Financial Statements
Notes to the 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. 09, Pelawatte, Battaramulla, Sri Lanka.
1.2 Principal activities and nature of operations
The principal activity for which the Company was established is to carry on the educational services.
1.3 Date of authorisation for issue
The Financial Statements of The Overseas School of Colombo (Guarantee) Limited for the year ended 31 July 2020 were authorised for issue by the Board of Directors on 5 November 2020.
2. Basis of preparation
The Financial Statements of The Overseas School of Colombo (Guarantee) Limited have been prepared in accordance with Sri Lanka Accounting Standards 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
Due to the significant uncertainty arising from the COVID-19 pandemic, the Management has assessed the existing and anticipated effects of COVID-19 on the Company and the appropriateness of the use of the going concern basis. The Company evaluated the resilience of its businesses considering a wide range of factors, relating to expected revenue, cost management, profitability, ability to defer non-essential capital expenditure, debt repayment restatements, and the amount of undrawn borrowing facilities, and potential sources of financing facilities.
The Directors, after due consideration of the range and likelihood of outcomes are satisfied that the Company have adequate resources to continue in operational existence for the foreseeable future and continue to adopt the going concern basis in preparing and presenting these Financial Statements.
In determining the above significant management judgements, estimates and assumptions the impact of COVID-19 pandemic has considered as of reporting date.
The Directors have made an assessment of the Company’s ability to continue as a going concern and is satisfied that it has the resources to continue in business for the foreseeable future. Therefore, the Financial Statements continue t be prepared on going concern basis.
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 Lankan Rupees, the Company’s functional and presentation currency, which is the primary economic environment in which the Company operates.
2.2 Significant accounting judgements, estimates and assumptions
2.2.1 Critical judgements 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 Lankan 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 three years in the statements of 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. Leasehold 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 various 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’ Provident 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. Property, plant and equipment
3.1 Gross carrying amounts
Balance
as at 1.8.2019 LKR |
Additions
during the year LKR |
Increase in
revaluation LKR |
Disposal/
Transfers/
Adjustments during the year LKR |
Balance
as at 31.7.2020 LKR |
|
At valuation | |||||
Freehold land | 236,151,000 | – | 95,289,000 | – | 331,440,000 |
Buildings on freehold land | 292,184,849 | – | 42,804,151 | – | 334,989,000 |
Buildings on leasehold land | 692,816,000 | – | 216,947,500 | – | 909,763,500 |
1,221,151,849 | – | 355,040,651 | – | 1,576,192,500 | |
At cost | |||||
Plant and machinery | 137,341,830 | 3,193,568 | – | (69,001) | 140,466,397 |
Computer equipment | 147,047,295 | 22,017,468 | – | (3,033,566) | 166,031,198 |
Furniture and fittings | 61,956,085 | 1,589,277 | – | – | 63,545,361 |
Motor vehicles | 50,054,019 | – | – | – | 50,054,019 |
396,399,229 | 26,800,313 | – | (3,102,567) | 420,096,975 | |
Assets under construction | |||||
Buildings | 11,710,686 | 2,749,531 | – | – | 14,460,217 |
11,710,686 | 2,749,531 | – | – | 14,460,217 | |
1,629,261,764 | 29,549,844 | 355,040,651 | (3,102,567) | 2,010,749,692 |
3.2 Accumulated depreciation
Balance
as at 1.8.2019 LKR |
Charge for the year LKR |
Disposal/
Transfers
during the year LKR |
Balance as at
31.7.2020 LKR |
|
At valuation | ||||
Buildings on freehold land | 21,913,864 | 7,324,634 | (29,238,498) | – |
Buildings on leasehold land | 51,961,200 | 17,367,853 | (69,329,053) | – |
73,875,064 | 24,692,487 | (98,567,551) | – |
Balance as at 1.8.2019 LKR |
Charge for
the year LKR |
Disposal during the year LKR |
Balance as at
31.7.2020 LKR |
|
At cost | ||||
Plant and machinery | 107,376,819 | 14,955,634 | (19,566) | 122,312,887 |
Computer equipment | 100,493,516 | 30,990,873 | (3,033,566) | 128,450,823 |
Furniture and fittings | 53,282,118 | 3,464,849 | – | 56,746,967 |
Motor vehicles | 27,513,853 | 7,394,557 | – | 34,908,410 |
288,666,306 | 56,805,913 | (3,053,132) | 342,419,087 | |
362,541,370 | 81,498,400 | (101,620,683) | 342,419,087 |
3.3 Net book value
2020
LKR |
2019
LKR |
|
At valuation | ||
Freehold land | 331,440,000 | 236,151,000 |
Buildings on freehold land | 334,989,000 | 270,270,985 |
Buildings on leasehold land | 909,763,500 | 640,854,800 |
1,576,192,500 | 1,147,276,785 | |
At cost | ||
Plant and machinery | 18,153,510 | 29,965,011 |
Computer equipment | 37,580,375 | 46,553,779 |
Furniture and fittings | 6,798,394 | 8,673,967 |
Motor vehicles | 15,145,609 | 22,540,166 |
77,677,888 | 107,732,923 | |
1,653,870,388 | 1,255,009,709 |
3.4 Assets under construction
2020
LKR |
2019
LKR |
|
At valuation | ||
Buildings | 14,460,217 | 11,710,686 |
14,460,217 | 11,710,686 |
3.5
During the financial year, the Company acquired property, plant and equipment to the aggregate value of LKR 29,545,844/- (2019 – LKR 57,722,736/-) of which cash payments amounting to LKR 29,545,844/- (2019 – LKR 57,722,736/-) were made during the year for purchase of property, plant and equipment.
3.6
The useful lives of the assets of the Company are estimated as follows:
2020 | 2019 | |
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 25,668,888/- (2019 – LKR 24,334,205/-).
Valuation of land and building were independently carried out by Mr Siri Nissanka, a Chartered and incorporated Valuer who has recent experience in valuing properties of similar location and categories. Fair value of the properties was determined 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 | 4,000,000 |
Price per sq. ft. – Buildings | 7,500 |
Price per sq. ft. – Gymnasium | 8,000 |
Price per sq. ft. – Auditorium | 8,000 |
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 | 21,978,320 | 33,948,497 |
Building on leasehold land | 348,880,467 | 84,933,264 | 263,947,203 |
4. Leasehold rights – Land
2020
LKR |
2019
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 | 13,968,701 | 13,333,760 |
Charge for the year | 634,941 | 634,941 |
Balance as at the end of the year | 14,603,642 | 13,968,701 |
Carrying amount as at end of the year | 39,366,358 | 40,001,299 |
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 1996/97 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 Statements and amortised over the lease period. No subsequent revaluation were carried out in relation to the leasehold right in accordance with the SoAT issued by CA Sri Lanka.
5. Intangible assets
2020
LKR |
2019
LKR |
|
Cost | ||
Balance as at the beginning of the year | 12,013,991 | 6,052,643 |
Additions during the year | – | 5,961,348 |
Balance as at the end of the year | 12,013,991 | 12,013,991 |
Accumulated amortisation | ||
Balance as at the beginning of the year | 7,401,136 | 5,312,174 |
Amortisation for the year | 2,361,044 | 2,088,962 |
Balance as at the end of the year | 9,762,180 | 7,401,136 |
Carrying amount as at end of the year | 2,251,811 | 4,612,855 |
5.1 Useful life of intangible assets
2020 | 2019 | |
Computer software | 3 years | 3 years |
5.2
During the financial year, the Company has acquired Intangible assets to the aggregate value of LKR NIL (2019 – LKR 5,961,348/-) of which cash payments amounting to LKR NIL (2019 – LKR 5,961,348/-) were made during the year for purchase of intangible assets.
6. Receivables and prepayments
2020
LKR |
2019
LKR |
|
Trade receivables | 25,166,239 | 33,297,501 |
Less: Provision for bad and doubtful debts | (12,176,805) | (22,532,238) |
12,989,434 | 10,765,263 | |
Prepayments | 108,503,172 | 125,103,259 |
Advances to suppliers | 28,959,996 | 7,474,561 |
Deposits | 23,576,568 | 18,659,320 |
Loans and advances to school staff | 4,276,298 | 3,614,543 |
Interest receivable | – | 17,209,033 |
Other receivables | 990,536 | 291,480 |
179,296,003 | 183,117,458 |
7. Short-term investments
2020
LKR |
2019
LKR |
|
Investments | 886,195,827 | 996,665,535 |
886,195,827 | 996,665,535 |
8. Cash and cash equivalents in the cash flow statement
2020
LKR |
2019
LKR |
|
Favourable cash and cash equivalent balance | ||
Cash at bank | 261,065,209 | 127,950,979 |
261,065,209 | 127,950,979 | |
Unfavourable cash and cash equivalent balance | ||
Cash at bank | (22,166,400) | (33,999,274) |
Total cash and cash equivalents for the purpose of cash flow statement | 238,898,809 | 93,951,705 |
9. Post-employment benefit plan
2020
LKR |
2019
LKR |
|
Defined benefit plan – Gratuity (Note 9.1) | 152,410,295 | 111,019,006 |
Defined contribution plan – Expatriate pension payable (Note 9.2) | 8,570,484 | 14,813,960 |
160,980,779 | 125,832,966 |
9.1 Defined benefit plan – Gratuity
2020
LKR |
2019
LKR |
|
Defined benefit plan as at the beginning of the year | 111,019,007 | 105,636,541 |
Actuarial loss | 39,967,507 | 9,215,120 |
Benefits paid during the year | (28,988,066) | (27,594,004) |
Current service costs and interest | 30,411,847 | 23,761,349 |
Defined benefit plan as at the end of the year | 152,410,295 | 111,019,006 |
Expense on defined benefit plan | ||
Current service cost | 15,925,162 | 12,141,330 |
Interest cost | 14,486,685 | 11,620,019 |
30,411,847 | 23,761,349 |
Principle assumptions
An actuarial valuation of the gratuity liability was carried out as at 31 July 2020 by Mr Piyal S Goonetilleke FSA, of Piyal S Goonetilleke and Associates.
The following are the principle actuarial assumptions at the reporting date.
2020 | 2019 | ||
Normal retirement age | 55 years | 55 Years | |
Rate of discount | 7.0% | 11.0% | |
Salary increment rate | Sri Lankan staff | 6.0% | 5.3% |
Expatriate staff | 6.0% | 5.3% |
9.2 Defined contribution plan – Expatriate pension payable
2020
LKR |
2019
LKR |
|
Defined contribution plan as at beginning of the year | 14,813,961 | 13,690,978 |
Provision made during the year | 32,734,391 | 25,870,929 |
Recovery made from salary | 33,721,852 | 36,418,169 |
Payment made during the year | (72,699,720) | (61,166,116) |
Defined contribution plan as at end of the year | 8,570,484 | 14,813,961 |
10. Project funds
2020
LKR |
2019
LKR |
|
Balance as at the beginning of the year | 18,648,579 | 17,225,431 |
Fund receipts/collection | 7,182,202 | 6,362,448 |
Fund disbursements | (3,794,396) | (4,939,300) |
Balance as at the end of the year | 22,036,385 | 18,648,579 |
11. Payables
2020
LKR |
2019
LKR |
|
Fees received in advance | 50,763,746 | 169,191,344 |
Refundable deposits | 20,994,226 | 22,361,409 |
Other creditors | 9,976,935 | 29,149,693 |
Accrued expenses | 7,337,697 | 13,325,362 |
Sundry creditors | 3,315,563 | 11,022,105 |
Contractor retention | – | 2,692,956 |
Other payables | 1,240,588 | 1,588,945 |
NBT payables | – | 1,815,052 |
93,628,755 | 251,146,865 |
12. Income
2020
LKR |
2019
LKR |
|
Registration fees – Gross | 129,875,416 | 119,385,988 |
Tuition fees – Gross | 1,277,378,509 | 1,102,911,092 |
Income before indirect taxes | 1,407,253,925 | 1,222,297,080 |
Less: NBT | (12,905,308) | (24,436,359) |
1,394,348,617 | 1,197,860,721 |
13. Direct expenses
2020
LKR |
2019
LKR |
|
Wages and salaries - Expatriate | 556,605,145 | 545,263,446 |
- Locals | 199,752,964 | 204,292,760 |
In-service training | 21,033,986 | 25,960,481 |
777,392,095 | 775,516,687 |
14. Administrative expenses
2020
LKR |
2019
LKR |
|
Staff expenses | 172,435,526 | 166,002,903 |
Depreciation on property, plant and equipment | 81,498,400 | 81,658,904 |
Senior, primary and pre-school activities | 56,002,551 | 55,473,001 |
Maintenance charges | 48,140,670 | 50,411,693 |
Utilities, rent and rates, insurance | 45,048,426 | 48,965,582 |
Stationery, computer, year book/publications and library books | 42,539,665 | 51,737,521 |
Defined contribution plan | 41,233,172 | 40,687,475 |
Expatriate pension provision | 32,123,560 | 25,870,929 |
Defined benefit obligations | 30,411,847 | 23,761,349 |
Local travelling expenses | 26,574,494 | 21,295,705 |
Security charges | 15,239,215 | 10,517,989 |
Physical education | 10,427,241 | 8,454,543 |
Accreditation | 7,496,250 | 997,665 |
Recruitment | 7,339,171 | 8,862,079 |
Marketing expenses | 5,089,942 | 6,870,869 |
Entertainment expenses | 4,888,094 | 4,298,039 |
Board expenses | 3,355,585 | 1,208,236 |
Provision for bad and doubtful debtors | 3,335,016 | 6,055,307 |
Bank charges | 2,872,892 | 2,876,953 |
Amortisation of computer software | 2,361,044 | 2,088,962 |
Medical and other activities | 1,624,688 | 2,045,221 |
Professional and consultancy fees | 1,458,508 | 917,044 |
Office supplies and sundry expenses | 733,009 | 270,551 |
Amortisation of leasehold land | 634,941 | 634,941 |
Postage, courier and stamp duty | 473,591 | 514,301 |
Professional fees – Audit fee and other | 598,372 | 733,201 |
643,935,870 | 623,210,964 |
15. Investment income
2020
LKR |
2019
LKR |
|
Foreign exchange gain | 67,133,574 | 117,778,989 |
Interest income on fixed deposits | 43,260,261 | 38,104,606 |
Interest income on saving accounts | 5,238,992 | 5,518,974 |
115,632,827 | 161,402,568 |
16. Other income
2020
LKR |
2019
LKR |
|
Transport income | 28,325,556 | 25,351,888 |
US grant income | 10,968,000 | 12,846,625 |
Payable written back | 9,578,984 | – |
Gain on disposal of property, plant and equipment | 53,785 | 706,061 |
Other income | – | 37,399 |
48,926,325 | 38,941,973 |
17. Income tax expenses
2020
LKR |
2019
LKR |
|
Current income tax | ||
Current tax expense on ordinary activities for the year (Note 16.1) | – | – |
Under/(over) provision of current taxes in respect of prior years | 184,408 | – |
Deferred tax charge/(reversal) (Note 16.3) | 21,429,209 | 832,126 |
21,613,617 | 832,126 |
17.1
Reconciliation between current tax expense and the product of accounting profit multiplied by the statutory tax rate is as follow:
2020
LKR |
2019
LKR |
|
Accounting profit | 137,579,804 | (522,388) |
Aggregate disallowed items | 123,218,762 | 145,872,862 |
Aggregate allowable expenses | (245,214,808) | (353,024,514) |
Assessable income from business | 15,583,758 | (207,674,040) |
Less: Tax credits (unutilised tax losses) | (15,583,758) | – |
Total taxable income | – | – |
Current income tax expense on taxable income @ 14% | – | – |
– | – |
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 |
|||
2020
LKR |
2019
LKR |
2020
LKR |
2019
LKR |
|
Deferred tax liability | ||||
Property plant and equipment | (2,797,246) | (33,870,761) | 31,073,515 | (19,078,416) |
Building – Revaluation | (166,154,093) | (88,273,782) | (77,880,311) | – |
Freehold land – Revaluation | (45,557,400) | (32,612,345) | (12,945,055) | – |
(214,508,739) | (154,756,888) | (59,751,851) | (19,078,416) | |
Deferred tax assets | ||||
Defined benefit plans | 21,337,441 | 15,542,661 | 5,794,780 | 753,545 |
Unutilised income tax losses | 8,346,006 | 17,292,600 | (8,946,594) | 17,292,600 |
Provision for doubtful debts | 1,704,754 | 3,154,513 | (1,449,759) | 3,154,513 |
Contingency provision | 552,720 | – | 552,720 | – |
31,940,921 | 35,989,774 | (4,048,853) | 21,200,658 | |
Deferred income tax income/(expense) | (63,800,705) | 2,122,243 | ||
Net deferred tax assets/(liabilities) | (182,567,818) | (118,767,112) |
17.3 Deferred tax liabilities
2020
LKR |
2019
LKR |
|
Balance as at the beginning of the year | (118,767,112) | (120,889,356) |
Reversal made from income statement during the year | 21,429,209 | 832,126 |
Reversal made from OCI during the year – Actuarial gains losses | 5,595,451 | 1,290,117 |
Charge made from OCI during the year – Property, plant and equipment revaluation | (90,825,366) | – |
Balance as at the end of the Year | (182,567,818) | (118,767,112) |
17.4 Income tax movement
2020
LKR |
2019
LKR |
|
Balance as at the beginning of the year | (12,751,451) | 22,346,487 |
Over provision inrespect of previous years | (184,408) | – |
Income tax paid | – | (29,047,344) |
Economic Service Charges paid | (2,967,842) | (6,050,594) |
Balance as at the end of the year | (15,903,701) | (12,751,451) |
18. Commitments and contingencies
The Company does not have significant commitments and contingencies as at 31 July 2020.
19. Events occurring after the reporting date
There have been no material events occurring after the end of the reporting date that require adjustments to or disclosure in the Financial Statements.
20. Impact on covid -19
Pursuant to the Ministry of Education’s directive dated 12.3.2020, The Overseas School of Colombo (OSC) was required to close campus for all students, parents, and visitors starting from Friday, 13 March 2020 and roll out its Distance Learning Plan (DLP). OSC was proactive in designing and implementing its DLP programme which moved all educational services online. The DLP maintained the planned curriculum content and skills development for students in all grade levels, ensuring a smooth transition back to classroom learning, and completion of grade-level expectations as per the School’s schedule upon lockdown closure. After a successful 52-day DLP programme OSC concluded its academic cycle on 11 June 2020.
During this period, OSC worked very closely with an external medical advisory team from Samana Health, namely Dr Changa Kurukularatne, (MD FAMS) specialising in infectious diseases, internal medicine and tropical medicine and Dr Aseni Wickramatillake (MBBS MPH) specialising in Public Health with a focus on Occupational Health and Safety to create a safe environment and robust operating framework for students, staff and visitors of OSC with the Covid-19 pandemic. The School revisited its budgets for the academic year 2020/21 and reallocated funds amounting to USD 84,140 for Covid-19 related operational requirements and related training. The Board also identified the need for creating a financial support system during this period and revised the budget in May 2020, offering a USD 200,000 financial aid package to affected parents and withholding the fee increase for the first semester of SY 2020/21.
21. Related party disclosures
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
2020
LKR |
2019
LKR |
|
Short-term employee benefits | 31,765,325 | 44,128,362 |
Termination benefits | – | 6,200,932 |
Post-employment benefits | 4,764,799 | 7,334,412 |
36,530,124 | 57,663,706 |