordinary shareholders divided by the weighted average number of ordinary shares in issue during the year.

BorrowingsAll interest bearing liabilities.

Cash and cash equivalentsLiquid investments with original maturity periods of three months or less.

Capital employedTotal equity and interest –bearing borrowings.

Current ratioCurrent assets divided by current liabilities. A measure of liquidity.

Contingent liabilityA possible obligation that arises from past events whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the enterprise.

Capital reservesReserves identified for specific purposes and considered not available for distribution.

Dividends Distribution of profits to holders of equity investments.

Dividend coverProfit attributable to ordinary shareholders divided by dividend. Measure the number of times divided is covered by distribution profit.

Dividend yeildDividend per share as a percentage of the market price. A measure of return on investments.

Deferred taxationThe tax effect of timing differences deferred to / from other periods, which would only qualify for on a tax return at a future date.

EBITDAAbbreviation for Earnings before Interest, Tax, Depreciation and Amortization.

Effective tax rateProvision for taxation excluding deferred taxation divided by the profit before tax.

EquityShareholders’ fund.

Fair valueFair value is the amount for which an asset could be exchanged between a knowledgeable, willing buyer and a knowledgeable, willing seller in an arm’s length transaction.

Foreign currency transactions The realised gain recorded when assets or liabilities denominated in foreign currencies are translated into Sri Lankan Rupees at the reporting date at prevailing rates which differ from those rates in force at inception at the previous reporting date.

Financial instruments Is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

GearingProportion of total interest –bearing borrowings to capital employed.

GroupA group is a parent and all its subsidiaries.

IASInternational Accounting Standards.

IFRS International Financial Reporting Standards.

ImpairmentThis occurs when recoverable amount of an asset is less than its carrying amount.

Intangible assetAn identifiable non-monetary asset without physical substance held for use in the production / supply of goods / services or for rental to others or for administrative purposes.

GLOSSARY OF FINANCIAL TERMS


53


Key management personnelThe key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly.

Market capitalisationNumber of Shares issues multiplied by the market value of each share at the reported date.

Market riskThis refers to the possibility of loss arising from changes in the value of a financial instrument as a result of changes in market variables such as interest rates, exchange rates, credit spreads and other asset prices.

Net assets per shareShareholders’ funds divided by the weighted average number of ordinary shares in issue. A basis of share valuation.

OCIOther Comprehensive Income

ParentA parent is an entity that has one or more subsidiaries.

Price – earnings ratioMarket price of a share dividend by earnings per share as reported date.

Related parties

Parties who could control or significant influence the financial and operating policies of the business.

Retirement benefitsPresent value of a defined benefit obligation is the present value of expected future payments required to settle the obligation resulting from employee service in the current and prior periods.

Return on average assets (ROA)Net income expressed as a percentage of average total assets, used along with ROE, as a measure of profitability and as a basis of intra-industry performance comparison.

Return on average equity (ROE)Net income, less preferred share dividends if any, expressed as a percentage of average ordinary shareholders’ equity.

Return on capital employedProfit before tax plus net interest cost dividend by capital employed.

Revaluation reserve Excess value identified between the fair value and carrying value of the revalued assets.

Revenue reservesReserves consolidated as being available for distribution and investments.

SLFRS / LKASSri Lanka Accounting Standards corresponding to International Financial Reporting standards.

SubsidiaryA subsidiary is an entity, including an unincorporated entity such as a partnership that is controlled by another entity (known as the parent). Shareholders’ fundsTotal of issued and fully paid share capital, capital reserves and revenue reserves.

Value additionThe quantum of wealth generated by the activities of the Group measured as the difference between turnover and the cost of materials and services bought in.

Working capitalCapital required to finance day to day operations computed as the excess of current assets over current liabilities.

NON- FINANCIAL TERMS

CEB - Ceylon Electricity Board

SLSEA - Sri Lanka Sustainable Energy Authority.

PUCSL - Public Utility Commission of Sri Lanka.

CEA - Central Environmental Authority

CSE - Colombo Stock Exchange

CDM - Clean Development Mechanism

CER - Certified Emission Reduction

MHPP - Mini Hydro Power Project

CSR - Corporate Social responsibility.

GRI - Global Reporting Initiatives

Watt-hour - Unit of energy which expended for one hour of time.

Kilowatt (kW) - Equal to 1000 watt.

Mega watt (MW) - Equals to one million watts or to 1000 kilowatts.

Giga watt (GW) - Equal to one billion watts or to 1000 megawatts.

GWh - Giga watt hours

GLOSSARY OF FINANCIAL TERMS CONTD.


54


NOTICE IS HERE BY GIVEN THAT THE THIRTEENTH ANNUAL GENERAL MEETING OF F L C HYDRO POWER PLC WILL BE HELD ON 29TH SEPTEMBER 2014 AT 10.30A.M. AT PARK PREMIER BANQUET HALL, EXCEL WORLD, NO. 338, T.B. JAYAH MAWATHA , COLOMBO 10.

AGENDA1. To receive, consider and adopt the Annual Report of the

Directors and the Audited Financial Statements for the year ended 31st March 2014 together with the report of the Auditors thereon.

2. To Propose and adopt as an Ordinary Resolution To re-appoint as a Director, Mr. Jayasiri Manik Sumithra de Mel, who

has attained the age of 72 years. The Company has received notice of intention to pass the under noted as an Ordinary Resolution in compliance with Section 211 of the Companies Act No 07 of 2007.

Ordinary Resolution “That Mr. Jayasiri Manik Sumithra de Mel, who has attained the age

of 72 years, be and is hereby re-appointed as a Director of the Company, and it is hereby declared as provided for in Section 211 of the Companies Act No 07 of 2007, that the age limit of 70 years, referred to in section 210 of the said Companies Act, shall not apply to Mr. Jayasiri Manik Sumithra de Mel.”

3. To Propose and adopt as an Ordinary Resolution To re-appoint as a Director, Mr. Uditha Harilal Palihakkara, who has

attained the age of 71 years. The Company has received notice of intention to pass the under noted as an Ordinary Resolution in compliance with Section 211 of the Companies Act No 07 of 2007.

Ordinary Resolution “That Mr. Uditha Harilal Palihakkara, who has attained the age of 71

years, be and is hereby re-appointed as a Director of the Company, and it is hereby declared as provided for in Section 211 of the Companies Act No 07 of 2007, that the age limit of 70 years, re-ferred to in section 210 of the said Companies Act, shall not apply to Mr. Uditha Harilal Palihakkara.”

4. To re-elect as a Director, Mr. Godfrey Anton Aloysius, who retires by rotation in Terms of Article 24 (6) of the Articles of Association of the Company.

5. To re-appoint M/s KPMG, Chartered Accountants as Auditors of the Company to hold office until the conclusion of the next Annual General Meeting of the Company and authorize the Directors to determine their remuneration.

6. To authorize the Directors to determine contributions to charities and other donations for the year 2014/2015 until the next Annual General Meeting.

BY ORDER OF THE BOARD OFF L C HYDRO POWER PLC

S S P CORPORATE SERVICES (PRIVATE) LIMITED

SECRETARIES

29h July 2014

NOTE :

(a) Any member/s is/are entitled to attend and vote is/are entitled to appoint a proxy in his stead.

(b) A form of Proxy accompanies this notice. A proxy need not be a shareholder.

(c)I nstruments appointing proxies must be lodged with the Company not less that 48 Hours before the meeting.

Notice of the Annual General Meeting


55



56


I/We, ………..………………………………………………………………………………………………………………………. of ………..………………………………………………………………..……………

…………………………………………………………………… being a member/members of F L C Hydro Power PLC hereby appoint Mr/Mrs/Ms ………..………………………

……………………………..………………………………………………… (NIC No………..………………………………………………………) of .………..……………………………………………………

…………..………………………………………………………………..……… whom failing,

Mr. Geoffrey Joseph Aloysius of Colombo whom failing, Mr. Godfrey Anton Aloysius of Colombo whom failing, Mr. Jayasiri Manik Sumithra de Mel of Panadura whom failing, Mr. Don Soshan Kamantha Amarasekera of Colombo whom failing, Dr. Thirugnasambandar Senthilverl of Colombo whom failing, Mr. Uditha Harilal Palihakkara of Colombo

as my /our proxy to represent me/us and vote on my/our behalf at the Thirteenth Annual General Meeting of the Company to be held on 29th September 2014 at 10.30A.M. At park premier banquet hall, excel world, no. 338, T.B. Jayah mawatha , colombo 10 and at any adjournment thereof.

1. To receive, consider and adopt the Annual Report of the Directors and the Audited Financial Statements for the year ended 31st March 2014 together with the report of the Auditors thereon

2. To Pass the following Ordinary Resolution in terms of Section 210 & 211 “That Mr. Jayasiri Manik Sumithra de Mel, who has attained the age of 72 years, be and is hereby re-appointed

as a Director of the Company, and it is hereby declared as provided for in Section 211 of the Companies Act No 07 of 2007, that the age limit of 70 years, referred to in section 210 of the said Companies Act, shall not apply to Mr. Jayasiri Manik Sumithra de Mel.”

3. To Pass the following Ordinary Resolution in terms of Section 210 & 211 “That Mr. Uditha Harilal Palihakkara, who has attained the age of 71 years, be and is hereby re-appointed as

a Director of the Company, and it is hereby declared as provided for in Section 211 of the Companies Act No 07 of 2007, that the age limit of 70 years, referred to in section 210 of the said Companies Act, shall not apply to Mr. Uditha Harilal Palihakkara.”

4. To re-elect as a Director, Mr. Godfrey Anton Aloysius, who retires by rotation in Terms of Article 24 (6) of the Articles of Association of the Company.

5. To re-appoint M/s KPMG, Chartered Accountants as Auditors of the Company to hold office until the conclusion of the next Annual General Meeting of the Company and authorize the Directors to determine their remuneration.

6. To authorize the Directors, to determine contributions to charities and other donations for the year 2014/2015 until the next Annual General Meeting

FOR AGAINST

FORM OF PROXY

Signed this…………………………day of ………………………… Two Thousand and Fourteen.

………………………………………………… …………………………………

NIC Number/P.P.No /Co. Reg. No (Signature/s)


57


INSTRUCTIONS FOR THE COMPLETION OF THE FORM OF PROXY:

1. Please complete the Form of Proxy after filling in legibly your full name, NIC Number and address and by signing in the space provided.

2. To be valid, this Form of Proxy must be deposited at the Registered Office of the Company, F L C Hydro Power PLC, Level 03, Prince Alfred Tower, No 10, Alfred House Gardens, Colombo 03 not less than 48 hours before the time appointed for holding the meeting.

3. Please indicate clearly how your proxy is to vote on the resolution. If no indication is given, the proxy in his discretion may vote as he thinks fit.

4. If the shareholder is a Company or body corporate, a form of Corporate Representation executed under its Common Seal in Accordance with its Articles of Association or Constitution should be submitted.

5. Where the Form of Proxy is signed under a Power of Attorney (POA) which has not been registered with the company, the original POA together with a photocopy of same or a copy certified by a Notary Public must be lodged with the company along with the Form of Proxy.

6. Any Shareholder / Proxy attending the Annual General Meeting is kindly requested to bring with him/her the National Identity Card or any other form of valid identification.


58


CORPORATE INFORMATION

Name of CompanyF L C Hydro Power PLC

Legal FormA Public quoted company with limited liability

incorporated under the Provisions of the Companies Act, No. 07 of 2007.

Date of Incorporation24th April 2000

Company Registration NumberPV 7385 PQ

Nature of the BusinessGenerate and Supply Electricity to the National Grid.

Accounting Year End31st March

Head Office and Registered OfficeLevel 03, Prince Alfred Tower, No.10, Alfred House

Gardens, Colombo 03.Telephone : 0117990000

Fax : 0117990019E – mail : [email protected]

Website : www.hydropowerfreelanka.com

Board of DirectorsG. J. Aloysius – ChairmanG. A. AloysiusJ. M. S. de MelD. S. K. AmarasekeraT. SenthilverlU. H. Palihakkara

AuditorsKPMG, No.32 A,Sir Mohamed Macan Markar Mawatha,Colombo 01.

Secretaries / RegistrarsSSP Corporate Services (Pvt) Ltd, No.101, Inner Flower Road, Colombo 03.

Subsidiary CompaniesThebuwana Hydro Power (Pvt.) LimitedStellenberg Hydro Power (Pvt.) LimitedHalgranoya Hydro Power (Pvt.) Limited

BankersSeylan Bank PLCHatton National Bank PLCNational Development Bank PLC


59


F L C Hydro Power PLCLevel 03, Prince Alfred Tower,

No. 10, Alfred House Gardens, Colombo 03, Sri Lanka

annual t 2013/2014 · statement of financial position 21 statement of changes in equity 22-23 ......

Documents