FINANCIAL STATEMENTS

1.1 General

The Overseas School of Colombo (Guarantee) Limited is a Company limited by guarantee, which incorporated and domiciled in Sri Lanka. The registered office and the principal place of business of the Company is located at No. 325, Pannipitiya Road, Battaramulla, Sri Lanka.

1.1 Principal Activities and Nature of Operations

The principal activity for which the Company was established is to carry on the educational services.

1.2 Date of Authorisation for Issue

The Financial Statements of The Overseas School of Colombo (Guarantee) Limited for the year ended 31 July 2022 were authorised for issue by the Board of Directors on 26 November 2022.

The Financial Statements of The Overseas School of Colombo (Guarantee) Limited have been prepared in accordance with

Sri Lanka Accounting Standard for Small and Medium sized Entities

(SLFRS for SMEs) issued by The Institute of Chartered Accounts of Sri Lanka.

2.1 Statement of Compliance

The Financial Statements have been prepared on a historical cost basis. The Financial Statements are presented in Sri Lankan Rupees. The preparation and presentation of these Financial Statements is in compliance with the Companies Act No. 07 of 2007.

2.1.1 Going Concern

The Directors have made an assessment of the Company’s ability to continue as a going concern and they do not intend either to liquidate or to cease the operation.

Having presented the outlook and after due consideration of the range and likelihood of outcomes, the Directors are satisfied that the Company, has adequate resources to continue in operational existence for the foreseeable future and continue to adopt the going concern basis in preparing and presenting theses Financial Statements

2.1.2 Comparative Information

The accounting policies have been consistently applied by the Company are consistent with those used in previously.

2.1.3 Presentation and Functional Currency

The Financial Statements are prepared in Sri Lanka Rupees, the Company’s functional and presentation currency, which is the primary economic environment in which the Company operates.

2.2 Significant Accounting Judgments, Estimates and Assumptions

2.2.1 Critical Judgments in Applying the Accounting Policies

In the process of applying the Company’s accounting policies, Management has made the following judgements, which have the most significant effect on the amounts recognised in the Financial Statements.

(a) Deferred Taxation

Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax that can be recognised based upon the likely timing and the levels of future taxable profits together with future tax planning strategies.

(b) Allowance for Doubtful Debts

The Company reviews at each date of the Statement of Financial Position all receivables to assess whether an allowance should be recorded in the profit or loss. The Management uses judgement in estimating such amounts in the light of the duration of outstanding and any other factors management in aware of that indicate uncertainty in recovery.

2.2.2 Estimates and Assumptions

The key assumptions concerning the future and other key sources of estimation of uncertainty at the reporting date, that have a significant risk of causing material adjustments to the carrying amounts of assets and liabilities within the next financial year are discussed below.

The Company based its assumptions and estimates on parameters available when the Financial Statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

(a) Defined Benefit Plans

The cost as well as the present value of the defined benefit plan, gratuity is determined using actuarial valuations. The actuarial valuation involves making assumptions about discount rates, future salary increases and other important related data. Due to the long term nature of employee benefits, such estimates are subject to significant uncertainty. Further details of assumptions are given in Note 12.

(b) Useful Lives of Property, Plant and Equipment

The Company reviews the assets’ residual values, useful lives and methods of depreciation or amortisation at each reporting date; judgement by management is exercised in the estimation of these values, rates and methods.

2.3 Summary of Significant Accounting Policies

2.3.1 Foreign Currency Translation

The Financial Statements are presented in Sri Lanka Rupees, which is the Company’s functional and presentation currency. Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the date of the Statement of Financial Position. All differences are taken to profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

2.3.2 Taxation

Current Taxes

Income tax is measured at the amounts expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amounts are those that are enacted or substantively enacted by the balance sheet date.

The provision for income tax is based on the elements of income and expenditure as reported in the Financial Statements and computed in accordance with the provisions of the Inland Revenue Act.

Deferred Taxation

Deferred income tax is provided, using the liability method, on temporary differences at the date of the Statement of Financial Position between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised.

The carrying amount of deferred income tax assets is reviewed at each date of the Statement of Financial Position and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the date of the Statement of Financial Position.

Sales Tax

Revenues, expenses and assets are recognised net of the amount of sales tax except where the sales tax incurred on a purchase of assets or service is not recoverable from the taxation authorities in which case the sales tax is recognised as a part of the cost of the asset or part of the expense items as applicable and receivable and payable that are stated with the amount of sales tax included. The amount of sales tax recoverable and payable in respect of taxation authorities is included as a part of receivables and payables in the Statement of Financial Position.

2.3.3 Borrowing Costs

Borrowing costs are recognised as an expense in the period in which they are incurred.

2.3.4 Intangible Assets

All computer software cost incurred, licensed for use by the Company which is not integrally related to the associate hardware, can be clearly identified, reliably measured and it is probable that they will lead to future economic benefits are included in the statement of financial position under the category intangible assets and carried at the cost less accumulated amortisation and accumulated impairment losses if any.

Expenditure incurred on intangible assets is capitalised only when it future economic benefits embodied in the specific assets to which it relates.

All other expenditure is expensed as incurred.

Intangible assets are amortised on a straight-line basis over a period of 3 years in the Statements of the Comprehensive Income from the date when the asset is available for use, over the best estimate of its useful economic life. The amortisation period and the amortisation method for intangible assets are reviewed at least at each financial year end.

2.3.5 Receivables

Receivables are stated at the amounts they are estimated to realise net of provisions for doubtful receivables.

2.3.6 Cash and Cash Equivalents

Cash and short term deposits are cash in hand, demand deposits and short-term highly liquid investments, readily convertible to known amounts of cash and subject to insignificant risk of changes in value.

For the purpose of cash flow statement, cash and cash equivalents consist of cash in hand and deposits in banks net of outstanding bank overdrafts. Investments with short maturities i.e. three months or less from the date of acquisition are also treated as cash equivalents.

2.3.7 Property, Plant and Equipment

Property, plant and equipment except for freehold land and buildings are stated at cost, excluding the costs of day to day servicing, less accumulated depreciation and accumulated impairment in value. Such cost includes the cost of replacing part of the plant and equipment when that cost is incurred, if the recognition criteria are met.

Revaluation of land and buildings are carried out with sufficient frequency to ensure that the fair value of the land does not materially differ from its carrying amount and professionally qualified valuer undertakes it.

Depreciation is calculated on a straight-line basis over the useful life of the assets.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognising of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Comprehensive Income in the year the asset is derecognised.

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

2.3.8 Leasehold Rights

Leasehold rights represent a contract in which the right of use of a land is conveyed for a period of a time in exchange for consideration. At the date of commencement of a lease, the lessee recognised in the statement of financial position as right-of-use of land and a liability to make lease payments. Lease hold rights are amortised over the remaining leased period.

2.3.9 Short-term Investments

Short-term Investments comprise investments in fixed deposits and are initially measured at transaction cost.

2.3.10 Project Funds

Project funds wholly consist of funds collected by the pupils and teachers of the school for varies social activities and projects which are maintained by the school, for administrative purposes of collection, retention and disbursement as required by the projects.

2.3.11 Employee Benefits

(a) Defined Benefit Plan – Gratuity

Defined benefit plan is a Post-employment benefit plan other than a defined contribution plan. The company’s obligation in respect of defined benefit plans is calculated by estimating the amount of future benefits that employees have earned in return for their service in the current and prior periods. The benefit is discounted to determine its
present value.

The discounted rate is yield at the reporting date on Government Bonds that have maturity dates approximating to the terms of the Company’s obligations. The calculation is performed by a qualified actuary using the project Unit Credit Method.

However, under the payment of Gratuity Act No. 12 of 1983, liability to an employee arises only on completion of five years of continual service.

The liability is not externally funded.

(b) Defined Contribution Plans – Employees’ Provident Fund and Employees’ Trust Fund

Employees are eligible for Employees’ Fund Contributions and Employees’ Trust Fund Contributions in line with the respective statutes and regulations. The Company contributes 12 % and 3% of gross emoluments of employees to Employees’ Provident Fund and Employees’ Trust Fund respectively.

2.3.12 Impairment of Non-Financial Assets

The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

Impairment losses of continuing operations are recognised in the statement of profit or loss and other comprehensive income in those expense categories consistent with the function of the impaired asset. For assets, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased.

If such indication exists, the Company makes an estimate of recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised.

If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement of profit or loss and other comprehensive income.

2.3.13 Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue and associated costs incurred 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) Tuition Fee Income

The main source of revenue for the Company is tuition fee which is recognised on accrual basis for each semester.

(b) Interest

Interest income is recognised on an accrual basis.

(c) Others

Other income is recognised on an accrual basis.

Net gains and losses of a revenue nature on the disposal of property, plant and equipment are accounted for in the Income Statement, having deducted from proceeds on disposal, the carrying amount of the assets and related selling expenses.

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.

2.3.14 Expenditure Recognition

(a) Expenses in carrying out the School and other activities of the Company are recognised in the Statement of Comprehensive Income during the year in which they are incurred. Other expenses incurred in administering and running the Trust and in restoring and maintaining the property, plant and equipment to perform at expected levels are accounted for on an accrual basis and charged to the Statement of Comprehensive Income.

(b) For the purpose of presentation of the Statement of Comprehensive Income, the Management is of the opinion that the function of expenses method, presents fairly the elements of the Company’s performance, and hence such a presentation method is adopted.

3.1 Gross Carrying Amounts

	Balance as at 1.8.2021 LKR	Additions during the year LKR	Increase in revaluation LKR	Disposal/ transfers/ adjustments during the year LKR	Balance as at 31.7.2022 LKR
At valuation
Freehold land	401,871,000	–	136,719,000	–	538,590,000
Buildings on freehold land	372,210,000	–	102,357,751	(9,305,250)	465,262,501
Buildings on leasehold land	1,046,649,000	–	279,263,725	(26,166,225)	1,299,746,500
	1,820,730,000	–	518,340,476	(35,471,475)	2,303,599,001
At cost
Plant and machinery	153,983,794	6,718,291	–	(3,344,173)	157,357,912
Computer equipment	166,801,125	16,079,372	–	(1,440,551)	181,439,948
Furniture and fittings	90,561,070	38,409,025	–	(1,118,488)	127,851,606
Motor vehicles	50,054,019	–	–	–	50,054,019
	461,400,008	61,206,689	–	(5,903,212)	516,703,485
Assets under construction
Buildings	16,369,854	808,713	–	–	17,178,567
	16,369,854	808,713	–	–	17,178,567
	2,298,499,862	62,015,402	518,340,476	(41,374,687)	2,837,481,053

3.2 Accumulated Depreciation

	Balance as at 1.8.2021 LKR	Charge for the year LKR	Disposal/ transfers during the year LKR	Balance as at 31.7.2022 LKR
At valuation
Buildings on freehold land	–	9,305,250	(9,305,250)	–
Buildings on leasehold land	–	26,166,225	(26,166,225)	–
	–	35,471,475	(35,471,475)	–

	Balance as at 1.8.2021 LKR	Charge for the year LKR	Disposal During the year LKR	Balance as at 31.7.2022 LKR
At cost
Plant and machinery	136,392,742	8,573,776	(3,127,673)	141,838,845
Computer equipment	151,508,901	15,634,240	(965,408)	166,177,733
Furniture and fittings	61,590,628	9,057,953	(576,972)	70,071,609
Motor vehicles	41,126,333	4,854,420	–	45,980,753
	390,618,604	38,120,389	(4,670,053)	424,068,940
	390,618,604	73,591,864	(40,141,528)	424,068,940

3.3 Net Book Value

	2022 LKR	2021 LKR
At valuation
Freehold land	538,590,000	401,871,000
Buildings on freehold land	465,262,501	372,210,000
Buildings on leasehold land	1,299,746,500	1,046,649,000
	2,303,599,001	1,820,730,000
At cost
Plant and machinery	15,519,067	17,591,052
Computer equipment	15,262,215	15,292,225
Furniture and fittings	57,779,997	28,970,441
Motor vehicles	4,073,266	8,927,686
	92,634,545	70,781,404
	2,396,233,546	1,891,511,405

3.4 Assets Under Construction

Buildings	17,178,567	16,369,854
	17,178,567	16,369,854

3.5 During the financial year, the Company acquired property, plant and equipment to the aggregate value of LKR 62,015,402/- (2021 – LKR 48,568,600/-) of which Cash payments amounting to LKR 62,015,402/- (2021 – LKR 48,568,600/-) were made during year for purchase of property, plant and equipment.

3.6 The useful lives of the assets of the Company are estimated as follows:

	2022	2021
Buildings	40 years	40 years
Plant and machinery	4 years	4 years
Furniture and fittings	5 years	5 years
Computer equipment	3 years	3 years
Motor vehicles	6 2/3 years	6 2/3 years

3.7 Property, plant and equipment includes fully depreciated assets having a gross carrying amounts of LKR 344,175,223.13/- (2021 – LKR 252,914,298 /-).

Valuation of land and building were independently carried out by Mr Siri Nissanka, a Chartered and Incorporated valuer who has recent experience in valuaing properties of similar location and categories. Fair value of the properties was determine using the market comparable method. The valuations have been performed by the valuer and are based on proprietary data bases of process of transactions for properties of similar nature, location and condition.

Significant unobservable valuation input	Amount LKR
Price per perch	6,500,000
Price per sq. ft. – Buildings	10,500
Price per sq. ft. – Gymnasium	12,000
Price per sq. ft. – Auditorium	12,500

3.8 The carrying amounts for revalued land and buildings that would have been included in the Financial Statements has the asset been carried at cost is as follows:

Asset	Cost LKR	Accumulated depreciation LKR	Net book value LKR
Land	4,381,439	–	4,381,439
Building on freehold land	55,926,817	24,774,660	31,152,157
Building on leasehold land	348,880,467	102,377,288	246,503,179

Year ended 31 July 2022	2022 LKR	2021 LKR
Balance as at the beginning of the year	53,970,000	53,970,000
Additions during the year	–	–
Balance as at the end of the year	53,970,000	53,970,000
Accumulated depreciation
Balance as at the beginning of the year	15,238,583	14,603,642
Charge for the year	634,941	634,941
Balance as at the end of the year	15,873,524	15,238,583
Carrying amount as at end of the year	38,096,476	38,731,417

The Overseas School of Colombo entered into a 99 Year Land Lease agreement with the Urban Development Authority in 1983 for the purpose of erecting buildings for school use. A ground rent of LKR 1,103,700 was paid as ground lease rent in advance for 99 Years. The Company will pay LKR 500 as annual lease rental. Leasehold land was revalued in 1996/1997 by P.B Kalugalagedera, an independent professional valuer on current market value basis. The valuation amount of to LKR 52,866,300 was recognised in the Financial Statement and amortised over the lease period. No subsequent revaluation were carried out in relation to the lease hold right in accordance with the SoAT issued by CA Sri Lanka.

	2022 LKR	2021 LKR
Cost
Balance as at the beginning of the year	12,013,991	12,013,991
Additions during the year	–	–
Balance as at the end of the year	12,013,991	12,013,991
Accumulated amortisation
Balance as at the beginning of the year	11,749,097	9,762,180
Amortisation for the year	264,894	1,986,917
Balance as at the end of the year	12,013,991	11,749,097
Carrying amount as at end of the year	–	264,894

5.1 Usefull Life of Intangible Assets

	2022	2021
Computer software	3 years	3 years

	2022 LKR	2021 LKR
Trade receivables	203,390,966	17,672,202
Less: Provision for bad and doubtful debts	(13,293,660)	(13,293,660)
	190,097,305	4,378,541
Prepayments	141,016,250	152,215,475
Advances to suppliers	136,274,250	43,173,291
Deposits	43,420,046	32,200,423
Loans and advances to school staff	6,308,889	2,472,978
Other receivables	813,986	1,366,146
	517,930,725	235,806,854

	2022 LKR	2021 LKR
Investments	872,753,383	817,470,811
	872,753,383	817,470,811

	2022 LKR	2021 LKR
Favorable cash and cash equivalent balance
Cash at bank	1,170,184,913	615,666,845
	1,170,184,913	615,666,845
Unfavorable cash and cash equivalent balance
Cash at bank	(51,355,280)	(45,527,234)
Total cash and cash equivalents for the purpose of cash flow statement	1,118,829,633	570,139,611

	2022 LKR	2021 LKR
Defined benefit plan – Gratuity (Note 9.1)	150,527,333	135,660,310
Defined contribution plan – Expatriate pension payable (Note 9.4)	11,544,818	44,937,142
	162,072,151	180,597,452

9.1 Defined Benefit Plan – Gratuity

	2022 LKR	2021 LKR
Defined benefit plan as at the beginning of the year	135,660,310	152,410,295
Adjustments due to actual census	8,098,119	(4,604,143)
Actuarial (gains)/losses	24,324,401	(782,120)
Benefits paid during the year	(49,924,446)	(39,971,892)
Current service costs and interest (Note 9.2)	32,368,949	28,608,170
Defined benefit plan as at the end of the year	150,527,333	135,660,310

9.2 Expense on Defined Benefit Plan

	2022 LKR	2021 LKR
Current service cost	20,868,275	17,939,450
Interest cost	11,500,674	10,668,720
	32,368,949	28,608,170

9.3 Principle Assumptions

An Actuarial Valuation of the gratuity liability was carried out as at 31 July 2022 by Mr Piyal S Goonetilleke FSA, of Piyal S Goonetilleke and Associates.

The following are the principal actuarial assumptions at the reporting date.

		2022	2021
Normal retirement age		60 years	55 years
Rate of discount		23.35%	7.0%
Salary increment rate	Sri Lankan staff	12.0%	6.0%
	Expatriate staff	12.0%	6.0%

9.4 Defined Contribution Plan - Expatriate Pension Payable

	2022 LKR	2021 LKR
Defined contribution plan as at beginning of the year	44,937,142	8,570,484
Provision made during the year	54,781,671	37,174,765
Recovery made from salary	49,404,668	40,625,583
Payment made during the year	(137,578,663)	(41,433,689)
Defined contribution plan as at end of the year	11,544,818	44,937,142

	2022 LKR	2021 LKR
Balance as at the beginning of the year	22,062,730	22,036,384
Fund receipts/collection	1,493,996	2,519,385
Fund disbursements	(2,780,496)	(2,493,039)
Balance as at the end of the year	20,776,230	22,062,730

	2022 LKR	2021 LKR
Fees received in advance	91,254,468	143,903,051
Refundable deposits	20,646,226	18,621,226
Other creditors	70,584,681	22,561,065
Accrued expenses	4,790,534	9,301,063
Sundry creditors	19,333,484	20,514,490
Contractor retention	2,160,484	633,426
Other payables	2,376,760	1,053,179
	211,146,637	216,587,500

	2022 LKR	2021 LKR
Registration fees – Gross	157,449,607	143,654,345
Tuition fees – Gross	1,375,552,983	1,337,708,433
	1,533,002,590	1,481,362,777

	2022 LKR	2021 LKR
Wages and salaries – Expatriate	827,496,880	617,444,780
– Locals	218,693,867	193,203,010
In-service training	19,212,595	6,019,532
	1,065,403,342	816,667,322

	2022 LKR	2021 LKR
Staff expenses	261,710,486	239,228,810
Depreciation on property, plant and equipment	73,591,863	83,180,603
Senior, primary and preschool activities	50,161,132	39,232,353
Maintenance charges	67,568,595	109,980,429
Utilities, rent and rates, insurance	50,175,218	46,712,988
Stationery, computer, year book/publications and library books	53,607,147	53,074,294
Defined contribution plan	49,943,207	42,392,274
Expatriate pension provision	47,725,306	37,174,765
Defined benefit obligations	32,368,949	28,608,170
Local travelling expenses	25,797,131	10,676,137
Security charges	19,061,426	23,560,075
Physical education	1,897,607	4,637,190
Accreditation	1,101,864	2,462,324
Recruitment	9,225,598	3,988,199
Marketing expenses	16,690,444	12,781,156
Entertainment expenses	5,318,484	4,369,710
Board expenses	2,036,435	2,611,464
Provision for bad and doubtful debtors	–	1,116,855
Bank charges	8,389,856	1,707,690
Amortisation of computer software	264,894	1,986,917
Medical and other activities	582,687	355,536
Professional and consultancy fees	8,558,047	8,745,139
Office supplies and sundry expenses	563,793	310,172
Amortisation of lease hold land	634,941	634,941
Postage, courier and stamp duty	558,555	145,801
Professional fees – audit fee and other	443,750	402,322
Expenses for COVID-19	22,156,227	18,928,600
Withholding tax on foreign remittance	1,149,810	65,413
Campus renovations	124,575,557	–
Irrecoverable Economic Service Charge (ESC) written-off	17,571,324	–
	953,430,335	779,070,327

	2022 LKR	2021 LKR
Foreigh exchange gain	1,284,800,065	82,251,765
Interest income on fixed deposits	40,470,905	43,968,181
Interest income on saving accounts	7,098,932	7,817,802
	1,332,369,902	134,037,748

	2022 LKR	2021 LKR
Transport income	35,569,347	12,293,288
US grant income	28,417,655	93,032,962
Payable written back	–	4,935,415
Gain on disposal of property, plant and equipment	1,937,587	2,386,547
Other income	27,467	–
	65,952,056	112,648,213

	2022 LKR	2021 LKR
Current income tax
Current tax expense on ordinary activities for the year (Note 16.1)	1,060,235	379,555
Under/(over) provision of current taxes in respect of prior years	(192,951)	–
Deferred tax charge/(reversal) (Note 16.3)	123,199,842	(1,714,142)
	124,067,125	(1,334,587)

17.1 Reconciliation between Current Tax Expense and the Product of Accounting Profit Multiplied by the Statutory Tax Rate is as follows:

	2022 LKR	2021 LKR
Accounting profit	912,490,870	132,311,090
Aggregate disallowed items	133,408,507	120,361,820
Aggregate allowable expenses	(1,184,510,559)	(251,091,432)
Assessable income from business	(138,611,182)	1,581,478
Investment income	4,417,645	–
Total taxable income	(134,193,537)	1,581,478
Investment income	4,417,645	–
Current income tax expense on taxable income @ 24% (2021 – 24%)	1,060,235	379,555
	1,060,235	379,555

17.2 Deferred Tax Assets/Liabilities

Deferred tax assets, liabilities and income tax relates to the followings:

	Statement of Financial Position		Statement of Comprehensive Income
	2022 LKR	2021 LKR	2022 LKR	2021 LKR
Deferred tax liability
Property plant and equipment	5,640,290	33,157	5,607,133	2,830,403
Building – revaluation	(248,312,643)	(194,885,636)	(53,427,007)	(28,731,543)
Free hold land – revaluation	(74,558,400)	(55,417,740)	(19,140,660)	(9,860,340)
Unrealised exchange gain	(143,661,457)		(143,661,457)
	(460,892,210)	(250,270,219)	(210,621,991)	(35,761,480)
Deferred tax assets
Defined benefit plans	21,073,827	18,992,443	2,081,384	(2,344,998)
Unutilised income tax losses	26,529,278	9,217,027	17,312,251	871,021
Provision for doubtful debts	1,861,112	1,861,112	–	156,358
Contingency provision	–	–	–	(552,720)
	49,464,217	30,070,582	19,393,635	(1,870,339)
Deferred income tax income/(expense)			(191,228,356)	(37,631,819)
Net deferred tax assets/(liabilities)	(411,427,993)	(220,199,637)

17.3 Deferred Tax Liabilities

	2022 LKR	2021 LKR
Balance as at the beginning of the year	(220,199,637)	(182,567,818)
Reversal made from income statement during the year	(123,199,842)	1,714,142
Reversal made from OCI during the year – Actuarial gains losses	4,539,153	(754,077)
Charge made from OCI During the year – Property, plant and equipment revaluation	(72,567,667)	(38,591,884)
Balance as at the end of the year	(411,427,993)	(220,199,637)

17.4 Income Tax Movement

	2022 LKR	2021 LKR
Balance as at the beginning of the year	(15,524,146)	(15,903,701)
(Over) provision	(192,951)	–
Income tax expenses	1,060,235	–
Economic Service Charge (ESC) written-off	17,571,324	379,555
Balance as at the end of the year	2,914,462	(15,524,146)

The Company does not have significant commitment and contingencies as at 31 July 2022.

There have been no material events occurring after the end of the reporting date that require adjustments to or disclosure in the Financial Statements.

Transactions with Key Management Personnel of the Company

The Key Management Personnel of the Company are the members of its Board of Directors and Head of School.

Key Management Personnel Compensation

	2022 LKR	2021 LKR
Short-term employee benefits	58,183,673	40,802,820
Post employment benefits	6,375,638	4,696,386
	64,559,311	45,499,206