1.1 Domicile and legal form

Sunshine Holdings PLC (the Company) is a public limited liability company incorporated and domiciled in Sri Lanka. The ordinary shares of the Company are listed on the Colombo Stock Exchange of Sri Lanka. The registered office and principal place of business of the Company is located at No. 60, Dharmapala Mawatha, Colombo 3.

Total staff strength of the Company and the Group on 31 March 2021 was as follow:

Group 3,130 (31 March 2020 – 2,663)

Company 21 (31 March 2020 – 20)

The Registrar General of Companies on 2 February 2021 issued the Certificate of Amalgamation in terms of Section 244 (1) (a) of the Companies Act No. 07 of 2007 that Estate Management Services (Pvt) Ltd. to be amalgamated with Sunshine Holdings PLC in accordance with the provisions of Part VIII of the Companies Act No. 07 of 2007 with Sunshine Holdings PLC as the surviving entity.

1.2 Consolidated and separate financial statements

The Consolidated Financial Statements of Sunshine Holdings PLC as at and for the year ended 31 March 2021 comprise the financial information of the Company and its subsidiaries (together referred to as “the Group” and encompass the Company and its subsidiaries (together referred to as the “Group”).

Sunshine Holdings PLC does not have an identifiable parent of its own. The Financial Statements of all companies in the Group are prepared for a common financial year, which ends on 31 March.

Presentation of Financial Statements

The separate Financial Statements of the Company consists of the following.

• Financial performance of the amalgamated entity [Sunshine Holdings PLC and Estate Management Services (Pvt) Ltd.] for the years ended 31 March 2021, 31 March 2020 (restated) as if the amalgamation occurred as at 1 April 2020 and 31 March 2020 as previously reported for better presentation and purposes of comparability. The Consolidated Financial performance did not require restatement given that the Group structure existed even prior to amalgamation.
• Financial position of the amalgamated entity [Sunshine Holdings PLC and Estate Management Services (Pvt) Ltd.] for the years ended 31 March 2021, 31 March 2020 (restated) as if the amalgamation occurred as at 1 April 2020 and 31 March 2020 as previously reported for better presentation and purposes of comparability. The consolidated financial position did not require restatement given that the Group structure existed even prior to amalgamation.
• Cash flows of the amalgamated entity (Sunshine Holdings PLC and Estate Management Services (Pvt) Ltd.) for the year ended 31 March 2021, 31 March 2020 (restated) as if the amalgamation occurred as at 1 April 2020 and 31 March 2020 as previously reported for better presentation and purposes of comparability. The Consolidated cash flows did not require restatement given that the Group structure existed even prior to amalgamation.

1.3 Parent Entity and Ultimate Parent Entity

Sunshine Holdings PLC does not have an identifiable parent of its own. The Company is the ultimate parent of the Group companies.

1.4 Principal business activities, nature of operations of the Group and ownership by the Company in its subsidiaries and associates

The Group Structure is given on page 62.

Entity	Principal business activity
Sunshine Holdings PLC As explained in Note 1.1 Estate Management Sevices (Pvt) Ltd. has been amalgamated with Sunshine Holdings PLC.	Managing portfolio of investments
Subsidiaries
Sunshine Healthcare Lanka Ltd.	Importing and distributing of pharmaceutical products island wide
Healthguard Pharmacy Ltd.	Engage in buying and selling of pharmaceutical items and healthcare through its chains of pharmacies
Akbar Pharmaceuticals (Pvt) Ltd. (w.e.f. 25 January 2021)	Importing of pharmaceutical and medical items for local distribution
Akbar Pharmaceuticals Holdings (Pvt) Ltd. (w.e.f. 25 January 2021)	Managing portfolio of investments
Lina Manufacturing (Pvt) Ltd. (w.e.f. 25 January 2021)	Manufcaturing of drugs
Lina Spiro (Pvt) Ltd. (w.e.f. 25 January 2021)	Manufcaturing of drugs
Sunshine Consumer Lanka Ltd. (formerly known as “Watawala Tea Ceylon Ltd.”)	Buying and adding value to tea for local and export markets
Daintee Limited (w.e.f. 30 August 2020)	Manufacturing and selling of confectioneries
Zesta Tea Ceylon (Shenzhen) Co. Limited	Wholesale, retail and import and export of tea leaves, tea set and accessories and raw materials
Sunshine Wilmar (Pvt) Ltd.	Managing investment portfolio
Watawala Plantations PLC	Engage in cultivation, manufacture and sale of crude palm oil
Watawala Dairy Ltd.	Engage in dairy farming
Sunshine Energy (Pvt) Ltd.	Investing in power generating companies
Waltrim Energy Ltd.
Sunshine Packaging Lanka Ltd.	Engaging in renting out premises and earn rental income.
Norris Canal Properties (Pvt) Ltd.	Engage in renting out premises and earn rental income.

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

Refer Note 24 for the changes in the Group structure during the year.

2.1 Statement of compliance

These Financial Statements of the Group and the Separated Financial Statements of the Company have been prepared and presented in accordance with the Sri Lanka Accounting Standards (SLFRSs and LKASs) laid down by The Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) and in compliance with the requirements of the Companies Act No. 07 of 2007.

The Board of Directors is responsible for the preparation and presentation of the Financial Statements of the Company and its subsidiaries as per provisions of Companies Act No. 07 of 2007 and the Sri Lanka Accounting Standards (SLFRSs/LKASs).

The Board of Directors acknowledges this responsibility as set out in the “Statement of Directors’ Responsibility for Financial Statements”, “Annual Report of the Board of Directors” and in the statement appearing with the Statement of Financial Position of this Annual Report.

The Financial Statements were authorised for issue by the Directors on May 25, 2021.

These Financial Statements, except for information on cash flows have been prepared following the accrual basis of accounting. Details of the Group’s significant accounting policies followed during the year are given on Notes 6 to 46 on pages 66 to 186.

These Financial Statements include the following components:

• a Statement of Profit or Loss and Other Comprehensive Income providing information on the financial performance of the Group and the Company for the year under review; (Refer pages 52 and 53).
• a Statement of Financial Position providing information on the financial position of the Group and the Company as at the year end; (Refer pages 54 and 55).
• a Statement of Changes in Equity depicting all changes in shareholders’ funds during the year under review of the Group and the Company; (Refer pages 54 and 55).
• a Statement of Cash Flows providing information to the users, on the ability of the Group and the Company to generate cash and cash equivalents and the needs of the entity to utilise those cash flows; (Refer pages 60 to 61).
• Notes to the Financial Statements comprising accounting policies and other explanatory information. (Refer pages 63 to 186)

2.2 Materiality and Aggregation

Each item which is similar in nature is presented separately if material. Items of dissimilar nature or function are presented separately unless they are immaterial as permitted by the Sri Lanka Accounting Standard LKAS 1 – “Presentation of Financial Statements”

2.3 Going concern

The Directors have made an assessment of the Group’s ability to continue as a going concern and is satisfied that it has the resources to continue in business for the foreseeable future. The assessment took into consideration the existing and potential implications of COVID-19 pandemic on the business operations and performance of the Group and the measures adopted by the Government to mitigate the pandemic’s spread and support recovery of the economy. Furthermore, the Management is not aware of any material uncertainties that may cast significant doubt upon the Group’s ability to continue as a going concern. Therefore, the Financial Statements continue to be prepared on a going concern basis. Refer Note 48 for the Directors, assessment on going concern.

2.4 Offsetting

Financial assets and financial liabilities are offset and the net amount is reported in the Statement of Financial Position, only when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or to realise the assets and settle the liabilities simultaneously. Income and expenses are not offset in the Income Statement, unless required or permitted by an Accounting Standard or Interpretation (issued by the IFRS Interpretations Committee and Standard Interpretations Committee) and as specifically disclosed in the significant accounting policies of the Group.

2.5 Comparative information

Comparative information including quantitative, narrative and descriptive information is disclosed in respect of the previous period in the Financial Statements in order to enhance the understanding of the current period’s Financial Statements and to enhance the inter period comparability.

The presentation and classification of the Financial Statements of the previous year are amended, where relevant for better presentation and to be comparable with those of the current year.

These Consolidated Financial Statements are presented in Sri Lankan Rupees (LKR), which is the Group’s functional currency, except for the foreign subsidiary whose functional currency is different as it operates in a different economic environment.

In preparing these Consolidated Financial Statements, Management has made judgements and estimates that affect the application of the Group's 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 estimates are recognised prospectively.

Coronavirus (COVID-19) pandemic

The COVID-19 pandemic and its effect on the global economy have impacted the customers, operations, and performance of the Group. The outbreak necessitated the governments to respond at unprecedented levels to protect the health of the population, local economy, and livelihoods. Thus the pandemic has significantly increased the estimation uncertainty in the preparation of these Financial Statements including, the extent and duration of the disruption to businesses, the expected economic downturn, and subsequent recovery.

The significant accounting estimates impacted by these forecasts and associated uncertainties are predominantly related to expected credit losses, fair value measurement, and the assessment of the recoverable amount of non-financial assets. The impact of the COVID-19 pandemic on each of these estimates is discussed further in the relevant notes of these Financial Statements.

(a) Judgements

Information about judgements made in applying accounting policies that have the most significant effects on the amounts recognised in the Financial Statements is included in the following Notes:

• Note 10 – revenue recognition: whether revenue is recognised over time or at a point in time;
• Note 24 – consolidation: whether the Group has the control over an investee
• Note 25 – equity-accounted investees: whether the Group has significant influence over an investee
• Note 34.3 – lease term: whether the Group is reasonably certain to exercise extension options.

(b) Assumptions and estimation uncertainties

Information about assumptions and estimation uncertainties at 31 March 2021 that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities in the next financial year is included in the following Notes:

• Note 35 – measurement of defined benefit obligations: key actuarial assumptions;
• Note 14 – recognition of current tax expense;
• Note 27 – recognition of deferred tax assets: availability of future taxable profit against which deductible temporary differences and tax losses carried forward can be utilised;
• Note 22 – determining the fair value of biological assets on the basis of significant unobservable inputs;
• Note 44 – recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an outflow of resources
• Note 6.3 – impairment of financial and non-financial assets
• Note 23 – determining the fair value of Investment Properties on the basis of significant unobservable inputs;
• Note 48 – potential impact of COVID-19 on financial reporting

The Financial Statements have been prepared on the historical cost basis and applied consistently which no adjustments being made for inflationary factors affecting the Financial Statements except for the following material items in the Statement of Financial Position.

Items	Measurement bases
Financial assets at fair value through profit or loss (FVTPL)	Fair value
Financial assets at fair value through other comprehensive income (FVOCI)	Fair value
Defined benefit obligations	Present value of the defined benefit obligation
Biological assets measured at fair value;	Fair value less costs to sell
Investment properties measured at fair value	Fair value less costs to sell
Derivative financial instruments	Fair value

Apart from the general accounting policies set out below, the specific accounting policies pertaining to each item in the Financial Statements have been presented within the respective notes to the Financial Statements. These significant accounting policies have been applied consistently to all periods presented in the Financial Statements of the Group, unless otherwise indicated. The accounting policies have been consistently applied by the Group entities where applicable and deviations if any have been disclosed accordingly. Further the changes in accounting policies due to adoption of new standards and interpretations or adoption of new accounting policies have been presented in Note 7 to the Financial Statements. The Group has not early adopted any other standard, interpretation or amendment that has been issued but not yet effective.

6.1   Basis of consolidation

Business combinations

The Group accounts for business combinations using the acquisition method when control is transferred to the Group. From 1 April 2020, in determining whether a particular set of activities and assets is a business, the Group assesses whether the set of assets and activities acquired includes, at a minimum, an input and substantive process and whether the acquired set has the ability to produce outputs. The Group has an option to apply a “concentration test” that permits a simplified assessment of whether an acquired set of activities and assets is not a business. The optional concentration test is met if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss. Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent consideration that meets the definition of a financial instrument is classified as equity, then it is not remeasured and settlement is accounted for within equity. Otherwise, other contingent consideration is remeasured at fair value at each reporting date and subsequent changes in the fair value of the contingent consideration are recognised in profit or loss.

Subsidiaries

Subsidiaries are entities controlled by the Group. The Group “controls” an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The Financial Statements of subsidiaries are included in the Consolidated Financial Statements from the date on which control commences until the date on which control ceases.

Non-controlling interests

NCI are measured initially at their proportionate share of the acquiree’s identifiable net assets at the date of acquisition. Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

Loss of control

When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related NCI and other components of equity. Any resulting gain or loss is recognised in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost.

Transactions eliminated on consolidation

Intra-group balances and transactions. and any unrealised income and expenses arising from intra-group transactions, are eliminated. 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.

Accounting period

The Financial Statements of all entities in the Group have a common financial year which ends on March 31.

6.2 Foreign currency

Foreign currency transactions

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

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Foreign currency differences are generally recognised in profit or loss and presented within finance costs.

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated at the exchange rates at the reporting date. The income and expenses of foreign operations are translated at the exchange rates at the dates of the transactions. Foreign currency differences are recognised in OCI and accumulated in the translation reserve, except to the extent that the translation difference is allocated to NCI.

6.3   Impairment of Assets

6.3.1 Financial instruments and contract assets

The Group recognises loss allowances for Expected Credit Losses on financial assets measured at amortised cost.

Loss allowances for trade receivables is always measured at an amount equal to lifetime Expected Credit Loss (ECL).

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group 's historical experience and informed credit assessment and including forward-looking information.

The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 90 days past due. The Group considers a financial asset to be in default when:

• the debtors is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions such as realising security (if any held); or
• the financials asset is more than 90 days past due.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument. 12-months ECLs are the portion of ECLs that result from default events that are possible within the 12-months after the reporting date (or a shorter period if the expected life of the instrument is less than 12-months). The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk.

Measurement of ECLs

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects to receive). ECLs are discounted at the effective interest rate of the financial asset.

Credit-impaired financial assets

At each reporting date, the Group assesses whether financial assets carried at amortised cost and debt securities at FVOCI are credit-impaired. A financial asset is “credit-impaired” when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

Evidence that a financial asset is credit-impaired includes the following observable data:

• significant financial difficulty of the borrower or issuer;
• a breach of contract;
• it is probable that the borrower will enter bankruptcy or other financial reorganisation; or
• the disappearance of an active market for a security because of financial difficulties.

Presentation of allowance for ECL in the Statement of Financial Position

Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets.

For debt securities at FVOCI, the loss allowance is charged to profit or loss and is recognised in OCI.

Write-off

For individual customers, the Group has a policy of writing off the gross carrying amount as approved by the Board of Directors based on historical experience of recoveries of similar assets. For corporate customers, the Group individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Group expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group’s procedures for recovery of amounts due. Evidence of impairment included a significant or prolonged decline in its fair value below its cost.

6.3.2 Non-financial assets

At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than biological assets, investment property, inventories and deferred tax assets) 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. 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. Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination. The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, 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. An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount. Impairment losses are recognised in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU 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.

7.1 Adoption of new accounting standards/amendments to accounting standards

The Group initially applied Definition of a Business (Amendments to SLFRS 3) from 1 April 2020.

Definition of a business

The Group applied Definition of a Business (Amendments to SLFRS 3) to Business Combinations whose dates of acquisition are on or after 1 April 2020 in assessing whether it had acquired a business or a group of assets.

The Group has amended its accounting policies for acquisitions on or after 1 April 2020. The details of accounting policies are set out in Note 6.1 and Note 24.

While there are other amendments to the existing standards which are also effective from 1 April 2020, those do not have a material effect on the Group/separates Financial Statements.

7.2 Application of new Significant Accounting Policies

Merger Accounting for Common Control Combination

The Group adopted the Statement of Recommended Practice (SORP) for Merger Accounting for Common Control Combinations approved by the Council of The Institute of Chartered Accountants of Sri Lanka on 19 December 2012, on merger accounting for common control combinations for annual periods beginning on or after 1 April 2020. The SORP is applicable for Consolidated Financial Statements. Due to the absence of clear guidance of accounting for amalgamation in the Separate Financial Statements, the Group adopted the SORP for Merger Accounting for Common Control Combinations, in preparing the Separate Financial Statements of the Company.

Consolidated/separate Financial Statements

The net assets of the combining entities or businesses are consolidated using the existing book values from the controlling parties’ perspective. The assets and liabilities of the acquired entity or business should be recorded at the book values as stated in the financial statements of the controlling party.

No amount is recognised as consideration for goodwill or excess of acquirer’s interest in the net fair value of acquiree’s identifiable assets, liabilities and contingent liabilities over cost at the time of common control combination, to the extent of the continuation of the controlling party or parties’ interests; and,

Comparative amounts in the financial statements are presented using the principles as set out above as if the entities or businesses had been combined at the previous balance sheet date unless the combining entities or businesses first came under common control at a later date.

The consolidated income statement includes the results of each of the combining entities or businesses from the earliest date presented (i.e. including the comparative period) or since the date when the combining entities or businesses first came under the control of the controlling party or parties, where this is a shorter period, regardless of the date of the common control combination. The consolidated income statement also takes into account the profit or loss attributable to the minority interest recorded in the consolidated financial statements of the controlling party.

Expenditure incurred in relation to a common control combination that is to be accounted for by using merger accounting is recognised as an expense in the period in which it is incurred. Such expenditure includes professional fees, registration fees, costs of furnishing information to shareholders, and salaries and other expenses involved in achieving the common control combination.

Consolidation is performed in accordance with LKAS 27. The principal consolidation entries are as follows:

(a) the effects of all transactions between the combining entities or businesses, whether occurring before or after the common control combination, are eliminated; and

(b) since the combined entity will present one set of consolidated financial statements, a uniform set of accounting policies is adopted which may result in adjustments to the assets, liabilities and equity of the combining entities or businesses.

A number of new standards and amendments to standards are effective for annual periods beginning after 1 April 2021 and earlier application is permitted; however, the Group has not early adopted them in preparing these Financial Statements.

The following amended/new standards are not expected to have a significant impact on the Group’s Financial Statements.

• Onerous Contracts – Cost of Fulfilling a Contract (Amendments to LKAS 37).
• COVID-19-Related Rent Concessions (Amendment to SLFRS 16).
• Property, Plant and Equipment: Proceeds before Intended Use (Amendments to LKAS 16).
• Reference to Conceptual Framework (Amendments to SLFRS 3).
• Interest Rate Benchmark Reform – Phase 1 and Phase 2 (Amendments to SLFRS 9, LKAS 39 and SLFRS 7).
• SLFRS 17 Insurance Contracts establishes principles for the recognition, measurement, presentation and disclosure of insurance contracts. SLFRS 17 introduces a new measurement model for insurance contracts and becomes effective in 2023.
• Annual improvements to SLFRSs 2018-2020.

9.1 Basis for segmentation

The Group has the following seven strategic divisions, which are reportable segments. These divisions offer different products and services, and are managed separately based on the Group’s management and internal reporting structure.

Healthcare	Manufacturing, importing, Marketing pharmaceuticals, nutraceuticals, medical diagnostic equipment and surgical products
Agribusiness	Cultivation, farming and processing
Consumer goods	Sales and distribution of branded tea and confectionery
Energy	Power Generation from renewable energy sources
Investment and Management Services	Managing portfolio of investments and providing expert management services
Rental business	Renting out of premises

Segment performance is evaluated based on operating profits or losses which are measured differently from operating profits or losses in the consolidated financial statements. Income taxes are managed on a group basis and are not allocated to operating segments.

The Group’s Management Committee reviews internal management reports from each division at least monthly.

Information about reportable segments

Information related to each reportable segment is set out below. Segment profit (loss) before tax is used to measure performance because management believes that this information is the most relevant in evaluating the results of the respective segments relative to other entities that operate in the same industries.

	Reportable segments						Total Rs.
2021	Healthcare Rs.	Agribusiness Rs.	Consumer goods Rs.	Energy Rs.	Investment and Management Services Rs.	Rental business Rs.
External revenues	12,769,793,315	3,933,523,000	7,124,963,802	440,243,207	1,755,824,437	25,920,684	26,050,268,445
Inter-segment revenue	–	–	–	–	–	9,616,639	9,616,639
Segment revenue	12,769,793,315	3,933,523,000	7,124,963,802	440,243,207	1,755,824,437	35,537,323	26,059,885,084
Segment profit/(loss) before tax	1,146,953,290	1,751,656,000	552,517,523	(7,755,927)	3,908,055,600	10,696,790	7,362,123,276
Interest income	49,042,296	15,532,000	33,709,335	11,862,667	158,704,678	200,456	269,051,432
Interest expense	(99,405,471)	(81,970,000)	(62,154,899)	(53,604,798)	(171,145,057)	(16,918,554)	(485,198,779)
Depreciation and amortisation	(215,268,385)	(357,058,000)	(140,590,464)	(113,264,570)	(22,476,545)	(4,821,418)	(853,479,382)
Other material non-cash items
– Impairment losses on trade and other receivables	(63,672,974)	–	5,883,975	–	–	–	(57,788,999)
Segment assets	10,720,898,200	7,106,719,000	3,774,410,106	2,270,973,724	9,405,365,622	1,002,012,269	34,280,378,921
Capital expenditure	(71,617,176)	(367,758,000)	(70,451,498)	(95,763,529)	(12,060,365)	–	(617,650,568)
Segment liabilities	4,862,966,416	2,044,309,000	2,493,442,307	887,569,220	1,244,574,305	264,781,986	11,797,643,234

 

	Reportable segments						Total Rs.
2020	Healthcare Rs.	Agribusiness Rs.	Consumer goods Rs.	Energy Rs.	Investment and Management Services Rs.	Rental business Rs.
External revenues	11,150,105,066	3,839,078,000	5,448,416,503	312,762,695	655,897,433	24,534,526	21,430,794,222
Inter-segment revenue	–	–	–	–	–	10,288,235	10,288,235
Segment revenue	11,150,105,066	3,839,078,000	5,448,416,503	312,762,695	655,897,433	34,822,761	21,441,082,458
Segment profit/(loss) before tax	750,973,278	934,381,238	425,549,310	33,368,350	1,987,767,355	200,745,304	4,332,784,835
Interest income	38,803,564	12,342,715	15,162,232	19,043,543	195,468,865	1,245,118	282,066,037
Interest expense	(146,719,834)	(193,099,811)	(6,917,875)	(78,434,344)	(184,130,732)	(17,020,274)	(626,322,870)
Depreciation and amortisation	(201,752,178)	(331,780,000)	(127,610,556)	(108,417,960)	(20,826,654)	(4,954,540)	(795,341,888)
Other material non-cash items
– Impairment losses on trade and other receivables	(25,116,900)	–	(13,862,424)	(2,656,285)	(644,467)	(28,657,612)	(70,937,688)
Segment assets	6,158,349,660	6,987,543,000	1,700,388,897	2,236,507,706	8,510,460,637	1,009,192,172	26,602,442,072
Capital expenditure	(124,500,327)	(359,184,999)	(36,215,484)	(131,402,820)	(15,245,259)	(119,159,259)	(785,708,148)
Segment liabilities	3,555,603,977	2,389,390,000	435,382,831	892,171,302	3,119,374,708	281,541,760	10,673,464,578

9.2 Operating segments

Reconciliations of information on reportable segments to SLFRS measures

	2021 Rs.	2020 Rs.
Revenue
Total revenue for reportable segments	26,059,885,084	21,441,082,458
Elimination of inter-segment revenue	(1,720,438,928)	(566,444,964)
Consolidated revenue	24,339,446,156	20,874,637,494
Profit before tax
Total profit before tax for reportable segments	7,362,123,276	4,332,784,835
Elimination of inter-segment profit	(4,052,984,486)	(1,769,407,911)
Consolidated profit before tax from operations	3,309,138,790	2,563,376,924
Assets
Total assets for reportable segments	34,280,378,921	26,602,442,072
Elimination of inter-segment assets	(7,397,373,461)	(3,767,978,659)
Consolidated total assets	26,883,005,460	22,834,463,413
Liabilities
Total liabilities for reportable segments	11,797,643,234	10,673,464,578
Elimination of inter-segment liabilities	(256,457,197)	(288,707,633)
Consolidated total liabilities	11,541,186,037	10,384,756,945

 

2021	Reportable segment totals Rs.	Adjustments Rs.	Consolidated totals Rs.
Other material items
Finance income	269,051,432	(16,405,000)	252,646,432
Finance cost	(485,198,779)	16,405,000	(468,793,779)
Capital expenditure	(617,650,568)	–	(617,650,568)
Depreciation and amortisation	(853,479,382)	–	(853,479,382)
Impairment losses on trade and other receivables	(57,788,999)	–	(57,788,999)

 

2020	Reportable segment totals Rs.	Adjustments Rs.	Consolidated totals Rs.
Other material items
Finance income	282,066,037	(17,575,547)	264,490,490
Finance cost	(626,322,870)	17,575,548	(608,747,322)
Capital expenditure	(785,708,148)	–	(785,708,148)
Depreciation and amortisation	(795,341,888)	–	(795,341,888)
Impairment losses on trade and other receivables	(70,937,688)	–	(70,937,688)

9.3 Geographic information

The Agribusiness and Consumer Goods segments are managed on a worldwide basis, but operate manufacturing facilities and sales offices primarily in Sri Lanka.

The geographic information analyses the Group’s revenue and assets by the Company’s country of domicile and other countries. In presenting the geographic information, segment revenue has been based on the geographic location of customers and segment assets were based on the geographic location of the assets.

	2021 Rs.	2020 Rs.
Revenue
Sri Lanka	25,966,906,717	21,060,477,395
China	15,985,927	189,889,525
Singapore	10,550,876	38,088,613
Philippines	–	22,176,079
Japan	17,681,874	13,141,577
Other countries	48,759,690	117,309,269
	26,059,885,084	21,441,082,458
Segment assets
Sri Lanka	34,280,378,921	26,509,211,454
Other countries	–	93,230,618
	34,280,378,921	26,602,442,072

A. Revenue streams

The Group generates revenue primarily from investment, healthcare, plantation, consumer goods, energy and other sectors.

	Group		Company
For the year ended 31 March	2021 Rs.	2020 Rs.	2021 Rs.	2020 Restated Rs.	2020 Rs.
Revenue from contracts with customers	23,398,286,575	20,839,814,733	850,202,179	655,897,433	497,330,868
Other revenue
Rentals from Investment property	941,159,581	34,822,761	–	–	–
	24,339,446,156	20,874,637,494	850,202,179	655,897,433	497,330,868

B. Disaggregation of revenue from contracts with customers

In the following table, revenue from contacts with customers is disaggregated by primary geographical market, major products and service lines and timing of revenue recognition.

	Group
For the year ended 31 March	2021 Rs.	2020 Rs.	2021 Rs.	2020 Restated Rs.	2020 Rs.
Primary geographic markets
Local	24,230,588,284	20,696,419,687	850,202,179	655,897,433	497,330,868
Exports	108,857,872	178,217,807	–	–
	24,339,446,156	20,874,637,494	850,202,179	655,897,433	497,330,868
Major product/service lines
Investments	45,002,148	99,740,704	850,202,179	655,897,433	497,330,868
Healthcare	12,769,793,315	11,150,105,066	–	–	–
Plantation	3,933,523,000	3,839,078,000	–	–	–
FMCG	7,124,963,802	5,448,416,503	–	–	–
Energy	440,243,207	312,762,695	–	–	–
Rent income	25,920,684	24,534,526	–	–	–
	24,339,446,156	20,874,637,494	850,202,179	655,897,433	497,330,868
Timing of revenue recognition
Products transferred at a point in time	24,313,525,472	20,840,804,733	850,202,179	655,897,433	497,330,868
Products and services transferred over time	25,920,684	33,832,761	–	–	–
	24,339,446,156	20,874,637,494	850,202,179	655,897,433	497,330,868

C. Contract balances

These refer to the Group's rights to consideration for work completed but not billed at the reporting date. There were no contract balances as at the reporting date.

D. Performance obligations and revenue recognition policies

Revenue is measured based on the consideration specified in a contract with a customer. The Group recognises revenue when it transfers control over a good or service to a customer.

The following table provides information about the nature and timing of the satisfaction of performance obligation in contacts with customers, including significant payment terms and related revenue recognition policies.

Type of product/service	Nature of timing of satisfaction of performance obligations, including significant payment terms	Revenue recognition under SLFRS 15
Investments	Dividend income is recognised in profit or loss on the date on which the Group's right to receive payment is established.	Dividend income is recognised in profit or loss on the date on which the Group's right to receive payment is established. This is now under the scope of SLFRS 9.
Healthcare	Customers obtain control of the goods sold when the goods are delivered to and have been accepted at their premises. Invoices are generated at that point in time.	Revenue is recognised when a customer obtains control of the goods or services. Determining the timing of the transfer of control is at a point in time.
Plantation	Customers obtain the control of the produce after the customer acknowledgement at the dispatch point.	Revenue is recognised point in time, at the time of dispatch after the customer acknowledgement.
FMCG	Customers obtain control of the goods sold when the goods are delivered to and have been accepted at their premises. Invoices are generated at that point in time.	Revenue is recognised when a customer obtains control of the goods or services. Determining the timing of the transfer of control is at a point in time.
Energy	This includes income from generating electricity units and transferred to Ceylon Electricity Board of Sri Lanka.	Revenue is recognised point in time as the electricity units are transferred to Ceylon Electricity Board of Sri Lanka.
Rent income	This includes rental income earned from renting out investment property owned by the Subsidiary.	Revenue is recognised over time as the rent income is recognised on a straight line basis over the term of the agreement.

Following  Coronavirus “COVID-19” outbreak in Sri Lanka the business operations and activities of the Group were temporarily interrupted.  The operating segments of the of the Group being Healthcare, Agri business, Consumer goods and Energy, the potential impact of  COVID-19  is expected to be minimal based on the internal assessment carried out by the Management.

		Group		Company
For the year ended 31 March	Note	2021 Rs .	2020 Rs.	2021 Rs.	2020 Restated Rs.	2020 Rs.
Dividend income		1,714,841	9	–	–	–
Gain on sale of property, plant and equipment		31,708,661	44,059,002	–	2,011,685	2,011,685
Amortisation of capital grants	36	50,554,000	50,555,000	–	–	–
Profit on sale of trees	11.1	–	7,747,000	–	–	–
Loss on disposal of investment		(5,700,960)		–	–	–
Fair value gain on investment properties	23	–	116,267,064	–	–	–
Lease rent – bungalow and others		–	134,129	–	–	–
Income from investment fund		20,666,000	31,674,000	–	–	–
Royalty		294,250	–	–	–	–
Sundry income	11.3	159,256,845	111,675,737	1,682,880	910,808	910,808
Rent income		21,968,511	25,807,361	–	–	–
Service income		–	–	342,343,261	306,972,559	306,972,559
Change in fair value of quoted shares		(1,086,323)	4,422,113	(2,225,511)	4,422,113	4,422,113
Change in fair value of livestock	22.3	(30,000)	12,634,000	–	–	–
Change in fair value of unharvested crop	22.1	10,891,000	10,526,000	–	–	–
Fair value gain/(loss) on consumable biological assets	11.2/22.2	1,200,000	(6,656,000)	–	–	–
		291,436,825	408,845,415	341,800,630	314,317,165	314,317,165

11.1 Income from sale of trees of Watawala Plantation PLC, a subsidiary of the Company, represents the disposal of trees recognised as consumable biological assets and bears biological assets at the reporting date.

11.2 The (loss)/gain on fair value of trees in Watawala Plantation PLC, a subsidiary of the Company, represents the unrealised gain from valuation of trees/timber at the reporting date.

11.3 Sundry income mainly includes commission income received from foreign suppliers for securing contracts with government to Sunshine Healthcare Lanka Ltd. amounting to Rs. 109 Mn. (2020 – Rs. 78 Mn.).

	Group		Company
For the year ended 31 March	2021 Rs.	2020 Rs.	2021 Rs.	2020 Restated Rs.	2020 Previously reported Rs.
Staff costs (Note 12.1)	3,056,384,699	2,407,342,102	307,166,046	297,465,212	297,698,622
Statutory audit fees – KPMG	9,819,750	6,721,000	1,627,500	1,850,000	1,550,000
– Other auditors	582,712	2,161,000		–	–
Audit related – KPMG	2,583,723	1,561,974	500,000	1,561,974	970,000
Non-audit – KPMG	3,450,000	32,076	750,000	32,076	3,476,226
– Other auditors	7,498,521	2,069,733	7,072,621	2,069,733	1,009,290
Provision/(Reversal) for trade debtors	57,788,999	22,994,323	–	–	–
Depreciation
– Property, plant and equipment	647,977,610	580,883,367	21,463,966	20,804,093	17,942,996
– Biological assets – bearer	157,230,000	167,161,000		–	–
Amortisation of intangible assets	38,151,772	37,014,521	4,685	22,562	22,562
Amortisation – Leasehold right to bare land	10,120,000	10,283,000	–	–	–

12.1 Staff costs

	Group		Company
For the year ended 31 March	2021 Rs.	2020 Rs.	2021 Rs.	2020 Restated Rs.	2020 Previously reported Rs.
Defined benefit plan (Gratuity)	119,130,631	110,473,610	13,526,859	14,874,882	14,874,882
Defined contribution EPF and ETF	201,476,157	183,369,474	26,209,335	26,566,821	26,566,821
Salaries, wages and other staff cost	2,735,777,911	2,113,499,019	267,429,852	256,023,509	256,023,509
	3,056,384,699	2,407,342,102	307,166,046	297,465,212	297,465,212

	Group		Company
For the year ended 31 March	2021 Rs.	2020 Rs.	2021 Rs.	2020 Restated Rs.	2020 Rs.
Interest income from related companies	–	–	16,405,000	17,575,548	17,575,548
Exchange gain	50,263,263	46,085,165	–	3,055	3,055
Interest income on other deposits/loans	202,383,169	218,405,325	139,820,875	177,890,263	102,468,963
Finance income	252,646,432	264,490,490	156,225,875	195,468,866	120,047,566
Interest on overdrafts and loans	390,181,698	534,256,783	168,806,964	180,331,879	180,331,879
Interest on finance lease	1,223,549	–	–	–	–
Exchange loss	4,327,542
Finance expense on lease liabilities	73,060,990	74,490,539	2,191,841	3,798,853	3,643,177
Finance cost	468,793,779	608,747,322	170,998,805	184,130,732	183,975,056
Net finance cost	(216,147,347)	(344,256,832)	(14,772,930)	11,338,134	(63,927,490)

14.1 Amount recognized in profit or loss

	Group		Company
For the year ended 31 March	2021 Rs.	2020 Rs.	2021 Rs.	2020 Restated Rs.	2020 Rs.
Current tax expense
Current income tax expense (Note 14.1.A)	798,651,344	541,540,003	101,379,536	19,956,847	–
Changes in estimates relating to prior years	(40,350,079)	20,447,174	1,986,280	(4,365,938)	(4,365,938)
Unclaimable economic service charges (ESC)	11,095,159	1,013,891	10,329,819	–	–
Write-off of tax receivable	2,963,386	–	2,963,386	–	–
WHT on dividends from subsidiaries	2,281,132	90,537,142	–	–	–
	774,640,942	653,538,210	116,659,021	15,590,909	(4,365,938)
Deferred tax expenses
Origination and reversal of deferred tax assets (Note 27.2)	486,289	19,485,816	4,279,438	(10,846,237)	(10,846,237)
Origination and reversal of deferred tax liabilities (Note 27.3)	(3,516,442)	57,715,332	(3,884,766)	7,486,858	7,486,858
	(3,030,153)	77,201,148	394,672	(3,359,379)	(3,359,379)
Tax expense	771,610,789	730,739,358	117,053,693	12,231,530	(7,725,317)

Tax expense on continuing operations excludes the Group's share of the tax expenses of equity-accounted investee of Rs. Nil/- (2020: Rs. Nil/-), which has been included in “share of profit of equity-accounted investee, net of tax”.

14.1.a Current Taxes

Company

In terms of the Inland Revenue Act No 24 of 2017 and subsequent gazette notifications thereto, the Company is liable for income tax at 24% (2018- 28%) on its taxable income. Refer Note 27.

As instructed by the Ministry of Finance on 31 January 2020, changes to the current tax rate was proposed as below, pending formal amendments being made to the Act and to be implemented with effect from 1 January 2020. The Bill to amend the Inland Revenue Act No. 24 of 2017 was gazetted and issued on 18 March 2021. The Bill was presented at the Parliament for first reading and approved on 26 March 2021. Accordingly, the new tax rates disclosed below have been considered to be substantially enacted as at reporting date for the computation of Current and Deferred tax computation for the year ended 31 March 2021.

	Tax Rate
For the year ended 31 March	2021 %	2020 %
Sunshine Holdings PLC	24	28
Sunshine Healthcare Lanka Ltd.	24	28
Estate Management Services (Pvt) Ltd. – Interest Income	24	28
Watawala Plantations PLC – Profits from Agri farming	Exempted	14
– Profits from Agri processing	14	14
– Profits from other activities	24	28
Healthguard Pharmacy Ltd.	24	28
Sunshine Consumer Lanka Ltd. (Formerly known as “Watawala Tea Ceylon Limited”)	18	28
Sunshine Packaging Limited	24	28
Sunshine Energy (Pvt) Ltd.	24	28
Sky Solar (Pvt) Ltd.	24	28
Waltrim Energy Ltd.	24	28
Waltrim Hydropower (Private) Limited	10	10
Norris Canal Properties (Pvt) Ltd.	24	28
Daintee Limited	18	–
Akbar Pharmaceuticals (Pvt) Ltd.	24	–
Akbar Pharmaceuticals Holdings (Pvt) Ltd.	24	–
Lina Manufacturing (Pvt) Ltd.	18	–
Lina Spiro (Pvt) Ltd.	18	–
Sunshine Wilmar (Pvt) Ltd.	24	–

Dividend income of the Group is liable for tax at 14% from 1 January 2020 to 31 March 2021.

Watawala Tea Australia Pty Ltd. was liable for Income Tax at 30% as per the Tax regulation in Australia.

Waltrim Hydropower (Private) Limited

Pursuant to the agreement entered into with the Board of Investments (BOI) of Sri Lanka, profit of the Subsidiary was exempted from income tax for a period of five years reckoned from the year of assessment as may be determined by the Board in which the Subsidiary commenced to make profits or any year of assessment not later than two years from the date of commencement of operations of the Subsidiary whichever was earlier. Accordingly the Subsidiary was exempt from February 2014. After the expiration of the aforesaid tax exemption period, the profit of the Company is taxed at the rate of 10% for a period of 2 years and at 20% thereafter. Accordingly the Company has become liable for income tax at a rate of 10% from the year 2019.

Upper Waltrim Hydropower (Private) Limited and Elgin Hydropower (Private) Ltd.

Pursuant to the agreement entered in to with the Board of Investments (BOI) of Sri Lanka, profit of the Upper Waltrim Hydropower (Private) Limited and Elgin Hydropower (Private) Ltd. shall qualify for tax exemption period of seven years as stipulated in the Inland Revenue Act No.10 of 2006 as amended by Inland Revenue (Amendment) Act No. 8 of 2012 (Sec 17A) based on proposed investment of more than Sri Lanka Rupee Five Hundred Million (Rs. 500 Mn.) in fixed assets in the Project.

For the above purpose, the “year of assessment” shall be reckoned from the year in which the enterprise commences to make profits or any year of assessment not later than two years reckoned from the date of commencement of commercial operations whichever is earlier as such.

The exemption period for Upper Waltrim Hydropower (Private) Limited commenced from financial year 2017/18.

Watawala Dairy Ltd.

Watawala Dairy Ltd. enjoys a tax exemption period of five years from the year in which the enterprise commences to make profits or any year of assessment not later than two years reckoned from the date of commencement of commercial operations whichever is earlier, under Section 17 (2) of the Board of Investment of Sri Lanka Law No. 4 of 1978 and in accordance with the provisions of the Inland Revenue Act No. 10 of 2006. After the expiration of the tax exemption period, the profit and income of the Company shall be charged at the rate of twenty percent (20%) for any year of assessment immediately succeeding the last date of the tax exemption period during which the profit and income of the entity is exempted from income tax.

14.2 Amount recognised in OCI

	Group		Company
For the year ended 31 March	2021 Rs.	2020 Rs.	2021 Rs.	2020 Restated Rs.	2020 Rs.
Items that will not be reclassified to profit or loss
Remeasurement of defined benefit liability/ (asset) (Note 27.2)	6,411,641	434,921	(1,451,978)	(634,692)	(634,692)
Equity investments at FVOCI – net change in fair value (Note 27.3)	12,364,862	11,296,155	12,364,862	11,296,156	11,296,156
	18,776,503	11,731,076	10,912,884	10,661,464	10,661,464

14.3 Amounts recognised directly in equity

There were no items recognised directly in equity during the year ended 31 March 2021.

14.4 Reconciliation of effective tax rate

	Group
	%	2021 Rs.	%	2020 Rs.
Profit before tax		3,309,138,790		2,563,376,924
Tax using the Company's domestic tax rate	24	794,193,310	28	717,745,539
Effect of the tax rates in subsidiaries	-7	(223,473,413)	-6	(156,373,504)
Tax effect of:
Non-deductible/Allowable expenses	11	375,218,829	2	40,063,570
Tax-exempt income	0	(2,161,796)	-1	(22,350,362)
Changes in estimates relating to prior years	-1	(40,350,079)	1	20,447,174
Recognition of previously unrecognized tax losses	-4	(145,125,586)	-1	(37,545,240)
Unclaimable Economic Service Charges (ESC)	0	11,095,159	0	1,013,891
Write-off of tax receivables	0	2,963,386	–	–
WHT on dividends from subsidiaries	0	2,281,132	2	90,537,142
	23	774,640,942	25	653,538,210

 

	Company
	%	2021 Rs.	%	2020 Restated Rs.	%	2020 Previously reported Rs.
Profit before tax from continuing operations		3,020,775,383		1,987,767,356		312,812,421
Tax using the Company’s domestic tax rate	24	724,986,092	28	556,574,860	28	87,587,478
Effect of use of different in tax rates		–	0	(2,798,988)	–	–
Tax effect of:
Non-deductible expenses and allowable expenses	-11	(344,727,395)	-18	(351,395,107)	3	62,264,726
Tax-exempt income and non-taxable income	-6	(195,409,802)	-8	(162,960,620)	-45	(141,000,822)
Recognition of previously unrecognised tax losses	-3	(83,469,359)	-1	(19,463,298)	-3	(8,851,382)
Changes in estimates relating to prior years	0	1,986,280	0	(4,365,938)	-1	(4,365,938)
Unclaimable Economic Service Charges (ESC)	0	10,329,819		–	–	–
Write-off of tax receivables	0	2,963,386		–	–	–
		116,659,021		15,590,909		(4,365,938)

14.5 Tax losses carried forward

	Group		Company
For the year ended 31 March	2021 Rs.	2020 Rs.	2021 Rs.	2020 Rs.
Tax loss brought forward	3,731,024,993	3,182,472,156	340,275,545	220,157,655
Reassessment of previous year tax losses	7,265,400	227,649,385	22,447,642	151,729,963
Recognised through acquisition of business combination	102,043,455	–	–	–
Tax loss for the year of assessment	353,501,000	592,764,852	156,989,748	88,622,736
Set-off against the current taxable income	(700,251,381)	(271,861,400)	(347,788,994)	(120,234,809)
Tax loss carried forward	3,493,583,468	3,731,024,993	171,923,941	340,275,545

Tax losses carried forward includes Rs. 333 Mn. relating to disposal group held for sale (Note 42)

Management has presented the performance measure adjusted EBITDA because it monitors this performance measure at a consolidated level and it believes that this measure is relevant to an understanding of the Group's financial performance. Adjusted EBITDA is calculated by adjusting profit from continuing operations to exclude the impact of taxation, net financier costs, depreciation, amortisation, impairment losses/reversals related to goodwill, intangible assets, property, plant and equipment and the premeasurement of disposal groups and share of profit of equity-accounted investees.

Adjusted EBITDA is not a defined performance measure in SLFRS. The Group's definition of adjusted EBITDA may not be comparable with similarly titled performance measures and disclosers by other entities.

Reconciliation of adjusted EBITDA to profit from continuing operations – Group

For the year ended 31 March	2021 Rs.	2020 Rs.
Profit from continuing operations	2,537,528,001	1,832,637,566
Income tax expense	771,610,789	730,739,358
Profit before tax	3,309,138,790	2,563,376,924
Adjustment for:
Net finance costs	216,147,347	344,256,832
Depreciation	805,207,610	748,044,367
Amortisation	47,371,772	47,297,521
Share of loss of equity-accounted investee, net of tax	92,356	1,413,934
Adjusted EBITDA	4,377,957,875	3,704,389,578

There is no significant impact to EBITDA due to COVID-19 outbreak.

16.1 Basic Earnings Per Share

The earnings per share is computed on the profit attributable to ordinary shareholders after tax and Non Controlling Interest divided by the weighted average number of ordinary shares during the year.

	Group		Company
For the year ended 31 March	2021 Rs.	2020 Restated Rs.	2021 Rs.	2020 Restated Rs.	2020
Profit for the year, attributable to the owners of the Company (Rs.)	1,522,207,103	1,147,045,943	2,903,721,690	1,975,535,826	320,537,738
Weighted average number of ordinary shares (basic)	448,662,309	448,662,309	448,662,309	448,662,309	448,662,309
Basic earnings per share (Rs.)	3.39	2.56	6.47	4.40	0.71

16.1.1 Weighted average number of shares

	2021	2020 Restated
Issued ordinary shares as at 1 April	149,554,103	149,554,103
Effect of the share split	299,108,206	299,108,206
Weighted average No of shares*	448,662,309	448,662,309

* The denominator for the purposes of calculating both basic and diluted earnings per share has been adjusted to reflect the share split made in 2021 as disclosed in Note 33.1.A.

Further, Weighted average Number of Ordinary shares in 2020 has been adjusted based on post sub-division of 3 shares for every one ordinary share held.

16.2 Diluted Earnings Per Share

There was no dilution of ordinary shares outstanding at any time during the year. Therefore, diluted earnings per share is the same as basic earning per share as shown in Note 16.1.

The Board of Directors of the Company has declared a final dividend of Rs. 0.50 per share (2020 – final dividend of Rs. 0.75 per share) for the financial year ended 31 March 2021.

	2021	2020
Dividend declared (Rs.)	373,885,258	112,165,577
Number of ordinary shares	448,662,309	149,554,103
Dividend per share (Rs.)	0.83	0.75

Compliance with Sections 56 and 57 of Companies Act No. 07 of 2007

As required by Section 56 of the Companies Act No. 07 of 2007, the Board of Directors of the Company satisfied the solvency test in accordance with Section 57, prior to declaring the final dividend. A statement of solvency duly completed and signed by the Directors on 25 May 2021 has been audited by Messrs KPMG.

17.1 Dividend paid during the year

	2021 Rs.	2020 Rs.
Final dividend of Rs. 1.25 per share paid out of 2018/19 profit	–	186,942,629
Final Dividend of Rs. 0.75 per share out of 2019/20 profit	112,165,577	–
Interim dividend of Rs. 1.00 per share out of of 2020/21 profit	149,554,103	–
	261,719,680	186,942,629

Financial Assets

Recognition and initial measurement

Trade receivables and debt securities issued are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised when the Group becomes a party to the contractual provisions of the instrument.

A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

Classification and subsequent measurement of financial assets

On initial recognition, a financial asset is classified as measured at: amortised cost; FVOCI (Fair value through OCI) – debt investment; FVOCI - equity investment; or FVTPL (Fair value through profit or loss).

Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:

• it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
• its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

• it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
• its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment's fair value in OCI. This election is made on an investment-by-investment basis.

All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Group may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Financial assets – Business model assessment

The Group makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to Management.

Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the Group's continuing recognition of the assets.

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

Financial assets – Assessment whether contractual cash flows are solely payments of principal and interest

For the purposes of this assessment, “principal” is defined as the fair value of the financial asset on initial recognition. “Interest” is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument.

Financial assets – Subsequent measurement and gains and losses

Financial assets at FVTPL	These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss.
Financial assets at amortised cost	These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.
Debt investments at FVOCI	These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.
Equity investments at FVOCI	These assets are subsequently measured at fair value. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never reclassified to profit or loss.

Non-derivative financial liabilities

The Group initially recognises debt securities issued and subordinated liabilities on the date that they are originated. All other financial liabilities (including liabilities designated at fair value through profit or loss) are recognised initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument.

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

Financial assets and liabilities are offset and the net amount 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 on a net basis or to realise the asset and settle the liability simultaneously.

The Group has the following non-derivative financial liabilities: trade and other payables and bank overdrafts.

Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortised cost using the effective interest method.

Derecognition

(a) Financial assets

The Group derecognised a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Group entered into transactions whereby it transfers assets recognised in its statement of financial position, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets were not derecognised.

(b) Financial liabilities

The Group derecognised a financial liability when its contractual obligations are discharged or cancelled, or expired. The Group also derecognised a financial liability when its terms are modified and the cash flows of the modified liability were substantially different, in which case a new financial liability based on the modified terms was recognised at fair value.

On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) was recognised in profit or loss.

Offsetting

Financial assets and financial liabilities were offset and the net amount presented in the statement of financial position when, and only when, the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.

Classification of financial assets and financial liabilities

The following table provides a reconciliation between line item in the statement of financial position and categories of financial instruments.

	Group				Company
31 March 2021	Mandatorily at FVTPL Rs.	FVOCI – Equity instruments Rs.	Amortised cost Rs.	Total carrying value Rs.	Mandatorily at FVTPL Rs.	FVOCI – equity instruments Rs.	Amortised cost Rs.	Total carrying value Rs.
Financial assets
Investment in unquoted shares	–	505,433,941	–	505,433,941	–	505,433,941	–	505,433,941
Investment in quoted shares	35,354,916	–	–	35,354,916	35,354,916	–	–	35,354,916
Investment fund	357,153,000	–	–	357,153,000	–	–	–	–
Derivative instruments	222,469,740	–	–	222,469,740	222,469,740	–	–	222,469,740
Investment in debentures and other short-term investments	–	–	219,283,488	219,283,488	–	–	106,389,041	106,389,041
Trade and other receivables	–	–	4,281,151,733	4,281,151,733	–	–	16,236,144	16,236,144
Amounts due from related parties	–	–	475,000	475,000	–	–	223,215,489	223,215,489
Cash and cash equivalents	–	–	2,520,552,239	2,520,552,239	–	–	1,281,865,256	1,281,865,256
Total financial assets	614,977,656	505,433,941	7,021,462,460	8,141,874,057	257,824,656	505,433,941	1,627,705,930	2,390,964,527
Financial liability
Loans and borrowings	–	–	4,153,528,795	4,153,528,795	–	–	1,006,808,533	1,006,808,533
Bank overdraft	–	–	872,203,730	872,203,730	–	–	1,198,941	1,198,941
Trade and other payables	–	–	2,593,943,975	2,593,943,975	–	–	–	–
Amounts due to related parties	–	–	12,802,099	12,802,099	–	–	–	–
Total financial liabilities	–	–	7,632,478,599	7,632,478,599	–	–	1,008,007,474	1,008,007,474

 

	Group				Company
31 March 2020	Mandatorily at FVTPL Rs.	FVOCI – Equity instruments Rs.	Amortised cost Rs.	Total carrying value Rs.	Mandatorily at FVTPL Rs.	FVOCI – equity instruments Rs.	Amortised cost Rs.	Total carrying value Rs.
Financial assets
Investment in unquoted shares	–	537,522,639	–	537,522,639	–	537,522,639	–	537,522,639
Investment in quoted shares	75,890,853	–	–	75,890,853	75,890,853	–	–	75,890,853
Investment in unit trust	7,346,627	–	–	7,346,627	7,346,627	–	–	7,346,627
Investment fund	343,725,000	–	–	343,725,000	–	–	–	–
Derivative instruments	234,792,226	–	–	234,792,226	234,792,226	–	–	234,792,226
Investment in debentures	–	–	106,419,178	106,419,178	–	–	106,419,178	106,419,178
Trade and other receivables	–	–	3,727,303,446	3,727,303,446	–	–	33,214,124	33,214,124
Amounts due from related parties	–	–	78,704,645	78,704,645	–	–	240,777,370	240,777,370
Cash and cash equivalents	–	–	4,572,232,065	4,572,232,065	–	–	3,879,071,288	3,879,071,288
Total financial assets	661,754,706	537,522,639	8,484,659,334	9,683,936,679	318,029,706	537,522,639	4,259,481,960	5,115,034,305
Financial liability
Loans and borrowings	–	–	5,283,746,339	5,283,746,339	–	–	2,925,274,598	2,925,274,598
Bank overdraft	–	–	1,163,836,455	1,163,836,455	–	–	52,737,440	52,737,440
Trade and other payables	–	–	1,779,294,948	1,779,294,948	–	–	–	–
Amounts due to related parties	–	–	27,513,242	27,513,242	–	–	2,875,808	2,875,808
Total financial liabilities	–	–	8,254,390,984	8,254,390,984	–	–	2,980,887,846	2,980,887,846

The estimated useful lives for the current and comparative periods are as follows:

Freehold assets	Years
Buildings	15-40
Roads and bridges	40
Sanitation, water, and electricity	20
Plant and machinery	13
Furniture and fittings	5-10
Equipment	5-8
Computer equipment	3-5
Computer software	4-6
Motor vehicles	4-5
Electrical equipment	2
Diagnostics and analyser equipment	4
Medical equipment	4
Hydropower plant	20
Fence and security lights	3
ROU assets	Over the lease period

 

Leasehold assets	Years
Bare land	53
Roads and bridges	40/Lease period
Improvements to land	30
Vested other assets	30
Buildings	25/Lease period
Plant and machinery	13
Sanitation, water and electricity	20
Water supply system	20
Mini-hydropower plant	10
Motor vehicles	4-5

Depreciation methods, useful life and residual values are re-assessed at the reporting date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Impairment of non-financial assets

The carrying amount to groups non-financial assets are reviewed at each reporting date to determine if there is any indication of impairment. If any such indication exists, them the asset's recoverable amount is estimated. For goodwill and intangible assets that have indefinite lives or that are not yet available for use, the recoverable amount is estimated at each reporting date or more frequently, if events or changes in circumstances indicate that they might be impaired.

Calculation of recoverable amount

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less cost to sell. In assessing value in use, 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. A cash generating unit is the smallest identifiable assets group that generate cash flows that are largely independent from other assets and groups.

Provision for/reversal of impairment

The carrying value of property plant and equipment is reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying value exceed the estimated recoverable amount the assets are written down to their recoverable amount. Impairment losses are recognised in the statement of comprehensive income unless it reverses a previous revaluation surplus for the same asset.

19.1 Reconciliation of carrying amount

a. Group

Cost

	Balance as at 1 April 2019 Rs.	Recognition of right-of-use asset on initial application of SLFRS 16 Rs.	Additions Rs.	Disposals Rs.	Transfers Rs.	Adjustment related to Disposal of a subsidiary Rs.	Balance as at 31 March 2020 Rs.	Balance as at 1 April 2020 Rs.	Additions Rs.	Disposals Rs.	Write-off Rs.	Transfers Rs.	Acquisition through business combination Rs.	Transfer to Asset Held for sale Rs.	Balance as at 31 March 2021 Rs.
Freehold assets
Land	192,240,816	–	–	–	(146,867,820)	–	45,372,996	45,372,996	–	–	–	–	806,165,000	–	851,537,996
Buildings	2,215,383,285	–	50,034,708	(9,349,019)	–	(710,804,000)	1,545,264,974	1,545,264,974	74,486,218	–	(177,538)	7,110,639	388,381,939	(6,261,668)	2,008,804,564
Plant and machinery	1,986,485,371	–	36,530,002	(7,560,000)	–	(927,722,000)	1,087,733,373	1,087,733,373	14,366,922	(68,748,642)	(326,759)	–	653,772,746	–	1,686,797,640
Power plant	1,971,048,398	–	20,774,129	–	–	–	1,991,822,527	1,991,822,527	1,808,167	–	–	35,347,735	–	(2,031,928,431)	(2,950,002)
Tools	68,200,000	–	–	–	56,397,500	–	124,597,500	124,597,500	–	–	–	62,357,620	–	–	186,955,120
Furniture and fittings	198,143,997	–	62,634,589	(1,570,302)	–	(35,948,000)	223,260,284	223,260,284	15,824,173	(6,211,322)	(611,837)	–	26,142,087	(3,891,370)	254,512,015
Equipment	283,728,647	–	14,705,155	–	–	(113,779,000)	184,654,802	184,654,802	25,542,333	–	–	–	13,029,476	(6,573,790)	216,652,821
Computer equipment	122,845,867	–	11,372,627	–	(121,737)	(16,846,000)	117,250,757	117,250,757	13,047,344	(6,802,668)	(1,639,700)	5,000,000	16,033,887	(2,933,041)	139,956,579
Motor vehicles	899,522,783	–	61,559,000	(80,843,998)	–	(164,673,000)	715,564,785	715,564,785	39,002,000	(78,075,450)	(1,200,000)	12,540,000	26,647,346	(535,550)	713,943,131
Electrical equipment	28,284,700	–	9,779,176	(9,484,774)	–	–	28,579,102	28,579,102	11,542,681	(12,149,516)	(1,492,023)	–	66,027,207	(53,709)	92,453,742
Medical equipment	341,545,758	–	6,889,322	–	(37,191,179)	–	311,243,901	311,243,901	34,805,797	(14,433,220)	–	–	65,405,315	–	397,021,793
Other	371,750,100	–	1,595,000	–	(1,043)	(127,687,000)	245,657,057	245,657,057	49,000	–	–	–	–	–	245,706,057
Right-of-use assets (Note 34)	–	364,860,578	–	–	–	–	364,860,578	364,860,578	206,049,375	(27,651,971)	–	–	105,269,688	(7,828,508)	640,699,162
Capital work-in-progress	48,213,662	–	144,930,682	–	(56,397,500)	(555,000)	136,191,844	136,191,844	115,258,905	–	–	(109,815,994)	47,571,939	–	189,206,694
	8,727,393,384	364,860,578	420,804,390	(108,808,093)	(184,181,779)	(2,098,014,000)	7,122,054,480	7,122,054,480	551,782,915	(214,072,789)	(5,447,857)	12,540,000	2,214,446,630	(2,060,006,067)	7,621,297,312
Leasehold assets
Roads and bridges	484,000	–	–	–	–	(479,000)	5,000	5,000	–	–	–	–	–	–	5,000
Improvements to land	3,340,000	–	–	–	–	(2,205,000)	1,135,000	1,135,000	–	–	–	–	–	–	1,135,000
Vested other assets	3,305,000	–	–	–	–	(2,104,000)	1,201,000	1,201,000	–	–	–	–	–	–	1,201,000
Buildings	93,279,000	–	–	–	–	(57,385,000)	35,894,000	35,894,000	–	–	–	–	–	–	35,894,000
Water supply system	3,838,000	–	–	–	–	(3,749,000)	89,000	89,000	–	–	–	–	–	–	89,000
Machinery	32,506,000	–	–	–	–	(9,298,000)	23,208,000	23,208,000	–	–	–	–	–	–	23,208,000
Mini-hydropower plant	1,540,000	–	–	–	–	(498,000)	1,042,000	1,042,000	–	–	–	–	–	–	1,042,000
Motor vehicles	27,362,280	–	–	(4,961,000)	–	–	22,401,280	22,401,280	–	–	–	(12,540,000)	–	(7,800,000)	2,061,280
Mature plantations	257,202,000	–	–	–	–	(257,202,000)	–	–	–	–	–	–	–	–	–
	422,856,280	–	–	(4,961,000)	–	(332,920,000)	84,975,280	84,975,280	–	–	–	(12,540,000)	–	(7,800,000)	64,635,280
Total cost	9,150,249,664	364,860,578	420,804,390	(113,769,093)	(184,181,779)	(2,430,934,000)	7,207,029,760	7,207,029,760	551,782,915	(214,072,789)	(5,447,857)	–	2,214,446,630	(2,067,806,067)	7,685,932,592

Accumulated depreciation

	Balance as at 1 April 2019 Rs.	Charge for the year Rs.	Disposals Rs.	Transfers Rs.	Adjustment related to Disposal of a subsidiary Rs.	Balance as at 31 March 2020 Rs.	Balance as at 1 April 2020 Rs.	Charge for the year Rs.	Disposals Rs.	Write-off Rs.	Transfers Rs.	Acquisition through business combination Rs.	Transfer to Asset Held for sale Rs.	Balance as at 31 March 2021 Rs.
Freehold assets
Buildings	288,436,554	53,227,232	–	–	(183,745,000)	157,918,786	157,918,786	95,124,827	–	–	–	67,191,743	(3,795,732)	316,439,624
Plant and machinery	1,092,613,521	83,928,574	(6,397,000)	–	(570,763,000)	599,382,095	599,382,095	91,838,574	(62,730,434)	(326,759)	–	214,875,671	–	843,039,147
Power plant	284,447,854	98,935,590	–	–	–	383,383,444	383,383,444	100,473,956	–	–	–	–	(483,927,684)	(70,284)
Tools	1,026,667	5,611,820	–	–	–	6,638,487	6,638,487	7,494,128	–	–	–	–	–	14,132,615
Furniture and fittings	133,756,267	20,267,670	(947,467)	–	(30,358,000)	122,718,470	122,718,470	26,531,489	(3,823,931)	(503,712)	–	18,809,288	(1,799,053)	161,932,551
Equipment	195,852,234	14,719,399	–	–	(100,851,000)	109,720,633	109,720,633	18,907,983	–	–	–	8,991,628	(5,177,161)	132,443,083
Computer equipment	101,709,650	11,586,851	–	(121,737)	(15,463,000)	97,711,764	97,711,764	11,351,502	(4,769,233)	(1,597,680)	–	9,424,847	(2,198,857)	109,922,343
Motor vehicles	562,092,473	100,898,984	(68,959,719)	–	(118,602,000)	475,429,738	475,429,738	74,462,190	(51,333,240)	(1,200,000)	12,540,000	25,335,940	(512,048)	534,722,580
Electrical equipment	34,219,698	6,370,160	–	–	–	40,589,858	40,589,858	7,965,747	(11,519,869)	(1,480,416)	–	33,689,451	(53,709)	69,191,062
Medical equipment	207,076,315	43,461,135	–	–	–	250,537,450	250,537,450	47,538,876	(7,221,549)	–	–	19,901,491	–	310,756,268
Other	88,153,264	8,436,987	–	–	(62,165,000)	34,425,251	34,425,251	23,467,000	–	–	–	–	–	57,892,251
Right-of-use assets (Note 34)	–	127,331,253	–	–	–	127,331,253	127,331,253	140,003,959	–	–	–	11,757,878	(1,433,013)	277,660,077
	2,989,384,497	574,775,655	(76,304,186)	(121,737)	(1,081,947,000)	2,405,787,229	2,405,787,229	645,160,231	(141,398,256)	(5,108,567)	12,540,000	409,977,937	(498,897,257)	2,828,061,317
Leasehold assets
Roads and bridges	315,000	3,000	–	–	(313,000)	5,000	5,000	–	–	–	–	–	–	5,000
Improvements to land	2,970,000	43,000	–	–	(1,964,000)	1,049,000	1,049,000	38,000	–	–	–	–	–	1,087,000
Vested other assets	1,199,000	41,000	–	–	(869,000)	371,000	371,000	11,000	–	–	–	–	–	382,000
Buildings	93,518,000	–	–	–	(57,624,000)	35,894,000	35,894,000	–	–	–	–	–	–	35,894,000
Water supply system	3,838,000	–	–	–	(3,749,000)	89,000	89,000	–	–	–	–	–	–	89,000
Machinery	32,506,000	–	–	–	(9,298,000)	23,208,000	23,208,000	–	–	–	–	–	–	23,208,000
Mini-hydropower plant	1,540,000	–	–	–	(498,000)	1,042,000	1,042,000	–	–	–	–	–	–	1,042,000
Motor vehicles	19,759,350	4,826,712	(4,961,000)	–		19,625,062	19,625,062	2,768,379	–	–	(12,540,000)	–	(7,800,000)	2,053,441
Mature plantations	204,765,000	1,194,000	–	–	(205,959,000)	–	–	–	–	–	–	–	–	–
	360,410,350	6,107,712	(4,961,000)	–	(280,274,000)	81,283,062	81,283,062	2,817,379	–	–	–	–	(7,800,000)	63,760,441
Total accumulated depreciation	3,349,794,847	580,883,367	(81,265,186)	(121,737)	(1,362,221,000)	2,487,070,291	2,487,070,291	647,977,610	(141,398,256)	(5,108,567)	–	409,977,937	(506,697,257)	2,891,821,758
Carrying value	5,800,454,817					4,719,959,469	4,719,959,469							4,794,110,834

• Assets in estates that are held under leasehold right to use have been taken into books of the Group retrospective from 18 June 1992. For this purpose, the Board of Directors of Watawala Plantation PLC is decided at its meeting on 8 March 1995 that those assets would be taken at their book value as they appeared in the books of the JEDB/SLSPC, on the date immediately preceding the date of formation of Watawala Plantation PLC.
• The assets shown above includes assets vested in the Watawala Plantation PLC the subsidiaries of the Company, by Gazetted notification on the date of formation of the subsidiary (18 June 1992) and all the investments made in the fixed assets by subsidiary since its formation.
• Investment by the Group on mature and immature plantations are shown separately under biological assets – mature/immature plantations.
• The transfer of immature plantation to mature plantations commences at the time the plantation is ready for commercial harvesting.
• As described in Note 24.4, the Group has acquired the Subsidiaries namely Daintee Limited and Akbar Pharmaceuticals (Pvt) Ltd. during the year. The net book value of the Property, plant and equipment acquired through business combination amounted to Rs. 1,804 Mn.
• Land and building classified as investment properties in the respective entity level and classified as PPE at consolidated level are carried at revalued amounts.

b. Company

Cost

	Balance as at 1 April 2019 Restated Rs.	Recognition of right-of-use asset on initial application of SLFRS 16 Rs.	Additions Rs.	Disposals Rs.	Transfers Rs.	Balance as at 31 March 2020 Rs.	Balance as at 1 April 2020 Rs.	Additions Rs.	Balance as at 31 March 2021 Rs.
Freehold assets
Furniture and fittings	2,935,541	–	4,527,825	–	–	7,463,366	7,463,366	232,400	7,695,766
Equipment	1,881,453	–	3,339,934	–	–	5,221,387	5,221,387	616,015	5,837,402
Computer equipment	5,951,726	–	877,500	–	(121,737)	6,707,489	6,707,489	3,656,290	10,363,779
Motor vehicles	17,370,000	–	6,500,000	(6,500,000)	–	17,370,000	17,370,000	–	17,370,000
Right-of-use assets	–	41,034,138	–	–	–	41,034,138	41,034,138	4,620,241	45,654,379
	28,138,720	41,034,138	15,245,259	(6,500,000)	(121,737)	77,796,380	77,796,380	9,124,946	86,921,326

Accumulated depreciation

	Balance as at 1 April 2019 Restated Rs.	Charge for the year Rs.	Disposals Rs.	Transfers Rs.	Balance as at 31 March 2020 Rs.	Balance as at 1 April 2020 Rs.	Charge for the year Rs.	Balance as at 31 March 2021 Rs.
Freehold assets
Furniture and fittings	2,456,068	470,043	–	–	2,926,111	2,926,111	1,103,059	4,029,170
Equipment	1,690,561	465,930	–	–	2,156,491	2,156,491	977,051	3,133,542
Computer equipment	4,126,461	810,311	–	(121,737)	4,815,035	4,815,035	864,471	5,679,506
Motor vehicles	3,445,447	3,494,203	(10,685)	–	6,928,965	6,928,965	3,474,000	10,402,965
Right-of-use assets	–	15,563,606	–	–	15,563,606	15,563,606	15,045,385	30,608,991
	11,718,537	20,804,093	(10,685)	(121,737)	32,390,208	32,390,208	21,463,966	53,854,174
Carrying value	16,420,183				45,406,172	45,406,172		33,067,152

19.2 Title restriction on property, plant and equipment

There are no restrictions that existed on the title of the property, plant and equipment of the Group as at the reporting date.

19.3 Acquisition of property, plant and equipment during the year

During the financial year, the Group acquired property, plant and equipment to the aggregate value of Rs. 421 Mn. (2020 – Rs. 614 Mn.). Cash payments amounting to Rs. 421 Mn. (2020 – Rs. 614 Mn.) were made during the year for purchase of property plant and equipment.

19.4 Capitalisation of borrowing costs

There is no capitalisation of borrowing cost relating to the acquisition of property, plant and equipment by the Group during the year (2020 – Nil).

19.5 Amount of contractual commitments for the acquisition of property, plant and equipment

The commitments for the acquisition of property, plant and equipment as at the reporting date has been disclosed in Note 43 (2020: Nil).

19.6 The details of freehold land and buildings which are stated at valuation – Group

Details of Group’s land, building and other properties stated at valuation are indicated below;

Location	Extent		Number of Building	Revalued amount			Value carried at cost
	Land (Perches)	Building (Square feet)		Land Rs.	Building Rs.	Total	Land Rs.	Building Rs.	Total Rs.
No130/6, Sri Wickrema Mawatha, Colombo 15	117	31,105	1	74,587,500	69,501,500	144,089,000	33,393,196	38,435,509	71,828,705
60/46,Sri Wickrama Road, Colombo 15	26	–	–	17,408,000	–	17,408,000	11,979,800	–	11,979,800
No. 8C, 1st Lane, Maligawa Road, Thelawela, Moratuwa	106	17,110	2	132,837,500	100,052,000	232,889,500	56,179,630	95,399,370	151,579,000
No. 72C, Kandawala Road, Ratmalana	50	11,878	2	75,000,000	38,955,825	113,955,825	456,202	3,833,166	4,289,368
Anura Mawatha, Borupana, Moratuwa	201	58,339	4	175,700,000	224,044,150	399,744,150	2,996,800	35,472,998	38,469,798
Koalin Refinary Road, Werahara, Boralasgamuwa	52	2,768	1	36,050,000	11,764,000	47,814,000	301,065	1,705,122	2,006,187
Janappriya Mawatha, Borupana, Moratuwa	21	N/A	–	20,700,000	–	20,700,000	5,240,000	–	5,240,000
				532,283,000	444,317,475	976,600,475	110,546,693	174,846,164	285,392,857

The land and buildings were revalued as at 31 March 2020, by Mr S Sivaskantha, BSc.Est,Mgt & Val (SL), Diploma in Valuation, a professional valuer in Sri Lanka. Further, the Management has obtained an addendum to the valuation obtained as at 31 March 2020 from Mr S Sivaskatha, to determine whether there is material change to the valuation of the property or change in assumptions used in the valuations as of 31 March 2021, due to potential implications of COVID 19 outbreak. Based on the said addendum, the fair value of the properties as at 31 March, 2021 has not changed compared to the valuation as at 31 March 2020. The fair value is determined based on an open market value using existing use basis.

19.7 Measurement of fair values

Fair value hierarchy

The fair value of property was determined by external, independent property valuers, having appropriate recognised professional qualifications and recent experience in the location and category of the property being valued. The independent valuers provide the fair value of the Group’s investment property portfolio every three years.

The fair value measurement of all of the investment properties has been categorised as a Level 3 fair value based on the inputs to the valuation techniques used.

The valuer has considered the potential impact of COVID-19 in his report when arriving at the market rate.

Valuation techniques and significant unobservable inputs

The table below sets out the significant unobservable inputs used in measuring land and building categorised as Level 3 in the fair value hierarchy as at 31 March 2021.

Location and address of the property	Method of valuation	Significant unobservable inputs	Range of estimates for unobservable inputs	Estimated fair value would increases or decreases
No. 130/6, Sri Wickrama Mawatha, Colombo 15	Market Comparable method	Land – Price per perch	Rs. 637,500-Rs. 850,000	Price per perch for land increases, decreases
		Building – Price per square feet	Rs. 2,000-Rs. 5,000	Price per square feet for building increases, decreases
No. 60/46, Sri Wickrama Road, Colombo 15	Market Comparable method	Land – Price per perch	Rs. 680,000-Rs. 850,000	Price per perch for land increases, decreases
No. 8C, 1st Lane, Maligawa Road, Thelawela, Moratuwa	Market Comparable method	Land – Price per perch	Rs. 1,250,000	Price per perch for land increases, decreases
		Building – Price per square feet	Rs. 4,000-Rs. 7,500	Price per square feet for building increases, decreases
No. 72C, Kandawala Road, Ratmalana	Market Comparable method	Land – Price per perch	Rs. 1,500,000	Price per perch for land increases, decreases
		Building – Price per square feet	Rs. 3,500-Rs. 5,000	Price per square feet for building increases, decreases
Anura Mawatha, Borupana, Moratuwa	Market Comparable method	Land – Price per perch	Rs. 875,000	Price per perch for land increases, decreases
		Building – Price per square feet	Rs. 3,750-Rs. 5,500	Price per square feet for building increases, decreases
Koalin Refinary Road, Werahara, Boralasgamuwa	Market Comparable method	Land – Price per perch	Rs. 700,000	Price per perch for land increases, decreases
		Building – Price per square feet	Rs. 5,000	Price per square feet for building increases, decreases
Janappriya Mawatha, Borupana, Moratuwa	Market Comparable method	Land – Price per perch	Rs. 1,000,000	Price per perch for land increases, decreases

Method of valuation – Market Comparable method

Comparison method for valuation of land considers the selling price of a similar property within a reasonably recent period of time in determining the fair value of the property being revalued. This involves evaluation of recent active market prices of similar assets making appropriate adjustments for differences in size, nature, location, condition of specific property.

Significant assumptions used by the valuer
Yield/Discount rate	20%-25% per annum

19.8 Impairment of property, plant and equipment

The Board of Directors has assessed the potential impairment loss of property, plant and equipment as at 31 March 2021. Based on the assessment, no impairment provision is required to be made in the financial statements as at the reporting date in respect of property, plant and equipment.

19.9 Property, plant and equipment pledged as security

None of the property, plant and equipment have been pledged as securities as at the reporting date.

19.10 Temporarily idle property, plant and equipment

There are no temporarily idle property, plant and equipment as at the reporting date.

19.11 Compensation from third parties for items of property, plant and equipment

There were no compensation received/receivable from third parties for items of property, plant and equipment that were impaired, lost or given up.

20.1 Reconciliation of carrying amount

	Group
	Software Rs.	Brand Rs.	Cpaital work in progress Rs.	Total Rs.
Cost
Balance as at 1 April 2019	233,002,916	59,150,000	–	292,152,916
Acquisitions	13,632,499	–	–	13,632,499
Transfers	(7,411,080)	–	–	(7,411,080)
Balance as at 31 March 2020	239,224,335	59,150,000	–	298,374,335
Balance as at 1 April 2020	239,224,335	59,150,000	–	298,374,335
Acquisition through business combination (Note 24.4)	4,918,693	82,270,651	–	87,189,344
Acquisition	5,042,272	–	47,840,756	52,883,028
Balance as at 31 March 2021	249,185,300	141,420,651	47,840,756	438,446,707

 

	Group
	Software Rs.	Brand Rs.	Capital work in progress Rs.	Total Rs.
Accumulated amortisation
Balance as at 1 April 2019	84,950,357	14,787,500	–	99,737,857
Amortisation	34,057,021	2,957,500	–	37,014,521
Transfers	(4,320,764)	–	–	(4,320,764)
Balance at 31 March 2020	114,686,614	17,745,000	–	132,431,614
Balance as at 1 April 2020	114,686,614	17,745,000	–	132,431,614
Acquisition through business combination (Note 24.4)	1,506,994	17,298,982	–	18,805,976
Amortisation	33,550,260	4,601,512	–	38,151,772
Balance as at 31 March 2021	149,743,868	39,645,494	–	188,389,362
Carrying value as at 31 March 2020	124,537,721	41,405,000	–	165,942,721
Carrying value as at 31 March 2021	99,441,432	101,775,157	47,840,756	249,057,345

20.1.1 Brand acquisition

The Group has recognised the brand “HEALTHGUARD” upon the acquisition of Healthguard Pharmacy Ltd., on 19 December 2010 and the Brand has been valued by an independent valuer, Quasar Capital Advisors (Pvt) Ltd. The value of the brand is tested for impairment on every reporting date. The Board of Directors has decided to amortise the brand for 20 years beginning from the year 2014/15.

Group subsidiaries namely Lina Manufacturing (Pvt) Ltd. and Lina Spiro (Pvt) Ltd. engaged in the development of new medicines and the cost incurred for development of such medicinal products have been capitalized during the year.

20.1.2 Capital Work in Progress

The Group is in the process of customising of a New ERP Software purchased from a third party vendor. A cost of Rs. 48 Mn. has been paid for the purchase of user licenses and capitalised as part of the project development cost.

	Company
	Software Rs.	Capital work in progress Rs.	2021 Rs.	2020 Rs.
Cost
Balance as at 1 April	3,012,500	–	3,012,500	3,012,500
Acquisitions	–	7,555,660	7,555,660	–
Balance as at 31 March	3,012,500	7,555,660	10,568,160	3,012,500
Accumulated amortisation and impairment losses
Balance as at 1 April	3,007,815	–	3,007,815	2,985,253
Amortisation	4,685	–	4,685	22,562
Balance as at 31 March	3,012,500	–	3,012,500	3,007,815
Carrying value as at 31 March	–	7,555,660	7,555,660	4,685

Assessment of impairment of intangible assets

The Board of Directors has assessed the potential impairment loss of intangible assets as at 31 March 2021. Based on the assessment, no impairment provision is required to be made in the financial statements as at the reporting date.

Title restriction on intangible assets

There are no restrictions that existed on the title of the intangible assets of the Company/Group as at the reporting date.

Intangible assets pledged as security

None of the Intangible assets have been pledged as security as at the reporting date.

Acquisition of intangible assets during the year

During the financial year, the Group acquired intangible assets to the aggregate value of Rs. 53 Mn. (2020 – Rs. 14 Mn.). Cash payments amounting to Rs. 53 Mn. (2019 – Rs.14 Mn.) were made during the year.

Acquisition through business combination

As described in Note 24.4 , the Group has acquired the Subsidiaries namely Daintee Limited and Akbar Pharmaceuticals (Pvt) Ltd. during the year. The fair value of the intangible assets acquired through business combination amounted to Rs. 68 Mn.

Amount of contractual commitments for the acquisition of intangible assets

The contractual commitments for the acquisition of Intangible Assets as at the reporting date has been disclosed in Note 43.

Fully amortised intangible assets in use

Intangible assets include fully amortised computer software which are in use in the normal business activities to the gross carrying value of Rs. 33 Mn. (2020 – Rs. 23 Mn.).

Leasehold right to land of JEDB/SLSPC estates

	Group
	2021 Rs.	2020 Rs.
Cost/Revaluation
Balance as at 1 April	433,895,000	372,840,000
Adjustment to right-of-use asset on application of SLFRS 16	–	174,011,000
Remeasurement of lease liabilities	5,367,000	–
Additions during the year	2,167,000	–
Adjustment related to disposal of a subsidiary	–	(112,956,000)
Balance at 31 March	441,429,000	433,895,000
Accumulated amortisation
Balance as at 1 April	192,456,000	188,877,000
Amortisation	10,120,000	10,283,000
Adjustment related to disposal of a subsidiary	–	(6,704,000)
Balance as at 31 March	202,576,000	192,456,000
Carrying amount	238,853,000	241,439,000

The lease of JEDB/SLSPC estates handed over to the subsidiary, Watawala Plantation PLC for the period of 53 years are all executed. The leasehold rights to the land on all these estates are taken in to the books of the subsidiary as at 18 June 1992 immediately after formation of the subsidiary Watawala Plantation PLC in terms of a ruling obtained from the Urgent Issue Task Force (UITF) of the Institute of Chartered Accountants of Sri Lanka. The bare land is revalued at the value established for this land by valuation specialists, Dr Wickramasinghe, just prior to the formation of the subsidiary.

The leasehold rights to land is recorded in accordance with the Statement of Recommended Practice for the Right-to-Use of land on lease which was approved by the Council of the Institute of Chartered Accountants of Sri Lanka on 19 December 2012. Corresponding liability is shown as a lease payable to JEDB/SLSPC.

The cost of areas coming into bearing are transferred to mature plantations and depreciated over their useful lives as follows:

	Freehold Years	Leasehold Years
Tea	33	30
Rubber	20	20
Palm Oil	20	20
Calliandra	10	–
Coconut	33	–

Timber plantation

Timber plantation is measured at fair value on initial recognition and at the end of each reporting period at fair value less cost to sell which includes all the cost that would be necessary to sell the assets including transportation costs.

Gain or loss arising on initial recognition of timber plantations at fair value less costs to sell and from the change in fair values less costs of plantations at each reporting date are included in the Statement of Profit or Loss for the period in which they arise. All costs incurred in maintaining the assets are included in Statement of Profit or Loss in the year in which they are incurred.

	Group
	2021 Rs.	2020 Rs.
Biological assets – Bearer (22.1)	2,762,684,000	2,763,947,000
Biological assets – Consumables (22.2)	32,857,000	31,657,000
Biological assets – Livestock (22.3)	749,340,000	695,538,000
	3,544,881,000	3,491,142,000
Non-current	3,492,193,000	3,449,345,000
Current	52,688,000	41,797,000
	3,544,881,000	3,491,142,000

22.1 Biological assets – Bearer

	Nurseries Rs.	Immature plantations Rs.	Mature plantations Rs.	Total 2021 Rs.	Total 2020 Rs.
Cost
Balance as at 1 April	19,823,000	745,190,000	3,114,482,000	3,879,495,000	4,664,493,000
Fair value of growing crops	–	–	10,891,000	10,891,000	10,526,000
Additions	3,397,000	161,805,000	–	165,202,000	211,390,000
Impairment losses and write-downs	(20,126,000)	–	–	(20,126,000)	–
Adjustment related to disposal of a subsidiary	–	–	–	–	(1,006,914,000)
Transfers	–	(487,065,000)	487,065,000	–	–
Balance as at 31 March	3,094,000	419,930,000	3,612,438,000	4,035,462,000	3,879,495,000
Accumulated depreciation
Balance as at 1 April	–	–	1,115,548,000	1,115,548,000	1,325,689,000
Charged for the year	–	–	157,230,000	157,230,000	167,161,000
Adjustment related to disposal of a subsidiary	–	–	–	–	(377,302,000)
Balance as at 31 March	–	–	1,272,778,000	1,272,778,000	1,115,548,000
Carrying value
As at 31 March 2021	3,094,000	419,930,000	2,339,660,000	2,762,684,000
As at 31 March 2020	19,823,000	745,190,000	1,998,934,000		2,763,947,000

Investments in biological assets – plantations since the formation of the Company have been classified as shown above and includes bearer biological assets comprising mainly tea and palm plantations. Bearer biological assets together with any unmanaged biological assets are stated at cost.

The requirement of recognition of bearer biological assets at its fair value less cost to sell under LKAS 41 was superseded by the ruling issued on 2 March 2012, by the Institute of Chartered Accountants of Sri Lanka. Accordingly, Watawala Plantations PLC, a subsidiary of the Company has elected to measure the bearer biological assets at cost using LKAS 16 – “Property, Plant and Equipment”.

22.2 Biological assets – Consumables

	Mature plantations Rs.	Total 2021 Rs.	Total 2020 Rs.
Cost
Balance as at 1 April	31,657,000	31,657,000	738,496,000
(Loss)/gain arising from changes in fair value less costs to sell	1,200,000	1,200,000	(6,656,000)
Additions	–	–	438,000
Decrease due to harvest	–	–	(273,000)
Adjustment related to disposal of a subsidiary	–	–	(700,348,000)
Balance as at 31 March	32,857,000	32,857,000	31,657,000

• Expected rate of return p.a. 14% (2020 – 14%)
• Maturity for harvesting – 25 years (2020 – 25 years)
• Number of trees valued – 7,569 (2020 – 7,574)

Immature consumer biological assets comprising trees under 5 years old are carried at cost less accumulated impairment losses.

22.1.1 Measurement of fair values

The valuation of consumable biological assets was carried by Mr Weerasinghe Chadrasena, an independent Incorporated Valuation Surveyor, using Discounted Cash Flows (DCF) methods. The Valuation Report dated 31 March 2021 has been prepared based on the physically verified timber statistics provided by the Group.

The future cash flows are determined by reference to current timber prices.

(a) The fair value measurements for the timber have been categorised as Level 3 fair values based on the inputs to the valuation techniques used. The fair value measurements of livestock have been categorised as Level 2 fair values based on observable market sales data.

(b) Level 3 fair values

The following table shows a breakdown of the total gains (losses) recognised in respect of Level 3 fair values (Timber).

	Group
	2021 Rs.	2020 Rs.
Gain included in “other income”
Change in fair value (unrealised)	1,200,000	(6,656,000)

(c) Valuation techniques and significant unobservable inputs

Following table shows the valuation techniques used in measuring Level 3 fair value of consumable biological assets as well as the significant unobservable inputs used for the valuation as at 31 March 2021.

Type	Valuation technique	Significant unobservable inputs	Inter-relationship between key unobservable inputs and fair value measurement
Standing timber Standing timber older than 4 years	Discounted cash flows The valuation model considers present value of future net cash flows expected to be generated by the plantation from the timber content of managed timber plantation on a tree-per-tree basis. Expected cash flows are discounted using a risk-adjusted discount rate of 14% (2020: 14.0%). Following factors have been considered in determining the risk premium; – The illiquid nature of The plantations prior to maturity – A lack of market evidence as to the value of biological assets through their life cycle – Risk relations to diseases and fire affecting the biological assets – Adoption of conservative valuation approach	Determination of timber content Timber trees in inter-crop areas and pure crop areas have been identified field-wise and spices were identified and harvestable trees were separated, according to their average girth and estimated age. Timber trees that have not come up to a harvestable size are valued working out the period that would take for those trees to grow up to a harvestable size. Determination of price of timber Trees have been valued as per the current timber prices per cubic metre based on the industry average prices logs sawn timber at the popular timber traders in Sri Lanka. In this exercise, following factors have been taken into consideration (a) Cost of obtaining approval of felling. (b) Cost of felling and cutting into logs. (c) Cost of transportation. (d) Sawing cost. (e) Cost of sale. (f) f. Exclusion of trees located in restricted area specialized in the circular No. 2019/01 dated on 6 November 2019 issued by the Ministry of Plantation Industries. Price range per cu.ft. is Rs. 150-/ to Rs. 650/- (2020- Rs. 150/- to Rs. 650/-) Risk-adjusted discount rate 2021 - 14.0% (2020 - 14.0%).	The estimated fair value at the time of harvesting each specific species is sensitive to the following variables: – the estimated timber content (The higher the volume, the higher the fair value) – the estimated selling related costs (Lower the selling related costs, the higher the fair value) – the estimated maturity age (Lower the rotation period, the higher the fair value) – the estimated maturity age – the risk-adjusted discount rate. (The higher the discount rate, the lesser the fair value)

22.1.2 Sensitivity analysis

The financial impact on the value appearing in the Statement of Financial Position due to change of selling price and variation of discount rate is given below.

Sensitivity variation sales price (using 10% estimated variation)

Simulations made for the timber show that a rise or decrease by 10% of the estimated future selling price has the following effect on the net present value of biological assets:

	2021 Rs.	2020 Rs.
Value stand as now	32,857,000	31,657,000
Value stand as at 10% (2020: 10%) positive variance	36,143,000	34,823,000
Value stand as at 10% (2020: 10%) negative variance	29,572,000	28,492,000

Sensitivity variation discount rate (using 1.0% variation)

Simulations made for the timber trees show that a rise or decrease by 1.0% of the discount rate has the following effect on the net present value of biological assets:

	2021 Rs.	2020 Rs.
Value stand as now	32,857,000	31,657,000
Value stand as at 1% positive variance	31,108,000	31,974,000
Value stand as at 1% negative variance	34,806,000	31,341,000

22.3 Biological assets – livestock

	Group
	2021 Rs.	2020 Rs.
Balance as at 1 April	695,538,000	662,620,000
Additions	59,114,000	24,120,000
Disposals during the year	(5,282,000)	(3,836,000)
Gain/(loss) arising from changes in fair value less costs to sell	(30,000)	12,634,000
Balance as at 31 March	749,340,000	695,538,000

As at 31 March 2021 livestock comprised 1,632 cattle (2020 – 1,267 cattle).

22.3.1 Valuation techniques and significant unobservable inputs

Type	Valuation technique	Significant unobservable inputs	Inter-relationship between key unobservable inputs and fair value measurement
Livestock Livestock comprises cattle	Discounted cash flows The valuation model considers present value of future net cash flows expected to be generated by the cattle based on lactation-wise annual milking averages and costs incurred. Expected cash flows are discounted using a risk-adjusted discount rate of 16.41% (2020: 19.36%).	Determination of selling price Selling price has been determined based on the market prices Determination of cost per cow Cost per cow has been determined based on the adjusted cost during the year Determination of discount factor Risk adjusted discount rate of 19.36% has been used for the valuation Determination of yield Yield has been determined based on the actual milk production in each lactation Risk-adjusted discount rate 2021 – 16.41% (2020 - 19.36%)	The estimated fair value would increase/(decrease): – the estimated milking prices were higher/(lower) – the estimated yield per cow were higher/(lower) – the risk-adjusted discount rate were higher/(lower)

22.3.2 Sensitivity analysis

The fair value measurements of livestock have been categorised as Level 3 fair value based on assumptions used.

Sensitivity variation sales price (using 10% estimated variation)

Simulations made for livestock show that an increase or decrease by 10% of the estimated future selling price has the following effect on the fair value of biological assets:

	2021 Rs.	2020 Rs.
Value stand as now	749,340,000	695,538,000
Value stand as at 10% positive variance	1,009,136,000	927,623,000
Value stand as at 10% negative variance	489,542,000	463,452,000

Sensitivity variation Cost (using 10% variation)

Simulations made for livestock show that an increase or decrease by 10% of the estimated future cost has the following effect on the fair value of biological assets:

	2021 Rs.	2020 Rs.
Value stand as now	749,340,000	695,538,000
Value stand as at 10% positive variance	937,262,000	862,149,000
Value stand as at 10% negative variance	561,416,000	528,926,000

Sensitivity variation discount rate (using 1.0% variation)

Simulations made for livestock show that an increase or decrease by 1% of the estimated future discount rate has the following effect on the fair value of biological assets:

	2021 Rs.	2020 Rs.
Value stand as now	749,340,000	695,538,000
Value stand as at 1% positive variance	763,548,000	709,754,000
Value stand as at 1% negative variance	735,710,000	684,788,000

Sensitivity Variation on yield (using 1.0% variation)

	2021 Rs.	2020 Rs.
Value stand as now	749,340,000	695,538,000
Value stand as at 1% positive variance	790,192,000	709,166,000
Value stand as at 1% negative variance	708,791,000	616,513,000

LKAS 41 – Amended-Valuation of growing crops on bearer plants

The amendment became effective for the period beginning on or after 1 January 2016.The growing crops on bearer plants should be fair valued and recognised in the financial statements.

	Group
	2021 Rs.	2020 Rs.
Balance as at 1 April	41,797,000	45,883,000
Change during the year	10,891,000	(4,086,000)
Balance as at 31 March	52,688,000	41,797,000

The volume of produce growing on bearer plants are measured considering the estimated crop of the last harvesting cycle of the year as follows,

Tea – Three days crop (50% of 6 days cycle),

Oil palm – Five days crop (50% of 10 days cycle)

Produce that grows on mature bearer plantations are measured at fair value less cost to sell. The value of the unharvested green leaves is measured using the Tea commissioner’s formula for bought leaf and the value of unharvested fresh fruit bunches (FFB) of Oil Palm is measured using the actual price used to purchase FFB from out growers.

Risk management strategy related to agricultural activities

Regulatory and environmental risks

The Group is subject to laws and regulations in various countries in which it operates. The Group has established environmental policies and procedures aimed at compliance with local environmental and other laws.

Supply and demand risk

The Group is exposed to risks arising from fluctuations in the price and sales volume. When possible, the Group manages this risk by aligning its harvest volume to market supply and demand. Management performs regular industry trend analyses for projected harvest volumes and pricing.

Climate and other risks

The Group's plantations are exposed to the risk of damage from climatic changes, diseases, forest fires and other natural forces. The Group has extensive processes in place aimed at monitoring and mitigating those risks, including regular forest health inspections and industry pest and disease surveys.

23.1 Reconciliation of carrying amount

	Group
	Land Rs.	Building Rs.	Total Rs.
Balance as at 1 April 2019	202,150,000	125,055,000	327,205,000
Transfer from property, plant and equipment (Note 23.1.2)	146,867,820	–	146,867,820
Additions	119,159,260	–	119,159,260
Fair value	112,965,470	3,301,594	116,267,064
Balance as at 31 March 2020	581,142,550	128,356,594	709,499,144
Balance as at 1 April 2020 (Note 23.1.1)	581,142,550	128,356,594	709,499,144
Acquisition through business combination (Note 23.4)	60,000,000	–	60,000,000
Balance as at 31 March 2021	641,142,550	128,356,594	769,499,144

Changes in fair values are recognised as gains in profit or loss and included in “other income”. All gains are unrealised.

23.1.1 Investment property as at 1 April 2020 comprises a commercial property that is leased to Abans Electricals PLC. This lease contains an initial period of 3-5 years from 2018 to 2023. Subsequent renewals were negotiated with the lessee and no contingent rents are charged.

23.1.2 Details of land and building under Investment Property

	Extent			Revalued amount
Location	Land (Perches)	Building (Square feet)	Number of Buildings	Land Rs.	Building Rs.	Carrying value after revaluation Rs.	Carrying value if carried at cost Rs.
No. 75A, Kandawala Road, Ratmalana	195.50	42,367.5	2	208,600,000	128,356,594	336,956,594	200,112,693
No. 107/11, Pasbatel Road, Mattakkuliya	108.43	–	–	64,515,850	–	64,515,850	104,828,000
No. 60/52, Sri Wickrama Mawatha, Mattakkuliya	137.86	–	–	82,026,700	–	82,026,700	66,846,080
No. 75, Norris Canal Road, Colombo 10	28.50	–	–	226,000,000	–	226,000,000	94,353,000
Budanapitiya Road, Hengawa and Modera, Kurunagala	1,672.00	–	–	36,000,000	–	36,000,000	17,554,000
Rukgaha Thothupola Road, Aluthgama, Bandaragama	160.00	–	–	24,000,000	–	24,000,000	16,960,000
				641,142,550	128,356,594	769,499,144	500,653,773

Kurunegala and Bandaragama lands were revalued as at 28 February 2021, by Mr S Sivaskantha, B.Sc.Est,Mgt & Val (SL), Diploma in Valuation, and by Mr J S M I B Karunatilaka, FIV, professional valuers respectively. The fair value is determined based on an open market value using direct comparison basis.

The rest of other land and buildings were revalued as at 31 March 2020, by Mr S Sivaskantha, B.Sc.Est,Mgt & Val (SL), Diploma in Valuation, a professional valuer in Sri Lanka. The fair value is determined based on an open market value using existing use basis.

23.2 Measurement of fair values

Fair value hierarchy

The fair value of investment property was determined by external, independent property valuers, having appropriate recognised professional qualifications and recent experience in the location and category of the property being valued. The independent valuers provide the fair value of the Group’s investment property portfolio every 3 years.

The fair value measurement of all of the investment properties has been categorised as a Level 3 fair value based on the inputs to the valuation techniques used.

A reassessment of the fair value of land was carried out by Mr S Sivaskantha considering the potential COVID-19 implications as at 31 March 2021 except for Kurunegala and Bandaragama Lands and declared that there is no change in the value.

Valuation techniques and significant unobservable inputs

The table below sets out the significant unobservable inputs used in measuring land and building categorised as Level 3 in the fair value hierarchy as at 31 March 2021.

Location and address of the property	Method of valuation	Significant unobservable inputs	Range of estimates for unobservable inputs	Estimated fair value would increases or decreases
No. 75A, Kandawala Road, Ratmalana.	Market comparable method	Land – Price per perch	Rs. 1,050,000-Rs. 1,350,000	Price per perch for land increases, decreases
		Building – Price per square feet	Rs. 5,000-Rs. 5,750	Price per square feet for Building increases, decreases
No. 107/11, Pasbatel Road, Mattakkuliya	Market comparable method	Land – Price per perch	Rs. 595,000- Rs. 850,000	Price per perch for land increases, decreases
No. 60/52, Sri Wickrama Mawatha, Mattakkuliya	Market comparable method	Land – Price per perch	Rs. 850,000-Rs. 900,000	Price per perch for land increases, decreases
		Building – Price per square feet	Rs. 5,500-Rs. 6,000	Price per square feet for Building increases, decreases
No. 75, Norris Canal Road, Colombo 10	Market comparable method	Land – Price per perch	Rs. 8,000,000-Rs. 8,500,000	Price per perch for land increases, decreases
Budanapitiya Road, Hengawa and Modera, Kurunagala	Market comparable method	Land – Price per perch	Rs. 1,125,000 per perch	Price per perch for land increases, decreases
Rukgaha Thothupola Road, Aluthgama, Bandaragama	Market comparable method	Land – Price per perch	Rs. 150,000 per perch	Price per perch for land increases, decreases

Method of valuation – Market Comparable method

Comparison method for valuation of land considers the selling price of a similar property within a reasonably recent period of time in determining the fair value of the property being revalued. This involves evaluation of recent active market prices of similar assets making appropriate adjustments for differences in size, nature, location, condition of specific property.

Significant assumptions used by the valuer:

Yield/discount rate – 25% per annum

23.3 Income from Investment Property

	Group
	2021 Rs.	2020 Rs.
Rent income from investment property (Note 9)	25,920,684	24,534,526
Direct operating expenses (including maintenance) generating rent income	(4,418,468)	(4,695,527)
Net profit from investment property carried at fair value	21,502,216	19,838,999

23.4 Acquisition through Business combination

As described in Note 24.4 , the Group has acquired the Subsidiaries namely Daintee Limited and Akbar Pharmaceuticals (Pvt) Ltd. during the year. The fair value of the Investment properties acquired through business combination amounted to Rs. 60 Mn.

Company	2021					2020 (Restated)
	Holding %	Number of shares	Cost Rs.	Impairment Rs.	Carrying value Rs.	Holding %	Number of shares	Cost Rs.	Impairment Rs.	Carrying value Rs.
Unquoted/Quoted
Sunshine Healthcare Lanka Ltd.	72	7,943,554	428,790,826	–	428,790,826	100.00	8,274,535	446,657,088	–	446,657,088
Sunshine Consumer Lanka Ltd. (formerly known as “Watawala Tea Ceylon Ltd.”)	100	35,500,002	741,595,042	–	741,595,042	100.00	35,500,005	741,595,042	–	741,595,042
Watawala Plantations PLC	–	–	–	–	–	74.24	150,937,043	966,997,639	–	966,997,639
Sunshine Energy (Pvt) Ltd.	70	42,125,000	557,908,231	–	557,908,231	70.00	42,125,000	557,908,231	–	557,908,231
Sunshine Packaging Lanka Ltd. (Note 24.7)	100	91,479,334	696,500,000	(177,581,884)	518,918,116	100.00	91,479,334	696,500,000	(177,581,884)	518,918,116
Elgin Hydropower (Private) Limited	–	1	10	–	10	–	1	10	–	10
Upper Waltrim Hydropower (Private) Limited	–	1	10	–	10	–	1	10	–	10
Sunshine Wilmar (Pvt) Ltd.	50	197,500,000	1,520,750,002	–	1,520,750,002	–	–	–	–	–
			3,945,544,121	(177,581,884)	3,767,962,237			3,409,658,020	(177,581,884)	3,232,076,136

24.1 Group's Indirect Holdings

	2021 %	2020 %
Watawala Plantations PLC	37.12	44.54
Sunshine Consumer lanka Ltd. (formerly known as “Watawala Tea Ceylon Limited”)*	–	60.00
Watawala Dairy Ltd.	37.12	44.54
Zesta Tea Ceylon (Shenzhen) Co. Limited	100.00	60.00
Healthguard Pharmacy Ltd.	72.00	100.00
Waltrim Energy Ltd.	42.41	42.41
Waltrim Hydropower (Pvt) Ltd.	42.41	42.41
Elgin Hydropower (Pvt) Ltd.	42.41	42.41
Upper Waltrim Hydropower (Pvt) Ltd.	42.41	42.41
Sky Solar (Pvt) Ltd.	70.00	70.00
Norris Canal Properties (Pvt) Ltd.	100.00	100.00
Daintee Limited	100.00	–
Akbar Pharmaceuticals (Pvt) Ltd.	72.00	–
Akbar Pharmaceuticals Holdings (Pvt) Ltd.	62.86	–
Lina Manufacturing (Pvt) Ltd.	62.86	–
Lina Spiro (Pvt) Ltd.	32.06	–

* Sunshine Consumer Lanka Ltd. (formerly known as “Watawala Tea Ceylon Ltd.”) has become a direct subsidiary of the Company with effect from 2 February 2021 upon amalgamation of Estate Management Services (Pvt) Ltd. with the Company.

24.2 Incorporation and Estabilishing Control Over Sunshine Wilmar (Pvt) Ltd.

On 13 March 2020, Sunshine Holdings PLC (the “Company”) and Pyramid Wilmar Plantations (Pvt) Ltd. (PWPL) jointly incorporated a new Company named Sunshine Wilmar (Pvt) Ltd. (SWPL) with equal shareholding (by issuing 2 ordinary shares).

On 12 May 2020; the Share Capital of Rs. 1,521 Mn. each were infused in to SWPL by the Company and PWPL.

Although the Company and PWPL hold equal shareholding and voting power in SWPL, the Group exercises the power over the SWPL by virtue of contractual agreement reached with the PWPL for exercising of operational control in accordance with the Shareholder Agreement dated 19 March 2020. Accordingly, SWPL and its subsidiary Watawala Plantations PLC ("WATA") are consolidated in these financial statements.

24.3 Change in NCI

24.3.1 On 15 May 2020, SWPL has acquired 74.24% stake of WATA from Estate Management Services (Pvt) Ltd. (EMSPL) for the purchase consideration of Rs. 3,019 Mn. As a result of this transactions Group’s effective shareholding of the WATA has dropped to 37.12% from 44.54%.

The gain on disposal of Rs. 2,033 Mn. has been recognised in the statement of profit or loss of the Company (2020: Gain on disposal of subsidiary namely Hatton Plantations PLC amounted to Rs. 1,477 Mn. has been recognised)

24.3.2 On May 19, 2020, the Company has acquired the remaining stake of 40% in EMSPL from PWPL for the purchase consideration of Rs. 2,903 million. As a result of this transaction effective shareholdings of Watawala Tea Ceylon Limited (consumer brands business) has increased from 60% to 100% through EMSPL.

Refer Note 24.4 for the change in NCI relating to Sunshine Healthcare Lanka Ltd.

24.4 Acquisition of Subsidiaries

On 31 August 2020, Sunshine Consumer Lanka Ltd. (formerly known as “Watawala Tea Ceylon Ltd.”), a Subsidiary of the Company, acquired 100% of the issued share capital of Daintee Limited, obtaining control of Daintee Limited. Daintee Limited is engaged in the manufacturing of confectionery products and qualifies as a business as defined in SLFRS 3. Daintee limited was acquired to enable Sunshine Group to expand its operations in FMCG sector.

Further on 25 January 2021, Sunshine Healthcare Lanka Ltd. (“SHL”), which is a 100% fully owned subsidiary of the Company, acquired 100% of the ordinary voting shares of Akbar Pharmaceutical (Private) Limited (“ABPL”) from Akbar Brothers (Private) Limited (“ABL”). The consideration for this purchase was satisfied by the issuance of new ordinary voting shares in SHL to ABL, which constitute 25% of its issued stated capital for a consideration of Rs. 2,320 Mn. Further, the Company sold 3% of the existing ordinary voting shares held in SHL to ABL for a cash consideration of Rs. 278.4 Mn. which resulted in a gain on disposal of subsidiary shares of Rs. 261 Mn. As a result of these transactions, the effective shareholding in SHL held by the Company reduced from 100% to 72%.

The aggregate effects of acquisition and disposal of subsidiaries are as follows:

	Daintee Limited Rs.	Akbar Pharmaceutical (Pvt) Ltd. Group Rs.	Total Rs.
Total Assets (Note 24.4.A)	1,909,394,041	2,293,707,871	4,203,101,912
Total liabilities (Note 24.4.A)	(408,777,199)	(1,223,327,172)	(1,632,104,371)
Amount of the subsidiary's net assets (100%)	1,500,616,842	1,070,380,699	2,570,997,541
Fair value of the Purchase consideration (Note 24.4.B)	1,696,057,300	2,320,249,300	4,016,306,600
Non-controlling interest as at the date of acquisition	–	131,339,319	131,339,319
Goodwill arises on acquisition (Note 24.4.C)	195,440,458	1,381,207,920	1,576,648,378

24.4.a Identifiable net assets

The amounts recognised in respect of the identifiable net assets acquired and liabilities assumed are as set out below:

	Daintee Limited Rs.	Akbar Pharmaceutical (Pvt) Ltd. Group Rs.	Total Rs.
Assets
Property, plant and equipment	936,182,634	868,286,061	1,804,468,695
Intangible assets	900,000	67,483,368	68,383,368
Deferred tax asset	–	23,072,561	23,072,561
Investment property	60,000,000	–	60,000,000
Inventory	228,550,531	586,234,264	814,784,795
Provision for impairment of inventory	–	(48,992,058)	(48,992,058)
Trade and other receivables	123,173,735	774,467,743	897,641,478
Provision for impairment of trade receivables	(4,334,000)	(9,209,851)	(13,543,851)
Amount due from related parties	–	88,950	88,950
Short term investments	487,239,754	–	487,239,754
Current tax receivable	–	8,654,833	8,654,833
Cash and cash equivalents	77,681,387	23,622,000	101,303,387
Total assets	1,909,394,041	2,293,707,871	4,203,101,912
Liabilities
Retirement benefit obligations	(28,942,268)	(28,650,528)	(57,592,796)
Deferred tax liability	(221,972,102)	(77,875,721)	(299,847,823)
Loan and borrowings	(3,732,593)	(210,550,329)	(214,282,922)
Trade and other payables	(129,134,015)	(163,274,903)	(292,408,918)
Amount due to related parties	–	(7,049,509)	(7,049,509)
Tax liability	(24,996,221)	(18,896,660)	(43,892,881)
Bank overdraft	–	(717,029,522)	(717,029,522)
Total liabilities	(408,777,199)	(1,223,327,172)	(1,632,104,371)
Total identifiable net assets acquired	1,500,616,842	1,070,380,699	2,570,997,541

24.4.B Fair value of the Purchase consideration satisfied by:

	Daintee Limited Rs.	Akbar Pharmaceutical (Pvt) Ltd. Group Rs.	Total Rs.
Purchase consideration paid in cash	1,622,633,402	–	1,622,633,402
Contingent consideration	73,423,898	–	73,423,898
Shares issued to satisfy the Purchase consideration	–	2,320,249,300	2,320,249,300
Fair value of total consideration	1,696,057,300	2,320,249,300	4,016,306,600

24.4.B.1 Contingent Consideration

Contingent consideration of Rs. 78,026,414/- to be paid within one month from a final non appealable order being made by the Court of Appeal or a settlement being reached with the Inland Revenue Department in favour of Daintee Limited of the disputed tax liabilities together with interest at the rate 5% per annum. However, if such liabilities on income tax are not subject to any final order or settlement by the Company with the Inland Revenue Department as aforesaid within a period of two years from the date of execution of acquisition of Daintee Limited, the said contingent consideration shall no longer be payable to the former shareholders and as such shall be retained in full by the Watawala Tea Ceylon Limited and in such event the purchase consideration will reduce by the contingent consideration.

24.4.C goodwill

Goodwill on acquisition is recognised as a result of the acquisitions as follows.

	Daintee Limited Rs.	Akbar Pharmaceutical (Pvt) Ltd. Group Rs.	Total Rs.
Fair value of the total consideration (Note 24.4.B)	1,696,057,300	2,320,249,300	4,016,306,600
Less: Identifiable Net Assets (Note 24.4.A)	(1,500,616,842)	(1,070,380,699)	(2,570,997,541)
Add: Non Controlling as at the date of acquisition	–	131,339,319	131,339,319
Goodwill arises on acquisition	195,440,458	1,381,207,920	1,576,648,378

24.4.d Net cash used in acquisition

	Daintee Limited Rs.	Akbar Pharmaceutical (Pvt) Ltd. Group Rs.	Total Rs.
Fair value of the consideration paid	1,622,633,402	–	1,622,633,40
Cash and cash equivalents acquired	(77,681,387)	693,407,522	615,726,135
	1,544,952,015	693,407,522	2,238,359,537

24.4.e Acquisition – related costs

The Group incurred acquisition-related costs of Rs. 41 Mn. on legal fees and due diligence costs. These costs have been included in “administrative expenses”.

24.5 Disposal of a subsidiary

On 30 September 2020, Watawala Plantations PLC, a subsidiary of the Company, has disposed its subsidiary Watawala Tea Australia Pty. Ltd.

The gain on disposal of the Subsidiary is recorded as part of profit for the period in the income statement.

The effects of disposal of subsidiary is as follows:

	Rs.
Trade and other receivables	2,203,000
Trade and other payables	(872,000)
Net assets disposed	1,331,000
Loss on disposal	(63,000)
Total consideration	1,268,000
Satisfied by:
Cash and cash equivalents	1,268,000
Net cash inflow arising on disposal:
Consideration received in cash and cash equivalents	1,268,000

* There were no cash and cash equivalents in subsidiaries disposed.

24.6 Amalgamation of a Subsidiary

The Company has completed the process of obtaining the legal clearance from the registrar of Companies for the amalgamation of Estate Management Services (Pvt) Ltd. (the “EMSPL”), a fully owned subsidiary with the Company. The Amalgamation Certificate has been obtained on 2 February 2021 and accordingly, the Books of the EMSPL amalgamated with the Company Books. Refer Note 46 for details.

24.7 Assessment of Impairment of Subsidiaries

The Board of Directors has assessed the potential impairment loss of investment in subsidiaries as at 31 March 2021. Based on the assessment, except for Sunshine Packaging Lanka Ltd., no impairment provision was required to be made in the financial statements as at the reporting date.

The Board of Directors of Sunshine Packaging Lanka Ltd., fully owned subsidiary of Sunshine Holdings PLC, decided to discontinue the manufacture and sell metal cans and allied products for the food canning industry with effect from 31 August 2017. Subsequent to the discontinue the operation, the Company is engaged in renting out premises and earn rental income. However, considering the net asset position and future cash flows of the subsidiary the Board has decided to make a provision for probable impairment of investment of Rs.177.6 Mn. during the prior years.

The Board of Directors of the Company carried out an internal assessment of the potential implications of COVID 19 outbreak on its subsidiaries and are of the view that there is no additional provision for impairment needed against its investments in subsidiaries as at reporting date.

25.1 Associate – Company

	Holding %	Number of shares	2021 Rs.	2020 Rs.
Strategic Business Innovator (Pvt) Ltd.
Cost
Balance as at March	20	900,000	9,000,000	9,000,000
Provision for impairment
Balance as at 1 April			(7,648,541)	–
Provision made during the year			(59,452)	(7,648,541)
Balance as at 31 March			(7,707,993)	(7,648,541)
Carrying amount as at 31 March			1,292,007	1,351,459

25.2 Associate – Group

	2021 Rs.	2020 Rs.
Interests in associate	1,292,006	1,384,362
Balance as at 31 March	1,292,006	1,384,362

The Group has a stake of 20% (900,000 shares) in Strategic Business Innovator (Pvt) Ltd.

Strategic Business Innovator (Pvt) Ltd. is the only Associate which the group owns. The Associate was formed through the partnership of Sunshine Holdings PLC and SBI Ven Holdings Pte. Ltd. (Head Office: Singapore), a subsidiary company of SBI Holdings (Japan). The SBI Group is a key player in the Japanese securities industry and has keen interests in the financial services sector in Japan.

Value of the Equity accounted associate

	2021 Rs.	2020 Rs.
Balance as at 1 April	1,384,362	2,798,296
Acquisitions during the year
Current year’s share of total comprehensive income
Included in profit or loss	(92,356)	(1,413,934)
	(92,356)	(1,413,934)
Balance as at 31 March	1,292,006	1,384,362

The following table summarises the financial information of Strategic Business Innovators (Pvt) Ltd. as included in its own Financial Statements, adjusted for fair value adjustments at acquisition and differences in accounting policies. The table also reconcile the summarised financial information to the carrying amount of the Group's interest in Strategic Business Innovation (Pvt) Ltd.

	2021 Rs.	2020 Rs.
Percentage ownership interest (%)	20%	20%
Financial position of equity accounted associate
Non-current assets	738,680	6,731,789
Current assets	5,770,092	232,937
Non-current liabilities	–	–
Current liabilities	(48,736)	(42,910)
Net assets (100%)	6,460,036	6,921,816
Group’s share of net assets (20%)	1,292,006	1,384,362
Elimination of unrealised profit on downstream sales	–	–
Carrying amount of interest in associate	1,292,006	1,384,362
Revenue	2,608,650	773,243
Profit for the year, net of tax (100%)	(1,357,048)	(7,069,668)
Changes in estimates relating to prior years	895,270	–
Profit for the year, net of tax (100%)	(461,778)	(7,069,668)
Group's share of net profit (20%)	(92,356)	(1,413,934)
Other comprehensive income (100%)	–	–
Total comprehensive income (100%)	(461,778)	(7,069,668)
Total comprehensive income (20%)	(92,356)	(1,413,934)
Elimination of unrealised profit on downstream sales	–	–
Group's share of total comprehensive income (20%)	(92,356)	(1,413,934)

There are no restrictions on the ability of the associate to transfer funds to the investor in the form of cash dividends, or repayment of loans or advances.

The Company has neither contingent liabilities nor capital and other commitments towards its associate company.

See accounting policies in Note 18.

Derivative financial instruments

The Group holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures. Embedded derivatives are separated from the host contract and accounted for separately if the host contract is not a financial asset and certain criteria are met.

Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognised in profit or loss.

The Group’s financial instruments are summarised as follows:

		Group		Company
For the year ended 31 March	Note	2021 Rs.	2020 Rs.	2021 Rs.	2020 Rs.
Fair value through profit or loss – FVTPL	26.1	392,507,916	426,962,480	35,354,916	83,237,480
Fair value through other comprehensive income – FVOCI	26.2	505,433,941	537,522,639	505,433,941	537,522,639
Derivative instruments	26.3	222,469,740	234,792,226	222,469,740	234,792,226
Amortised cost	26.4	219,283,488	106,419,178	106,389,041	106,419,178
		1,339,695,085	1,305,696,523	869,647,638	961,971,523
Non-current investments		1,004,330,898	1,070,904,297	647,177,898	727,179,297
Current investments		335,364,187	234,792,226	222,469,740	234,792,226
		1,339,695,085	1,305,696,523	869,647,638	961,971,523

Information about the Group's exposure to credit and market risk, and fair value measurement, is included in Note 39 and 40.

26.1 Fair Value through Profit or Loss – FVTPL

		Group		Company
For the year ended 31 March	Note	2021 Rs.	2020 Rs.	2021 Rs.	2020 Rs.
Investment in quoted shares	26.1.1	35,354,916	75,890,853	35,354,916	75,890,853
Investment in unit trust	26.1.2	–	7,346,627	–	7,346,627
Investment fund	26.1.3	357,153,000	343,725,000	–	–
		392,507,916	426,962,480	35,354,916	83,237,480

26.1.1 Investment in Quoted Shares

	2021			2020
Group and Company	Number of shares	Cost Rs.	Market Value Rs.	Number of shares	Cost Rs.	Market value Rs.
Dialog Axiata PLC				413,581	4,512,610	4,880,256
John Keells Holdings PLC	10,848	1,605,708	1,610,928	25,848	3,853,708	3,773,808
Commercial Bank of Ceylon PLC	86,622	8,577,207	7,406,181	52,966	6,256,471	4,528,593
Hatton National Bank PLC – Non-voting	41,785	5,798,156	4,061,502	31,738	4,908,521	3,998,988
Hatton National Bank PLC	22,247	3,056,664	2,803,122	21,690	2,980,773	3,190,599
Ceylon Cold Stores PLC	234,662	5,779,655	2,487,417	3,450	1,966,500	2,656,500
Hayleys Fabric PLC	–	–	–	79,850	758,575	974,170
Distilleries Company of Sri Lanka PLC	–	–	–	320,000	4,602,500	5,408,000
Hemas Holdings PLC	–	–	–	83,971	7,479,089	5,835,985
Tokyo Cement PLC	–	–	–	134,000	2,412,000	3,845,800
Ceylon Hotels Corporation PLC	–	–	–	234,662	5,779,655	2,229,289
Aitken Spence Hotels Holdings PLC	18,000	1,456,128	543,600	18,000	1,456,128	370,800
Ceylinco Insurance PLC	–	–	–	6,976	4,726,182	5,720,320
People’s Leasing and Finance PLC	314,173	5,167,294	3,707,241	300,000	4,987,297	4,410,000
Chevron Lubricants Lanka PLC	59,000	8,684,000	5,310,000	59,000	8,684,000	4,183,100
Sampath Bank PLC	38,575	8,770,604	6,226,005	38,575	8,770,604	6,152,713
Access Engineering PLC	–	–	–	115,750	2,050,350	2,118,225
Central Finance Company PLC	–	–	–	59,511	5,867,862	5,665,447
Cargills Ceylon PLC	–	–	–	18,286	3,217,600	3,474,340
LVL Energy Fund Ltd.	123,600	1,236,000	1,198,920	343,600	3,436,000	2,473,920
Total		50,131,417	35,354,916		88,706,425	75,890,853
Fair value adjustment		(14,776,501)			(12,815,572)
Market value		35,354,916			75,890,853

26.1.2 Investment in Unit Trusts

	2021			2020
Group and Company	Number of shares	Cost Rs.	Market value Rs.	Number of shares	Cost Rs.	Market value Rs.
Investment in unit trusts	–	–	–	523,467	7,082,049	7,346,627
Total cost	–	–	–	–	7,082,049	–
Fair value adjustment	–	–	–	–	264,578	–
Market value	–	–	–	–	7,346,627	–

26.1.3 Investment fund

	Group
For the year ended 31 March	2021 Rs.	2020 Rs.
Balance as at 1 April	343,725,000	312,051,000
Investments/disposals made during the year	(7,736,000)	–
Gain on increase in net asset value during the year	21,164,000	31,674,000
Carrying value as at 31 March	357,153,000	343,725,000

The fund comprises investments made in Capital Alliance Investments Limited and Hatton National Bank Custody Trustee Services. The average yield for the year was 12.80% for HNB portfolio and 7.4% for CAL investment.(2020 –12.31%).

The carrying value of the investment fund represents the following:

	Group
For the year ended 31 March	2021 Rs.	2020 Rs.
Quoted shares	–	20,269,000
Corporate bonds	100,461,000	–
Debentures	–	183,966,000
Fixed deposits	15,356,000	119,956,000
Unit trusts	–	13,861,000
Cash at bank	33,605,000	3,266,000
Interest receivables	–	927,000
Dividend receivables	–	219,000
Debenture WHT payables	264,000	–
Income tax recoverable on FD	–	1,261,000
Investment in capital alliance grade fund	207,467,000	–
	357,153,000	343,725,000

26.2 Fair Value through Other Comprehensive Income – FVOCI

		Group		Company
For the year ended 31 March	Note	2021 Rs.	2020 Rs.	2021 Rs.	2020 Rs.
Investment in unquoted shares	26.2.1	505,433,941	537,522,639	505,433,941	537,522,639
		505,433,941	537,522,639	505,433,941	537,522,639

26.2.1 Investment in Unquoted Shares

	Group/Company
For the year ended 31 March	2021 Rs.	2020 Rs.
TATA Communication Lanka Limited	354,719,873	328,732,056
Lanka Commodity Brokers Limited	150,714,068	208,790,583
	505,433,941	537,522,639

 

Group and Company	Unit Energy Lanka (Pvt) Ltd. Rs.	Lanka Commodity Brokers Limited Rs.	TATA Communication Lanka Limited Rs.	Total Rs.
Balance as at 1st April 2019	10,763,000	117,692,727	75,000,000	203,455,727
Adjustment related to disposal of Subsidiary	(10,763,000)	–	–	(10,763,000)
Balance as at 31 March 2020	–	117,692,727	75,000,000	192,692,727
Cost as of 1 April 2020	–	117,692,727	75,000,000	192,692,727
Balance as at 31 March 2021	–	117,692,727	75,000,000	192,692,727
Fair value
Balance as at 1 April 2019	5,690,000	10,183,005	374,990,321	390,863,326
Increase in fair valuation during the year	–	80,914,851	(121,258,265)	(40,343,414)
Adjustment related to disposal of Subsidiary	(5,690,000)	–	–	(5,690,000)
Balance as at 31 March 2020	–	91,097,856	253,732,056	344,829,912
Balance as at 1 April 2020	–	91,097,856	253,732,056	344,829,912
Increase in fair valuation during the year	–	(58,076,515)	25,987,817	(32,088,698)
Balance as at 31 March 2021	–	33,021,341	279,719,873	312,741,214
Carrying value of investment as at 31 March 2020	–	208,790,583	328,732,056	537,522,639
Carrying value of investment as at 31 March 2021	–	150,714,068	354,719,873	505,433,941

In the year 2016, Watawala Plantations PLC, a subsidiary of the Company has received Rs. 10,763,000 worth of investment from Unit Energy Lanka (Pvt) Limited against their land rights. In September 2017, this investment was vested from Watawala Plantations PLC to Hatton Plantations PLC (between two subsidiaries). This investment represents 5% of investment in Unit Energy Lanka (Private) Limited. The Group has changed the measurement of the investment to the fair value method during 2019.

Equity securities designated as at FVOCI*

As at 1 April 2018, the Group designated the investment shown below as equity securities at FVOCI because these equity securities represent investment that the Group intends to hold for the long term for strategic purposes.

	Holding %	Fair value at 31 March 2021 Rs.	Dividend income recognised during 2021 Rs.
Lanka Commodity Brokers Limited	15.55	150,714,068	30,358,720
TATA Communication Lanka Limited	10	354,719,873	3,362,670
		505,433,941	33,721,390

No Strategic investments were disposed during 2021, and there were no transfer of any cumulative gain or loss within equity relating to these investments.

26.3 Derivative instruments

	Company/Group
For the year ended 31 March	2021 Rs.	2020 Rs.
Interest rate and exchange rate swaps	222,469,740	234,792,226
	222,469,740	234,792,226

 

	Company/Group
	2021 Rs.	2019 Rs.
Balance as at 1 April	234,792,226	203,742,135
Fair value increase adjusted through loan	(32,322,486)	51,050,091
Amount recognised in Profit and loss account	20,000,000	(20,000,000)
Balance as at 31 March	222,469,740	234,792,226

During 2019, Group had entered into a derivative agreement for fixed interest rate and fixed exchange rate with Standard Chartered Bank Sri Lanka for the loan obtained from Standard Chartered Bank Mauritius of Rs. 1.4 Bn. (USD 9.15 Mn.) in April 2018.

26.4 Amortised cost

		Group		Company
For the year ended 31 March	Note	2021 Rs.	2020 Rs.	2021 Rs.	2020 Rs.
Debentures	26.4.A	106,389,041	106,419,178	106,389,041	106,419,178
Other short-term investments	26.4.B	112,894,447	–	–	–
		219,283,488	106,419,178	106,389,041	106,419,178

26.4.a Debentures

During 2020, Company/Group has invested Rs. 100 Mn. in unlisted rated senior unsecured redeemable Type A – 3 years debentures issued by National Savings Bank with fixed Interest rate of 11% per annum payable annually.

	Group/company
	2021 Rs.	2020 Rs.
Investment made	106,419,178	100,000,000
Interest accrued	11,000,000	6,419,178
Interest received	(11,030,137)	–
Balance as at 31 March	106,389,041	106,419,178

 

For the year ended 31 March	Credit rating	Maturity date	Number of debentures	Carrying value	Interest
National Savings Bank	AA+	10 September 22	1,000,000	106,389,041	11%

26.4.B Other Short-term Investments

Other Short-term investments represents the investment made in money market instruments with the intention of withdrawing after 3 months period.

26.5 Acquisition through Business Combination

As described in Note 24.4 , the Group has acquired the Subsidiaries namely Daintee Limited and Akbar Pharmaceuticals (Pvt) Ltd. during the year. The fair value of the Short term investment acquired through business combination amounted to Rs. 487 Mn.

26.6 COVID-19 impact on Investment valuation

The Board of Directors has assessed the potential impact of COVID-19 in the investment valuations.

27.1 Composition of net and gross deferred tax asset/(liability)

	Group		Company
For the year ended 31 March	2021 Rs.	2020 Rs.	2021 Rs.	2020 Rs.
Composition of net deferred tax asset/(liability)
Net deferred tax asset	42,611,982	65,787,835	42,536,150	32,017,938
Net deferred tax liability	(632,277,792)	(533,907,752)	–	–
	(589,665,810)	(468,119,917)	42,536,150	32,017,938

 

		Group		Company
For the year ended 31 March	Note	2021 Rs.	2020 Rs.	2021 Rs.	2020 Rs.
Composition of gross deferred tax asset/(liability)
Gross deferred tax asset (27.2)	27.2	170,206,877	286,009,995	28,859,363	34,590,779
Gross deferred tax liability (27.3)	27.3	(759,872,687)	(754,129,912)	13,676,787	(2,572,841)
		(589,665,810)	(468,119,917)	42,536,150	32,017,938

27.2 Deferred tax asset (gross)

		Group		Company
For the year ended 31 March	Note	2021 Rs.	2020 Rs.	2021 Rs.	2020 Rs.
Balance as at 1 April		286,009,995	464,590,290	34,590,779	24,379,234
Charge/(reversal) for the year recognised in profit or loss		(486,289)	(19,485,216)	(4,279,438)	10,846,237
Charge/(reversal) for the year recognised in other comprehensive income		6,411,641	434,921	(1,451,978)	(634,692)
Adjustment related to disposal of a subsidiary		–	(159,530,000)	–	–
Acquisition through business combination	27.6	23,072,561	–	–	–
Transferred to Asset held for sale		(144,801,031)	–	–	–
Balance as at 31 March*		170,206,877	286,009,995	28,859,363	34,590,779

27.3 Deferred tax liability (gross)

		Group		Company
For the year ended 31 March	Note	2021 Rs.	2020 Rs.	2021 Rs.	2020 Rs.
Balance as at 1 April		754,129,912	919,329,135	2,572,841	6,382,139
Charge/(reversal) for the year recognised in profit or loss		(3,516,442)	57,715,932	(3,884,766)	7,486,858
Charge/(reversal) for the year recognised in other comprehensive income		(12,364,862)	(11,296,155)	(12,364,862)	(11,296,156)
Transferred during the year		–	–	–	–
Adjustment related to disposal of a subsidiary		–	(211,619,000)	–	–
Acquisition through business combination	27.6	299,847,823	–	–	–
Transferred to Liability held for sale		(278,223,744)	–	–	–
Balance as at 31 March**		759,872,687	754,129,912	(13,676,787)	2,572,841
Net deferred tax asset/(liability)	27.1	(589,665,810)	(468,119,917)	42,536,150	32,017,938

27.4 Reconciliation of Deferred Tax Liabilities and Deferred Tax Assets

	Group
	2021		2020
	Temporary difference Rs.	Tax effect Rs.	Temporary difference Rs.	Tax effect Rs.
Property, plant and equipment	(1,545,701,272)	(268,030,553)	(1,698,799,571)	(356,166,816)
Lease creditor – ROU	52,854,145	10,368,939	44,909,627	11,382,216
Biological assets – Bearer	(2,670,909,286)	(377,056,000)	(2,614,188,000)	(365,986,000)
Biological assets – Consumable	(32,858,000)	(6,571,000)	–	–
Retirement benefit obligation	711,236,025	138,254,903	524,878,926	112,527,572
Debtors provision	39,136,749	9,392,820	24,103,403	6,748,953
Revaluation surplus of property, plant and equipment	(818,477,133)	(147,325,884)	–	–
Fair value gain on investment property	(104,527,767)	(40,687,349)	(79,041,767)	(22,131,695)
Capital gain on land	(159,801,070)	(15,980,107)	(159,801,070)	(15,980,107)
Capital grants	43,799,000	6,132,000	46,157,000	6,462,000
Fair value gain on investments at FVOCI	72,432,112	17,383,707	17,924,447	5,018,845
Tax losses carried forward	407,306,801	84,452,712	769,767,190	150,005,115
	(4,005,509,695)	(589,665,810)	(3,124,089,815)	(468,119,917)

 

	Company
	2021		2020
	Temporary difference Rs.	Tax effect Rs.	Temporary difference Rs.	Tax effect Rs.
Property, plant and equipment	(15,445,499)	(3,706,920)	(27,113,163)	(7,591,686)
Lease creditor – ROU	16,369,056	3,928,573	26,826,174	7,511,329
Retirement benefit obligation	103,878,290	24,930,789	96,712,325	27,079,450
Fair value gain on investments at FVOCI	72,432,112	17,383,707	17,924,447	5,018,845
	177,233,959	42,536,150	114,349,783	32,017,938

27.5 Reconciliation of Deferred Tax Liabilities and Deferred Tax Assets included under Asset Held for Sale and Liability held for sale

	2021
	Temporary difference Rs.	Tax effect Rs.
Lease creditor – ROU	368,172	72,689
Retirement benefit obligation	3,502,479	766,056
Tax losses carried forward	647,818,213	143,962,286
Total deferred tax assets included under asset held for sale	651,688,865	144,801,031
Property, plant and equipment	(1,216,347,998)	(278,223,744)
Total deferred tax liability included under liability held for Sale	(1,216,347,998)	(278,223,744)
Net Deferred Tax Liability	(564,659,134)	(133,422,713)

27.6 Unrecognised deferred tax assets on tax losses

	2021		2020
	Temporary difference Rs.	Tax effect Rs.	Temporary difference Rs.	Tax effect Rs.
Sunshine Holdings PLC	171,923,941	41,261,746	340,275,545	95,277,152
Sunshine Packaging (Pvt) Ltd.	393,196,524	94,367,166	387,540,463	108,511,330
Waltrim Energy Ltd.	–	–	30,619,403	–
Waltrim Hydropower (Pvt) Ltd.	–	–	71,290,796	14,258,159
Upper Waltrim Hydropower (Pvt) Ltd.	–	–	332,474,314	–
Elgin Hydropower (Private) Limited	–	–	8,464,114	1,184,976
Sky Solar (Pvt) Ltd.	36,307,230	8,713,735	19,852,134	5,161,555
Watawala Dairy Ltd.	1,504,385,684	210,613,996	1,770,741,035	–
	2,105,813,379	354,956,643	2,961,257,804	224,393,172

The deferred tax assets and liabilities are arrived by applying the relevant tax rate applicable for the sources of income of the Company and its subsidiaries.

With the introduction of the Inland Revenue Act No. 24 of 2017 which became effective from 1 April 2018, the Company will have taxable income from the year ended 31 March 2020. As such, the Company will be eligible to claim its brought forward tax losses against its future taxable income within a period of 6 years.

Accordingly, during the year ended 31 March 2021, the Group recognised a deferred tax asset amounting to Rs. 84 Mn. (2020 – Rs. 150 Mn.) arising from brought forward tax losses as at 31 March 2021 after assessing the availability of future taxable profits for utilisation based on the 5 year profit projection approved by the Board. The deferred tax asset recognised will be tested for impairment on an annual basis and deferred tax asset recognised may written off if required. Accordingly, unrecognised deferred tax asset as at reporting date was Rs. 355 Mn. (2020 - Rs. 224 Mn.).

Deferred tax liability arising from revaluation gain

Deferred tax recognised for Sunshine Packaging Lanka Ltd. amounted to Rs. 41 Mn. (2020 – Rs. 44 Mn.) includes deferred tax recognised on revaluation surplus of Rs. 79 Mn. (2020 – Rs.79 Mn.) relating the revaluation of the Buildings at the rate of 24% (2020 – 28%) and on the capital gain on land amounting to Rs. 28 Mn. (2020 – Rs. 28 Mn.) at the tax rate of 10% (2020 – 10%) as at reporting date.

Due to uncertainties that exist on the interpretation of the new tax law relating to freehold land for tax purposes, significant judgement was exercised to determine the provision required for deferred taxes on capital gains applicable to freehold land.

Having discussed internally and based on market practices, Sunshine Packaging Lanka Ltd. and Norris Canal Properties (Pvt) Ltd. is of the view that the freehold land used in the business falls under the category “Investment Assets” and accordingly Sunshine Packaging Lanka Ltd. and Norris Canal Properties (Pvt) Ltd. will be liable for capital gain tax at a rate of 10% on the revaluation surplus in excess of the deemed cost of investment assets as at 30 September 2017.In the event it is deemed that freehold land be considered as “Capital Assets used in the business”, Sunshine Packaging Lanka Ltd. would have to make an additional deferred tax charge in the statement of profit or loss for the year ended 31 March 2021 amounting to Rs. 22 Mn. (2020 – Rs. 29 Mn.) with a consequential increase in the deferred tax liability on the statement of financial position.

27.7 Recoverability of Deferred Tax assets

During the year ended 31 March 2021, the Group has recognised a deferred tax asset amounting to Rs. 84 Mn. arising from tax losses as at 31 March 2021 after assessing the availability of future taxable profits for utilisation based on the 5 years profit projection approved by the Board. The Board of Directors of Company/Group had revised the business plan and approved by incorporating the potential implications of COVID-19 outbreak on business operations. Based on the profit projections, the Board is confident on the availability future taxable profits against which Deferred Tax asset of Rs. 84 Mn. could be utilised . The deferred tax asset recognised will be tested for impairment on an annual basis and deferred tax asset recognised may be written off, if required.

27.8 Acquisition through Business Combination

As described in Note 24.4, the Group has acquired the Subsidiaries namely Daintee Limited and Akbar Pharmaceuticals (Pvt) Ltd. during the year. The deferred tax asset and deferred tax liability balances of Rs. 23 Mn. and Rs. 300 Mn. respectively has been acquired through business combination during the year.

27.9 Impact due to corporate income tax rate change

As provided for in LKAS 12 – Income taxes, deferred tax assets and liabilities should be measured at the tax rate that are expected to be applied in the period in which the asset will be realised or the liability will be settled, based on the tax rate (and tax laws) that have been enacted or substantively enacted by the reporting date.

As referred to Note 14.1.A, Current taxes, the net tax rates have been considered for the computation of deferred tax as at 31 March 2021.

The impart of tax rate changes on deferred tax is as follow:

* During the year, the Group and the Company reversed deferred tax asset of Rs. 4 Mn. and RS. 5 Mn. respectively in statement of comprehensive income on account of effect of tax rate changes.

** Further, the Group and the Company reversed deferred tax liability of Rs. 116 Mn. and Rs.0.4 Mn. respectively in statement of comprehensive income on account of effect of tax rate changes.