14210/jkl inner final report_optim.pdf · 2>> john keells limited /annual report 2004/05...

J O H N K E E L L S L I M I T E D / A n n u a l R e p o r t 2 0 0 4 / 0 52 >>

Corporate Goals 2

Financial Highlights/Financial Calendar 4

Notice of Meeting 5

Historical Milestones 6

Group Structure 7

Chairman’s Statement 8 - 9

Managing Director's Statement 10 - 12

Board Profile 13

Report of the Directors 14 - 15

Human Resources 16

Corporate Social Responsibility 17

Stakeholder dialogue 18 - 19

Risk Management 20

Corporate Governance 21

Statement of Directors’ Responsibilities 22

Report of the Auditors 23

Income Statement 24

Balance Sheet 25

Statement of Changes in Equity 26

Cash Flow Statement 27

Notes to the Financial Statements 28 - 49

Statement of Value added 50 - 51

Information to Shareholders and Investors 52 - 53

Five Year Summary 54 - 55

Glossary 56

Form of Proxy 57

Corporate Information Inner Back Cover

J O H N K E E L L S L I M I T E D / A n n u a l R e p o r t 2 0 0 4 / 0 5 << 3

VISION

MISSION

VALUES

To be internationally recognised

as the best Produce Broker in

the world.

We are committed to the highest level of integrity

and ethical conduct in all our business activities.

We will look towards exceeding Shareholder and

Customer expectations by achieving excellence in all

areas of operations.

We recognize the right of every individual to be

treated with fairness, dignity and respect and assist

our employees to improve their skills and reward

their accomplishments.

We will focus on corporate social responsibility and

look to protect and safe guard the environment.

To retain the pre-eminent position as

Sri Lanka’s leading Tea and Rubber broker; To

uphold the traditions and ethics of the Tea

and Rubber trades; To ensure superior

customer service through a dedicated and

motivated workforce.


FINANCIAL HIGHLIGHTS

FINANCIAL CALENDAR

COMPANY CONSOLIDATED2004/2005 2003/2004 Change % 2004/2005 2003/2004 Change %

Revenue (Rs.000's) 311,792 272.842 14.3 517,446 574,845 (9.9)

Profit before Tax (Rs.000’s) 247,765 57,745 329.1 252,827 223,616 13.1

Profit after Tax (Rs.000’s) 221,374 44,184 401.0 188,764 153,427 23.03

Revenue to Government (Rs.000’s) 35,407 20.882 69.6 70,813 75,183 (5.8)

Profit before Tax on Turnover (%) 79.5 21.2 275.0 48.9 38.9 25.7

Return on Capital Employed (%) 12.1 10.7 13.1 29.6 28.7 3.1

Earnings per Share (Rs.) 29.13 5.81 401.4 23.53 16.60 41.75

Dividend per Share (Rs.) 5.00 5.00 - 5.00 5.00 -

Dividend Yield (%) 3.4 3.8 (10.5) 3.4 3.8 (10.5)

Dividend Cover (Times) 5.83 1.16 402.6 4.71 3.32 41.9

Net Assets per Share (Rs.) 105.07 80.83 30.0 123.76 95.07 30.2

No. of Employees 144 155 (7.1) 174 184 (5.4)

Turnover per Employee (Rs.000’s) 2,165 1,760 23.0 2,974 3,124 (4.8)

Profit per Employee (Rs.000’s) 1,721 373 361.4 1,453 1,215 19.6

INTERIM REPORTS

1st Quarter 15th July, 2004

2nd Quarter 20th October, 2004

3rd Quarter 25th February, 2005

ANNUAL REPORTS

2003/04 18th May, 2004

2004/05 20th May, 2005

MEETINGS

57th Annual General Meeting 18th June, 2004

58th Annual General Meeting 29th June, 2005

DIVIDENDS

Final Dividend 2004/2005 to be

declared, if approved on 29th June, 2005


NOTICE OF MEETING

Notice is hereby given that the Fifty Eighth Annual General Meeting of John Keells Limited will be held on Wednesday29th June, 2005 at 9.30 a.m. at the Registered Office of the Company, No. 130, Glennie Street, Colombo 2. The business to be brought before the Meeting will be:

• To read the Notice convening the Meeting.

• To confirm the minutes of the Fifty Seventh Annual General Meeting.

• To receive and consider the Report of the Directors and the Statement of Accounts for the Financial Year ended

31st March, 2005 with the Report of the Auditors thereon.

• To declare a First and Final Dividend of 50% as recommended by the Directors.

• To re-elect as Director, Mr. V. Lintotawela who retires in Terms of Section 85 of the Articles of Association.

• To re-elect as Director, Mr. S.C. Munasinghe who retires in Terms of Section 85 of the Articles of Association.

• To re-elect as Director, Mr. V.A.A. Perera who retires in Terms of Section 85 of the Articles of Association.

• To re-elect as Director, Mr. G.S.A. Gunesekera who retires in Terms of section 91 of the Articles of Association.

• To authorise the Directors to determine and make donations.

• To pass the following resolution in accordance with the Rules & Regulations of the Colombo Stock Exchange.

SPECIAL RESOLUTION :

“That the Company amends its Articles of Association by adding the following Article numbered 34B immediately after

Article number 34A:”

“34B Not with standing any provision in these Articles suggesting the contrary, shares quoted on the Colombo Stock

Exchange shall be freely transferable and registration of the transfer of such quoted shares shall not be subject to

any restrictions save and expect to the extent required for compliance with statutory requirements.”

• To re-appoint Auditors and to authorise the Directors to determine their remuneration.

• To consider any other business of which due notice has been given.

Note:

I. A member unable to attend is entitled to appoint a proxy to attend and vote in his/her place.

II. A proxy need not be a member of the Company.

III. A member wishing to vote by proxy at the meeting may use the Proxy Form enclosed.

IV To be valid, the completed Proxy Form must be lodged at the registered office of the Company not less than

48 hours before the meeting.

V. Provided that the Final Dividend recommended is declared, it is proposed that dividend warrants be posted on

29th June, 2005.

VI. In accordance with the rules of the Colombo Stock Exchange, the shares of the Company will be quoted

ex-dividend with effect from 16th June, 2005.

VII. The transfer books of the Company will remain open.

By Order of the Board

KEELLS CONSULTANTS LIMITED

Secretaries

Colombo

01st June, 2005


HISTORICAL MILESTONES

1870 Edwin John came to Ceylon, as the Island was then called, to join his brother George. Together, theyestablished themselves as Produce and Exchange Brokers.

1876 A partnership styled "John Brothers and Company" was formed with offices situated in Colombo andKandy.

1878 This partnership was dissolved and Edwin John started an establishment of his own titled “E. John” andcarried on the business of produce and exchange broking. The first decade of business of E. John was oneof low activity. Villers records this period thus, “Business in those days was very limited. Coffee had all butgone out, Tea had not expanded sufficiently and the little business in Chinchona was not enough to goaround.” During this period, Reginald, son of Edwin John, joined his father in Ceylon.

1890 Prospects began to improve rapidly with the approaching tea business.

1895 Reginald John was taken into the partnership of E. John & Co. By this time, business was growing quiterapidly in tea, shares, oil and exchange.

1948 E. John & Co., amalgamated with two London Tea Broking firms, William Jas and Hy Thompson & Co.and Geo White and Co. The firm was then incorporated as a private limited liability company and thename was changed to E. John, Thompson, White and Co. Ltd.

1960 E. John, Thompson, White & Co. Ltd., amalgamated with Keell & Waldock Ltd. The name was changedto John Keells Thompson White Ltd. This Company had its office in the National Mutual InsuranceCompany building in Chatham Street. The first Chairman of the Company was Douglas Armitage and onhis retirement he was succeeded by A.G.R. Willis. The Company acquired its Glennie Street premises fromDodwell & Company which was initially used as a warehouse.

1962 The firm moved to the sixth floor of the then newly constructed Ceylinco House.

1966 The initial step towards diversification of the activities of the Company was taken with the acquisition ofCeylon Mineral Waters Ltd.

1970 M.C. Bostock was elected Chairman of the Company.

1971 John Keells Ltd., moved its offices to Glennie Street, Slave Island.

1976 John Keells Ltd., became a People's Company.

1986 John Keells Holdings Ltd., acquired the controlling interest of John Keells Ltd., M.C. Bostock retired andD.J.M. Blackler took over as the Chairman of the Company.

1990 K. Balendra took over as Chairman, the first Sri Lankan to hold this position. John Keells Ltd., acquiredcontrolling interests in John Keells Stock Brokers (Pvt) Ltd.

1993 Financial Statements of the associates Keells Realtors Ltd., and International Tourists & Hoteliers Ltd., wereincorporated to the Consolidated Accounts.

2000 K. Balendra retired as Chairman on 31st December, 2000.

2001 V. Lintotawela took over as Chairman on 1st January, 2001. John Keells Ltd., incorporated John KeellsWarehousing (Pvt) Ltd., a fully owned subsidiary with B.O.I. status.

2003 The state of the art warehouse of John Keells Warehousing (Pvt) Ltd., which is the largest hi-tech teawarehouse in this part of the region was commissioned for storing pre-auctioned produce.

2004 The Company disposed its Investment in International Tourists & Hoteliers Ltd.

SUBSIDIARY : JOHN KEELLS STOCK BROKERS (PVT) LTD.

Directors of the Company : Mr. V. Lintotawela (Chairman), Mr. S.C. Ratnayake, Mr. A.D. Gunewardene, Mr. G.S.A. Gunesekera, Mr. J.R.F. Peiris, Mr. T. Ratnayake.

Year of Incorporation : 1979

Principal Activities : Share Broking

Capital Structure :

No. of Shareholders Issued Share Capital Holding Percentage(Rs.000's) (%)

2005 2004 2005 2004 2005 2004

8 8 7,500 7,500 76 76

Operating Performance :

Gross Turnover Net Profit/(Loss) before Tax No. of Employees(Rs.000's) (Rs.000's)

2005 2004 2005 2004 2005 2004

138,540 237,852 65,747 167,816 26 25


SUBSIDIARY : JOHN KEELLS WAREHOUSING (PVT) LTD.

Directors of the Company : Mr. V. Lintotawela (Chairman), Mr. S.C. Ratnayake, Mr. A.D. Gunewardene, Mr. G.S.A. Gunesekera, Mr. L.D. Ramanayake, Mr. S.N. Dharmaratna, Mr. S.C. Munasinghe.


Principal Activities : Real Estate/Warehousing of Tea and RubberCapital Structure :


2005 2004 2005 2004 2005 2004

3 3 120,000 120,000 100 100



2005 2004 2005 2004 2005 2004

75,663 56,080 15,820 377 4 4

ASSOCIATE : KEELLS REALTORS LTD.

Directors of the Company : Mr. V. Lintotawela (Chairman), Mr. S.C. Ratnayake, Mr. A.D. Gunewardene, Mr. G.S.A. Gunesekera, Mr. J.R.F. Peiris, Mr. L.D. Ramanayake, Mr. S.N. Dharmaratna.


Principal Activities : Property Developers, Owns Garage Complex, Warehousing, Land and Buildings in the City of Colombo.

Capital Structure :


2005 2004 2005 2004 2005 2004

11 11 75,000 75,000 32 32



2005 2004 2005 2004 2005 2004

27,213 27,709 2,063 (4,766) 3 3

GROUP STRUCTURE

COMPANY : JOHN KEELLS LIMITED Principal Activities: Produce Broking and Real Estate Ownership


CHAIRMAN’S STATEMENT

On behalf of the board of directors, I am pleased topresent to you the annual report of your company forthe year ended 31st March 2005.

ECONOMIC ENVIRONMENT

SRI LANKA/GLOBAL

Sri Lanka faced several weather related set backs duringthe past year, commencing with a severe droughtwhich was later followed by floods and culminating inthe tsunami disaster. The economic problems werecompounded by a sharp increase in the international oilprices. Given the set backs, the annual GDP growth of5.4% could be considered reasonable. However thiscompares with a 6% growth achieved in the previousyear.

Due to inequitable distribution of rainfall, theagricultural production failed to show growth and infact, contracted by 0.7%. The drop in production inpaddy was the main cause for the poor performance.Tea and Rubber harvests reflected small gains whilstcoconut was marginally below the previous year.

It is observed that price inflation which was initially ona downward movement, nevertheless changed courseand thereafter witnessed a rise in the trend. This wastrue for all price indices both at primary market level aswell as retail market level. Although exports grew at apleasing 12%, imports grew by 20% resulting in awidening of trade balance to US$ 2243 Mn.

The devastation caused by the tsunami in the coastalbelt is estimated to cost our country around US$ 1Billion which will be just under 5% of GDP and thereconstruction is estimated at US $ 1.8 Billion or 8.9%of GDP. The impact of the tsunami and the new threat

of earthquakes in our region due to the creation of anew plate which has increased the probability of earthtremors in Sri Lanka, will no doubt change our lifestylesand business planning for the future.

The global economy witnessed an impressive growth of5.1% which is the best during the past few decades.This was despite the significant increases ininternational oil prices. The economies of USA andJapan which grew at satisfactory levels were the maincontributors. Backed by the high economic growth,world trade grew by 9.9% in 2004.

BUSINESS ENVIRONMENT

TEA BROKING

Total tea exports from Sri Lanka reached the 300 MnKg mark for the first time. Export earnings from teaincreased by 8% to US$ 739 Mn which is 13% of totalexports. Sri Lanka’s tea production improved 1.6% to308 Mn Kg which is marginally below the all timerecord harvest of 310 Mn Kg. Tea production in Indiadeclined fairly sharply but Kenya more than matchedthe short fall with a 10.5% increase in the productionto reach a new record harvest of 325 Mn Kg.Consequently Kenya became the largest tea exporter,pushing Sri Lanka into the second slot. The total worldproduction of tea at 3,150,000 metric tons reflected aninsignificant increase.

The Colombo auctions remained as one of the largestauction centres in the world with the producerscontinuing to acknowledge this method of sale as beingthe most appropriate for farm gate price determination.However, Mombassa is now the largest auction centrein the world and handled 28.3 Mn Kg more than

Tea Exports

1,32

8.4

1,38

8.6

1,43

6.1

1,38

7.2 1,49

6.2

288.

0

294.

5

291.

8

298.

3

300.

2

0

200

400

600

800

1,000

1,200

1,400

1,600

2000 2001 2002 2003 2004

Sri Lanka (Mn Kg.) World (Mn Kg.)


CHAIRMAN’S STATEMENT

Colombo, helped by the sale of produce of other EastAfrican countries at the said auction centre.

I am pleased to convey that your company continuedto maintain the largest market share amongst the teabrokers operating in Colombo.

RUBBER BROKING

The rubber market which commenced its ascent in theprevious year continued to be buoyant and prices wereattractive to the producer. With the rubber industrybecoming more viable, producers looked to improvetheir harvests as well as re-invest in the plantations. Thishelped rubber production to reflect a moderate increaseof 3% to 94.8 Mn Kg. Prices continued to beextremely good and reached record levels during Mayand June. The prices did decline after the imposition ofa cess of Rs.4/- per Kg applicable for all exports of rawrubber which was effective from October. The annualaverage for the RSS 1 Grade at the Colombo auctionimproved by 8%. Consequently, rubber broking onceagain enjoyed a profitable year albeit at a smallpercentage of total income.

WAREHOUSING

Our state of the art warehouse continued to enjoy highutilization levels with more and more producers lookingto take advantage of the excellent facilities offered byour subsidiary company. Currently well over 50% ofmain sale teas offered at the Colombo auction are nowwarehoused by three tea brokers including us at theKerawalapitiya industrial zone in Wattala.

REAL ESTATE

The income from Real Estate improved over the sameperiod last year on account of improved rates andbetter utilisation of office space. The damages causedas a result of the fire to the 3rd floor of the head officebuilding was fully repaired and re-commissioned duringthe current financial year, which costs were covered byinsurance.

GROUP FINANCIAL PERFORMANCE

Although the stock market showed volatility, the overallperformance could be termed satisfactory and JohnKeells Stock Brokers once again enjoyed an excellentyear. During the year your company also divested theshare holdings in hotel companies which brought in asubstantial additional income. Consequently theconsolidated net profit climbed sharply to Rs. 188.8 Mnwhich compares with Rs.153.4 Mn for the previousyear.

SHARE HOLDER RETURNS

The share price of your company fluctuated between ahigh of Rs.160/- and a low of Rs.121/50 and at theend of the financial year the share price was at Rs.145/-and compares with Rs.130/- at the end of the previousyear. Your Board is pleased to recommend a first andfinal dividend of 50%, and a bonus issue of one to onewhich continues to ensure an excellent return for ourshare holders.

CONCLUSION

This has been an excellent year for your company andI wish to convey my heartfelt gratitude to all our clients,all members of staff and our share holders.

V.LintotawelaChairman

20th May, 2005


MANAGING DIRECTOR'S STATEMENT

INTRODUCTION

The weather was not too kind to agricultural crops, asa drought was followed by floods and the tsunamiwaves caused unimaginable destruction in our Isle ofnatural beauty, where natural disasters of suchmagnitude, were never considered a possibility.Fortunately, the plantation industry was spared ofdestruction, and was able to function smoothly. Ofparticular importance, was that there was no damageto the port of Colombo, as otherwise, the movement ofcargo would have been hampered, resulting in aconstraint in the conducting of the weekly auctions,and this in turn would have created cash flow problemsfor producers.

All in all, it was a good year for the Tea and Rubberindustries, at least, in-so-far as the market demand andauction prices were concerned. The Broking of thesetwo commodities, are the principal activities of yourcompany.

Two key scenarios will feature prominently in theperformance of the Tea and Rubber markets inColombo, in the ensuing year. For Tea, it will be the FTAwith Pakistan, where our Tea exports will come underthe (TRQ) special tariff rate quota, with zero duty for10 Mn Kg of Tea. Our exporters have a goldenopportunity, to regain a greater portion of the marketshare that we enjoyed three decades ago. In Rubber,the Global Rubber meeting that was recently concludedin Colombo, which was the 41st Assembly of Nationsand the International Rubber Forum, has forecastedattractive prices for the commodity, for the mediumterm.

FINANCIAL PERFORMANCE

With both Tea and Rubber markets reflectingimprovements over the previous year, the income frombroking increased by a satisfactory margin. Thewarehousing services continued to be provided by thesubsidiary company John Keells Warehousing (Pvt) Ltd,which witnessed a fair improvement in income throughincreased efficiencies. Another subsidiary, John KeellsStock Brokers (Pvt) Ltd., enjoyed a good year andcontributed well to the group performance. Theassociate company Keells Realtors Ltd., had animproved performance to reflect a profit as against theloss incurred in the previous year. The companyenjoyed capital gains from the sale of shares. We alsodivested our interest in the associate companyInternational Tourists & Hoteliers Ltd., through thesesales.

REVIEW OF COMPANY ACTIVITIES

Of the core businesses of your company, Tea andRubber broking, together with the Real Estate activities,remained under the parent company. The warehousingsupport services, were under the subsidiary, John KeellsWarehousing (Pvt) Ltd.

GLOBAL TRENDS

TEA

The world Tea production was quite similar to theprevious year but exports improved by nearly 8% .Theincrease did not weaken the market as inventories hadnot reached a high level and countries such as Iran andRussia increased their activities at producer auction

centres. Kenya improved her production substantially toa record harvest of 325 Mn Kg and consequently Kenyabecame the largest black tea exporting country whilstMombassa was the largest auction centre in the world.Whereas Kenya improved her harvest by 31 Mn Kg, theproduction in India declined fairly sharply by 37 Mn Kg.This helped the world production to be stable. Theproduction in Bangladesh and Indonesia has been staticduring the past few years whilst production in Chinahas also been increasing by only two to three percent inmost years. Asia is yet the largest in exports with 62 %

Tea Production

2,90

8.5

3,04

1.0

3,05

3.0

3,14

4.4

3,15

0.5

305.

8

295.

1

310.

0

303.

2

308.

1

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2000 2001 2002 2003 2004

Sri Lanka( Mn Kg.) World (Mn Kg.)


whilst Africa has a share of 32% of world Tea exports.Russia was the largest importer with 165 Mn Kgfollowed by UK at 127 Mn Kg and Pakistan at 120 MnKg. The apparent world consumption of Tea appearedto decline by 2%, having shown growth of 4.5%, 0.1%and 3.8% in the three previous years respectively.

RUBBER

The world supply and demand once again moved infavour of the latter, and the world prices for NaturalRubber continued to move in favour of the producers.The International Rubber Forum, which met inColombo, has predicted an attractive price average ofUS$ 2 per Kg for the next two years and US$ 2.50 perKg by the year 2010.

LOCAL TRENDS

Sri Lanka’s Tea production improved by 1.7% to 308Mn.Kg, which is slightly below the record harvest. Lowgrown segment increased its crop by 9.5%, enjoyed arecord harvest and produced 60% of the national crop.Meanwhile, the High grown crop declined by 8.6% andthe Medium grown crop declined by 8%. The harvestswere the lowest for eight years. The National TeaAverage improved by 21.3% to Rs.180.74 whilst in USDollar terms too there was a satisfactory increase of15% to US$ 1.79. Given the good marketingconditions, averages of all three elevations recordedsatisfactory increases of 24%, 25%, and 18% for High,Medium and Low grown elevations respectively. Teaexports from Sri Lanka increased only slightly, buttouched the 300 Mn.Kg mark for the first time. Incomefrom exports improved to Rs.75 Billion. Sri Lankacontinues to have the highest value addition amongstthe producer countries but, the quantum of valueadded exports continues to decline and was only 38%for the calendar year 2004. CIS continued to be ourlargest market segment followed by the Middle East.Together, these markets account for around 70% of SriLanka’s Tea exports.

The Rubber production improved marginally, but moreimportantly, the good prices of the past two years andthe prognosis of continued bullish markets is giving theproducers confidence to resuscitate the Rubberplantations. The prices for the best Crepe Rubbercommenced around Rs. 110 in January, and movedprogressively to reach Rs. 169 in June. Prices declinedthereafter to Rs. 136 by September, but advanced toRs. 163 in October. Levels in November/Decemberwere around Rs.145 per Kg. Sheet Rubber toofluctuated but peaked at a very attractive Rs. 159 inJune. Given the above price levels, it was natural towitness several record prices being achieved. Thehighest price for Crepe Rubber was Rs. 170.05 whilstthe best for Sheet Rubber was Rs. 159.

OPERATIONAL REVIEW

TEA BROKING

Your company continued to have the largest marketshare in Sri Lanka. The company once again establishedthe highest number of ‘Top Prices’ and record pricesamongst the brokers. The weekly price average of thecompany reflected an attractive premium over thenational average. The company continued to offer highend services to the producer and exporter clients.

RUBBER BROKING

Backed by excellent prices and satisfactory quantities,Rubber broking continued viable, but the contributionwas again quite small.

WAREHOUSING

The state of the art warehouse improved efficienciesduring the year. It is now providing an excellent serviceto both producers and exporters. The time taken tounload a producer lorry has been reduced to around 30minutes whilst delivery is given to an exporter lorrywithin 20 minutes. Additionally, the handling and

Sri Lanka Tea Export Earnings

6,67

0.3

6,62

0.8

6,43

0.4

6,65

0.0

7,42

0.7

51,0

43.0 59

,327

.0

61,1

88.8

63,6

40.0

74,8

30.4

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

2000 2001 2002 2003 2004

Rs. Mn. US$ Mn

National Tea Average

1.77

1.61

1.57

1.55

1.79

135.

53 143.

96

149.

30

149.

05

180.

74

0

20

40

60

80

100

120

140

160

180

200

2000 2001 2002 2003 2004

US$ per Kg.Rs. per Kg.

MANAGING DIRECTOR’S STATEMENT


condition of storing is the best in pre-auctionwarehousing of produce. Given these high standardsand based on the high investment cost of thewarehouse, we are confident that producers would befavourable for a realistic rate of warehousing rent.

REAL ESTATE

The contribution from the Real Estate sector improvedover the previous year. The third floor of the head officebuilding where a fire occurred, was completelyrefurbished and rented out. The damage caused by thefire was recovered from insurance.

ACCOUNTING SYSTEMS AND PROCESSES

The John Keells Group introduced an E.R.P. systemnamely, SAP during the year thereby increasing overallefficiencies in financial management. SAP also positionsJKL to participate in shared services at a later date.

BEST CORPORATE REPORTING

We are pleased to inform that your company wasawarded the “Merit Certificate” once again for QuotedCompanies under 5 subsidiaries by the Institute ofChartered Accountants of Sri Lanka for the AnnualReport.

PERFORMANCE OF SUBSIDIARIES

JOHN KEELLS STOCK BROKERS (PVT) LTD –(76% HOLDING)

Although witnessing some fluctuation, the activity atthe Colombo Stock Exchange was high and the marketbuoyant. John Keells Stock Brokers enjoyed anothergood year, with a double digit market share, togetherwith an attractive ranking on performance.Consequently the Company recorded a profit of Rs.65.7 Mn. as against a profit of Rs. 167.8 Mn. theprevious year.

JOHN KEELLS WAREHOUSING (PVT) LTD. –(100% HOLDING)

Operational details of warehousing are given under“Operational Review” in this report. The utilization wasimproved upon and the turnover and income alsoreflected an improvement. The company had a fullyoperational year as against 9 months of operation theprevious year and recorded an improved profit asagainst the previous year.

PERFORMANCE OF ASSOCIATE COMPANIES

KEELLS REALTORS LTD – (32% HOLDING)

Keells Realtors Ltd., your other associate company thatowns real estate recorded a Rs. 2.0 Mn profit (beforetax) as against a loss of Rs. 4.7 Mn (before tax) in theprevious year.

INTERNATIONAL TOURISTS & HOTELIERSLTD – (20.5% HOLDING)

The shareholding in the above company was divestedduring the year. Hence, this company is no longer anassociate of John Keells Ltd. The divestiture brought inan additional income amounting to Rs. 38.5 Mn foryour company.

STAFF WELFARE AND EMPLOYEEDEVELOPMENT

During the year employees were engaged in ThePerformance Management system, Reward andRecognition system, and other HR initiatives. Training isnow clearly identified from the appraisals, whilst careerdevelopment is structured and institutionalized. Thecompany has a Joint Consultative Committee, withrepresentatives of non-executive staff from each sub-department. This committee meets every month, inorder to discuss and address employee andorganizational issues. Staff members also engaged insporting and other activities of the company and theJohn Keells group, including providing assistance in theaftermath of the Tsunami, both in cash and kind.

In conclusion, I wish to thank the Chairman and theBoard of Directors, for the direction and guidancegiven. My gratitude also goes, to all categories of staff,and our valued clients, for their loyalty and support.

L.D. RamanayakeManaging Director

20th May, 2005

MANAGING DIRECTOR’S STATEMENT

Celebrating the launch of SAP ‘Go Live’ at John Keells Ltd.


VIVENDRA LINTOTAWELA - Chairman

Became Chairman in January, 2001, after beingappointed to the Board in 1985/86. Mr. Lintotawela isChairman of all subsidiary companies of the John KeellsGroup and has been with the Group for over 24 years.He is a Fellow of the Institute of Chartered Accountantsof Sri Lanka and the Society of Certified ManagementAccountants of Sri Lanka. He is the Consul General forSpain in Sri Lanka.

LALLITH RAMANAYAKE - Managing Director

Appointed to the Board during 1986/87 and wassubsequently appointed as the Managing Director in1989. Mr. Ramanayake has been with the group forover 32 years. He is also a director of John KeellsWarehousing (Pvt) Ltd., and Keells Realtors Ltd. He wasrecently made a member of the Group OperatingCommittee (GOC) and is currently the Sector Head ofBroking, Warehousing and Plantations Sector. He is aChartered Marketeer with membership from theChartered Institute of Marketing UK and also holds aMasters Degree in Business Administration. He hasbeen the Chairman of the Colombo Brokers Associationon several occasions.

SUSANTHA RATNAYAKE - Director

Appointed to the Board during the year 2001 and iscurrently the Deputy Chairman/Joint ManagingDirector of John Keells Holdings Ltd. Mr Ratnayake hasbeen a member on the John Keells Holdings Ltd., Boardsince 1992/1993. A Director in a host of GroupCompanies, Mr. Ratnayake boasts of over 25 yearsmanagement experience, many of which is within theJKH Group.

AJIT GUNEWARDENE - Director

Appointed to the Board during the year 2001 and iscurrently the Joint Managing Director of John KeellsHoldings Ltd. Mr. Gunewardena has been a member onthe John Keells Holdings Ltd., Board since 1992/1993.A Director in many Group Companies and previouslyChairman of the Colombo Stock Exchange, Mr.Gunewardena brings 20 years of managementexperience to the Board.

SUMITHRA GUNESEKERA - Director

Appointed to the Board on 07th March 2005. Mr. Gunesekera has overall responsibility for thePlantations Sector of the Group and the CorporateCommunications function at the centre. He is also thehead of the CSR Committee of the Group. A memberof the board of Governors of the Sri Lanka Institute ofTourism and Hotel Management, he is also a memberof the Food Advisory Committee of the Health Ministry,

representing the Ceylon Chamber of Commerce. Mr.Gunesekera is a director in many Group Companies andhas over 22 years of management experience.

SUDATH MUNASINGHE - Director

Appointed to the Board of John Keells Ltd., in 1994. Heis also a Director of John Keells Warehousing (Pvt) Ltd.,and has over 23 years of experience in Tea Broking.

SRIYAN SENADHIRA - Director

Joined John Keells Ltd., on 01st July 1978 and wasappointed to the Board in 1990. He has 25 years ofexperience in Tea Broking.

ASHOK JAYEWICKREME - Director

Appointed to the Board during 1995/1996. Initiallyworked in the Coconut & Produce Department andsubsequently in the Rubber Department for the last 19years.

ANIL PERERA - Director

Anil Perera is the Executive Director of Tea SmallholderFactories Ltd., and has 25 years experience in TeaPlantations, Broking and Factory Management. Heholds a Diploma in Agriculture. He is also a CommitteeMember of the Private Tea Factory Owners'Association.

DILANI ALAGARATNAM - Director

Appointed to the Board of John Keells Ltd., in 1999.She counts over 13 years of service with the John KeellsGroup and is an Attorney-at-Law holding a MastersDegree in Law (Sri Lanka). Currently she is the SectorHead of the Legal, Secretarial and Human Resourcefunctions of the John Keells Group of Companies.

SUNIL DHARMARATNA - Director

Appointed to the Board of John Keells Ltd., in 1999 andis currently the Sector Financial Controller of theBroking, Warehousing and Plantations Sector. Hecounts over 19 years in the John Keells Group and is anAssociate Member of the Institute of CharteredAccountants of Sri Lanka and the Chartered Institute ofManagement Accountants (UK). He is a Fellow andfounder member of the Society of CertifiedManagement Accountants of Sri Lanka. He is also adirector of John Keells Warehousing (Pvt) Ltd., KeellsRealtors Ltd., and Keells Consultants Ltd.

BOARD PROFILE


To be presented at the Fifty Eighth Annual GeneralMeeting of John Keells Ltd., to be held at theRegistered Office No.130, Glennie Street, Colombo 2,on Wednesday 29th June, 2005.

The Directors have pleasure in presenting to theMembers, their Report together with the AuditedFinancial Statements of John Keells Ltd., and theAudited Consolidated Financial Statements for the yearended 31st March, 2005.

PRINCIPAL ACTIVITIES

The principal activities of the Group are shown onpage 7.

REVIEW OF BUSINESS

The statements of both the Chairman and ManagingDirector describe in brief the Company's affairs andrefer to important events of the year.

TURNOVER

The gross turnovers of the Company was Rs. 312Mn(2003/04-Rs. 273Mn) and the Consolidated grossturnover amounted to Rs. 517Mn (2003/04 - Rs. 575 Mn).

DIVIDENDS AND RESERVES

There were no transfers to Reserves (2003/04 - Nil). A Final Dividend of 50% (2003/04 - 50% ) has beenproposed for approval on 29th June, 2005.

RESULTS AND APPROPRIATIONSCOMPANY CONSOLIDATED

2004/05 2003/04 2004/05 2003/04Rs.000's Rs.000's Rs.000's Rs.000's

Profits

After making provision for bad and doubtful debts and for all known liabilities and after providing for depreciation onfixed assets, the profit earned was 247,765 57,745 252,827 223,616From which has to be deducted the provision for taxation of (26,391) (13,561) (64,063) (70,189)

Leaving a net profit on ordinary activities after taxation of 221,374 44,184 188,764 153,427From which the amount attributable to Minority Interest was(deducted) - - (9,950) (27,281)Add Adjustment on account of Associate Companiesshare of Net Assets - - 7,758 -And Withholding Tax on Dividend Received from SubsidiaryCompany (deducted) - - - (570)And after the balance brought forward from the previous yearwas added 65,964 48,380 160,947 69,571

The amount available for appropriation was 287,338 92,564 347,519 195,147

Appropriations

Your Directors have recommended that the following transfersbe made to General Reserve - - - (7,600)

Leaving a balance for distribution of 287,338 92,564 347,519 187,547- -

And a Final Dividend of 50% was paid for (2003/04)in June 2004 (37,121) (26,600) (37,121) (26,600)

Leaving a balance to be carried forward to the next year of 250,217 65,964 310,398 160,947

REPORT OF THE DIRECTORS


CORPORATE DONATIONSThe total Donations made by the Company during theyear amounted to Rs. 95,899/- (2003/04–Rs.647,000/-). The total Donations made by the Groupduring the year amounted to Rs. 100,899/- (2003/04 –Rs .2,874,000/-)

PROPERTY, PLANT AND EQUIPMENTExpenditure on acquisition of fixed assets during theyear amounted to Rs. 32.3 Mn (2003/04 - Rs.19.7Mn). The Consolidated figures amounted to Rs.34.6Mn (2003/04 - Rs. 49.9Mn). Details are given inNotes 12.1 & 12.3 to the Accounts on pages 38 & 39.

MARKET VALUE OF PROPERTIESDetails of properties owned by the Company and itsAssociate which are as per revaluations appear in Note 12.11 on page 40.

ISSUE OF SHARESThe Company is a subsidiary of John Keells HoldingsLtd. An analysis of shareholdings appear on pages 52and 53 As at 31st March, 2005 there were 515registered shareholders.

RESERVESThe total Group Reserves after appropriations shownon page 55 stand at Rs.864Mn (2003/04 – Rs. 647Mn)comprising Capital Reserves of Rs. 361Mn (2003/04 –Rs. 292Mn) and Revenue Reserves of Rs. 503Mn(2003/04 – Rs. 355Mn).

SHARE INFORMATIONAs At As at

31/03/05 31/03/04(Rs.) (Rs.)

Earnings per Share 23.53 16.60Dividends per Share 5.00 5.00Net Assets per Share 123.76 95.07Market Value per Share 145.00 130.00Highest Value per Share 160.00 195.00Lowest Value per Share 121.50 65.00

SUBSTANTIAL SHAREHOLDINGShareholders who hold a substantial part of the sharecapital of the Company are shown in the Information toShareholders and Investors on page 53.

SEGMENTAL INFORMATIONThe Segment Information is given in Note 3.2 on page34 in the Financial Statements.

RISK MANAGEMENTAll risks that could influence the achievement of yourorganisation’s strategic, operational and financialobjectives are explained in the Risk ManagementStatement on page 20.

DIRECTORSThe Board of Directors of John Keells Ltd., as at thedate of the Report are shown on page 13.

DIRECTORS' INTERESTS IN SHARES OF THECOMPANYShareholdings of Directors who held office during thefinancial year are as follows.

As At As at31/03/05 31/03/04

(Rs.) (Rs.)

Mr. S.A. Jayewickreme 928 928Mr. S.N. Dharmaratna 1,314 1,514

DIRECTORS' INTERESTS IN CONTRACTSDirectors' interests in contracts of the Company aredisclosed in Note 33 on pages 47 to 49 and have beendeclared at a meeting of the Directors. The Directorshave no direct or indirect interests in any other contractor proposed contract of the Company other than thosedisclosed therein.

ENVIRONMENTAL PROTECTIONThe Company has not been engaged in any activitieswhich could have caused detriment to theenvironment.

STATUTORY PAYMENTSThe Company has to date made all statutory paymentsto the Government and to its Employees.

EVENTS OCCURRING AFTER THE BALANCE SHEET DATEA Final Dividend of 50% has been proposed forapproval on the 29th June, 2005 and a 1:1 Bonus Issuehas been proposed.

GOING CONCERNYour Company will continue with its current operationsin the foreseeable future. There appears no threats thatcould restrict or curtail its ongoing operations.

APPOINTMENT OF AUDITORSThe accounts for the year have been audited by Messrs.Ernst & Young (Chartered Accountants) who offerthemselves for re-appointment. At a meeting of theBoard of Directors held on 20th May, 2005 it wasresolved that they be recommended for re-appointment as Auditors.

By Order of the BoardKEELLS CONSULTANTS LIMITEDSecretaries

Colombo20th May, 2005

REPORT OF THE DIRECTORS


HUMAN RESOURCES

Company Subsidiaries Total

Category

Directors 11 2 13

Managers 11 9 20

Executives 30 13 43

52 24 76

Clerical 23 3 26

Minor Staff 69 3 72

Total 144 30 174


Age

50 - 60 years 6 3 9

40 - 50 15 3 18

30 - 40 18 13 31

20 - 30 13 5 18

52 24 76


Years of Service

Over 20 years 10 - 10

15 - 20 8 2 10

10 - 15 8 7 15

05 - 10 7 3 10

00 - 05 19 12 31

52 24 76

12

34

56

7 8 9 1011

12

1. Mr. M.F.S.P. Senadhira

2. Mr. H.R.A. Wanasinghe

3. Mr. R.H. Walpola

4. Mr. S.C. Munasinghe

5. Mr. O.V.R. Perera

6. Mr. L.D. Ramanayake (Convenor)

7. Mr. R.S. Ingram

8. Mr. S.N. Dharmaratna

9. Mr. S.K. Karunaratne

10. Mr. S.A. Jayewickreme

11 Mr. B.I. Perera

12. Mr. D. Dassanayaka

Management Committee


CORPORATE SOCIAL RESPONSIBIL ITY

Waves of humanity pass through the Slave IslandRailway Station each day, one of the busiest stations inColombo and one of the oldest legacies of our Britishheritage, dating back to 1846. However, the legacy hasremained just that. Of the thousands of people whoflock to the station daily, and whose lives rotate on thearrival and departure of the trains, none are able to seethe colonial splendour of a bygone era, now covered bydecades of dust, grime and sheer neglect. To the peoplewho pass through, the station is just another amenity,which should be clean and user friendly, but is not –and they have learned to live with that.

To us at John Keells Ltd., the Slave Island RailwayStation, which lies less than a quarter of a kilometrefrom our main Glennie Street premises, seems to share

a strong bond with the very core of our existence.Almost every single person who steps onto thatplatform has been touched by John Keells Ltd., eitherbeing among our employees, shareholders, partners orsimply stakeholders.

We have now restored the station close to its originalsplendour, enabling modern facilities to complementthe age – old architecture by refurbishing andmodernising the level crossing, bridge and otheramenities within the the station. Our aim is to continuemaintaining these standards on a long term basis as wesee this as yet another contribution towards ourcommunity; to the people who are a part of our dailylives.


STAKEHOLDER DIALOGUE

INTERACTION

Through the affiliation of our parent company John

Keells Holdings Ltd., to the United Nations sponsored

global compact, your company has been committed to

social responsibility and sustainability development

including corporate governance and stakeholder

dialog.

CLIENTS

• Tea and Rubber producers form the bulk of our

clients.

• Of our clients, the corporate client offices which are

situated in Colombo are visited weekly in order to

convey marketing trends and to discuss production

issues.

• Officers in the regions are visited periodically and,

are contacted over the telephone regularly through

the week.

• Communication with private producers occur

before and after the tea and rubber auctions each

week.

• Estate visits are made by Manufacture Advisors and

marketing personnel in order to give professional

expertise in the manufacture of optimum grades

inline with marketing needs. (Private & Corporate

clients)

• Tasting sessions and seminars are conducted in

Colombo quarterly as strategy discussions for

producers.

CUSTOMERS

• Tea Exporters and Tea Buyers operating in the local

market form the bulk of our customers.

• The export companies are visited each week to

convey production and quality trends and to

discuss marketing trends.

• Daily interaction is made with exporters to service

their needs on private sales and out lot offers.

EXPECTATION BY STAKEHOLDERS AND KEY

DELIVERABLES

“We listen to our stakeholders and respond to fulfill

their expectations.”

Our producer clients expect the broking unit to guide

them to produce suitable grades and qualities of Tea

and Rubber inline with market requirements in order to

secure attractive prices. This we do through

manufacture advise during estate visits, strategic

decision making through seminars, effective reporting

through organoleptic testing, marketing and efficient

selling of the tea at the Colombo auctions. John Keells

continue to be the leader with the highest number of

top prices and record prices at the auctions. The

producers also expect a very efficient and effective

conveyance of management information. This we

achieve through integrated IT solutions where

information is forwarded via e-mail and facsimile on

the day of the auction and on the day on which

catalogues close. Producers also require monetary

advances against sales for working capital purposes.

These are released immediately on request, using

improved technology of internet banking where the

client has access to funds from a bank in a town far

away from Colombo within a couple of hours of

making the request.

Our Tea Buyer/Exporter customers expect a high end

service in areas such as on time delivery of catalogues

and samples, regular offering of private sales, speedy

conveyance of purchase details and speedy settlement

of claims. A highly efficient and streamlined tea

sampling operation is carried out weekly throughout

the year, and in every instance the samples are

available on time for buyer collection. Printing of

catalogues too are processed and released to the

buyers immediately after the closure of catalogues.

Proactive interaction is made to ascertain the

requirement of private sale offers each week. The

purchase details of buyer/exporters are conveyed

through e-mail/fax on the day of the auction. Claims

are processed speedily to meet buyer expectation. The

details of these claims are evaluated at meetings. Other

industry stakeholders such as the Colombo Brokers


STAKEHOLDER DIALOGUE

Association, The Colombo Tea Traders Association and

the Sri Lanka Tea Board require conformity to various

ethics and bye- laws. The code of ethics as well as the

rules of the Colombo Brokers Association are observed.

Similarly the bye-laws of the Colombo Tea Traders

Association are adhered to. The procedures laid down

by the Sri Lanka Tea Board are also followed and here,

we receive regular commendation for the high

standard achieved..

For our employees, many new HR initiatives have been

implemented such as the performance management

system with appraisals, career committee discussions

on performance, reward and recognition programmes

including “V-Sparc” & “Chairman’s Award”.

Integrated training systems are in place with training

needs extracted from the appraisal form. Career

Development is mapped out in consultation with the

employee. A Joint Consultative Council is in place with

monthly meetings of the committee that has been

appointed by the employees representing each sub

division of the company. Annually, an Award Ceremony

is held in appreciation of employees who complete 25

years of service in the Group . Following the recent

December 26th tsunami, the affected employees

received assistance from the company. Through a

group wide initiative, an EHS Audit (Environmental,

Health & Safety) has been completed and the findings

will now receive very close attention of the

management.

To meet the aspirations of our shareholders, an

attractive dividend policy is pursued along with a focus

on increasing shareholder value. Internal audit reports

are regularly made available for implementation whilst

risk management is a critical item in strategy

formulation.

Corporate Governance receives the close attention of

the management with a focus on the ten disciplines of

the United Nations Global Compact. The Directors

have embraced a code of conduct which is highlighted

in a special booklet.

The Colombo Brokers Association celebrated 100 years in existence during the current financial year.


RISK MANAGEMENT

Risks are the uncertain events, which could influencethe achievement of an organisation’s strategic,operational and financial objectives. The purpose of riskmanagement is to manage and control risks rather thaneliminating it. A brief review of the key risks associatedwith the Company’s business and the management ofthese risks by the Company is enumerated below.

BUSINESS RISK

Due to the controlled environment in which Tea andRubber Brokers operate, business risk may not be aslarge as in other industries. The risks stem mainly frompoor service performance and poor business ethics. TheCompany looks to perform beyond customerexpectations by ensuring that the team of Auctioneersand Tasters are the best among brokers, by conductingweekly previews and reviews of the service levelsincluding the exchange of market related information.Additionally, enterprise management and marketingadvice is given to producer clients in order that estatesare aligned to market requirements and the businessesare on a path to stay viable. The Company is identifiedby the Tea and Rubber trade for its high business ethics.

OPERATIONAL RISKS

To prevent operational risks, there are many controls inthe Tea and Rubber Departments, MIS Division and theFinance Division. These are reviewed regularly. Newtechnology on hardware and software contributes torisk control along with system reviews. The strictadherence to the bye-laws of the TradeAssociations/Chamber of Commerce also preventsoperational risks. During the previous year, a legalaudit was carried out and the compliance with the legalaudit has further minimised the operational risk.

FINANCIAL RISKS

Credit Risk

The Company deals with mostly recognised, creditworthy clients who are private Tea Factory Owners andPlantation Companies. Credit Risks are minimised aswe advance funds based on stocks that are in ourwarehouse valued on historical prices obtained for therelevant Marks. Over advances granted are monitoredclosely and are made available only for those who havea good past record.

In addition, receivable balances are monitored on anongoing basis with the result that the Group’s exposureto Bad Debts is not significant.

LIQUIDITY RISK

The Company’s objective is to maintain a balancebetween continuity of funding and flexibility throughthe use of mainly overdrafts and bank loans.

INTEREST RATE RISK

As the Company has a mark up on all Short TermAdvances, exposure to market risk for changes inInterest Rates are minimised. The Colombo BrokersAssociation controls the Lending Rates to the Tea Tradebased on periodic revisions made by FinancialInstitutions as per Government Monetary Policy.

FOREIGN CURRENCY RISK

As the Auction Systems is presently based on localcurrency, foreign currency risks do not arise presently.There is at present a move to have Dollar Auctions inthe future, which is being addressed seriously by theTrade.

LEGAL RISK

This is the risk of unexpected material financial lossresulting from legal consequences of a transaction oraction. Inadequate documentation, legal or regulatoryissues and a variety of other factors may result inunenforceability of contracts. At present the Companyobtains the advisory services of the Legal Departmentof the parent Company John Keells Holdings Ltd.


CORPORATE GOVERNANCE

The Institute of Chartered Accountants of Sri Lankawhen developing their Code of Best Practice, clarifiedtheir understanding of Corporate Governance asfollows:

• Corporate Governance is popularly understoodas the system by which Companies are directedand controlled. The Board of Directors areresponsible for the Governance of theirCompanies.

• The Shareholders' role in Governance is toappoint the Directors and the Auditors and tosatisfy themselves that an appropriateGovernance Structure is in place.

• The responsibilities of the Board include thesetting out of the Company’s strategic aims,providing the leadership to put them into effect,supervising the management of the Business andreporting to shareholders on their stewardship.

POLICY

John Keells Ltd., is committed to maintaining a highstandard of Corporate Governance through itscommitment towards accountability and transparencyin its dealings with stakeholders namely; customers,employees, business partners and the community,whilst enhancing shareholder value.

During the financial year under review, importantCorporate Governance practices that were in place atJohn Keells Ltd., included the following:

• Setting the Company’s corporate direction withinthe policy frame of the Company VISION,MISSION, VALUES and CORPORATESTRATEGIES.

• Clearly indicating and creating an awareness ofall the Company’s Financial and other Goals.

• Identifying the Financial Risks towardsminimizing losses that could arise when fundingclients.

• Timely preparation of Annual Budgets andCorporate Plans including Capital ExpenditurePlanning & Cash Flow Statement.

• There is a detailed planning process in operationwhich includes all departments covering Tea,Rubber, Warehousing and Real Estate.

• Monthly performance is monitored against Planand where necessary Forecasts are revisedperiodically.

• Assessing and approving the integrity ofFinancial Control and Management InformationSystems.

• Making policy decisions in releasing DailyAdvances and Loans to clients, as well as onDividends and Operational Procedures of theCompany.

• Forwarding timely, Quarterly and AnnualAccounts to shareholders.

BOARD OF DIRECTORS

The Board of Directors delegates day to day operationsto the Management Committee, comprising of seniormembers of the staff and reserves certain decisions toitself such as for Capital Expenditure, Acquisitions,Investments and Employment of key staff members.

As recommended in the Code, the position of theCompany’s Chairman is separate from that of the ChiefExecutive Officer.

Article No.85 of the Articles of Association of theCompany provides for one third of the Directors toretire every subsequent year and they may offerthemselves for re-election at the Annual GeneralMeeting.

The Company being mainly in the Produce Brokingbusiness is committed to timeliness, prompt service,seeking better prices for produce, assisting clients withtechnical know how and up-dating to best TradePractices and responding to clients' inquiries.

Directors and Senior Managers meet clients on aregular basis and continuously explore avenues tomaximise Market Share of the Company’s Business.

Over the past year the Company held regular MonthlySector Meetings and Management CommitteeMeetings where most Directors and Senior Managersattended. Detailed Agenda is followed at all types ofmeetings and Directors received a comprehensivepackage of information prior to each meeting.

COMPLIANCE

The Company’s compliance with its statutoryobligations is regularly checked by senior managementand a statement of compliance presented to the Boardon a regular basis.

ACCOUNTABILITY AND DISCLOSURE

As in previous years, the members of the Board ofDirectors reviewed in detail the quarterly financialupdates to shareholders, the annual ConsolidatedFinancial Statements and Accounts in order to satisfythemselves that they present a true and balanced viewof the Company’s affairs to shareholders.


STATEMENT OF DIRECTORS’RESPONSIBILITIES FOR PREPARING THEFINANCIAL STATEMENTS.

This statement which is to be read in conjunction withthe Auditors’ Statement is made to distinguish therespective responsibilities of the Auditors and theDirectors in relation to the financial information in theAnnual Report to the Shareholders.

The Directors of John Keells Ltd., are required by theCompanies Act No.17 of 1982, to prepare FinancialStatements which give a true and fair view of the stateof affairs of the Company and the Group as at the endof the financial year and of the Profit or Loss and theCash Flows of the Company and the Group for theyear.

The Directors consider that, in preparing the FinancialStatements for the year ended 31st March, 2005 onpages 24 to 49, the Company and its Subsidiaries JohnKeells Stock Brokers (Pvt) Ltd., and john KeellsWarehousing (Pvt) Ltd., along with its AssociateCompany Keells Realtors Ltd., have used appropriateaccounting policies, consistently applied and supportedby reasonable and prudent judgements and estimates.The Directors also consider that all applicableaccounting standards have been followed and confirmthat the Financial Statements have been prepared on agoing concern basis. As the Directors are satisfied thatthe Company, its Subsidiaries and the AssociateCompany have the resources to continue in business forthe foreseeable future, the Financial Statementscontinue to be prepared on the said basis.

The Directors are responsible for ensuring that theCompany, its Subsidiaries and the Associate Companykeep accounting records which disclose with reasonableaccuracy at any time the financial position of theCompany and of its Subsidiaries and AssociateCompany which enable them to ensure that theFinancial Statements comply with the Companies ActNo.17 of 1982.

The Directors are also responsible for taking such stepsthat are reasonably open to them to safeguard theassets of the Company, its Subsidiaries and Associate toprevent and detect fraud and other irregularities.

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

COMPLIANCE REPORT

The Directors confirm that to the best of theirknowledge all taxes, duties and levies payable by theCompany and its Subsidiaries and all contributions,levies and taxes payable on behalf of and in respect ofthe employees of the Company and its Subsidiaries andall other known statutory dues as were due and payableby the Company as at the Balance Sheet date havebeen paid, or where relevant provided for.

By Order of the BoardKEELLS CONSULTANTS LIMITEDSecretaries

Colombo20th May, 2005

STATEMENT OF DIRECTORS’ RESPONSIBIL IT IES


REPORT OF THE AUDITORS

TO THE MEMBERS OF JOHN KEELLSLIMITED

We have audited the Balance Sheet of John Keells Ltd.,as at 31st March, 2005, the Consolidated Balance Sheetof the Company and its Subsidiaries as at that date, andthe related Statement of Income, Cash Flows andChanges in Equity for the year then ended, togetherwith the Accounting Policies and Notes as setout onpages 28 to 49.

RESPECTIVE RESPONSIBILITIES OFDIRECTORS AND AUDITORS

The Directors are responsible for preparing andpresenting these financial statements in accordancewith the Sri Lanka Accounting Standards. Ourresponsibility is to express an opinion on these financialstatements, based on our audit.

BASIS OF OPINION

We conducted our audit in accordance with the SriLanka Auditing Standards, which require that we planand perform the audit to obtain reasonable assuranceabout whether the said financial statements are free ofmaterial misstatements. An audit includes examining,on a test basis, evidence supporting the amounts anddisclosures in the said financial statements, assessingthe accounting principles used and significant estimatesmade by the Directors, evaluating the overallpresentation of the financial statements, anddetermining whether the said financial statements areprepared and presented in accordance with the SriLanka Accounting Standards. We have obtained all theinformation and explanations which to the best of ourknowledge and belief were necessary for the purposesof our audit. We therefore believe that our auditprovides a reasonable basis for our opinion.

OPINION

In our opinion, so far as appears from our examination,the Company has maintained proper books of accountfor the year ended 31 March 2005, and to the best of

our information and according to the explanationsgiven to us, the said Balance Sheet and relatedStatements of Income, Cash Flows and Changes inEquity and the Accounting Policies and Notes thereto,which are in agreement with the said books and havebeen prepared and presented in accordance with the SriLanka Accounting Standards, provide the informationrequired by the Companies Act, No.17 of 1982 andgive a true and fair view of the Company’s state ofaffairs as at 31 March 2005, its profit and cash flows forthe year then ended.

In our opinion, the Consolidated Balance Sheet andrelated Statements of Income, Cash Flow, Changes inEquity and the Accounting Policies and Notes thereto,have been properly prepared and presented inaccordance with the Companies Act No.17 of 1982 andthe Sri Lanka Accounting Standards, and give a trueand fair view of the state of affairs as at 31st March,2005 and the profit and cash flows for the year thenended of the Company and its Subsidiaries dealt withthereby, so far as concerns the members of theCompany.

DIRECTORS’ INTEREST IN CONTRACTSWITH THE COMPANY

According to the information made available to us, theDirectors of the Company were not directly or indirectlyinterested in contracts with the Company during theyear ended 31 March 2005, except as stated in Note 33to these financial statements.

Colombo.20th May, 2005


STATEMENT OF INCOME

COMPANY CONSOLIDATEDFor the year ended 31st March 2005 2004 2005 2004

Note Rs.000's Rs.000's Rs.000's Rs.000's

Revenue 3 311,792 272,842 517,446 574,845

Cost of Sales (82,281) (72,486) (133,704) (131,857)

Gross Profit 229,511 200,356 383,742 442,988

Other Operating Income 4 160,955 12,369 55,208 15,943

Distribution Expenses 2,345 (794) (6,968) (6,870)

Administrative Expenses (135,302) (115,043) (187,022) (188,025)

Amortisation of Negative Goodwill - 266 266

Profit from Operating Activities 5 257,509 96,888 245,226 264,302

Finance Expenses 6 (9,744) (20,387) (31,570) (45,372)

Profit/(Loss) from Discontinued Operations 7 - (18,756) - -

Share of Associate Companies’ Profit 8 - - 660 4,687

Profit on Disposal of Investment in Associate Company 9 - - 38,511 -

Profit from Ordinary Activities before Taxation 247,765 57,745 252,827 223,616

Income Tax Expense 10 (26,391) (13,561) (64,063) (70,189)

Profit after Taxation 221,374 44,184 188,764 153,427

Minority Interest 24 - - (9,950) (27,281)

Net Profit for the year 221,374 44,184 178,814 126,146

Earnings Per Share - Basic 11 29.13 5.81 23.53 16.60

Dividends Per Share - Gross/(Effective) 30 5.00 5.00 5.00 5.00

- Net 30 4.50 4.88 4.50 4.88

The Accounting Policies and Notes as setout on pages 28 through 49 form an integral part of the Financial Statements.

20th May, 2005


COMPANY CONSOLIDATEDAs at 31st March 2005 2004 2005 2004

Note Rs.000's Rs.000's Rs.000's Rs.000's

ASSETSNon-Current AssetsProperty, Plant & Equipment - At Cost 12 81,347 64,678 269,401 265,224

- At Valuation 12 374,896 379,715 374,896 379,715 Investments in Subsidiaries 13.3 120,380 120,380 - - Investments in Associates 13.4 24,000 31,892 105,301 48,569 Other Investments 13.5 11,304 16,648 11,304 16,648 Operating Lease Prepayments 14 - - 50,003 18,422 Deposits with Colombo Stock Exchange - - 11,000 5,500

611,927 613,313 821,905 734,078 Current AssetsInventories 15 2,195 2,353 2,308 2,421 Trade & Other Receivables 16 377,074 235,158 616,650 398,543 Other Recoverables - Short Term Deposits 880 903 880 1,216 Amounts Due from Related Parties 17 35,303 23,699 8,094 1,124 Short Term Investments 45,000 - 59,300 215,000 Cash and Bank 18 61,019 11,107 91,813 20,664

521,471 273,220 779,045 638,968

Total Assets 1,133,398 886,533 1,600,950 1,373,046

EQUITY AND LIABILITIESCapital and ReservesIssued Share Capital 19 76,000 76,000 76,000 76,000 Revaluation Reserve 21 292,333 292,333 360,848 292,333 Other Reserves 22 180,000 180,000 193,300 193,300 Retained Earnings 23 250,217 65,964 310,398 160,947

Total Equity 798,550 614,297 940,546 722,580

Minority Interest 24 - - 19,062 33,112

Non-Current LiabilitiesNegative Goodwill on Consolidation 20 - - 3,453 3,719 Interest Bearing Loans & Borrowings 29 - - 83,369 85,984 Deferred Tax Liabilities 25 10,920 16,134 13,500 16,446 Retirement Benefit Obligations 26 30,990 24,941 36,355 30,396

41,910 41,075 136,677 136,545 Current Liabilities Trade and Other Payables 27 148,802 81,277 319,816 244,623 Income Tax Payable 15,444 149 18,436 46,419 Amounts Due to Related Parties 28 27,670 7,534 32,587 31,104 Interest Bearing Loans & Borrowings 29 100,000 - 102,613 2,101 Bank Overdrafts 18 1,022 142,201 31,213 156,562

292,938 231,161 504,665 480,809

Total Equity and Liabilities 1,133,398 886,533 1,600,950 1,373,046


The Board of Directors is responsible for the preparation and presentation of these Financial Statements.Signed for and on behalf of the Board by,

………………………………… …………………………………

V. Lintotawela G.S.A. Gunesekera

Chairman Director

20th May, 2005

BALANCE SHEET


COMPANYNote Share Revaluation General Accumulated Total

Capital Reserve Reserves ProfitRs.000's Rs.000's Rs.000's Rs.000's Rs.000's

Balance as at 31st March 2003 76,000 292,333 180,000 48,380 596,713

Net Profit for the year - - - 44,184 44,184

Final Dividend Paid - 2002/2003 30 - - - (26,600) (26,600)





CONSOLIDATEDNote Share Revaluation General Accumulated Total

Capital Reserve Reserves ProfitRs.000's Rs.000's Rs.000's Rs.000's Rs.000's



Transfer - - 7,600 (7,600) -


Withholding Tax on Dividends

from Subsidiary - - - (570) (570)




Adjustment on account of Associate

Companies Share of Net Assets - 68,515 - 7,758 76,273



STATEMENT OF CHANGES IN EQUITY


CASH FLOW STATEMENT

COMPANY CONSOLIDATED

For the year ended 31st March Note 2005 2004 2005 2004

Rs.000’s Rs.000’s Rs.000's Rs.000's

Cash Flows from Operating Activities

Net profit before Income Tax Expense 247,765 57,745 252,827 223,616

Adjustments for

Profit on Disposal of Investment in Associate Company - - (38,511) -

Associate companies Share of Profit - - (660) (4,687)

Depreciation 18,487 16,764 33,091 27,780

Profit on Sale of Investments (84,970) - (37,428) -

Amortisation of Negative Goodwill - - (266) (266)

Amortisation of Lease Charges - - 1,089 1,089

(Profit)/Loss on Sale of Property, Plant & Equipment 1,975 1,192 1,967 1,192

Provision for Retirement Benefit Obligation 7,055 3,504 8,649 5,137

Interest Income (1,486) (3,561) (11,000) (14,267)

Investment Income (73,113) (7,915) (4,712) (640)

Finance Expenses 9,744 20,387 31,570 45,372

Operating Profit/(Loss) before Working Capital Changes 125,457 88,116 236,616 284,326

(Increase) / Decrease in Inventories 157 (104) 113 (172)

(Increase) / Decrease in Trade and Other Receivables (141,893) 42,224 (217,768) (54,683)

(Increase) / Decrease in Amounts Due from Related Parties (11,602) 62,860 (6,970) 85,436

Increase / (Decrease) in Amounts Due to Related Parties 20,136 2,478 1,483 (33,989)

Increase / (Decrease) in Trade and Other Payables 67,525 (52,770) 75,192 30,327

Cash Generated from Operations 59,780 142,804 88,666 311,245

Finance Expenses Paid (9,744) (20,387) (31,570) (45,372)

Income Tax Paid (16,310) (23,500) (84,116) (37,065)

Retirement Benefit Cost Paid (1,006) (3,924) (2,690) (4,419)

Deposits made with Colombo Stock Exchange - - (5,500) (2,000)

Net Cash Flows from/(Used in) Operating Activities 32,720 94,993 (35,210) 222,389

Cash Flows from/(Used in) Investing Activities

Purchase of Investments - (60,000) - -

Acquisition of Property, Plant & Equipment (32,312) (18,541) (34,437) (40,998)

Proceeds from Sale of Property, Plant & Equipment - 78 20 78

Proceeds from Sale of Shares 42,772 - 42,772 -

Proceeds from Sale of Shares in Associate Company 55,434 - 55,434 -

Interest Received 1,486 3,561 11,000 14,267

Dividend Received 73,112 7,915 4,712 2,785

Net Cash Flows from/(Used in) Investing Activities 140,492 (66,987) 79,501 (23,868)

Cash Flows from/(Used in) Financing Activities

Proceeds from Interest Bearing Loans & Borrowings 100,000 - 100,000 -

Repayment of Interest Bearing Loans & Borrowings - - (2,103) (1,740)

Advance Payment on Lease - - (32,670) -

Dividend Paid (37,121) (26,600) (68,720) (28,400)

Net Cash Flows from/(Used in) Financing Activities 62,879 (26,600) (3,493) (30,140)

Net Increase in Cash and Cash Equivalents 236,091 1,406 40,798 168,381

Cash and Cash Equivalents at the beginning of the year 18 (131,094) (132,500) 79,102 (89,279)

Cash and Cash Equivalents at the end of the year 18 104,997 (131,094) 119,900 79,102

The Accounting Policies and Notes as set out on pages 28 through 49 form an integral part of the Financial Statements.


NOTES TO THE FINANCIAL STATEMENTS

ACCOUNTING POLICIES

1. CORPORATE INFORMATION

1.1 GeneralJohn Keells Ltd., is a public limited liability company, incorporated and domiciled in Sri Lanka and listed on the

Colombo Stock Exchange. The Registered Office and the principal place of business of the Company is situated

at No. 130, Glennie Street, Colombo 2.

1.2 Principal Activities and Nature of OperationsDuring the year, the principal activities of the Company and its Subsidiaries (Group) were the broking of tea

and rubber, renting office space and warehouse space and the provision of stock broking activities.

1.3 Parent EnterpriseThe Company’s parent and controlling party is John Keells Holdings Ltd., which is incorporated in Sri Lanka.

1.4 Date of Authorization for IssueThe Financial Statements of John Keells Ltd., for the year ended 31st March 2005, were authorized for issue

in accordance with a resolution of the Board of Directors on 20th May, 2005.

1.5 Number of EmployeesThe number of employees of the Group at the end of the year was 174 (2004 – 184).

1.6 Companies in the Group

(a) Subsidiaries

All companies in the Group whose Financial Statements have been included in the Consolidated

Financial Statements are listed below.

John Keells Warehousing (Pvt) Ltd.

John Keells Stock Brokers (Pvt) Ltd.

All Subsidiary Companies have been Consolidated under section 150 (1) (a) (11) of the Companies Act,

No.17 of 1982.

(b) Associates

The results of the Associate Company Keells Realtors Ltd., have been included in the Consolidated

Financial Statements on the basis of the share of income accruing to the Group.

(c) Acquisitions and Divestments

During the year the Group disposed of its interest in the following Associate Company ;

International Tourists & Hoteliers Ltd.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 General Policies

2.1.1 Basis of Preparation

The Balance Sheet, Statement of Income, and Changes in Equity and Cash Flows, together with the

Accounting Policies and Notes, ("Financial Statements") of the Company and of the Group as at 31st

March, 2005 and for the year then ended, comply with the Sri Lanka Accounting Standards.

These Financial Statements presented in Sri Lankan Rupees have been prepared on a historical cost basis

except for the revaluation of certain Property, Plant and Equipment.



2.1.2 Consolidation Policy

(a) Principles of Consolidation

The Consolidated Financial Statements include the results, assets and liabilities of John Keells

Ltd; and its Subsidiaries John Keells Stock Brokers (Pvt) Ltd., and John Keells Warehousing

(Pvt) Ltd., after the elimination of all material inter company transactions. Subsidiaries are

consolidated from the date the parent obtains control until such time as control ceases.

Acquisition of Subsidiaries are accounted for using the Purchase Method of accounting.

The total profits and losses of the Company and its Subsidiaries included in Consolidation are

shown in the Financial Statements with the proportion of the profit or loss after taxation

pertaining to outside shareholders being reflected as "Minority Interest".

All assets and liabilities of the Company and of its Subsidiaries included in consolidation are

shown in the Consolidated Balance Sheet. The interest of outside Shareholders in the net

assets of the Group are indicated separately in the Consolidated Balance Sheet under the

heading "Minority Interest". The Consolidated Cash Flow Statements includes the Cash Flow

s of the Company and its Subsidiaries.

All the Companies included in the Group have a common financial year, which ends on

March 31.

(b) Investment in Associate Company

The investment in Associate Company has been accounted for under the equity method of

accounting. The Income Statement reflects the Group’s share of the results of the operations of

such Associate. The related investment appears in the Consolidated Balance Sheet at values

adjusted to reflect the Group’s share of the fair value of net assets of the Associate, net of any

dividends paid by such Associate.

(c) Negative Goodwill

Negative Goodwill arising on the acquisition of the Subsidiary, John Keells Stockbrokers (Pvt) Ltd.,

will be amortised over a period of twenty years commencing from 01st April, 1998, based on

factors such as the foreseeable life of the business.

2.1.3 Comparative Information

The Accounting Policies have been consistently applied by the Group and are consistent with those

used in the previous year. Previous year’s figures and phrases have been re-arranged wherever

necessary to conform to the current presentation.

2.1.4 Taxation

a) Current Taxes

The provision for Income Tax is based on the elements of income and expenditure as reported in

the Financial Statements and computed in accordance with the provisions of the relevant tax

statutes.

b) Deferred Taxation

Deferred Taxation is provided for on the Liability Method. The tax effect of all timing differences

which occur where items are allowed for Income Tax purposes in a period different from that when

they are recognised in Financial Statements is included in the provision for Deferred Taxation at

current rates of taxation.



Deferred Tax assets are recognized for all deductible timing differences and carried forward unused

tax losses, to the extent that it is probable that taxable profit will be available to off set against

such deductible timing differences and carried forward unused tax losses. The carrying amount of

Deferred Tax Asset is reviewed at each Balance Sheet date and reduced by the extent that it is no

longer probable that sufficient taxable profit will be available to allow all or part of the Deferred

Tax Asset to be utilised.

2.1.5 Borrowing Costs

Borrowing Costs are recognised as an expense in the period in which they are incurred except to the

extent where borrowing costs that are directly attributable to the acquisition, construction or production

of an asset that takes a substantial period of time to get ready for its intended use, are capitalised as

part of that asset.

2.2 Valuation of Assets and their Measurement Bases

2.2.1 Inventories

Building materials, consumables and spares are valued at the lower of cost and net realisable value, after

making due allowance for obsolete and slow moving items. Net realisable value is the price at which

inventories can be sold in the ordinary course of business.

The cost incurred in bringing inventories to its present location and condition are accounted as

follows :-

Building Materials - On a weighted average basis.

Consumables & Spares - On a weighted average basis.

2.2.2 Trade and Other Receivables

Trade receivables are stated at the amounts they are estimated to realise net of allowance for bad

and doubtful receivables.

Other receivables and dues from Related Parties are recognised at cost less allowance for bad and

doubtful receivables.

2.2.3 Cash and Cash Equivalents

Cash and cash equivalents are defined as cash in hand, demand deposits and short term highly liquid

investments, readily convertible to known amounts of cash and subject to insignificant risks of changes

in value.

For the purpose of the Cash Flow Statement, cash and cash equivalents consists of cash and cash

equivalents as defined above net of outstanding bank overdrafts.

2.2.4 Property, Plant and Equipment

(a) Cost and Valuation

Property, Plant and Equipment is stated at cost or fair value less accumulated depreciation and any

impairment in value.

All items of Property, Plant and Equipment are initially recorded at cost. Where items of

Property, Plant and Equipment are subsequently revalued, the entire class of such assets are

revalued at fair value. Revaluations are made with sufficient regularity to ensure that their

carrying amounts do not differ materially from their fair value as at the Balance Sheet date.



When an asset is revalued, any increase in the carrying amount is credited directly to a

revaluation reserve, unless it reverses a previous deficit on the same asset recognised as an

expense. Any revaluation deficit directly off setting a previous surplus in the same asset is

directly offset against the surplus in the revaluation reserve or recognised as an expense.

Upon disposal any revaluation reserve relating to the asset sold is transferred to retained

earnings.

(b) Restoration Costs

Expenditure incurred on repairs or maintenance of Property, Plant and Equipment in order to

restore or maintain the future economic benefits expected from originally assessed standards of

performance, is recognized as an expense when incurred.

(c) Depreciation

The provision for depreciation is calculated by using the straight line method on the cost or

valuation of all Property, Plant and Equipment other than Freehold Land in order to write off such

amounts over the estimated useful lives by equal instalments. Generally depreciation is not

provided for in the year of purchase while a full year’s depreciation is provided for in the year of

sale. However, in respect of computer software provision is made from the date of purchase for a

period of three years. The annual rate of depreciation generally used by companies in the Group

are as follows :

Buildings - over 40 years

Plant and Machinery - over 10 years

Furniture and Fittings - over 8 years

Motor Vehicles - over 5 years

Office Equipment - over 6 years

Computer Equipment

- Hardware - over 5 years

- Software - over 3 years

Others - over 5 years

2.2.5 Leases

Operating Leases

Leases where the lessor effectively retains substantially all the risks and benefits of ownership over

the leased term are classified as Operating Leases.

Rentals paid under operating leases are recognised as an expense in the Income Statement on a straight-

line basis over the lease term.

2.3 Investments

Long Term Investments

All quoted and unquoted securities, which are held as long term investments, are valued at cost. The cost of

the investment is the cost of acquisition inclusive of brokerage, stamp duty and bank fees. The carrying

amount of long term investments are reduced to recognise a decline which is considered other than temporary

in the value of investments, determined on an individual investment basis.

In the Company’s Financial Statements, investments in Subsidiaries and Associate Company have been

accounted for at cost, net of any provision for permanent dimunition in value. Income from these investments

is recognised only to the extent of dividends received, while any provision made for the decline in value of

such investments is charged to the Income Statement.



2.4 Liabilities and Provisions

2.4.1 Provisions, Contingent Assets and Contingent Liabilities

Provisions are made for all obligations (legal or constructive) existing as at the Balance Sheet date

when it is probable that such an obligation will result in an outflow of resources and a reliable

estimate can be made of the quantum of the outflow.

All contingent liabilities are disclosed as a note to the Financial Statements unless the outflow of

resources is remote.

All contingent assets are disclosed where the inflow of economic benefit is probable.

2.4.2 Retirement Benefit Obligations

a) Defined Benefit Plans – Gratuity

Gratuity is a Defined Benefit Plan as per the Sri Lanka Accounting Standard No. 16. In order

to meet this liability a provision is carried forward in the Balance Sheet, based on a half

month’s salary of the last month of the financial year of all employees for each completed

year of service, commencing from the first year of service. The resulting difference between

brought forward provision at the beginning of a year and the carried forward provision at the

end of a year is dealt with in the Income Statement.

However, as per the Payment of Gratuity Act No. 12 of 1983 this liability arises only upon

completion of 5 years continued service with the Company.

The gratuity liability is not funded nor actuarially valued. This item is grouped under

Retirement Benefit Obligations in the Balance Sheet.

b) Defined Contribution Plans – EPF and ETF

Employees are eligible for Employees’ Provident Fund contributions and Employees’ Trust Fund

contributions in line with respective Statutes and Regulations. The Company Contributes 12%

and 3% of gross emoluments of employees to Employees’ Provident Fund and Employees’ Trust

Fund respectively.

2.5 Income Statement

2.5.1 Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the

company and the revenue and associated costs incurred or to be incurred can be reliably measured.

Revenue is measured at the fair value of the consideration received or receivable net of trade discounts

and sales taxes. The following specific criteria are used for the purpose of recognition of revenue.

a) Brokerage Income

Brokerage Income is recognized on an accrual basis on the contractual date. Brokerage

Income in respect of forward sales contracts are recognized at the point of delivery of goods.

b) Rendering of Services

Revenue from rendering of services is recognized in the accounting period in which the

services are rendered or performed.

c) Interest Income

Interest Income is recognized on an accrual basis.



d) Dividend Income

Dividend Income is recognized on a cash basis.

e) Rental Income

Rental Income is recognized on an accrual basis.

f) Others

Other Income is recognized on an accrual basis.

Net gains and losses of a revenue nature on the disposal of Property, Plant & Equipment and

other non current assets including investments have been accounted for in the Income

Statement, having deducted from proceeds on disposal, the carrying amount of the assets

and related selling expenses. On disposal of revalued Property, Plant and Equipment, the

amount remaining in Revaluation Reserve relating to that asset is transferred directly to

Accumulated Profit.

Gains and losses arising from incidental activities to main revenue generating activities and

those arising from a group of similar transactions which are not material, are aggregated,

reported and presented on a net basis.

2.5.2 Expenditure Recognition

a) Expenses are recognized in the Income Statement on the basis of a direct association between

the cost incurred and the earning of specific item of income. All expenditure incurred in the

running of the business and in maintaining the Property, Plant and Equipment in a state of

efficiency has been charged to the Income Statement in arriving at the profit for the year.

b) For the purpose of presentation of Income Statement the Directors are of the opinion that

function of expenses method present fairly the elements of the company’s performance.

Hence such a presentation method is adopted.

2.5.3 Segment Information

Segmental information is provided for the different business segments of the Group, Business

segmentation has been determined based on the nature of services provided by the Group after

considering the risks and rewards of each type of service.

Since the individual segments are located close to each other and operate in the same industry

environment, catering to clientele from the same geographical location, the need for geographical

segmentation does not arise.

Inter-segment transfers are based on fair market price.

Revenue and expenses directly attributable to each segment are allocated intact to the respective

segments. Revenue and expenses not directly attributable to a segment are allocated on the basis of

their resource utilisation wherever possible.

Segment information has been prepared in conformity with the accounting policies adopted for

preparing and presenting the Consolidated Financial Statements of the Group.




Rs.000's Rs.000's Rs.000's Rs.000's

3. REVENUE

3.1 SummaryGross Turnover 311,808 272,868 517,462 574,871

Less: Turnover Based Taxes:

Turnover Tax (16) (26) (16) (26)

311,792 272,842 517,446 574,845

3.2 Segment InformationCONSOLIDATED

Produce Broking Share Broking Real Estate Total

Warehousing

2005 2,004 2005 2,004 2005 2,004 2005 2,004

Rs.000's Rs.000's Rs.000's Rs.000's Rs.000's Rs.000's Rs.000's Rs.000's

Segment Revenue

Gross Revenue

- Third Party 273,504 246,059 138,540 237,852 - - 412,044 483,911

- Related Parties - - 113,967 96,422 113,967 96,422

Inter Segment Sales - - (8,549) (5,462) (8,549) (5,462)

Sales to Customers Outside

the Group 273,504 246,059 138,540 237,852 105,418 90,960 517,462 574,871

Segment Results

Profit Before Tax 156,900 28,026 65,746 167,816 30,181 21,561 252,827 217,403

Unallocated - - - - - - - 6,213

Total 252,827 223,616

Taxation - - (24,829) (54,147) (3,278) (1,505) (28,107) (55,652)

Unallocated (35,956) (14,537)

Total (64,063) (70,189)

Profit After Tax 188,764 153,427

Segment Assets 852,550 558,783 292,157 394,535 456,243 410,698 1,600,950 1,364,016

Unallocated - - - - - - - 9,030

Consolidated Total Assets 1,600,950 1,373,046

Segment Liabilities 428,698 360,786 212,644 256,568 - - 641,342 617,354

Others

Purchase of Property Plant &

Equipments 9,388 40,774 1,640 3,685 23,606 5,426 34,634 49,885

Depreciation 18,585 18,052 1,722 1,394 12,783 8,338 33,090 27,784

Amortisation of

Negative Goodwill - - (266) (266) - - (266) (266)




Rs.000's Rs.000's Rs.000's Rs.000's

4. OTHER OPERATING INCOME

Income from Investments with Related Parties - Quoted 4,713 2,786 4,713 640

- Non-quoted 68,400 5,130 - -

Interest Income - Related Parties - 2,695 - 3,867

- Outside 1,486 866 11,000 10,400

Guarantee Fees 894 892 894 892

Profit on Disposal of Non-Current Investments 84,970 - 37,428 -

Sundry Income 492 - 1,173 144

160,955 12,369 55,208 15,943

5. PROFIT/(LOSS) FROM OPERATING ACTIVITIES

Stated after charging/(crediting)

Directors' Emoluments 18,913 13,706 25,348 19,503

Personnel Costs includes

Defined Benefit Plan Costs - Gratuity 7,056 3,504 8,649 5,115

Defined Benefit Plan Costs - EPF & ETF 8,539 6,016 11,508 8,506

Other Staff Costs 50,591 39,019 71,398 65,257

Donations 95 647 101 2,874

Auditors' Fees & Expense 637 452 1,083 722

Depreciation 18,487 16,764 33,091 27,780

(Profit)/Loss on disposal of Property, Plant and Equipment - 1,193 (8) 1,193

Legal Fees & Professional Charges 4,120 4,981 6,279 7,318

Compensation Received from Insurance (13,043) - (13,043) -

Expenses incurred on Reinstatement of Damages 12,029 - 12,029 -

Loss on Write off of Property, Plant & Equipment 1,975 - 1,975 -

Amortisation of Negative Goodwill - - (266) (266)

6. FINANCE EXPENSES

On Overdrafts 8,767 19,917 9,146 20,270

Interest Expense on Loans & Borrowings Payable to

- Related Parties 336 - 336 -

- Others 641 470 22,088 25,102

9,744 20,387 31,570 45,372

7. PROFIT/ (LOSS) FROM DISCONTINUED OPERATIONS

For the period ended 30.06.2003Rs.000's

Profit/ (Loss) on abandonment of the Warehousing

Operations on 30th June 2003 (18,756)

The warehousing activity of the Company was discontinued as a fully owned subsidiary, John Keells Warehousing (Pvt)

Ltd. took over this activity from 1st of July, 2003.

The revenue and results of the discontinued operation for the period are as follows;

Revenue 13,591Cost of Sales (14,919)

Gross Profit/ (Loss) (1,328)Voluntary Retirement Scheme Cost (17,428)

Total Profit/ (Loss) from discontinued operation (18,756)



CONSOLIDATEDFor the year ended 31st March 2005 2004

Rs.000's Rs.000's

8. SHARE OF ASSOCIATE COMPANIES' PROFIT

Keells Realtors Ltd. 660 (1,525)

International Tourists & Hoteliers Ltd. - 6,212

660 4,687

9. PROFIT ON DISPOSAL OF INVESTMENT IN ASSOCIATE COMPANY

International Tourists & Hoteliers Ltd 38,511 -

The profit/(loss) for the Group on the sale is the difference between the proceeds from the disposal of the investmentand the net carrying value of the assets and liabilities of the operation as at the date of sale.

International Tourists & Hoteliers LtdMonth of Disposal July 2004Nature of Investment AssociateBusiness Segment Others


Rs.000's Rs.000's Rs.000's Rs.000's

10. INCOME TAX EXPENSE

Current Tax on Ordinary Activities for the year (10.1) 31,605 17,483 56,132 71,784Deferred Taxation Charge/(Reversal) (10.5) (5,214) (3,922) (2,947) (4,077)Tax on Dividend Income - - 7,600 -Share of Income Tax on Associate Companies’ Profit - - 3,278 2,482

26,391 13,561 64,063 70,189

COMPANY CONSOLIDATED2005 2004 2005 2004

Rs.000's Rs.000's Rs.000's Rs.000's

10.1 Reconciliation between tax expenses and the product of accounting profit.Consolidated Profit before Tax - - 252,827 223,616Consolidated Adjustments - - 76,504 2,322

Aggregate Accounting Profit 247,765 57,745 329,331 225,938

Comprises:Accounting Profit - Parent 247,765 57,745

- Subsidiaries 81,566 329,331 168,193 225,938

Aggregate Disallowed Items 28,413 22,818 53.564 37,724Aggregate Allowable Expenses (170,585) (22,109) (215,972) (73,141)

Taxable Profits 105,593 58,454 166,923 190,521

Comprises

Taxable Profits - Parent - - 105,593 58,454- Subsidiary - - 75,469 167,082

Tax Losses carried forward - Subsidiary - - (14,139) (35,015)

105,593 58,454 166,923 190,521




Rs.000's Rs.000's Rs.000's Rs.000's

Statutory Tax Rates - 30% 31,678 17,537 31,678 17,536 Less: Amounts Over Providedin Previous Years (73) (54) (73) (54)

31,605 17,483 31,605 17,482Statutory Tax Rate 32.5%

- Subsidiary - - 24,527 54,302Withholding Tax on Dividends - - - -

Current Tax on Ordinary Activities 31,605 17,483 56,132 71,784

The Group tax expense is based on the taxable profit of each Group Company, since at present the tax laws

do not provide for Group taxation.

10.2 The provision for Income Tax for John Keells Ltd., is based on the elements of income and expenditure

as reported in the Financial Statements and computed in accordance with the provisions of the Inland

Revenue Act at the rate of 30%.

10.3 In accordance with the provisions of the Inland Revenue Act No. 28 of 1979, John Keells Stock Brokers

(Pvt) Ltd., and Keells Realtors Ltd., are liable to Income Tax at the rate of 32.5%.

10.4 In terms of the agreement dated 14th March, 2003 entered into with the Board of Investment of Sri

Lanka under section 15 of the BOI Law No. 4 of 1978, John Keells Warehousing (Pvt) Ltd., is entitled

to a concessionary tax rate of 15% on business profits for a period of 7 years, commencing from the year

of assessment 2003/2004.

10.5 Deferred Tax has been computed using the current effective tax rate.

11. EARNINGS PER SHARE

11.1 The Basic Earnings per Share is calculated by dividing the net profit for the year attributable to ordinary

shareholders by the weighted average number of ordinary shares outstanding during the year.

COMPANY CONSOLIDATED

2005 2004 2005 2004

Amounts Used as the Numerator:

Net Profit Attributable to Ordinary

Shareholders (Rs.000’s) 221,374 44,184 178,814 126,146

Number of Ordinary Shares Used as the Denominator:

Weighted Average number of Ordinary

Shares in Issue (Nos. in 000’s) 7,600 7,600 7,600 7,600

Earnings Per Share (Rs) 29.13 5.81 23.53 16.60



COMPANYBalance Additions Disposals Transfers Balance

as at as at01.04.2004 31.03.2005

Rs.000'S Rs.000'S Rs.000'S Rs.000'S Rs.000'S

12. PROPERTY, PLANT & EQUIPMENT

12.1 Cost/ValuationAt Cost

Building on Freehold Land 1,884 15,222 - (35) 17,071

Plant & Machinery 53,314 4,001 (173) - 57,142

Furniture & Fittings 63,497 2,828 (872) 35 65,488

Motor Vehicles 9,267 - - - 9,267

Computer Equipment 25,499 8,966 (1,457) - 33,008

Office Equipment 7,550 115 - - 7,665

Others 3,957 1,180 (38) - 5,099

164,968 32,312 (2,540) - 194,740

At Valuation

Land 271,252 - - - 271,252

Building on Freehold Land 111,777 - (1,593) - 110,184

383,029 - (1,593) - 381,436

Total Value of Assets 547,997 32,312 (4,133) - 576,176

12.2 Depreciation

At Cost

Building on Freehold Land - 47 - (19) 28

Plant & Machinery 24,214 5,140 (34) - 29,320

Furniture & Fittings 46,414 3,000 (617) 19 48,816

Motor Vehicles 7,375 861 - - 8,236

Computer Equipment 14,366 4,843 (1,411) - 17,798

Office Equipment 6,280 494 - - 6,774

Others 1,641 788 (8) - 2,421

100,290 15,173 (2,070) - 113,393

At Valuation

Building on Freehold Land 3,314 3,314 (88) - 6,540

Total Depreciation 103,604 18,487 (2,158) - 119,933



CONSOLIDATEDBalance Additions Disposals Transfers Balance

as at as at01.04.2004 31.03.2005

Rs.000'S Rs.000'S Rs.000'S Rs.000'S Rs.000'S

12.3 Cost/ValuationAt CostBuilding on Freehold Land 1,884 15,222 - (35) 17,071Building on Leasehold Land 121,385 - (199) 121,186Plant & Machinery 83,223 4,001 (173) - 87,051Furniture & Fittings 113,232 3,300 (1,003) 35 115,564Motor Vehicles 9,358 - - - 9,358Computer Equipment 37,410 9,389 (3,017) - 43,782Office Equipment 11,416 201 (813) - 10,804Others 4,055 1,180 (38) 199 5,396

381,963 33,293 (5,044) - 410,212

AT VALUATIONLand 271,252 - - - 271,252Building on Freehold Land 111,777 - (1,593) - 110,184

383,029 - (1,593) - 381,436

Total Value of Assets 764,992 33,293 (6,637) - 791,648

12.4 In the Course of ConstructionCapital Work-in-Progress - 1,144 - - 1,144

Gross Carrying Value 764,992 34,437 (6,637) - 792,792

12.5 DepreciationAt CostBuilding on Freehold Land - 47 - (19) 28Building on Leasehold Land 3,023 3,031 - - 6,054Plant & Machinery 26,597 8,131 (34) - 34,694Furniture & Fittings 51,814 9,046 (748) 19 60,131Motor Vehicles 7,394 879 - - 8,273Computer Equipment 18,981 6,808 (2,959) - 22,830Office Equipment 7,290 989 (813) - 7,466Others 1,640 846 (7) - 2,479

116,739 29,777 (4,561) - 141,955

At ValuationBuilding on Freehold Land 3,314 3,314 (88) - 6,540

Total Depreciation 120,053 33,091 (4,653) - 148,495


Rs.000's Rs.000's Rs.000's Rs.000's

12.6 Net Book Value of AssetsAt Cost 81,347 64,678 269,401 265,224 At Valuation. 374,896 379,715 374,896 379,715

Total carrying amount of Property, Plant & Equipment 456,243 444,393 644,297 644,939

12.7 The land and buildings owned by the Company were revalued during the financial year ended 31stMarch 2003 by Mr. R.G.Wijesinghe, Consultant, Valuer & Assessor. The results of such valuation wereincorporated in these financial statements from its effective date, 31st March 2003. Such assets werevalued at their fair value, which has been determined using the Land & Building basis of valuation whichpresupposes continued use of the asset in the same or similar business.

The carrying amount of revalued assets that would have been included in the financial statements hadthe assets been carried at cost less depreciation, is as follows:



Cost Cumulative Net Carrying Net CarryingClass of Asset Depreciation Amount Amount

If Assets Were 2005 2004Carried At Cost

Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Land 84,216 - 84,216 84,216 Building 137,321 38,948 98,372 101,805

221,537 38,948 182,588 186,021

12.8 During the financial year, the Company acquired Property, Plant and Equipment to the aggregate valueof Rs. 32.3Mn (2004 - Rs. 19.7Mn) Cash payments amounting to Rs. 32.3Mn (2004 - Rs. 18.5Mn) waspaid during the year for the acquisition of Property, Plant and Equipment.

12.9 During the financial year, the Group acquired Property, Plant and Equipment to the aggregate value ofRs. 34.6Mn (2004-Rs. 49.9Mn) Cash payments amounting to Rs. 34.6Mn (2004 - Rs.49.9Mn) was paidduring the year for the acquisition of Property, Plant and Equipment.

12.10 Details of Leasehold Land as at 31st March 2005.

Extend of Land Period of Lease Annual Rental

A - R - P Rs. Rs.

John Keells Ltd - 2 12.64 Annual 7,740/-

Land facing the Beira Lake at

130, Glennie Street,

Colombo 2.

12.11 The details of Property, Plant & Equipment of the Group which are stated at valuation aredisclosed below.

Owner Company/Location Area (Bldgs) Land in Acres Valuation Date Name of Valuer

Sq . Ft. F/hold L/hold (Rs.000's)

John Keells Ltd.

130, Glennie Street,

Colombo 2. 119,286 1.87 0.50 345,500 31/3/03 Mr R. G. Wijesinghe

50, Minuwangoda Road,

Ekala. Ja-Ela. 3,180 3.25 - 36,279 31/3/03 Mr R. G. Wijesinghe

Keells Realtors Ltd.

427 & 429, Ferguson Road, 46,795 3.48 - 90,000 31/3/03 Mr S. T. P. Senadhira

Colombo 15.

80, Nawam Mawatha, 34,315 0.69 - 253,000 31/3/03 Mr S. T. P. Senadhira

Colombo 2.


Rs.000's Rs.000's Rs.000's Rs.000's

13. LONG TERM INVESTMENTS

13.1 SummaryInvestments in Subsidiaries (13.3) 120,380 120,380 - -

Investments in Associates (13.4) 24,000 31,892 105,301 48,569

Other Investments (13.5) 11,304 16,648 11,304 16,648

Total Investments 155,684 168,920 116,605 65,217




Rs.000's Rs.000's Rs.000's Rs.000's

13.2 Movement in Company Investments

Balance at the beginning of the year 168,920 108,920 65,217 65,156

Additions during the year - 60,000 - -

Disposals during the year (13,236) - (5,344) -

Share of Profit of Associate Company - - 660 -

Adjustment on account of

Associate Companies' share of Net Assets - - 56,072 61

155,684 168,920 116,605 65,217

No. of Shares Cost of the Investment Directors' / MarketValuation

2005 2004 Holding 2005 Movement 2004 2005 2004% Rs.000's. Rs.000's. Rs.000's. Rs.000's. Rs.000's.

13.3 Investment in Subsidiaries

Non-QuotedJohn Keells

Warehousing (Pvt) Ltd. 12,000,000 12,000,000 100% 120,000 - 120,000 120,000 120,000 John Keells Stock

Brokers (Pvt) Ltd. 570,000 570,000 76% 380 - 380 380 380

120,380 - 120,380 120,380 120,380

13.4 Investments in AssociatesCompany

Quoted International Tourists &

Hoteliers Ltd. - 1,588,876 - - (7,892) 7,892 - 37,736

Non-QuotedKeells Realtors Ltd. 2,400,000 2,400,000 32% 24,000 - 24,000 24,000 24,000

Total Investment in Associates at Cost 24,000 (7,892) 31,892 24,000 61.736

Consolidated

Share of Associate Company

Net AssetsKeells Realtors Ltd 81,301 73,655 7,646 International Tourists & Hoteliers Ltd - (9,031) 9,031

105,301 56,732 48,569

13.5 Other Investments

Other Investments

Quoted Habarana Lodge Ltd* - 205,548 - - (2,194) 2,194 - 13,155 Kandy Walk Inn Ltd* - 300,000 - - (3,000) 3,000 - 15,075 Keells Food Products Ltd* 463,991 463,991 9.28% 11,295 - 11,295 17,632 7,888 Ceylon Hotels Corporation Ltd. 5,181 5,181 0.07% 9 - 9 570 473

11,304 (5,194) 16,498 18,202 36,591

Non-QuotedUnawatuna Walk Inn Ltd* - 15,000 - - (150) 150 - 150

- (150) 150 - -

11,304 (5,344) 16,648 18,202 36,741*Members of the John Keells Holdings Group.



CONSOLIDATED

2005 2004

Rs.000’s Rs.000’s

14 OPERATING LEASE PREPAYMENTS

14.1 SummaryBalance as at the beginning of the year 18,422 19,6511

Payments made during the year 32,670 -

Total Prepaid as at the end of the year 51,092 19,511

Amortised during the year (1,089) (1,089)

Balance as at the end of the year 50,003 18,422

14.2 Amortisation of Pre-paid Operating LeaseMuthurajawela Land

To be amortised in 2006 1,089

To be amortised from 2007 - 2011 5,445

To be amortised from 2012 - 2052 44,558

50,003

The Company has entered in to a 50 year Lease Agreement with Sri Lanka Land Reclamation and Development

Corporation to lease a land in Muthurajawela for a total lease of Rs. 54,450,000/-. The total lease liability has

been paid off during the year ended 31/03/2005. The total pre-paid lease rentals are being amortised over the

period of 50 years.


Rs.000's Rs.000's Rs.000's Rs.000's

15. INVENTORIES

Building Materials 1,113 1,144 1,113 1,212Consumables and Spares 1,082 1,209 1,195 1,209

2,195 2,353 2,308 2,421

16. TRADE AND OTHER RECEIVABLES

Trade Debtors 359,446 236,289 590,026 397,267

Trade Dues from Related Parties (16.1) 16,757 6,869 16,757 3,238 Less: Provision for Doubtful Debts (6,393) (11,425) (6,564) (11,467)Other Debtors 5,891 1,690 11,058 4,311 Advances and Prepayments 1,373 1,735 5,373 5,194

377,074 235,158 616,650 398,543

16.1 Trade Dues from Related PartiesRelationship

John Keells Holdings Ltd Parent 16,404 1,292 16,404 1,292 DHL Keells (Pvt) Ltd Affiliate 326 604 326 604 Keells Realtors Ltd. Affiliate 7 - 7 - Keells Food Products Ltd. Affiliate 20 - 20 - Keells Hotel Management Services Ltd. Affiliate - 1,342 - 1,342 John Keells Stock Brokers (Pvt) Ltd. Subsidiary - 3,631 - -

16,757 6,869 16,757 3,238




Rs.000's Rs.000's Rs.000's Rs.000's

17. AMOUNTS DUE FROM RELATED PARTIES

RelationshipKeells Hotel Management Services Ltd. Affiliate 3 38 3 38 Keells Restaurants Ltd. Affiliate 25 25 25 25 Keells Realtors Ltd. Associate 97 42 97 42 DHL Keells (Pvt) Ltd. Affiliate 301 77 301 77 Keells Food Products Ltd Affiliate 3 21 3 21 Keells Consultants Ltd. Affiliate 13 28 13 32 Mackinnon & Keells Financial Services Ltd. Affiliate 50 56 50 56 John Keells Holdings Ltd. Parent 7,236 830 7,236 830 Keells Business Systems Ltd. Affiliate - 2 - 2 Ceylon Holiday Resorts Ltd. Affiliate 283 - 283 - International Tourists & Hoteliers Ltd. Affiliate 14 - 14 - Jay Kay Marketing Services Ltd. Affiliate 44 - 44 - Whittall Bousteads Ltd. Affiliate 25 - 25 - John Keells Stock Brokers (Pvt) Ltd. Subsidiary - 6 - - Ceylon Cold Stores Ltd. Affiliate - 1 - 1 John Keells Warehousing (Pvt) Ltd. Subsidiary - 52 - -

8,094 1,178 8,094 1,124

Add: Inter-Company Loans-Short Term

John Keells Warehousing (Pvt) Ltd. Subsidiary 27,209 22,521 - -

35,303 23,699 8,094 1,124

18. CASH AND CASH EQUIVALENTS IN CASH FLOW STATEMENT

18.1 Favourable BalancesCash & Bank Balances 61,019 11,107 91,813 20,664Treasury Bills 45,000 - 59,300 215,000

106,019 11,107 151,113 235,664 18.2 Unfavourable Balances

Bank Overdrafts (1,022) (142,201) (31,213) (156,562)

104,997 (131,094) 119,900 79,102

19. ISSUED CAPITAL

Par Value19.1 Authorised Rs.

15,000,000 Ordinary Shares 10/- 150,000 150,000 150,000 150,000

19.2 Issued and Fully Paid7,600,000 Ordinary Shares 10/- 76,000 76,000 76,000 76,000

20. NEGATIVE GOODWILL ON CONSOLIDATION

Total Goodwill on Consolidation 5,315 5,315 Accumulated Amortisation at the beginning of the year (1,596) (1,330)

Balance Goodwill at the beginning of the year 3,719 3,985 Amortised during the year (266) (266)

Balance Goodwill at the end of the year 3,453 3,719




Rs.000's Rs.000's Rs.000's Rs.000's

21. REVALUATION RESERVE

Balance at the beginning of the year 292,333 292,333 292,333 292,333Adjustment on Account of Associate Companies’ share of Net Assets - - 68,515 -

Balance at the end of the year 292,333 292,333 360,848 292,333

21.1 The above revaluation surplus consists of the net surplus resulting from the revaluation of Property, Plantand Equipment as described in Note 12.7 to the Financial Statements. The unrealized surplus cannot bedirectly distributed to shareholders

22. OTHER RESERVES

22.1 General ReserveGeneral Reserve which is a revenue reserve represents the amounts set aside by the directors for generalapplication. The movement of general reserve is as follows:Balance at the beginning of the year 180,000 180,000 193,300 185,700 Transfers made during the year - - - 7,600


23. RETAINED EARNINGS

John Keells Ltd 250,217 65,964 104,978 45,215 Subsidiaries - - 142,948 96,911 Associates - - 62,472 18,821

250,217 65,964 310,398 160,947

24. MINORITY INTEREST

Balance at the beginning of the year 33,112 7,631 Share of Profit for the year 9,950 27,281 Dividend Paid (24,000) (1,800)

Balance at the end of the year 19,062 33,112

25. DEFERRED TAX LIABILITIES

Balance at the beginning of the year 16,134 20,056 16,446 20,523 Reversals made during the year (5,214) (3,922) (2,946) (4,077)


26. RETIREMENT BENEFIT OBLIGATIONS

Balance as at the Beginning of the year 24,941 25,361 30,396 28,246

Provision made during the year 7,055 3,504 8,649 6,569 Payments made during the year (1,006) (3,924) (2,690) (4,419)

Balance as at the end of the year 30,990 24,941 36,355 30,396




Rs.000's Rs.000's Rs.000's Rs.000's

27. TRADE AND OTHER PAYABLES

Trade Creditors 127,340 65,887 291,693 224,424

Sundry Creditors and Accrued Expenses 21,462 15,390 28,123 20,199

148,802 81,277 319,816 244,623

28. AMOUNTS DUE TO RELATED PARTIES

RelationshipCurrent AccountsJohn Keells Holdings Ltd. Parent 23,395 3,850 32,089 29,462John Keells Warehousing (Pvt) Ltd. Subsidiary 3,777 3,313 - -Keells Tours (Pvt) Ltd. Affiliate 5 - 5 -Keells Realtors Ltd. Associate 437 - 437 -Jay Kay Marketing Services Ltd. Affiliate 56 37 56 37Keells Business Systems Ltd. Affiliate - 334 - 1,373JayKay Office Automation (Pvt) Ltd Affiliate - - - 232

27,670 7,534 32,587 31,104

29. INTEREST BEARING LOANS & BORROWINGSCONSOLIDATED

Loans LoansBalance Obtained Repaid Balance

as at During the During the as at01-04-2004 Year Year 31-03-2005

29.1 Asset Backed Notes Payable (JKW) - Gross Liability 207,724 - (20,882) 186,842- Finance Charges (119,639) - 18,779 (100,860)

88,085 - (2,103) 85,982

29.2 Short Term Loan - Standard Chartered Bank (John Keells Ltd) - 100,000 - 100,000

88,085 100,000 (2,103) 185,982

2005 2005 2005 2004 2004 2004Amount Amount Amount Amount

Repayable Repayable Repayable RepayableWithin 1 Year After 1 Year Total Within 1 Year After 1 Year Total

Rs. 000’s Rs. 000’s Rs. 000’s Rs. 000’s Rs. 000’s Rs. 000’s

29.3 Assets Backed Notes (JKW) - Gross Liability 20,881 165,961 186,842 20,881 186,843 207,724

- Finance Charges (18,268) (82,592) (100,860) (18,780) (100,859) (119,639)

2,613 83,369 85,982 2,101 85,984 88,08529.4 Short Term Loan - Standard Chartered Bank

(John Keells Ltd) 100,000 - 100,000 - - -

102,613 83,369 185,982 2,101 85,984 88,085

The Asset Backed Notes of John Keells Warehousing (Pvt) Ltd., are payable over a period of 10 years, based on a pre-

determined payment plan. The parent Company John Keells Ltd., has provided a corporate guarantee covering the full

liability against the Asset Backed Notes.




Rs.000's Rs.000's Rs.000's Rs.000's

30. DIVIDENDS

30.1 DividendsDividend Paid -Final 50%(2003/04)

Out of Dividends received - Free of tax 7,915 - 7,915 - Out of Profits - Liable for tax 29,206 26,600 29,206 26,600

37,121 26,600 37,121 26,600

Proposed for Approval at AGM 50%

(2004/05 - 50%)

Out of Dividends received - Free of tax 34,200 7,915 34,200 7,915 Out of Profits - Liable for tax - 29,206 - 29,206

34,200 37,121 34,200 37,121

30.2 Dividend Per Share - Gross (Effective) 5.00 5.00 5.00 5.00- Net 4.50 4.88 4.50 4.88

Proposed for approval at AGM.

The dividend per share is based on the dividend declared and proposed for the period covered by theFinancial Statements.

31. COMMITMENTS AND CONTINGENCIES

31.1 Capital Commitments

Capital commitments expenditure contracted for at the Balance Sheet date, but which has not beenprovided for in the Consolidated Financial Statements are as follows :

2005 2004

Rs. 000’s Rs. 000’s

John Keells Stock Brokers (Pvt) Ltd. 942 -

31.2 Financial Commitments


Rs. 000’s Rs. 000’s Rs. 000’s Rs. 000’s

Guarantees given by the Company to Banks

on behalf of related Companies 248,083 267,224 248,083 267,224

32. ASSETS PLEDGED

As at the Balance Sheet date the following assets of the Company have been pledged as security against the

Company’s borrowings.

Nature of Assets Nature of Liability 2005 2004

Rs. Mn Rs. Mn

Property Bank Borrowing 45.5 45.5

Investments Bank Borrowing 3.9 22.0

Book Debts Bank Borrowing 10.0 10.0

59.4 77.5



33. DIRECTORS' INTERESTS IN CONTRACTS / RELATED PARTY TRANSACTIONS

NAME OF COMPANY NATURE OF TRANSACTION AMOUNTPAID/

(RECEIVED)(RS.)

JOHN KEELLS HOLDINGS LTD.

Holding Company providing functional services Legal 3,905,800

Human Resources 3,974,124

Management Information 13,806,949

Tax & Finance 6,781,063

Lends funds temporarily for which Interest is paid at cost 265,962

Guarantees Bank Facilities for which Guarantee Fees are paid 810,000

Fee for usage of SAP 994,475

Taken Office Space on Rent (31,387,240)

The Company guarantees Bank Facilities for whichGuarantee Fees is received (675,000)

The Directors of the Company are : Mr. V. Lintotawela - Chairman, Mr. S.C. Ratnayake, Mr. A.D. Gunewardene &Mr. G.S.A. Gunesekera.

KEELLS CONSULTANTS LTD.

Provides Secretarial services 158,700

Service charges - handling Salaries 45,315

Taken Office Space on Rent (912,960)

The Directors of the Company are : Mr. V. Lintotawela- Chairman, Mr. S.N. Dharmaratna & Ms. D.C. Alagaratnam.

DHL KEELLS (PVT) LTD.


The Directors of the Company are : Mr. V. Lintotawela & Mr. S.C. Ratnayake.

KEELLS REALTORS LTD.

Provides Warehousing Space on Rent 2,280,960

Interest is paid at cost 336,075

Taken Office Space on Rent (36,000)

The Directors of the Company are : Mr. V. Lintotawela - Chairman, Mr. S.C. Ratnayake, Mr. A.D. Gunewardene, Mr. L.D. Ramanayake & Mr. S.N. Dharmaratna.

KEELLS FOOD PRODUCTS LTD.

Taken Land on Lease rent (207,447)


The Directors of the Company are : Mr. V. Lintotawela - Chairman, Mr. S.C. Ratnayake, Mr. A.D. Gunewardene & Ms. D.C. Alagaratnam.




(RECEIVED)(RS.)

WALKERS TOURS LTD.


The Company guarantees Bank Facilities for whichGuarantee Fee is received (150,000)

The Directors of the Company are : Mr. V. Lintotawela - Chairman, Mr. S.C. Ratnayake & Mr. A.D. Gunewardene.

KEELLS HOTEL MANAGEMENT SERVICES LTD.



KEELLS BUSINESS SYSTEMS LTD.

Supply of Computers and Accessories 3,649,074

Computer Maintainance. Services & RepairsData Cabling chargesSupply of Telecom Equipment


KEELLS TOURS (PVT) LIMITED.

Vehicle Hire charges 18,280

The Directors of the Company are : Mr. V. Lintotawela - Chairman, Mr. A.D. Gunewardene & Mr. G.S.A. Gunesekera.

MACKINNONS TOURS (PVT) LTD.



J.K. OFFICE AUTOMATION (PVT) LTD.

Maintenance Agreements 89,279

Sale of Consumables and Accessories 303,992

Printing 16,763

The Directors of the Company are : Mr. V. Lintotawela - Chairman, Mr. S.C. Ratnayake, Mr. A.D. Gunewardene &Mr. G.S.A. Gunasekera.

WHITTALL BOUSTEAD LTD.

Provides Office Space on Rent 49,764

The Directors of the Company are : Mr. V. Lintotawela - Chairman, Mr. S.C. Ratnayake, Mr. A.D. Gunewardene, Mr. G.S.A. Gunesekera & Ms. D.C. Alagaratnam.

NAMUNUKULA PLANTATIONS LTD.

Earned Brokerage on teas sold (4,298,975)

Earned Lot Money on teas sold (160,762)

Earned Store Rent on teas sold (3,159,954)

The Directors of the Company are : Mr. V. Lintotawela - Chairman, Mr. S.C. Ratnayake, Mr. G.S.A. Gunesekera &Mr. L.D. Ramanayake.


(RECEIVED)(RS.)

CEYLON HOLIDAY RESORTS LTD.

Fee for hire of Generator (246,000)


MACKINNON EXPRESS TRAVELS LTD.

Air Passage and related charges 104,546

The Directors of the Company are : Mr. V. Lintotawela - Chairman.

TEA SMALLHOLDERS FACTORIES LTD.

Earned Brokerage, Lot Money and (15,434,962)

Store Rent on teas sold

The Directors of the Company are : Mr. V. Lintotawela - Chairman, Mr. S.C. Ratnayake, Mr. G.S.A. Gunesekera &Mr. V.A.A. Perera.

JAYKAY MARKETING SERVICES (PVT) LTD.

Consumables 890,111


NATIONS TRUST BANK

Lends funds temporarily for which Interest is paid at cost 224,437


34. EVENTS OCCURRING AFTER THE BALANCE SHEET DATE

The Board of Directors at a meeting held on 11th May, 2005 proposed a First and Final Dividend of 50% forthe year and a Scrip Issue of one additional share for every share held.

In accordance with the Sri Lanka Accounting Standard No.12 (Revised 2003) - Events Occurring After theBalance Sheet Date, the proposed dividend is not reflected as a liability in the current year.

Except for the above, there have been no material events occurring after the Balance Sheet date that requireadjustment to or disclosure in the Financial Statements.

35. RELATED PARTY TRANSACTIONS

35.1 There are no related parties and related party transactions other than those disclosed in Note 33 above.

35.2 The amounts receivable from or payable to above related parties as at 31st March, 2005 and 2004 aredisclosed in Note Nos. 16.1, 17 and 28.

36. PRICING POLICIES

Sales and purchases of goods and/or services to related parties were made at normal trading terms on an arm’slength basis.




COMPANY

2001 2002 2003 2004 2005

Rs.000's Rs.000's Rs.000's Rs.000's Rs.000’s

VALUE ADDED

Gross Turnover 262,804 259,619 202,805 272,868 311,808

Other Income 25,623 14,975 14,575 12,369 160,955

288,427 274,594 217,380 285,237 472,763

Cost of Materials and Services purchased (106,006) (104,256) (27,074) (75,527) (55,132)

182,421 170,338 190,306 209,710 417,631

% SHARE % SHARE % SHARE % SHARE % SHARE

DISTRIBUTION OF VALUE ADDED

To Employees as Remuneration 35 64,228 38 64,642 38 72,499 39 80,921 23 95,499

To Government (see below) 12 22,474 14 24,298 13 24,295 10 20,882 8 35,407

To Lenders of Capital

- Interest on borrowings 9 16,959 7 12,547 3 4,876 10 20,387 2 9,744

- Minority Interest - - - - - - - - - -

To Shareholders as Dividends 21 37,470 22 37,841 6 10,545 13 26,600 9 37,121

Retained in the Business 23 41,290 19 31,010 40 78,091 29 60,920 58 239,860

100 182,421 100 170,338 100 190,306 100 209,710 100 417,631

The Statement of Value Added shows the wealth, the Company and the Group have been able to create on its own and its employees

efforts. It also explains how Value Added has been distributed.

REVENUE TO GOVERNMENT

Turnover Tax / GST / NSL / VAT 129 583 373 444 240

Rates and Taxes 3,062 3,123 1,590 2,955 3,562

Income Tax 19,283 20,592 22,332 17,483 31,605

Total 22,474 24,298 24,295 20,882 35,407

STATEMENT OF VALUE ADDED


Distribution of Value Added

43%

Employees as Remuneration

27%

14%

8%8%

GovernmentLenders of CapitalShareholders as DividendsRetained in Business

Revenue to Government

Turnover Tax/Vat

1%

98%

Rates and TaxesIncome Tax

1%

CONSOLIDATED

2001 2002 2003 2004 2005


279,765 299,799 331,728 574,871 517,462

24,034 13,487 11,991 15,943 55,208

303,799 313,286 343,719 590,814 572,670

(109,691) (126,081) (113,475) (175,444) (79,390)

194,108 187,205 230,244 415,370 493,280

% SHARE % SHARE % SHARE % SHARE % SHARE

38 73,642 40 74,074 39 89,416 28 115,923 27 131,922

12 22,474 16 30,423 15 34,232 18 75,183 14 70,813

8 15,085 6 10,763 5 10,854 11 45,372 6 31,570

- (175) 1 1,936 2 4,323 7 27,281 2 9,950

19 37,470 20 37,841 4 10,545 6 26,600 8 37,121

23 45,612 17 32,168 35 80,874 30 125,011 43 211,904

100 194,108 100 187,205 100 230,244 100 415,370 100 493,280

129 583 373 444 240

3,062 3,123 1,590 2,955 3,562

19,283 26,717 32,269 71,784 67,011

22,474 30,423 34,232 75,183 70,813

STATEMENT OF VALUE ADDED


INFORMATION TO SHAREHOLDERS AND INVESTORS

1. STOCK EXCHANGE LISTING

The issued ordinary shares of John Keells Limited are listed with the Colombo Stock Exchange of Sri Lanka

The Audited Accounts of the Company and the Consolidated Accounts for the year ended 31st March, 2005 have

been submitted to the Colombo Stock Exchange.

2. DISTRIBUTION OF SHAREHOLDINGS

31st March 2005 31st March 2004

No. of Shares held Shareholders Holdings Shareholders Holdings

Number % Number % Number % Number %

Less than 1,000 381 73.98 119,075 1.56 335 72.51 104,719 1.38

1,001 - 5,000 85 16.50 174,195 2.29 83 17.97 172,423 2.27

5,001 - 10,000 23 4.47 156,518 2.06 18 3.90 120,660 1.59

10,001 - 50,000 20 3.88 430,060 5.66 20 4.33 484,902 6.37

50,001 - 100,000 2 0.39 113,698 1.50 2 0.43 113,698 1.50

100,001 - 500,000 2 0.39 830,756 10.93 2 0.43 827,900 10.89

500,001 - 1,000,000 - - - - - - - -

over 1,000,000 2 0.39 5,775,698 76.00 2 0.43 5,775,698 76.00

Total 515 100.00 7,600,000 100.00 462 100.00 7,600,000 100.00

Earnings Per Share (Rs.)

6.81

6.10

5.81

16.6

0

23.5

3

0

5

10

15

20

25

2001 2002 2003 2004 2005

Dividend Per Share (Rs.)

4.93 4.98

4.89 5.

00

5.00

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2001 2002 2003 2004 2005

Net Assets Per Share (Rs.)

2001 2002 2003 2004 2005

78.9

2

80.0

4

82.0

5

95.0

7

123.

76

0

20

40

60

80

100

120

140

Market Price Per Share (Rs.)

37.0

0

57.0

0

62.0

0

130.

00

145.

00

0

20

40

60

80

100

120

140

160

2001 2002 2003 2004 2005


3. ANALYSIS OF SHAREHOLDERS

31st March 2005 31st March 2004

Categories of Shareholders Holdings Shareholders Holdings

Shareholders Number % Number % Number % Number %

Individuals 455 88.35 697,151 9.17 409 88.53 1,154,785 15.19

Institutions 60 11.65 6,902,849 90.83 53 11.47 6,445,215 84.81

Total 515 100.00 7,600,000 100.00 462 100.00 7,600,000 100.00

Residents 506 98.25 7,561,002 99.49 454 98.27 7,561,102 99.49

Non Residents 9 1.75 38,998 0.51 8 1.73 38,898 0.51

Total 515 100.00 7,600,000 100.00 462 100.00 7,600,000 100.00

John Keells Holdings

and Subsidiaries 2 0.39 5,775,698 76.00 2 0.43 5,775,698 76.00

Public 513 99.61 1,824,302 24.00 460 99.57 1,824,302 24.00

Total 515 100.00 1,824,302 100.00 462 100.00 7,600,000 100.00

4. MARKET VALUE PER SHARE

The market value of a share of John Keells Limited as at 31st March, 2005 as quoted by the Colombo Stock Exchange

was Rs. 145/- (2004 - Rs. 130/-). The highest and lowest values recorded during this twelve month period was Rs.

160/- on 16th August 2004 (2004 - Rs. 195/-) and Rs. 121.50 on 27th July, 2004 (2004 - Rs. 65/-) respectively. The

value as at 26th May, 2005 was Rs. 187.50.

5. DIVIDEND PAYMENTSFinal Dividend - 50% Proposed for payment on 29th June, 2005 (2003/2004 - 50%).

6. TOP TWENTY SHAREHOLDERS

As at 31st March, 2005 As at 31st March, 2004

NAME OF SHAREHOLDER NO. OF HOLDING NO. OF HOLDING

SHARES % SHARES %

John Keells Holdings Ltd. 4,354,270 57.29 4,354,270 57.29

Mackinnon & Keells Financial Services Ltd. 1,421,428 18.70 1,421,428 18.70

Ceylon Investment Company Ltd. 456,700 6.01 456,700 6.01

Ceylon Guardian Investment Trust Ltd. 374,056 4.92 371,200 4.88

Lee Hedges & Co. Ltd. 57,142 0.75 57,142 0.75

Bhadra Investments Ltd. 56,556 0.74 56,556 0.74

The Roman Catholic Archbishop of Colombo 42,854 0.56 42,854 0.56

H.S.D. Soysa 40,014 0.53 40,014 0.53

H.G.S. Ansell 36,140 0.48 36,140 0.48

J.B. Cocoshell (Pvt) Ltd. 29,500 0.39 29,500 0.39

M. Radhakrishnan 29,100 0.38 29,100 0.38

Eric Rajapakse and Company Ltd. 28,142 0.37 28,142 0.37

M.L. De silva 25,984 0.34 25,984 0.34

Waldock Mackenzie Ltd./Mrs. G. Soysa 21,770 0.29 21,770 0.29

N. Tirimanne 20,000 0.26 20,000 0.26

H.L.A. Gunawardene - - 19,886 0.26

R. Senathirajah 18,600 0.24 - -

G. Goysa 17,884 0.24 17,884 0.24

H.P.N. Soysa - - 16,570 0.22

J.A.P. Mirando 16,000 0.21 - 0.21

L.S.I. Perera 15,800 0.21 28,300 0.38

A.L. Ganwani 14,300 0.19 49,714 0.65

7,076,240 93.10 7,123,154 93.72

INFORMATION TO SHAREHOLDERS AND INVESTORS


FIVE YEAR SUMMARY

COMPANY

For the year ended 31st March 2001 2002 2003 2004 2005


TRADING RESULTS

Gross Revenue 262,804 259,619 202,805 272,868 311.808

Operating Profit 50,399 52,684 50,678 45,376 86,810

Other Income 25,623 14,975 14,575 12,369 160,955

Share of Associate Company Profits - - - - -

Amortisation of Negative Goodwill - - - - -

Profit before Taxation 76,022 67,659 65,253 57,745 247,765

Taxation based thereon (26,216) (21,196) (17,769) (13,561) (26,391)

Profit after Taxation 49,806 46,463 47,484 44,184 221,374

Minority Interest - - - - -

Profit attributable to John Keells Ltd. 49,806 46,463 47,484 44,184 221,374

SHARE CAPITAL AND RESERVES

Paid-up Capital 76,000 76,000 76,000 76,000 76,000

Capital Reserves 310,626 310,626 292,333 292,333 292,333

Revenue Reserves 182,820 191,442 228,381 245,964 430,217

Shareholders' Funds 569,446 578,068 596,714 614,297 798,550

Minority Interest - - - - -

569,446 578,068 596,714 614,297 798,550

ASSETS LESS LIABILITIES

Current Assets 277,322 287,911 391,827 273,220 521,471

Current Liabilities (264,401) (239,899) (302,504) (231,161) (292,938)

Net Current Assets/(Liabilities) 12,921 48,012 89,323 42,059 228,533

Fixed Assets and Investments 598,279 576,447 552,808 613,313 611,927

Long Term Liabilities - - - - -

Negative Goodwill on Consolidation - - - - -

Deferred Liabilities (41,754) (46,391) (45,417) (41,075) (41,910)

569,446 578,068 596,714 614,297 798,550

RATIOS AND STATISTICS

Earnings per share (Rs.) ** 6.55 6.11 6.25 5.81 29.13

Net Assets per share at year end (Rs.) ** 74.93 76.06 78.52 80.83 105.07

Market Price per share (Rs.) 37.00 57.00 62.00 130.00 145.00

Price-Earnings Ratio (Times) 5.65 9.33 9.92 22.38 4.98

Effective rate of Dividend (%) 50.00 50.00 50.00 50.00 50.00

Dividend per share (Rs.) 4.93 4.98 4.89 5.00 5.00

Dividend (Rs.000's) 37,470 37,841 37,145 38,000 38,000

Dividend Cover (Times) 1.31 1.22 1.28 1.16 5.83

Annual Turnover Growth (%) 24.47 (1.21) (21.9) 34.55 14.27

Current Ratio (Times) 1.05 1.20 1.29 1.18 1.78

Turnover per employee (Rs.000's) 1,327 1,345 1,045 1,760 2,165

Value added per employee (Rs.000's) 921 897 981 1,335 2,900

Note:

** Earnings per share, Net Assets per share and Price Earnings Ratio are based on 7,600,000 shares in issue

as at 31st March, 2005.


Revenue/Profit before Taxation (Rs. 000's)

Revenue Profit

79,2

92

76,0

59

77,3

90

223,

616

252,

827

279,

765

299,

799

331,

790

574,

845

517,

446

0

100,000

200,000

300,000

400,000

500,000

600,000

2001 2002 2003 2004 2005

Quoted Investments (Rs. 000's)

Book Value Market Value

37,3

50 40,9

09

59,8

31

74,3

27

18,2

02

25,4

09

24,3

90

24,3

90

24,3

90

11,3

04

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

2001 2002 2003 2004 2005

Growth in Shareholders' Funds (Rs. 000's)

76,0

00

76,0

00

76,0

00

76,0

00

76,0

00

523,

773

532,

304

547,

604

646,

580

864,

546

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

2001 2002 2003 2004 2005

Reserves Capital

CONSOLIDATED

2001 2002 2003 2004 2005


279,765 299,799 331,790 574,871 517,462

47,251 65,023 63,603 202,720 196,693

24,034 13,487 11,991 15,943 55,208

7,741 (2,717) 1,530 4,687 660

266 266 266 266 266

79,292 76,059 77,390 223,616 252,827

(27,734) (27,749) (28,931) (70,189) (64,063)

51,558 48,310 48,459 153,427 188,764

175 (1,936) (4,323) (27,281) (9,950)

51,733 46,374 44,136 126,146 178,814

76,000 76,000 76,000 76,000 76,000

310,626 310,626 292,333 292,333 360,848

213,147 221,678 255,271 354,247 503,698

599,773 608,304 623,604 722,580 940,546

4,072 4,208 7,631 33,112 19,062

603,845 612,512 631,235 755,692 959,608

295,134 1,275,137 489,479 638,968 779,045

(269,922) (1,207,557) (411,356) (480,809) (504,665)

25,212 67,580 78,123 158,159 274,380

626,706 597,657 693,951 734,078 821,905

- - (88,085) (85,984) (83,369)

(4,517) (4,251) (3,985) (3,719) (3,453)

(43,556) (48,474) (48,769) (46,842) (49,855)

603,845 612,512 631,235 755,692 959,608

6.81 6.10 5.81 16.60 23.53

78.92 80.04 82,05 95.07 123.76

37.00 57.00 62.00 130.00 145.00

5.43 9.34 10.67 7.83 6.16

50.00 50.00 50.00 50.00 50.00

4.93 4.98 4.89 5.00 5.00

37,470 37,841 37,145 38,000 38,000

1.36 1.21 1.30 3.32 4.71

13.15 7.16 10.66 73.26 (9.99)

1.11 1.06 1.19 1.33 1.33

1,289 1,414 1,536 3,124 2,974

895 883 1,062 2,244 2,835

Note:

All figures in Rs. 000's unless otherwise stated.

F IVE YEAR SUMMARY


GLOSSARY OF FINANCIAL TERMINOLOGY

APPROPRIATIONS

Apportioning of annual earnings for committed outflows.

CAPITAL RESERVES

Reserves identified for specific purposes and considerednot available for distribution. It also consists ofRevaluation Reserves arising from revaluation ofproperties owned by the Company and the Group.

CASH EQUIVALENTS

Liquid Investments with original maturities of threemonths or less.

CONTINGENT LIABILITIES

Conditions or situations at the Balance Sheet date, thefinancial effects of which are to be determined byfuture events which may or may not occur.

CURRENT RATIO

Current Assets divided by Current Liabilities.

DIVIDEND COVER

Profit after Tax divided by Gross Dividends. This ratiomeasures the number of times dividend is covered bycurrent year’s Distributable Profits.

DIVIDEND PER SHARE

Dividends Paid and Proposed divided by the Number ofShares in issue which ranked for those dividends.

DIVIDEND YIELD

Dividend per share divided by the Market Price perShare

EARNINGS PER SHARE

Profits attributable to ordinary Shareholders beforeExtraordinary Items divided by the number of OrdinaryShares in issue and ranking for dividend.

GROSS DIVIDENDS

The portion of profits inclusive of tax withhelddistributed to shareholders.

MARKET CAPITALISATION

The Market Value of a company at a given dateobtained by multiplying the Share Price by the numberof issued shares.

NET ASSETS

Sum of Fixed Assets and Current Assets less CurrentLiabilities.

NET ASSETS PER SHARE

Net Assets at the end of the period divided by thenumber of Shares in issue.

PRICE EARNINGS RATIO

Market Price of a share divided by Earnings per Share

PROFIT PER EMPLOYEE

Profit before Tax divided by the number of Employees.

RELATED PARTIES

Parties who could control or significantly influence thefinancial and operating policies of the business.

RETURN ON CAPITAL EMPLOYED

Profit before Interest and tax divided by Net Assets.

REVENUE RESERVES

Reserves considered as being available for distributionand investments.

SEGMENT

Constituent business units grouped in terms of natureand similarity of operations.

SHAREHOLDERS’ FUNDS

Funds attributable to shareholders and comprises ShareCapital, Reserves and Retained Profit.

TURNOVER PER EMPLOYEES

Consolidated Turnover of the Company for the yeardivided by the number of Employees employed at yearend.

VALUE ADDITION

The quantum of wealth generated by the activities ofthe Group and its application.

WORKING CAPITAL

Capital required to finance the day-to-day operationsCurrent Assets minus Current Liabilities.


FORM OF PROXY

I/We……………...............………………………………………………...................……………….…………................

of…………………………………………………………............…..................................……............….....……..........

being a member/members of John Keells Limited hereby appoint ………………………..........................……………

………………………………………………………………………………………............................………………………

of ……………………………………………………………................………… failing him/her

Mr. Vivendra Lintotawela of Colombo, failing him

Mr. Susantha Chaminda Ratnayake of Colombo, failing him

Mr. Ajit Damon Gunewardene of Colombo, failing him

Mr. Gerard Sumithra Abeywardane Gunesekera of Colombo, failing him

Mr. Lallith Devakumar Ramanayake of Colombo, failing him

Ms. Dilani Champika Alagaratnam of Colombo, failing her

Mr. Sunil Noel Dharmaratna of Colombo, failing him

Mr. Surendra Ashok Jayewickreme of Colombo, failing him

Mr. Sudath Chandima Munasinghe of Colombo, failing him

Mr. Vithanage Augustine Anil Perera of Colombo, failing him

Mr. Magamage Felix Sriyan Perera Senadhira of Colombo, failing him

as my/our proxy to vote for me/us on my/our behalf at the Fifty Eighth Annual General Meeting of the Company

to be held on Wednesday, 29th June, 2005 and at every poll which may be taken on consequence of the aforesaid

meeting and at any adjournment thereof.

I/We the undersigned, hereby direct my/our proxy to vote for me/us and on my/our behalf on the Specified

Resolution as indicated by the letter “X” in the appropriate cage :

FOR AGAINST

SPECIAL RESOLUTION

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

………………………………..

Signature of Shareholder

Note:

(1) A proxy need not be a member of the Group.

(2) Instructions regarding completion appear on the reverse hereof.


INSTRUCTIONS AS TO COMPLETION

(1) To be valid, the form of proxy must be deposited at the Registered Office of the Company, 130, GlennieStreet, Colombo 2, not less than 48 hours before the time appointed for holding the meeting.

(2) In perfecting the form of proxy, please ensure that all details are legible, sign in the space provided and fill inthe date of signature.

(3) If you wish to appoint a person other than the Directors as your proxy, please insert the relevant details inthe space provided overleaf and initial against this entry.

(4) In the case of a company or body corporate, the proxy must be executed under its common seal whichshould be affixed and attested in the manner prescribed by its Articles and Association of Constitution.

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