Ceylon Guardian Investment Trust PLC – Annual Report 2012/13

Annual Report 2012/13

Ceylon GuARdiAn investment tRust PlC

Contents Corporate Information

Name of CompanyCeylon Guardian investment trust PlC (A Carson Cumberbatch Company)

Company Registration No.PQ 52

Domicile and Legal FormCeylon Guardian investment trust PlC, is a Public Quoted Company with limited liability domiciled in sri lanka.

the Company was incorporated in sri lanka in 1951.

Principal Activity and Nature of Operationsduring the year, the principal activity of the Company was holding and managing of an investment portfolio.

Parent Companythe Company’s parent Company and controlling entity is Carson Cumberbatch PlC, which is incorporated in sri lanka.

Directorsmr. i. Paulraj (Chairman)mr. d.C.R. Gunawardenamr. A. de. Z. Gunasekeramr. v.m. Fernando mrs. m.A.R.C. Cooray mr. K. selvanathan mr. C.W. Knight

Number of Employeesthe Company did not have any employees of its own as at the end of the year

Bankers standard Chartered Bank HsBCCommercial Bank of Ceylon PlCdeutsche Bank AGdFCC BankPeoples’ Bank

Auditorsmessrs. KPmG Chartered Accountants,no. 32A, sir mohamed macan markar mawatha, Colombo 3.

Investment ManagersGuardian Fund management limitedno. 61, Janadhipathi mawatha, Colombo 1, sri lanka.tele: +94-11-2039200Fax: +94-11-2039385

Managers & SecretariesCarsons management services (Private) limitedno. 61, Janadhipathi mawatha, Colombo 1.tele: +94-11-2039200 Fax: +94-11-2039300

Registered Office and Principal Place of Businessno. 61, Janadhipathi mawatha, Colombo 1.tele: +94-11-2039200 Fax: +94-11-2039300

Corporate Websitewww.carsoncumberbatch.com

the Company is a member of the Carson Cumberbatch Group of companies

Financial Highlights 01

Chairman’s statement 02

managers’ Review 04

Risk management 15

Annual Report of the Board of directors

on the Affairs of the Company 21

Profiles of the directors 30

management team Profile 33

Audit Committee Report 34

Financial information 36

independent Auditors’ Report 37

statement of Comprehensive income 38

statement of Financial Position 39

statement of Changes in equity 40

Cash Flow statement 42

notes to the Financial statements 43

Five year summary 103

us$ Financials 105

information to shareholders and investors 110

notice of meeting 114

Form of Proxy 115

Designed and produced by emagewiseDigital Plates by Imageline (Pvt) Ltd Printed by Printage (Pvt) Ltd

ANNUAL REPORT 2012/13 1

Financial HighlightsIn Rupees Thousands

For the year ended / As at 31st March 2013 2012 Change (%)

Revenue 1,642,599 2,081,300 (21)Profit from operations 1,560,758 1,289,520 21 Share of profit of equity accounted investees net of tax 755,198 1,269,924 (41)Profit before taxation 2,314,985 2,554,255 (9)Profit for the year 2,291,406 2,538,559 (10)Profit attributable to equity holders of the parent company 1,881,070 2,166,950 (13)Other comprehensive expense for the year (401,927) (3,428,391) (88)Total comprehensive income/(expense) for the year 1,889,479 (889,832) (312)Total comprehensive income/(expense) attributable to equity holders of the parent company 1,502,966 (749,441) (301)

Net cash generated from operating activities 1,634,668 1,678,344 (3)

Total equity attributable to equity holders of the parent 14,722,744 13,395,451 10 Total equity 17,868,752 16,198,839 10 Total assets 17,961,674 16,265,432 10

Return on ordinary shareholders’ funds (%) 12.78 16.18 (21)Earnings per share (Rs) 21.42 24.67 (13)Dividend per share (Rs) * 2.50 2.00 25Net assets per ordinary/deferred share - book value (Rs) 167.62 152.50 10 Net assets per ordinary/deferred share - market value (Rs) 247.48 265.88 (7)Guardian fund value ** 26,029,738 28,052,053 (7)

Stock market dataAs at 31st March

All Share Price Index (points) 5,736 5,420 6 S&P SL 20 Index (points) 3,294 2,986 10 Market capitalization (Company) 13,135,475 18,964,342 (31)Share price (Rs.)

Year end 160.00 231.00 (31)High 231.00 402.00 (43)Low 144.00 231.00 (38)

* Based on proposed dividends and subject to approval at the Annual General Meeting** Based on market value of portfolio after adjusting for cash and cash equivalents

Ceylon Guardian Investment Trust PLCCeylon Guardian Investment Trust PLC is the largest listed

investment trust on the Colombo Stock Exchange. Ceylon

Guardian is the holding company of the investment sector of

the Carson Cumberbatch Group, and therefore has diverse

interests in capital market activity.

Its businesses comprise of listed and private equity

investments, asset management and management of mutual

funds, carried out by the Group’s fund management company,

Guardian Fund Management Limited.

Ceylon Guardian investment trust PlC2

Dear shareholder,I welcome you to the 61st Annual General Meeting of the Company on behalf of the Board of Directors, and take pleasure in presenting the Annual Report and Audited Accounts of the Company for the year ended 31st March 2013.

The year under review has been a challenging one with the Colombo stock market experiencing much volatility and recording marginal positive growth during the period under review. Domestic and global issues have affected the sentiment of the Colombo Bourse and transactions have been subdued. Economic concerns added to the prevailing sentiment, driving investors to fixed income products in the backdrop of a rising interest rate scenario. However, on the international front, markets have been buoyant despite challenging economic problems; namely the debt crisis of the European Union financial cliff overhang of the US and decline in GDP momentum of China. Despite this, foreign markets have been on positive ground, going against the economic fundamentals faced by the developed economies. Recent indications of a strengthening of the US economy, coupled with a signal that fiscal stimulus packages would slowdown, has led to an outflow of capital from emerging markets back to the US.

Confident of Future Growth ProspectsDespite the clouding effect of both local and overseas macro factors, at Ceylon Guardian, we still remain confident of the long term potential of Sri Lankan equities and the sustainability of the economic development plans set in place after an end to a 30 year civil war in 2009. We believe that the long term development potential of Sri Lanka will flow through to its equity markets and ratios such as market capitalisation to GDP (currently at 29%) will improve in the near future to more mature markets levels. Short term

Chairman’s Statement

blips however are likely to bring uncertainty to equity investors, but we remain confident that in the long haul the vagaries of the market will be ironed out. Hence, Ceylon Guardian being a long term investor remains buoyant and would look to exploit weaknesses in equity markets to our advantage.

Strong PerformanceThe company recorded a profit after tax of Rs. 2.29 bn despite volatile market conditions, whereby the market ended on a positive note for the financial year 2012/13. Our above average performance was attributed to booking of profits on selected overvalued stocks, capturing market anomalies and booking substantial capital gains despite volatile market conditions. Our portfolio value decreased to Rs. 26.03 bn, from Rs. 28.05 bn a year earlier; recording a depreciation of 7.2% vis-à-vis a 5.8% increase in the benchmark All Share Index and 10.3% appreciation in the newly constructed Standard & Poors Sri Lanka 20 Index.

On evaluating the medium term performance, five year compounded annual portfolio growth rate was 22.6% on market value basis and 33.3% on market capitalization, vis-à-vis an All Share Index growth of 17.6%. The long term track record of Ceylon Guardian is thus highlighted, on reading market conditions effectively enabling shifting of funds between asset classes, and thereby contributing to portfolio performance. We have not been weary of holding high cash positions and waiting out of equities, being patient during times of market uncertainty.

Guardian Fund ManagementThe initiative of managing and growing assets under management (AUM) has been entrusted to Guardian Fund Management Limited the asset management company of the Guardian Group. It provides a variety of diverse services, namely, customized portfolios for institutional clients and country & mutual fund management.

Our initiative to model group company assets in terms of risk appetite into listed and private equity has been done via the three listed investment companies of the Ceylon Guardian Group. Based on the above, the investment companies have been sub grouped to best represent these multiple asset classes. Ceylon Guardian Investment Trust PLC functions as the main holding entity with diverse interests while subsidiary Ceylon Investment PLC concentrates on listed equity investing, both having a mix of trading and long term portfolios to add different flavors based on investment horizon and strategy. The focus on unlisted private equity comes via Guardian Capital Partners a riskier but lucrative asset class. Thus, our corporate structure has been formulated to suit different investor groups and asset classes. Hence, we remain confident that our model would enable us to attract strategic global partners who would want to be part of the country’s capital markets.


Guardian Fund Management Limited (GFM) is registered with the Securities and Exchange Commission of Sri Lanka. GFM over the years has built an experienced team whereby competencies in all aspects of fund management have been addressed. Our model puts emphasis on fundamental style investing, driven by research. All company portfolios are currently managed by GFM and competencies have been expanded by way of growth in AUM internally and externally by pitching for new client portfolios. In managing external client and mutual funds, GFM leverages the expertise it has built on managing its own proprietary funds, a unique advantage it has, as opposed to fund managers who only manage outsourced portfolios.

Future OutlookTaking a long term view of the development of capital markets in Sri Lanka, our strategy has extended our services to manage retail funds via our joint venture with Acuity Partners (Private) Limited (the investment banking arm of the HNB and DFCC Bank). We believe that in the long term this segment will grow, given the progression of the economy in the island and increase in national savings rate. Also our international fund “The Sri Lanka Fund” which caters to institutional investors, funds of fund investors and Sri Lankan diaspora has been slow to raise funds due to global challenges. However we believe that this space would attract investments in the future with its track record and accreditation as a restricted investment scheme in Singapore. Currently the Group has built competencies in managing the fixed income asset class and believes that in the future it would become a core segment given build-up of cash generated through sales proceeds of Ceylon Guardian Group and managing fixed income funds via our unit trust business.

Public and private investments in developing Sri Lanka has been skewed towards more public sector participation in development programs, playing the role of infrastructure developer. However, the government has shown its long term commitment in attracting foreign direct investments by offering many concessions to attract investors and engaging the private sector in the development of Sri Lanka. Thus, we should see entrepreneurial capital flowing into the growth of the stock market. Also, as the country progresses, state-owned enterprises which account for significant economic activity are likely to get listed and thus support the depth of the capital markets in the country. We believe that bold steps such as this are required to make a significant change in the economic progress of the country. The company is encouraged by the tax concessions granted for listed debt and other steps to widen the debt markets, and the results have been immediately forthcoming with an array of debt issues coming into the market shortly afterwards.

Hence, we are not discouraged by the present volatile sentiment at the Colombo Bourse, nor are we overconfident of future expectations on the equity front. We remain practical and our investments would be guided on pure fundamentals. We believe many areas need to be addressed to bring confidence and economic progress to the country. Clear government policy is needed to take the country to the next level of sustained growth, along with a strong boost in confidence levels to attract foreign capital. The current challenges faced by Sri Lanka on its international standing will have to be managed to attract direct investments and build the platform for economic prosperity.

AcknowledgementsIn conclusion, I would like to thank the shareholders for the confidence placed in the management over the years and to the regulators for supporting our businesses. I would also like to thank the members of our staff for their untiring contribution; the Audit Committee, the Remuneration Committee and Nomination Committee for their guidance; and lastly my colleagues on the board for their input. We believe that all our stakeholders would benefit and be a part of the identified growth trajectory of the Company.

(Sgd).Israel PaulrajChairman

Colombo18th June 2013


Managers’ Review

Economy and the Equity MarketThe Sri Lankan economy recorded a GDP growth of 6.4% in 2012, down from 8.3% in year 2011. Quarterwise GDP growth recorded was: Qtr 1 – 7.9%, Qtr 2 – 6.4%, Qtr 3 - 4.8% & Qtr 4 - 6.3%. The decline in GDP growth was impacted by the poor performance in the industry and services sectors. Also, the agriculture sector due to extreme weather posed volatility in its contribution to GDP. The industries sector which accounts for 30% of GDP contributed 10.3% to GDP growth during the year. The services sector, which accounts for 59% contributed 4.6% and agriculture sector which accounts for 11% contributed 5.8%. In the first quarter of 2013 the Sri Lankan economy recorded a GDP growth of 6.0%, attributed to the growth in the industry sector 10.7%, services sector 4.3% and agricultural sector 2.0%.

The country’s GDP per capita at market prices improved to US$ 2,923 in 2012 from US$ 2,836 in 2011, on track to achieving US$ 4,000 per capita in 2016. Gross Domestic Product (GDP) at current market prices crossed the Rs.6,500 bn mark. For the year January – December 2012, Sri Lanka posted a Balance of Trade deficit of US$ 9,313 mn, a reduction from US$ 9,710 mn recorded last year. Earnings from tourism (up 25% yoy) and workers remittances (up 16% yoy) continued to hold up, cushioning the current account of the Balance of Payments. Tourist arrivals during the year 2012 amounted to 1,005,605 arrivals, reflecting a growth of 17.5% with earnings from tourism up 25% to US$ 1,039 mn. Same period worker remittances recorded a year-on-year growth of 16.3% amounting to US$ 5,985 mn.

Exports recorded a decline of 7.4%, amounting to US$ 9,774 mn from US$ 10,559 mn recorded last year. This was mainly due to two main sectors agriculture and industrial exports declining 7.8% during the year, due to a drop in tea exports, given the turmoil in the Middle

East segment, which is the largest buyer of Ceylon tea and garment exports facing a challenge given the economic woes of the USA & EU. The decline in prices of commodities such as cotton and rubber in international markets contributed to the decrease in export earnings. The earnings from garment exports which accounted for 38% of total exports made the largest contribution to the decline. Earnings from agriculture and industrial exports too declined.

Imports for the same period January – December 2012 recorded a decline of 5%, year on year to US$ 19,087mn from US$ 20,269 mn, with a decline in consumer goods by 18% and intermediate goods by 5.7%. However, investment goods posted a growth of 4.8% for the year. Crude oil also made a relatively high contribution to the decline in import expenditure due to a drop in world crude oil prices.

Foreign direct investment (FDI) amounted to US$ 1,338 mn by end December 2012 and portfolio investments on the Colombo Stock Exchange increased significantly to US$ 304 mn on a net basis. In addition, foreign inflows including borrowings by commercial banks increased to US$ 973 mn and also foreign investments into Government securities (treasury bills/bonds) was US$ 843 mn. During the same period, gross official reserves by

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end December 2012 amounted to US$ 6,877 mn, whereas total international reserves (gross official reserves and foreign assets of commercial banks) amounted to US$ 8,357 mn equivalent to 5.2 months and 4.3 months of imports respectively.

Broad money (M2) recorded a yoy growth of 18.3% for the year 2012 in comparison to a year ago of 21.5%. This was due to restrictions imposed on credit to private sector. However, credit obtained by the public sector continued its momentum and caused broad money (M2b) to expand 17.5% during 2012. Average monthly credit expansion is about Rs. 25 bn down from the highs of Rs. 52 bn recorded in the peak of March 2012, where M2 growth was 35%. In the New Year, M2b expanded by 18.3% and M2 expanded by 15.5%.

The main policy interest rates of the Central Bank represented by the repurchase rate and the reverse repurchase rate remained the same at 7.50% and 9.50% respectively. Also, the statutory reserve ratio remained at 8.0%. However, it is a concern that even after relaxing monetary policy, interest rates on both deposit and lending rates still remain high.

Inflation measured by the change in the Colombo Consumers Price Index (CCPI) decreased to 7.5% end March from a high of 9.8% in Feb 2013, up from 5.9% at end March 2012. Inflation on an annual average basis increased to 8.8% in March from 5.9% in March 2012. The annual average change continued to be maintained at single digit levels despite the drought experienced in the country. Meanwhile, core inflation increased to 6.4% on an annual average basis and 6.8% year on year basis. The contribution to monthly increase in the index came mainly from price increases in the food category. Within the non-food category, prices increased for water, electricity, furnishing & household while sub categories of transport, communication & education remained flat.

Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13

Treasury Bill 3M(%) 8.7 11.0 11.1 11.3 10.0 9.3

12M (%) 9.3 11.3 12.9 13.0 11.7 11.3

Call Money (%) 8.9 9.2 10.4 10.6 9.8 9.5

Prime Lending (%) 10.8 12.8 13.4 14.1 14.4 13.8

Market interest rates increased in 2012 as a result of tight monetary conditions. In the 3rd quarter of 2012, call money rates increased to double digit levels of 10.57% but tapered off by end of the year. Also, on the Government Securities front - the 3 month T-Bill rate closed the year at 10.0% (reaching a high of 11.44% in mid September), resulting in an increase of 132 basis points for the year and the 12 month T-Bill rate (peaked at 13.36% in mid September) closed the year at 11.69%, up 238 basis points for the year. Consequently, interest rates eased off in the New Year with T-Bill rates dropping to 9.10% (3 months) & 11.10% (12 months). However, the trend reversed in the month of March where interest rates were seen picking up. The government 2-5 year bonds are currently trading around 11.05% - 11.20% and 6 months to 1 year FD rates are in the region of 14%-14.25%.

SLRs.Per

unit as at

31/12/11

SLRs.Per

unit as at

31/12/12

SLRs.Per

unit as at

31/03/13

Change

for calendar Yr 2012

US $ 113.95 127.05 126.89 -11.5%

STG 175.59 204.59 192.07 -16.5%

Euro 147.48 168.13 162.13 -14.0%

Yen 1.47 1.47 1.35 0.0%

After the aggressive currency depreciation we saw at the beginning of 2012, the dollar maintained and closed the year at Rs.127.05 (Dec 11 –SLRs.113.95) amounting to a depreciation of 11.50% for the calendar year 2012. The Rupee also depreciated against other major currencies such as the Sterling Pound (16.52%), Euro (14.00%) & Yen (0.00%).

We believe that low interest rates are imperative for positive capital market performance. Hence, for interest rates to remain low, inflationary pressures must ease which is unlikely given the recent hike in electricity tariffs. It poses a challenge to hold interest rates taking into account its cascading impact through the economy. Also, there is evidence of moral suasion to

Equity vs Fixed Income

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bring down interest rates with state banks reducing interest rates and persuading commercial banks to follow suit. Also, Government Securities rates coming down at the auctions is a way of representing the same. The current excess liquidity in the system is helping to momentarily bring down rates. However, to make an impact in the medium to long term, fiscal targets must be met. To achieve forecast GDP growth targets, momentum in the economy must be maintained and thus it’s vital to have low interest rates for credit growth. Weaker exchange rates too pose a challenge and growth in forex earnings is vital to strengthen the balance of payments.

Equity Market in PerspectiveThe Colombo Stock Exchange(CSE) for the calendar year 2013 (January to March) is in positive territory which is marginally up 1.6% in comparison to negative 7.1% recorded in year 2012. For the preceding two calendar years, the CSE has been in the red, after record performances post war, which was a positive 125% in 2009 and positive 96% in 2010. However, the market exuberance that was evident post war has been moderated and now we are faced with a correction of the market and eroding investor confidence. We have witnessed retail investors suffering losses, given the entry of these investors to the market at the peak. However, volatility has posed an opportunity for institutional investors to trade, exploiting market cycles.

During the financial year 2012/13 under review, the market recorded an ASPI appreciation of 5.8% and S&P Sri Lanka 20 Index appreciation of 10.3%, where indices closed at ASPI (All Share Price Index) at 5,736 and Standard & Poor’s SL 20 index

Managers’ Review

at 3,294. The ASPI tested the 6,000 index barrier on two occasions, during the month of September 2012 and January 2013 during the period of review. However, it failed to break the strong technical barrier. During the period of review, the market traded between a low of ASPI 4,738 index level and high of ASPI 5,972 index level, a narrow band. The daily average turnover level remained healthy at approximately Rs.750 mn but improved in the New Year with much foreign interest at the Colombo Bourse.

The newly constructed Standard & Poor’s SL 20 index which consists of 20 select companies with minimum Rs.500 mn market capitalization was introduced during the year 2012. The newly introduced index has fared well since launch and it has recorded a growth of 10.3% for FY 2012/13.

31st Dec 11

31st Mar 12

31st Dec 12

31st Mar 13

Move- ment for

year 2012

Move-ment for

F/Y 2012/13

ASPI 6,074.4 5,420.2 5,643.0 5,735.7 -7.1% 5.8%Avg.T/O Rs.mn

853 1,578 649 909 -23.9% -42.4%

Mkt Cap Rs. bn

2,213.90 2,012.87 2,167.58 2,205.05 -2.1% 9.5%

Mkt P/E ratio

15.8 14.4 15.9 15.5 0.7% 7.8%

ASPI tested the 6000 index barrier on two occasions

ASPI & S&P SL20 Movement -1 year

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Taking into account a more longer term perspective, the market has given a reasonable compound annual growth rate (CAGR) of 15.5% p.a in the last three years and 17.6% p.a taking a five year period, demonstrating that market cycles smoothen out in the long term.

Much of the market activity has been from the foreign side. A net foreign inflow of approximately over Rs. 4,850 mn has been recorded in the New Year (for the period January to March) 2013. This is further to the total net inflow of Rs.33 bn recorded in 2012. Foreign interest at the CSE has been evident with most blue chips in demand with continuous buying seen on John Keells Holdings and banking sector stocks such as Commercial Bank, Sampath Bank, National Development Bank and Hatton National Bank. This is a positive sign for the equity market given the net foreign outflow of Rs. 19,021 mn in year 2011 and Rs. 32,191 mn recorded in year 2010. Also, foreign buying has been evident on high dividend yield stocks such as Ceylon Tobacco, Nestle and Chevron Lubricants.

Market capitalization of the CSE remained above the Rs. 2 trillion mark, with domestic participation at 52% and foreign participation at 48% as at end March 2013 in comparison to a domestic mix of 65% and foreign participation at 35% end March 2012. Retail interest was minimal though buying was evident on the second tier and more speculative counters, while domestic institutional activity has been evident on the sell side. Thus, increasingly, turnover has been dominated by foreign buying on select counters.

CSE Sector Performance

Sector Move-ment

2012/13

Market weight

31st March

2013

Banking & Finance 9.6% 23.9%

Beverage, Food & Tobacco

37.2% 18.3%

Diversified 3.9% 22.4%

Health Care 25.5% 1.7%

Hotels & Travels -6.2% 6.5%

Manufacturing -4.0% 4.4%

Chemicals & Pharma -23.1% 0.8%

Construct & Enging -17.8% 1.7%

Land & Property -6.3% 1.5%

Oil Palm -14.8% 4.6%

Footwear & Textiles -7.8% 0.5%

Trading -12.2% 1.2%

Telecommunication 7.4% 6.9%

Motors -28.6% 0.9%

Power & Energy -7.0% 1.4%

Plantations 3.7% 1.1%

Investment Trust -20.0% 1.5%

Information Technology

-45.4% 0.1%

Stores Supplies -18.4% 0.2%

Services -3.1% 0.3%

ASPI Movement 5.8%

S & P SL 20 Movement

10.3%

The CSE is currently trading at 15.51 times P/E ratio, based on last year’s earnings, down from an all time high of 25 times recorded in February 2011. However it is marginally down from December closing P/E of 15.93. The average P/E band we have witnessed at the Colombo Stock market has been 14 times taking a long cycle. On a 1 year forward earnings 2012/13 the market is trading at 10.5 times and on 2 year forward earnings 2013/14 the market comes down to 8.5 times. However the CSE remains fairly valued vis-a vis other regional markets. The performance of the Sri Lankan stock market in relation to other regional peers has been poor.

Turnover - Domestic vs Foreign

Turnover - Domestic Turnover - Foreign

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Net out�ow of Rs.19,000 mn (Yr 2011), Net in�ow of Rs. 33,607 mn (Yr 2012), and Net in�ow of Rs.4,881 mn (Yr 2013 - Jan to Mar 2013)

1,102

-1,3533,175

1,5442,4013,063

-2,235+2,449

+619+1,339

+929+17,944+1,907

+472

Net Foreign in�ow(Rs. Mn)

Months

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Daily average turnover vs Market PE

Average Turnover Market PE

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May-

13

Tim

es

Rs.

mn


The developed markets have been showing much promise amidst the poor global economic environment with most international markets in positive territory.

Though Sri Lanka too has its own economic concerns the stock market has been on an uptrend. Further, we are wary of capital flights from equities given the proposed large debenture issues at attractive rates by private sector companies and banks in the near term. The fixed income market also has an added attractiveness due to tax advantages announced in the recent budget thus being very attractive to both retail and corporate investors.

Against the backdrop of challenging market conditions, corporates raising funding via the IPO route was minimal, opting instead for funding via debentures taking the fixed income route. Initial public offerings and rights issues raised Rs.13 bn during the calendar year 2012 in contrast to Rs.45 bn raised in 2011. Dividend yield of the market increased to 2.4% in 2012 from 1.8% in 2011. During the period of review, the market cap to GDP declined to 29% from 33% with the downturn in the market.

The CSE performance has been driven by strong performance of the beverage, food & tobacco sector which accounts for 17.7% of total market capitalisation. During the period of review, the sector appreciated

37.2% and banking & finance sector which accounts for 23% of market capitalisation, appreciated 9.6% above the market appreciation of 5.8%. However, the diversified sector which accounts for 22% of market cap has appreciated 3.9% marginally lower than market movement. The telecommunication sector, which accounts for 7% market weight, has overperformed the benchmark for the period. For other sectors, such as construction, hotels & travel and land & property, the performance has been negative.

Index Market Current Yr Current Yr Est. 2013

Next Yr Est. 2014

ASPI Colombo 13.0 11.2 10.2

Sensex Bombay 16.0 14.5 12.7

Dow Jones New York 14.1 13.0 11.9

FTSE 100 London 18.2 11.8 10.7

Hang Seng Hong Kong 10.7 10.8 9.9

JCI Composite Jakarta 19.3 15.7 13.3

Nikkei 225 Tokyo 24.8 23.8 18.6

SSE Composite Shanghai 12.1 9.5 8.4

ST Times Singapore 10.9 15.0 13.8

Bursa Malay Malaysia 14.9 15.3 14.0

SET Thailand 17.7 14.2 12.5

Karachi 100 Pakistan 7.8 7.1 6.1

IBOV Brazil 42.8 11.4 9.5

IPSA Chile 23.4 18.0 15.0

RTS I$ Russia 5.3 5.5 5.3

MSCI Frontier mkts (MXFM)

11.6 10.3 8.9

MSCI Emerging Index (MXEF)

11.9 10.9 9.8

Managers’ Review

International markets performance 2012

-20 0 20 40 60 80 100 120 140Hang Seng

BSE SensexStraits Times

Karachi IndexASPI

Dow JonesFTSE

NikkeiSSE Composite

JKSE CompositeKLCI Malaysia

Thai IndexHanoi Index

MSCI Frontier IndexMSCI Emerging Index

22.9%25.7%

19.7%115.2%

-7.1%7.3%5.8%

22.9%3.2%

12.9%10.3%

35.8%17.7%

4.9%15.1%

Percentage

International markets performance 2013 (Jan to Mar)

-5 0 5 10 15 20

Hang SengBSE Sensex

Straits TimesKarachi Index

ASPIDow Jones

FTSENikkei

SSE CompositeJKSE Composite

KLCI MalaysiaThai Index

VN Index - Ho Chi MinhMSCI Frontier Index

MSCI Emerging Index

-1.6%-3.0%

4.5%6.2%

1.6%10.9%

8.4%18.7%

-1.4%14.5%

-0.9%11.0%

18.6%7.0%

-2.2%

Percentage


Financial Review and Shareholder ReturnsCeylon Guardian Investment Trust PLC and its subsidiaries, Ceylon Investment PLC, Guardian Capital Partners PLC and Rubber Investment Trust Limited, and share of associate company Bukit Darah PLC reported a consolidated profit after tax of Rs. 2,291.4 mn for the year ended 31st March 2013, on consolidated revenue of Rs. 1,642.6 mn. The consolidated profit after tax and revenue recorded decreases of 10% and 21% respectively. Also the portfolio depreciation reduced from Rs. 8.2 bn to Rs. 2.0 bn during the period of review.

Shareholder Returns 31-3-2008 31-3-2009 31-3-2010 31-3-2011 31-3-2012 31-3-2013

ASPI 2,550 1,638 3,725 7,226 5,420 5,736

ASPI gain -8.6% -35.8% 127.4% 94.0% -25.0% 5.8%

ASPI gain CAGR 5Yr 17.6%

Start of the year - Quantity 1,000 1,000 1,000 850 4,335 4,335

- Market price per share 162.50 165.00 104.25 501.50 369.50 231.00

- Wealth 162,500 165,000 104,250 426,275 1,601,783 1,001,385

Dividends - Dividend per share 1.75 11.50 9.00 1.50 2.00 2.50

- Value 1,750 11,500 62,850 1,275 8,670 10,838

End of the year - Quantity 1,000 1,000 850 4,335 4,335 4,335

- Market price per share 165.00 104.25 501.50 369.50 231.00 161 .00

- Wealth 166,750 115,750 489,125 1,603,058 1,010,055 708,773

Annual Shareholder wealth gain % 2.6% -29.8% 369.2% 276.1% -36.9% -29.2%

Shareholder wealth gain 5Yr CAGR 40.8%

The total portfolio on market value basis is valued at Rs. 26 billion at the year end

Ceylon Guardian CSE-ASPI

2008

Rs.

2009 2010 2011 2012 2013

CAGR 5 yrs 40.8%Rs. 5,527

Rs. 2,249CAGR 5 yrs 17.6%

01,0002,0003,0004,0005,0006,0007,0008,0009,000

10,00011,00012,00013,00014,000

Value of Rs. 1,000/- invested in CSE & Ceylon Guardian

CGIT Market cap growth vs ASPI growth

CGIT Market Cap Indexed ASI Indexed

2008

Ind

ex C

om

po

site

2009 2010 2011 2012 2013

CAGR 5 yrs 33.3%

CAGR 5 yrs 17.6%

0100200300400500600700800900

1,0001,100


The company’s EPS decreased to Rs. 21.42 from Rs. 24.67, decrease of 13.0%. The value per share of the company amounts to Rs. 247.48 on a market price based net asset valuation given the statement of financial position is now stated at market value and taking into account IFRS methodology. Hence the share price theoretically must represent the net asset value per share; however the market price at Rs. 160 is trading at a discount of 35% as at 31st March 2013 from the intrinsic value.

The Company proposes a final dividend of Rs. 2.50 per share, an improvement on the dividend of Rs. 2.00 paid in 2011/12. The Company has been trying to maintain a consistent dividend policy to match shareholder expectations despite the vagaries of the stock market. The dividend yield of the company has increased to 1.6%, owing to the share price coming down. Shareholder wealth gain during the year was negative 29.2% attributed to the fall in share price with the market down turn.

Cash generated from operations amounted to Rs. 1.63 bn for the year, thus strengthening the cash position to Rs. 2.69 bn. This is an increase of Rs. 1.41 bn from the last financial year of Rs. 1.29 bn.

Total shareholder return for the year 2012/13 has been a negative 29.2% taking into account both share price drop and cash dividend received for the year. Taking a more longer term horizon the

shareholders of Ceylon Guardian has got a return of 40.8% p.a. on average over the last 5 years in comparison to market benchmark performance of 17.6%. Thus shareholder return in CGIT have grown well in excess of the market.

Investment Performance and StrategyThe Ceylon Guardian portfolio is segmented into long-term, trading, private equity and strategic investments. The total portfolio on market value basis is valued at Rs. 26.03 billion at the year end from Rs. 28.05 billion as at 31st March 2012, a depreciation of 7.2% against the benchmark All Share Index appreciation of 5.8% and Standard & Poor’s, SL 20 Index appreciation of 10.3% for the same period. The discretionary component of the portfolio is made up of the trading portfolio and long term portfolio, and the group company share holdings adds to it. The composite performance is detailed below:

Amounts in 000’ As at 31st March Change %

2013 2012

Discretionary portfolio (‘000) 11,610,552 10,520,121 10.4

Total Portfolio (‘000) 26,029,738 28,052,053 (7.2)

Benchmark - ASPI (Points) 5,735.7 5,420.2 5.8

Managers’ Review

Pro�t to shareholders vs Cash�ows genereated (Rs. 000’)

Pro�t attributable to shareholders Cash�ow from operating activities

2009 2010 2011 20132012

Rs

-500,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

NAV per share (Market value) vs Price per share (Rs.)

NAV per share at Market Value Price per share

2009 2010 2011 20132012

Rs

0

100

200

300

400

500

600

700

EPS vs Dividends (Rs.)

2009

Rs

2010 2011 20132012

0

5

10

15

20

25

30

35

40

EPS DPS


Listed EquityOur investment strategy is based on a fundamental bottom-up approach, representing a more micro level stock specific style. Company level valuations are done to determine the intrinsic value of the investee company and determine whether a stock is fairly valued in terms of intrinsic value. This would initiate a buy or sell on the universe of stocks covered by our research team. This is in contrast to some investors who take a top-down approach to investing, whereby macro level analysis is complemented with a view of market and sectors. However, when investing, we tend to look at the macro level picture as well, to determine the attractiveness of the external environment. We balance our portfolio regularly and transform from overvalued to undervalued stocks. Similarly, we make decisions when we totally get out of a stock and remain in cash until such time as we discover a potential undervalued company that fits our investment profile.

Our portfolio continues to lean heavily on the diversified sector, which is a proxy for tourism, bank & finance, food & beverages and the palm oil sectors. We also are bullish on the healthcare sector, which we believe will yield good returns taking a longer cycle with demand for private health care increasing. A neutral stance has been taken on the banking & finance sector; however we would look to build on it at opportune time at attractive

price levels. Portfolio concentration on a few sectors which has matched our investment style has limited us in terms of diversity and risk. However, our conviction in investing in what we know in terms of industry potential, growth, risk factors and competition would determine future portfolio performance.

During the year ended 31st March 2013, Ceylon Guardian Group made Rs. 1.57 bn of new investments and Rs. 2.77 bn of divestments. Hence, Ceylon Guardian has been a net seller in the market, whereby a cash position of Rs. 2.69 bn was built in keeping with our strategy of divesting when investee companies share prices go beyond intrinsic prices. Till such time of identifying undervalued stocks to invest in, we would earn interest income on excess cash.

Private EquityThe private equity asset class continued to pose a challenge to Ceylon Guardian total portfolio performance. However, we continue to see value in being in the asset class given its potential in the long term. The companies we have invested in did not yield returns to expectations due to knock on effects of the global economic downturn, rise in borrowing cost, proposed expansion plans being put on hold and poor investor sentiment. We continued to hold the existing investments on the PE side, since we remain confident of the business models. Two of our PE investments got listed via the IPO route. However we saw further value in holding our stakes.

Security Market Value Rs. mn

% of Portfolio

% Stake Held

BUKI. N0000 14,419 55.4% 20.0%JKH. N0000 3,379 13.0% 1.6%COMB. N0000 1,660 6.4% 1.9%CARG. N0000 706 2.7% 2.1%SAMP. N0000 326 1.2% 0.9%

Ceylon Guardian Group - sector exposure

Portfolio Exposure Market Weight

0 10 20 30 40 50 60 70

Hotels & Travels

Healthcare

Beverage, Food & Tobacco

Bank, Finance & Insurance

Diversi�ed

Construction & engineering

Manufacturing

Land & Property

Telecommunications

Palm Oil 4.6%61.7%

0.3%6.9%

0.1%1.5%

0.2%4.4%

0.8%1.7%

15.8%22.3%

4.2%18.3%

11.3%24.1%

3.0%1.7%

1.1%6.5%

Percentage

Ceylon Guardian Group - asset mix

Equity

Fixed IncomePrivate Equity

88%

10%2%


We evaluated many private equity investment opportunities in varying industries but most projects failed to achieve our internal set benchmarks. However, we remain confident that good projects would come our way in the future and our cautious approach to investing will pay dividends in the longer term. We have highlighted before in our reviews that PE investing is a riskier option thus posing many hurdles to companies such as Guardian Capital Partners in monitoring investments and forging relationships with our investee partners. Hence our style of PE investing is to be prudent since exit options are limited. We also believe in close engagement with our investee companies to add value where appropriate, either in improving the commercial aspects of their business or the governance and reporting aspects. In doing this, we draw upon valuable group wide learning we have gained from our parent conglomerate. Also, given the present negative sentiment on listed equities, the interest on deal flows on the private equity front too has dried up.

Profile of the Fund ManagersThe funds are managed by Guardian Fund Management Ltd (GFM), which is a fully owned subsidiary of Guardian Group and is registered with the Securities and Exchange Commission of Sri Lanka. It manages the largest listed equity fund in Sri Lanka and has built up its competencies in the field of portfolio management, research and support services. GFM manages the Sri Lanka Fund which was formerly known as the Regent Sri Lanka Fund, established in 1993. However the fund was re-launched in August 2010 to aggressively raise foreign capital. The company has extended its business model to capture retail funds by managing unit trust funds via a joint venture partnership with Acuity Partners (Private) Limited. We recognize the growth potential of the mutual fund industry in Sri Lanka and yet feel it’s at an infancy stage, and therefore foresee increasing savings to drive investment amongst Sri Lankans. Our joint venture Guardian Acuity Asset Management will address those needs and structure investment schemes to meet varying demand.

The fund management company has a professional outfit set up with effective compliance process, code of ethics & standards of professional conduct for employees. Hence, the structure has been set in place as a comprehensive fund management unit. Guardian Fund Management has expanded its operation by extending its fund management capabilities to companies outside the Group and built a portfolio of external clients consisting of provident funds, pension funds, corporate clients and a

Managers’ Review

Ceylon Guardian has been a net seller in the market, whereby a cash position of Rs. 2.69 bn was built in keeping with our strategy of divesting when investee companies share prices go beyond intrinsic prices.

Discretionary portfolio - 1 year (March 2012 to March 2013)

Ceylon Guardian - Discretionary ASPI S&P SL20

0

50

100

150

200

250

300

350

CAGR 11.6%

Ind

ex C

om

po

site CAGR 10.3%

CAGR 5.8%

80

90

100

110

120

Mar

12

Ap

r 12

May 1

2

Jun

12

Jul 1

2

Au

g 1

2

Sep

12

Oct

12

No

v 1

2

Dec

12

Jan

13

Feb

13

Mar

13

Total portfolio performance 5 year CAGR*

Ceylon Guardian - Total ASPI S&P SL20

0

50

100

150

200

250

300

350

400

450

Mar

Jun

e

Sep

Dec

Mar

Jun

e

Sep

Dec

Mar

Jun

e

Sep

Dec

Mar

Jun

e

Sep

Dec

Mar

Jun

e

Sep

Dec

Mar

2008/0908 2009/10 2010/11 2011/12 2012/13

CAGR 22.6%

CAGR 16.3%

CAGR 17.6%

CAGR (Compound annual growth rate)

Ind

ex C

om

po

site

*


Our Top Holdings as at 31st March 2013 Value of the holding

Rs.mn

Portfolio Weight

%

Price movement

%

Group Holdings

Bukit Darah PLC - An investment holding company with a 46% stake in Carson Cumberbatch PLC and exposure to oil palm plantations in Indonesia & Malaysia, and palm oil processing in the region

14,419 55.4% -17.8%

Group Holdings total value 14,419 55.4%

Non Group Holdings

John Keells Holdings - A diversified company with interest in ports & related activities, transportation, property development, tourism, financial services and consumer products in Sri Lanka

3,379 13.0% 21.8%

Commercial Bank of Ceylon - One of the largest commercial banks in Sri Lanka with a wide branch network of over 200 branches spread island wide

1,660 6.4% 15.3%

Cargills (Ceylon) - Leading player in the retail super market trade, commanding 50% of modern retail market share. Also has manufacturing operations in the food and beverage sector and operates the KFC franchise in Sri Lanka

706 2.7% -12.8%

Sampath Bank - Fastest growing private commercial bank in terms of assets and reach with over 200 branches. Aggressively repositioned itself to capture the growth opportunities in the SME sector

326 1.3% 28.5%

Aitken Spence Hotel Holdings - In the leisure business with exposure to both Sri Lanka & Maldives. Its total room capacity of 1,236 rooms (owned) has high end hotel properties

252 1.0% 5.7%

Central Finance - One of the oldest leasing companies in Sri Lanka with a strong balance sheet. Mostly concentrated on vehicle leasing segment of the business

239 0.9% 5.1%

Expolanka Holdings - One of the leading freight forwarders in the South Asian region, specialized in the garments/apparel vertical. In addition to freight forwarding the company has also diversified into air line GSA, travel agency, export of agro commodities, pharmaceutical and paper manufacturing

237 0.9% 9.7%

Distilleries Company - A group with a diversified business interest spanning across beverages, investments,telecommunication, plantation, logistics etc. Market leader in the alcohol business

236 0.9% 14.8%

Non Group Holdings total 7,289 28.0%

Top Holdings 21,708 83.4%

Other holdings 4,321 16.6%

Total Portfolio 26,029 100.0%

All Share index movement 31st March 12 to 31st March 13 5.8%


country fund. To enable the management of external funds, we have an independent compliance officer to monitor client interest and ensure that objectives are being met with the risk profile of the client. The AUM under this category has grown to a sizeable amount of Rs. 1.4 bn. The fund management company also built its capabilities in becoming a specialist in private equity, perfecting the style of evaluating, managing and structuring private equity deals. This is a long term business and very different to the investment expertise built in terms of listed investments.

In the year under review, we at GFM have expanded our horizons in specializing in the fixed income asset class. As a result, research capabilities have been enhanced in detailing macro economic variables and forecasting, to support the fixed income side of the business.

Our future viewInvestor sentiment at the Colombo bourse is likely to be mixed with strong interest from overseas and lukewarm interest on the domestic front. Aggressive foreign buying on heavyweight select counters has kept up a positive momentum. Retail interest is likely to come in when blue chip counters have rallied, to second tier stocks and when interest rate momentum dries up.

We believe the catalyst to market performance would be the underlying corporate earnings of the companies. We remain skeptical about the ability of the companies to record above average growth due to low GDP growth targets and falling exports against the background of cautious investing by the private sector, amidst volatile interest and exchange rates. Furthermore, higher energy costs and rising wage bills will have a knock-on effect on investor confidence. Looking forward, we feel that the equity space might be crowded out with the pipeline of debentures in the market, enticing investors to move funds to high yielding debentures given the perceived low risk return option. This will prompt an asset class shift in 2013.

The ASPI will test the 6000 technical barrier but for this to happen, the largest market cap stocks need to demonstrate performance. Also, the heavyweight banking sector needs to hold its ground. We do not foresee any major IPO’s entering the market in the coming months. However, alternate asset class of debt issuances will be active, given the new tax incentives making it very attractive to investors.

Despite uncertainties clouding the Colombo Bourse, we remain confident in the long term on the potential of equities. We at Ceylon Guardian do believe that equities offer above average returns in long cycles and hence are not reluctant to commit long term capital in good companies at attractive price levels. At present, the CSE is trading at 15.5 times, relatively valued in comparison to other Asian markets and frontier markets. However, on a 1 year forward earnings, the market is at a P/E ratio of 10.5 times and 2 year forward earnings is at a P/E of 9.0 times. Hence, we are of the view that the market offers value in the medium term.

Guardian Fund Management LtdInvestment Managers


Managers’ Review


Risk Management

Risk management is an integral part of our business, particularly since balancing risks against returns is a critical trade off decision we have to make everyday when it comes to making investment decisions. We recognise the importance of risk management and have built a comprehensive risk management process & structure that focuses on continuous identification and management of business risks. We have in place several measures to strengthen our risk management processes which are linked to our daily investment decisions. These include policies to mitigate business risks along with the upgrading of the support systems that enable easy monitoring and management of risks.

We believe that risk management is of paramount importance in safeguarding the interest of all stakeholders and have undertaken a comprehensive review to enhance the risk mitigating processes already set in place by Guardian Fund Management Limited, the investment managers of the Company.

We see risk management not as an effort to eliminate risk, but as managing risk given certain risk tolerance levels set by the company. Risks appropriate for a particular portfolio will be assessed against the risk preferences of the investor and overall portfolio strategy. Thus different portfolio’s within the Ceylon Guardian Group would have differing risk profiles. In light of new asset classes being added with the consolidation of Guardian Capital Partners PLC, we have extended our risk management process to cover our business in private equity investments. Furthermore, risk management also now covers managing retail regulated unit trust funds marketed by our joint venture Company Guardian Acuity Asset Management Limited.

The risk management structure in placeGuardian Fund Management (GFM) has been set up as an independent fund management company and the management of the portfolios of the Ceylon Guardian Group has been delegated to this company. The Board of Directors has formulated and approved an investment framework and control limits for GFM’s fund management operation. GFM’s management team is responsible for the recommendation and execution of investment decisions, during the course of which oversight and management of the business, financial and operational risks of the company come into play. A comprehensive risk identification and management framework is in place and is monitored consistently.

The Fund Manager (GFM) has been registered as an Investment Manager with the Securities and Exchange Commission of Sri Lanka since 2006 while Ceylon Guardian Investment Trust PLC and its subsidiary Ceylon Investment PLC have been registered as underwriters since 2009. GFM as well as the Company therefore, come under the purview of the capital market regulator and hence internal monitoring is done on a quarterly basis to ensure that the set regulations are adhered to. Audits by the Securities and Exchange Commission may also be carried out as required. Furthermore, as a listed company the Ceylon Guardian Investment Trust PLC and its listed subsidiary Ceylon Investment PLC & Guardian Capital Partners PLC conform to the listing rules and guidelines of the Colombo Stock Exchange.

Ceylon Guardian Group’s joint venture with Acuity Partners (Private) Limited to manage and market unit trusts was established with the launch of two mutual funds schemes approved by the Securities and Exchange Commission during the period of review. Hence the Group’s first initiative to reach the retail segment and offer products via local and international markets has added a new kind of risk to the business. These new risks have been recognized and incorporated into the risk management process.

The Board of Directors of the above Companies have ultimate responsibility for risk management. Hence the Boards are supported by an organization structure that covers the entire risk management framework through an independent Compliance Officer who functions within GFM, as well as the internal audit function of the Carson Cumberbatch Group to which the Ceylon Guardian Group companies belong. The Audit Committee of the Company has oversight over the financial reporting function of the company, the system of internal controls; as well as the audit, compliance and risk management processes. Further, an Investment Committee drawn from across the Carsons Group directorate provide advice and insights to the fund management team to further sharpen and refine their decision making process. This organization structure determines the objectives and policies of our risk management framework and promotes a culture of risk awareness and balanced risk-taking within the company.

Risk categoriesCeylon Guardian has identified and categorized its risks into four categories, namely macro environmental risks, portfolio risks, regulatory risks and operational risks. Given below is its approach in managing these key risk areas.


Macro environmental risksCountry risksCountry risk is applicable if an investment is made in a security issued by an entity subject to foreign laws or if transactions are entered into in markets in other jurisdictions. The sums invested and profits or returns accruing maybe subject to exchange control regulations, currency fluctuations, transaction costs & taxes and other actions that may be imposed by the government or policy making bodies of the said countries.

This risk is not currently applicable to the Guardian Group as our exposure at present is only to Sri Lankan investments. Hence no risk mitigating systems are required to be in place. However, since the capital account has now been liberalised to the extent of permitting approved overseas investments upto a certain value by listed companies, this is a new risk that we would have to build into our framework looking to the future.

Currency riskWhere investments are denominated in currencies other than our primary reference currency which is the Sri Lanka Rupee, and where the company is required to convert funds from one currency to another upon making investments, as well as in receiving the returns from those investments, the company is exposed to the risk of the foreign exchange parities moving against one’s investment.

This risk is not currently applicable to the Guardian Group as the current exposure of the Guardian group to investments denominated in foreign currencies is nil. Hence no risk mitigating processes are required; but looking ahead we need to prepare for this due to the gradual exchange control de-regulation that is now taking place. A detailed investment policy would be developed in the year ahead in gaining exposure to new markets.

The exposure however, indirectly exists when managing the Sri Lanka Fund and any portfolios of foreign investors. Here we take care to ensure that benchmark returns on such foreign currency dependent portfolios are met after currency conversions are executed. Our economic research would give us an understanding of the expectations on future currency movements.

Market risk - domesticThe broad definition of market risk is exposure to adverse movements in the securities markets for both equity and fixed income investments, which can result in value loss as well as variations in the anticipated returns from those securities. All financial institutions face market risks, created by changes in the macro environment related to political factors, national security, economic management and globalization influences which have an impact on systematic risk factors such as interest rates, currency parity, inflation, and availability of credit. Therefore, understanding market risks requires considering multiple dimensions and complexity in the macro environment.

Market risks are inherent in every security and are thus collectively considered at the portfolio level to take into account the asset allocation decisions of the portfolio. Thus market risks affecting a particular class of security are mitigated by switching to asset classes that are assessed to be less risky in a particular scenario.

All market participants such as Ceylon Guardian should ideally develop its business model taking into account exposure limits and parameters to sustain itself when faced with market risks that can affect portfolio values. The only mitigating process is to develop a sound research base to determine changing economic fundamentals of the country and determine the impact on equity vs fixed income investments and the prompt shifting of funds between asset classes. This is of vital importance in trading portfolio decisions where quick encashment of equities is carried out if macro indicators move adversely leading to a slow down in stock market activity.

The process of assessing market risks on investee companies also forms a vital part of our research process, where sensitivity of stock valuations to changes in economic indicators are monitored.

Market risk - international and externalThese risks cannot be diversified or mitigated by the company. We as investors in the equity market in Sri Lanka have to live with the risk of international happenings affecting our market. There is an indirect impact of risks of other markets to our domestic market as clearly seen in the past with the spiraling impacts of the global financial crisis spreading to other Western countries and impacting Asian countries and in turn Sri Lanka. In the global world of cross border trade and cross border investment flows, the impact of changing economic indicators and policy will be high for the domestic economy, especially in a country such as ours which is import dependent for vital commodities.

Risk Management


Hence in determining fund strategy we monitor key economic indicators such as interest rates, exchange rates, inflation, budget deficits of key economic super powers, as well as global commodity prices since Sri Lanka is a net importer of essential commodities. This enables the fund team to get a feel of changing international market dynamics and in turn relate that to local developments. The entry and exit of foreign investor interest on the local market is also determined by the macro economic trends prevailing in foreign markets and relative valuations of our market vis-a-vis developed and other comparative Asian markets. Information to monitor and interpret global developments in capital markets is vital to assess and mitigate this risk.

We believe that building expertise in foreign markets is of paramount importance going forward, with possible further liberalisation on the cards. In mitigating the risk we are looking to tie up or collaborate with foreign entities that have expertise in such markets and at such times when we have the ability to invest overseas.

Market risk - private equity As an asset class, private equity is not closely correlated with the public equity markets and, therefore, helps diversify market risk from a traditional investment portfolio consisting of publicly traded stocks and bonds. Private equity investments in Sri Lanka also offer exposure to new avenues of businesses that listed companies do not.

(a) Liquidity and valuation risk

Since private equity investments are unlisted, there is no official market price available for valuing the investment. However we monitor secondary market trades to track prices. This would not be an accurate guide as the volume of trades is a key factor in determining fair price. As we take fairly significant positions in private equity investee companies divestment of our stakes is more difficult, bringing a further element of illiquidity to our investments. Also liquidity risk is relatively higher given the longer holding period. It has been further restricted with a minimum lock in period being imposed at the time of the company going for listing via the IPO route, extending the private equity investors’ holding period.

(b) Exit risk

The exit from private equity investments can pose a risk whereby company cashflows are tied up due to limited exit options. . Finding ready buyers at fair valuation or even at a discount might be a challenge. However, risk mitigating

strategies are adopted by way of covenants to create multiple options of exit in the shareholder agreement. These take various forms including listing, buy back and sale to a third party.

Also further guidelines have been imposed by the SEC restricting private equity investors selling at the initial listing in order to protect minority investors. This limits the sale of stakes held by private equity investors who take higher risks in funding at the restructuring and growth stage of the investee companies.

(c) Monitoring risk

No regular performance reporting requirements are there for unlisted companies and hence private equity investors face the risk of not getting financial statements on a quarterly and yearly basis as is mandatory for listed securities. However we request the investee companies through our shareholder agreement to provide us quarterly & annual financial statements and we also schedule review meetings with management on a regular basis. A rapport with the management is built through time, along with a monitoring process.

(d) Governance risk Since unlisted companies don’t have a large minority shareholder base, there are no specified governance practices and a mechanism to enforce them since there is no regulatory framework governing investor interests.

However, we request investee companies through the shareholder agreement to get our approval for critical decisions such as divestment of major assets, acquisitions etc. We also require appointment of audit committees and adherence to disclosure requirements of listed companies, so that they may prepare themselves for eventual listing requirements. Where our stake in a company exceeds a particular threshold, we may request board representation to safeguard our interests as investors.

Our risk mitigating strategy for private equity is set in place via a shareholder agreement that is signed at the onset and the close relationship we build with investee companies from the time of investment. The performance monitoring of the investment is done by way of quarterly review meetings with the management of investee companies whereby financials and strategy are discussed. Also covenants are built into the shareholder agreement to protect investor interest in terms of clauses undertaking to list within certain time period, buy back options, borrowing limits and sale of major assets etc.


Portfolio RisksGeneral securities riskAny trading in securities carries inherent investment risks associated with the entity issuing those securities. In particular the price or value of any security can and does fluctuate and may even become valueless, resulting in possible loss not only of returns and profits, but even all or part of the principal sums invested in the case of a fixed income instrument. These risks arise as a result of the overall risks faced by the issuing entity which affects its ability to provide a return to the investors holding the securities issued by it. Particularly in the case of equities, past performance of any investment is not necessarily indicative of future performance. Our approach focuses on the fact that there is no substitute for fundamental security assessment. Our portfolio management and investment selection process is designed to maximize the risk/return tradeoff to our shareholders and we employ a bottom up investment selection process.

Our risk mitigating methodology is based on our internal research process that has added value over time to our choice of investments. Prospective investments are selected from fundamental analysis and contact with corporate management of the issuing company through company visits. Once an investment is made, a continuous process of monitoring the performance of that investment is adopted.

We manage the concentration risk arising from over exposure to one security by monitoring sector exposure and single company exposure as mitigation strategies. Further, private equity exposure limits at company and group level are monitored as another measure of managing risk. Loss limits are set to monitor stocks performing below their cost of acquisition to determine whether temporary capital erosion is a concern. This helps us mitigate the downside risk of any security in the portfolio.

In the case of private equity, Board representation in proportion to the investment for stakes over 10% is considered necessary while for smaller stakes, monitoring mechanisms to facilitate constant evaluation of the investment are built into the shareholder agreement.

Liquidity riskUnder certain market conditions, an investor may find it difficult or impossible to liquidate a position. This can occur when trading is suspended by the exchange on which a security is listed or when poor market sentiment dries up investor interest in a security. In addition, there may not be

a ready market for certain investments due to low levels of publicly traded quantities. Some investments will have to be held to maturity. Proper information for determining the value of certain investments may also not be available under such circumstances of low liquidity. However the strategy of holding big stakes might be a limiting factor when selling, if the stock is illiquid or in the case of a change in fundamentals.

We mitigate this risk by investing in companies with a reasonable free float and where securities are heavily traded. Also by limiting the portfolio’s buy list to highly traded blue chips, the risk of illiquidity can be mitigated. Good research will enable the fund team to identify changes in fundamentals and be proactive in investment decision making.

In instances where we are presented with a promising investment opportunity, being short of funds to pursue that opportunity, is also an extension of liquidity risk. A shortage may arise due to the inability to disposing existing positions with inferior risk/return trade off or the need to commit more money than available on hand to fully exploit the opportunity. To guard against this risk, we have arranged several overdraft facilities, which have not been utilized as yet. However close monitoring of interest rate movements and liquidation of positions to cover overdrafts after 3-6 months exposure would be the risk mitigation methods used to ensure low exposure to interest rate risks.

Performance volatility risks The composition of portfolio investments will determine the portfolio’s ability to out perform the market. If more volatile stocks that respond more than proportionately to market movements are selected, there is a likelihood that the portfolio will outperform the benchmark All Share Price Index in a growing market, while in a downturn it can under-perform the market. It is once again an attempt at balancing good performance with a certain risk tolerance in a volatile environment.

Measuring portfolio volatility through calculation of a portfolio beta is one method of keeping ourselves aware of the sensitivities of the portfolio. In the case of the long term portfolio, we would not attempt to handle market volatility by encashing stocks, but would rather attempt to hold into fundamentally strong stocks and ride out low performing cycles. For this, we ensure adequate cash generation by way of dividend and other income flows to keep our daily operations running smoothly while we ride out low market periods. On the other hand, in the case

Risk Management


of the trading portfolio, it is necessary to keep an even closer tab on market volatility, since it needs to regularly encash its profitable positions to remain a high performing portfolio.

Investment performance riskThis is the risk that the portfolio will not meet the investment objectives by over-performing the benchmark indices. This can adversely affect the reputation of the company and have impact in the future in terms of proven track record and confidence when raising money on future capital calls.

We mitigate this risk by setting a process which seeks to meet investment targets within stated risk parameters. Portfolio performance, valuations and risks are monitored by fund managers and managed on a regular basis.

Regulatory Risks Legal compliance The legal support services to Guardian Fund Management comes through the management services company of the Carson Cumberbatch Group, which ensures that the Guardian Group complies with all legal and regulatory provisions applicable to it. The legal function proactively identifies and advices GFM to set up appropriate systems and processes for legal and regulatory compliance in respect of all our investments and regulated activities. We also ensure legal and regulatory compliance in any foreign country that we operate in, and in such instances through legal counsel retained in those environments.

Proactive monitoring of the compliance process is followed and we see that our investments are made, and trades are executed in keeping with the Companies Act, SEC regulations, tax regulations, exchange control regulations and other applicable guidelines. The legal advisors of the Company also carry out periodic awareness programmes to educate all staff members.

Regulatory complianceThe operations of the Guardian Group come within the rules and regulations applicable to all market participants operating in the equity (listed and unlisted) and debt markets of Sri Lanka, as well as the regulatory provisions applicable to companies listed on the CSE and regulations applicable to securities trading set by the Securities and Exchange Commission of Sri Lanka.

Our systems and processes are structured to satisfy the criteria set by these regulations, and staff is constantly kept aware of the compliance needs imposed by these regulations. An independent compliance officer undertakes responsibility for maintaining a check on the overall compliance process and he is supported by the internal audit function of the Carsons Group. GFM, as an Investment Manager registered with the SEC, is also subject to further regulation by the capital markets regulator.

Operational RisksProfessionalism in operational dealingsOur fund managers emphasize professionalism in the manner in which the staff interacts with clients as well as market intermediaries, since it is vital for maintaining the company’s standing within the investment community. GFM staff has signed a Code of Ethics at the time of recruitment by the company, which lays down professional standards of conduct and dealing that is expected of staff. Structures to avoid conflicts of interest and compromising of best practices are set up. Staff education covers these areas of practice, and declarations by the staff members on compliance in personal equity trading are mandatory.

Compliance with SEC trading rules on insider trading, front running, market manipulation etc are checked by comparing trading statistics between portfolios and pre-approved personal transaction of employees, by the Compliance Officer.

Compliance with the Code of Ethics ensures that the conduct of fund managers and other staff do not violate the code of ethics for which employees are signatories. Some of the areas that have been highlighted include avoiding conflict of interest between portfolios through coordination of trades between portfolio managers within the company, as well as internal controls and audits to ensure monitoring & compliance.

Systems and process risksWe manage operational risks by identifying areas of risk, formulating plans for their management, promoting best practices, implementing internal controls and systems, and monitoring compliance with these internal guidelines for managing operational risks. Operational risks mainly cover the areas of system failure, continuity of decision making, dealing with contingencies and ensuring efficiency in operations and correct application of recommended management practices. Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.


In order to deal with unexpected contingencies, we have developed and implemented a business continuity plan, which looks after aspects such as staff deployment and systems backup in case of an unexpected disruption to the business. This business continuity plan forms a part of the Carsons Group’s business continuity plan, which is regularly tested.

The internal audit function of the Carsons Group, ensures the safeguarding of company assets and recommends process improvements in areas where process control failures are noted. Compliance with the investment objectives of each portfolio involves checking whether fund managers have adhered to the investment guidelines for each portfolio operating within set limits & not falling to prohibited investments; as well as monitoring portfolio performance against the benchmarks set. Further compliance with the operating process manual involves checking the application of proper internal controls such as segregation of duties, authority limits, approvals and that cash management processes are in order.

Systems support for the portfolio management software is made available through an annual maintenance agreement with the software vendor which ensures on line support for system issues and queries. At the same time the financial transaction processing and reporting system are based on an ERP system in use at Carsons Group level and as such back up support services for this system are available through the parent company’s management services company.

Staff risksA fund management operational unit requires qualified professionals with experience in the fund management industry. Knowledge of the operating mechanism of the market as well as its norms and ethics is of importance. We attempt to pass on this valuable local knowledge to our staff at all levels. Having diversity in the team, developing a strong second level, training and development opportunities, are standard practices of the industry, which we benchmark ourselves with. A performance related incentive scheme for the staff is in place and is being reviewed. The networking ability of key staff source deals is important in running a successful fund management operation by being shown both important buy side and sell side deals by brokers.

The staff of GFM are all professionally qualified with a track record of experience in the industry. A strong research team has been developed to complement the fund management operation and raise the standard of the investment decision making process. Staff training and development is identified as an important areas of concern, while retention is managed through a comprehensive reward structure & incentive scheme, opportunities for career progression and a culture of being HR oriented. Collectively these steps help us work towards having an effective succession plan in place.

Reputation riskAs a company which carries out a role of trust between itself and a client, it is vital to safeguard the good name and reputation of the business. Further, now being in the public domain through unit trusts, safeguarding reputation risk is of utmost importance.

Employees are communicated the right values from the inception both by formal communication and by example. Our screening process at interviews, attempts to select people of the right caliber, while training them for higher responsibility is ongoing. The extensive compliance process also ensures that the company does not take the risk of process failure that will lead to reputation risk. Maintaining good relationships with all industry and government stakeholders further helps manage any crisis situations that can damage reputation.

Guardian Fund Management LtdInvestment Managers


Risk Management


Annual Report of the Board of Directors on the Affairs of the Company

The details set out herein provide the pertinent information required by the Companies Act. No. 07 of 2007, Listing Rules of the Colombo Stock Exchange and recommended best accounting practices. The Annual Report was approved by the Board of Directors on 18th June 2013.

1. GENERAL The Directors have pleasure in presenting to the

shareholders their report together with the audited financial statements for the year ended 31st March 2013 of Ceylon Guardian Investment Trust PLC (the “Company”), a public limited liability company incorporated in Sri Lanka in 1951.

2. THE PRINCIPAL ACTIVITIES OF THE COMPANY

The principal activities of the Company and its subsidiaries are to act as specialised investment vehicles within the investment business to undertake listed, private equity and fixed income investments and engage in fund management activities. This will give the investors an opportunity to select an investment company to suit their risk appetite. Ceylon Guardian Investment Trust PLC would, as the parent entity, take-up diverse risks of all sub-segments of the investment business.

There were no significant changes in the nature of the principal activities of the Company and the Group during the financial year under review.

A list of subsidiaries and associate companies are provided in notes 20 and 21 to these financial statements.

3. REVIEW OF OPERATIONS AND FUTURE DEVELOPMENTS

The Chairman’s Statement and Managers’ Review on pages 2 to 14 provide an overall assessment of the business performance of the Company and the Group and its future developments. These reports together with the audited consolidated financial statements reflect the state of affairs of the Company and the Group.

4. FINANCIAL STATEMENTS The consolidated financial statements which comprise

the Statement of Comprehensive Income, Statement of Financial Position, Cash Flow Statement, Statement of Changes in Equity and Notes to the financial statements of the Company and the Group for the year ended 31st March 2013 are set out on pages 38 to 102. These financial statements do comply with the requirements of the Companies Act, No 07 of 2007.

4.1 Revenue The Company and the Group generated revenue of

Rs.624.4 mn and Rs. 1,642.6 mn (2012–Rs.1,335.9 mn and Rs. 2,081.3 mn) respectively. A detailed analysis of the revenue for the year is given in note 11 to the Financial Statements.

4.2 Financial results and appropriation An abridgement of the financial performance of the

Company and the Group is presented in the table below:

(In Rupees thousands) Group Company

For the year ended 31st March 2013 2012 2013 2012

Profit for the year 1,881,070 2,166,950 597,595 1,000,380Retained profit brought forward from previous year 7,179,079 4,979,589 2,984,476 2,105,214Profit available for appropriations 9,060,149 7,146,539 3,582,071 3,105,594From which the following appropriations/distributions have been made: Dividend paid (175,673) (131,755) (175,673) (131,755)Transfer to fair value through profit or loss financial assets reserve (54,440) 164,295 (9,395) 10,637Retained profit carried forward 8,830,036 7,179,079 3,397,003 2,984,476


4.3 Significant accounting policies For all periods up to and including the year ended

31st March 2012, the Company and the Group prepared its financial statements in accordance with Sri Lanka Accounting Standards which were in effect up to that date. Following the convergence of Sri Lanka Accounting Standards with the International Financial Reporting Standards (IFRSs), all existing/ new Sri Lanka Accounting Standards were prefixed as SLFRS and LKAS (referred to as “SLFRS” in these financial statements) to represent Sri Lanka Accounting Standards corresponding to International Financial Reporting Standards (IFRS) and Sri Lanka Accounting Standards corresponding to International Accounting Standards (IASs), respectively. Accordingly, the Company and the Group adopted these new Sri Lanka Accounting Standards applicable for financial periods commencing from 1st April 2012.

These are the Group’s first audited financial statements prepared in accordance with LKAS/ SLFRS and SLFRS 1 - “First time Adoption of Sri Lanka Accounting Standards” has been applied.

An explanation on how the transition to LKAS/ SLFRS has affected the reported financial position, financial performance and cash flows of the Company is provided in Note 36.

4.4 Reserves As at 31st March 2013, the total reserves stood at

Rs. 4,609.8 mn and Rs. 13,769.6 mn (2012-Rs 4,396.9 mn and Rs. 12,442.3 mn ) for the Company and the Group respectively.

The movements are set out in the Statement of Changes in Equity.

4.5 Fair value through profit or loss financial assets reserve

Any gains arising on change in fair value will be transferred from retained earnings to “Fair value through profit or loss financial assets reserve” as at the reporting date and any unrealised losses will be transferred from “Fair value through profit or loss financial assets reserve” to retained earnings to the extent that loss does not exceed the balance held in the said reserve as at that date.

Accordingly, an amount of Rs. 54.4 mn and Rs. 9.4 mn was transferred to (2012 - Rs.164.3 mn and Rs.10.6 mn was transferred from) “Fair value through profit or loss financial assets reserve” resulting from change in fair value of fair value through profit or loss financial assets for the Group and the Company respectively as shown in the statement of changes in equity on pages 40 to 41.

4.6 Available for sales financial assets reserve

During the year, a net negative movement of Rs.208.9 mn and Rs.187.0 mn (2012 - a net negative movement of Rs.1,835.3 mn and Rs. 3,035.4 mn) was reflected in the “Available for sale financial assets reserve” for the Company and the Group respectively, arising out of transfer of realized gains and adjustment on change in fair value of available for sale financial assets.

5. STATEMENTS OF DIRECTORS’ RESPONSIBILITIES

The responsibilities of the Directors, in relation to the financial statements are detailed in the following paragraphs, while the responsibilities of the Auditors are set out in the Independent Auditors’ Report.

According to the Companies Act, No. 07 of 2007 and Sri Lanka Accounting and Auditing Standards Act, No. 15 of 1995, Directors are required to prepare financial statements for each financial year, giving a true and fair view of the state of affairs of the Company and the Group as at the end of the financial year and of the performance for the said period.

The financial statements comprise of inter alia;

• aStatementoffinancialposition,whichpresents a true and fair view of the state of affairs of the company and its subsidiaries as at the end of the financial year:

• aStatementofcomprehensiveincomeofthecompany and its subsidiaries, which presents a true and fair view of the profit and loss and other comprehensive income/expense of the company and its subsidiaries for the financial year.



In preparing these financial statements, the Directors are required to ensure that:

• appropriateaccountingpolicieshavebeenselected and applied consistently, while material departures, if any, have been disclosed and explained;

• allapplicableaccountingstandardshavebeencomplied with;

• reasonableandprudentjudgmentsandestimates have been made; and

• providestheinformationrequiredbyandotherwise comply with the Colombo Stock Exchange.

The Directors are responsible for ensuring that the Company and the Group maintain sufficient accounting records to disclose with reasonable accuracy, the financial position of the Company and the group and for ensuring that the financial statements have been prepared and presented in accordance with the Sri Lanka Accounting and Auditing Standards Act, No. 15 of 1995 and meet with the requirements of the Companies Act, No. 07 of 2007.

They are also responsible for taking reasonable measures to safeguard the assets of the Company and the group and in this regard to give proper consideration to the establishment and effective operation of appropriate systems of internal control with a view to prevent, detect and rectify fraud and other irregularities.

These financial statements have been prepared on a going concern basis, since the Directors are of the view that the Company has adequate resources to continue in operation, for the foreseeable future from the date of signing these financial statements.

The Directors are also of the view that they have discharged their responsibilities as set out in this statement.

6. INDEPENDENT AUDITORS’ REPORT The Independent Auditors’ Report on the financial

statements is given on page 37 of the Annual Report.

7. INTERESTS REGISTER The Company maintains an Interests Register

conforming to the provisions of the Companies Act, No. 07 of 2007. All Directors have made declarations as provided for in Section 192(2) of the Companies Act aforesaid..

The relevant details as required by the Companies Act, No. 07 of 2007 have been entered in the Interests Register during the year under review.

The Interests Register is available for inspection as required under the Companies Act.

7.1 Remuneration of Directors Directors’ Remuneration for the financial year ended

31st March 2013 is given in Note 12 to the financial statements on pages 56 and 57 of the Annual Report.

7.2 Directors’ Interest in Contracts and Shares

Directors’ interests in transactions of the Company and the Group are disclosed in note 35 to these financial statements and have been declared at meetings of the Directors. The Directors have had no direct or indirect interest in contracts or proposed contracts in relation to the business of the Company, while they had the following interests in ordinary shares of the Company:

Directors No of Shares as at

31st March 2013

01st April 2012

Mr. I. Paulraj (Chairman) 255 255

Mr. D.C.R. Gunawardena 255 255

Mr. A. de Z. Gunasekera 255 255

Mr. V.M. Fernando - -

Mrs. M.A.R.C. Cooray - -

Mr. K. Selvanathan - -

Mr. C.W. Knight - -


8. DIRECTORS The names of the Directors who served during the

year are given under Corporate information provided in the inner back cover of the Annual Report.

8.1 Directors to retire by rotation In terms of Articles 89, 90 and 91 of the Articles of

Association of the Company, Messrs. V.M. Fernando and K. Selvanathan retire by rotation and being eligible offer themselves for re-election.

8.2 Appointment of Directors who are over 70 years of age

Upon the recommendation of the Nomination Committee and the Board, it is recommended that Messrs. I. Paulraj, A. de Z. Gunasekera and C.W. Knight who are over 70 years of age be re-appointed as Directors of the Company for a further period of one year from the conclusion of the Annual General Meeting and that the age limit stipulated in Section 210 of the Companies Act, No. 07 of 2007 shall not be applicable.

9. AUDITORS Company’s Auditors during the year under review

were Messrs. KPMG, Chartered Accountants.

A sum of Rs. 330,000/- and Rs. 1,065,000/- was paid to them by the Company and the Group respectively as audit fees for the year ended 31st March 2013 (2012 - Rs. 290,000/- and Rs.930,000/-). In addition to the above, the auditors were paid Rs. 63,000/- and Rs. 225,000/- (2012 - Rs. 50,000/- and Rs. 180,000/-) as audit related fees for the Company and the Group respectively during the year.

The retiring auditors have expressed their willingness to continue in office. A resolution to re-appoint them as auditors of the Company and authorizing the Directors to fix their remuneration will be proposed at the forthcoming Annual General Meeting.

The Audit Committee reviewed the appointment of the auditors, their effectiveness and its relationship with the Company and its subsidiaries, including the level of audit and non-audit fees paid to the auditor.

9.1 Auditors’ relationship or any interest with the Company

The Directors are satisfied that, based on written representations made by the independent auditors to the Board, the auditors do not have any interest with the Company and its subsidiaries that would impair their independence.

10. SIGNIFICANT EVENTS DURING THE YEAR

10.1 Company There were no significant events during the year.

10.2 Significant events during the year - Subsidiaries

During the year, GFM increased its stated capital by way of two right issues of shares for the shareholders existed as at 5th July 2012 and 25th March 2013. The said right issues resulted in new ordinary shares being issued to the amounts of 600,000 and 1,203,670 respectively, at a price of Rs. 25/- per share. Total funds raised by the said company amounted to Rs. 45,091,750/-.

11. RELATED PARTY TRANSACTIONS EXCEEDING 10% OF THE EQUITY OR 5% OF THE TOTAL ASSETS OF THE COMPANY

There were no transactions entered into by the Company in and its subsidiaries in their ordinary course of business, the value of which exceeded 10% of the shareholders’ equity or 5% of the total assets of the respective companies during the year.



12. CORPORATE GOVERNANCE The Board has ensured that the Company has

complied with the Corporate Governance Rules as per the Listing Rules of the Colombo Stock Exchange (CSE).

12.1 Board of Directors The following Directors held office as at the reporting

date and their brief profiles are given on pages 30 to 31 of the Annual Report.

Directors Executive Non Executive

Independent

Mr. I. Paulraj (Chairman)* -

Mr. D.C.R. Gunawardena- -

Mr. A. de Z. Gunasekera ** -

Mr. V.M. Fernando *** -

Mrs. M.A.R.C. Cooray **** -

Mr. K. Selvanathan - -

Mr. C.W. Knight -

Each of the Non-Executive Directors of the Company have submitted a signed declaration on Independence/Non-Independence as per Rule 7.10.2.b. of the Listing Rules of the Colombo Stock Exchange. The said declarations were tabled at the Board Meeting held on 18th June 2013, in order to enable the Board of Directors to determine the Independence/Non-Independence of the Non-Executive Directors.

* The Board has determined that Mr. I. Paulraj is an Independent Director in spite of being on the Board for more than 9 years and being a Director of Ceylon Investment PLC, in which a majority of the other Directors of the Board are also Directors, since he is not directly involved in the management of the Company.

** The Board has determined that Mr. A. de Z. Gunasekera is an Independent Director in spite of being on the Board for more than 9 years and being a Director of Ceylon Investment PLC, in which a majority of the other Directors of the Board are also Directors, since he is not directly involved in the management of the Company.

*** The Board has determined that Mr. V.M. Fernando is an Independent Director in spite of being on the Board for more than 9 years and being a Director of Ceylon Investment PLC, in which a majority of the other Directors of the Board are also Directors, since he is not directly involved in the management of the Company.

**** The Board has determined that Mrs. M.A.R.C. Cooray is an Independent Director in spite of being a Director of Ceylon Investment PLC, in which a majority of the other Directors of the Board are also Directors, since she is not directly involved in the management of the Company.

12.2 Remuneration Committee As per Rule 7.10.5 of the Listing Rules of the Colombo

Stock Exchange, the Remuneration Committee of Carson Cumberbatch PLC (CCPLC), the parent company, functions as the Remuneration Committee of the Company and comprises of the following members;

Remuneration Committee members

Executive/Non Executive/ Independent

Mr. I. Paulraj (Chairman) Non Executive/ Independent Director of CCPLC

Mr. M. Moonesinghe Non Executive/ Independent Director of CCPLC

Mr. D.C.R. Gunawardena Non Executive Director of CCPLC

The committee has formulated a remuneration policy based on market and industry factors and individual performance for all Group companies.

Aggregated remuneration paid to the Non-Executive Directors of the Company is disclosed under note 12 on pages 56 and 57 of this Annual Report.

Executive Directors are not compensated for their role on the Board.


12.3 Audit Committee As per Rule 7.10.6 of the Listing Rules of the Colombo

Stock Exchange, the Audit Committee of Carson Cumberbatch PLC (CCPLC), the parent Company, functions as the Audit Committee of the Company and comprises of the following members;

Audit Committee members Executive/Non Executive/ Independent

Mr. V.P. Malalasekera (Chairman)

Non Executive/ Independent Director of CCPLC

Mr. D.C.R. Gunawardena Non Executive Director of CCPLC

Mr. F. Mohideen Non Executive Director of CCPLC

The Audit Committee Report is given on pages 34 to 35 of this Annual Report.

12.4 Directors Meetings Attendance Four (04) Board meetings were convened during the

financial year and the attendance of the Directors was as follows:

Directors Meetings attended (out of 4)

Mr. I. Paulraj (Chairman) 4

Mr. D.C.R.Gunawardena 3

Mr. A. de Z. Gunasekera 4

Mr. V.M. Fernando 2

Mrs. M.A.R.C. Cooray 4

Mr. K. Selvanathan 4

Mr. C.W. Knight 3

13. NOMINATION COMMITTEE The Company formed a Nomination Committee which

also functions as the Nomination Committee for some of its Subsidiaries.

The said Nomination Committee comprises of the following members;

Nomination Committee members

Executive/Non Executive/ Independent

Mr. I. Paulraj (Chairman) Non-Executive/Independent Director

Mrs. M.A.R.C. Cooray Non-Executive/Independent Director

Mr. D.C.R. Gunawardena Non-Executive Director

The primary objective of the Nomination Committee is to recommend the appointments of new Directors to the Board and the Nominations of Members to represent the Company in Group Companies/Investee Companies.

14. INTERNAL CONTROL AND RISK MANAGEMENT

The ultimate responsibility to establish, monitor and review a Group-wide internal control system rests with the Board of Directors. The intensity, depth and the tolerance limits for each component of the internal control system would be based on the weight of the element of risk imposed on the sustenance of the business by the respective area of operation. Whilst a strong internal control system would mitigate the crystallization of risk elements to a greater extent, employment of external support structures would also be necessary based on the risk assessments made thereon. Effective maintenance of internal controls, risk identification and mitigation is handed down to the respective members of senior management within the guidelines of benchmark policies, procedures and authority limits clearly laid down.

Group Internal Audit, whose scope of scrutiny is entirely driven by the grading of the risk involved will be monitoring and providing the feedback to the management and the respective Audit Committees.



Regular submission of compliance and internal solvency certificates vouched by the heads of the respective divisions as a mandatory agenda item keeps the Directors abreast of the health of the Company and the Group resource base and governance requirements.

This allows the Board to have total control of the fulfillment of governance requirements by providing opportunity to take timely preventive action in case of potential deterioration of status quo. More detailed description of the risk management strategies of the Company is given on pages 15 to 20.

15. HUMAN RESOURCES The management of the Group’s investments is

undertaken by Guardian Fund Management Limited (GFM) and management support services are provided by Carsons Management Services (Private) Limited (CMSL).

GFM continued to invest in human capital development and implement effective human resource practices and policies to develop and build an efficient and effective workforce aligned around new business priorities of the Group and to ensure that its employees are developing the skills and knowledge required for the future success of the Group, centered around the core competencies required by an investment house.

The number of persons employed by GFM as at 31st March 2013 was 16 (31st March 2012 – 14).

16. EQUITABLE TREATMENT TO SHAREHOLDERS

The Company endeavours at all times to ensure equitable treatment to all shareholders.

17. DIVIDENDS Subject to the approval of the shareholders at the

Annual General Meeting, the Board of Directors recommend a first & final dividend of Rs. 2/50 per ordinary share and deferred share for the year ended 31st March 2013.

The dividend payable has not been accounted for until it is approved at the forthcoming Annual General Meeting.

The details of the dividends paid during the year are set out in note 17 to the financial statements.

18. SOLVENCY TEST Taking into account the said distribution, the Directors

are satisfied that the Company would meet the Solvency Test requirement under Section 56(2) of the Companies Act, No.07 of 2007 immediately after the distribution. The Company’s Auditors, Messrs. KPMG, Chartered Accountants have issued a Certificate of Solvency confirming same.

19. STATED CAPITAL The Stated Capital of the Company as at 31st March

2013 was Rs. 953,166,933/- comprising of 82,096,719 ordinary shares and 5,739,770 deferred shares. The movement in Stated Capital of the Company is given in note 26 to the financial statements.

There was no change in the Stated Capital of the Company during the year.

20. INVESTMENTS Investments of the Company and the Group

represents, investment in subsidiaries, investment in associate company, investment in jointly controlled entity, available for sale financial assets and fair value through profit or loss financial assets.

Investment in subsidiaries are given in note 20 on page 63.

Investment in the associate company is given in detail through 21.1 on page 64.

Investment in jointly controlled entity is given in detail through note 21.2 on page 65.

Investments in available for sale financial assets at fair value are disclosed in Note 22, comprises those investments which are held for a longer tenure, usually over 3-5 years. The fair value of investments in available for sale financial assets were Rs.7,993.6 mn and Rs.2,555.6 mn (2012 – Rs. 8,465.5 mn and Rs.2,832.1 mn) for the Group and the Company respectively, as explained in pages 66 to 73.

Investment in fair value through profit or loss financial assets are carried at its fair value and represents the portfolio of assets managed for active trading, the details of which are given in note 24 in pages 74 to 77. The carrying value of the said portfolio of assets as at 31st March 2013 was Rs.947.6 mn and Rs. 147.5 mn (2012 – Rs. 782.4 mn and Rs.149.1 mn) for Group and the Company respectively.


21. CAPITAL EXPENDITURE The details of capital expenditure of the Group is as

follows.

In Rupees thousands Group

2013 2012

Property plant and equipment 1448 1,239

Intangible assets - 4,470

22. STATUTORY PAYMENTS The Directors to the best of their knowledge and

belief were satisfied that all statutory dues have been paid up to date or have been provided for in the financial statements.

23. GOING CONCERN The Board of Directors is satisfied that the Company

has adequate resources to continue its operations in the foreseeable future. Accordingly, the financial statements are prepared based on the going concern concept.


24. EVENTS AFTER THE REPORTING PERIOD

Subsequent to the reporting date, no circumstances have arisen, which would require adjustments to or disclosures in the financial statements, other than those disclosed in note 33 to the financial statements.

25. CONTINGENT LIABILITIES AND CAPITAL COMMITMENT

The contingent liabilities and commitments made on account of capital expenditure as at 31st March 2013 are given in note 34 to the financial statements.

26. CORPORATE DONATIONS There were no donations granted during the year.

27. SHARE INFORMATION The details relating to earnings, net assets, market

value per share and information on share trading are given on pages 103 to 104 and 110 to 111 of the Annual Report.


29. ANNUAL REPORT The Board of Directors on 18th June 2013 approved

the consolidated financial statements, together with the reviews which forms part of the Annual Report. The appropriate number of copies of the Report would be submitted to the Colombo Stock Exchange, Sri Lanka Accounting and Auditing Standard Monitoring Board and the Registrar of Companies within the given time frames.

30. ANNUAL GENERAL MEETING 61st Annual General Meeting of the Company

will be held on Tuesday, the 30th day of July 2013 at 11.00 a.m. at The Kingsbury Hotel, “The Balmoral” Ballroom, No. 48, Janadhipathi Mawatha, Colombo 1. The Notice of the Annual General Meeting is on page 112 of the Annual Report.

28. TWENTY MAJOR SHAREHOLDERS The parent company, Carson Cumberbatch PLC holds 67.15% of the total ordinary shares in issue of the Company.

Twenty Major Shareholders with comparatives

As at 31st March 2013 2012

Name of Shareholders No. of ordinary shares

% No. of ordinary shares

%

Carson Cumberbatch PLC A/C No.2 55,130,831 67.15 55,130,831 67.15

Thurston Investments Limited 5,278,174 6.43 5,278,174 6.43

Est. of Late Mr. M. Radhakrishnan(Deceased) 2,033,186 2.48 2,033,186 2.48

GF Capital Global Limited 1,572,962 1.92 1,572,962 1.92

Employees Trust Fund Board 1,260,750 1.54 1,133,770 1.38

Miss. G.I.A. De Silva 868,275 1.06 868,275 1.06

Mr. G.J.W. De Silva 867,900 1.06 867,900 1.06

Mrs. M.L. De Silva 857,616 1.04 857,616 1.04

Mr. K.C. Vignarajah 609,473 0.74 609,473 0.74

Perpetual Capital (Private) Limited 573,360 0.70 457,071 0.56

Miss. R.H. Abdulhussein 391,906 0.48 485,983 0.59

The Ceylon Desiccated Coconut and Oil Company (Pvt) Ltd. 382,438 0.47 382,438 0.47

Waldock Mackenzie Ltd/ Mr. M.A.N. Yoosufali 362,040 0.44 359,232 0.44

Miss. G.N.A. De Silva 360,493 0.44 360,493 0.44

Bartleet Finance PLC 315,000 0.38 315,000 0.38

DFCC Bank A/C 1 275,000 0.33 246,931 0.30

Sri Lanka Insurance Corporation Ltd-General Fund 272,100 0.33 272,100 0.33

Miss. R.E.W. Jayasuriya 264,894 0.32 132,447 0.16

Mr. O.D. Liyanage 263,609 0.32 263,609 0.32

J.B. Cocoshell (Pvt) Ltd. 259,687 0.32 230,822 0.28

Signed on behalf of the Board,

(Sgd). (Sgd). I. Paulraj D.C.R. Gunawardena Chairman Director

(Sgd). K.D. de Silva(Mrs.) Director Carsons Management Services (Private) Limited Secretaries

Colombo 18th June 2013


Profiles of the Directors

ISRAEL PAULRAJ Israel Paulraj is the Chairman of Ceylon Investment PLC, Guardian Capital Partners PLC and Rubber Investment Trust Limited. He serves as a Director of Carson Cumberbatch PLC and of several of the subsidiary companies within the Carsons Group.

He served as Past Chairman of the Federation of Exporters Associations of Sri Lanka and The Coconut Products Traders Association. He was a member of the Executive Committee of The Ceylon Chamber of Commerce and National Chamber of Commerce of Sri Lanka Shippers Council. He served on the Board of Arbitrators of The Ceylon Chamber of Commerce. He has served as Hony. General Secretary of the Central Council of Social Services, Hony. Treasurer of The Christian Conference in Asia, President of the Church of Ceylon Youth Movement and Hony. Treasurer of the National Christian Council of Sri Lanka. He has also served as Chairman of the Incorporated Trustees of the Church of Ceylon.

He also served on the Presidential Task Force on Non-Traditional Export and Import Competitive Agriculture set up by President R.Premadasa. He also served as Chairman of the Ecumenical Loan Fund of Sri Lanka and on its International Board in Geneva. He was a member of the Commercial Law Reform Commission and has served on the Parliamentary Consultative Committee on Internal and International Trade.

He holds a Bachelor of Law Degree and an Executive Diploma in Business Administration.

CHANDIMA GUNAWARDENAChandima Gunawardena serves as a Non-Independent, Non-Executive Director of Carson Cumberbatch PLC and in most of the Carsons Group Companies in Sri Lanka and overseas. He is also a Director of Bukit Darah PLC. Since assuming Non-Executive status in the group in 2011, he serves as an advisor to the group’s Strategic Planning and Management forums in Sri Lanka and serves on Board Committees including the Audit Committees of the Group in Sri Lanka and overseas covering all operating sectors of the group.

Mr.Gunawardena has over four decades of experience in varied fields of business and commercial activities and has held senior positions in Corporate, Mercantile and State Institutions. He was appointed to the Carsons Group Directorate in 1990.

He has served on the Management Committee of The Ceylon Chamber of Commerce for over 10 years and was a Founder Council member of the Sri Lanka Institute of Directors (SLID) and continued to serve in the council for over 10 years.

He is a Fellow of the Chartered Institute of Management Accountants, UK.

ASOKA DE Z. GUNASEKERAAsoka de Z. Gunasekera is a Director of Ceylon Investment PLC. Also serves as alternate Director to Mr. I.W Senanayake (Chairman) of IWS Holdings (Pvt) Ltd and in most of its group companies. Past Chairman of the National Chamber of Commerce of Sri Lanka and Past President of the Ceylon National Chamber of Industries. He is a Past International Director and a Board Appointee of Lions Clubs International and was also a Member of the National Police Commission of Sri Lanka. He served as Legal Advisor and Secretary to the Ministry of Posts and Telecommunications; Co-ordinating Secretary to the Ministry of Power and Energy and Ministry of Highways and was the Acting Secretary to the Ministry of Policy Planning.

He is an Attorney - at- Law & Notary Public.


MANILAL FERNANDOManilal Fernando is a Director of Ceylon Investment PLC. He is currently the Chairman of Shipping Cargo Logistics (Pvt) Limited, Hyundai Lanka (Pvt) Limited and Dynamic AV Technologies (Pvt) Limited. Director of Pirarus (Pvt) Limited, Aitken Spence & Co. PLC, Sri Lankan Airlines Limited and Stallion Plantations (Pvt) Limited. He is also a Trustee of Joseph Fraser Memorial Hospital.

He has been a Past President of the Football Federation of Sri Lanka from 1979 to 1999. He is the Vice President of the National Olympic Committee of Sri Lanka from 1990 to date. He is an Attorney - at- Law & Notary Public.

ROSE COORAYRose Cooray is a Director of Ceylon Investment PLC and Hatton National Bank PLC. She is a retired Deputy Governor of the Central Bank of Sri Lanka where she served for over 35 years.

On release from the Central Bank, she had served at the Ministry of Finance in the capacity of Director General Fiscal Policy and Economic Affairs Department for nearly 6 years, represented the Government on the Boards of DFCC Bank, Sri Lanka Institute of Information Technology, Sri Lanka Telecom, Ceylon Electricity Board, De La Rue Currency and Security Print (Pvt) Ltd, Export Development Board, National Housing and Development Authority and represented the Monetary Board on West Coast Power (Pvt) Ltd.

She has functioned as the Vice Chairperson of the Institute of Bankers of Sri Lanka for 5 years and has served on a number of Committees at national level covering a variety of subjects representing the Ministry of Finance and the Central Bank. She has also represented the Central Bank and the Ministry of Finance at various international meetings/seminars.

Mrs.Cooray has been involved extensively in policy making and implementing projects and programmes, especially in the area of regional development and microfinance. She has wide experience in negotiating loans with multilateral and other donors as well as bilateral trade agreements on behalf of the Government. Her articles/papers have been published in professional journals.

KRISHNA SELVANATHANKrishna Selvanathan is a Director of Carsons Management Services (Private) Limited, Lion Brewery (Ceylon) PLC and the Investment Sector Companies of the Carsons Group. He is also a Director of Carlsberg India (Pvt) Ltd.

He holds a BA Degree in Accounting & Finance and Business Administration from the University of Kent, U.K.

WILLIAM KNIGHTWilliam Knight is the Chairman of China Chaintek United Limited, an AIM listed Chinese domestic logistics company. He is also Chairman of the JP Morgan Chinese Investment Trust Plc, a London listed Investment Trust and of Abingwoth Bio Ventures II, a Luxembourg domiciled early-stage life science Investment Company. His current board positions include the Fidelity Asian Values Trust Plc, Axis Fiduciary and the Smith Tan Phoenix Asia Fund. He also chairs a public equity investment fund for India. In recent years he has served as a board member of specialist funds investing in: India, Korea, Mauritius, Portugal, Russia, Thailand and Vietnam respectively and he chaired EIH Plc, an Aim listed fund of funds.

He originally specialised in financing major capital projects at Lazard Brothers. 18 years were then spent in various senior positions in the Lloyds Bank group, based in London, where he became Managing Director of Lloyds Bank Fund Management, in Hong Kong, where he established an office to provide merchant banking services across the whole of Asia and in Portugal where he ran the Bank of London and South America’s long-standing Portuguese operations. Since 1991, he has held a wide range of non-executive positions as an independent director or adviser based in London for investment-oriented companies. He is a co-founder of Emerisque Brands, an East/West management buy-in company and he is a senior member of the advisory board of Homestrings LLP, an investment platform for the world’s Diaspora.


Profiles of the Directors of subsidiary Companies not on the Board of Ceylon Guardian Investment Trust PLC

AJITH WEERATUNGE Ajith Weeratunge is a Director of the Carson Cumberbatch Group’s Management Company - Carsons Management Services (Private) Limited and holds the position of Head of Finance. He is also a Director of Equity One PLC and Equity Two PLC, as well as the Group’s Investment Holding Sector - Ceylon Investment PLC and Rubber Investment Trust Limited. He counts over 32 years of finance related experience in the mercantile sector and has held positions in Lanka Walltile Ltd., Union Apparels (Pvt) Ltd., John Keells Holdings PLC, Phoenix Industries (Pvt) Ltd and Ceylon Beverage Holdings PLC. He is a Fellow member of the Chartered Institute of Management Accountants of UK.

RUVINI FERNANDORuvini Fernando is the Director and CEO of Guardian Fund Management Limited, the Fund Management Company of the Carsons Group and a Director of The Sri Lanka Fund - a foreign incorporated country fund managed by Guardian Fund Management Limited. Director of Guardian Acuity Asset Management Limited, a joint venture company of the Guardian Group, responsible for operating and managing licensed unit trusts. Represents the Guardian Group on the Board of Durdans Medical and Surgical Hospital (Private) Limited, in which the Group has an equity stake.

Counts over 23 years work experience in the fields of Management Accounting, Finance, Research Analysis, Strategic Planning and Investments, within the Hayleys Group and Carson Cumberbatch Group. Was a former visiting faculty member of the Postgraduate Institute of Management in the MBA programme. Member of the Regaining Sri Lanka Tourism Steering Committee, a key policy making forum of the government from January 2002 to January 2004. Fellow of the Chartered Institute of Management Accountants, UK and the Association of Chartered Certified Accountants, UK. Has a Masters Degree in Business Administration from the Postgraduate Institute of Management (PIM), University of Sri Jayawardenapura, Sri Lanka.

NILOO JAYATILAKENiloo Jayatilake is a Director of Guardian Fund Management Limited and heads the portfolio management division of the management company. Alternate Director in Durdans Medical and Surgical Hospitals Limited and Guardian Acuity Asset Management Limited. Counts over 17 years experience in the investments field. Prior to joining the Carsons Group worked as Fund Manager at The Unit Trust Management Company Limited, managers of Ceybank Unit Trust Funds in Sri Lanka.

Is an Associate Member of the Chartered Institute of Management Accountants, UK and Associate Member of the Institute of Chartered Secretaries and Administrators, UK.

Profiles of the Directors


Management Team Profile

RUVINI FERNANDO Refer page 32

NILOO JAYATILAKERefer page 32

THARINDA JAYAWARDANAHead of Research of Guardian Fund Management Ltd. He has over 6 years experience in investment research. Prior to joining the Carson Cumberbatch Group he worked as a financial analyst at JB Securities Ltd. He is a CFA Charter Holder and an Associate Member of the Chartered Institute of Management Accountants (UK). He also has a first class B.Sc (Hons) in Finance from the University of Sri Jayewardenepura.

SUMITH PERERAFund Manager, Guardian Fund Management Ltd. Has over 7 years of experience in the field of Asset Management working as a Fund Manager for CAAM Saudi Fransi LLC (Kingdom of Saudi Arabia), Investment Analyst for Eagle NDB Fund Management (Sri Lanka) and as a Financial Analyst for John Keells Stockbrokers (Sri Lanka). He holds a Bsc (Hons) in Economics and Business Finance from Brunel University, UK and is an Associate Member of the Chartered Institute of Management Accountants.

VIBATH WIJESINGHEFinancial Controller of Carsons Management Services (Private) Limited the management support service provider to the Carson Cumberbatch Group. He began his career at M/s. KPMG, Sri Lanka and has over ten years of experience in the fields of finance, corporate finance and auditing. He joined Carson Cumberbatch Group in 2004. He is an Associate Member of the Institute of Chartered Accountants of Sri Lanka, Chartered Institute of Management Accountants (UK) and of the Society of Certified Management Accountants of Sri Lanka. He also holds a Masters degree in Business Administration from Postgraduate Institute of Management – University of Sri Jayewardenepura.

PASAN ABEYGUNAWARDANEHead of Portfolio Operations, Guardian Fund Management Ltd. Has over 9 years experience in the field of Asset Management working as a Operations Manager for CAAM Saudi Fransi LLC (Kingdom of Saudi Arabia) and Eagle NDB Fund Management (Sri Lanka). He holds a Bsc (Gen) in Applied Science from Sri Jayawardenapura University and is an Associate Member of the Chartered Institute of Management Accountants.

GAYAN KARUNARATHNASector Accountant for the Investment, Real Estate and Leisure sectors. Commenced career at Ernst & Young, Chartered Accountants and progressed with PricewaterhouseCoopers, Chartered Accountants, prior to joining Carsons Group. Counts over seven years of experience in auditing, accounting and financial reporting. He is an Associate Member of the Institute of Chartered Accountants of Sri Lanka, Chartered Institute of Management Accountants, UK and a member of CPA Australia. He also holds a Bachelors Degree specializing in finance from the University of Colombo, Sri Lanka.

ASANKA JAYASEKERAManager Research, Guardian Fund Management Ltd. He has over 6 years of experience in investment research. Prior to joining the Carson Cumberbatch Group, he worked as a financial analyst at JB Securities Ltd. He is an associate member of the Chartered Institute of Management Accountants (UK) and holds a B.Sc degree from the University of Sri Jayewardenepura specializing in Finance.

LAKMAL WICKRAMAARACHCHIAccountant, Guardian Fund Management Limited. Commenced career at KPMG, Chartered Accountants, prior to joining the Carsons Group. Counts over six years of experience in auditing and accounting. Associate Member of the Institute of Chartered Accountants of Sri Lanka. Holds a B.Sc. Finance (Special) Degree from the University of Sri Jayewardenepura, Sri Lanka.


Audit Committee Report

As provided by the Colombo Stock Exchange Listing Rules, the Audit Committee of Carson Cumberbatch PLC (CCPLC)-the Parent Company is the Audit Committee of the Company.

The purpose of the Audit Committee of CCPLC is as follows :

To assist the Board of Directors in fulfilling its oversight responsibilities for the financial reporting process, the system of internal control over financial reporting, the audit process and the Company’s process for monitoring compliance with laws and regulations, Company policies and procedures and the code of conduct.

To ensure that the internal audit activity is well managed, so that it adds value to the organization by being objective in providing relevant assurance, contributing to the effectiveness and efficiency of governance, risk management and control processes.

The members of the Audit Committee are as follows :

Audit Committee Members Executive/Non-Executive/Independent

Mr. Vijaya Malalasekera (Chairman)

Non-Executive, Independent (CCPLC)

Mr. Chandima Gunawardena

Non-Executive (CCPLC)

Mr. Faiz Mohideen Non-Executive, Independent (CCPLC)

Mr.Vijaya Malalasekera is a Non-Executive, Independent Director of CCPLC and a former Director of Ceylon Tobacco Company PLC.

Mr.Chandima Gunawardena is a Non-Executive Director of CCPLC and in most of its Group Companies. He is a Fellow of the Chartered Institute of Management Accountants, U.K.

Mr.Faiz Mohideen, a Non-Executive, Independent Director of CCPLC, was the former Deputy Secretary to the Treasury and a former Director of Bank of Ceylon and Securities and Exchange Commission of Sri Lanka.

The audit aspects of Ceylon Guardian Investment Trust PLC are conducted within the Agenda of CCPLC-Audit Committee.

CCPLC-Audit Committee held 05 Meetings during the financial year to discuss matters relating to the Company and the attendance of the Members of the Audit Committee was as follows :

Meetings attended (out of five)

Mr. Vijaya Malalasekera (Chairman) 05

Mr. Chandima Gunawardena 05

Mr. Faiz Mohideen 05

The Chief Executive Officer-Investment Sector, Financial Controller-Carsons Management Services (Private) Limited-Managers, internal auditors and senior management staff members also attended the Audit Committee Meetings by invitation.

The Committee met the external auditors twice during the year, i.e. to discuss the audit scope and to deliberate the draft Financial Report and Accounts. The Audit Committee also met the external auditors, Messrs.KPMG and discussed the draft Financial Report and Accounts, without the management being present.

In accordance with the audit plan formulated and approved by the Audit Committee for the financial year 2012/2013, the Group Internal Audit (GIA) carried out four detailed audits on the Investment Sector companies.

The findings and contents of the Group Internal Audit reports have been discussed with the management and subsequently the audit reports were circulated to the Audit Committee and to the management.

The objectives of the GIA work was to have an independent review of the system of internal controls as established by the management, its adequacy and integrity vis-à-vis objectives served and to determine the extent of adherence to the controls by staff responsible for the function and to take corrective/preventive action where necessary.

The interim financial statements of Ceylon Guardian Investment Trust PLC have been reviewed by the Audit Committee Members at Audit Committee Meetings.

For all periods up to and including the year ended 31st March 2012, the Company and the Group prepared their financial statements in accordance with the Sri Lanka Accounting Standards, which were in effect up to that date. Following the convergence of the Sri Lanka Accounting Standards with the International Financial Reporting


Standards (IFRSs), all existing/new Sri Lanka Accounting Standards were prefixed as SLFRS and LKAS (referred to as “SLFRS” in these financial statements) and with effect from the financial periods beginning on or after 1st January 2012, it was mandatory for the Company and the Group to comply with the requirements of the said new / revised Sri Lanka Accounting Standards (LKAS/SLFRS). The adoption of new/revised accounting framework required amendments to the basis of recognition, measurement and disclosure of transactions and balances in the financial statements of the Company and the Group, which are duly addressed in the financial statements for the year ended 31st March 2013. The transition and the resultant impact arising from the adoption of new/revised accounting standards on the financial statements of the Company and the Group were audited by Messrs.KPMG, Chartered Accountants, the Auditors, during the year end audit.

The draft financial statements of Ceylon Guardian Investment Trust PLC for the year ended 31st March 2013 were reviewed at a Meeting of the Audit Committee, together with the External Auditors, Messrs. KPMG, prior to release of same to the Regulatory Authorities and to the shareholders. The Audit Committee was provided with confirmations and declarations as required, by the Managers, Carsons Management Services (Private) Limited that the said financial statements were prepared in accordance with the Sri Lanka Accounting Standards and the information required by the Companies Act No. 7 of 2007 therein and presented a true and fair view of the Company’s state of affairs as at that date and the Company’s activities during the year under review.

The Audit Committee has determined that Messrs.KPMG, Chartered Accountants, Auditors were independent on the basis that they did not carry out any management related functions of the Company.

The Audit Committee has concurred to recommend to the Board of Directors the re-appointment of Messrs. KPMG, Chartered Accountants, as Auditors for the financial year ending 31st March 2014, subject to the approval of the shareholders of Ceylon Guardian Investment Trust PLC at the Annual General Meeting.

(Sgd). V.P. MalalasekeraChairman – Audit CommitteeCarson Cumberbatch PLC

18th June 2013


Independent Auditors’ Report 37

Statement of Comprehensive Income 38

Statement of Financial Position 39

Statement of Changes in Equity 40

Cash Flow Statement 42

Notes to the Financial Statements 43

Five Year Summary 103

FINANCIAL CALENDAR

Financial year end 31st March 2013

61st Annual General Meeting to be held on 30th July 2013

ANNOUNCEMENT OF RESULTS

Interim Financial Statements published in terms of the Listing Rules of the

Colombo Stock Exchange

1st Quarter ended 30th June 2012 14th August 2012

2nd Quarter ended 30th September 2012 14th November 2012

3rd Quarter ended 31st December 2012 14th February 2013

4th Quarter ended 31st March 2013 31st May 2013

Financial Information


Independent Auditors’ Report

TO THE SHAREHOLDERS OF CEYLON GUARDIAN INVESTMENT TRUST PLCReport on the Financial StatementsWe have audited the accompanying financial statements of Ceylon Guardian Investment Trust PLC (“the Company”) and the consolidated financial statements of the Company and its subsidiaries (“the Group”), which comprise the statement of financial position as at March 31, 2013, the statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information set out on pages 38 to 102 of the annual 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.

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, 2013 and the financial statements give a true and fair view of the financial position of the Company as at March 31, 2013, and of its financial performance and its cash flow 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, 2013, and of its financial performance and its cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

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

Chartered Accountants



Statement of Comprehensive IncomeIn Rupees Thousands

Group Company

For the year ended 31st March Note 2013 2012 2013 2012

Revenue 11 1,642,599 2,081,300 624,423 1,335,949 Impairment loss on available for sale financial assets (53,440) (559,563) (10,760) (272,386)Net change in fair value of fair value through profit or loss financial assets 91,450 (117,758) 10,562 (22,789)Profit on investment activities 1,680,609 1,403,979 624,225 1,040,774 Administrative and other operating expenses (119,851) (114,459) (27,715) (31,616)Profit from operations 12 1,560,758 1,289,520 596,510 1,009,158 Net finance expense 13 (971) (5,189) (541) (1,683)Profit from operations after net finance expense 1,559,787 1,284,331 595,969 1,007,475 Share of profit of equity accounted investees net of tax 14 755,198 1,269,924 - - Profit before taxation 2,314,985 2,554,255 595,969 1,007,475 Income tax (expenses)/reversal 15 (23,579) (15,696) 1,626 (7,095)Profit for the year 2,291,406 2,538,559 597,595 1,000,380

Other comprehensive incomeNet change in fair value of available for sale financial assets 843,083 (1,132,039) 96,980 (544,034)Foreign currency differences arising from the translation of available for sale financial assets (5,580) 31,640 (2,790) 15,820 Transfer of realized gains on available for sale financial assets (1,006,826) (2,472,859) (303,143) (1,307,132)Share of other comprehensive income/(expense) of equity accounted investees net of tax (232,604) 144,867 - - Other comprehensive expense for the year (401,927) (3,428,391) (208,953) (1,835,346)

Total comprehensive income/(expense) for the year 1,889,479 (889,832) 388,642 (834,966)

Profit attributable to:Equity holders of the parent 1,881,070 2,166,950 - - Non controlling interest 410,336 371,609 - - 2,291,406 2,538,559 - -

Total comprehensive income/(expense) attributable to:Equity holders of the parent 1,502,966 (749,441) - -Non controlling interest 386,513 (140,391) - - 1,889,479 (889,832) - -

Earnings per share (Rs.) 16 21.42 24.67 6.80 11.39 Dividend per share (Rs.)* 17 2.50 2.00 2.50 2.00

The notes to the financial statements from pages 43 to 102 form an integral part of these financial statements.

* Dividend per share is based on the proposed/ interim dividends.


Group Company

As at 31st March Note 2013 2012 1 April 2011 2013 2012 1 April 2011

ASSETSNon-Current AssetsProperty, plant and equipment 18 3,203 4,667 6,447 - - - Intangible assets including goodwill 19 236,562 239,194 237,199 - - - Investment in subsidiaries 20 - - - 1,971,532 1,926,441 1,926,422 Investment in equity accounted investees 21 5,908,805 5,432,526 4,048,831 35,000 20,000 - Available for sale financial assets 22 7,993,560 8,465,479 11,985,226 2,555,610 2,832,091 4,605,100 Deferred tax assets 30 10,404 - - 10,404 - - Total Non-Current Assets 14,152,534 14,141,866 16,277,703 4,572,546 4,778,532 6,531,522

Current AssetsTrade and other receivables 23 149,351 32,091 55,465 41,202 16,950 7,741 Current tax recoverable 14,724 20,813 14,981 13,349 14,881 10,728 Fair value through profit or loss financial assets 24 947,594 782,421 1,163,989 147,453 149,078 101,324 Cash and cash equivalents 25 2,697,471 1,288,241 321,823 830,362 403,072 10,649 Total Current Assets 3,809,140 2,123,566 1,556,258 1,032,366 583,981 130,442 Total Assets 17,961,674 16,265,432 17,833,961 5,604,912 5,362,513 6,661,964

EQUITY AND LIABILITIES EquityStated capital 26 953,167 953,167 953,167 953,167 953,167 953,167 Capital reserves 27 1,526,715 1,717,775 1,598,708 208,660 208,660 208,660 Revenue reserves 28 12,242,862 10,724,509 11,724,772 4,401,167 4,188,198 5,154,919 Total equity attributable to equity holders of the parent 14,722,744 13,395,451 14,276,647 5,562,994 5,350,025 6,316,746

Non controlling interest 3,146,008 2,803,388 2,978,917 - - - Total Equity 17,868,752 16,198,839 17,255,564 5,562,994 5,350,025 6,316,746

Non-Current LiabilitiesEmployee benefits 29 5,425 3,564 1,720 - - - Deferred tax liabilities 30 - 792 1,896 - - - Total Non-Current Liabilities 5,425 4,356 3,616 - - -

Current LiabilitiesTrade and other payables 31 48,240 46,178 30,318 14,291 12,488 9,480 Current tax liabilities 11,184 39 3,489 - - - Bank overdrafts 25 28,073 16,020 540,974 27,627 - 335,738 Total Current Liabilities 87,497 62,237 574,781 41,918 12,488 345,218 Total Liabilities 92,922 66,593 578,397 41,918 12,488 345,218 Total Equity and Liabilities 17,961,674 16,265,432 17,833,961 5,604,912 5,362,513 6,661,964

Net assets per ordinary/deferred share - Book value (Rs.) 167.62 152.50 162.54 63.33 60.91 71.91 Net assets per ordinary/deferred share - Market value (Rs.) 247.48 265.88 349.05 213.71 232.14 387.84

The notes to the financial statements from pages 43 to 102 form an integral part of these financial statements.

I certify that these Financial Statements have been prepared in compliance with the requirements of the Companies Act No. 07 of 2007.

(Sgd).V.R. WijesingheFinancial ControllerCarsons Management Services (Private) Limited.

The Board of Directors responsible for the preparation and presentation of these financial statements.

Approved & Signed on behalf of the Investment Managers, Approved & Signed on behalf of the Board,

(Sgd). (Sgd). (Sgd).W.Y.R. Fernando I. Paulraj D.C.R. GunawardenaDirector Chairman DirectorGuardian Fund Management Limited


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32,6

68

4,97

9,58

9 14

,276

,647

2,

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917

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t for

the

year

-

- -

- -

- -

- 2,

166,

950

2,16

6,95

0 37

1,60

9 2,

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- -

(18)

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- -

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1,88

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410,

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- -

- 63

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- -

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(2

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(401

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)To

tal c

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inco

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(exp

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-

- -

637

(191

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(187

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) -

1,88

1,07

0 1,

502,

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386,

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1,88

9,47

9 Di

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- -

- -

- -

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- -

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54,4

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- -

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3 95

3,16

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316,

741

637

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1,53

2 54

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3,

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32,6

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6 14

,722

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The

note

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to 10

2 fo

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f the

se fi

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ures

in b

rack

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educ

tions

.


Stat

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Capi

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eser

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Reve

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Rese

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thro

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pr

ofit

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fin

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finan

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Com

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Bala

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2,10

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- -

- 1,

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380

1,00

0,38

0 O

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(1,8

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(1,8

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- 1,

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(834

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)D

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- -

(131

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) (1

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Bala

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12

953,

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984,

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5,35

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5 Pr

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- -

- -

- -

597,5

95

597,5

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Oth

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(exp

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-

- -

- (2

08,9

53)

- -

(208

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)To

tal c

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(exp

ense

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the

year

-

- -

- (2

08,9

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- 59

7,595

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8,64

2 D

ivid

end

paid

for 2

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- -

- -

- -

(175

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) (1

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- -

9,39

5 -

- (9

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Bala

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013

953,

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7,805

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0,85

5 9,

395

979,

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14,9

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3,39

7,003

5,

562,

994

Th

e n

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s fr

om

pag

es 4

3 to

102

fo

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n in

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ral p

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of

thes

e fi

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sta

tem

ents

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Fig

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s in

bra

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s in

dic

ate

ded

uct

ion

s.


Group Company

For the year ended 31st March Note 2013 2012 2013 2012

Cash flows from operating activitiesProfit before taxation 2,314,985 2,554,255 595,969 1,007,475

Adjustments for:Share of profit of equity accounted investees net of tax (755,198) (1,269,924) - - Depreciation on property, plant and equipment 18 2,887 3,019 - - Amortization of intangible assets 19 2,632 2,475 - - Loss on write off of property, plant and equipment 25 - - -Provision for employee benefits 29 1,861 1,844 - - Net finance expense 13 971 5,189 541 1,683 Dividend received from associate company 21.1 61,315 51,096 - - Impairment of available for sale financial assets 53,440 559,563 10,760 272,386 Net change in fair value of fair value through profit or loss financial assets (91,450) 117,758 (10,562) 22,789 Operating profit before working capital changes 1,591,468 2,025,275 596,708 1,304,333 (Increase)/decrease in trade and other receivables (117,260) 23,374 (24,252) (9,209)Net (increase)/decrease in investments 175,433 (349,264) 68,955 (405,266)Increase/(decrease) in trade and other payables 2,568 5,041 (302) 827 Cash generated from operations 1,652,209 1,704,426 641,109 890,685 Income tax paid (17,541) (26,082) (7,246) (11,248)Net cash generated from operating activities 1,634,668 1,678,344 633,863 879,437

Cash flows from investing activitiesAcquisition of property, plant and equipment 18 (1,448) (1,239) - - Acquisition of intangible assets 19 - (4,470) - - Investment in subsidiaries - (19) (45,091) (19) Investment in jointly controlled entity (15,000) (20,000) (15,000) (20,000)Net cash used in investing activities (16,448) (25,728) (60,091) (20,019)

Cash flows from financing activitiesDividend paid (173,568) (129,574) (173,568) (129,574)Dividend paid to minority shareholders (46,504) (26,481) - - Net finance expense paid (971) (5,189) (541) (1,683)Net cash used in financing activities (221,043) (161,244) (174,109) (131,257)

Net increase in cash and cash equivalents 1,397,177 1,491,372 399,663 728,161 Cash and cash equivalents at the beginning of the year 1,272,221 (219,151) 403,072 (325,089)Cash and cash equivalents at the end of the year 25 2,669,398 1,272,221 802,735 403,072

The notes from pages 43 to 102 form an integral part of these financial statements.

Figures in brackets indicate deductions.

Cash Flow StatementIn Rupees Thousands


1. Reporting entity Ceylon Guardian Investment Trust PLC (the

‘Company’) is a company domiciled in Sri Lanka. The shares of the Company have a primary listing on the Colombo Stock Exchange.

The registered office of the Company is located at No. 61, Janadhipathi Mawatha, Colombo 1.

The Consolidated financial statements of the Company as at and for the year ended 31st March 2013 comprise the Company and its subsidiaries (together referred to as the ‘Group’ and individually as ‘Group entities’) and the Group’s interest in associate and jointly controlled entity.

The principal activities of the Company and its subsidiaries are to act as specialised investment vehicles to undertake listed, private equity and fixed income investments and to engage in fund management activities.

The Group has two listed subsidiaries, listed on the Colombo Stock Exchange, out of the four subsidiaries, the associate company and the jointly controlled entity set out in notes 20 and 21 pages 63 and 65 to the financial statements.

There were no significant changes in the nature of the principal activities of the Company and the Group during the financial year under review.

The Group had 16 employees at the end of the financial year (2012 - 14). The Company had no employees of its own as at the reporting date (2012 - Nil).

2. Basis of preparation (a) Statement of compliance

The financial statements of the Company and the Group comprise the statement of financial position, statement of comprehensive income, statement of changes in equity and cash flows together with the notes to the financial statements.

The consolidated financial statements have been prepared in accordance with Sri Lanka Accounting Standards (LKAS/SLFRS) laid down by the Institute of Chartered Accountants of Sri Lanka and the requirements of Companies Act No. 7 of 2007.

For all periods up to and including the year ended 31st March 2012, the Group and the Company prepared their financial statements in accordance with Sri Lanka Accounting Standards which were in effect up to that date. Following the convergence of Sri Lanka Accounting Standards with the International Financial Reporting Standards (IFRSs), all existing/ new Sri Lanka Accounting Standards were prefixed as SLFRS and LKAS (referred to as “SLFRS” in these financial statements) to represent Sri Lanka Accounting Standards corresponding to International Financial Reporting Standards and Sri Lanka Accounting Standards corresponding to International Accounting Standards (IASs), respectively. Accordingly, the Group and the Company adopted these new Sri Lanka Accounting Standards (which are commonly known as SLFRSs) applicable for financial periods commencing from 1st April 2012.

These are the Group’s first consolidated financial statements prepared in accordance with LKAS/SLFRS and SLFRS1 “First time adoption of Sri Lanka Accounting Standards” has been applied.

The explanation how the transition to LKAS/ SLFRS has affected the reported financial position , financial performance and cashflows of the Group is provided in Note 36 to the financial statements.

The consolidated financial statements were authorised for issue by the Board of Directors on 18th June 2013.

(b) Basis of measurement The consolidated financial statements have been

prepared on the historical cost basis and applied consistently with no adjustments being made for inflationary factors affecting the financial statements, except for the following material items in the statement of financial position:

• financialinstrumentsclassifiedasfairvaluethrough profit or loss are measured at fair value;

• availableforsalefinancialassetsaremeasuredatfair value.

Notes to the Financial Statements


• non-derivativefinancialinstrumentsclassifiedas ‘Loans and receivables’ and ‘Other financial liabilities’ measured at amortised cost.

• definedbenefitobligationsaremeasuredatitspresent value, based on an actuarial valuation as explained in Note 29.

These financial statements have been prepared on the basis that the Company and the Group would continue as a going concern for the foreseeable future.

(c) Functional and presentation currency Items included in the financial statements of each of

the Group’s entities are measured using the currency of the primary economic environment in which the entities operate (‘the functional currency’).

The consolidated financial statements are presented in Sri Lankan Rupees, which is the Company’s functional and presentation currency.

(d) Use of estimates and judgements

The preparation of the consolidated financial statements in conformity with LKAS/SLFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

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

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year are included in the following notes:

• AssessmentofImpairment-Keyassumptionsused in discounted cash flow projections

The Group assesses at each reporting date whether there is objective evidence that an asset or portfolio of assets is impaired. The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell.

In assessing value in use, the estimated future cash flows are discounted to present value using appropriate discount rates that reflects the current market assessments of the time value of money and risks specific to the asset.

• Fairvaluemeasurementofavailableforsalefinancial assets

The Group assess at each reporting date, the fair value of the available for sale financial assets, which comprise of both quoted securities and unquoted securities. The fair value measurement of such unquoted securities are primarily based on estimated future cash flows, discounted to present value using appropriate discount rates that reflects the current market assessments of the time value of money and risks specific to the asset.

At the point of realization, the amounts realized may differ from such reported values.

• Deferredtaxation-utilizationoftaxlosses

Deferred tax assets are recognized for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Management judgement is required to determine the amount of deferred tax assets that can be recognized, based upon the level of future taxable profits together with future tax planning strategies.

• Definedbenefitplans

The assessment of the liability of defined benefit obligations involves a significant element of assumptions; including discount rates, future salary increases, mortality rates and future pension increases and due to the long-term nature of these plans, such estimates are subject to uncertainty.

• Currenttaxation

Current tax liabilities are provided for in the financial statements applying the relevant tax statutes and regulations which the management believes reflect the actual liability. There can be



instances where the stand taken by the Group on transactions is contested by revenue authorities. Any additional costs on account of these issues are accounted for as a tax expense at the point the liability is confirmed on any group entity.

Materiality and aggregation

Each material class of similar items is presented in aggregate in the financial statements. Items of dissimilar nature or function are presented separately unless they are immaterial.

3. Significant accounting policies The accounting policies set out below have been

applied consistently to all periods presented in the financial statements of the Group and in preparing the opening LKAS/SLFRS Statement of financial position at 1st April 2011 for the purposes of the transition to LKAS/SLFRSs, unless otherwise indicated.

(a) Basis of consolidation

i. Business combinations

Business combinations are accounted for using the acquisition method as at the acquisition date – i.e. when control is transferred to the Group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that are currently exercisable.

The Group measures goodwill at the acquisition date as:

• thefairvalueoftheconsiderationtransferred;plus

• therecognisedamountofanynon-controllinginterests in the acquiree; plus

• ifthebusinesscombinationisachievedinstages,the fair value of the pre-existing equity interest in the acquiree; less

• thenetrecognisedamount(generallyfairvalue)of the identifiable assets acquired and liabilities assumed.

When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss.

Transactions costs, other than those associated with the issue of debt securities that the Group incurs in connection with a business combination are expensed as incurred. Any contingent consideration payable is measured at fair value at the acquisition date. If the contingent consideration is classified as equity, then it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes in the fair value of the contingent consideration are recognised in profit or loss.

ii. Non-controlling interests

For each business combination, the Group elects to measure any non-controlling interests in the acquiree either:

• atfairvalue;or

• attheirproportionateshareoftheacquiree’sidentifiable net assets, which are generally at fair value.

Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as transactions with owners in their capacity as owners. Adjustments to non-controlling interests are based on a proportionate amount of the net assets of the subsidiary.

No adjustments are made to goodwill and no gain or loss is recognised in profit or loss.

iii. Subsidiaries

Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.


Adjustments required to the accounting policies of subsidiaries have been changed where ever necessary to align them with the policies adopted by the Group.

In the Company’s financial statements, investments in subsidiaries are carried at cost less impairment if any, in net recoverable value.

The consolidated financial statements are prepared to a common financial year end of 31st March.

iv. Loss of control

On the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost.

Subsequently that retained interest is accounted for as an equity-accounted investee or as an available for sale financial asset depending on the level of influence retained.

v. Investments in associates and jointly controlled entities (equity-accounted investees)

Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20 percent and 50 percent of the voting power of another entity. Jointly controlled entities are those entities over whose activities the Group has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions.

Investments in associates and jointly controlled entities are accounted for under the equity method and are recognised initially at cost. The cost of the investment includes transaction costs.

The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of equity-accounted

investees, after adjustments to align the accounting policies with those of the Group, from the date that significant influence or joint control commences until the date that significant influence or joint control ceases.

When the Group’s share of losses exceeds its interest in an equity-accounted investee, the carrying amount of the investment, including any long-term interests that form part thereof, is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.

vi. Transactions eliminated on consolidation

Intra-group balances and 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.

vii. Financial year end

All companies in the Group have a common financial year which ends on 31st March, except the following.

Company Nature of relationship

Financial year end

Guardian Acuity Asset Management Limited

Jointly controlled entity

31st December

(b) Foreign currency

i. Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate as at that date.



The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the year, adjusted for effective interest and payments during the year, and the amortised cost in foreign currency translated at the exchange rate at the end of the year.

Non-monetary assets and liabilities that are measured at fair value in a foreign currency are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

Foreign currency differences arising on retranslation are generally recognised in profit or loss. However, foreign currency differences arising from the retranslation of available for sale equity investments (except on impairment in which case foreign currency differences that have been recognised in other comprehensive income are reclassified to profit or loss) are recognised in other comprehensive income:

(c) Financial instruments

i. Non-derivative financial assets

The Group initially recognises loans and receivables on the date that they are originated. All other financial assets (including assets designated as at fair value through profit or loss) are recognised initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of the instrument.

The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in such transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability.

Financial assets and liabilities are offset and the net amount is presented in the statement of financial position when, and only when, the Group has a legal

right to offset the amounts and intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.

The Group classifies non-derivative financial assets into the following categories: financial assets at fair value through profit or loss, loans and receivables and available-for-sale financial assets. The Group do not hold financial assets categorized in to “held to maturity” classification.

Financial assets at fair value through profit or loss

A financial asset is classified as at fair value through profit or loss if it is classified as held-for trading or is designated as such on initial recognition. Financial assets are designated as at fair value through profit or loss if the Group manages such investments and makes purchase and sale decisions based on their fair value in accordance with the Group’s documented risk management or investment strategy. Attributable 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 changes therein, which takes into account any dividend income, are recognised in profit or loss.

Financial assets classified as held-for-trading comprise short-term sovereign debt securities actively managed by the Group’s treasury department with due consideration on short-term liquidity needs.

Financial assets designated as at fair value through profit or loss comprise equity securities that otherwise would have been classified as available for sale.

Loans and receivables

Loans 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 comprise cash and cash equivalents and trade and other receivables.


Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits with maturities of three months or less from the acquisition date that are subject to an insignificant risk of changes in their fair value, and are used by the Group in the management of its short-term commitments.

Available for sale financial assets

Available for sale financial assets are non-derivative financial assets that are designated as available for sale or are not classified in any of the above categories of financial assets. Available for sale financial assets are recognised initially at fair value plus any directly attributable transaction costs.

Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses and foreign currency differences on available for sale debt instruments, are recognised in other comprehensive income and presented in the “available for sale financial asset reserve” in equity. When an investment is derecognised, the gain or loss accumulated in equity is reclassified to profit or loss.

Available-for-sale financial assets comprise equity securities and debt securities.

ii. Non-derivative financial liabilities

The Group initially recognises subordinated liabilities on the date that they are originated. All other financial liabilities are recognised initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of the instrument.

The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire.

The Group classifies non-derivative financial liabilities into the other financial liabilities category. Such financial liabilities are recognised initially at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method.

Other financial liabilities comprise loans and borrowings, bank overdrafts and trade and other payables.

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

iii. Stated capital

Ordinary shares and deferred shares

Ordinary shares and deferred shares are classified as equity. Costs attributable to the issue of ordinary shares and deferred shares are recognised as an expense.

(d) Property, plant and equipment

i. Recognition and measurement

All items of property, plant and equipment are initially recorded at cost.

Subsequent to the initial recognition of the asset at cost, property, plant and equipment are carried at cost less accumulated depreciation thereon and accumulated impairment losses, if any.

Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the following:

• thecostofmaterialsanddirectlabour;

• anyothercostsdirectlyattributabletobringingthe assets to a working condition for their intended use;

• whentheGrouphasanobligationtoremovethe asset or restore the site, an estimate of the costs of dismantling and removing the items and restoring the site on which they are located; and

• capitalisedborrowingcosts.

Cost also includes transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.



When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

ii. Subsequent costs

Subsequent expenditure is capitalised only when it is probable that the future economic benefits associated with the expenditure will flow to the Group. Ongoing repairs and maintenance are expensed as incurred.

iii. Depreciation

Items of property, plant and equipment are depreciated from the date they are available for use or, in respect of self-constructed assets, from the date that the asset is completed and ready for use.

Depreciation is calculated to write off the cost of items of property, plant and equipment less their estimated residual values using the straight-line basis over their estimated useful lives. Depreciation is generally recognised in profit or loss, unless the amount is included in the carrying amount of another asset.

The estimated useful lives for the current and comparative years of significant items of property, plant and equipment are as follows:

Class of asset No of years

Motor vehicles 4-5

Furniture and fittings 5-10

Computers equipment 3-5

Office equipment 5-10

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

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

iv. Disposal

The gains or losses arising on disposal or retirement of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of the property, plant and equipment and recognized net within Other income in the statement of comprehensive income.

(e) Intangible assets and goodwill i. Goodwill

Goodwill that arises on the acquisition of subsidiaries is presented within intangible assets.

Subsequent measurement

Goodwill is measured at cost less accumulated impairment losses. In respect of equity accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment, and any impairment loss is allocated to the carrying amount of the equity accounted investee as a whole.

ii. Software

All computer software costs incurred, licensed for use by the Group, which are not integrally related to associated hardware, which can be clearly identified, reliably measured and is probable that they will lead to future economic benefits, are included in the statement of financial position under the category intangible assets and carried at cost less accumulated amortization and any accumulated impairment losses. These costs are amortised to the statement of comprehensive income using the straight line method over a period of 3 to 10 years.

Subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure are recognised in profit or loss as incurred.

(f) Impairment

i. Non-derivative financial assets

A financial asset not classified as at fair value through profit or loss, including an interest in an equity-accounted investee, is assessed at each reporting date to determine whether there is objective evidence that


it is impaired. A financial asset is impaired if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset, and that loss event(s) had an impact on the estimated future cash flows of that asset that can be estimated reliably.

Objective evidence that financial assets are impaired includes default or delinquency by a debtor, restructuring of an amount due to the Group on terms that the Group would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, adverse changes in the payment status of borrowers or issuers, economic conditions that correlate with defaults or the disappearance of an active market for a security. In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment. The Group considers a decline of 20 percent to be significant and a period of 9 months to be prolonged.

Financial assets measured at amortised cost

The Group considers evidence of impairment for financial assets measured at amortised cost (loans and receivables) at both a specific asset and collective level. All individually significant assets are assessed for specific impairment. Those found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Assets that are not individually significant are collectively assessed for impairment by grouping together assets with similar risk characteristics.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account against loans and receivables. Interest on the impaired asset continues to be recognised. When an event occurring after the impairment was recognised 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, and presented in the fair value reserve in equity, to profit or loss. The cumulative loss that is removed from other comprehensive income and recognised in 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.

If, in a subsequent period, the fair value of an impaired available for sale debt security increases and the increase can be related objectively to an event occurring after the impairment loss was recognised, then the impairment loss is reversed, with the amount of the reversal recognised in profit or loss. However, any subsequent recovery in the fair value of an impaired available for sale equity security is recognised in other comprehensive income.

An impairment loss in respect of an equity-accounted investee is measured by comparing the recoverable amount of the investment with its carrying amount.

ii. Non-financial assets

The carrying amounts of the Group’s non-financial assets including deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill is tested annually for impairment.

An impairment loss is recognised if the carrying amount of an asset or cash-generating unit (CGU) exceeds its recoverable amount.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. For impairment testing, assets are grouped together into the smallest group



of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. Subject to an operating segment ceiling test, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. Goodwill acquired in a business combination is allocated to groups of CGUs that are expected to benefit from the synergies of the combination.

Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the CGU (group of CGUs), and then to reduce the carrying amounts of the other assets in the CGU (group of CGUs) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

(g) Employee benefits

i. Short-term employee benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

ii. Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and has no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognised as an employee benefit expense in profit or loss in the periods during which related services are rendered by employees.

iii. Defined benefit plans

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan.

The Company and the Group are liable to pay retirement benefits under the Payment of Gratuity Act, No. 12 of 1983. Under the said Act, the liability to an employee arises only on completion of 5 years of continued service. The liability recognised in the financial statements in respect of defined benefit plans is the present value of the defined benefit obligation as at the reporting date. The defined benefit obligation is calculated by a qualified actuary as at the reporting date using the Projected Unit Credit (PUC) method as recommended by Sri Lanka Accounting Standard (LKAS 19) - ‘Employee Benefits’. All Actuarial gains or losses are recognised immediately in profit or loss applying the faster recognition approach.

(h) Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

(i) Contingent liabilities and contingent assets

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation.

A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Group does not recognize a contingent liability but discloses its existence in the financial statements.

A contingent asset is a possible asset that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the


Group. The Group does not recognize contingent assets but discloses its existence where inflows of economic benefits are probable, but not virtually certain. In the acquisition of subsidiaries by the Group under business combinations, contingent liabilities assumed are measured initially at their fair value at the acquisition date, irrespective of the extent of any minority interest.

(j) Revenue

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group, and the revenue and associated costs incurred or to be incurred can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable, net of sales taxes, and after eliminating sales within the Group.

The following specific criteria are used for the purpose of recognition of revenue:

i. Dividend Income

Dividend income is recognised in profit or loss on the date that the Group’s right to receive payment is established, which in the case of quoted securities is normally the ex-dividend date.

ii. Management fee income

Management fee income is recognised on accrual basis.

iii. Gain on disposal of financial assets (categorized as available for sale / fair value through profit or loss)

Profit or loss on disposal of investments are accounted for in the Statement of comprehensive income on the basis of realized net profit.

iv. Interest income

Interest income comprises the amounts earned on funds invested (including available-for-sale financial assets), and is recognised as it accrues in profit or loss, using the effective interest method.

v. Other Income

On accrual basis. Net gains and losses of a revenue nature resulting from the disposal of property, plant and equipment are accounted for in the statement of comprehensive income.

(k) Expenditure Recognition

Operating Expenses

All expenses incurred in day-to-day operations of the business and in maintaining the property, plant and equipment in a state of efficiency has been charged to revenue in arriving at the profit or loss for the year.

Provision has also been made for bad and doubtful debts, all known liabilities and depreciation on property, plant and equipment.

(l) Finance income and finance costs

Finance costs comprise interest expense on loans and borrowings and bank overdrafts.

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.

Foreign currency gains and losses on financial assets and financial liabilities are reported on a net basis as either finance income or finance cost depending on whether foreign currency movements are in a net gain or net loss position.

(m) Income tax expense

Income tax expense comprises current and deferred taxation, which are recognised in profit or loss except to the extent that it relates to a business combination, items recognised directly in equity or in other comprehensive income.

i. Current taxation

Current taxation 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.

ii. Deferred taxation

Deferred taxation is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.



Deferred tax is not recognised for:

• temporarydifferencesontheinitialrecognitionof assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;

• temporarydifferencesrelatedtoinvestmentsinsubsidiaries, associates and jointly controlled entities to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

• taxabletemporarydifferencesarisingontheinitial recognition of goodwill.

The measurement of deferred taxation reflects the tax consequences that would follow the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.

Deferred taxation assets and liabilities are offset, if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to 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 benefit will be realised, based on the level of future taxable profit forecasts and tax planning strategies.

iii. Tax exposures

In determining the amount of current and deferred tax, the Group takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available that causes the Group to change its judgement regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period in which such a determination is made.

Economic Service Charge (ESC)

As per the provisions of Economic Service Charge Act No. 13 of 2006 and amendments thereto, ESC is payable on “Liable Turnover” and is deductible from the income tax payments. Any unclaimed ESC can be carried forward and settle against the income tax payable in the four subsequent years.

(n) Earnings per share

The Group presents basic earnings per share (EPS) data for its ordinary and deferred shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of Ceylon Guardian Investment Trust PLC by the weighted average number of ordinary shares outstanding during the year.

4. Statement of cash flows Interest paid, interest received and dividend received

are classified as operating cash flows, while dividend paid is classified as financing cash flows for the purpose of presentation of cash flow statement which has been prepared using the “Indirect Method”.

5. Related party transactions Disclosure has been made in respect of the

transactions in which one party has the ability to control or exercise significant influence over the financial and operating policies/decisions of the other, irrespective of whether a price is charged.


6. Events after the reporting period All material and important events which occur

after the reporting date have been considered and disclosed in Note 33.

7. Dividends on ordinary and deferred shares

Dividends on ordinary and deferred shares are recognized as a liability and deducted from equity when they are approved by the Company’s shareholders. Interim dividends are deducted from equity when they are declared and are no longer at the discretion of the Company.

8. Presentation Assets and liabilities are grouped by nature and listed

in an order that reflects their relative liquidity and maturity pattern.

Where appropriate, the significant accounting policies are disclosed in the succeeding notes.

Offsetting Income and Expenses

Income and expenses are not offset unless required or permitted by accounting standards.

Offsetting Assets and Liabilities

Assets and liabilities are offset and the net amount reported in the statement of financial position only where there is:

• acurrentenforceablelegalrighttooffsettheassetand the liability; and

• anintentiontosettletheliabilitysimultaneously

9. Determination of fair values The Group’s accounting policies and disclosures

require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

(a) Property, plant and equipment

The fair value of property, plant and equipment recognised as a result of a business combination is the estimated amount for which property could be exchanged on the acquisition date between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably. The fair value of items of plant, equipment, fixtures and fittings is based on the market approach and cost approaches using quoted market prices for similar items when available and depreciated replacement cost when appropriate. Depreciated replacement cost reflects adjustments for physical deterioration as well as functional and economic obsolescence.

(b) Equity and debt securities

The fair values of investments in equity and debt securities are determined with reference to their quoted closing bid price at the measurement date, or if unquoted, determined using a valuation technique. Valuation techniques employed include market multiples and discounted cash flow analysis using expected future cash flows and a market-related discount rate.

(c) Trade and other receivables

Short-term receivables with no stated interest rate are measured at the original invoice amount if the effect of discounting is immaterial. Fair value is determined at initial recognition and, for disclosure purposes, at each annual reporting date.

(d) Other non-derivative financial liabilities

Other non-derivative financial liabilities are measured at fair value, at initial recognition and for disclosure purposes, at each annual reporting date.

10. New Accounting Standards issued but not effective as at reporting date

The Institute of Chartered Accountants of Sri Lanka has issued the following new Sri Lanka Accounting Standards which will become applicable for financial periods beginning on or after 1st January 2014/ 2015.

Accordingly, these Standards have not been applied in preparing these financial statements.



• SriLankaAccountingStandards–SLFRS10“Consolidated financial statements”

The objective of this SLFRS is to establish principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities.

An investor is expected to control an investee if and only if the investor has all the following:

(b) exposure, or rights, to variable returns from its involvement with the investee ; and

(c) the ability to use its power over the investee to affect the amount of the investor’s returns

This Standard will require the Company to review the group structure in the context of the new Standard and its requirements. Accordingly adoption of this standard is expected to have an impact on the Group structure, and consolidated reporting .

SLFRS 10 will become effective from 1 April 2014 for the Group with early adoption permitted. This SLFRS will supersede the requirements relating to consolidated financial statements in LKAS 27”Consolidated and Separate Financial Statements

• SriLankaAccountingStandards–SLFRS11“Joint Arrangements”

The objective of this SLFRS is to establish principles for financial reporting by entities that have an interest in arrangements that are controlled jointly (ie joint arrangements).

SLFRS 11 will become effective from 1 April 2014 for the Group with early adoption permitted. This SLFRS will supersede the requirements relating to consolidated financial statements in LKAS 31” Interests in Joint Ventures

• SriLankaAccountingStandard-SLFRS12”Disclosure of Interests in Other Entities”

SLFRS 10 will become effective from 1 April 2014 for the Group with early adoption permitted

• SriLankaAccountingStandard-SLFRS13,“FairValue Measurement”

This SLFRS defines fair value, sets out in a single SLFRS a framework for measuring fair value; and requires disclosures about fair value measurements.

This SLFRS will become effective for the Group from 1 April 2014. Earlier application is permitted.

This SLFRS shall be applied prospectively as of the beginning of the annual period in which it is initially applied. The disclosure requirements of this SLFRS need not be applied in comparative information provided for periods before initial application of this SLFRS.

• SriLankaAccountingStandard–SLFRS9“Financial Instruments”

The objective of this SLFRS is to establish principles for the financial reporting of financial assets and financial liabilities that will present relevant and useful information to users of financial statements for their assessment of the amounts, timing and uncertainty of an entity’s future cash flows.

An entity shall apply this SLFRS to all items within the scope of LKAS 39 Financial Instruments: Recognition and Measurement.

This SLFRS will become effective for the group from 1 April 2015. Earlier application is permitted for the financial period beginning on or after 01 January, 2013. However, if the Group elects to apply this SLFRS early, it must apply all of the requirements in this SLFRS at the same time


Notes to the Financial StatementsIn Rupees Thousands

11. Revenue Group Company For the year ended 31st March 2013 2012 2013 2012

Dividend income 471,025 410,896 208,133 178,516 Interest income 154,853 95,670 51,731 41,410 Net gain/(loss) from disposal of fair value

through profit or loss financial assets 27,748 (142,155) 6,571 (7,124) Net gain from disposal of available for sale

financial assets (Note 11.a) 1,207,950 1,905,300 357,988 1,123,147 Management fees 43,755 44,487 - - 1,905,331 2,314,198 624,423 1,335,949 Intra-group transactions (262,732) (232,898) - - 1,642,599 2,081,300 624,423 1,335,949

11.a Net gain from disposal of available for sale financial assets

Proceeds from disposal of available for sale financial assets 1,983,585 3,126,518 665,989 1,648,638

Carrying value of available for sale financial assets disposed (1,782,461) (3,694,077) (611,144) (1,832,623)

Transfer from available for sale financial assets reserve 1,006,826 2,472,859 303,143 1,307,132 1,207,950 1,905,300 357,988 1,123,147

12. Profit from operations Group Company For the year ended 31st March 2013 2012 2013 2012

Profit from operations is stated after charging all related expenses which include the following:

Directors’ fees 8,633 7,285 6,533 5,500 Management fees 18,786 19,977 5,100 5,680 Audit Committee fees - 200 - 200 Auditors’ remuneration and expenses - Audit fees 1,065 930 330 290 - Audit related fees 225 180 63 50 - Non audit services 560 400 187 400 Depreciation and amortization (Note 12.a) 5,519 5,494 - - Professional Services (Note 12.b) 990 845 519 721 Personnel cost (Note 12.c) 50,832 35,034 - -

12.a Depreciationandamortization

Depreciation of property, plant and equipment 2,887 3,019 - - Amortization of intangible assets 2,632 2,475 - - 5,519 5,494 - -


Group Company For the year ended 31st March 2013 2012 2013 2012

12.b Professional Services

Legal services 350 646 - 527 Valuation services 190 199 182 194 Other professional service 450 - 337 - 990 845 519 721

12.c Personnel cost

Salaries, wages and other related expenses 44,971 31,718 - - Defined benefit plan cost (Note 29) 1,861 1,844 - - Defined contribution plan cost 4,000 1,472 - - 50,832 35,034 - -

The above include Directors’ emoluments 17,866 12,868 - - 17,866 12,868 - -

13. Net finance expense Group Company For the year ended 31st March 2013 2012 2013 2012

Finance income Interest income 527 210 - - Exchange gains 140 - - - 667 210 - -

Finance expense Interest on debts and borrowings 1,616 5,276 519 1,683 Exchange losses 22 123 22 - 1,638 5,399 541 1,683 Net finance expense 971 5,189 541 1,683

14. Share of profit of equity accounted investees net of tax Revenue Profit/(loss) before tax Investor’s share of

profit/(loss) net of tax

For the year ended 31st March 2013 2012 2013 2012 2013 2012

Bukit Darah PLC 76,160,413 66,078,183 13,555,159 17,695,891 763,030 1,272,313 Guardian Acuity Asset

Management Limited 2,828 - (15,230) (4,439) (7,832) (2,389) 76,163,241 66,078,183 13,539,929 17,691,452 755,198 1,269,924


15. Income tax expense/(reversal) Group Company For the year ended 31st March 2013 2012 2013 2012

15.1 Current taxation

Income tax expense for the year 35,387 16,467 8,756 7,045 (Over)/under provision for previous year (611) 333 22 50 34,776 16,800 8,778 7,095 Deferred Taxation On origination and reversal of temporary differences (11,197) (1,104) (10,404) - (11,197) (1,104) (10,404) -

Income tax expense/(reversal) for the year 23,579 15,696 (1,626) 7,095

15.2 Reconciliation of accounting profit and taxable profit for the year


Profit before taxation 2,314,985 2,554,255 595,969 1,007,475

Adjustments: Exempt profits on sale of quoted public shares (1,235,698) (1,763,145) (364,559) (1,116,023) Dividend income (471,025) (410,896) (208,133) (178,516) Allowable claims (2,483) (3,290) - (7) Impairment loss on available for sale financial assets 53,440 559,563 10,760 272,386 Net change in fair value of fair value through

profit or loss financial assets (91,450) 117,758 (10,562) 22,789 Expenses attributable to exempt profits 60,323 71,192 20,986 27,782 Disallowable expenses 27,007 27,683 3,648 2,822

655,099 1,153,120 48,109 38,708 Transactions eliminated on consolidation 227,516 199,471 - - Share of profit of equity accounted investees net of tax (755,198) (1,269,924) - - Adjustments on losses 15,981 1,555 - - Utilisation of tax losses (Note 15.3) (17,022) (23,480) (16,838) (13,548) Adjusted profit for tax purposes 126,376 60,742 31,271 25,160

Income tax liability for the current year Income tax expense of the Company (Note 15.4 (a)) 8,756 7,045 8,756 7,045 Income tax expense of subsidiaries (Note 15.4 (a)) 26,631 9,422 - - 35,387 16,467 8,756 7,045

Income tax expense for the Group is based on the taxable profit of individual companies within the Group. At present, the tax laws in Sri Lanka do not provide for Group taxation.



15.3 Analysis of tax losses


Tax losses brought forward 60,324 77,614 54,042 67,590 Adjustment on finalization of income tax liability 799 (92) (45) - Tax losses incurred during the year 15,981 6,282 - - Utilization of tax losses during the year (17,022) (23,480) (16,838) (13,548) Tax losses carried forward 60,082 60,324 37,159 54,042

Utilization of tax losses is restricted to 35% of Statutory Income. Unabsorbed tax losses can be carried forward indefinitely.

15.4 Summary of provision applicable under relevant tax legislation(a) In accordance with the provisions of the Inland Revenue Act No. 10 of 2006 and amendments thereto, the Company

and its subsidiaries are liable to income tax at the standard rate of 28% (2012 - 28%) on its operating profits, excluding profits disclosed in note 15.4 (b) .

(b) In terms of section 13 (t) of the Inland Revenue Act, No.10 of 2006 and amendments thereto, profits derived on sale of shares on which Share Transaction Levy (STL) has been paid is exempt from income tax.

(c ) Economic Service Charge (ESC) paid by the Company and it’s subsidiaries are available as income tax credit over a period of four subsequent years. In instances where recoverability is not possible due to tax status, amounts paid are written-off to the statement of comprehensive income.


16. Earnings per share The Company’s and the Group’s basic earnings per ordinary/deferred share is calculated on the profit attributable

to shareholders of Ceylon Guardian Investment Trust PLC over the weighted average number of ordinary shares outstanding during the year, as required by Sri Lanka Accounting Standard (LKAS 33) - “Earnings per share”.

The following reflect the earnings and share data used for the computation of earnings per ordinary/deferred share:


Amount used as the numerator Profit for the year attributable to the

shareholders of Ceylon Guardian Investment Trust PLC 1,881,070 2,166,950 597,595 1,000,380 Amount used as denominator (in thousands) Weighted average number of ordinary shares/ deferred

shares outstanding used as the denominator * (‘000) 87,837 87,837 87,837 87,837 Earnings per share (Rs.) 21.42 24.67 6.80 11.39

* Each deferred share considered to be equivalent to an ordinary share in calculating the weighted average number of shares outstanding during the year for the purpose of earnings per share calculation.

17. Dividend Company For the year ended 31st March 2013 2012

Dividend paid On ordinary shares 164,193 123,145 On deferred shares 11,480 8,610 175,673 131,755

Dividend proposed * On ordinary shares 205,242 164,193 On deferred shares 14,349 11,480 219,591 175,673

Dividend per share 2.50 2.00

* The proposed dividend is subject to approval by the shareholders at the forthcoming Annual General Meeting and according to the Sri Lanka Accounting Standard (LKAS 11) - “Events after the reporting period “, the liability has not been provided for in the financial statements.



18. Property, plant and equipment - Group Office Computer Furniture & Motor Total equipment equipments fittings vehicle

Cost Balance as at 1st April 2011 187 919 2,094 9,675 12,875 Additions - 1,043 196 - 1,239 Transfers (134) - 134 - - Balance as at 31st March 2012 53 1,962 2,424 9,675 14,114

Balance as at 1st April 2012 53 1,962 2,424 9,675 14,114 Additions 133 794 521 - 1,448 Disposals / Write-off - - (84) - (84) Balance as at 31st March 2013 186 2,756 2,861 9,675 15,478

Depreciation Balance as at 1st April 2011 187 445 475 5,321 6,428 Charge for the year - 441 642 1,936 3,019 Transfers (134) - 134 - - Balance as at 31st March 2012 53 886 1,251 7,257 9,447

Balance as at 1st April 2012 53 886 1,251 7,257 9,447 Charge for the year 13 657 282 1,935 2,887 Disposals / Write-off - - (59) - (59) Balance as at 31st March 2013 66 1,543 1,474 9,192 12,275

Net book value as at 31st March 2013 120 1,213 1,387 483 3,203 Net book value as at 31st March 2012 - 1,076 1,173 2,418 4,667 Net book value as at 1st April 2011 - 474 1,619 4,354 6,447

18.1 Details of fully depreciated assets in property, plant and equipment are as follows;

As at 31st March 2013 2012 1 April 2011

Office equipment 53 53 187 Computer equipment 568 390 - 621 443 187

18.2 The Group do not have any leased assets as at the reporting date.

18.3 No borrowing costs were capitalized during the year (2012 - Nil).

18.4 No fixed asset were pledged as security as at the reporting date.


19. Intangible assets including goodwill - Group Goodwill on Computer Total consolidation software

Cost Balance as at 1st April 2011 231,917 10,880 242,797 Additions - 4,470 4,470 Balance as at 31st March 2012 231,917 15,350 247,267

Balance as at 1st April 2012 231,917 15,350 247,267 Balance as at 31st March 2013 231,917 15,350 247,267

Amortization Balance as at 1st April 2011 - 5,598 5,598 Charge for the year - 2,475 2,475 Balance as at 31st March 2012 - 8,073 8,073

Balance as at 1st April 2012 - 8,073 8,073 Charge for the year - 2,632 2,632 Balance as at 31st March 2013 - 10,705 10,705

Net book value as at 31st March 2013 231,917 4,645 236,562 Net book value as at 31st March 2012 231,917 7,277 239,194 Net book value as at 1st April 2011 231,917 5,282 237,199

19.1 Intangible assets do not include fully amortized assets as at the reporting date.

19.2 Analysis of computer software


Purchased software 15,350 15,350 10,880 15,350 15,350 10,880

19.3 Impairment assessment on goodwill

Goodwill arising on business combinations - Guardian Capital Partners PLC

Based on the prevailing published market prices at the end of the year and the forecasted growth of its current investment portfolio, the Board of Directors is confident that the recoverable amount of goodwill arising on consolidation is higher than its corresponding carrying amount as at the reporting date.



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lue

C

ost

va

lue

as

at

as a

t

as a

t as

at

as

at

as a

t

N

o. o

f 31

st M

arch

31s

t M

arch

N

o. o

f 31

st M

arch

31s

t M

arch

N

o. o

f 1s

t Ap

ril

1st A

pri

l

sh

ares

20

13

2013

sh

ares

20

12

2012

sh

ares

20

11

2011

(a)

Qu

ote

d in

vest

men

ts

Cey

lon

Inve

stm

ent

PLC

63

,407

,518

1,

239,

234

5,07

2,60

2 63

,407

,518

1,

239,

234

4,96

4,80

9 63

,407

,518

1,

239,

234

9,57

4,53

5

Gu

ard

ian

Cap

ital

P

artn

ers

PLC

21

,692

,800

65

8,66

1 83

7,34

2 21

,692

,800

65

8,66

1 1,

522,

834

21,6

92,8

00

658,

661

6,30

3,92

8

1,89

7,89

5 5,

909,

944

1,

897,

895

6,48

7,64

3

1,89

7,89

5 15

,878

,463

(b

) U

nq

uo

ted

inve

stm

ents

R

ub

ber

Inve

stm

ent

T

rust

Lim

ited

3,

955,

609

316

9,19

6,40

5 3,

955,

609

316

10,4

50,8

68

3,95

5,57

9 29

7 13

,769

,504

Gu

ard

ian

Fu

nd

M

anag

emen

t Li

mit

ed

2,84

8,68

5 73

,321

73

,321

1,

045,

012

28,2

30

28,2

30

1,04

5,01

2 28

,230

28

,230

73,6

37

9,26

9,72

6

28,5

46

10,4

79,0

98

5,00

0,59

1 28

,527

13

,797

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Tota

l inv

estm

ent

in

su

bsi

dia

ries

1,97

1,53

2 15

,179

,670

1,92

6,44

1 16

,966

,741

1,92

6,42

2 29

,676

,197

T

he

fair

val

ue

of

qu

ote

d in

vest

men

ts a

re b

ased

on

clo

sin

g t

rad

ed p

rice

s p

ub

lish

ed b

y th

e C

olo

mb

o S

tock

Exc

han

ge

as a

t 31

st M

arch

, w

hils

t fa

ir v

alu

e o

f R

ub

ber

Inve

stm

ent T

rust

Lim

ited

is c

alcu

late

d b

ased

on

th

e M

arke

t va

lue

of

its’

inve

stm

ent

po

rtfo

lio.

21.

Inve

stm

ent

in e

qu

ity

acco

un

ted

inve

stee

s21

.a

Gro

up

C

arry

ing

Fa

ir

C

arry

ing

Fa

ir

C

arry

ing

Fa

ir

C

ost

va

lue

valu

e C

ost

va

lue

valu

e C

ost

va

lue

valu

e

as

at

as a

t as

at

as a

t as

at

as a

t as

at

as a

t as

at

31st

Mar

ch 3

1st

Mar

ch 3

1st

Mar

ch 3

1st

Mar

ch 3

1st

Mar

ch 3

1st

Mar

ch

1st A

pri

l 1s

t Ap

ril

1st A

pri

l

20

13

2013

20

13

2012

20

12

2012

20

11

2011

20

11

In

vest

men

t in

as

soci

ate

(No

te 2

1.1)

1,

928

5,88

3,38

9 14

,419

,186

1,

928

5,41

4,91

5 17

,531

,932

1,

928

4,04

8,83

1 23

,982

,244

Inve

stm

ent

in jo

intl

y

con

tro

lled

en

tity

(N

ote

21.

2)

35,0

00

25,4

16

25,4

16

20,0

00

17,6

11

17,6

11

- -

-

36

,928

5,

908,

805

14,4

44,6

02

21,9

28

5,43

2,52

6 17

,549

,543

1,

928

4,04

8,83

1 23

,982

,244

21.b

Co

mp

any

C

ost

Co

st

C

ost

as a

t

as a

t

as a

t

N

o. o

f 31

st M

arch

N

o. o

f 31

st M

arch

N

o. o

f 1

Ap

ril

shar

es

2013

sh

ares

20

12

shar

es

2011

Inve

stm

ent

in jo

intl

y co

ntr

olle

d e

nti

ty

3,5

00,0

00

35,

000

2

,000

,000

2

0,00

0

-

-

35,

000

20,

000

-


21.

Inve

stm

ent

in e

qu

ity

acco

un

ted

inve

stee

s (c

on

tin

ued

)21

.1 I

nves

tmen

t in

ass

oci

ate

- G

rou

p

Fa

ir

Fair

Co

st

valu

e

Co

st

valu

e

as

at

as a

t

as a

t as

at

N

o. o

f 31

st M

arch

31s

t M

arch

N

o. o

f 31

st M

arch

31s

t M

arch

sh

ares

20

13

2013

sh

ares

20

12

2012

Q

uo

ted

O

n o

rdin

ary

shar

es

Bu

kit

Dar

ah P

LC

20

,438

,250

1,

927

14,4

19,1

85

20,4

38,2

50

1,92

7 17

,531

,931

Un

qu

ote

d

On

pre

fere

nce

sh

ares

B

uki

t D

arah

PLC

(

8% p

arti

cip

ativ

e cu

mu

lati

ve p

refe

ren

ce s

har

es)

31,8

75

1 1

31,8

75

1 1

1,92

8 14

,419

,186

1,92

8 17

,531

,932

Car

ryin

g

Fair

Car

ryin

g

Fair

valu

e va

lue

va

lue

valu

e

as

at

as a

t

as a

t as

at

Per

cen

tage

31s

t M

arch

31s

t M

arch

Per

cen

tag

e 31

st M

arch

31s

t M

arch

H

old

ing

20

13

2013

H

old

ing

20

12

2012

In

vest

ors

’ sh

are

of

net

ass

ets

A

t th

e b

egin

nin

g o

f th

e ye

ar

20

.04%

5,

412,

987

- 20

.04%

4,

046,

903

-

Sh

are

of

pro

fit

of

equ

ity

acco

un

ted

inve

stee

s n

et o

f ta

x

76

3,03

0 -

1,

272,

313

-

Sh

are

of

oth

er c

om

pre

hen

sive

inco

me/

(ex

pen

se)

of

e

qu

ity

acco

un

ted

inve

stee

s n

et o

f ta

x

(2

33,2

41)

-

144,

867

-

Div

iden

d

(61,

315)

-

(5

1,09

6)

-

At

the

end

of

the

year

5,

881,

461

-

5,41

2,98

7 -

To

tal i

nves

tmen

t in

ass

oci

ate

com

pan

y o

n e

qu

ity

met

ho

d

5,88

3,38

9 14

,419

,186

5,41

4,91

5 17

,531

,932

T

he

fair

val

ue

of

the

inve

stm

ent

in a

sso

ciat

e is

bas

ed o

n t

he

clo

sin

g t

rad

ed p

rice

s p

ub

lish

ed b

y th

e C

olo

mb

o S

tock

Exc

han

ge

as a

t

31st

Mar

ch

21.1(a)Summarized

finan

cialin

form

ationoftheas

sociateco

mpan

y

Tota

l ass

ets

Tota

l lia

bili

ties

As

at 3

1st

Mar

ch

20

13

2012

20

13

2012

Bu

kit

Dar

ah P

LC

137

,313

,868

11

7,08

0,11

7 70

,098

,273

55

,975

,985

1

37,3

13,8

68

117,

080,

117

70,0

98,2

73

55,9

75,9

85



21.2

In

vest

men

t in

join

tly

con

tro

lled

en

tity

- G

rou

p

C

arry

ing

C

arry

ing

Co

st

valu

e

Co

st

valu

e

as

at

as a

t

as a

t as

at

N

o. o

f 31

st M

arch

31s

t M

arch

N

o. o

f 31

st M

arch

31s

t M

arch

sh

ares

20

13

2013

sh

ares

20

12

2012

U

nq

uo

ted

G

uar

dia

n A

cuit

y A

sset

Man

agem

ent

Lim

ited

3,

500,

000

35,0

00

25,4

16

2,00

0,00

0 20

,000

17

,611

35

,000

25

,416

20,0

00

17,6

11

T

he

fair

val

ue

of

join

tly

con

tro

lled

en

tity

is b

ased

on

its’

net

ass

et v

alu

e.

Car

ryin

g

Car

ryin

g

va

lue

Fair

val

ue

va

lue

Fair

val

ue

as a

t as

at

as

at

as a

t

P

erce

nta

ge 3

1st

Mar

ch 3

1st

Mar

ch P

erce

nta

ge

31st

Mar

ch 3

1st

Mar

ch

Ho

ldin

g

2013

20

13

Ho

ldin

g

2012

20

12

In

vest

ors

’ sh

are

of

net

ass

ets

A

t th

e b

egin

nin

g o

f th

e ye

ar

50

%

(2,3

89)

- 50

%

- -

S

har

e o

f jo

intl

y co

ntr

olle

d e

nti

ty’s

loss

net

of

tax

(7

,832

) -

(2

,389

) -

S

hare

of j

oint

ly c

onro

lled

entit

y’s

othe

r co

mpr

ehen

sive

inco

me

net o

f tax

637

-

- -

A

t th

e en

d o

f th

e ye

ar

(9,5

84)

25,4

16

(2

,389

) 17

,611

To

tal i

nves

tmen

ts in

join

tly

con

tro

lled

en

tity

on

eq

uit

y m

eth

od

25,4

16

25,4

16

17

,611

17

,611

21

.2(a)Summarized

finan

cialin

form

ationofthejointlyco

ntrolle

dentity

To

tal a

sset

s To

tal l

iab

iliti

es

A

s at

31s

t M

arch

2013

20

12

2013

20

12

S

um

mar

ized

fin

anci

al in

form

atio

n o

f th

e jo

intl

y co

ntr

olle

d e

nti

ty

Gu

ard

ian

Acu

ity

Ass

et M

anag

emen

t Li

mit

ed

52,7

08

35,8

00

1,87

7 57

8

52,7

08

35,8

00

1,87

7 57

8

G

uar

dia

n A

cuit

y A

sset

Man

agem

ent

Lim

ited

, is

a C

om

pan

y in

corp

ora

ted

in S

ri L

anka

, to

set

up

an

d c

arry

ou

t U

nit

Tru

st m

anag

emen

t ac

tivi

ties

lic

ense

d b

y S

ecu

riti

es a

nd

Exc

han

ge

Co

mm

issi

on

of

Sri

Lan

ka, a

nd

gov

ern

ed b

y a

Join

t Ven

ture

ag

reem

ent

bet

wee

n A

cuit

y Pa

rtn

ers

(Pri

vate

) Li

mit

ed a

nd

Cey

lon

Gu

ard

ian

Inve

stm

ent T

rust

PLC

. Cey

lon

Gu

ard

ian

Inve

stm

ent T

rust

PLC

an

d A

cuit

y Pa

rtn

ers

(Pvt

) Li

mit

ed h

old

s 50

% e

ach

of

the

issu

ed s

har

e ca

pit

al in

th

e sa

id c

om

pan

y.


22.

Ava

ilab

le fo

r sa

le fi

nan

cial

ass

ets

22.a

Su

mm

ary

- G

rou

p

C

arry

ing

Fa

ir

Car

ryin

g

Fair

C

arry

ing

Fa

ir

valu

e /

cost

va

lue

valu

e / c

ost

va

lue

valu

e / c

ost

va

lue

as

at

as a

t as

at

as a

t as

at

as a

t

31st

Mar

ch

31st

Mar

ch

31st

Mar

ch

31st

Mar

ch

1st A

pri

l 1s

t Ap

ril

20

13

2013

20

12

2012

20

11

2011

In

vest

men

t in

eq

uit

y se

curi

ties

Q

uo

ted

22

.1(a

) 3,

436,

807

7,16

7,42

1 3,

906,

462

7,68

9,88

5 2,

911,

986

10,2

50,3

80

Un

qu

ote

d

22.1

(b)

17,3

34

17,3

34

17,3

34

17,3

34

17,3

34

17,3

34

Priv

ate

equ

ity

22.1

(c)

320,

802

441,

148

320,

802

430,

005

802,

418

1,43

2,45

6

Tota

l inv

estm

ent

in

eq

uit

y se

curi

ties

3,77

4,94

3 7,

625,

903

4,24

4,59

8 8,

137,

224

3,73

1,73

8 11

,700

,170

In

vest

men

t in

deb

entu

res

U

nq

uo

ted

22

.1(d

) 5

5 5

5 5

5

Tota

l inv

estm

ent

in

deb

entu

res

5

5 5

5 5

5

In

vest

men

t in

un

it t

rust

s

Un

qu

ote

d

22.1

(e)

324,

560

367,

652

324,

560

328,

250

224,

564

285,

051

To

tal i

nves

tmen

t in

u

nit

s tr

ust

s

324,

560

367,

652

324,

560

328,

250

224,

564

285,

051

To

tal i

nves

tmen

ts in

ava

ilab

le fo

r

sal

e fi

nan

cial

ass

ets

4,

099,

508

7,99

3,56

0 4,

569,

163

8,46

5,47

9 3,

956,

307

11,9

85,2

26

N

ote

- Fa

ir v

alu

e o

f q

uo

ted

inve

stm

ents

are

bas

ed o

n t

he

clo

sin

g t

rad

ed p

rice

s p

ub

lish

ed b

y th

e C

olo

mb

o S

tock

Exc

han

ge

as a

t 31

st

Mar

ch-

Th

e fa

ir v

alu

es o

f in

vest

men

t in

un

it t

rust

s ar

e b

ased

on

‘net

ass

ets

valu

es’ p

ub

lish

ed b

y th

e cu

sto

dia

n b

ank

and

th

e m

anag

emen

t co

mp

any

as a

t 31

st M

arch

- T

he

fair

val

ues

of

inve

stm

ent

in p

riva

te e

qu

ity

are

arri

ved

at

bas

ed o

n v

alu

atio

n t

ech

niq

ues

; in

clu

din

g f

ore

cast

ed c

ash

flo

w

pro

ject

ion

s, n

et a

sset

val

ue,

ear

nin

gs

bas

ed v

alu

atio

n a

nd

exp

ecte

d r

ealiz

able

val

ues

in a

n a

rm’s

len

gth

tra

nsa

ctio

n a

s ap

pro

pri

ate.



22.b

Mov

emen

t in

ava

ilab

le fo

r sa

le fi

nan

cial

ass

ets

- G

rou

p

Fair

Fair

valu

e

valu

e

as

at

Ch

ang

e as

at

1st A

pri

l

in

fai

r 31

st M

arch

Ye

ar 2

012/

13

N

ote

20

12

Ad

dit

ion

s D

isp

osa

ls

valu

e 20

12

In

vest

men

t in

eq

uit

y se

curi

ties

8,

137,

224

526,

479

(1,7

82,4

61)

744,

661

7,62

5,90

3

Inve

stm

ent

in d

eben

ture

s

5

- -

- 5

In

vest

men

t in

un

it t

rust

s

32

8,25

0 -

- 39

,402

36

7,65

2

8,

465,

479

526,

479

(1,7

82,4

61)

784,

063

7,99

3,56

0

Fair

Fair

valu

e

valu

e

as

at

Ch

ang

e as

at

1st A

pri

l

in

fai

r 31

st M

arch

Ye

ar 2

011/

12

2011

A

dd

itio

ns

Dis

po

sals

va

lue

2012

In

vest

men

t in

eq

uit

y se

curi

ties

11

,700

,170

1,

734,

292

(3,6

94,0

77)

(1,6

03,1

61)

8,13

7,22

4

Inve

stm

ent

in d

eben

ture

s

5

- -

- 5

In

vest

men

t in

un

it t

rust

s

28

5,05

1 10

0,00

0 -

(56,

801)

32

8,25

0

11

,985

,226

1,

834,

292

(3,6

94,0

77)

(1,6

59,9

62)

8,46

5,47

9

T

he

chan

ge

in f

air

valu

e re

pre

sen

t u

nre

aliz

ed g

ain

s/(l

oss

es)

on

ava

ilab

le f

or

sale

fin

anci

al a

sset

s.

A

s re

qu

ired

by

Sri

Lan

ka A

cco

un

tin

g S

tan

dar

d (

LKA

S)

39 –

‘Fin

anci

al In

stru

men

ts; R

eco

gn

itio

n a

nd

mea

sure

men

t’, a

n im

pai

rmen

t lo

ss

of

Rs.

53.

4 m

n (

2012

– R

s. 5

59.6

mn

) h

as b

een

rec

og

niz

ed in

th

e p

rofi

t fo

r th

e ye

ar o

n a

cco

un

t o

f ad

just

men

t o

n s

ign

ifica

nt/

pro

lon

ged

d

eclin

e in

fai

r va

lue

of

inve

stm

ent

in e

qu

ity

secu

riti

es b

elo

w it

s co

st.

T

he

Sri

Lan

ka A

cco

un

tin

g S

tan

dar

d a

lso

req

uir

es r

eco

gn

isin

g f

air

valu

e ga

ins

and

loss

es, o

ther

th

an im

pai

rmen

t lo

sses

an

d c

han

ges

ar

isin

g f

rom

tra

nsl

atio

n o

f av

aila

ble

fo

r sa

le fi

nan

cial

ass

ets

den

om

inat

ed in

fo

reig

n c

urr

ency

, in

oth

er c

om

pre

hen

sive

inco

me.

A

cco

rdin

gly

, a g

ain

of

Rs.

843.

1 m

n (

2012

– a

loss

of

Rs.

1,1

32 m

n)

hav

e b

een

rec

og

nis

ed in

oth

er c

om

pre

hen

sive

inco

me

for

the

resp

ecti

ve y

ears

.


22.

Ava

ilab

le fo

r sa

le fi

nan

cial

ass

ets

(co

nti

nu

ed)

22.1

Ava

ilab

le fo

r sa

le fi

nan

cial

ass

ets

- G

rou

p(a

) In

vest

men

t in

equi

ty se

curit

ies -

Quo

ted

Co

st

Fair

valu

e

Cost

Fa

ir va

lue

Co

st

Fair

valu

e

as a

t as

at

as

at

as a

t

as a

t as

at

No.

of

31st

Mar

ch

31st

Mar

ch

No.

of

31st

Mar

ch

31st

Mar

ch

No.

of

1st A

pril

1st A

pril

shar

es

2013

20

13

shar

es

2012

20

12

shar

es

2011

20

11

Ba

nks,

Fina

nce

& In

sura

nce

Ce

ntra

l Fin

ance

Com

pany

PLC

1,

327,5

75

231,

809

238,

964

- -

- -

- -

Co

mm

ercia

l Ban

k of C

eylo

n PL

C 13

,025

,350

91

2,98

8 1,

471,

863

11,4

15,5

48

748,

440

1,14

1,55

4 4,

484,

335

463,

946

1,19

1,93

6

Hatto

n N

atio

nal B

ank P

LC

- -

- -

- -

2,00

0,00

0 34

1,36

8 76

0,00

0

HNB

Assu

ranc

e PL

C 2,

000,

000

106,

360

95,6

00

2,00

0,00

0 10

6,36

0 91

,600

1,

500,

000

90,7

35

120,

000

Pe

ople

’s Le

asin

g an

d Fi

nanc

e PL

C 10

,595

,691

19

0,72

2 13

8,80

4 22

,907

,300

41

2,33

2 26

5,72

5 -

- -

Sa

mpa

th B

ank P

LC

1,44

9,59

3 42

7,752

32

6,01

3 1,

679,

593

495,

704

301,

991

1,60

4,50

0 47

9,42

1 46

2,57

7

1,86

9,63

1 2,

271,

244

1,

762,

836

1,80

0,87

0

1,37

5,47

0 2,

534,

513

Be

vera

ge, F

ood

& To

bacc

o

Carg

ills (

Ceyl

on) P

LC

4,65

0,30

0 13

8,01

5 70

5,91

6 6,

650,

300

197,3

72

1,15

7,151

6,

650,

300

197,3

72

1,51

8,26

3

Nes

tle L

anka

PLC

-

- -

274,

500

185,

386

250,

015

100,

000

32,5

90

64,0

80

13

8,01

5 70

5,91

6

382,

758

1,40

7,166

229,

962

1,58

2,34

3

Co

nstru

ctio

n &

Eng

inee

ring

Ac

cess

Eng

inee

ring

PLC

8,00

0,00

0 20

0,28

0 15

7,600

8,

000,

000

200,

280

213,

600

- -

-

200,

280

157,6

00

20

0,28

0 21

3,60

0

- -

Di

vers

ified

Ai

tken

Spe

nce

PLC

- -

- -

- -

10,2

45,0

00

299,

555

1,66

2,76

4

Expo

lank

a Ho

ldin

gs P

LC

44,8

45,1

50

345,

618

304,

947

50,6

00,0

00

380,

493

313,

720

- -

-

John

Kee

lls H

oldi

ngs P

LC

12,8

51,1

70

406,

063

3,17

4,23

9 16

,629

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53

1,72

7 3,

425,

754

12,4

91,1

59

532,

790

3,56

7,475

751,

681

3,47

9,18

6

912,

220

3,73

9,47

4

832,

345

5,23

0,23

9

Ho

tels

& Tr

avel

Ai

tken

Spe

nce

Hote

l Hol

ding

s PLC

3,

199,

908

210,

468

236,

793

3,00

0,00

0 19

7,730

21

0,00

0 6,

447,0

50

252,

935

631,

811

21

0,46

8 23

6,79

3

197,7

30

210,

000

25

2,93

5 63

1,81

1

He

alth

Car

e

Asiri

Sur

gica

l Hos

pita

l PLC

14

,890

,872

15

1,39

0 16

9,75

6 8,

677,8

00

84,7

79

65,9

51

- -

-

Ceyl

on H

ospi

tals

PLC

1,30

7,509

90

,712

13

0,75

1 75

6,91

5 39

,942

54

,876

75

6,91

5 39

,942

75

,692

242,

102

300,

507

12

4,72

1 12

0,82

7

39,9

42

75,6

92

M

anuf

actu

ring

Te

xtur

ed J

erse

y La

nka

PLC

1,63

3,84

4 24

,630

16

,175

2,

343,

300

35,3

25

16,8

72

- -

-

Toky

o Ce

men

t C

ompa

ny (L

anka

) PLC

(Non

Votin

g)

- -

- 6,

706,

500

290,

592

181,

076

4,44

9,60

0 18

1,33

2 19

5,78

2

24,6

30

16,1

75

32

5,91

7 19

7,948

181,

332

195,

782

To

tal I

nves

tmen

t in

equi

ty

secu

ritie

s - Q

uote

d

3,43

6,80

7 7,1

67,4

21

3,

906,

462

7,689

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2,91

1,98

6 10

,250

,380



(b)

Inve

stm

ent i

n eq

uity

secu

ritie

s - U

nquo

ted

Fair

Fair

Fair

Co

st

valu

e

Cost

va

lue

Co

st

valu

e

as a

t as

at

as

at

as a

t

as a

t as

at

No.

of

31st

Mar

ch

31st

Mar

ch

No.

of

31st

Mar

ch

31st

Mar

ch

No.

of

1st A

pril

1st A

pril

shar

es

2013

20

13

shar

es

2012

20

12

shar

es

2011

20

11

DF

CC Va

rdha

na B

ank L

imite

d 12

8,92

5 1,

600

1,60

0 12

8,92

5 1,

600

1,60

0 12

8,92

5 1,

600

1,60

0

Equi

ty In

vest

men

ts

Lan

ka (P

rivat

e) L

imite

d 11

,250

2

2 11

,250

2

2 11

,250

2

2

Kand

y Pr

ivat

e Ho

spita

ls Li

mite

d 1,

200

18

18

1,20

0 18

18

1,

200

18

18

La

nka

Com

mun

icatio

ns L

imite

d 1,

428,

496

15,7

14

15,7

14

1,42

8,49

6 15

,714

15

,714

1,

428,

496

15,7

14

15,7

14

To

tal i

nves

tmen

t in

e

quity

secu

ritie

s - U

nquo

ted

17

,334

17

,334

17,3

34

17,3

34

17

,334

17

,334

(c)

Inve

stm

ent i

n eq

uity

secu

ritie

s - P

rivat

e eq

uity

(unl

isted

)

Fa

ir

Fa

ir

Fa

ir

Cost

va

lue

Co

st

valu

e

Cost

va

lue

as

at

as a

t

as a

t as

at

as

at

as a

t

N

o. o

f 31

st M

arch

31

st M

arch

N

o. o

f 31

st M

arch

31

st M

arch

N

o. o

f 1s

t Apr

il 1s

t Apr

il

sh

ares

20

13

2013

sh

ares

20

12

2012

sh

ares

20

11

2011

Du

rdan

s Med

ical &

Sur

gica

l H

ospi

tal (

Priv

ate)

Lim

ited

22,2

85,7

15

280,

797

401,

143

22,2

85,7

15

280,

797

390,

000

21,0

00,0

00

262,

797

262,

797

Ex

pola

nka

Hold

ings

Lim

ited

- -

-

- -

41,6

00,0

00

252,

102

582,

224

hS

enid

Bus

ines

s Sol

utio

ns (P

rivat

e) L

td.

163,

419

40,0

05

40,0

05

163,

419

40,0

05

40,0

05

- -

-

Softl

ogic

Hold

ings

(Priv

ate)

Lim

ited

- -

-

- -

27,7

70,0

00

199,

944

499,

860

Te

xtur

ed J

erse

y La

nka

(Priv

ate)

Lim

ited

- -

-

- -

2,34

3,30

0 35

,325

35

,325

Valli

bel O

ne L

imite

d -

- -

-

- 2,

090,

000

52,2

50

52,2

50

To

tal i

nves

tmen

t equ

ity se

curit

ies -

P

rivat

e eq

uity

320,

802

441,

148

32

0,80

2 43

0,00

5

802,

418

1,43

2,45

6

To

tal i

nves

tmen

t equ

ity se

curit

ies

3,

774,

943

7,625

,903

4,24

4,59

8 8,

137,2

24

3,

731,

738

11,7

00,1

70

(d)

Inve

stm

ents

in d

eben

ture

s - U

nquo

ted

Fair

Fair

Fair

Co

st

valu

e

Cost

va

lue

Co

st

valu

e

as a

t as

at

as

at

as a

t

as a

t as

at

No.

of

31st

Mar

ch

31st

Mar

ch

No.

of

31st

Mar

ch

31st

Mar

ch

No.

of

1st A

pril

1st A

pril

debe

ntur

es

2013

20

13

debe

ntur

es

2012

20

12

debe

ntur

es

2011

20

11

Re

deem

able

uns

ecur

ed

Tang

erin

e Be

ach

Hote

ls Li

mite

d -

Zer

o Co

upon

56

1

1 56

1

1 56

1

1

Oce

an V

iew

Lim

ited

- 6%

36

0 4

4 36

0 4

4 36

0 4

4

Tota

l inv

estm

ent i

n de

bent

ures

5 5

5

5

5 5


22.

Ava

ilab

le fo

r sa

le fi

nan

cial

ass

ets

(co

nti

nu

ed)

(e)

Inve

stm

ents

in u

nit t

rust

s - U

nquo

ted

Co

st

Fair

valu

e

Cost

Fa

ir va

lue

Co

st

Fair

valu

e

as a

t as

at

as

at

as a

t

as a

t as

at

No.

of

31st

Mar

ch

31st

Mar

ch

No.

of

31st

Mar

ch

31st

Mar

ch

No.

of

1st A

pril

1st A

pril

units

20

13

2013

un

its

2012

20

12

units

20

11

2011

G

uard

ian

Acui

ty E

quity

Fun

d 2,

500,

000

25,0

00

28,7

00

2,50

0,00

0 25

,000

25

,126

-

- -

G

uard

ian

Acui

ty F

ixed

Inco

me

Fund

7,5

00,0

00

75,0

00

85,2

00

7,500

,000

75

,000

75

,750

-

- -

Th

e Sr

i Lan

ka F

und

2,53

1,64

6 22

4,56

0 25

3,75

2 2,

531,

646

224,

560

227,3

74

2,53

1,64

6 22

4,56

4 28

5,05

1

Tota

l inv

estm

ent i

n un

it tru

sts

32

4,56

0 36

7,652

324,

560

328,

250

22

4,56

4 28

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1

22.c

Su

mm

ary

- C

om

pan

y

C

arry

ing

Fa

ir

Car

ryin

g

Fair

C

arry

ing

Fa

ir

valu

e /

cost

va

lue

valu

e / c

ost

va

lue

valu

e / c

ost

va

lue

as

at

as a

t as

at

as a

t as

at

as a

t

31st

Mar

ch

31st

Mar

ch

31st

Mar

ch

31st

Mar

ch

1st A

pri

l 1s

t Ap

ril

20

13

2013

20

12

2012

20

11

2011

In

vest

men

t in

eq

uit

y se

curi

ties

Q

uo

ted

22

.2(a

) 1,

449,

554

2,14

5,41

5 1,

590,

257

2,44

7,43

3 1,

216,

034

4,06

0,95

7

Un

qu

ote

d

22.2

(b)

16,2

57

16,2

57

16,2

57

16,2

57

16,2

57

16,2

57

Pr

ivat

e eq

uit

y 22

.2(c

) 14

6,91

9 21

0,11

1 14

6,92

0 20

4,27

5 23

6,64

4 38

5,36

0

Tota

l inv

estm

ent

in

eq

uit

y se

curi

ties

1,61

2,73

0 2,

371,

783

1,75

3,43

4 2,

667,

965

1,46

8,93

5 4,

462,

574

In

vest

men

t in

deb

entu

res

U

nq

uo

ted

22

.2(d

) 1

1 1

1 1

1

Tota

l inv

estm

ent

in

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entu

res

1

1 1

1 1

1

In

vest

men

t in

un

it t

rust

s

Un

qu

ote

d

22.2

(e)

162,

280

183,

826

162,

280

164,

125

112,

282

142,

525

To

tal i

nves

tmen

t in

u

nit

s tr

ust

s

162,

280

183,

826

162,

280

164,

125

112,

282

142,

525

To

tal i

nves

tmen

ts in

ava

ilab

le fo

r

sal

e fi

nan

cial

ass

ets

1,

775,

011

2,55

5,61

0 1,

915,

715

2,83

2,09

1 1,

581,

218

4,60

5,10

0

N

ote

:-

Fair

valu

e of

quo

ted

inve

stm

ents

are

bas

ed o

n th

e cl

osin

g tr

aded

pric

es li

st p

ublis

hed

by th

e C

olom

bo S

tock

Exc

hang

e as

at 3

1st M

arch

- T

he

fair

val

ues

of

inve

stm

ent

in u

nit

tru

sts

are

bas

ed o

n ‘n

et a

sset

s va

lues

’ pu

blis

hed

by

the

cust

od

ian

ban

k an

d t

he

man

agem

ent

com

pan

y as

at

31st

Mar

ch-

Th

e fa

ir v

alu

es o

f in

vest

men

t in

pri

vate

eq

uit

y ar

e ar

rive

d a

t b

ased

on

val

uat

ion

tec

hn

iqu

es; i

ncl

ud

ing

fo

reca

sted

cas

h fl

ow

p

roje

ctio

ns,

net

ass

ets

valu

e, e

arn

ing

bas

ed v

alu

atio

n a

nd

exp

ecte

d r

ealiz

able

val

ues

in a

n a

rm’s

len

gth

tra

nsa

ctio

n a

s ap

pro

pri

ate.



22.

Ava

ilab

le fo

r sa

le fi

nan

cial

ass

ets

(co

nti

nu

ed)

(e)

Inve

stm

ents

in u

nit t

rust

s - U

nquo

ted

Co

st

Fair

valu

e

Cost

Fa

ir va

lue

Co

st

Fair

valu

e

as a

t as

at

as

at

as a

t

as a

t as

at

No.

of

31st

Mar

ch

31st

Mar

ch

No.

of

31st

Mar

ch

31st

Mar

ch

No.

of

1st A

pril

1st A

pril

units

20

13

2013

un

its

2012

20

12

units

20

11

2011

G

uard

ian

Acui

ty E

quity

Fun

d 2,

500,

000

25,0

00

28,7

00

2,50

0,00

0 25

,000

25

,126

-

- -

G

uard

ian

Acui

ty F

ixed

Inco

me

Fund

7,5

00,0

00

75,0

00

85,2

00

7,500

,000

75

,000

75

,750

-

- -

Th

e Sr

i Lan

ka F

und

2,53

1,64

6 22

4,56

0 25

3,75

2 2,

531,

646

224,

560

227,3

74

2,53

1,64

6 22

4,56

4 28

5,05

1

Tota

l inv

estm

ent i

n un

it tru

sts

32

4,56

0 36

7,652

324,

560

328,

250

22

4,56

4 28

5,05

1

22.c

Su

mm

ary

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om

pan

y

C

arry

ing

Fa

ir

Car

ryin

g

Fair

C

arry

ing

Fa

ir

valu

e /

cost

va

lue

valu

e / c

ost

va

lue

valu

e / c

ost

va

lue

as

at

as a

t as

at

as a

t as

at

as a

t

31st

Mar

ch

31st

Mar

ch

31st

Mar

ch

31st

Mar

ch

1st A

pri

l 1s

t Ap

ril

20

13

2013

20

12

2012

20

11

2011

In

vest

men

t in

eq

uit

y se

curi

ties

Q

uo

ted

22

.2(a

) 1,

449,

554

2,14

5,41

5 1,

590,

257

2,44

7,43

3 1,

216,

034

4,06

0,95

7

Un

qu

ote

d

22.2

(b)

16,2

57

16,2

57

16,2

57

16,2

57

16,2

57

16,2

57

Pr

ivat

e eq

uit

y 22

.2(c

) 14

6,91

9 21

0,11

1 14

6,92

0 20

4,27

5 23

6,64

4 38

5,36

0

Tota

l inv

estm

ent

in

eq

uit

y se

curi

ties

1,61

2,73

0 2,

371,

783

1,75

3,43

4 2,

667,

965

1,46

8,93

5 4,

462,

574

In

vest

men

t in

deb

entu

res

U

nq

uo

ted

22

.2(d

) 1

1 1

1 1

1

Tota

l inv

estm

ent

in

deb

entu

res

1

1 1

1 1

1

In

vest

men

t in

un

it t

rust

s

Un

qu

ote

d

22.2

(e)

162,

280

183,

826

162,

280

164,

125

112,

282

142,

525

To

tal i

nves

tmen

t in

u

nit

s tr

ust

s

162,

280

183,

826

162,

280

164,

125

112,

282

142,

525

To

tal i

nves

tmen

ts in

ava

ilab

le fo

r

sal

e fi

nan

cial

ass

ets

1,

775,

011

2,55

5,61

0 1,

915,

715

2,83

2,09

1 1,

581,

218

4,60

5,10

0

N

ote

:-

Fair

valu

e of

quo

ted

inve

stm

ents

are

bas

ed o

n th

e cl

osin

g tr

aded

pric

es li

st p

ublis

hed

by th

e C

olom

bo S

tock

Exc

hang

e as

at 3

1st M

arch

- T

he

fair

val

ues

of

inve

stm

ent

in u

nit

tru

sts

are

bas

ed o

n ‘n

et a

sset

s va

lues

’ pu

blis

hed

by

the

cust

od

ian

ban

k an

d t

he

man

agem

ent

com

pan

y as

at

31st

Mar

ch-

Th

e fa

ir v

alu

es o

f in

vest

men

t in

pri

vate

eq

uit

y ar

e ar

rive

d a

t b

ased

on

val

uat

ion

tec

hn

iqu

es; i

ncl

ud

ing

fo

reca

sted

cas

h fl

ow

p

roje

ctio

ns,

net

ass

ets

valu

e, e

arn

ing

bas

ed v

alu

atio

n a

nd

exp

ecte

d r

ealiz

able

val

ues

in a

n a

rm’s

len

gth

tra

nsa

ctio

n a

s ap

pro

pri

ate.

22.d

Mov

emen

t in

ava

ilab

le fo

r sa

le fi

nan

cial

ass

ets

- C

om

pan

y

Fa

ir

Fa

ir

valu

e

valu

e

as

at

Ch

ang

e as

at

1s

t Ap

ril

in f

air

31st

Mar

ch

Year

201

2/13

N

ote

2

012

Ad

dit

ion

s D

isp

osa

ls

valu

e 20

13

In

vest

men

t in

eq

uit

y se

curi

ties

2,66

7,96

5 25

1,23

3 (6

11,1

44)

63,7

29

2,37

1,78

3

Inve

stm

ent

in d

eben

ture

s

1 -

- -

1

Inve

stm

ent

in u

nit

tru

sts

16

4,12

5 -

- 19

,701

18

3,82

6

2,83

2,09

1 25

1,23

3 (6

11,1

44)

83,4

30

2,55

5,61

0

Fa

ir

C

arry

ing

valu

e

valu

e

as a

t

C

han

ge

as a

t

1st A

pri

l

in

fai

r 31

st M

arch

Ye

ar 2

011/

12

20

11

Ad

dit

ion

s D

isp

osa

ls

valu

e 20

12

In

vest

men

t in

eq

uit

y se

curi

ties

4,46

2,57

4 76

0,21

4 (1

,832

,623

) (7

72,2

00)

2,66

7,96

5

Inve

stm

ent

in d

eben

ture

s

1 -

- -

1

Inve

stm

ent

in u

nit

tru

sts

14

2,52

5 50

,000

-

(28,

400)

16

4,12

5

4,60

5,10

0 81

0,21

4 (1

,832

,623

) (8

00,6

00)

2,83

2,09

1

T

he

chan

ge

in f

air

valu

e re

pre

sen

t u

nre

aliz

ed g

ain

s/(l

oss

es)

on

fai

r va

lue

thro

ug

h p

rofi

t o

r lo

ss fi

nan

cial

ass

ets.

A

s re

qu

ired

by

Sri

Lan

ka A

cco

un

tin

g S

tan

dar

d (

LKA

S)

39 –

‘Fin

anci

al In

stru

men

ts; R

eco

gn

itio

n a

nd

mea

sure

men

t’, a

n im

pai

rmen

t lo

ss o

f R

s. 1

0.8

mn

(20

12 –

Rs.

272

.4 m

n)

has

bee

n r

eco

gn

ized

in t

he

pro

fit

for

the

year

on

acc

ou

nt

of

the

adju

stm

ents

on

sig

nifi

can

t/p

rolo

ng

ed d

eclin

e in

fai

r va

lue

of

inve

stm

ent

in e

qu

ity

secu

riti

es b

elo

w it

s co

st.

T

he

Sri

Lan

ka A

cco

un

tin

g S

tan

dar

d a

lso

req

uir

es r

eco

gn

isin

g f

air

valu

e ga

ins/

(lo

sses

) o

ther

th

an im

pai

rmen

t lo

sses

an

d c

han

ges

ar

isin

g f

rom

tra

nsl

atio

ns

of

avai

lab

le f

or

sale

fin

anci

al a

sset

s d

eno

min

ated

in f

ore

ign

cu

rren

cies

in

oth

er c

om

pre

hen

sive

inco

me.

A

cco

rdin

gly

, a g

ain

of

Rs.

97.

0 m

n (

2012

– a

loss

of

Rs.

544

mn

) h

ave

bee

n r

eco

gn

ised

in o

ther

co

mp

reh

ensi

ve in

com

e fo

r th

e re

spec

tive

ye

ars.



22.

Ava

ilab

le fo

r sa

le fi

nan

cial

ass

ets

(co

nti

nu

ed)

22.2

Ava

ilab

le fo

r sa

le fi

nan

cial

ass

ets

- C

om

pan

y

(a)

Inve

stm

ent i

n eq

uity

secu

ritie

s - Q

uote

d

Cost

Fa

ir va

lue

Co

st

Fair

valu

e

Cost

Fa

ir va

lue

as

at

as a

t

as a

t as

at

as

at

as a

t

N

o. o

f 31

st M

arch

31

st M

arch

N

o. o

f 31

st M

arch

31

st M

arch

N

o. o

f 1s

t Apr

il 1s

t Apr

il

sh

ares

20

13

2013

sh

ares

20

12

2012

sh

ares

20

11

2011

Ba

nks,

Fina

nce

& In

sura

nce

Ce

ntra

l Fin

ance

Com

pany

PLC

65

8,87

7 11

5,12

9 11

8,59

8 -

- -

- -

-

Com

mer

cial B

ank o

f Cey

lon

PLC

6,34

2,95

4 47

0,39

5 71

6,75

4 5,

843,

200

418,

904

584,

320

2,30

4,26

4 27

5,61

2 61

2,47

3

Hatto

n N

atio

nal B

ank P

LC

- -

- -

- -

500,

000

96,1

51

190,

000

HN

B As

sura

nce

PLC

2,00

0,00

0 10

6,36

0 95

,600

2,

000,

000

106,

360

91,6

00

1,50

0,00

0 90

,735

12

0,00

0

Peop

le’s

Leas

ing

and

Fina

nce

PLC

3,64

0,80

0 65

,534

47

,694

13

,086

,600

23

5,55

9 15

1,80

5 -

- -

Sa

mpa

th B

ank P

LC

742,

570

217,4

27

167,0

04

842,

570

246,

707

151,

494

804,

900

238,

539

232,

053

97

4,84

5 1,

145,

650

1,

007,5

30

979,

219

70

1,03

7 1,

154,

526

Be

vera

ge, F

ood

& To

bacc

o

Carg

ills (

Ceyl

on) P

LC

4,65

0,30

0 13

8,01

5 70

5,91

5 6,

650,

300

197,3

72

1,15

7,152

6,

650,

300

197,3

72

1,51

8,26

3

Nes

tle L

anka

PLC

-

- -

129,

900

103,

812

118,

313

15,4

00

3,89

1 9,

868

13

8,01

5 70

5,91

5

301,

184

1,27

5,46

5

201,

263

1,52

8,13

1

Di

vers

ified

Ai

tken

Spe

nce

PLC

- -

- -

- -

6,91

9,50

0 21

8,04

5 1,

123,

035

Ex

pola

nka

Hold

ings

PLC

10

,000

,000

13

4,45

1 68

,000

10

,000

,000

13

4,45

1 62

,000

-

- -

13

4,45

1 68

,000

134,

451

62,0

00

21

8,04

5 1,

123,

035

He

alth

Car

e

Asiri

Sur

gica

l Hos

pita

l PLC

7,4

25,5

82

75,4

39

84,6

52

4,05

0,70

0 39

,567

30

,785

-

- -

Ce

ylon

Hos

pita

ls PL

C 49

4,13

1 44

,970

49

,413

-

- -

- -

-

120,

409

134,

065

39

,567

30

,785

- -

Ho

tels

& Tr

avel

s

Aitk

en S

penc

e Ho

tel H

oldi

ngs P

LC

1,24

0,33

3 81

,834

91

,784

1,

181,

200

78,0

60

82,6

84

2,60

4,75

0 95

,689

25

5,26

5

81,8

34

91,7

84

78

,060

82

,684

95,6

89

255,

265

M

anuf

actu

ring

To

kyo

Cem

ent

Com

pany

(Lan

ka) P

LC (N

on v

otin

g)

- -

- 64

0,00

0 29

,465

17

,280

-

- -

-

-

29,4

65

17,2

80

-

-

To

tal i

nves

tmen

t in

equi

ty

sec

uriti

es -

Quo

ted

1,

449,

554

2,14

5,41

5

1,59

0,25

7 2,

447,4

33

1,

216,

034

4,06

0,95

7


(b)

Inve

stm

ent i

n eq

uity

secu

ritie

s - U

nquo

ted

Fair

Fair

Fair

Co

st

valu

e

Cost

va

lue

Co

st

valu

e

as a

t as

at

as

at

as a

t

as a

t as

at

No.

of

31st

Mar

ch

31st

Mar

ch

No.

of

31st

Mar

ch

31st

Mar

ch

No.

of

1st A

pril

1st A

pril

shar

es

2013

20

13

shar

es

2012

20

12

shar

es

2011

20

11

DF

CC Va

rdha

na B

ank l

imite

d 42

,975

53

3 53

3 42

,975

53

3 53

3 42

,975

53

3 53

3

Equi

ty In

vest

men

ts L

anka

(Priv

ate)

Lim

ited

1 1

1 1

1 1

Ka

ndy

Priv

ate

Hosp

itals

Lim

ited

600

9 9

600

9 9

600

9 9

La

nka

Com

mun

icatio

ns L

imite

d 1,

428,

496

15,7

14

15,7

14

1,42

8,49

6 15

,714

15

,714

1,

428,

496

15,7

14

15,7

14

To

tal i

nves

tmen

t in

equi

ty

sec

uriti

es -

unqu

oted

16,2

57

16,2

57

16

,257

16

,257

16,2

57

16,2

57

(c)

Inve

stm

ent i

n eq

uity

secu

ritie

s - P

rivat

e eq

uity

(unl

isted

)

Fa

ir

Fa

ir

Fa

ir

Cost

va

lue

Co

st

valu

e

Cost

va

lue

as

at

as a

t

as a

t as

at

as

at

as a

t

N

o. o

f 31

st M

arch

31

st M

arch

N

o. o

f 31

st M

arch

31

st M

arch

N

o. o

f 1s

t Apr

il 1s

t Apr

il

sh

ares

20

13

2013

sh

ares

20

12

2012

sh

ares

20

11

2011

Du

rdan

s Med

ical &

Sur

gica

l H

ospi

tal (

Priv

ate)

Lim

ited

11,6

72,8

57

146,

919

210,

111

11,6

72,8

57

146,

920

204,

275

11,0

00,0

00

137,5

00

137,5

00

So

ftlog

ic Ho

ldin

gs (P

rivat

e) L

imite

d

- -

-

- 13

,770

,000

99

,144

24

7,860

Tota

l inv

estm

ent i

n eq

uity

s

ecur

ities

- Pr

ivat

e eq

uity

146,

919

210,

111

14

6,92

0 20

4,27

5

236,

644

385,

360

To

tal i

nves

tmen

t in

equi

ty se

curit

ies

1,

612,

730

2,37

1,78

3

1,75

3,43

4 2,

667,9

65

1,

468,

935

4,46

2,57

4

(d)

Inve

stm

ents

in d

eben

ture

s - U

nquo

ted

Fair

Fair

Fair

Co

st

valu

e

Cost

va

lue

Co

st

valu

e

as a

t as

at

as

at

as a

t

as a

t as

at

No.

of

31st

Mar

ch

31st

Mar

ch

No.

of

31st

Mar

ch

31st

Mar

ch

No.

of

1st A

pril

1st A

pril

debe

ntur

es

2013

20

13

debe

ntur

es

2012

20

12

debe

ntur

es

2011

20

11

Re

deem

able

uns

ecur

ed

Oce

an V

iew

Lim

ited

- 6%

12

0 1

1 12

0 1

1 12

0 1

1

Tota

l inv

estm

ent i

n de

bent

ures

1 1

1

1

1 1

(e)

Inve

stm

ents

in u

nit t

rust

s - U

nquo

ted

Co

st

Fair

valu

e

Cost

Fa

ir va

lue

Co

st

Fair

valu

e

as a

t as

at

as

at

as a

t

as a

t as

at

No.

of

31st

Mar

ch

31st

Mar

ch

No.

of

31st

Mar

ch

31st

Mar

ch

No.

of

1st A

pril

1st A

pril

units

20

13

2013

un

its

2012

20

12

units

20

11

2011

G

uard

ian

Acui

ty E

quity

Fun

d 1,

250,

000

12,5

00

14,3

50

1,25

0,00

0 12

,500

12

,563

-

- -

G

uard

ian

Acui

ty F

ixed

Inco

me

Fund

3,

750,

000

37,5

00

42,6

00

3,75

0,00

0 37

,500

37

,875

-

- -

Th

e Sr

i Lan

ka F

und

1,26

5,82

3 11

2,28

0 12

6,87

6 1,

265,

823

112,

280

113,

687

1,26

5,82

3 11

2,28

2 14

2,52

5

Tota

l inv

estm

ent i

n un

it tru

sts

16

2,28

0 18

3,82

6

162,

280

164,

125

11

2,28

2 14

2,52

5



23. Trade and other receivables Group Company As at 31st March 2013 2012 1 April 2011 2013 2012 1 April 2011

Financial Trade receivable 95,230 1,974 43,137 16,782 - 238 Dividend receivable 48,114 28,811 11,113 24,030 16,284 6,906 Other receivable 1,082 - - - - - 144,426 30,785 54,250 40,812 16,284 7,144

Non financial Prepaid expenses 4,925 1,306 1,215 390 666 597 4,925 1,306 1,215 390 666 597

149,351 32,091 55,465 41,202 16,950 7,741

24. Fair value through profit or loss financial assets24.a Summary

Group Company As at 31st March 2013 2012 1 April 2011 2013 2012 1 April 2011

Investment in equity securities Quoted 947,594 782,421 1,163,989 147,453 149,078 101,324 Total investment in fair value through

profit or loss financial assets 947,594 782,421 1,163,989 147,453 149,078 101,324

24.b Movement in fair value through profit or loss financial assets - Group

Fair Fair value value as at as at 1st April Change in 31st March Year 2012/2013 2012 Additions Disposals fair value 2013

Investments in equity securities Quoted 782,421 1,047,995 (974,272) 91,450 947,594 782,421 1,047,995 (974,272) 91,450 947,594


Investments in equity securities Quoted 1,163,989 506,407 (770,217) (117,758) 782,421 1,163,989 506,407 (770,217) (117,758) 782,421

The change in fair value represent unrealized gains/(losses) on fair value through profit or loss financial assets.


24.1 Fair value through profit or loss financial assets - Group

(a) Investment in equity securities - Quoted Fair value Fair value Fair value as at as at as at No. of 31st March No. of 31st March No. of 1st April shares 2013 shares 2012 shares 2011

Bank, Finance and Insurance Central Finance Company PLC - - - - 40,000 50,948 Commercial Bank of Ceylon PLC 1,668,660 188,558 2,371,099 237,110 153,881 40,902 Hatton National Bank PLC 1,085,000 181,521 - - 100,000 38,000 Lanka Orix Leasing Company PLC - - - - 100,000 11,960 LB Finance PLC - - - - 53,800 9,420 Merchant Bank of Sri Lanka PLC - - - - 450,000 20,790 National Development Bank PLC - - 387,200 47,548 193,600 65,901 People’s Leasing & Finance PLC 180,688 2,367 - - - - Sampath Bank PLC - - - - 480,884 138,639 372,446 284,658 376,560

Beverage, Food & Tobacco Ceylon Tobacco Company PLC 64,167 50,095 - - - - Distilleries Company of Sri Lanka PLC 1,419,646 236,371 902,000 130,790 8,520,200 153,360 286,466 130,790 153,360

Diversified CT Holdings PLC - - 521,512 78,279 512,200 102,440 Expolanka Holdings PLC - - 4,198,600 26,032 - - John Keells Holdings PLC 889,422 219,687 1,001,700 206,349 1,136,600 324,613 Richard Peiris and Company PLC - - - - 2,000,000 27,200 219,687 310,660 454,253

Hotels & Travels Aitken Spence Hotel Holdings PLC 200,577 14,843 - - - - Trans Asia Hotels PLC - - - - 187,600 36,732 14,843 - 36,732

Land & Property Colombo Land and Development

Company PLC 518,093 15,802 87,500 3,413 - - 15,802 3,413 -

Manufacturing Piramal Glass Ceylon PLC 4,000,000 24,400 - - 1,400,000 15,540 Lanka Floortiles PLC - - - - 431,900 56,622 Royal Ceramics Lanka PLC - - 460,000 52,900 200,000 31,400 24,400 52,900 103,562

Plantations Kegalle Plantations PLC - - - - 107,900 22,389 Namunukula Plantations PLC - - - - 149,500 17,133 - - 39,522

Telecommunications Dialog Axiata PLC 1,550,000 13,950 - - - - 13,950 - -

Total investment in equity securities - Quoted 947,594 782,421 1,163,989

The fair value of quoted investments are based on the closing traded prices published by the Colombo Stock Exchange as at 31st March.



24. Fair value through profit or loss financial assets (continued)24.c Movement in fair value through profit or loss financial assets - Company


Investment in equity securities Quoted 149,078 149,872 (162,059) 10,562 147,453 149,078 149,872 (162,059) 10,562 147,453


Investments in equity securities Quoted 101,324 149,451 (78,908) (22,789) 149,078 101,324 149,451 (78,908) (22,789) 149,078

The change in fair value represent unrealized gains/(losses) on fair value through profit or loss financial assets.


24.2 Fair value through profit or loss financial assets - Company

(a) Investment in equity securities - Quoted

Fair value Fair value Fair value as at as at as at No. of 31st March No. of 31st March No. of 1st April shares 2013 shares 2012 shares 2011

Banks Finance & Insurance Commercial Bank of Ceylon PLC 521,336 58,910 1,017,751 101,775 - - Hatton National Bank PLC 345,000 57,719 - - - - Merchant Bank of Sri Lanka PLC - - - - 200,000 9,240 116,629 101,775 9,240

Beverage Food & Tobacco Ceylon Tobacco Company PLC 15,000 11,711 - - - - 11,711 - -

Diversified John Keells Holdings PLC - - 76,433 15,744 125,000 35,700 CT Holdings PLC - - 100,800 15,130 99,000 19,800 Expolanka Holdings PLC - - 2,099,300 13,016 - - - 43,890 55,500

Land & Property Colombo Land and Development

Company PLC 226,670 6,913 87,500 3,413 - - 6,913 3,413 -

Manufacturing Piramal Glass Ceylon PLC 2,000,000 12,200 - - - - Lanka Floor Tiles PLC - - - - 70,000 9,177 12,200 - 9,177

Plantations Kegalle Plantations PLC - - - - 87,900 18,239 Namunukula Plantations PLC - - - - 80,000 9,168 - - 27,407

Total investment in equity securities - Quoted 147,453 149,078 101,324

The fair value of quoted investments are based on the closing traded prices published by the Colombo Stock Exchange as at 31st March.



25. Cash and cash equivalents Group Company As at 31st March 2013 2012 1 April 2011 2013 2012 1 April 2011

Cash at bank 67,591 29,250 80,954 14,516 9,079 10,649 Placements with banking institutions 2,059,218 305,419 - 743,377 393,993 - Investments under repurchase

agreements 570,662 953,572 240,869 72,469 - - Total cash and cash equivalents 2,697,471 1,288,241 321,823 830,362 403,072 10,649

Bank overdrafts 28,073 16,020 540,974 27,627 - 335,738 28,073 16,020 540,974 27,627 - 335,738 Net cash and cash equivalents for the

purpose of cash flow statement 2,669,398 1,272,221 (219,151) 802,735 403,072 (325,089)

26. Stated capital As at 31st March 2013 2012 1 April 2011 Number Value Number Value Number Value of shares of shares of shares

26.1 Ordinary shares

Issued and fully paid Balance as at the beginning of the year 82,096,719 879,607 82,096,719 879,607 16,097,396 617,220 Sub division of shares (note 26.3.a) - - - - 64,389,584 - Capitalization of reserves (note 26.3.b) - - - - 1,609,739 262,387 Balance as at the end of the year 82,096,719 879,607 82,096,719 879,607 82,096,719 879,607

26.2 Deferred shares

As at 31st March 2013 2012 1 April 2011 Number Value Number Value Number Value of shares of shares of shares

Balance at the beginning of the year Fully paid shares 5,739,770 73,560 5,739,770 73,560 8,669 10,199 Partly paid shares* - - - - 2,593 45,392 Sub division of shares (Note 26.4) Fully paid shares - - - - 4,325,831 - Partly paid shares - - - - 1,293,907 - Capitalization of reserves (Note 26.4) Fully paid shares - - - - 86,690 14,131 Partly paid shares - - - - 22,080 3,838 Balance at the end of the year Fully paid shares 5,739,770 73,560 5,739,770 73,560 5,739,770 73,560 Partly paid shares - - - - - -

Total 953,167 953,167 953,167

* Partly paid deferred shares (issued price of Rs. 1,000/- per share) at the beginning of the financial year 2010/11 represent a paid up capital of Rs. 908/- per share and an unpaid capital of Rs. 92/- per share.


26.3Sub-divisionofsharesandcapitalizationofreserves

After obtaining the approval from the shareholders at an Extraordinary General Meeting held on 12th November 2010, the Company made the following changes to the stated capital of the Company during the financial year 2010/11.

(a) Sub-division of existing ordinary shares, fully paid deferred shares and partly paid deferred shares of the Company in the following manner:

Description Existing Subdivision No. of shares Number of ratio after the shares sub-division

Ordinary shares 16,097,396 5 : 1 80,486,980 Deferred shares – fully paid Rs.1,000/- 8,669 500 : 1 4,334,500 Deferred shares – partly paid Rs.908/- 2,593 500 : 1 1,296,500 (Rs. 238,556/- pending call up) (Rs. 238,556/- pending call up)

The sub-division of shares will not result in increasing the value of the stated capital of the Company.

(b) The Company, by capitalizing part of the Company’s revenue reserves, issued new ordinary shares, deferred shares and settle un-called amount of partly paid deferred shares in the proportion of 1:50 based on the number of ordinary shares /deferred shares after the above sub-division detailed in note 26.3 (a). Total of the revenue reserves capitalized amounted to Rs. 280,355,523/-

Description Ratio No. of shares issued by Consideration for capitalization of reserves shares issued

Ordinary shares 1:50 1,609,739 Rs.163/- per share Deferred shares – fully paid 1:50 86,690 Rs.163/- per share Deferred shares – partly paid 1:50 Credit of the uncalled capital

amount of Rs.238,556/- on the 1,296,500 partly paid deferred shares and issue of further 22,080 fully paid deferred shares. Rs.3,837,596/-

26.4 The Company issued a total of 1,609,739 ordinary shares and 108,770 new deferred shares from the capitalization of reserves.

26.5 After the subdivision and capitalization of reserves, the total stated capital of the Company amounted to Rs. 953 mn which consists of 82,096,719 ordinary shares and 5,739,770 fully paid deferred shares.

26.6 Superior voting rights attached to the deferred shares

The Company has in issue 5,739,770 shares titled ‘Deferred shares’. The Deferred shares are subordinated to the ordinary shares in respect of dividend entitlement and right to a dividend does not arise unless and until the ordinary shareholders have been paid a dividend. The Deferred shares confer on the holders present in person, by proxy or by attorney the right to as many votes as the number of votes conferred by all other shares for the time being issued and each holder as aforesaid present in person, proxy or attorney at any such meeting shall be entitled to such proportion of the votes conferred by the Deferred shares collectively as the number of his Deferred shares bears to the full number of the Deferred shares. The Deferred shares rank pari passu for all other purposes including capitalization of reserves with the ordinary shares of the Company, except for voting rights and dividend rights.



27. Capital reserves Group Company As at 31st March 2013 2012 1 April 2011 2013 2012 1 April 2011

Investment reserve (Note 27.1) 7,805 7,805 7,805 7,805 7,805 7,805 Other capital reserve (Note 27.1) 316,741 316,741 316,741 200,855 200,855 200,855 Associate company’s

capital reserve (Note 27.2) 1,201,532 1,393,229 1,274,162 - - - Jointly controlled entity’s

capital reserve (Note 27.2) 637 - - - - - 1,526,715 1,717,775 1,598,708 208,660 208,660 208,660

27.1 Investment reserve and other capital reserve

These amounts have been reserved for future development of the Company.

27.2 Associate company’s capital reserve/Jointly controlled entity’s capital reserve

Associate company’s capital reserve / jointly controlled entity’s capital reserve recognises the investor’s share of the other comprehensive income of the associate company / jointly controlled entity after the date of acquisition/ incorporation.

28. Revenue reserves Group Company As at 31st March 2013 2012 1 April 2011 2013 2012 1 April 2011

Fair value through profit or loss financial assets reserve (Note 28.1) 54,440 - 164,295 9,395 - 10,637

Available for sale financial assets reserve (Note 28.2) 3,325,718 3,512,762 6,548,220 979,808 1,188,761 3,024,107

General reserve (Note 28.3) 32,668 32,668 32,668 14,961 14,961 14,961 Retained earnings 8,830,036 7,179,079 4,979,589 3,397,003 2,984,476 2,105,214 12,242,862 10,724,509 11,724,772 4,401,167 4,188,198 5,154,919

28.1 Fair value through profit or loss financial assets reserve

An amount of Rs. 54.4 mn and Rs. 9.4 mn was transferred to (2012 - Rs.164.3 mn and Rs.10.6 mn was transferred from) “Fair value through profit or loss financial assets reserve” resulting from the change in fair value of fair value through profit or loss financial asset as shown in the statement of changes in equity.

Any gains arising from fair value adjustment will be transferred from retained earnings to “Fair value through profit or loss financial assets reserve” at the reporting date and any realised losses arising will be transferred from “Fair value through profit or loss financial assets reserve” to retained earnings to the extent that the loss does not exceed the balance held in the said reserve as at that date.

28.2 Available for sale financial assets reserve

This consists of net unrealised gains / (losses) arising from change in fair value of available for sale financial assets and excludes cumulative impairments losses incurred as at the reporting date.

28.3 General reserve

These represents the amounts set aside by the Directors to meet any contingencies.


29. Employee benefits Group Company As at 31st March 2013 2012 1 April 2011 2013 2012 1 April 2011

Balance at the beginning of the year 3,564 1,720 561 - - - Provision for the year 1,861 1,844 1,159 - - - Payments made during the year - - - - - - Balance as at the end of the year 5,425 3,564 1,720 - - -

29.1 The amounts recognised in the Statement of comprehensive income are as follows;

Group Company As at 31st March 2013 2012 1 April 2011 2013 2012 1 April 2011

Interest cost 357 172 68 - - - Current service cost 1,334 854 353 - - - Actuarial gains /(losses) 170 818 738 - - - Balance as at the end of the year 1,861 1,844 1,159 - - -

The gratuity liability as at 31st March 2013 amounting to Rs. 5,425,732/- (2012 - Rs.3,564,156/-) for the Group is made based on an actuarial valuation carried out by Mr. M. Poopalanathan (AIA) of Messrs Actuarial & Management Consultants (Pvt) Ltd. As recommended by the Sri Lanka Accounting Standard (LKAS - 19)- “Employee Benefits”, the “Projected Unit Credit (PUC)” method has been used in this valuation.

The principal assumptions made are given below :

- Rate of discount 10% p.a. - Rate of pay increase 12% p.a. - Retirement age 55 years - Mortality A 67/70 mortality table, issued by the Institute of

Actuaries, London was used. - Withdrawal rate 5% for age up to 49 and Zero thereafter. - The company is a going concern.

The above liability is not externally funded.


30. Deferred tax liabilities/(assets) Group Company As at 31st March 2013 2012 1 April 2011 2013 2012 1 April 2011

Balance as at the beginning of the year 792 1,896 (250) - - - On origination and reversal of temporary differences (11,196) (1,104) 2,146 (10,404) - - (10,404) 792 1,896 (10,404) - -

30.1 Movement in deferred taxation during the year

Employee benefits 376 (516) (324) - - - Property plant and equipments (1,168) (588) 2,470 - - - Tax losses carried forward (10,404) - - (10,404) Net deferred tax charged/(reversed) for the year (11,196) (1,104) 2,146 (10,404) - -

30.2 Deferred tax liabilities

Tax effect on property, plant and equipment 622 1,790 2,378 - - - 622 1,790 2,378 - - -

30.3 Deferred tax assets

Tax effect on employee benefits 622 998 482 - - - Tax effect on brought forward tax losses 10,404 - - 10,404 - - 11,026 998 482 10,404 - - (10,404) 792 1,896 (10,404) - -

Unrecognised Deferred tax asset

Due to the uncertainty regarding the availability of future taxable profits against which the deferred tax asset would be utilized. Unrecognized deferred tax asset as at the reporting date amounted to Rs.7,315,322/-

30.4 Impact due to corporate income tax rate change

As provided for in Sri Lanka Accounting Standard (LKAS 12) - “Income taxes”, deferred tax assets and liabilities should be measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the reporting date.

Consequently following rates have been used for the computation of deferred tax assets/ liabilities in respective years.

As at 31st March Income tax rate

2011 - 28% 2012 - 28% 2013 - 28%



31. Trade and other payables Group Company As at 31st March 2013 2012 1 April 2011 2013 2012 1 April 2011

Financial Trade payables - - - - - - Other payables 35,209 37,117 27,190 12,593 10,532 8,578 35,209 37,117 27,190 12,593 10,532 8,578

Non financial Accruals and provisions 13,031 9,061 3,128 1,698 1,956 902 13,031 9,061 3,128 1,698 1,956 902 48,240 46,178 30,318 14,291 12,488 9,480

32. Comparative figures Previous years’ figures and phrases have been rearranged wherever necessary to conform to the current year’s

presentations.

33. Events after the reporting period After satisfying the solvency test in accordance with Section 57 of the Companies Act, No. 07 of 2007, the Directors

have recommended the payment of a first and final dividend of Rs. 2/50 (2012 - Rs. 2/00) per ordinary share / deferred share for the year ended 31st March 2013 amounting to Rs. 219,591,222/50 (2012 - Rs. 175,672,978/-) which is to be approved at the forthcoming Annual General Meeting. In accordance with Sri Lanka Accounting Standard (LKAS 10) - “Events after the reporting period”, this proposed first and final dividend has not been recognised as a liability as at 31st March 2013.

Subsequent to the reporting period, no circumstances have arisen which would require adjustments to or disclosure in the financial statements, other than the above.

34. Commitments and contingencies34.1 Capital expenditure commitments

There were no material capital commitments exist as at the reporting date.

34.2 Contingencies

There were no material contingent liabilities as at the reporting date.


35. Related party transactions The Company carried out transactions in the ordinary course of its business with parties who are defined as related

parties in Sri Lanka Accounting Standard (LKAS 24) - “Related Party Disclosures”, the details of which are reported below

35.1 Parent and ultimate controlling party

In the opinion of the Directors, Carson Cumberbatch PLC is the parent and ultimate controlling party of Ceylon Guardian Investment Trust PLC.

35.2 Group entities

Ownership interest % As at 31st March 2013 2012 1 April 2011

Subsidiaries Ceylon Investment PLC 64 64 64

Rubber Investment Trust Limited 82 82 82 Guardian Capital Partners PLC 84 84 84 Guardian Fund Management Limited 100 100 100

Equity Accounted Investees Associate Company 20 20 20

Bukit Darah PLC

Jointly controlled entity Guardian Acuity Asset Management Limited 50 50 -

35.3 Transactions with Key Management Personnel (KMP)

According to Sri Lanka Accounting Standard (LKAS 24) - “Related Party Disclosures”, Key Management Personnel (KMP) are those having authority and responsibility for planning and controlling the activities of the entity. Accordingly, the Directors of the Company and its parent company (including executive and non-executive directors) and their immediate family members have been classified as Key Management Personnel of the Company.

Compensation paid to the Key Management Personnel of the Company and the Group comprise the following;


Short-term employee benefits 25,973 20,153 6,533 5,500 Post-employment benefits 506 438 - - Termination benefits - - - - Other long-term benefits - - - - Non cash benefits 20 - - - 26,499 20,591 6,533 5,500

No transactions have taken place during the year between the Company and its subsidiaries and its KMPs other than disclosed above.



35.4 Transactions with related companies

Name and the nature of relationship

Names of the common Directors/

KMPs

Nature of transactions Value of the transactions

Group Company

2013 2012 2013 2012Parent CompanyCarson Cumberbatch PLC

I. Paulraj D.C.R. GunawardenaK. Selvanathan (Alternate to M. Selvanathan)

Short-term advances provided Interest earned on short-term advances Settlements made on the short term advances providedDividend paid

-

-

-

121,741

50,000

40

50,000

94,177

-

-

-

121,741

50,000

40

50,000

94,177

SubsidiariesCeylon Investment PLC

I. PaulrajD.C.R. GunawardenaA. de Z.GunasekeraV. M. FernandoMrs. M. A. R. C CoorayK. Selvanathan

Dividends received - - 79,260 62,854

Rubber Investment Trust Limited

I. Paulraj D.C.R. Gunawardena

Dividends received - - 43,512 41,043

Guardian Fund Management Limited (GFM)

I. Paulraj**D.C.R. Gunawardena**K. Selvanathan

Portfolio management fees paidShort-term advances providedSettlement received on short-term advance providedSubscription to the rights issue of shares

-

-

-

-

-

-

-

-

6,704

6,000

6,000

45,092

6,829

-

-

-

Associate CompanyBukit Darah PLC I. Paulraj

D.C.R. Gunawardena K. Selvanathan (Alternate to M. Selvanathan)

Dividend received on ordinary sharesDividend received on 8% participative cumulative preference shares

61,315

765

51,096

636

-

-

-

-



Name and the nature of relationship

Names of the common Directors/

KMPs

Nature of transactions Value of the transactions

Group Company

2013 2012 2013 2012

Jointly controlled entityGuardian Acuity Asset Management Limited

D.C.R. GunawardenaK. Selvanathan

Subscription to the initial share issuePortfolio management fees receivedSubscription to the rights issue of shares

-

3,140

15,000

20,000

2,025

-

-

-

15,000

20,000

-

-

Fellow subsidiariesCarsons Management Services (Private) Limited

D.C.R. Gunawardena*K. Selvanathan

Management fees paidComputer fees paidSecretarial fees paidSecretarial expenses paidFees on professional services rendered

18,7861,3201,140

--

19,9771,290

450153

1,500

5,100420300

--

5,680420300

40-

Equity Two PLC D.C.R. Gunawardena Rental charges paid 2,465 741 - -

Other entitiesSri Lanka Fund D.C.R. Gunawardena Portfolio management fees

received3,520 4,075 - -

Hatton National Bank PLC

Mrs. M.A.R.C. Cooray R. Theagarajah***

Interest income receivedBalances held in demand depositsInterest expenseBalances held in Short-term deposits

57,6431,569

--

30,2861,246

2,920305,418

36,547738

--

16,511574

423152,709

The Company as at the reporting date carries approved inter-changeable short-term borrowing facility with Ceylon Investment PLC, the subsidiary, to the value of Rs. 300 mn (2012 - Rs. 300 mn)

* Mr. D. C. R. Gunawardena relinquished his duties and responsibilities as a Director of Carsons Management Services (Private) Limited with effect from 15th April 2011

** Mr. I. Paulraj and D. C. R. Gunawardena resigned from the Board of Guardian Fund Management Limited with effect from 19th April 2011 and 15th April 2011 respectively.

*** Mr. R. Theagarajah is a director of Carson Cumberbatch PLC, the parent entity of Ceylon Guardian Investment Trust PLC.

35. Related party transactions (continued)


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p

As a

t 31s

t Mar

ch 2

012

1st A

pril

2011

Effe

ct o

f tra

nsiti

on to

Ef

fect

of t

rans

ition

to

LK

AS/S

LFRS

LK

AS/S

LFRS

N

ote

As p

er R

eclas

sifica

tion

Re-m

easu

remen

t As

per

LKA

S As

per

Rec

lassifi

catio

n Re

-mea

surem

ent

As p

er L

KAS

SL

AS

/SLF

RS

SLAS

/S

LFRS

AS

SETS

N

on-c

urre

nt a

sset

s

Prop

erty

, pla

nt a

nd e

quip

men

t

4,66

7 -

- 4,

667

6,44

7 -

- 6,

447

In

tang

ible

ass

ets

incl

udin

g go

odw

ill

23

9,19

4 -

- 23

9,19

4 23

7,199

-

- 23

7,199

Inve

stm

ent i

n eq

uity

acc

ount

ed in

vest

ees

36.2

.3

3,33

9,08

7 -

2,09

3,43

9 5,

432,

526

2,70

9,48

1 -

1,33

9,35

0 4,

048,

831

O

ther

long

-term

inve

stm

ents

36

.2.5

8,

356,

276

(8,3

56,2

76)

- -

11,3

55,1

88

(11,3

55,1

88)

- -

Av

aila

ble

for s

ale

finan

cial

ass

ets

36.2

.4/3

6.2.

5 -

8,35

6,27

6 10

9,20

3 8,

465,

479

- 11

,355

,188

63

0,03

8 11

,985

,226

Tota

l non

-cur

rent

ass

ets

11

,939

,224

-

2,20

2,64

2 14

,141

,866

14

,308

,315

-

1,96

9,38

8 16

,277

,703

Curre

nt a

sset

s

Trad

e an

d ot

her r

ecei

vabl

es

36.2

.6

35,7

19

- (3

,628

) 32

,091

55

,691

-

(226

) 55

,465

Curre

nt ta

x re

cove

rabl

e

20,8

13

- -

20,8

13

14,9

81

- -

14,9

81

Sh

ort-t

erm

inve

stm

ents

36

.2.5

78

2,42

1 (7

82,4

21)

- -

1,16

3,98

9 (1

,163

,989

) -

-

Fair

valu

e th

roug

h pr

ofit o

r los

s fin

anci

al a

sset

s 36

.2.5

-

782,

421

- 78

2,42

1 -

1,16

3,98

9 -

1,16

3,98

9

Cash

and

cas

h eq

uiva

lent

s 36

.2.6

1,

284,

613

- 3,

628

1,28

8,24

1 32

1,59

7 -

226

321,

823

To

tal c

urre

nt a

sset

s

2,12

3,56

6 -

- 2,

123,

566

1,55

6,25

8 -

- 1,

556,

258

To

tal a

sset

s

14,0

62,7

90

- 2,

202,

642

16,2

65,4

32

15,8

64,5

73

- 1,

969,

388

17,8

33,9

61

EQ

UIT

Y AN

D LI

ABIL

ITIE

S

Eq

uity

St

ated

cap

ital

95

3,16

7 -

- 95

3,16

7 95

3,16

7 -

- 95

3,16

7

Capi

tal r

eser

ves

1,

378,

976

- 33

8,79

9 1,

717,7

75

1,59

8,70

8 -

- 1,

598,

708

Re

venu

e re

serv

es

9,

840,

182

- 88

4,32

7 10

,724

,509

10

,579

,883

-

1,14

4,88

9 11

,724

,772

Tota

l equ

ity a

ttrib

utab

le to

e

quity

hol

ders

of t

he p

aren

t

12,1

72,3

25

- 1,

223,

126

13,3

95,4

51

13,1

31,7

58

- 1,

144,

889

14,2

76,6

47

N

on c

ontro

lling

inte

rest

1,82

3,87

2 -

979,

516

2,80

3,38

8 2,

154,

418

- 82

4,49

9 2,

978,

917

To

tal e

quity

13,9

96,1

97

- 2,

202,

642

16,1

98,8

39

15,2

86,1

76

- 1,

969,

388

17,2

55,5

64

Li

abili

ties

Non

-cur

rent

liab

ilitie

s

Em

ploy

ee b

enefi

ts

3,

564

- -

3,56

4 1,

720

- -

1,72

0

Defe

rred

tax

liabi

litie

s

792

- -

792

1,89

6 -

- 1,

896

To

tal n

on-c

urre

nt li

abili

ties

4,

356

- -

4,35

6 3,

616

- -

3,61

6

Cu

rrent

liab

ilitie

s

Trad

e an

d ot

her p

ayab

les

46

,178

-

- 46

,178

30

,318

-

- 30

,318

Inco

me

tax

paya

ble

39

-

- 39

3,

489

- -

3,48

9

Bank

ove

rdra

ft

16,0

20

- -

16,0

20

540,

974

- -

540,

974

To

tal c

urre

nt li

abili

ties

62

,237

-

- 62

,237

57

4,78

1 -

- 57

4,78

1

Tota

l lia

bilit

ies

66

,593

-

- 66

,593

57

8,39

7 -

- 57

8,39

7

Tota

l equ

ity a

nd li

abili

ties

14

,062

,790

-

2,20

2,64

2 16

,265

,432

15

,864

,573

-

1,96

9,38

8 17

,833

,961



36.

Tran

siti

on

to

LK

AS

/SLF

RS

(co

nti

nu

ed)

36.1

.2 R

eco

nci

liati

on

of

equ

ity

- G

rou

p

As a

t 31s

t Mar

ch 2

012

1st A

pril

2011

Effe

ct o

f tra

nsiti

on to

Ef

fect

of t

rans

ition

to

LK

AS/S

LFRS

LK

AS/S

LFRS

N

ote

As p

er R

eclas

sifica

tion

Re-m

easu

remen

t As

per

LKA

S As

per

Rec

lassifi

catio

n Re

-mea

surem

ent

As p

er L

KAS

SL

AS

/SLF

RS

SLAS

/S

LFRS

AS

SETS

N

on-c

urre

nt a

sset

s

Prop

erty

, pla

nt a

nd e

quip

men

t

4,66

7 -

- 4,

667

6,44

7 -

- 6,

447

In

tang

ible

ass

ets

incl

udin

g go

odw

ill

23

9,19

4 -

- 23

9,19

4 23

7,199

-

- 23

7,199

Inve

stm

ent i

n eq

uity

acc

ount

ed in

vest

ees

36.2

.3

3,33

9,08

7 -

2,09

3,43

9 5,

432,

526

2,70

9,48

1 -

1,33

9,35

0 4,

048,

831

O

ther

long

-term

inve

stm

ents

36

.2.5

8,

356,

276

(8,3

56,2

76)

- -

11,3

55,1

88

(11,3

55,1

88)

- -

Av

aila

ble

for s

ale

finan

cial

ass

ets

36.2

.4/3

6.2.

5 -

8,35

6,27

6 10

9,20

3 8,

465,

479

- 11

,355

,188

63

0,03

8 11

,985

,226

Tota

l non

-cur

rent

ass

ets

11

,939

,224

-

2,20

2,64

2 14

,141

,866

14

,308

,315

-

1,96

9,38

8 16

,277

,703

Curre

nt a

sset

s

Trad

e an

d ot

her r

ecei

vabl

es

36.2

.6

35,7

19

- (3

,628

) 32

,091

55

,691

-

(226

) 55

,465

Curre

nt ta

x re

cove

rabl

e

20,8

13

- -

20,8

13

14,9

81

- -

14,9

81

Sh

ort-t

erm

inve

stm

ents

36

.2.5

78

2,42

1 (7

82,4

21)

- -

1,16

3,98

9 (1

,163

,989

) -

-

Fair

valu

e th

roug

h pr

ofit o

r los

s fin

anci

al a

sset

s 36

.2.5

-

782,

421

- 78

2,42

1 -

1,16

3,98

9 -

1,16

3,98

9

Cash

and

cas

h eq

uiva

lent

s 36

.2.6

1,

284,

613

- 3,

628

1,28

8,24

1 32

1,59

7 -

226

321,

823

To

tal c

urre

nt a

sset

s

2,12

3,56

6 -

- 2,

123,

566

1,55

6,25

8 -

- 1,

556,

258

To

tal a

sset

s

14,0

62,7

90

- 2,

202,

642

16,2

65,4

32

15,8

64,5

73

- 1,

969,

388

17,8

33,9

61

EQ

UIT

Y AN

D LI

ABIL

ITIE

S

Eq

uity

St

ated

cap

ital

95

3,16

7 -

- 95

3,16

7 95

3,16

7 -

- 95

3,16

7

Capi

tal r

eser

ves

1,

378,

976

- 33

8,79

9 1,

717,7

75

1,59

8,70

8 -

- 1,

598,

708

Re

venu

e re

serv

es

9,

840,

182

- 88

4,32

7 10

,724

,509

10

,579

,883

-

1,14

4,88

9 11

,724

,772

Tota

l equ

ity a

ttrib

utab

le to

e

quity

hol

ders

of t

he p

aren

t

12,1

72,3

25

- 1,

223,

126

13,3

95,4

51

13,1

31,7

58

- 1,

144,

889

14,2

76,6

47

N

on c

ontro

lling

inte

rest

1,82

3,87

2 -

979,

516

2,80

3,38

8 2,

154,

418

- 82

4,49

9 2,

978,

917

To

tal e

quity

13,9

96,1

97

- 2,

202,

642

16,1

98,8

39

15,2

86,1

76

- 1,

969,

388

17,2

55,5

64

Li

abili

ties

Non

-cur

rent

liab

ilitie

s

Em

ploy

ee b

enefi

ts

3,

564

- -

3,56

4 1,

720

- -

1,72

0

Defe

rred

tax

liabi

litie

s

792

- -

792

1,89

6 -

- 1,

896

To

tal n

on-c

urre

nt li

abili

ties

4,

356

- -

4,35

6 3,

616

- -

3,61

6

Cu

rrent

liab

ilitie

s

Trad

e an

d ot

her p

ayab

les

46

,178

-

- 46

,178

30

,318

-

- 30

,318

Inco

me

tax

paya

ble

39

-

- 39

3,

489

- -

3,48

9

Bank

ove

rdra

ft

16,0

20

- -

16,0

20

540,

974

- -

540,

974

To

tal c

urre

nt li

abili

ties

62

,237

-

- 62

,237

57

4,78

1 -

- 57

4,78

1

Tota

l lia

bilit

ies

66

,593

-

- 66

,593

57

8,39

7 -

- 57

8,39

7

Tota

l equ

ity a

nd li

abili

ties

14

,062

,790

-

2,20

2,64

2 16

,265

,432

15

,864

,573

-

1,96

9,38

8 17

,833

,961

36.1

.3

Rec

on

cilia

tio

n o

f eq

uit

y -

Co

mp

any

As a

t 31s

t Mar

ch 2

012

1 Ap

ril 2

011

Effe

ct o

f tra

nsiti

on to

Ef

fect

of t

rans

ition

to

LK

AS/S

LFRS

LK

AS/S

LFRS

Not

e As

per

Rec

lassifi

catio

n Re

-mea

surem

ent

As p

er L

KAS

As p

er R

eclas

sifica

tion

Re-m

easu

remen

t As

per

LKA

S

SLAS

/

SLFR

S SL

AS

/ SL

FRS

AS

SETS

N

on-c

urre

nt a

sset

s

Inve

stm

ent i

n su

bsid

iarie

s

1,92

6,44

1 -

- 1,

926,

441

1,92

6,42

2 -

- 1,

926,

422

In

vest

men

t in

join

tly c

ontro

lled

entit

y

20,0

00

- -

20,0

00

- -

- -

O

ther

long

-term

inve

stm

ents

36

.2.5

2,

774,

736

(2,7

74,7

36)

- -

4,45

6,38

4 (4

,456

,384

) -

-

Avai

labl

e fo

r sal

e fin

anci

al a

sset

s 36

.2.4

/36.

2.5

- 2,

774,

736

57,3

55

2,83

2,09

1 -

4,45

6,38

4 14

8,71

6 4,

605,

100

To

tal N

on-C

urre

nt A

sset

s

4,72

1,17

7 -

57,3

55

4,77

8,53

2 6,

382,

806

- 14

8,71

6 6,

531,

522

Cu

rrent

ass

ets

Tr

ade

and

othe

r rec

eiva

bles

36

.2.6

18

,570

-

(1,6

20)

16,9

50

7,741

-

- 7,7

41

In

com

e ta

x re

cove

rabl

e

14,8

81

- -

14,8

81

10,7

28

- -

10,7

28

Sh

ort-t

erm

inve

stm

ents

36

.2.5

14

9,07

8 (1

49,0

78)

- -

101,

324

(101

,324

) -

-

Fair

valu

e th

roug

h pr

ofit o

r los

s

fina

ncia

l ass

ets

36.2

.5

- 14

9,07

8 -

149,

078

- 10

1,32

4 -

101,

324

Ca

sh a

nd c

ash

equi

vale

nts

36.2

.6

401,

452

- 1,

620

403,

072

10,6

49

- -

10,6

49

To

tal C

urre

nt A

sset

s

583,

981

- -

583,

981

130,

442

- -

130,

442

To

tal A

sset

s

5,30

5,15

8 -

57,3

55

5,36

2,51

3 6,

513,

248

- 14

8,71

6 6,

661,

964

EQ

UIT

Y AN

D LI

ABIL

ITIE

S

Equi

ty

Stat

ed c

apita

l

953,

167

- -

953,

167

953,

167

- -

953,

167

Ca

pita

l res

erve

s

208,

660

- -

208,

660

208,

660

- -

208,

660

Re

venu

e re

serv

es

4,

130,

843

- 57

,355

4,

188,

198

5,00

6,20

3 -

148,

716

5,15

4,91

9

Tota

l equ

ity

5,

292,

670

- 57

,355

5,

350,

025

6,16

8,03

0 -

148,

716

6,31

6,74

6

LIAB

ILIT

IES

Cu

rrent

liab

ilitie

s

Trad

e an

d ot

her p

ayab

les

12

,488

-

- 12

,488

9,

480

- -

9,48

0

Bank

ove

rdra

ft

- -

- -

335,

738

- -

335,

738

To

tal l

iabi

litie

s

12,4

88

- -

12,4

88

345,

218

- -

345,

218

To

tal e

quity

and

liab

ilitie

s

5,30

5,15

8 -

57,3

55

5,36

2,51

3 6,

513,

248

- 14

8,71

6 6,

661,

964


36. Transition to LKAS/SLFRS (continued)36.2 Notes to the reconciliations36.2.1 Transfers between different categories of financial assets and recognition of gain/(loss) on disposal of such

investments. The Group historically has classified its unquoted investments as ‘long-term investments’ and upon listing of such

securities in the Colombo Stock Exchange, had transferred such investments on a selective basis, into ‘short-term investments’ category. This resulted in gain/(loss) arising on the disposal of such investments being accounted for as ‘Net gain/(loss) on disposal of short-term investments’, which would otherwise be accounted for as ‘Net gain/(loss) on disposal of long-term investments’.

With the adoption of Sri Lanka Accounting Standard (LKAS) 39 – “Financial Instruments; Recognition and measurement”, effective from the date of transition, the Group designated its long-term investments into ‘Available for sale financial assets’ category and short-term investments into ‘Fair value through profit or loss financial assets’ category. Further, the said revised accounting standards brought in restrictions over transfers between different categories of financial assets/financial liabilities, upon their initial designation against a stipulated class of financial assets/liabilities.

Accordingly, the Group has recognized the gains arising on disposal of investments which were originally classified as ‘long-term investments’ as ‘Net gain on disposal of available for sale financial assets’.

The impact to the financial statements: For the year ended 31st March 2012 Group Company

Statement of comprehensive income Net gain/(loss) on disposal of fair value through profit or loss financial assets (359,705) (175,742) Net gain on disposal of available for sale financial assets 359,705 175,742 Net effect on total comprehensive income - -

36.2.2 Change in basis of recognition of impairment of available for sale financial assets Under the previous accounting framework, the Group recognized an impairment loss on its long-term investments,

referred to as ‘Unrealized gain/(loss) on mark to market value adjustment’ in the income statement, being the fall in value of such investments below their cost of acquisition. Reversal of such impairment losses was accounted for in the income statement, in the period in which such circumstances changed and only to the extent that such reversal would offset a previously recognized unrealized loss on mark to market value adjustment.

Sri Lanka Accounting Standard (LKAS) 39 – “Financial Instruments; Recognition and measurement” requires impairment losses on available for sale financial assets be recognized in the Statement of comprehensive income, being the fall in value of such investments below their cost of acquisition, only when such fall in value amounts to be significant or prolonged. The Group considers a decline of 20 percent below the cost of acquisition to be significant and a period of 9 months to be prolonged.

Further, the said revised accounting standards require any previously recognized impairment losses be reversed, if the fair value of the underlying financial asset classified as ‘available for sale’ increases subsequently and restricts such reversal be accounted through the profit or loss.

The impact to the financial statements: For the year ended 31st March 2012 Group Company

Statement of comprehensive income Impairment of available for sale financial assets 14,760 14,760

Other comprehensive income Net change in fair value of available for sale financial assets (14,760) (14,760) Net effect on total comprehensive income - -



36.2.3 Impact on the investment in associate company arising from the adoption of LKAS/SLFRS

Due to the adoption of LKAS/SLFRS, the financial performance and the financial position of the associate company, Bukit Darah PLC for the prescribed periods have been re-measured.

Such re-measurement required the financial performance and the financial position of the Group be re-measured for the prescribed periods, with the resultant impact is reflected on the ‘Share of profit of equity accounted investees net of tax’, ‘Share of other comprehensive income of equity accounted investees net of tax’ and ‘Investment in equity accounted investees’.

The impact to the financial statements:

For the year ended 31st March 2012 Group Company

Statement of comprehensive income Share of profit of equity accounted investees net of tax 389,489 -

Other comprehensive income Share of other comprehensive income of equity accounted investees net of tax 364,599 - Net effect on total comprehensive income 754,088 -

Group Company As at 31st March 2012 1 April 2011 2012 1 April 2011

Statement of financial position Investment in equity accounted investees 2,093,439 1,339,350 - - Net effect on total equity 2,093,439 1,339,350 - -

36.2.4 Designation of private equity (unlisted) investments into ‘Available for sale financial assets’ category

Under the previous accounting reporting framework, the Group accounted for its private equity (unlisted) investments at cost, on a more prudent basis.

Sri Lanka Accounting Standard (LKAS) 39 – “Financial Instruments; Recognition and measurement” requires such investments be designated into ‘available for sale financial assets’ category and be measured at their fair value. Accordingly, the Group has applied valuation techniques; including forecasted cash flow projections, net assets value, earning based valuation and expected realizable values in an arm’s length transaction as appropriate, to determined the fair value of the underlying investments. The resultant impact as at the date of transition has been recognized under ‘Revenue reserves’. Subsequent changes in fair value, except in the case of an impairment loss, are accounted for under ‘Other comprehensive income’ as ‘Net change in fair value of available for sale financial assets’.

The impact to the financial statements are:

For the year ended 31st March 2012 Group Company

Statement of comprehensive income Other comprehensive income

Net change in fair value of available for sale financial assets (212,979) 57,355 Transfer of realized gains on available for sale financial assets (307,856) (148,716) Net effect on total comprehensive income (520,835) (91,361)


36. Transition to LKAS/SLFRS (continued) Group Company As at 31st March 2012 1 April 2011 2012 1 April 2011

Statement of financial position Available for sale financial assets 109,203 630,038 57,355 148,716 Net effect on total equity 109,203 630,038 57,355 148,716

36.2.5 Re-classification of long-term investments into ‘Available for sale financial assets’ category and short-term investments in to ‘Fair value through profit or loss financial assets’ category

Under previous accounting framework, the Group classified its investments held for yield and capital appreciation in the medium to long term into ‘long-term investments’. Such investments were carried at revalued amounts; based on the closing traded prices, net asset values and at cost, as appropriate. Further, investments held for short-term trading are classified into ‘short-term investments’ and carried at market values .

With adoption Sri Lanka Accounting Standard (LKAS) 39 – “Financial Instruments; Recognition and measurement”, the Group reclassified such ‘long-term investments’ in to ‘Available for sale financial assets’ category and ‘short-term investments’ in to ‘Fair value through profit or loss financial assets’ category.



Available for sale financial assets 8,356,276 11,355,188 2,774,736 4,456,384 Other long-term investments (8,356,276) (11,355,188) (2,774,736) (4,456,384) Fair value through profit or loss financial assets 782,421 1,163,989 149,078 101,324 Short-term investments (782,421) (1,163,989) (149,078) (101,324) Net effect on total equity - - - -

36.2.6Recognitionof‘Loansandreceivables-Financialassets’atamortizedcost

With the transition to LKAS/SLFRS, the Group classified its ‘Cash and cash equivalents’ in to ‘Loans and receivables - Financial assets’ category and recognized such at amortized cost, with the interest accrued on such balances being classified from ‘Trade and other receivables’.



Statement of financial position Cash and cash equivalents 3,628 226 1,620 - Trade and other receivables (3,628) (226) (1,620) - Net effect on total equity - - - -



36.2.7 Impact on total comprehensive income / total equity The above changes increased / (decreased) the total comprehensive income for the year as follows: For the year ended 31st March 2012 Group Company

Statement of comprehensive income Impairment of available for sale financial assets - Change in basis of recognition

of impairment of available for sale financial assets 14,760 14,760 Share of profit of equity accounted investees net of tax - Impact on the

investment in associate company arising from the adoption of LKAS/SLFRS 389,489 - Net effect on total profit 404,249 14,760

Other comprehensive income Net change in fair value of available for sale financial assets - Change in basis of

recognition of impairment of available for sale financial assets (14,760) (14,760) Transfer of realized gains on available for sale financial assets - Designation of

private equity (unlisted) investments into ‘Available for sale financial assets’ category (307,856) (148,716) Share of other comprehensive income of equity accounted investees net of tax - Impact

on the investment in associate company arising from the adoption of LKAS/SLFRS 364,599 - Net change in fair value of available for sale financial assets - - Designation of private

equity (unlisted) investments into ‘Available for sale financial assets’ category (212,979) 57,355 Net effect on total other comprehensive income (170,996) (106,121) Net effect on total comprehensive income 233,253 (91,361)

The above changes increased / (decreased) the total equity as at the end of the year and the composition thereof as follows:

Net effect of transition on profit attributable to: Equity holders of the parent 186,710 14,760 Non controlling interest 217,539 - Net effect of transition on profit for the year 404,249 14,760

Net effect of transition on total comprehensive income attributable to: Equity holders of the parent 78,236 (91,361) Non controlling interest 155,017 - Net effect of transition on total comprehensive income for the year 233,253 (91,361)

The above changes increased / (decreased) the total equity as at the end of the year and the composition thereof as follows: Group Company As at 31st March 2012 1 April 2011 2012 1 April 2011

Statement of financial position Investment in equity accounted investees - Impact on the investment

in associate company arising from the adoption of LKAS/SLFRS 2,093,439 1,339,350 - - Available for sale financial assets - Designation of private

equity (unlisted) investments into ‘Available for sale financial assets’ category 109,203 630,038 57,355 148,716

Net effect on total equity at the end of the year 2,202,642 1,969,388 57,355 148,716

Effect of transition on total equity attributable to: Equity holders of the parent 1,223,126 1,144,889 57,355 148,716 Non controlling interest 979,516 824,499 - - Net effect on total equity at the end of the year 2,202,642 1,969,388 57,355 148,716

36.2.9 Cash flow statement No material impact to the Cash flow statements of the Company and the Group arises from the transition from SLAS

to LKAS/SLFRS.


37. Financial instruments Financial risk management - Overview

The Group has exposure to the following risks arising from financial instruments:

Credit risk Liquidity risk Market risk.

This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risk.

Risk management framework

The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Board of Directors has delegated this function to the Chief Executive Officer of Guardian Fund Management Limited, the Fund Managers and Carsons Management Services (Private) Limited, the Managers; who are responsible for developing and monitoring the Group’s risk management policies and submission of reports regularly to the Board of Directors on its activities.

The Groups’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls and to monitor compliance therewith. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group, through its training and management standards/procedures aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Audit Committee of Carson Cumberbatch PLC, the parent company, oversees how management monitors compliance with the Group’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Audit Committee is assisted in its supervision role by the Group Internal Audit function. Internal Audit function undertakes both regular and ad-hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee. In keeping with the best practices in an investment business, the Group has an Independent Compliance Officer, who has supervision over the regulatory, compliance aspects and operational procedures and reports to the Audit Committee.

Further, an Investment Committee drawn from across the Carsons Group directorate provide advice and insights to the fund management team to further sharpen and refine their decision making process. This comprehensive management structure determines the objectives and policies of the Group’s risk management framework and promotes a culture of risk awareness and balanced risk-taking within the Group.

37.1 Credit risk

Credit risk is the risk of financial loss to the Group, if a customer or a counterparty to a financial instrument or an obliged party to a receivable fails to meet its contractual obligations and arises primarily on the Group’s investments in fixed income earning securities, placements with banking institutions and receivables from market intermediaries and other counter parties, the Group has dealings with.



37.1.1 Credit risk exposure and managing the risk

The carrying amount of financial assets from sources as more fully described in paragraph 37.1 represents the maximum credit exposure; the values at the end of each reporting period was as follows;

Carrying Amount As at 31st March Note 2013 2012 1 April 2011

Available for sale financial assets - Investment in debentures 22.a 5 5 5 Available for sale financial assets - Investment in unit trusts 22.a 367,652 328,250 285,051 Trade and other receivables 23 144,426 30,785 54,250 Cash and cash equivalents - Cash at bank 25 67,591 29,250 80,953 Cash and cash equivalents - Placements with banking institutions 25 2,059,218 305,419 - Cash and cash equivalents - Investments under repurchases agreements 25 570,662 953,572 240,869 3,209,554 1,647,281 661,128


Investment in debentures

These represents investment in debentures, which yields interest income on a continuing basis. However the Group’s exposure to credit risk, arising from these investments is insignificant, considering the net investment value.

Investment in unit trusts

The Group has invested in three unit trusts; The Sri Lanka Fund, Guardian Acuity Equity Fund and Guardian Acuity Fixed Income Fund. The Group has infused promoters capital to each of these funds and the management of the underlying funds rests with the Group’s investment management arm; Guardian Fund Management Limited.

These investments are carried at their fair values; being the net asset value of the funds as at each reporting date. They operate in a highly regulated environment, which requires the funds to carry adequate assets in highly liquid form, generally 5% of the net assets value, which will ensure customer withdrawals are settled promptly.

A due evaluation process has been carried out by the Group prior to these investments, which included an assessment of their ability to repay, in the event the Group wishes to withdraw.

Trade and other receivables

A significant portion of the trade and other receivable comprise of proceeds receivable on disposal of quoted securities, dividend receivable and portfolio management fee receivable from clients external to the Group.

Settlement procedures surrounding the equity markets are highly structured and regulated. A ‘T+3’ settlement cycle is in place with the involvement of a custodian bank, which is being duly monitored by the regulator, hence provides assurance on the realization of underlying balances. Further, a due evaluation process, including a continuous assessment mechanism is in place, in ascertaining ‘market intermediaries’ the Group transacts with, and requires the approval of the Board of Directors.

Dividend receivable is accounted for when the right to receive the dividend is established. The balances are settled within a maximum period of 4-6 weeks and no risk of default, based on past experience in the industry.


37. Financial instruments (continued) The management fee receivable from clients external to the Group are invoiced once in every three months and an

approved credit period of 30 days prevail for settlement. The terms determining the fees have been agreed with the parties in the form of a bi-lateral agreements, such that the risk of a dispute is kept to the minimum. These customers have transacted with the Group for a period exceeding 3 years and have resulted in no defaults to-date.

Impairment losses

The aging of trade and other receivables at the end of the reporting period that were not impaired are as follows


Less than 30 days 143,201 29,453 52,677 30 – 60 days 508 624 775 61 – 90 days 590 708 798 91 – 120 days 43 - - More than 120 days 84 - - 144,426 30,785 54,250

The Group has neither recognized an impairment loss nor an allowance for impairment of its trade and other receivables over the past 5 years.

Cash and cash equivalents

The Group held cash and equivalents in the form of demand deposits with commercial banks, placements with banking institutions and investments under repurchase agreements, hence the Group is exposed to risk of such counter-parties failing to meet contractual obligations.

The Group minimizes the credit risk by monitoring creditworthiness of the underlying counter-parties periodically.

An analysis of banking and financial institutional counter-parties with whom the balances were held at end of each of the reporting period is presented below;


Credit rating AAA 28,649 5,450 26,447

AA 2,632,796 950,517 272,687 AA- 1,569 306,665 - Unrated 34,457 25,609 22,689 2,697,471 1,288,241 321,823

37.2 Liquidity risk

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



37.2.1 Exposure to liquidity risk

The following are the remaining contractual maturities of financial liabilities at the end of the reporting period;

Contractual cash flows Carrying up to 3 3-12 More than As at 31st March 2013 amount Total months months a year

Non derivative financial liabilities Trade and other payables 35,209 35,209 35,209 - - Bank overdrafts 28,073 28,073 28,073 - - 63,282 63,282 63,282 - -

Contractual cash flows Carrying up to 3 3-12 More than As at 31st March 2012 amount Total months months a year


Contractual cash flows Carrying up to 3 3-12 More than As at 1st April 2011 amount Total months months a year


It is not expected that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different amounts.

37.2.2 Management of liquidity risk The Group’s approach to managing liquidity risk is to ensure, as far as possible, that it will have sufficient liquidity to

meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

The Group maintains a portion of its assets in highly liquid form, demand deposits with commercial banks, placements with banking institutions and investments under repurchase agreements, in order to capitalize on the opportunities arising in volatile market conditions and to meet its contractual obligations during the normal course of its operations.

A significant portion of the Group’s investment portfolio comprise of listed equity investments, which provides the Group with exposure to adequate liquidity, given the ability to convert into cash and cash equivalents within a very short period of time.

An analysis of unutilized short-term financing arrangements available to the Group as at each of the reporting dates are given below;


Unutilized short-term financing arrangements 1,572,373 1,583,980 734,026 1,572,373 1,583,980 734,026


37. Financial instruments (continued)37.3 Market risk

The market risk is exposure to adverse movements in equity and fixed income investments resulting from factors external to the Group, which can result in variations in the anticipated return. All financial institutions face market risks, created by changes in the macro economic environmental factors, including political factors, national security, economic management and globalization influences which have an impact on the systematic risk.

37.3.1 Interest rate risk

The Group is exposed to interest rate risk, arising from its placements with banking institutions and investments under repurchase agreements, and short-term financing facilities, in the event such have been utilized. All such financial instruments which the Group has contracted for, carry variable rates of interest.

Profile

At the end of each reporting period, the interest rate profile of the Group’s interest-bearing financial instruments as reported to the Management of the Group was as follows;

Carrying Amount As at 31st March 2013 2012 1 April 2011

Financial assets Placements with banking institutions 2,059,218 305,419 - Investments under repurchases agreements 570,662 953,572 240,869 2,629,880 1,258,991 240,869

Financial liabilities Bank overdrafts 28,073 16,020 540,974 28,073 16,020 540,974

The indexed average base interest rates applied for the above financial instruments are as follows;

Commercial Banks Average Weighted Prime Lending Rate ( AWPLR) * 13.86% 12.42% 9.15% Commercial Banks Average Weighted Fixed Deposit Rate ( AWFDR) * 13.94% 9.84% 8.17% * Monthly average rate

Sensitivity Analysis

A change of 1% in interest rates at the end of the reporting period would have increased/(decreased) profit or loss by the amounts shown below.

Profit or loss Movement in interest rate Increase in 1% Decrease in 1%

As at 31 March 2013 - On interest earning assets 26,299 (26,299) - On interest bearing liabilities (281) 281 26,018 (26,018) As at 31 March 2012 - On interest earning assets 12,590 (12,590) - On interest bearing liabilities (160) 160 12,430 (12,430)



37.3.2 Equity price risk

The Group operate as an investment house, where the principal activity of each of the companies within the Group being to act as specialized investment vehicles to undertake, among others; listed and private equity investments, the Group is categorically exposed to equity price risk. Having a substantial portion of 70% (2012 – 81%), of its investment portfolio designated as listed investments in the Colombo Stock Exchange and private equity investments, market volatilities bring in substantial volatility to the Group’s earnings and value of its asset base at each of the reporting dates.

Management of market price risk Listed equity

Management of the Group monitors the equity securities in its investment portfolio based on market indices, where timing of buy / sell decisions are well supported with structured in-house research recommendations. Transactions of a major magnitude are subject to review and approval by the Investment Committee.

Private equity

Due evaluations are carried out before-hand, extending to both financial and operational feasibility of the private equity projects that the Group ventures into, with a view to ascertain the Company’s investment decision and the risks involved. Continuous monitoring of the operations against the budgets and the industry standards ensure that the projects meet the desired outcome, and thereby the returns. Further, the Group generally carries investment agreements with the parties concerned, which carry specific ‘exit clauses’ to private equity projects - typically an ‘Initial Public Offering’ or a ‘Buy-out’ at a specified price or price formulae, which provides cover against movements in market conditions.

The total asset base which is exposed to equity price risk is tabulated below;

Carrying amount As at 31st March Note 2013 2012 1 April 2011

Investment in equity securities - Available for sale financial assets 22 7,625,903 8,137,224 11,700,170 Investment in equity securities - Fair value through profit or

loss financial assets 24 947,594 782,421 1,163,989 8,573,497 8,919,645 12,864,159

A broad analysis of the investments made by the Group based on the industry/sector is given in note 22 and 24.


37. Financial instruments (continued)37.3.3 Currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate, due to changes in foreign exchange rates. The Group is exposed to currency risk on its investments that are denominated in a currency other than the functional currency. The Group’s investment in ‘The Sri Lanka Fund’, a country fund domiciled in Cayman Islands to which the Group has infused promoters capital, remains the prime factor that exposes the Group in to currency risk.

The net exposure to currency risk, as at the reporting date is as follows.

Carrying Amount As at 31st March Currency 2013 2012 2011

Investments in Unit Trusts - The Sri Lanka Fund LKR 253,752 227,374 285,051 Investments in Unit Trusts - The Sri Lanka Fund USD 2,024,994 1,774,972 2,581,984

The following exchange rates applied during the year.

USD/ LKR 125.31 128.10 110.40

Sensitivity Analysis

Strengthening/(weakening) of the USD against Sri Lankan Rupee would have increased/(decreased) the equity as at the end of the period by the amounts shown below. The analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of further investments or withdrawals.

No impact to profit or loss for the year arises from a movement in the foreign exchange rates, provided such movements in value of ‘Available for sale financial assets’ resulting from a movement in foreign exchange rates are required to be recognised in other comprehensive income, as provided for in Sri Lanka Accounting Standard (LKAS) 39 – “Financial Instruments; Recognition and measurement”.

Impact to equity Movement in exchange rate Strengthening Weakening

As at 31 March 2013 - United State Dollars (1% movement) (2,538) 2,538

As at 31 March 2012 - United State Dollars (1% movement) (2,274) 2,274


ANNUAL REPORT 2012/13101

37.4 Fair values Vs carrying amounts

The fair values of financial assets and liabilities together with the respective carrying amounts as shown in the statement of financial position are as follows;

Fair value Held Loans Available Other Total through profit to and for financial carrying Fair As at 31st March 2013 or loss maturity receivables sale liabilities amount value

Assets Available for sale financial assets - - - 7,993,560 - 7,993,560 7,993,560 Trade and other receivables - - 144,426 - - 144,426 144,426 Fair value through profit or loss financial assets 947,594 - - - - 947,594 947,594 Cash and cash equivalents - - 2,697,471 - - 2,697,471 2,697,471 Total financial assets 947,594 - 2,841,897 7,993,560 - 11,783,051 11,783,051

Liabilities Trade and other payables - - - - 35,209 35,209 35,209 Bank overdraft - - - - 28,073 28,073 28,073 Total financial liabilities - - - - 63,282 63,282 63,282

Fair value Held Loans Available Other Total through profit to and for financial carrying Fair As at 31st March 2012 or loss maturity receivables sale liabilities amount value

Assets Available for sale financial assets - - - 8,465,479 - 8,465,479 8,465,479 Trade and other receivables - - 30,785 - - 30,785 30,785 Fair value through profit or loss financial assets 782,421 - - - - 782,421 782,421 Cash and cash equivalents - - 1,288,241 - - 1,288,241 1,288,241 Total financial assets 782,421 - 1,319,026 8,465,479 - 10,566,926 10,566,926


Fair value Held Loans Available Other Total through profit to and for financial carrying Fair As at 1st April 2011 or loss maturity receivables sale liabilities amount value

Assets Available for sale financial assets - - - 11,985,226 - 11,985,226 11,985,226 Trade and other receivables - - 54,250 - - 54,250 54,250 Fair value through profit or loss financial assets 1,163,989 - - - - 1,163,989 1,163,989 Cash and cash equivalents - - 321,823 - - 321,823 321,823 Total financial assets 1,163,989 - 376,073 11,985,226 - 13,525,288 13,525,288



37. Financial instruments (continued)37.5 Fair value hierarchy

The table below analyses financial instruments carried at fair value, by the levels in the fair value hierarchy. The different levels have been defined as follows;

Level 1: Availability of quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Use of inputs other than quoted prices that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3: Use of inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Level 1 Level 2 Level 3 Total

As at 31st March 2013 Equity securities - available for sale financial assets 7,535,073 401,143 57,344 7,993,560 Equity securities - Fair value through profit or loss financial assets 947,594 - - 947,594 8,482,667 401,143 57,344 8,941,154

As at 31st March 2012 Equity securities - available for sale financial assets 8,018,135 390,000 57,344 8,465,479 Equity securities - Fair value through profit or loss financial assets 782,421 - - 782,421 8,800,556 390,000 57,344 9,247,900

As at 1st April 2011 Equity securities - available for sale financial assets 10,535,431 1,134,334 315,461 11,985,226 Equity securities - Fair value through profit or loss financial assets 1,163,989 - - 1,163,989 11,699,420 1,134,334 315,461 13,149,215

During the year 2012, available for sale equity securities with a carrying amount of Rs. 1,134 mn were transferred from Level 2 to Level 1, upon their listing in the Colombo Stock Exchange and the quoted prices in the market for such equity securities becoming available.

During the year 2012, available-for-sale equity securities with a carrying amount of Rs. 262.8 mn were transferred from Level 3 to Level 2.

No movements have occurred in the fair value measurement of financial assets classified in to Level 3 of the fair value hierarchy, during the year.

38. Responsibility for financial statements The Board of Directors is responsible for the preparation and presentation of the financial statements. This is more

fully described under the relevant clause in the Directors’ report.



Five Year SummaryIn Rupees Thousands

SLFRS/LKAS SLAS For the year ended/As at 31st March 2013 2012 2011 2010 2009

Financial performance - Group RevenueDividend income 471,025 410,896 293,890 398,324 241,580 Net gain on disposal of investments 1,235,698 1,763,145 2,373,482 2,012,807 789,304 Interest income 154,853 95,670 15,356 135,482 38,122 Management fee 43,755 44,487 37,218 13,981 10,807 1,905,331 2,314,198 2,719,946 2,560,594 1,079,813 Less: Inter-group transactions (262,732) (232,898) (194,354) (1,463,679) (91,707) 1,642,599 2,081,300 2,525,592 1,096,915 988,106 Fair value adjustment - unrealized 2 38,010 (677,321) 199,678 304,339 (356,284)Profit on investment activities 1,680,609 1,403,979 2,725,270 1,401,254 631,822

Profit before taxation 2,314,985 2,554,255 3,328,380 1,714,685 660,632 Income tax expense (23,579) (15,696) (4,532) (35,106) (7,463)Profit for the year 2,291,406 2,538,559 3,323,848 1,679,579 653,169 Non controlling interest (410,336) (371,609) (361,088) (359,206) (360,442)Profit attributable to the equity holders ofCeylon Guardian Investment Trust PLC 1,881,070 2,166,950 2,962,760 1,320,373 292,727 Dividends paid (Company) (175,673) (131,755) (154,798) (232,702) (35,411)

Statement of financial positionCapital employedStated capital 953,167 953,167 953,167 672,811 672,811 Reserves 13,769,577 12,442,284 12,178,591 6,964,438 3,879,095 Total equity attributable to equity holders ofCeylon Guardian Investment Trust PLC 14,722,744 13,395,451 13,131,758 7,637,249 4,551,906 Non controlling interest 3,146,008 2,803,388 2,154,418 1,566,029 1,053,800 Net assets 17,868,752 16,198,839 15,286,176 9,203,278 5,605,706

Assets employedCurrent assets 3,809,140 2,123,566 1,556,258 746,646 2,170,024 Current liabilities (87,497) (62,237) (574,781) (346,542) (69,041)Net current assets 3,721,643 2,061,329 981,477 400,104 2,100,983

Non-current assets 14,152,534 14,141,866 14,308,315 8,803,735 3,505,084 Non-current liabilities (5,425) (4,356) (3,616) (561) (361)Net assets 17,868,752 16,198,839 15,286,176 9,203,278 5,605,706

Cash Flow StatementsNet cash generated from/(used in) from operating activities 1,634,668 1,678,344 1,295,516 (321,393) 1,383,420 Net cash generated from/(used in) investing activities (16,448) (25,728) (1,108,829) (291) 707,908 Net cash generated from/(used in) financing activities (221,043) (161,244) (205,508) (1,856,358) (63,051)Net increase/(decrease) in cash and cash equivalents 1,397,177 1,491,372 (18,821) (2,178,042) 2,028,277

1 Financial information for the periods 2009 - 2011 were not adjusted to reflect the transition to new/revised Sri Lanka Accounting Standards (LKAS/SLFRS) applicable for financial periods beginning on or after 1st January 2012.

2 Fair value adjustment - unrealized comprises of unrealized gains/(losses) on the distinctive categories of financial assets, under the previous and revised accounting framework.


SLFRS/LKAS SLAS For the year ended/As at 31st March 2013 2012 2011 2010 2009

Ratios & statisticsOperational ratioReturn on ordinary shareholders funds (%) 12.78 16.18 22.56 17.29 6.43

Liquidity ratioCurrent ratio (Times) 43.53 34.12 2.71 2.15 31.43

Investor ratioEarnings per share (Rs.) 21.42 24.67 33.73 14.52 14.47 Dividend per share (Rs.) 1 2.50 2.00 1.50 9.00 11.50 Dividend cover (times) 8.57 12.34 22.49 7.63 1.26 Dividend growth (%) 25 33 (15) (33) 557 Dividend yield (%) 1.56 0.87 0.41 1.79 11.03 Dividend payout ratio (%) 11.67 8.11 4.45 61.98 79.49 Net assets per share - book value (Rs.) 167.62 152.50 149.50 444.03 224.95 Net assets per share - market value (Rs.) 247.48 265.88 354.68 620.33 252.95 Market value per share (Rs.) 2 160.00 231.00 369.50 501.50 104.25 Price earning ratio (times) 7.47 9.36 10.95 34.54 7.20 Price to book value ratio (times) 0.95 1.51 2.47 1.13 0.46 Market capitalisation (Rs.) 13,135,475 18,964,342 30,334,738 8,072,844 1,974,287 Fair value of investments (Rs.) 26,029,738 28,052,053 36,282,044 13,784,140 6,135,154 All Share Price Index (points) 5,736 5,420 7,226 3,725 1,638 S&P SL 20 Index (points) 3,294 2,986 3,893 2,142 912

1 Proposed dividend of Rs. 219.6mn for the current year is not provided for in the financial statements.2 As at 31st March.

Five Year SummaryIn Rupees Thousands


US$ Financials

Preparation of US DollarFinancial Statements

The Financial Statements of the Company are

stated in Sri Lankan Rupees. The translation of

Sri Lankan Rupee amounts into US Dollar

amounts is included solely for the convenience

of Shareholders, Investors, Bankers and other

users of Financial Statements. US Dollar

Financials do not form part of the audited

Financial Statements of the Company.


For the year ended / As at 31st March 2013 2012 Change (%)

Revenue 12,676,331 18,553,218 (32)

Profit from operations 12,044,707 11,500,222 5

Share of profit of equity accounted investees net of tax 5,828,044 11,320,414 (49)

Profit before taxation 17,865,240 22,779,408 (22)

Profit for the year 17,683,331 22,629,336 (22)

Total other comprehensive expense for the year (3,101,767) (30,575,145) (90)

Total comprehensive income/(expense) for the year 14,581,519 (7,935,717) (284)

Net cash generated from operating activities 12,615,087 14,968,438 (16)

Total equity attributable to equity holders of the parent 116,064,202 104,570,265 11

Return on ordinary shareholders’ funds (%) 15.72 22.50 (30)

Earnings per share (Rs) 0.17 0.22 (23)

Dividend per share (Rs) * 0.02 0.02 8

Net assets per share - Book value 1.32 1.19 11

Net assets per share - Market value 1.95 2.08 (6)

Ceylon Guardian - Fund value ** 205,200,922 218,985,574 (6)

* Based on proposed dividends and subject to approval at the Annual General Meeting

** Based on fair value of portfolio after adjusting for cash and cash equivalents

Basis of conversion

The translation of Sri Lankan Rupee amounts in to US Dollar amounts is solely for the convenience of the shareholder, investor, banker and other users of financial statements.

The translation of the financial statements in to US Dollar were effected based on the following exchange rates. 2013 2012 2011

Income statement Average rate 129.58 112.18 112.13Monetary assets and liabilities Closing rate 126.85 128.10 110.40Non-monetary assets and liabilities Closing rate 126.85 128.10 110.40 Ordinary share capital Historical rate Gains or losses on conversion are accounted for in the foreign currency equalization reserve.

Financial HighlightsIn United States Dollars


Statement of Comprehensive IncomeIn United States Dollars

Group For the year ended 31st March 2013 2012

Revenue 12,676,331 18,553,218 Impairment of available for sale financial assets (412,409) (4,988,082)Net change in fair value of fair value through profit or loss financial assets 705,742 (1,049,724)Profit on investment activities 12,969,664 12,515,412 Administrative and other operating expenses (924,919) (1,020,316)Profit from operations 12,044,745 11,495,096 Net finance expense (7,493) (46,256)Profit from operations after net finance expense 12,037,252 11,448,840 Share of profit of equity accounted investees net of tax 5,828,044 11,320,414 Profit before taxation 17,865,296 22,769,254 Income tax expense (181,965) (139,918)Profit for the year 17,683,331 22,629,336

Other comprehensive incomeNet change in fair value of available for sale financial assets 6,506,274 (10,091,273)Foreign currency differences arising from the retranslation of available for sale financial assets (43,062) 282,047 Transfer of realized gains on available for sale financial assets (7,769,918) (22,043,671)Share of other comprehensive income/(expense) of equity accounted investees net of tax (1,795,061) 1,291,380 Other comprehensive expense for the year (3,101,767) (30,561,517)Total comprehensive income/(expense) for the year 14,581,564 (7,932,181)

Profit attributable to:Equity holders of the parent 14,516,669 19,316,723 Non controlling interest 3,166,662 3,312,613 17,683,331 22,629,336

Total comprehensive income/(expense) attributable to:Equity holders of the parent 11,598,750 (6,680,701)Non controlling interest 2,982,814 (1,251,480) 14,581,564 (7,932,181)

Earnings per share - USD 0.17 0.19 Dividend per share - USD 0.02 0.02

* Dividend per share is based on the proposed/ interim dividends.


Statement of Financial PositionIn United States Dollars

Group As at 31st March 2013 2012 1 April 2011

ASSETSNon-Current AssetsProperty, plant and equipment 25,250 36,432 58,397 Intangible assets including goodwill 1,864,896 1,867,244 2,148,542 Investment in equity accounted investees 46,581,041 42,408,478 36,674,194 Available for sale financial assets 63,015,845 66,084,926 108,561,830 Deterred tax assets 82,018 - - Total Non-Current Assets 111,569,050 110,397,080 147,442,963

Current AssetsTrade and other receivables 1,177,383 250,515 502,400 Current tax recoverable 116,074 162,475 135,697 Fair value through profit or loss financial assets 7,470,193 6,107,892 10,543,379 Cash and cash equivalents 21,265,045 10,056,526 2,915,063 Total Current Assets 30,028,695 16,577,408 14,096,539 Total Assets 141,597,745 126,974,488 161,539,502

EQUITY AND LIABILITIESEquityStated capital 8,834,775 8,834,775 8,834,775 Capital reserves 10,458,561 12,253,622 10,962,242 Revenue reserves 96,770,866 83,481,868 109,520,596 Total equity attributable to equity holders of the parent 116,064,202 104,570,265 129,317,613

Non-controlling interest 24,801,009 21,884,372 26,982,786 Total Equity 140,865,211 126,454,637 156,300,399

Non-Current LiabilitiesEmployee benefits 42,767 27,822 15,580 Deferred tax liabilities - 6,183 17,174 Total Non-Current Liabilities 42,767 34,005 32,754

Current LiabilitiesTrade and other payables 380,292 360,483 274,619 Current tax liabilities 88,166 304 31,603 Bank overdraft 221,309 125,059 4,900,127 Total Current Liabilities 689,767 485,846 5,206,349 Total Liabilities 732,534 519,851 5,239,103 Total Equity and Liabilities 141,597,745 126,974,488 161,539,502

Net assets per ordinary/deferred share - Book value - Rs. 1.32 1.19 1.47 Net assets per ordinary/deferred share - Market value - Rs. 1.95 2.08 3.16


Five year summaryIn United States Dollars

SLFR/LKAS SLAS Year ended 31st March 2013 2012 2011 2010 2009

Financial highlights - GroupStatement of incomeRevenueDividend income 3,635,013 3,662,828 2,620,976 3,467,003 2,103,439 Net gain on disposal of investments 9,536,178 15,717,106 21,167,234 17,519,427 6,872,477 Interest income 1,195,038 852,826 136,948 1,179,232 331,929 Management fee 337,668 396,568 331,918 121,682 94,097 14,703,897 20,629,328 24,257,076 22,287,344 9,401,942 Less: Inter-group transactions (2,027,566) (2,076,110) (1,733,291) (12,739,829) (798,494) 12,676,331 18,553,218 22,523,785 9,547,515 8,603,448

Profit before taxation 17,865,296 22,779,254 29,683,225 14,924,580 5,752,129 Income tax expense (181,965) (139,918) (40,417) (305,558) (64,980)Profit for the year 17,683,331 22,629,336 29,642,808 14,619,022 5,687,149 Non controlling interest (3,166,662) (3,312,613) (3,220,263) (3,126,522) (3,138,372)Profit attributable to the equity holders ofCeylon Guardian Investment Trust PLC 14,516,669 19,316,723 26,422,545 11,492,500 2,548,777 Dividends paid (company) (1,355,707) (1,175,020) (1,379,907) (1,261,002) (1,896,285)

Statement of Financial positionCapital employedStated capital 8,834,775 8,834,775 8,834,775 6,334,507 6,334,507 Reserves 107,229,427 95,735,490 110,112,457 60,611,923 33,007,809 Shareholders’ funds 116,064,202 104,570,265 118,947,232 66,946,430 39,342,316 Minority interest 24,801,009 21,884,372 19,514,498 13,727,464 9,108,038 140,865,211 126,454,637 138,461,730 80,673,894 48,450,354

Assets employedCurrent assets 30,028,695 16,577,408 14,096,540 6,547,121 18,757,770 Current liabilities (689,767) (485,846) (5,206,350) (3,037,710) (596,724)Net current assets 29,338,928 16,013,667 8,890,190 3,509,411 18,161,046 Non-current assets 111,569,050 110,397,080 129,604,303 77,169,401 30,292,428 Non-current liabilities (42,767) (34,005) (32,763) (4,918) (3,120) 140,865,211 126,454,637 138,461,730 80,673,894 48,450,354

Cash Flow StatementsNet cash generated from/(used in) operating activities 12,615,087 14,968,447 11,553,696 (2,797,398) 12,045,451 Net cash generated from/(used in) investing activities (126,933) (229,279) (9,888,781) (2,533) 6,163,761 Net cash generated from/ (used in) financing activities (1,705,837) (1,438,776) (1,832,766) (16,157,699) (548,986)Net increase/(decrease) in cash & cash equivalents 10,782,317 13,300,392 (167,851) (18,957,630) 17,660,226

RATIOS & STATISTICSOperating ratioReturn on ordinary shareholders’ funds (%) 10.57 15.33 22.21 21.84 14.46

Liquidity ratioCurrent ratio (times) 34.12 34.12 2.71 2.16 31.43

Investor ratiosEarnings per share (US$) 0.17 0.22 0.30 0.13 0.13


Information to shareholders and investors

1. Stock Exchange listing Ceylon Guardian Investment Trust PLC is a public listed company, the Ordinary Shares of which are listed on the main

board of the Colombo Stock Exchange.

Stock Exchange code for Ceylon Guardian Investment Trust PLC shares is “GUAR”.

2. Share valuation The market price of the Company’s shares as at 31st March 2013 was Rs.160/- per share (2012 – Rs. 231/-).

3. Ordinary shareholders As at 31st March 2013 2012

Number of Shareholders 1,682 1,705

The number of ordinary shares held by non-residents as at 31st March, 2013 was 8,285,134 (2012 – 8,098,559) which amounts to 10.10% (2012 – 9.87%).

Distribution of Shares

Residents Non-Residents Total

No of share-

holders

No. of Shares

% No of share-

holders

No of Shares

% No of share-

holders

No of Shares

%

1 - 1,000 1,113 254,652 0.31 16 6,551 0.01 1,129 261,203 0.32

1,001 - 10,000 345 1,150,964 1.40 21 80,483 0.10 366 1,231,447 1.50

10,001 - 100,000 119 3,722,788 4.53 22 672,134 0.82 141 4,394,922 5.35

100,001 - 1,000,000 37 10,258,414 12.50 4 674,830 0.82 41 10,933,244 13.32

Above 1,000,000 3 58,424,767 71.16 2 6,851,136 8.35 5 65,275,903 79.51

Total 1,617 73,811,585 89.90 65 8,285,134 10.10 1,682 82,096,719 100.00

Categories of shareholders No of shareholders No. of Shares %

Individuals 1,499 12,932,839 15.75

Institutions 183 69,163,880 84.25

Total 1,682 82,096,719 100.00

4. Market performance - Ordinary shares

For the year 2013 2012

As at 31st March (Rs.) 160.00 231.00 Highest (Rs.) 231.00 402.00 Lowest (Rs.) 144.00 231.00 Value of the shares traded (Rs.) 225,871,683 1,490,213,227 No. of shares traded 1,288,133 4,621,453 Volume of transactions (Nos.) 1,845 3,279


5. Marketcapitalization Market capitalisation of the Company which is the number of ordinary shares in issue multiplied by the market value

of an ordinary share was Rs.13,135,475,040/- as at 31st March, 2013 (2012 - Rs. 18,964,342,089/-).

6. Record of Bonus Issues, Rights Issues, Repurchase and Subdivision of shares The undermentioned share issues/repurchase have been made by the Company to date, in relation to its ordinary

shares.

Year ended Issue Basis No. of shares Cumulative No. of shares

1951 - Initial Capital – 757,525 757,525

1990 - Bonus 01:01 757,525 1,515,050

1992 - Bonus 01:08 189,381 1,704,431

1999 - Bonus 01:04 426,108 2,130,539

2000 - Bonus 01:04 532,634 2,663,173

2002 - April Rights 01:07 380,453 3,043,626

- May Bonus 01:04 760,906 3,804,532

2003 - July Rights 01:05 760,906 4,565,438

- August Bonus 01:06 760,906 5,326,344

2004 - July Rights 01:02 2,663,172 7,989,516

2004 - September Bonus 01:03 2,663,172 10,652,688

2005 - March Rights 01:03 3,550,896 14,203,584

- June Bonus 01:03 4,734,528 18,938,112

2009 - October Repurchase 03.20 (2,840,716) 16,097,396

2010 - November Subdivision 05:01 64,389,584 80,486,980

Capitalisation of Reserves 01:50 1,609,739 82,096,719

7. Public Holding The percentage of ordinary shares held by the public as at 31st March 2013 was 32.84% (2012 - 32.84%)

8. Dividend The Directors have recommended a first and final dividend of Rs. 2/50 per Ordinary share and Deferred share for the

year ended 31st March 2013 (2012 - Rs.2/-).

9. Number of employees The Company had no employees at the balance sheet date (2012 - Nil). The Group has 16 (2012 - 14) employees as at

the balance sheet date.

10. Major shareholders A list of major shareholders of the Company as at the balance sheet date is provided in the Annual Report of the Board

of Directors, on page 29.

Information to shareholders and investors


Notes



Notice of Meeting

NOTICE IS HEREBY GIVEN that the SIX TY FIRST Annual General Meeting of CEYLON GUARDIAN INVESTMENT TRUST PLC will be held on Tuesday, the 30th day of July 2013 at 11.00 a.m. at The Kingsbury Hotel, “The Balmoral” Ballroom, No. 48, Janadhipathi Mawatha, Colombo 1 for the following purposes :

1. To receive and adopt the Annual Report of the Board of Directors and the Financial Statements for the year ended 31st March 2013, together with the Independent Auditors’ Report thereon.

2. To declare a dividend as recommended by the Directors.

3. To re-elect Mr. V.M. Fernando who retires by rotation in terms of Articles 89, 90 and 91 of the Articles of Association of the Company.

4. To re-elect Mr. K. Selvanathan who retires by rotation in terms of Articles 89, 90 and 91 of the Articles of Association of the Company.

5. To re-appoint Mr. I. Paulraj as a Director of the Company who is over Seventy years of age and to consider and if deemed fit to pass the following resolution :

“IT IS HEREBY RESOLVED that the age limit stipulated in Section 210 of the Companies Act, No. 07 of 2007 shall not be applicable to Mr. I. Paulraj who is 76 years of age and that he be re-appointed a Director of the Company from the conclusion of the Annual General Meeting for a further period of one year.”

6. To re-appoint Mr. A. de Z. Gunasekera as a Director of the Company who is over Seventy years of age and to consider and if deemed fit to pass the following resolution :

“IT IS HEREBY RESOLVED that the age limit stipulated in Section 210 of the Companies Act, No. 07 of 2007 shall not be applicable to Mr. A. de Z. Gunasekera who is 73 years of age and that he be re-appointed a Director of the Company from the conclusion of the Annual General Meeting for a further period of one year.”

7. To re-appoint Mr. C.W. Knight as a Director of the Company who is over Seventy years of age and to consider and if deemed fit to pass the following resolution :

“IT IS HEREBY RESOLVED that the age limit stipulated in Section 210 of the Companies Act, No. 07 of 2007 shall not be applicable to Mr. C.W. Knight who is 70 years of age and that he be re-appointed a Director of the Company from the conclusion of the Annual General Meeting for a further period of one year.”

8. To re-appoint Messrs. KPMG, Chartered Accountants as Auditors of the Company as set out in Section 154 (1) of the Companies Act, No. 07 of 2007 and to authorize the Directors to determine their remuneration.

By Order of the Board

(Sgd).K.D. de Silva (Mrs.)DirectorCarsons Management Services (Private) LimitedSecretaries


Notes

1. A member is entitled to appoint a proxy to attend and vote instead of him/her. A proxy need not be a member of the Company. A Form of Proxy accompanies this notice.

2. The completed Form of Proxy must be deposited at the Registered Office, No.61, Janadhipathi Mawatha, Colombo 1, not later than 11.00 a.m. on 28th July 2013.

3. A person representing a Corporation is required to carry a certified copy of the resolution authorising him/ her to act as the representative of the Corporation. A representative need not be a member.

4. The transfer books of the Company will remain open.

5. Security Check We shall be obliged if the shareholders/proxies

attending the Annual General Meeting, produce their National Identity Card to the security personnel stationed at the entrance lobby.


Form of Proxy

*I/ We........................................................................................................................................................................................................

of...............................................................................................................................................................................................................

being *a Member/Members of CEYLON GUARDIAN INVESTMENT TRUST PLC

hereby appoint........................................................................................................................................................................................

of...............................................................................................................................................................................................................

bearing NIC No./ Passport No......................................or failing him/her

Israel Paulraj or failing him,Don Chandima Rajakaruna Gunawardena or failing him,Asoka de Z. Gunasekera or failing him,Vernon Manilal Fernando or failing him, Mirihana Arachchige Rose Chandralatha Cooray or failing her, Krishna Selvanathan or failing him,Christopher William Knight

as *my/our proxy to attend the Annual General Meeting of the Company to be held on Tuesday, the 30th day of July 2013 at 11.00 a.m., at The Kingsbury Hotel, “The Balmoral” Ballroom, No. 48, Janadhipathi Mawatha, Colombo 1 and at any adjournment thereof and at every poll which may be taken in consequence thereof.

For Against

(1) To adopt the Annual Report of the Board of Directors and the Financial Statements for the year ended 31st March 2013, together with the Independent Auditors‘ Report thereon.

(2) To declare Rs. 2/50 per Ordinary share and Deferred share as a First & Final dividend for the financial year ended 31st March 2013 as recommended by the Directors.

(3) To re-elect Mr. V.M. Fernando who retires by rotation in terms of Articles 89, 90 and 91 of the Articles of Association of the Company.

(4) To re-elect Mr. K. Selvanathan who retires by rotation in terms of Articles 89, 90 and 91 of the Articles of Association of the Company.

(5) To re-appoint Mr. I. Paulraj who is over Seventy years of age as a Director of the Company.

(6) To re-appoint Mr. A. de Z. Gunasekera who is over Seventy years of age as a Director of the Company.

(7) To re-appoint Mr. C.W. Knight who is over Seventy years of age as a Director of the Company.

(8) To re-appoint Messrs. KPMG, Chartered Accountants as Auditors of the Company as set out in Section 154 (1) of the Companies Act, No. 07 of 2007 and to authorize the Directors to determine their remuneration.

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

…………………………………. Signature/s Note: (a) Please delete the inappropriate words.

(b) A shareholder entitled to attend and vote at a General meeting of the company, is entitled to appoint a proxy to attend and vote instead of him/her and the proxy need not be a shareholder of the company. A proxy so appointed shall have the right to vote on a show of hands or on a poll and to speak at the general meeting of the shareholders.

(c) A shareholder is not entitled to appoint more than one proxy to attend on the same occasion.(d) Instructions are noted on the reverse hereof.


INSTRUCTIONS AS TO COMPLETION

1. Kindly perfect the form of proxy after filling in legibly your full name and address, by signing in the space provided. Please fill in the date of signature.

2. If you wish to appoint a person other than the Directors as your proxy, please insert the relevant details in the space provided overleaf.

3. In terms of Article 71 of the Articles of Association of the Company:

The instrument appointing a proxy shall be in writing and :

(i) in the case of an individual shall be signed by the appointor or by his attorney; and

(ii) in the case of a corporation shall be either under its common seal or signed by its attorney or by an officer on behalf of the corporation.

The Company may, but shall not be bound to, require evidence of the authority of any such attorney or officer. A proxy need not be a member of the company.

4. In terms of Article 66 of the Articles of Association of the Company:

In the case of joint-holders of a share, the senior who tenders a vote, whether in person or by proxy or by attorney or by representative, shall be accepted to the exclusion of the votes of the other joint-holders and for this purpose seniority shall be determined by the order in which the names stand in the Register of Members in respect of the joint holding.

5. To be valid the completed form of proxy should be deposited at the Registered Office of the Company situated at No. 61, Janadhipathi Mawatha, Colombo 1 not later than 11.00 a.m. on 28th July 2013.

Please fill in the following details:

Name : ........ …………….......................................……………….………….….

Address : ........ …………….......................................……………….………….….

......... …………….......................................….…………….………….….

Jointly with : ........ …………….......................................……………….………….….

Share Folio No. : ........ …………….........................………………………….………….….

Contents Corporate Information

Name of CompanyCeylon Guardian investment trust PlC (A Carson Cumberbatch Company)

Company Registration No.PQ 52

Domicile and Legal FormCeylon Guardian investment trust PlC, is a Public Quoted Company with limited liability domiciled in sri lanka.

the Company was incorporated in sri lanka in 1951.

Principal Activity and Nature of Operationsduring the year, the principal activity of the Company was holding and managing of an investment portfolio.

Parent Companythe Company’s parent Company and controlling entity is Carson Cumberbatch PlC, which is incorporated in sri lanka.

Directorsmr. i. Paulraj (Chairman)mr. d.C.R. Gunawardenamr. A. de. Z. Gunasekeramr. v.m. Fernando mrs. m.A.R.C. Cooray mr. K. selvanathan mr. C.W. Knight

Number of Employeesthe Company did not have any employees of its own as at the end of the year

Bankers standard Chartered Bank HsBCCommercial Bank of Ceylon PlCdeutsche Bank AGdFCC BankPeoples’ Bank

Auditorsmessrs. KPmG Chartered Accountants,no. 32A, sir mohamed macan markar mawatha, Colombo 3.

Investment ManagersGuardian Fund management limitedno. 61, Janadhipathi mawatha, Colombo 1, sri lanka.tele: +94-11-2039200Fax: +94-11-2039385

Managers & SecretariesCarsons management services (Private) limitedno. 61, Janadhipathi mawatha, Colombo 1.tele: +94-11-2039200 Fax: +94-11-2039300

Registered Office and Principal Place of Businessno. 61, Janadhipathi mawatha, Colombo 1.tele: +94-11-2039200 Fax: +94-11-2039300

Corporate Websitewww.carsoncumberbatch.com

the Company is a member of the Carson Cumberbatch Group of companies

Financial Highlights 01

Chairman’s statement 02

managers’ Review 04

Risk management 15

Annual Report of the Board of directors

on the Affairs of the Company 21

Profiles of the directors 30

management team Profile 33

Audit Committee Report 34

Financial information 36

independent Auditors’ Report 37

statement of Comprehensive income 38

statement of Financial Position 39

statement of Changes in equity 40

Cash Flow statement 42

notes to the Financial statements 43

Five year summary 103

us$ Financials 105

information to shareholders and investors 110

notice of meeting 114

Form of Proxy 115

Designed and produced by emagewiseDigital Plates by Imageline (Pvt) Ltd Printed by Printage (Pvt) Ltd

Annual Report 2012/13

Ceylon GuARdiAn investment tRust PlC

CEYLON GUARDIAN INVESTMENT TRUST PLC - PQ 52

ADDITIONAL INFORMATION TO SHAREHOLDERS We are herewith circulating the portfolio of the company’s subsidiary company, Rubber Investment Trust Limited.

INVESTMENT PORTFOLIO OF RUBBER INVESTMENT TRUST LIMITED (Amounts expressed in Sri Lankan Rupee thousands)

Cost Fair Value Cost Fair Value as at as at as at as at Note 31st March 31st March 31st March 31st March 2013 2013 2012 2012

Investment in Associate 1 1,927 14,419,185 1,927 17,531,931 Available for sale financial assets 2 338,099 2,776,948 422,297 2,893,649 Fair value through profit or loss

financial assets 3 - 296,512 - 176,948 340,026 17,492,645 424,224 20,602,528 1 Investment in Associate

% Cost Fair Value % Cost Fair Value Holding as at as at Holding as at as at 31st March 31st March 31st March 31st March 2013 2013 2012 2012

Quoted Investments Bukit Darah PLC 20.04% 1,927 14,419,185 20.04% 1,927 17,531,931 1,927 14,419,185 1,927 17,531,931 2 Available for sale financial assets

No. of Cost Fair Value No. of Cost Fair Value Shares as at as at Shares as at as at 31st March 31st March 31st March 31st March 2013 2013 2012 2012

(A) Quoted Diversified John Keells Holdings PLC 11,240,529 337,563 2,776,412 14,044,237 421,760 2,893,113 337,563 2,776,412 421,760 2,893,113 Total investment in available for sale

financial assets - Quoted 337,563 2,776,412 421,760 2,893,113 (B) Unquoted DFCC Vardhana Bank 42,975 533 533 42,975 533 533 533 533 533 533 Total investment in available for sale

financial assets - Unquoted 533 533 533 533

2 Available for sale financial assets (Contd.)

No. of Cost Fair Value No. of Cost Fair Value Shares as at as at Shares as at as at 31st March 31st March 31st March 31st March 2013 2013 2012 2012

(C) Investments in Debentures - Redeemable unsecured Debentures Riverina Hotels Limited 56 1 1 56 1 1 Ocean View Limited - 6% 120 1 1 120 1 1 Total Investment in Debentures 2 2 2 2 (D) Preference Shares in Associate Bukit Darah PLC - 8% 31,875 1 1 31,875 1 1 Total Investment in Preference Shares 1 1 1 1 Total investment in available for sale

financial assets 338,099 2,776,948 422,297 2,893,649 3 Fair value through profit or loss financial assets

No. of Fair Value No. of Fair Value Shares as at Shares as at 31st March 31st March 2013 2012

Banks, Finance & Insurance Commercial Bank of Ceylon PLC 441,040 49,838 258,777 25,878 Hatton National Bank PLC 390,000 65,247 - - National Development Bank PLC - - 150,000 18,420 Peoples Leasing and Finance PLC 180,688 2,367 - - Sampath Bank PLC - - - - 117,452 44,298 Beverage, Food & Tobacco Ceylon Tobacco Company PLC 24,340 19,002 - - Distilleries Company of Sri Lanka PLC 393,644 65,542 130,000 18,850 84,544 18,850 Diversified John Keells Holdings PLC - - 281,866 58,064 C T Holdings PLC 295,234 72,923 218,094 32,736 72,923 90,800 Hotels & Travels Aitken Spence Hotel Holdings PLC 200,577 14,843 - - 14,843 - Manufacturing Royal Ceramics Lanka PLC - - 200,000 23,000 - 23,000 Telecommunications Dialog Axiata PLC 750,000 6,750 - - 6,750 - Total investment in fair value through

profit or loss financial assets 296,512 176,948

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Ceylon Guardian Investment Trust PLC – Annual Report 2012/13

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