COLOMBO, 07 September 2026 – The Kandy Hotels Company (1938) PLC (KHC), a prominent entity listed on the Colombo Stock Exchange (CSE), today announced an errata to its Annual Report for the financial year 2025/2026. The company identified a misstatement in the accounting treatment for its investment in a joint venture, prompting the issuance of revised financial figures to ensure accuracy and transparency for stakeholders.
Background to the Correction
KHC’s Annual Report 2025/2026 was initially published and uploaded to the CSE website on 31st August 2026. Following this publication, the company’s internal review identified an anomaly related to the accounting presentation of its investment in Suisse Hotel Kandy (Pvt) Ltd, a key joint venture.
Details of the Misstatement
The core of the issue stemmed from Suisse Hotel Kandy (Pvt) Ltd (JV) adopting a Revaluation model for its Land and Buildings as of 31st March 2026, leading to a revaluation of these assets. Historically, KHC’s Group Consolidated Financial Statements had already reflected the JV’s Land and Buildings at fair value, aligning with the Group’s own accounting policies for fair value presentation of assets.
This dual recognition effectively caused the JV’s Land and Building revaluation to be accounted for twice in the Consolidated Financial Statements. The consequence was an overstatement in the carrying value of the investment in the Joint Venture and a corresponding overstatement in the related equity reserves.
Impact on Financial Statements
It is crucial for investors and the market to note that these amendments do not affect the Group’s reported profit after tax, earnings per share (EPS), cash flows, or underlying operations for the year ended 31st March 2026. The corrections are specific to the recognition and presentation of the Group’s share of other comprehensive income from the joint venture and the corresponding equity balances. The company has assured that the operational performance and profitability remain as initially reported.
Key Adjustments to Financial Figures
The Kandy Hotels Company (1938) PLC has tabled the following specific adjustments:
- Statement of Financial Position – Investment in joint venture (Page 81):
- Published: 1,396,296,332 Rs.
- Adjusted: 555,287,926 Rs.
- Statement of Financial Position – Revaluation reserve (Page 81):
- Published: 8,074,072,098 Rs.
- Adjusted: 7,233,063,692 Rs.
- Statement of Financial Position – Net assets per share (Rs.) (Page 81):
- Published: 14.76 Rs.
- Adjusted: 13.65 Rs.
- Other Equity – accounted investees – share of change of other comprehensive income (Page 80):
- Published: 857,838,945 Rs.
- Adjusted: 16,830,539 Rs.
- Statement of Changes In Equity – accounted investees – share of change of other comprehensive income (Page 82):
- Published: 857,838,945 Rs.
- Adjusted: 16,830,539 Rs.
- Note 18 – Group’s share of other comprehensive income for the year (Page 121):
- Published: 857,838,945 Rs.
- Adjusted: 16,830,539 Rs.
- Note 18.3 – Share of adjustments for uniform accounting policy (Page 122):
- Published: –
- Adjusted: 1,682,016,809 Rs.
- Note 26 – Group’s share of other comprehensive income for the year (Page 128):
- Published: 857,838,945 Rs.
- Adjusted: 16,830,539 Rs.
Forward Steps
The revised Annual Report for the year ended 31st March 2026, incorporating these adjustments, has been enclosed with the errata notice and will be published shortly. The Board of Directors of The Kandy Hotels Company (1938) PLC has expressed its regrets for the errors and any inconvenience caused to its shareholders and the broader market.
This proactive step by KHC underlines its commitment to maintaining high standards of financial reporting and corporate governance, ensuring that all published financial information accurately reflects the company’s position.
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