Notes to the Financial Statements

The tax on the Company’s profit before tax differs from the theoretical amount that would arise using the basic tax rate of the    Company, as follows:

Group/Company            ---------------- ----------------         1999 1998         Rs.million Rs.million           ---------------- ----------------   Net profit before taxes     2,325 3,482           ---------------- ----------------     Tax at 35%     814 1,219     Expenses not deductible     397 65     Income not subject to tax     (155) (24)           ---------------- ----------------           1,056 1,260           ---------------- ----------------                   Further information about deferred tax is presented in note 15.                   6. Prior year Adjustments                           As explained in the Accounting Policy No. 18, the policy followed by the Company in recording goodwill was changed during the year. The change in the accounting policy was treated as a prior year adjustment in accordance with the recommendation made in Sri Lanka Accounting Standard No. 10, Net Profit or Loss for the Period, Fundamental Errors and Changes in Accounting Policies. The Directors take the view that the proposed treatment gives a fairer presentation of the results for the year and assets and liabilities at the balance sheet date.                         The impact of this change is set out below:              Group/Company           ---------------- ----------------           1999 1998           Rs.million Rs.million           ---------------- ----------------     Increase in retained profit at 1 January 1998     257 259     Increase in retained profit for the year ended 31 December 1998   688 688           ---------------- ----------------     Increase in retained profit at 1 January 1999     945 947         ---------------- ----------------     7. Earnings per Share                 Basic earnings per share is calculated by dividing the net profit attributable to shareholders by the weighted average number of ordinary shares in issue during the year.                        Company         ---------------- ----------------         1999 1998         Rs.million Rs.million           ---------------- ----------------     Net profit attributable to shareholders   1,269 2,222     Weighted average number of ordinary shares in issue (million)   1,805 1,805     Basic earnings per share     0.70 1.23         ---------------- ----------------

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Notes to the Financial Statements                               Page   1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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