Annual Report - Cargills (Ceylon)

Transcription

Cargills (Ceylon) PLC
The year 2010/11 was a year of unprecedented investment for Cargills (Ceylon) PLC. We accelerated
the expansion of our flagship supermarket chain while continuing to build on our strength in the food
manufacturing sector. We entered new product categories and invested in people and in technology
to harness this expansion. We redefined our place in the dairy sector acquiring a brand with a distinct
identity that is synonymous with the industry. Through these investments we will connect our brands
with millions of consumers to improve quality of life. Our investments will continue to help farmers and
communities succeed, and our stakeholders enjoy sustainable returns. In the year 2011/12 and beyond our
commitment towards Investing for Growth remains steadfast.
Contents
Our businesses
2-3
Financial highlights
4-5
Profile of Directors
6
Chairman’s statement
7 - 11
Corporate governance
12 - 16
Audit & Remuneration Committee reports
Risk management
17
18-19
Sustainability report
20 - 26
Financial information
27 - 66
Statement of value added
67
Five year financial summary
68
Group real estate portfolio
69
Investor relations supplement
Notice of Annual General Meeting
The proxy form is on page 73
70 - 71
72
2
Annual Report 2011
Our businesses
Cargills is Sri Lanka’s largest modern retailer with more than
50% of the modern trade market share. Its pioneer venture into
modern trade was an innovation of the Company’s trading
legacy. Thereafter Cargills Food City continued to challenge
the norm by taking to the masses what was traditionally an
affluent focused business and offering ‘higher value for the
lowest price’.
Today the Cargills retail operation has grown to 163
outlets spread across the 25 districts, as ‘Cargills Food City’
supermarkets, ‘Cargills Express’ convenience stores and
Cargills ‘Big City’ hypermarket. In its short span of operation of
28 years, Cargills Food City has been consistently rated among
the most valuable brands in Sri Lanka as per the Brand Finance
Index rating.
The Company is also in the business of food manufacturing,
restaurant and distribution through its subsidiaries given
below.
Cargills Quality Dairies (Private) Limited
Magic is the number one dairy ice cream in Sri Lanka
and is a strong number two player in the overall ice cream
market. Cargills Quality Dairies which produces Cargills
Magic ice cream, Milk and Milk Shakes is the first and only
dairy product manufacturing Company in Sri Lanka to be
accredited with all three ISO certifications; ISO 9001: 2000
Quality Management System certification, ISO 22000: 2005
Food Safety Management System certification and ISO 14001:
2004 Environment Management System certification. Cargills
Magic was the first to introduce fresh fruits and local flavours to
its portfolio of ice creams creating a new trend in the overall ice
cream industry. Through its innovation driven focus Cargills
Magic has expanded its market share exponentially and is now
the fastest growing ice cream brand in Sri Lanka.
Cargills Agrifoods Limited
Kist is one of the most trusted brand names in Sri Lanka known
by generations for its true Sri Lankan flavours and high standards
of quality. Cargills Kist which is traditionally renowned for its
delectable selection of jams, sauces and cordials has expanded
its 100% fruit based product range introducing fruit based
nectars to the market. Today the nutritious and delicious Kist
nectar range has revolutionized the industry and is popular for
its genuine fruity taste.
Cargills Quality Foods Limited
The processed meats range consists of Cargills Supremo
catering to mass market demand, Cargillls Finest a premium
deli range and traditional favorites ‘Goldi’ and ‘Sams’.
Cargills is rapidly gaining market share in this category
through its product innovation, quality and unique taste.
Cargills Quality Foods is the only meat processing plant in
Sri Lanka that has secured the ISO 9001: 2000 Quality
Annual Report 2011
3
Our businesses contd...
Management System certification, ISO 22000: 2005 Food
Safety Management System certification and ISO 14001: 2004
Environment Management System certification. The Company
has also engaged international expertise to develop new and
innovative products which offer a novel variety of taste whilst
catering to the nutritional needs of the consumer.
Cargills Food Processors (Private) Limited
The Company holds the franchise for the internationally
acclaimed KFC chain which is the largest and most popular
international restaurant chain in the country. The success
of KFC was in the fusion of an international brand with
well - loved Sri Lankan recipes. The locally inspired additions
to the KFC menu have now been included into the regional
product portfolio.
Kotmale Holdings PLC
Kotmale is a leading brand in the dairy sector known for
highest quality products at a reasonable price having entered
the market three decades ago. The Brand is synonymous with
locally produced cheese and has won mass appeal for its
delicious range of dairy ice cream as well as pasteurized milk,
yoghurt, fresh cream, ghee, curd and fruit drinks. Established
in 1967 as Lambretta (Ceylon) Ltd, its beginnings are traced
back to the cool surroundings of Bogahawatte, Patana (Upper
Kotmale). Kotmale Holdings PLC was acquired by the Cargills
Group in 2010.
Diana Biscuits Manufactures (Private) Limited
Diana Biscuits Manufactures (Private) Limited is engaged in
the manufacturing, distribution and marketing of biscuits and
confectionaries under the Brand name ‘Helan’. The Company
was a family owned business established in 2006 and acquired
by Cargills in 2010 and manufactures soft & hard dough
biscuits & wafers. The factory is located at the Nalanda
Industrial Estate in Matale. The Company has now been
renamed as Cargills Quality Confectionaries (Private) Limited.
The biscuits would be relaunched shortly under a new Brand
name and would be an altogether new and improved range.
Millers Brewery Limited
Millers Brewery Limited is the brewer of the finest beers in the
country such as ‘Three Coins’ ‘Irish Dark’, ‘Sando Stout’ and
‘Grand blonde’ that have also won international appeal. The
Company which came into the Cargills fold in 2011 is presently
expanding its capacity and upgrading its infrastructure.
THREE COINS
THE
ALL
MALT
BEER
MILLERS BREWERY LIMITED, SRI LANKA
Millers Limited
The Group’s marketing and distribution arm Millers, is one of
the largest distribution and logistic operations in the country
geared with a network spread across the 25 districts of Sri
Lanka. Millers is the island wide distributor for international
brands such as Kodak, Kraft, Cadbury, Bonlac, Nabisco, Tang,
Toblerone etc and is also the mass market distributor for own
brands.
4
Annual Report 2011
Rs. Bn
Group
2011
2010
change
Rs. ‘ 000
Rs. ‘ 000
%
37,128,661
30,874,797
20.26
Profit from operation
1,825,442
1,429,545
27.69
Profit before taxation
1,406,703
1,000,726
40.57
Profit after taxation
1,094,173
712,392
53.59
13,568,878
9,251,241
46.67
5,736,722
4,697,601
22.12
11,348,392
7,085,476
60.16
907,775
722,211
25.69
7,049,433
6,141,155
14.79
4.86
3.18
52.83
Operations
Turnover
Rs. Mn
Balance sheet
Non current assets
Current assets
Current liabilities
Non current liabilities
Capital and reserves
Per share data (Rs.)
Rs. Mn
Earnings per share
Dividend per share
1.50
1.10
36.36
Net assets per share
31.07
27.42
13.31
228.30
70.50
223.83
2,088,275
1,374,544
- Investing activities
(4,844,610)
(1,040,320)
- Financing activities
1,488,868
(156,951)
Market value per share
Cash Flow
Net cash generated from / (used in)
- Operating activities
Rs. Bn
Annual Report 2011
5
Rs. Bn
Company
2011
2010
change
Rs. ‘ 000
Rs. ‘ 000
%
29,669,660
17,328,142
71.22
1,050,355
642,721
63.42
756,107
345,487
118.85
555,285
315,443
76.03
Non current assets
9,355,826
8,400,290
11.38
Current assets
6,501,560
2,730,386
138.12
10,599,605
6,134,818
72.78
452,215
474,465
(4.69)
4,805,566
4,521,393
6.29
Earnings per share
2.48
1.41
75.89
Dividend per share
1.50
1.10
36.36
Net assets per share
21.45
20.18
6.29
228.30
70.50
223.83
(253,515)
805,110
- Investing activities
(2,566,322)
(751,156)
- Financing activities
1,702,310
(87,697)
Operations
Turnover
Rs. Mn
Balance sheet
Current liabilities
Per share data (Rs.)
Rs. Mn
Cash Flow
Net cash generated from / (used in)
- Operating activities
Rs. Bn
6
Annual Report 2011
Profile of Directors
Mr. L R Page
**Chairman
Mr. Louis R Page is a Fellow Member of the Institute of
Chartered Accountants of Sri Lanka and a Fellow Member of
the Chartered Institute of Management Accountants (UK). He
has been involved in the operations of the C T Holdings group
in a non - executive capacity and in the setting and review of
policy framework, and in key investment decision-making.
He has also held a number of senior management and board
positions in overseas companies.
Mr. V R Page
Deputy Chairman / CEO
Mr. Ranjit Page possesses over 28 years of management
experience with expertise in food retailing, food service,
and manufacturing, having introduced the concept of
supermarketing to the Sri Lankan masses. He also serves on
the boards of several other companies. He is also a FounderDirector of the Mawbima Lanka Foundation, set up to promote
local industry and produce. He was appointed Managing
Director of C T Holdings PLC on 1 January 2011.
Mr. M I Abdul Wahid
Managing Director / Deputy CEO
Mr. M. Imtiaz Abdul Wahid is an Associate Member of the
Institute of Chartered Accountants of Sri Lanka and a Fellow
Member of the Chartered Institute of Management Accountants
(UK). He has been involved in the operations of the Company
in an executive capacity at different intervals progressively at
higher levels (appointed Director 1997 and Deputy Managing
Director in 2001) spanning a period of 24 years, leaving the
services of the Company for employment abroad on two
occasions in between whereby he also gained valuable exposure
holding a number of senior management positions in overseas
companies. He was appointed Managing Director/Deputy
CEO in May 2010.
Mr. S V Kodikara
Executive Director
Mr. Sidath Kodikara is the Chief Operating Officer for Retail
and Restaurant operations. He is a Member of the Institute of
Hospitality of United Kingdom. He counts over 26 years of
managerial experience in the hospitality and retail sector.
Mr. P S Mathavan
Executive Director
Mr. Prabhu Mathavan is the Chief Financial Officer. He is an
Associate Member of the Chartered Institute of Management
Accountants (UK) and the Institute of Chartered Accountants of
Sri Lanka. He also holds a Bachelors Degree in Commerce. He
possesses over 18 years of experience in the fields of Finance,
Auditing, Accounting and Taxation.
Mr. Jayantha Dhanapala
*Director
Mr. Jayantha Dhanapala is a former United Nations UnderSecretary-General for Disarmament Affairs (1998-2003) and a
former Ambassador of Sri Lanka to the USA (1995-1997) and
to the UN Office in Geneva (1984-1987). He was Director of
the UN Institute for Disarmament Research (UNIDIR) from
1987-1992. As a Sri Lankan diplomat Mr. Dhanapala served
in London, Beijing, Washington D.C., New Delhi and Geneva
and represented Sri Lanka at many international conferences
chairing several of them. He is currently the President of the
Pugwash Conferences on Science and World Affairs ; a member
of the Governing Board of the Stockholm International Peace
Research Institute (SIPRI) and several other advisory boards of
international bodies.
Mr. A T P Edirisinghe
*Director
Mr. Priya Edirisinghe is a Fellow Member of the Institute of
Chartered Accountants of Sri Lanka and a Fellow Member of
the Chartered Institute of Management Accountants (UK) and
holds a Diploma in Commercial Arbitration. He was the Senior
Partner of HLB Edirsinghe & Co., Chartered Accountants and
currently serves as Consultant / Advisor. He counts over 41
years of experience in both public practice and in the private
sector. He serves on the Boards of a number of other listed and
non-listed companies.
Mr. Sanjeev Gardiner
**Director
Mr. Sanjeev Gardiner is the Chairman and Chief Executive
Officer of the Gardiner group, comprising the Galle Face Hotel
Co. Limited, the Ceylon Hotels Corporation PLC, Kandy Hotels
Company (1938) PLC (which owns the Queen’s and Suisse
Hotels in Kandy), and The Surf, Bentota. He is also a Director
of several public and private companies and counts over
22 years of management experience. He holds a Bachelor of
Business Degree from Royal Melbourne Institute of Technology
and Bachelor of Business Degree (Banking and Finance) from
Monash University, Australia. He has been a Council Member
of HelpAge International, Sri Lanka branch for several years.
Mr. Sunil Mendis
*Director
Desamanya Sunil Mendis was formerly the Chairman of
Hayleys group, and the immediate former Governor of the
Central Bank of Sri Lanka. He possesses around 44 years of
wide and varied commercial experience most of which has been
in very senior positions.
Mr. Anthony A Page
**Director
Mr. Anthony Page is the Chairman of C T Holdings group of
companies and counts 42 years of management experience in
a diverse array of businesses. He serves on the Boards of many
group as well as other companies. He is a Fellow Member of the
Institute of Chartered Accountants of Sri Lanka. He was on the
Board of the Colombo Stock Exchange and also was a former
Council Member of the Employers Federation of Ceylon.
Mr. J C Page
**Director
Mr. Joseph Page is the Deputy Chairman/Managing Director
of C T Land Development PLC. He is also Executive Director of
C T Properties Limited. Prior to joining C T Land Development
PLC he was Executive Director of Millers Limited. He has over
28 years of management experience in the private sector.
Mr. E A D Perera
*Director
Mr. Errol Perera has held Senior Management positions in
England and Malaysia. On his return to Sri Lanka he focused on
promoting joint venture projects with foreign investment and
technology transfer. He was successful in obtaining Board of
Investment approval with pioneer status for projects in the field
of telecommunications and financial services. He is at present a
Director of several other listed and non-listed companies in Sri
Lanka and overseas.
* Independent Non Executive
** Non Independent Non Executive
Annual Report 2011
7
Chairman’s statement
Rs. 37,129 Mn
(2010 - Rs. 30,875 Mn)
Dear Shareholders,
It gives me great pleasure to present, on behalf of the Board
of Directors, the Annual Report and the Audited Financial
Statements for the year ended 31 March 2011.
In 2010 the Sri Lankan economy maintained a steady growth
of 8% whilst most developed economies continued to grapple
with the implications of the 2008 financial meltdown. State
investments in infrastructure development and progressive
policy changes proposed through the 2010 budget have laid
the foundation for the private sector to fast track investment.
Considering this promising economic and policy environment,
your Company has continued to invest and expand with
the long term vision of evolving into a globally competitive
enterprise. The year saw the highest ever annual investment
made by your Company in its 167 year history. Strategic
investments were made towards developing business models
that are led by professional management teams, supported by
advanced technology delivering quality products and services.
With all of the above we aim to transform your Company into
an enterprise that can compete with multinational corporations
in our industry.
Group Turnover
20.26 % Growth
The year concluded saw your Company
excelling its performance in all areas of
business with both Retail and FMCG
reporting appreciable growth in revenue
and profits.
The year concluded, saw your Company excelling its
performance in all areas of business with both Retail and Fast
Moving Consumer Goods (FMCG) reporting appreciable
growth in revenue and profits.
Retail
‘Cargills Food City’ your flagship brand continues to lead
the modern trade category with the chain now reaching 163
locations island wide. This sector’s success has been achieved
Rs. Bn
through a constant focus on what matters to our customers.
“Cargills Food City Express” is a new store concept that is now
being established to meet consumer needs even in the remotest
locations of each district. This smaller store model is stylized
to meet the unique needs of its immediate neighborhood while
offering the same comfort and convenience of the larger format.
Our infrastructure and leadership is in place to maintain the
current pace of expansion and the focus on a smaller and leaner
format would certainly see healthier returns in the long term.
Cargills Food City has also remained consistent in offering
the most competitive prices in every department for identified
products that impact everyday living. We believe our initiatives
in reducing the cost of living whilst engaging with rural youth
and farmer communities to create sustainable value, is aligned
with the needs of our core customer base. Training farmers on
best practices in crop and animal agriculture, facilitating credit,
providing inputs, transport and infrastructure along with fair
Turnover
40
35
30
25
20
15
10
5
-
2007
2008
2009
2010
2011
8
Annual Report 2011
Chairman’s statement contd...
Rs. 1,407 Mn
(2010 - Rs. 1,001 Mn)
Group Profit before tax
40.57 % Growth
and transparent pricing policies has elevated the dignity of
farming to that of a profitable and attractive enterprise. The
approach has helped retain a new generation of young rural
farmers within the industry reducing regional unemployment
and under-employment. This commitment reinforces our
position as a responsible retailer and makes us the preferred
choice for consumers.
The success enjoyed by the FMCG sector
of your Company stems from years
of strategic planning and a dynamic
management style complemented by a
vibrant team.
Profit before tax
The success enjoyed by the FMCG sector of your Company stems
from years of strategic planning and dynamic management
complemented by a vibrant team. Our national brands have
emerged key players in their categories through an innovation
driven focus.
Cargills Magic continues to set the benchmark in the ice cream
industry growing market share and churning out new product
variations both in take-home and impulse categories. The
investments made in the latest technology have elevated Cargills
Magic to a new tier of taste, variety and quality. Magic is now
well positioned as the No 1 dairy ice cream in Sri Lanka and
stands as a strong brand in its own right. In the year concluded
the Company expanded its distribution network establishing a
strong presence in the Northern region. Investments made in
strengthening its cold-chain have yielded results with Magic
gaining popularity and market share.
The Company’s agri-processing business Cargills Kist has
enhanced its product portfolio by introducing two-fruit
variations to its popular nectar and jam ranges. The culinary
range was also expanded to provide consumers exciting new
accompaniments to their meals and snacks. Kist has now
matured into a truly household brand closely linked with the
daily lives and eating habits of Sri Lankans.The brand will soon
increase this presence in the near future with the entry into new
product segments and categories.
Rs. Mn
1,600
1,400
1,200
1,000
800
600
400
200
-
FMCG
2007
2008
2009
2010
2011
Cargills processed meats continues to enjoy a steady progress.
The Company’s approach towards catering to varied market
segments has proven successful. Cargills Finest, the unique
European deli range has now taken leadership in the premium
product segment and enjoys a good demand from the
institutional market. Traditional favourites ‘Goldi’ and ‘Sams’
too have been re-introduced to the market. The continued
delivery of exciting and innovative products would see the
brands consolidating the Company’s presence in the processed
meat category. The year ended saw Cargills meats enhancing
market presence in Maldives and India.
Annual Report 2011
9
Rs. 6,960 Mn
(2010 - Rs. 6,141Mn)
Shareholders’ funds
13.33 % Growth
The KFC chain of restaurants enjoyed a vibrant year with some
popular products being relaunched and growing transactions.
The increased tendency for urban clientele to seek modern yet
affordable ‘eating-out’ facilities is reflected in the exceptional
performance of the restaurant sector. The Company is bullish
about this sector and looks forward to playing a greater role
in the hospitality arena as the country welcomes an increased
number of travellers and economic activity stimulates demand
from a growing segment of middle income families.
Millers Limited is now being nurtured to take on the
responsibility of driving the FMCG business through its strong
sales force and advanced logistics operation that reaches 40,000
retailers islandwide. The distribution and marketing operation
is being further strengthened in terms of personnel and
infrastructure to support the Company’s increased interests in
the sector. The Company’s international agency lines are also
performing to expectation and would be further enhanced in
tandem with the demand for branded consumer goods.
FMCG Expansion
Your Company has identified the expansion and diversification
of the FMCG sector to be a thrust in its overall growth plans. The
year ended saw your Company making strategic investments to
strengthen its position as a lead player in the FMCG industry.
These investments reflect our strong commitment to growth
and would enable us to connect our brands with millions
of consumers to improve quality of life, help farmers and
communities succeed, and our stakeholders enjoy sustainable
returns.
In November 2010 Cargills expanded its interests in the dairy
sector with the acquisition of Kotmale Holdings PLC. The
Company now holds an 81.72% stake in Kotmale. With the
change in ownership, the Kotmale Board of Directors was
reconstituted on 5 January 2011 and Mr. Stuart Young was
appointed Chairman to consolidates Cargills’s interests in the
dairy sector and expand its product range from its present
leadership in the dairy ice cream category through Cargills
Magic. This also offers Cargills the opportunity to build on
its successful out-grower model that directly impacts rural
economies island wide. Kotmale and Cargills Magic together
collect 22 million litres of fresh milk from an over 20,000 strong
dairy farmer network, making Cargills the 3rd largest milk
collector in the island.
Cargills entered the confectionary industry in November
2010 when Cargills Quality Foods Limited acquired Diana
Biscuits Manufactures (Pvt) Ltd. The production plant located
Profit after tax
Rs. Mn
1,200
1,000
800
600
400
200
-
2007
2008
2009
2010
2011
Your Company has identified the
expansion and diversification of the
FMCG sector to be a thrust in its overall
growth plans.
10
Annual Report 2011
Rs. 19,306 Mn
(2010 - Rs. 13,949 Mn)
Total assets (Group)
38.40 % Growth
Over the years Cargills has practiced
a multi-stakeholder value creation
approach through which your Company
has impacted the development of our
Country.
Turnover vs profit after tax
Rs. Mn
Rs. Bn
40
1,200
35
1,000
30
800
25
20
600
15
400
200
-
10
5
2007
2008
2009
2010
Turnover
Profit after tax
2011
in Nalanda, Matale is now being modified to develop a wider
product range than what was hitherto marketed under the
‘Helan’ brand. The first range of biscuits made to new recipes
is to be launched shortly under a new brand name and would
without doubt excite customers and the industry with its
sensational new selection of biscuit varieties. The Company has
since been renamed Cargills Quality Confectionaries (Pvt) Ltd.
In the fourth quarter of 2010/11 the newly incorporated
subsidiary Millers Brewery Limited (MBL) entered into an
agreement for the purchase of the business and business assets,
including the brands of McCallum Breweries (Ceylon) Limited,
McCallum Brewing Company (Private) Limited and Three Coins
Company (Private) Limited . In relation to this transaction, MBL
has obtained the relevant licenses dated 7 February 2011 from
the Excise Commissioner (Revenue) of the Excise Department
of Sri Lanka. The acquisition included renowned brands such
as ‘Three Coins’, ‘Sando Stout’, ‘Three Coins Riva’, ‘Irish Dark’
and ‘Grand Blonde’. Mr. Stuart Young was also entrusted with
the responsibility of driving the success of MBL.
The upbeat forecasts from the tourism sector and the change
in lifestyle stemming from economic growth augurs well for
our investments in the soft alcohol industry. MBL has now
commenced production and distribution while a sales strategy
is being implemented to revive the ‘Three Coins’ brand. The
management team of MBL would be developing a range of high
quality beverages with local roots but with an international
outlook with a view to catering to both the mass market and
niche clientele. The ready access the MBL brands would have
to distribution channels including linkages with institutional
customers provides a strong platform from which MBL should
certainly develop into a formidable player in the medium term.
The Company is optimistic that said investments would yield
above average returns in the medium to long term and is also
aware of the initial impact on the bottom line in terms of higher
interest costs and turnaround time of the two loss making
biscuit and brewery operations. We are confident of minimising
this turnaround time based on our previous experience in
purchasing loss making business entities and transforming
them into formidable industry leaders in the medium term.
My Country. My Company
Over the years Cargills has practiced a multi-stakeholder value
creation approach through which your Company has impacted
the development of our Country. Cargills has remained closely
engaged with our community in our sustainable business
practices by supporting the reduction of cost of living,
enhancing youth skills and bridging regional disparity. Our
continued confidence in our Country and the resilience of our
people coupled with our commitment to play an increasingly
Annual Report 2011
11
nurturing role in uplifting our community now warrants
taking this platform to an even higher level. The year ahead
would see your Company playing an even more significant
role in building on its core strength of food and nutrition
whilst investing into key growth sectors of our Country. Your
Company believes in a bright and prosperous future for Sri
Lanka and is now well positioned as a trusted partner of Sri
Lanka to spearhead that journey of success.
Summary of Performance
Rs. 4.86
(2010 - Rs. 3.18)
Earnings per share (Group)
52.83 % Growth
Your Company recorded an excellent performance in the year
concluded with Profit after tax crossing the Rs. 1 Bn milestone.
This is a growth of 54% from Rs. 712 Mn reported last year.
The Group consolidated turnover exceeded Rs. 37 Bn having
achieved a growth of 20%. Profit before tax has recorded a 41%
increase to Rs. 1.4 Bn. The Group after tax profit attributable to
share holders was Rs. 1.1 Bn a growth of 53% over the previous
year’s profit of Rs. 712 Mn.
Appropriation
Rs. 31.07
(2010 - Rs. 27.42)
Net assets per share (Group)
13.31 % Growth
A dividend of 50 cents per share was paid on 7 February
2011 as interim dividend and a dividend of Rs. 1 per share
will be proposed at the forthcoming annual general meeting.
The Company maintains a consistent dividend policy being
aware of its capital commitments towards investment aimed
at long-term growth. The performance of the share bears ample
testimony to shareholder appreciation of the increasing value
of the Company. We are confident that the Company would
continue to create substantial and sustainable capital wealth in
the future.
Acknowledgement
In conclusion I take this opportunity to commend our team of
6,790 persons who have worked with enduring commitment
and loyalty to engage every opportunity that has come our way.
The quality of our performance is attributed to this remarkably
competent team, their knowledge, skills and professionalism.
I extend my sincere thanks to the Board of Directors whose
leadership and foresight has steered the Company to success.
I thank our business partners in the farming communities
and small and medium enterprises as well as our principals,
suppliers and financial institutions for their continued support.
I express my thanks to our shareholders for their continued
confidence in us. I am sure you will stay with us as we strive to
create greater value in our enterprise and contribute towards
the progress and prosperity of our country.
Signed
L R Page
Chairman
17 August 2011
12
Annual Report 2011
Corporate governance
The disclosures below demonstrate the extent to which the principles of good corporate governance are complied with within the
Group. Further to the above, the Board of Directors to the best of knowledge and belief is also satisfied that all statutory payments
due to the Government, other regulatory institutions, and related to the employees, have been made on time.
Company’s adherence to the Corporate Governance Rules as required by Section 7.10 of the Listing Rules of the Colombo
Stock Exchange:
Corporate Governance Rule
Compliance
Status
Details
7.10.1 Non-Executive Directors
a) The board of directors of a Listed Entity shall include at Complied with
least,
(i) Two non-executive directors; or
(ii) Such number of non-executive directors equivalent to one
third of the total number of directors whichever is higher.
Company has eight non executive directors
and four executive directors on its board.
b) The total number of directors is to be calculated based on the Complied with
number as at the conclusion of the immediately preceding
Annual General Meeting.
The composition of the Board remain
unchanged all throughout.
c) Any change occurring to this ratio shall be rectified within Not applicable
(N/A)
ninety (90) days from the date of the change.
During the year no changes occurred to this
ratio.
7.10.2 Independent Directors
a) Where the constitution of the board of directors includes only Complied with
two non-executive directors as mentioned above, both such
non-executive directors shall be ‘independent’.
In all other instances two or 1/3 of non-executive directors
appointed to the board of directors, whichever is higher shall
be ‘independent’
One half of non executive directors determined
to be independent.
b) The board shall require each non-executive director to Complied with
submit a signed and dated declaration annually of his/her
independence or non-independence against the specified
criteria.
Each non executive director has provided
a signed and dated declaration of his/ her
independence or non independence against
the criteria laid down in the listing rules.
7.10.3 Disclosures Relating to Directors
a) The board shall make a determination annually as to the Complied with
independence or non-independence of each non-executive
director based on such declaration and other information
available to the board and shall set out in the annual report
the names of directors determined to be ‘independent.’
One non executive director is an independent
director as per the criteria set.
b) In the event a director does not qualify as ‘independent’ Complied with
against any of the criteria set out below but if the board,
taking account all the circumstances, is of the opinion that
the director is nevertheless ‘independent’, The board shall
specify the criteria not met and the basis for its determination
in the annual report.
Three other non executive directors are
deemed independent by the Board and
the criteria not met and the basis for such
determination is set out in Note on page 16.
c) In addition to the disclosures relating to the Independence of Complied with
a director set out above, the board shall publish in its annual
report a brief resume of each director on its board which
Includes information on the nature of his/her expertise in
relevant functional areas.
Please refer profile of directors on page 6.
d) Upon appointment of a new director to its board, the Entity Complied with
shall forthwith provide to the exchange a brief resume of such
director for dissemination to the public. Such resume shall
include information on the matters itemized in paragraphs
(a), (b) and (c) above.
Mr. M I Abdul Wahid was appointed to
the Board on 21 May 2010 and the required
details were submitted to the exchange the
same day.
Annual Report 2011
13
Corporate governance contd...
Compliance
Status
Details
7.10.5 Remuneration Committee
A Listed Entity shall have a remuneration committee in
conformity with the following:
(a) Composition
The remuneration committee shall comprise;
(i) a minimum of two independent non-executive directors Complied with
(in instances where an Entity has only two directors of on
its board); or
(ii) non-executive directors a majority of whom shall be
independent, whichever shall be higher.
The remuneration committee comprise three
independent non executive directors and the
details are given on the inner back cover.
In a situation where both the parent company and the subsidiary Complied with
are ‘Listed Entities’, the remuneration committee of the parent
company may be permitted to function as the remuneration
committee of the subsidiary.
Kotmale Holdings PLC is a subsidiary of
the Company and has its own remuneration
committee.
However, if the parent company is not a Listed Entity, then the N/A
remuneration committee of the parent company is not permitted
to act as the remuneration committee of the subsidiary. The
subsidiary shall have a separate remuneration committee.
N/A
One non-executive director shall be appointed as Chairman of Complied with
the committee by the board of directors.
Please refer inner back cover.
(b)Functions
The remuneration committee shall recommend the remuneration Complied with
payable to the executive directors and Chief Executive Officer of
the Listed Entity and/or equivalent position thereof, to the board
of the Listed Entity which will make the final determination
upon consideration of such recommendations.
(c) Disclosures
The annual report should set out the names of directors (or Complied with
persons in the parent company’s committee in the case of a group
company) comprising the remuneration committee, contain a
statement of the remuneration policy and set out the aggregate
remuneration paid to executive and non-executive directors.
The term “remuneration” shall make reference to cash and
all non-cash benefits whatsoever received in consideration
of employment with the Listed Entity (excluding statutory
entitlements such as Employees Provident Fund and Employees
Trust Fund).
The Committee recommends to the
Board the remuneration payable to the
Executive Directors and the Chief Executive
Officer. In recommending an appropriate
remuneration package the primary objective
of the Committee is to attract and retain the
services of highly qualified and experienced
personnel.
Please refer inner back cover for the names of
directors of the remuneration committee.
Please refer the remuneration committee
report on page 17 for a statement of the
remuneration policy.
Please refer Note 7 to the financial statements
for the aggregate remuneration paid to the
directors.
7.10.6 Audit Committee
A Listed Entity shall have an audit committee in
conformity with the following:
(a) Composition
The audit committee shall comprise;
(i) a minimum of two independent non-executive directors Complied with
(in instances where an Entity has only two directors on its
board); or
(ii) non-executive directors a majority of whom shall be
independent, whichever shall be higher.
The audit committee comprise
independent non executive directors.
three
14
Annual Report 2011
Corporate governance contd.
Compliance
Status
Details
In a situation where both the parent company and the subsidiary Complied with
are ‘Listed Entities’, the audit committee of the parent company
may function as the audit committee of the subsidiary.
Kotmale Holdings PLC is a subsidiary of the
Company and has its own audit committee.
However, if the parent company is not a Listed Entity, then the N/A
audit committee of the parent company is not permitted to act
as the audit committee of the subsidiary. The subsidiary should
have a separate audit committee.
N/A
One non-executive director shall be appointed as Chairman of Complied with
the committee by the board of directors.
Unless otherwise determined by the audit committee, the Chief Complied with
Executive Officer and the Chief Financial Officer of the Listed
Entity shall attend audit committee meetings.
Please refer audit committee report on page 17.
The Chairman or one member of the committee should be a Complied with
member of a recognized professional accounting body.
The Chairman of the committee is a member
of ICASL and CIMA (UK).
(b) Functions
Shall include,
(i) Overseeing of the preparation, presentation and adequacy Complied with
of disclosures in the financial statements of a Listed Entity,
in accordance with Sri Lanka Accounting Standards.
(ii) Overseeing of the Entity’s compliance with financial Complied with
reporting requirements, information requirements of the
Companies Act and other relevant financial reporting
related regulations and requirements.
(iii) Overseeing the processes to ensure that the Entity’s Complied with
internal controls and risk management are adequate,
to meet the requirements of the Sri Lanka Auditing
Standards.
(iv) Assessment of the independence and performance of the Complied with
Entity’s external auditors.
(v) To make recommendation to the board pertaining to Complied with
appointment, re-appointment and removal of external
auditors and to approve the remuneration and terms of
engagement of the external auditors.
(c) Disclosures
The names of the directors (or persons in the parent company’s Complied with
committee in the case of a group company) comprising the audit
committee should be disclosed in the annual report.
The committee shall make a determination of the independence Complied with
of the auditors and shall disclose the basis for such determination
in the annual report.
The annual report shall contain a report by the audit committee, Complied with
setting out the manner of compliance by the Entity in relation to
the above, during the period to which the annual report relates.
Annual Report 2011
15
Corporate governance contd...
Company’s adherence to the Provisions of Rule 7.6 as required by the Listing Rules of the Colombo Stock Exchange on
disclosure in Annual Reports of Listed Entities:
Compliance
Status
Details
A Listed Entity must include in its annual reports and accounts,
inter alia;
i) Names of persons who were Directors of the Entity Complied with
during the financial year.
Please refer inner back cover for the names of
directors of the Company.
ii) Principal activities of the Entity and its subsidiaries Complied with
during the year and any changes therein.
Please refer Note 1.1 to the financial
statements.
iii) The names and the number of shares held by the 20 Complied with
largest holders of voting and nonvoting shares and the
percentage of such shares held.
Please refer Investor relations supplement on
page 71.
iv) The public holding percentage.
Please refer Investor relations supplement on
page 71.
Complied with
v) A statement of each director’s holding and Chief Executive Complied with
Officer’s holding in shares of the Entity at the beginning
and end of each financial year.
Please refer page 31.
vi) Information pertaining to material foreseeable risk factors Complied with
of the Entity.
Please refer report on Risk management on
page 18 to 19.
vii) Details of material issues pertaining to employees and N/A
industrial relations of the Entity.
No material issues pertaining to employees
and industrial relations
viii)Extents, locations, valuations and the number of buildings Complied with
of the Entity’s land holding and investment properties.
Please refer page 69 Group real estate
portfolio.
ix) Number of shares representing the Entity’s stated Complied with
capital.
Please refer page 70 Investor relations
supplement.
x) A distribution schedule of the number of holders in each Complied with
class of equity securities and the percentage of their total
holdings in the specified categories.
supplement.
xi) The following ratios and market price information.
EQUITY
1.
2.
3.
4.
Dividend per share
Dividend pay out
Net asset value per share
Highest and lowest value recorded
Value as at the end of financial year.
Complied with
Please refer page 68 Five year summary.
Complied with
supplement.
DEBT (Only if listed)
xii) Significant changes in the Entity’s or its subsidiaries’ N/A
fixed asset and the market value of land, if the value
differs substantially from the book value.
N/A
xiii) If during the year the Entity has raised funds either N/A
through a public issue, Right issue, and private
placement;
N/A
a. A statement as to the manner in which the proceeds
of such issue has been utilized.
b. If any shares or debentures have been issued, the
number, class and consideration received and the
reason for the issue; and,
c. Any material change in the use of funds raised
through an issue of securities.
16
Annual Report 2011
Corporate governance contd.
Compliance
Status
xiv) The following information should be disclosed in respect N/A
of each employees share ownership or stock option
scheme.
-
Details
N/A
Total number of shares allotted during the financial
year
Price at which shares were allotted
Highest, lowest and closing price of the share
recorded during the financial year
Details of funding granted to employees (if any)
xv) Disclosures pertaining to Corporate Governance practices Complied with
in terms of Rules 7.10.3, 7.10.5 c. and 7.10.6 c. of section 7
of the Rules.
Please refer page 12 to 14 for the disclosures in
terms of Section 7.10.
xvi) Related Party transactions exceeding 10% of the Equity Complied with
or 5% of the total assets of the Entity as per Audited
Financial Statements, whichever is lower.
Please refer Note 20 and 35.
Details of investments in a Related Party and/or amounts
due from a Related Party to be set out separately.
The details shall include, as a minimum:
a. The date of transaction;
b. The name of the Related Party;
c. The relationship between the Entity and the Related
Party;
d. The amount of the transaction and terms of the
transaction;
e. The rationale for entering into the transaction.
Note :
Based on the declarations provided by the non executive directors, the Board has decided the following directors as independent:
Mr. Jayantha Dhanapala, and
Mr. E A D Perera
- who has served on the Company’s Board now for a period in excess of nine years and
- who has served on the Company’s Board for a period in excess of nine years and
- is also a Director of C T Holdings PLC which has a significant shareholding in the Company, and
Mr. Sunil Mendis
- who is also a Director of C T Holdings PLC
who, in spite of their service on the Company’s Board for over nine years and / or being Directors in another company which has
a significant shareholding in the Company, the Board has nevertheless determined as in the previous years to be independent
considering their credentials and integrity.
Annual Report 2011
17
Audit & Remuneration Committee reports
Audit Committee Report
The Audit Committee is appointed by the Board of Directors
of the Company and reports directly to the Board. The Audit
Committee comprise three members who are non-executive
Directors who are deemed independent. The Chairman of
the Audit Committee is a Fellow Member of the Institute of
Chartered Accountants of Sri Lanka and a Fellow Member
of the Chartered Institute of Management Accountants (UK).
The composition of the members of the Audit Committee
satisfies the criteria as specified in the Standards on Corporate
Governance for listed companies.
The Members of the Audit Committee:
Name / Independence
Mr. A T P Edirisinghe FCMA, FCA - Chairman Independent
Mr. Sunil Mendis - Independent
Mr. E A D Perera - Independent
The Chief Financial Officer (CFO) and the Chief Internal Auditor
attend all meetings and the Chief Executive Officer (CEO) and
the Managing Director attend audit committee meetings as
and when requested to do so by the Audit Committee. The
Company Secretary acts as the Secretary to the Committee.
The oversight function of (a) the preparation, presentation and
adequacy of disclosures in the quarterly and annual financial
statements of the Company, in accordance with Sri Lanka
Accounting Standards and (b) the Company’s compliance with
financial reporting requirements, information requirements
of the Companies Act and other relevant financial reporting
related regulations and requirements, was duly performed and
the Audit Committee reviewed and discussed the year-end
financial statements and recommended their adoption to the
Board, whilst this was done on circulation at quarter-ends. In
all instances, the Audit Committee obtained a declaration from
the CFO stating that the respective financial statements are in
conformity with the applicable accounting standards, Company
law and other statues including corporate governance rules
and that the presentation of such financial statements are
consistent with those of the previous quarter or year as the
case may be, and further states any departures from financial
reporting, statutory requirements and Group policies, (if any).
Quarterly Compliance Certificates are also obtained from the
Finance, Legal, and Secretarial divisions of the Company on an
updated standardized exception reporting format perfected by
the Audit Committee, stating any instances (where applicable)
of, and reasons for, non-compliance.
The oversight function over the processes to ensure that
the Company’s internal controls and risk management, are
adequate, to meet the requirements of the Sri Lanka Auditing
Standards was duly performed and the Audit Committee
reviewed and discussed (a) the business risk management
processes and procedures adopted by the company, to manage
and mitigate the effects of such risks and measures taken to
minimize the impact of such risks, (b) the internal audit plan
and monitoring the performance of the internal auditor and
adherence to the internal audit plan and (c) the internal audit
reports and monitoring follow up action by the management.
Based on the recommendations of the Audit Committee, the
Company has engaged a third party Audit Firm to obtain an
independent verification, of stock and cash counts at all its
outlets and the factories and other facilities of its own and
subsidiary companies, and also adherence to standard systems
and procedures as laid down by the Company, commencing
in the new Financial Year. The Audit Committee assessed the
independence and performance of the Company’s external
auditors and made recommendations to the Board pertaining
to appointment/ re-appointment. The Audit Committee also
reviewed the audit fees for the Company and approved the
remuneration and terms of engagement of the external auditors
and made recommendations to the Board. When doing so, the
Audit Committee reviewed the type and quantum of nonaudit services (if any) provided by the external auditors to the
Company to ensure that their independence as Auditors has
not been impaired. The Audit Committee obtains an ‘Auditor’s
Statement ‘ from Messrs KPMG Ford, Rhodes, Thornton and
Company confirming independence as required by Section
163 (3) of the Companies Act No. 7 of 2007 on the audit of the
balance sheet and the related statements of income, changes in
equity, and cash flows of the Company and the Cargills Group.
The Audit Committee has recommended to the Board that
Messrs KPMG Ford, Rhodes, Thornton and Company,
Chartered Accountants, be continued as external auditors of
the Company for the financial year ending 31 March 2012.
A T P Edirisinghe - FCMA, FCA
Chairman – Audit Committee
17 August 2011
Remuneration Committee Report
The Remuneration Committee of Cargills (Ceylon) PLC consists
of three Non – Executive Directors – Messrs. Sunil Mendis
(Chairman), Jayantha Dhanapala and A T P Edirisinghe. The
Deputy Chairman & CEO and the Managing Director may also
be invited to join in the deliberations as required.
The Committee studies and recommends the remuneration
and perquisites applicable to the Executive Directors of the
Company and makes appropriate recommendations to the
Board of Directors of the Company for approval.
The Committee also carries out periodic reviews to ensure that
the remunerations are in line with market conditions.
Sunil Mendis
Chairman – Remuneration Committee
17 August 2011
18
Annual Report 2011
Risk management
Introduction
Risk management is of paramount importance to Cargills
(Ceylon) PLC to safeguard the interest of all stakeholders. To
keep risk management at the centre of the executive agenda,
continuous awareness is created and it is embedded in everyday
business management.
The expansion drive of the Cargills Food City operation and
manufacturing subsidiaries together with latest business
acquisitions has meant that the Group’s operation has become
more complex with an increased risk profile. In an improving
economic environment the Group also anticipates a higher
business risk in terms of increased competition.
The management considers each business risk in the context of
the Group’s strategy by identifying the potential upside and
downside to the Group business. Any identified downside is
subject to mitigation and any upside is fully made use of to
strengthen the competitive position of the Group. Risks and
methodology of mitigation are presented here in the areas of
business (operation), financial reporting and compliance with
applicable laws and regulations.
Administrative support for risk management
Corporate Management Committee (CMC)
The Board as the focal point in managing the business has been
vested with the final responsibility of managing the risks the
Group faces. A Corporate Management Committee (CMC) has
been set up to assist the Board in meeting this responsibility.
The CMC with the help of senior management decides the risk
profile of the Group. It also evaluates the business proposals
in view of the existing risk appetite and keeps the Board
informed of the suitability of the business proposals. The CMC
reviews the operational issues tabled in the monthly meetings
to identify the key risks faced by the Group including their
impact, likelihood and controls and procedures implemented
to mitigate these risks. The Board is required to take decisions
that would increase the intrinsic value of the Company in terms
of investing in capital assets which would enhance the future
earnings capacity. In this perspective, tolerable risk levels
are defined by the CMC provided those investments show
commercial justification striking a balance between risk and
return. In addition, the management letter issued by external
auditors of the Company is reviewed by the audit committee.
Any material findings adversely affecting the smooth operation
of the business are addressed in detail and corrective actions
are taken.
Centralised Legal Function
The Group obtains the service of a centralized legal department
to ensure that the Group complies with applicable laws and
regulations. The department reports on a monthly basis to the
Board verifying compliance with laws and regulations. All legal
agreements are thoroughly scrutinized by competent legal
officers while the Company Secretary ensures compliance with
the Companies Act.
Corporate Financial Reporting Function
Documentation and reporting also plays a key role in managing
risk. The corporate financial reporting division has been set up
to ensure all financial reporting aspects are addressed. The
division coordinates with relevant authorities and institutions.
The audit committee reviews all financial and related
information that is reported and disseminated.
Internal Controls and Internal Audit Function
The Company has put in place a system of internal control to
assist in achieving the management’s objective of ensuring
orderly and efficient conduct of business, safeguarding of
assets, the prevention and detection of fraud and error, timely
preparation of reliable financial information, and compliance
with relevant laws and regulations.
At Cargills, we believe that an effective internal audit function
would enhance the Company’s performance in every aspect of
business. This function would primarily involve monitoring
of internal control, examination of financial and operating
information, review of the efficiency and effectiveness of the
operation, and review compliance with legal and regulatory
requirements. It also continuously verifies and audits the
systems and promptly escalates any problems or potential risks
to the management. Evaluation of the existing risk management
setup is also a task assigned to the internal audit function.
Internal audit reports are reviewed by the audit committee and
any material findings are inquired into in detail.
Overview of Risks Affecting the Business
Business Risk
The business risk management is a dynamic process due to the
constant change and complexity in the operating environment
of the Group. The different business operations of the Group and
their performances are subject to a variety of risk factors which
are constantly monitored and evaluated by the management
in order to respond effectively. All manufacturing facilities are
maintained according to best international food manufacturing
standards to mitigate business risk arising from production
processes.
Competitive Environment
The retail industry in Sri Lanka is highly competitive. To
remain competitive the Group is focused on areas such as
price, product range, quality and service. We monitor our
performance against a range of measures including customer
satisfaction, perception and experience while also evaluating
the performance of competitors.
Annual Report 2011
19
Risk management contd.
People capabilities
Our greatest asset is our employees. It is critical to our success
to attract, retain, develop and motivate the best people with
the right capabilities at all levels of operations. We review
across our operations in enabling us to operate efficiently. We
have extensive controls in place to maintain the integrity and
efficiency of our IT infrastructure and to ensure consistency of
delivery. All relevant staff is effectively engaged to mitigate IT
our people policies regularly and are committed to investing
related risks through effective policy and procedures as well as
in training and development. We also carry out succession
increased awareness.
planning to ensure that the future needs of the business are
considered and provided for. There are clear processes for
understanding and responding to employees’ needs through
HR initiatives, staff surveys, and regular communication of
business developments.
Reputational Risk
Failure to protect the Group’s reputation and brands could lead
to a loss of trust and confidence. This could result in a decline
in the customer base and affect the ability to recruit and retain
high-calibre people. Emotional loyalty to the Cargills brand
has helped us diversify into new areas of businesses through
integration and diversification strategies. We recognise the
commercial imperative to safeguard the interests of all our
Regulatory and Political Environment
Due to the diverse nature of our businesses we are subject to
a wide variety of regulations prevailing in the country. We
consider these uncertainties in the external environment when
developing strategy and reviewing performance. We remain
vigilant to future changes. As part of our day-to-day operations
we
engage
with
governmental
and
non-governmental
organizations to ensure the views of our customers and
employees are represented and try to anticipate and contribute
to important changes in public policy whenever possible.
Funding and Liquidity
stakeholders and avoid the loss of such loyalty. The ‘Cargills
The Group finances its operations by a combination of retained
Values’ are embedded in the way we do business at every level.
earnings, long term and short term loans. The objective is to
Our Code of Ethics guides our relationships with customers,
ensure the continuity of funding and to arrange funding ahead
employees and suppliers. We engage with stakeholders in
every sphere, take into account their views and endeavor to
develop strategy that reflects their interests.
Product safety
The safety and quality of our products is of paramount
of requirements and to maintain sufficient undrawn committed
bank facilities. We as a Group maintain a portfolio of banking
institutions to cater to the funding requirements and to obtain
them on favorable terms. Healthy relationships with bankers
allow us to have borrowing arrangement within a shorter
period of time.
importance to Cargills as well as being essential for maintaining
customer trust and confidence. A breach in confidence could
affect the size of our customer base and hence financial results.
We have detailed and established procedures for ensuring
Interest rate risk
It is the Company’s objective to limit its exposure to increases
product integrity at all times. There are strict product safety
in interest rates while retaining the opportunity to benefit
processes in place and regular management reports. We work
from interest rate reductions. Accordingly the Group manages
in partnership with suppliers to ensure mutual understanding
interest rate fluctuations with an appropriate mix of fixed and
of the standards required. We also monitor developments
variable rate debts through a centralized treasury management
in areas such as health, safety and nutrition in order to
function.
respond appropriately to changing customer trends and new
legislation.
Credit risk
Health and Safety risks
The Company aims to reduce the risk of loss arising from default
Provision of adequate safety to our staff and customers is of
monitored and required actions are taken. Our manufacturing
the utmost importance to us. Injury or loss of life cannot be
measured in financial terms. We operate stringent health
and safety processes in line with best practice in our outlets,
manufacturing facilities and offices, which are monitored and
audited regularly.
by parties to financial transactions. Risk of default is routinely
subsidiaries are more exposed to credit risk by the very nature
of their business and this risk is neutralised through a rigorous
process of credit management.
Foreign Exchange Rate Risk
IT Systems and Infrastructure
The Group’s exposure to this risk is minimal as exports
The business is dependent on efficient Information Technology
are negligible. Risk on imports of plant, machineries and
(IT) systems. We recognise the essential role that IT plays
equipments are managed adequately.
20
Annual Report 2011
Sustainability report
01. Our approach to Sustainability
capabilities and respected for who they are. We strive to create
a happy and focused work atmosphere that celebrates the team
and encourages innovation.
1.1 Introduction
From a single seed in a farmer’s field to homes and hearths
halfway across Sri Lanka Cargills brings ideas together to help
satisfy our nation’s needs. To get there, we collaborate with
customers to create better products and services, streamline
supply chains, save energy, reduce costs and move goods to
every corner of Sri Lanka. We help farmers get higher yields
from fewer acres, and store crops so they have greater flexibility
in marketing their harvest. We give back to the communities
where we do business through continuous efforts to improve
nutrition, health and education, and protect natural resources.
Every day, Cargills nourishes people and ideas-in both expected
and unexpected ways.
Our goal is to provide a workplace where all employees
can thrive and grow - A workplace where employees feel
included, safe and are given the opportunities to make valuable
contributions to Cargills and thereby partner the progress of
Sri Lanka.
2.1 Nurturing an exceptional team
Our sustainability strategy is to make social responsibility
an integral part of everything we do. It is a Company-wide
commitment that channels our expertise and knowledge
to create sustainable value for every direct and indirect
stakeholder we touch.
We are committed to attracting, developing, and retaining a
group of talented Team Members and to creating a workplace
that allows each Team Member to contribute to the collective
success of our Company. Our programs and initiatives related
to employment practices, compensation and benefits, talent
management, diversity and inclusion, and Team Member
relations are important to fulfilling this commitment, especially
in today’s challenging economic climate. To be an inspiration to
our Team Members about their work, their contributions, and
their company is our pledge.
02 Responsible to our People
2.1.1 Our Team Members
Treating our team with dignity and respect and striving to create
a safe work environment.
Cargills employs 6,790 employees as at 31 March 2011. We are
committed to providing a good working environment and to
retaining our Team Members through competitive wages, fair
treatment, training, benefits, and safe working conditions. We
recognize that the nature of our industry and the changing
external environment means that retention of our team is
foremost challenge. This is a challenge that we seek to address
by providing inspiration and motivation to our Team Members
about their work, their contributions, and their company’s role
in partnering the development of Sri Lanka and its people.
At the heart of the Cargills culture is the desire to embrace
our differences and make connections across business units, at
every location in every district across the island - so that each
employee can reach their full potential.
Our multi-cultural work environment is warm and equitable
ensuring that each member of our team is valued for their
Total No. of Employees as at 31 March 2011
Permanent cadre
Contract Staff
6,790
6,613
177
Executive cadre
1,186
Non- Executive cadre
5,604
Male
3,884
Female
2,906
Non Executive 83%
Executive 17%
Permanent
Non-Executive
Male
Contract
Executive
Female
Annual Report 2011
21
Sustainability report contd...
2.2 Health and Safety of Our Team
implemented procedures and controls regarding health and
safety
2.2.1 Management System Approach
2.3 Training & Development
All Cargills manufacturing facilities have implemented
Environmental, Health, and Safety Management Systems
in line with statutory and ISO requirements. The health and
safety aspect of this system fulfills the requirements set forth
in international occupational health and safety management
system specifications. As such, each facility has developed and
AAPI provides training and development opportunities for youth
from rural Sri Lanka as a non profit initiative. AAPI collaborates with
civil society partners to identify and train young men and women
who lack the necessary skills-sets to gain employment in the private
sector. Many go on to be a part of Team Cargills.
ALBERT A. PAGE INSTITUTE OF FOOD BUSINESS
The Albert A. Page Institute (AAPI) of Food Business was established in 2006 in response to the needs of young Sri Lankans from
rural areas. As Cargills expanded its presence in regional Sri Lanka it understood the true potential of rural youth who were either
under-employed or unemployed due to the lack of professional skills. On the other hand the value derived to our economy from
unskilled labor employed overseas is significant. Unskilled migrant labor sourced largely from rural Sri Lanka draws the highest
foreign exchange earnings to the country. This further encouraged Cargills to work towards the capacity-building of rural youth.
AAPI has developed series of certificate and diploma programmes aimed at creating opportunity for career advancement in the
food and manufacturing sector. The Certificate programs develop the various basic skills required to become an effective and
efficient executives. The courses are designed to cater to all sectors of Food Marketing encompassing Operations, Manufacturing,
Support Services, Sales and Distribution and Central Warehouse, Agri – Business. The advanced certificate courses for Managerial
Skills Development have been designed considering all the aspects of Organizational needs of Technical, Human and Conceptual
skills which are crucial elements of becoming an effective and efficient Executive aligned with today’s competitive and dynamic
business environment. Once students acquire the Advanced Certificate they have the option of enhancing the certification to a
Diploma. Currently Cargills is exploring the possibility of offering the Diploma’s in affiliation with Sri Lanka’s premier postgraduate education college.
Accelerated Skills Acquisition Programme (ASAP)
ASAP is a programme which has been developed by the USAID is endorsed by the Ceylon Chamber of Commerce as study
material that is suitable for potential employees in the private sector. The programme which is focused on attitude development
consists of five-day, 10-day and 20-day study programmes on IT, English proficiency, career guidance and entrepreneurial skills.
The objective of the programme is to endow recipients with the essential skills required for competitive employment.
AAPI has been certified as a trainer of the ASAP programme and is currently carrying out training for identified target groups in
collaboration with non-profit partners such as the Gemi Diriya project funded by the World Bank.
Independent Grocers Alliance Online Training
The IGA Institute is a non-profit educational foundation developed by IGA (Independent Grocers Alliance), to provide on-line
training materials, web based job certification courses, class room training to support the career development needs of its retail
food associated around the globe. The IGA Institute functions as the Alliance’s Learning & development department by bringing
competitive skills to independent retailers world wide. AAPI is currently registered with the IGA Institute and is able to offer these
courses online for students. Cargills utilizes these online learning opportunity to empower youth in rural areas using ICT as a tool
for development.
3. Responsible to our Planet
Fulfilling our purpose of nourishing people requires clean water, soil
and air. As a food Company, we are focused on a sustainable future
that reduces demands on the environment as populations continue to
grow.
Green Business
The primary objectives that drive the Cargills Green Business
is to reduce, re-use and recycle energy, plastics, water and all
other natural resources that we use in our day to day business
practice.
Through the ‘Green Business’ programme Cargills is committed
to minimizing its environmental impacts throughout our entire
supply chain, from the farm to the trolley. Cargills is also
committed to a role of environmental leadership in all facets
of our business.
22
Annual Report 2011
Initiatives eligible for Carbon Credit
SBU
Initiatives taken
Cargills Quality Dairies
- Best use of treated effluent water to create humus matter in the rocky barren land. Its enrichment has
enabled the utilization of the land to produce agriculture crops (papaya, pineapple, passion fruit,
forest trees).
- Used polythene/ cardboard recycled.
- Separate the fat from ETP and used in biogas plant; Ammonia is used as a refrigerant.
- Coconut cultivation and in-house garden.
Cargills Quality Foods
- Rainwater harvesting.
- Pork Fat used in ‘Pig Power’ project to operate incinerator as substitute for diesel in delivery vehicles.
Part of the pork fat is to be used for conversion to Bio diesel.
- Bones disposed for fertilizer manufacture reduces incineration load.
- In house garden- enrichment of garden excellent landscaping and use of spare/surplus land for
improving the quality of rocky land generating agriculture products.
Cargills Agrifoods
- Wormiculture/ hormone digestion project - Worms/ hormones are being tested to hasten the
decomposition process of elements that are slow to decompose.
- Coconut cultivation in previously barren land.
- In house garden project.
Cargills Food
Processors
- Cargills has sealed a Memorandum of Understanding with the University of Moratuwa to operate
a Food Process Development Incubator which carries out scientific research especially towards
making Cargills a leaner and greener operation. As part of the project the University of Moratuwa has
provided Cargills the technology to convert used oil discarded as waste by KFC into bio-diesel. This
bio-diesel is now used to run a diesel three-wheeler for KFC logistical support services.
- It is notable that in an economic sense KFC incurs a significant cost to convert oil into bio diesel
however in line with the corporate strategy of creating sustainable value for the community KFC has
opted to take the economically expenses yet environmentally and socially responsible route.
Energy Saving measures and renewable energy use
SBU
Energy Saving measures and renewable energy use
Cargills Quality Dairies
-
Phased out and controlled operation of the compressors in refrigeration plant.
Energy saving CFL bulbs and controlled use of all machinery, air-conditioning and lightings.
Computers kept on standby mode.
Insulation of boiler and all steam pipe lines.
Minimizing steam leakages.
Maintenance of condensate recovery pumps in working order.
Solar heaters for hot water generation.
Cargills Quality Foods
-
Solar heaters for hot water generation.
Hot water generated from incinerators.
Capacitor Bank to reduce the maximum demand.
Energy saving blasters for fluorescent lights.
Control of air condition temperature according to atmospheric conditions.
Training of staff on energy savings, especially in cold rooms and smoke chamber operations.
Automated switching system for outdoor lights.
Cargills Agrifoods
-
Capacitor Bank to reduce the maximum demand.
Production plan scheduled to reduce the maximum demand.
Oversized motors replaced by smaller sized motors according to application.
Routine monitoring and cleaning of air filters in ventilation fans.
Cooling water re-cycling.
Solar heaters.
Annual Report 2011
23
extends beyond regulatory requirements to address such
4. Responsible to our Customers
issues as facility sanitation, team member training, personal
Fostering
a
Companywide
culture
that
drives
continuous
improvement towards the safety and wellbeing of our Customers.
hygiene, product handling, food protection, foreign material
prevention, product quality, storage, and transportation. All
our manufacturing plants are accredited with ISO 9001:2000
As the leader in Retail and Consumer Goods in Sri Lanka our
for Quality Management, ISO 14001:2004 for Environment
goal is to ensure that our customers enjoy the best possible
Management and ISO 22000: 2005 for Food Safety Management
products and services at the best possible price with minimum
as well as SLS standards.
implications on the wellbeing of all our stakeholders. Cargills
uses it widespread retail and mass market distribution
4.2 Research, Development and Innovation
operation to provide essential commodities to consumers at
a consistently affordable price. Cargills applies effort at every
Cargills is dedicated to developing a best-in-class, value-added
step in the process from where food is produced through
product portfolio that meets the needs of today’s changing
where it is purchased to ensure we provide the safest and
market. By applying in-depth understanding of consumer
most high quality products and services to our customers.
and customer needs, analytical skills, and strategic thinking,
Our food processing plants are equipped with comprehensive
we are positioned at the forefront of product innovation.
ISO and SLS certification to ensure that our superior taste is
We will continue to demonstrate our commitment to research
complemented by superior safety and quality.
and development by creating new and relevant food solutions
4.1 Managing Food Safety and Quality
Cargills approach to food safety and quality is comprehensive,
preventive, and proactive. We implement controls and
measures at every level to make sure our products are secondto-none in food safety and quality. We assess our products
for improvement during product research and development,
manufacturing and production, marketing and promotion,
storage and distribution, and use. We believe this approach
helps guarantee the safety and quality of our products from the
farm all the way to the point of purchase.
4.1.1 At the Farm
Cargills is engaged in every aspect of its supply chain to ensure
only the best products of highest nutrition and quality reach
our retail outlets and manufacturing units. Our advanced
post harvest technologies ensure that all fresh produce reach
customers at optimum levels of freshness with minimal
wastage. The waste within our supply chain is as little as 3-4%
while national post harvest losses are as much as 40%. This
helps Cargills give customers the best choice in quality and
nutrition and affordability.
4.1.2 Systematic Management Approach
In addition to governmental regulatory requirements, we have
developed our own highly integrated policies, procedures,
controls, and good manufacturing practices designed to ensure
the safety and quality of our food products. Our system often
for years to come.
4.2.1 Food Process Development Incubator
Sri Lanka is clearly in need of a new national approach to
research and development. This new approach must bring
together the country’s best minds, working in the best facilities,
and focused on the challenges and opportunities that lie ahead
for Sri Lanka’s Food and Agribusiness sector working in
partnership with industry. It is in the hope of filling this void
that the Food Process Development Incubator was established
by Cargills together with the University of Moratuwa. This
institution will endeavor to develop a more competitive
innovation led Food and Agriculture sector which creates
value for consumers, farmers and the industry in manner that
is sustainable to the community and the environment.
The incubator conducts R & D in the following areas:
To enhance human health and wellness through food,
nutrition and innovative products.
To enhance the quality of food and the safety of the
food system.
To enhance security and protection of the food supply
by improving scientific capacity and knowledge to
detect, monitor and control various food production
and distribution systems.
To seek opportunities to enhance the profitability and
competitiveness of farmers, the Agri-food system, rural
communities, and local industry.
To enhance the environmental performance of the Food
and Agriculture industry.
24
Annual Report 2011
4.3 Promoting National Nutrition and Wellness
farmer base island wide to help improve efficiencies and
increase incomes.
As Sri Lanka’s largest food retailing and manufacturing
business house Cargills is conscious of its role in facilitating
Agribusiness Projects - Activities during the Year 2010/11
affordable nutrition for all Sri Lankans. While our research
and development initiatives help us develop more nutritious
1. Project
: Nutritious Snacks/Food Manufacturing
Project’
products our sustainable supply chain ensures these products
reach every part of Sri Lanka safely and at an affordable price.
Location
Our direct links with farming communities and entrepreneurs
Partners
: Dehiattakandiya
: USAID/CORE.
provide us the strength to bring essential commodities to
Objective
: To raise productivity, profitability and
consumers minus the intermediary costs. This is why our
stability
products at our retail outlets and from our manufacturing
highland crops by strengthening input
farmers
engaged
in
minor
facilities are of better quality and are easier to afford.
support, knowledge and know-how base
of farmers and establishing strong buyback
5. Responsible to our Partners
arrangements.
Project Cost
Working directly with our partners to overcome challenges, providing
: SLR. 35 Million
No. of farmers : 500 farmers (stage 1)
knowledge and resources to help them succeed.
2. Project
: Northern Horticultural Alliance (NHA)
Project
Our focus on rural development involves our direct
investment in and engagement with the agriculture sector. Our
Locations
investments have improved livelihoods for rural Sri Lankans
Partner
: Jaffna & Killinochchi
: USAID
in economically meaningful, environmentally sustainable and
Objective
: Sustainable Livelihoods through Processing
and Value addition.
socially responsible ways. Today we are a global role model in
corporate driven rural development. Each year, Cargills works
Aim
directly with thousands of farmers and small scale entrepreneurs
employment security of fruit and vegetable
to
resuscitate
economic
and
to help increase their productivity, thereby helping to raise
farmers of Northern Province by improving
their standard of living and increase our access to quality raw
cultivation and infusing value adding
processes
materials.
Project Cost
: SLR. 135 Million
5.1 Sustainable Agribusiness
3. Project
: Vegetable Processing Unit for Boralanda
Promoting and practicing sustainable agribusiness is an
Location
: Boralanda
important part of our commitment to conduct business with
Partner
: IFAD
integrity and responsibility, treat people with dignity and
Objective
: Vegetable Collection Center
respect, and help protect and conserve the environment. We
A new vegetable collection center established
work with business partners, governments, nongovernmental
at Boralanda. Land for building has been
organizations and communities to foster sustainable economic
allotted
development and promote responsible practices throughout
Walimada.
by
the
Divisional
our agribusiness supply chains. Together, our activities are
Project Cost
improving agricultural and labor practices, as well as helping to
No. of farmers : 300 farmers (Stage 1)
Secretariat
: SLR. 3.5 Million
conserve the environment.
4. Project
5.1.1 Farmer Training and Development
Our team works directly with farmers to overcome challenges,
: Passion Fruit Cultivation
Locations
: Monaragala & Galgamuwa
Partner
: IFAD
Objective
: Provide
passion
fruit
seeds/seedlings,
providing knowledge and resources to help farmers succeed.
technical support in terms of professional
Across Sri Lanka thousands of farmers have participated in
guidance to farmers on scientific methods
Cargills productivity and product quality enhancing programs.
of cultivation and management of passion
We have committed to expanding this program to a larger
fruit crop.
Annual Report 2011
25
we have with the fields they sow, the families they nurture, the
Expected Annual
Crop yield
: To surpass 1250 MT and cater to both local
market and international markets
No. of farmers : 250 farmers from Monaragala & Uva
Provinces
communities they live in and the schools where their children
learn. Cargills has therefore initiated farmer community
development funds where 50 cents is given back to the village
against each kilogram of vegetables purchased from our
farmers. This fund is used to provide scholarships for needy
: Cashew Processing Project
children from the community, to provide resources for learning
Location
: Anamaduwa
and advancement, to meet basic community infrastructure
Partners
: Green Vision / World Vision
needs such as utility connections, community centres, libraries
Objective
: To revive the livelihoods of cashew
etc. Our focus is to engage the communities that work with us
5. Project
cultivators in the area who are facing sever
to charter their own course of development.
economic hardships due to inability to face
increasing competition
Workforce
6. Project
6. Responsible to Our Community
: 200 strong workforce (mostly women).
Would have over arching impact on the life
Our continued success depends on the growth and health of the
and living of rural poor in the region
communities we work with.
: Seed Testing Project
One Trust Sri Lanka
Locations
: Island wide
Partner
: Department of Agriculture
One Trust came into being from the very heart of Cargills out
Objective
: In order to improve productivity and
of compassion and empathy for our fellow Sri Lankans whose
profitability of vegetable cultivation good
lives were devastated in the Boxing Day Tsunami of 2004.
quality high yielding seed is the most
One Trust targeted the children who survived the mental and
crucial intervention. As per the statutory
physical trauma of the Tsunami disaster and helped rebuild
requirements, systematic testing of the
identified schools from Southern and Eastern coastal areas.
imported seed would be conducted either
7. Project
at the farm of the Horticulture Research and
Today One Trust has expanded its vision to heal the spirits and
Development Institute (HORDI) or in the
hearts of children affected by war and restore their ability to
farmers’ fields.
hope and dream.
: Yal Utpaththi
One Trust in Vavuniya
Location
: Jaffna Peninsula
Partners
: Central Bank of Sri Lanka & Bank of
Objective
: Cargills and the Central of Bank of Sri
of identifying beneficiaries’ currently in institutional care or
Lanka have launched a joint programme to
in the care of immediate family. The Department would also
create markets for farmers from the Jaffna
facilitate the process of channeling funds to the identified
peninsula who specialize in Palmyrah based
children in supporting and monitoring their educational needs.
products. This follows the Central Bank’s
This is done as a bi-annual event, where Cargills sponsor their
Poverty Alleviation Microfinance Project
educational needs through the One Trust Fund. These includes,
funded by the Bank of Ceylon. Under the
school text books, Uniforms, stationery items, cupboards,
project farmers received micro-credit as
mosquito nets, bedding, medicines, vaccines and other needs
means of reinvigorating the traditional
identified at the time of distribution. These identified children
livelihoods. Cargills came forward to
are given an opportunity to re-build their lives by re-opening
provide a market for products made by the
doors for education through ongoing school based projects.
Ceylon
The project is being supported by the Department of Probation
and Child Care Services which is coordinating the process
beneficiary farmers.
An Inspired Swan Lake & Nut Cracker by Center Stage
5.2 Investing in regional economies
Production
At Cargills a relationship we establish with farmers is a bond
The One Trust partnership with Center-stage production is
26
Annual Report 2011
especially noteworthy where “An Inspired Swan Lake” and
communities it works with across Sri Lanka. Accordingly One
most recently ‘Nutcracker’ directed and choreographed by
Trust complements the efforts of community development
Jehan Aloysius brought together the cause of One Trust with
initiated by Cargills by providing scholarships for higher
the complementary and commendable efforts of ‘Center-Stage
education as well as educational material including laptops for
Productions. The participants of these production consisted
tertiary level students.
of an inspiring physically-challenged cast of soldiers from
Ranaviru Sevana who were injured in the line of duty and
hearing impaired performers from the Sunera Foundation. One
Trust will undoubtedly sponsor such events in the future as
means of promoting theater and art as a form of expression for
those who are facing different forms of challenges. This would
in turn inspire many others to transcend beyond their own
challenges to re-discover their inner strength.
One Trust in our Community
One Trust in association with Deutsche Bank Colombo organized
a one day programme that involved an educational tour of
Colombo for 50 children in the Cargills farming community,
many of whom who have never visited the commercial capital.
This program was initiated with a broader aim to include
children from communities that Cargills works with in the
‘Children of Change’ initiative carried out by Deutsche Bank, to
igniting a spark, to embrace change, in the hearts of Sri Lankan
One Trust partners Cargills Agribusiness efforts to uplift the
children in this new environment of peace.
7. Cargills compliance with global sustainability benchmarks
UNGC Principles Description of Principle
Compliance
Human Rights
Principle 1
Businesses should support and respect the protection of internationally proclaimed human
rights.
Comply
Principle 2
Make sure that they are not complicit in human rights abuses.
Comply
Principle 3
Businesses should uphold the freedom of association and the effective recognition of the right
to collective bargaining.
Comply
Principle 4
The elimination of all forms of forced and compulsory labor.
Comply
Principle 5
The effective abolition of child labor.
Comply
Principle 6
Elimination of discrimination in respect of employment and occupation.
Comply
Principle 7
Businesses should support a precautionary approach to environmental challenges.
Comply
Principle 8
Undertake initiatives to promote greater environmental responsibility.
Comply
Principle 9
Encourage the development and diffusion of environmentally friendly technologies.
Comply
Businesses should work against corruption in all its forms, including extortion and bribery.
Comply
Labor
Environment
AntiCorruption
Principle 10
Annual Report 2011
27
28
Annual Report 2011
Financial information
Annual Report of the Directors on the affairs of the Company .............
..........................................................................................................................
Statement of Directors’ responsibilities
..........................................................................................................................
Independent Auditors’ report
..........................................................................................................................
Income statements
..........................................................................................................................
Balance sheets
..........................................................................................................................
Statements of changes in equity
..........................................................................................................................
Cash flow statements
..........................................................................................................................
Notes to the financial statements
..........................................................................................................................
29 - 31
32
33
34
35
36
37
38 - 66
29
Annual Report 2011
Annual Report of the Directors on the affairs of the
Company
The Directors are pleased to submit the Annual Report together with the audited financial statements of Cargills (Ceylon) PLC and
consolidated audited financial statements of the Group for the year ended 31 March 2011.
Review of the year
The chairman’s statement describes in brief the Group’s affairs, performance and important events of the year.
Activities
Manufacturing of and trading in Food and Beverage and Distribution are the principal activities.
The Group:
a) Operates a chain of supermarkets, convenience stores and a hyper market.
b) Distributes world renowned brands of beverages and other FMCG products.
c) Manufactures / produces / processes and markets processed meats, dairy ice creams, milk, jams, cordials, sauces, biscuits and
beverages.
d) Operates the ‘Kentucky Fried Chicken’ franchise restaurants in Sri Lanka, by processing of agricultural produce.
e) Operates a Hotel in hill - country.
f) Operates a chain of photo processing outlets.
Financial statements
The audited financial statements include the income statements, balance sheets, statements of changes in equity and notes to the
financial statements of the Company and the Group for the financial year ended 31 March 2011 are given on page 34 to 66 form an
integral part of the Annual Report of the Board.
Auditors’ report
The auditors’ report is set out on page 33.
Accounting policies
The accounting policies adopted in the preparation of the financial statements are given on the pages 38 to 43. There were no significant changes to the accounting policies of the Group during the year.
Results and dividends
Group
For the year ended 31 March
Profit for the year after taxation amounted to
After deducting the amount attributable to minority interest of
The profit attributable to shareholders was
To which profit brought forward from previous year is added
Transfer to General reserve
Leaving an amount available to the Company
for appropriation of
From which your Directors have made appropriations
as follows :
Dividend paid for the year ended 31 March 2010
Interim 20 Cents per share
Final 30 Cents per share
Dividend paid for the year ended 31 March 2011
Final 80 Cents per share
Leaving an unappropriated balance to be carried forward of
Company
2011
Rs. ‘ 000
2010
Rs. ‘ 000
2011
Rs. ‘ 000
2010
Rs. ‘ 000
1,094,173
5,623
1,088,550
1,522,745
100,000
712,392
712,392
989,553
-
555,285
555,285
407,152
100,000
315,443
315,443
270,909
-
2,511,295
1,701,945
862,437
586,352
-
44,800
67,200
67,200
-
44,800
67,200
67,200
179,200
112,000
2,220,095
2,511,295
1,522,745
1,701,945
179,200
112,000
571,237
862,437
407,152
586,352
An interim dividend of 50 Cents per share (Rs. 112,000,000) was paid on 7 February 2011 for the year ended 31 March 2011. A final
dividend of Rs. 1 per share (Rs. 224,000,000) is proposed for the year ended 31 March 2011. These will be reflected in the subsequent
year’s financial statements. (refer note 11 to the financial statements on page 47).
Reserves
After the above mentioned appropriations, the total reserves of the Group stands at Rs. 6,829 Mn (2010 - Rs. 6,010 Mn), while the total
reserves of the Company stand at Rs. 4,675 Mn (2010 - Rs. 4,391 Mn).
Stated capital
Stated capital of the Company as at 31 March 2011 was Rs. 131 Mn. The details of the stated capital is given in note 21 to the financial
statements on page 55.
30
Annual Report 2011
Company contd...
Capital expenditure
The Group’s capital outlay on property, plant and equipment amounted to Rs. 1,408.9 Mn (2010 - 602.7 Mn) while the capital outlay
of the Company on property, plant and equipment amounted to Rs. 877.2 Mn (2010 - Rs. 458.4 Mn). Details are given in note 12 to the
financial statements on pages 48 and 49.
The movement of property, plant and equipment during the year is given in note 12 to the financial statements on pages 48 and 49.
Market value of properties
The Group land and buildings were revalued as at 31 March 2010. Details are given in note 12 to the financial statements on pages
48 and 49.
The portfolio of the revalued land and buildings are given on page 69 to the financial statements.
Shareholdings
The Company is a subsidiary of C T Holdings PLC and there were 2,243 of registered share holders as at 31 March 2011 (2010 1,922).
An analysis of shareholdings according to the size of holding and the names of the 20 largest shareholders is given on pages 70 and
71.
Directorate
The Directors listed on the inner back cover have been Directors of the Company throughout the year under review except for
Mr. M I Abdul wahid who was appointed on 21 May 2010.
Messrs A T P Edirisinghe, E A D Perera and S E C Gardiner retire by rotation in terms of the Company’s Articles of Association and
being eligible offer themselves for re - election.
Mrs. S R Thambiayah tendered her resignation on 21 May 2010 in keeping with the newly established Company policy with regard
to Directors over 70 years of age which reads thus:
“Group Policy on Retirement Age of Directors
A Director to retire on reaching the age of 70 years provided such Director has completed five years as a Director of such Company.
Such Director may continue up to the said 5 years at his/her request unless the Company decides otherwise.”
With the resignation of Mrs. S R Thambiayah Mr. M I Abdul Wahid was appointed to the Board in the capacity of Managing Director
& Deputy CEO on 21 May 2010.
Consequent to the appointment of Mr. M I Abdul Wahid as Managing Director, Mr. V R Page’s designation was changed from
‘Deputy Chairman and Managing Director’ to ‘Deputy Chairman and CEO’.
Mr. Jayantha Dhanapala (72) is due to retire in terms of Section 210 (2) (b) of the Companies Act No. 7 of 2007, and offers himself for
re-election in terms of Section 211 (1) and (2) of the Companies Act No. 7 of 2007.
The newly established Company policy with regard to Directors over 70 years of age does not apply to Mr. Jayantha Dhanapala as he
has not completed 5 years as a Director of the Company being first appointed a Director on 1 June 2008. The re - election of the retiring
Directors has the unanimous support of the other Directors.
Directors’ remuneration
The remuneration of the directors is given in note 35 on page 63 to the consolidated financial statements.
Directors’ interests in contracts
Directors’ interest in transactions of the Company are disclosed in note 35 to the financial statements and have been declared at
meetings of the directors. The directors have had no direct or indirect interest in any other contracts in relation to the business of the
Company.
Interest register
The Company maintains an Interest Register conforming to the Provisions of the Companies Act No. 7 of 2007.
Directors’ shareholding
The Directors’ shareholdings in the Company were as follows:
Annual Report 2011
31
Company contd...
As at
As at
31 March 2011
31 March 2010
Mr. L R Page
36,760
36,760
Mr. V R Page
14,380,200
14,285,000
4,000
-
Mr. S V Kodikara
124,000
124,000
Mr. P S Mathavan
500
20,000
Mr. M I Abdul Wahid (w.e.f. 21 May 2010)
Mr. Jayantha Dhanapala
-
-
50,000
50,000
Mr. S E C Gardiner
20,000
20,000
Mr. Sunil Mendis
20,000
20,000
Mr. Anthony A Page
5,050,000
4,838,500
Mr. J C Page
1,705,500
1,705,500
10,000
20,000
-
40,000
Mr. E A D Perera
Mrs. S R Thambiayah (resigned w.e.f. 21 May 2010)
Donations
During the year Rs. 8,765 (2010 - Rs. 71,696) had been made by the Company.
Auditors
Messrs KPMG Ford, Rhodes, Thornton & Co. are deemed reappointed as Auditors at the Annual General Meeting of the Company
in terms of Section 158 of the Companies Act No. 7 of 2007. The Directors have been authorised to determine the remuneration of the
Auditors and the fee paid to auditors are disclosed in note 7 to the financial statements. As far as the Directors are aware, the auditors
do not have any relationship (other than that of an auditor) with the Company or any of its Subsidiaries other than those disclosed
in the above note.
Post balance sheet events
Post balance sheet events of the Company are given in note 34 to the financial statements on page 63.
Statutory payments
All statutory payments due to the Government of Sri Lanka and on behalf of employees have been made or accrued for the balance
sheet date.
Future developments
The chairman’s statement describes the future developments of the Group.
Environmental protection
After making adequate enquiries from the management, the Directors are satisfied that the Company and its subsidiaries operate in a
manner that minimizes the detrimental effect on the environment and provide products and services that have a beneficial effect on
the customers and the communities within which the Group operates.
Going concern
The directors have adopted the Going concern basis in preparing these financial statements. After making enquiries from the management, the Directors are satisfied that the Group has adequate resources to continue its operations in the foreseeable future.
For and on behalf of the Board
Signed M I Abdul Wahid (Managing Director / Deputy CEO)
Signed P S Mathavan (Executive Director / CFO)
Signed S L W Dissanayake (Company Secretary)
17 August 2011
32
Annual Report 2011
Statement of Directors’ responsibilities
The Companies Act No. 7 of 2007 places the responsibility on
the Directors to prepare and present financial statements for
each year comprising a balance sheet as at year end date and
statements of income, cash flows and changes in equity for the
year together with the accounting policies and explanatory
notes. The responsibility of the auditors with regard to these
financial statements, which differ from that of the Directors, is
set out in the Auditors’ report (page 33).
Considering the present financial position of the Company
and the forecasts for the next year, the Directors have adopted
the going concern basis for the preparation of these financial
statements.
The Directors confirm that the financial statements have been
prepared and presented in accordance with the Sri Lanka
Accounting Standards, which have been consistently applied
and supported, by reasonable and prudent judgments and
estimates.
The Directors are responsible for ensuring that the Company
maintains adequate accounting records to be able to disclose
with reasonable accuracy, the financial position of the Company
and the Group and for ensuring that the financial statements
are prepared and presented in accordance with the Sri Lanka
Accounting Standards and provide the information required by
the Companies Act.
The Directors are responsible for the proper management of
the resources of the Company. The internal control system has
been designed and implemented to obtain reasonable but not
absolute assurance that the Company is protected from undue
risks, frauds and other irregularities. The Directors are satisfied
that the control procedures operated effectively during the
year.
The Directors, to the best of their knowledge and belief, are
satisfied that all statutory payments have been made up to date
or have been provided for in these financial statements.
By order of the Board
S L W Dissanayake
Company Secretary
17 August 2011
Annual Report 2011
33
Independent Auditors’ report
KPMG Ford, Rhodes, Thornton & Co
(Chartered Accountants)
32A, Sir Mohamed Macan Markar Mawatha
P. O. Box 186,
Colombo 00300
Sri Lanka
Tel
: +94 - 11 242 6426
+94 - 11 542 6426
Fax
: +94 - 11 244 5872
+94 - 11 244 6058
+94 - 11 254 1249
+94 - 11 230 7345
Internet : www.lk.kpmg.com
TO THE SHAREHOLDERS OF CARGILLS (CEYLON) PLC
Report on the Financial Statements
We have audited the accompanying financial statements of
Cargills (Ceylon) PLC (the “Company”), the consolidated
financial statements of the Company and its subsidiaries as at
31 March 2011 which comprise the balance sheet as at 31 March
2011, and the income statement, statement of changes in equity
and cash flow statement for the year then ended, and a summary
of significant accounting policies and other explanatory notes
as set out on pages 34 to 66 of this Annual Report.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair
presentation of these financial statements in accordance with
Sri Lanka Accounting Standards. This responsibility includes:
designing, implementing and maintaining internal control
relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether
due to fraud or error; selecting and applying appropriate
accounting policies; and making accounting estimates that are
reasonable in the circumstances.
We have obtained all the information and explanations which
to the best of our knowledge and belief were necessary for
the purposes of our audit. We therefore believe that our audit
provides a reasonable basis for our opinion.
Opinion
In our opinion, so far as appears from our examination, the
Company maintained proper accounting records for the year
ended 31 March 2011 and the financial statements give a true
and fair view of the Company’s state of affairs as at 31 March
2011 and its profit and cash flows for the year then ended in
accordance with Sri Lanka Accounting Standards.
In our opinion, the consolidated financial statements give a
true and fair view of the state of affairs as at 31 March 2011 and
the profit and cash flows for the year then ended, in accordance
with Sri Lanka Accounting Standards, of the Company and
its subsidiaries dealt with thereby, so far as concerns the
shareholders of the Company.
Scope of Audit and Basis of Opinion
Report on Other Legal and Regulatory Requirements
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit
in accordance with Sri Lanka Auditing Standards. Those
standards require that we plan and perform the audit to obtain
reasonable assurance whether the financial statements are free
from material misstatement.
These financial statements also comply with the requirements
of Sections 153 (2) to 153 (7) as appropriate of the Companies
Act No. 7 of 2007.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
policies used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
Signed
KPMG Ford, Rhodes, Thornton & Co.
Chartered Accountants
Colombo
17 August 2011
34
Annual Report 2011
Income statements
Group
Company
Notes
2011
Rs. ‘ 000
2010
Rs. ‘ 000
2011
Rs. ‘ 000
2010
Rs. ‘ 000
Revenue
3
37,128,661
30,874,797
29,669,660
17,328,142
Cost of sales
4
(33,646,234)
(28,234,424)
(28,210,024)
(16,732,614)
3,482,427
2,640,373
1,459,636
595,528
582,450
510,453
633,048
634,121
(635,971)
(506,121)
(176,045)
(110,907)
(1,412,112)
(1,072,180)
(806,978)
(437,074)
Other expenses
(191,352)
(142,980)
(59,306)
(38,947)
Operating profit
1,825,442
1,429,545
1,050,355
642,721
6
(363,946)
(428,819)
(294,248)
(297,234)
14.4
(54,793)
-
-
-
7
1,406,703
1,000,726
756,107
345,487
Income tax expense
8
(312,530)
(288,334)
(200,822)
(30,044)
1,094,173
712,392
555,285
315,443
1,088,550
712,392
555,285
315,443
5,623
-
-
-
1,094,173
712,392
555,285
315,443
Gross profit
Other income
5
Distribution costs
Administrative expenses
Finance costs
Share of loss of equity accounted investee
Net profit for the year
Attributable to :
Equity shareholders of the parent
Minority interest
Earnings per share (Rs.)
10
4.86
3.18
2.48
1.41
Dividend per share (Rs.)
11
1.50
1.10
1.50
1.10
1.30
0.80
1.30
0.80
Dividend paid per share (Rs.)
The accounting policies and notes from pages 38 to 66 form an integral part of these financial statements.
35
Annual Report 2011
Balance sheets
Group
As at 31 March
Notes
Company
2011
Rs. ‘ 000
2010
Rs. ‘ 000
2011
Rs. ‘ 000
2010
Rs. ‘ 000
ASSETS
Non - current assets
Property, plant and equipment
Intangible assets
Investments in subsidiaries
Investment in associate
Advance paid for acquisition of assets
Prepayment on leasehold land and building
Deferred tax assets
12
13
14.1
14.2
15
16
17
11,104,597
1,054,384
161,282
1,205,425
28,875
14,315
13,568,878
8,691,716
291,923
216,075
29,750
21,777
9,251,241
7,471,198
1,668,553
216,075
9,355,826
6,515,762
1,668,453
216,075
8,400,290
Current assets
Inventories
Trade and other receivables
Amount due from related companies
Short term investments
Cash and cash equivalents
18
19
20
14.3
23
3,576,322
1,584,089
197,079
75,587
303,645
5,736,722
19,305,600
3,059,389
1,119,749
252,941
3,759
261,763
4,697,601
13,948,842
2,707,913
699,823
2,800,698
46,965
246,161
6,501,560
15,857,386
1,823,335
474,571
268,757
3,672
160,051
2,730,386
11,130,676
130,723
4,608,892
2,220,095
6,959,710
89,723
7,049,433
130,723
4,487,687
1,522,745
6,141,155
6,141,155
130,723
4,103,606
571,237
4,805,566
4,805,566
130,723
3,983,518
407,152
4,521,393
4,521,393
24
25
26
27
384,167
328,458
2,389
192,761
907,775
198,499
360,352
163,360
722,211
287,662
164,553
452,215
324,195
150,270
474,465
28
4,817,170
277,501
1,636
17,610
6,234,475
11,348,392
12,256,167
19,305,600
4,086,484
181,175
4,166
14,080
2,799,571
7,085,476
7,807,687
13,948,842
3,843,632
229,719
1,035,803
17,609
5,472,842
10,599,605
11,051,820
15,857,386
3,433,827
57,983
349,704
14,080
2,279,224
6,134,818
6,609,283
11,130,676
Total assets
EQUITY
Stated capital
21
Reserves
22
Retained earnings
Total equity attributable to equity holders of the company
Minority interest
Total Equity
LIABILITIES
Non - current liabilities
Borrowings
Deferred tax liability
Capital grant
Retirement benefit obligations
Current liabilities
Trade and other payables
Current tax liability
Amount due to related companies
Dividend payable
Borrowings
20
29
24
Total liabilities
Total equity and liabilities
I certify that these financial statements have been prepared in accordance with the requirements of the Companies Act No. 7 of 2007.
Signed K D N S Perera (General Manager - Finance)
The Board of Directors is responsible for the preparation and presentation of these financial statements.
The accounting policies and notes from page 38 to 66 form an integral part of these financial statements.
These financial statements have been approved by the Board on 17 August 2011.
Signed for and on behalf of the Board
Signed M I Abdul Wahid (Managing Director / Deputy CEO)
Signed P S Mathavan (Executive Director / CFO)
Colombo
36
Annual Report 2011
Statements of changes in equity
Stated
capital
Rs. ‘ 000
Attributable to equity holders of Parent
Capital Revaluation
General
Retained
reserve
reserve
reserve
earnings
Rs. ‘ 000
Rs. ‘ 000
Rs. ‘ 000
Rs. ‘ 000
Total
Rs. ‘ 000
Minority
interest
Rs. ‘ 000
Total
Rs. ‘ 000
Group
Balance as at 1 April 2009
130,723
7,928
619,000
385,500
989,553
2,132,704
-
2,132,704
Revaluation
-
-
3,571,724
-
-
3,571,724
-
3,571,724
-
-
-
-
712,392
712,392
-
712,392
Deferred tax on revaluation
-
-
(96,465)
-
-
(96,465)
-
(96,465)
Dividends
-
-
-
-
(179,200)
(179,200)
-
(179,200)
Balance as at 31 March 2010
130,723
7,928
4,094,259
385,500
1,522,745
6,141,155
-
6,141,155
130,723
7,928
4,094,259
385,500
1,522,745
6,141,155
-
6,141,155
Acquisition of subsidiaries
-
-
-
-
-
-
84,100
84,100
-
-
-
-
1,088,550
1,088,550
5,623
1,094,173
-
-
21,205
-
-
21,205
-
21,205
Transferred to General reserve
-
-
-
100,000
(100,000)
-
-
-
Dividends
-
-
-
-
(291,200)
(291,200)
-
(291,200)
130,723
7,928
4,115,464
485,500
2,220,095
6,959,710
89,723
7,049,433
Stated Revaluation
capital
reserve
Rs. ‘ 000
Rs. ‘ 000
General
reserve
Rs. ‘ 000
Retained
earnings
Rs. ‘ 000
Total
Rs. ‘ 000
130,723
619,000
385,500
270,909
1,406,132
Revaluation
-
3,072,021
-
-
3,072,021
-
-
-
315,443
315,443
-
(93,003)
-
-
(93,003)
Dividends
-
-
-
(179,200)
(179,200)
130,723
3,598,018
385,500
407,152
4,521,393
Company
130,723
3,598,018
385,500
407,152
4,521,393
Transferred to General reserve
-
-
100,000
(100,000)
-
-
-
-
555,285
555,285
-
20,088
-
-
20,088
Dividends
-
-
-
(291,200)
(291,200)
130,723
3,618,106
485,500
571,237
4,805,566
37
Annual Report 2011
Cash flow statements
Group
Company
2011
Rs. ‘ 000
2010
Rs. ‘ 000
2011
Rs. ‘ 000
2010
Rs. ‘ 000
1,406,703
1,000,726
756,107
345,487
851,291
28,454
7,785
875
151
10,967
814
(477)
54,793
(7,768)
11,355
9,186
1,844
363,946
(8)
772,852
79,693
7,478
875
(8,604)
6,276
(16,658)
(506)
428,819
-
535,586
24,753
113
(7,768)
1,877
294,248
(48,603)
455,641
75,816
(2,825)
(10,222)
(461)
297,234
(275,382)
2,739,911
2,270,951
1,556,313
885,288
(417,291)
(214,243)
115,368
464,888
(14,431)
(415,879)
11,374
20,976
168,963
(4,510)
(884,578)
(164,244)
(1,445,653)
409,805
686,099
(236,934)
61,062
3,842
57,149
408,082
Cash generated from operations
Taxes paid
Interest paid
Gratuity paid
27
Net cash generated from / (used in) operating activities
2,674,202
(210,753)
(363,946)
(11,228)
2,088,275
2,051,875
(240,624)
(428,819)
(7,888)
1,374,544
157,742
(106,539)
(294,248)
(10,470)
(253,515)
1,178,489
(68,836)
(297,234)
(7,309)
805,110
Cash flows from investing activities
Addition of property, plant and equipment
Addition to intangible assets
13
Acquisition of subsidiaries
14.6
15
Investment in associates
Sales of property, plant and equipment
Dividend received
5
Net cash generated from / (used in) investing activities
(2,188,963)
(5,853)
(1,380,668)
(1,205,425)
(64,535)
826
8
(4,844,610)
(835,266)
(216,075)
11,021
(1,040,320)
(1,491,135)
(1,037,785)
(37,402)
(2,566,322)
(539,690)
(216,075)
4,609
(751,156)
1,920,315
(143,776)
(287,671)
1,488,868
717,062
(701,337)
(172,676)
(156,951)
2,039,980
(49,999)
(287,671)
1,702,310
634,980
(550,001)
(172,676)
(87,697)
(1,267,467)
177,273
(1,117,527)
(33,743)
(806,429)
(196,547)
(1,267,467)
(2,270,443)
(983,702)
177,273
(806,429)
(819,194)
(1,117,527)
(1,936,721)
(785,451)
(33,743)
(819,194)
Notes
Cash flows from operating activities
Profit before tax
Adjustments for:
Depreciation
12
27
Amortisation of intangible assets
13
Amortisation of prepayment on leasehold land & building 16
Loss / (profit) on sales of property, plant and equipment 5
Impairment of property, plant and equipment
12
Write-off of capital work in progress
Amortisation of capital grant
26
Share of Associate results
14.4
Profit from disposal of investments
5
Provision for inventories
Provision / (reversal) for doubtful debtors
Provision / (reversal) for investments
Finance cost
6
Dividend income
5
Operating profit before working capital changes
Changes in working capital
- (Increase) / decrease in inventories
- (Increase) / decrease in trade and other receivables
- (Increase) / decrease in related company receivables
- Increase / (decrease) in trade and other payables
- Increase / (decrease) in related company payables
Cash flows from financing activities
Net proceeds from short term borrowings
Repayments of long term borrowings
Dividend paid
Net cash generated from / (used in) financing activities
24
Increase / (decrease) in cash and cash equivalents
Movement in cash and cash equivalents
At the beginning of the year
On acquisition of subsidiaries
Movement during the year
At the end of the year
14.6
23
38
Annual Report 2011
Notes to the financial statements
1.1
Reporting entity
Cargills (Ceylon) PLC is a quoted public limited liability
Company incorporated and domiciled in Sri Lanka. The
registered office of the Company is located at 40, York
Street, Colombo 1.
The principal activities of the Group are operation of large
supermarket chain, “Food City” in Sri Lanka, manufacture/
produce/ process and marketing of “ Cargills Magic”
ice cream and dairy products, “Kist” fruit base products
“Supremo” meat products, “Kotmale” dairy products,
“Helan” biscuits and franchise holder to operate Kentucky
Fried Chicken (KFC) restaurants in Sri Lanka, by processing
agricultural produce. Further the subsidiary Millers Limited
engages in Island wide distribution of fast moving consumer
goods, operation of hotel in Bandarawela and operation of
chain of photo processing outlets.
The Company, in the Financial Statements, refers to Cargills
(Ceylon) PLC and Group refers to the Company and all
its subsidiaries whose financial statements have been
consolidated.
1.2
Basis of preparation
The financial statements are prepared in accordance with
and comply with Sri Lanka Accounting Standards (SLAS)
laid down by the Institute of Chartered Accountants of Sri
Lanka and the requirements of Companies Act No. 7 of 2007.
These financial statements have been prepared under the
historical cost convention, as modified by the revaluation of
free hold land and building.
The preparation of financial statements in conformity with
SLASs requires the use of certain critical accounting estimates.
It requires management to exercise their judgment in the
process of applying the Company’s accounting policies. The
areas where assumptions and estimate are significant to the
consolidated financial statements are disclosed.
The directors have made an assessment of the Group’s ability
to continue as a going concern in the foreseeable future, and
they do not intend either to liquidate or cease operations.
1.3
Significant accounting policies
These accounting policies applied by the Group are, unless
otherwise stated, consistent with those used in the previous
year. Previous year figures and phrases have been rearranged, wherever necessary, to conform to the current
year’s presentation.
1.3.1
Basis of consolidation
The consolidated financial statements (referred to as the
“Group”) comprise the financial statements of the Company
and its subsidiaries and the Group’s interest in associate
companies. Subsidiaries and associates consolidated are
disclosed in note 14 to the financial statements.
1.3.1.1 Subsidiaries
Subsidiaries are all entities over which the Group has
the power to govern the financial and operating policies
generally accompanying a shareholding of more than one
half of the voting rights. The existence and effect of potential
voting rights that are currently exercisable or convertible
are considered when assessing whether the Group controls
another entity. Subsidiaries are fully consolidated from the
date on which control is transferred to the Group. They are
de-consolidated from the date that control ceases.
The purchase method of accounting is used to account for
the acquisition of subsidiaries by the Group. The cost of an
acquisition is measured as the fair value of the assets given,
equity instruments issued and liabilities incurred or assumed
at the date of exchange, plus costs directly attributable to the
acquisition. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date,
irrespective of the extent of any minority interest. The excess
of the cost of acquisition over the fair value of the Group’s
share of the identifiable net assets acquired is recorded as
goodwill. If the cost of acquisition is less than the fair value
of the net assets of the subsidiary acquired, the difference is
recognised directly in the income statement.
Inter - company transactions, balances and unrealised gains
on transactions between group companies are eliminated.
Unrealised losses are also eliminated but considered an
impairment indicator of the asset transferred. Accounting
policies of subsidiaries have been changed where necessary
to ensure consistency with the policies adopted by the
Group.
The subsidiary undertakings financial years are coterminous
with that of the Company.
1.3.1.2
Minority interests
Minority interest is measured at the minorities’ share of the
post acquisition fair values of the identifiable assets and
liabilities of the acquired entity. Separate disclosure is made
of minority interest.
The Group applies a policy of treating transactions with
minority interests as transactions with parties external to the
Group. Disposals to minority interests result in gains and
losses for the Group are recorded in the income statement.
Purchases from minority interests result in goodwill, being
the difference between any consideration paid and the
relevant share acquired of the carrying value of net assets of
the subsidiary.
1.3.1.3
Associates
Associates are all entities over which the Group has
significant influence but not control, generally accompanying
a shareholding of between 20% and 50% of the voting rights.
Annual Report 2011
39
Notes to the financial statements contd...
Investments in associates are accounted for using the equity
method of accounting and are initially recognised at cost.
The Group’s investment in associates includes goodwill
identified on acquisition, net of any accumulated impairment
loss.
The Group’s share of its associates’ post-acquisition profits
or losses is recognised in the income statement, and its share
of post-acquisition movements in reserves is recognised in
reserves. The cumulative post acquisition movements are
adjusted against the carrying amount of the investment.
When the Group’s share of losses in an associate equals
or exceeds its interest in the associate, including any other
unsecured receivables, the Group does not recognise further
losses, unless it has incurred obligations or made payments
on behalf of the associate.
Unrealised gains on transactions between the Group and its
associates are eliminated to the extent of the Group’s interest
in the associates. Unrealised losses are also eliminated
unless the transaction provides evidence of an impairment
of the asset transferred. Accounting policies of associates
have been changed where necessary to ensure consistency
with the policies adopted by the Group.
Dilution gains and losses in associates are recognised in the
income statement.
1.3.1.4
Goodwill
Goodwill represents the excess of the cost of an acquisition
over the fair value of the Group’s share of the net identifiable
assets of the acquired subsidiary at the date of acquisition.
Goodwill on acquisitions of subsidiaries is included
in intangible assets. Goodwill acquired in a business
combination is tested annually for impairment, or more
frequently if events or changes in circumstance indicate that
it might be impaired; and carried at costs less accumulated
impairment losses. Separately recognised goodwill is tested
annually for impairment and carried at cost less accumulated
impairment losses. Impairment losses on goodwill are not
reversed.
Goodwill is allocated to cash-generating units for the purpose
of impairment testing. The allocation is made to those cash
generating units or groups of cash generating units that are
expected to benefit from the business combination in which
the goodwill arose.
1.3.1.5
Reporting date
All the Group’s subsidiaries and associate company have a
common financial year ends on the 31 March.
1.3.2
Transactions in foreign exchange
Items included in the financial statements of each of the
Group’s entities are measured using the currency of the
primary economic environment in which the entity operates
(‘the functional currency’). The consolidated financial
statements are presented in Sri Lankan Rupees, which is the
Company’s functional and presentation currency.
Foreign currency transactions are translated into the
functional currency using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and
losses resulting from the settlement of such transactions and
from the translation at year-end exchange rates of monetary
assets and liabilities denominated in foreign currencies are
recognized in the income statement.
1.3.3
Assets and bases of their valuation
1.3.3.1
Recognition and measurement
The property, plant and equipment are measured at cost/fair
value less accumulated depreciation and any accumulated
impairment losses.
The cost of property, plant and equipment includes
expenditures that are directly attributable to the acquisition
of the asset. When a property, plant and equipment
comprise components which has different useful life, they
are accounted for as a separate items of property, plant and
equipment.
Carrying amounts of property plant and equipment are
reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not
be recoverable. An asset’s carrying amount is written down
immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount.
All the property, plant and equipment are initially recorded
at cost. Where items of property, plant and equipment are
subsequently revalued, any increases in the carrying amount
are credited to revaluation reserve in shareholders’ equity.
Decreases that offset previous increases of the same asset are
charged against the revaluation reserve directly in equity,
any excess and all other decreases are charged to the income
statement. Revaluation of property, plant and equipment
are undertaken by professionally qualified independent
valuers.
Subsequent cost
Subsequent costs are included in the asset’s carrying amount
or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with
the item will flow to the Group and the cost of the item
can be measured reliably. Property, plant and equipment
are derecognised upon replacement, disposal or when no
future economic benefits are expected from its use. Any
gain or loss arising on derecognition of property plant and
equipment is included in the income statement in the year it
is derecognised. All other repairs and maintenance costs are
charged to the income statement during the financial period
in which they are incurred.
40
Annual Report 2011
Depreciation
of transaction. Provision for impairment is made in the
Provision for depreciation is calculated based on their
estimated useful lives of each part of an item of property,
plant and equipment other than land. Depreciation is
calculated using straight line method to allocate their cost
or revalued amounts to their residual values over their
estimated useful lives.
temporary in the value of investments, determined on an
individual basis.
Marketable securities which have been classified under
short term investments are valued at lower of cost and
market value, on an aggregate portfolio basis. Market
value is calculated by reference to closing share values as
The estimated useful lives are as follows
Freehold buildings
Plant and machinery
Office and other equipment
Furniture and fittings
IT equipment and software
Motor vehicles
Air condition and refrigeration
Improvements to leasehold assets
income statement, when there has been a decline other than
at the balance sheet date published by the Colombo Stock
50 years
5 years
5 years
5 years
3 - 5 years
4 years
5 -10 years
4 -10 years
Exchange.
1.3.3.4
Intangible assets
Franchisee fee
Franchisee fee are shown at historical cost. Franchisee
fee have a finite useful life and are carried at cost less
accumulated amortisation. Amortisation is calculated using
the straight-line method to allocate the cost of Franchisee fee
Improvements on leasehold buildings and buildings
constructed on leasehold land are amortised over the lower
of their economic useful lives or unexpired period of lease.
over their estimated useful life of 10 years.
Depreciation of an asset begins when it is available for use
and ceases at the earlier of the date that the assets is classified
as held for sale and the date that the assets is derecognised.
Acquired computer software licences are capitalised on
The useful life, depreciating methods and residual values
are assessed annually or in an earlier date where any
circumstance indicates such assessment is required.
Computer software
the basis of the costs incurred to acquire and bring to use
the specific software. These costs are amortised over their
estimated useful life of 4 years.
Costs associated with developing or maintaining computer
software programmes are recognised as an expense
as incurred. Costs that are directly associated with the
1.3.3.2
Leases
Finance leases
production of identifiable and unique software products
controlled by the Group, and that will probably generate
economic benefits exceeding costs beyond one year, are
Assets are classified as acquired by finance leases when by
an agreement, the Group substantially assumes the risk and
rewards incidental to the ownership of an asset.
recognised as intangible assets. Costs include the software
Assets acquired by the way of finance lease are measured
at an amount equal to the lower of their fair value and the
present value of minimum lease payments at the inception
less accumulated depreciation and accumulated impairment
losses.
useful lives.
development employee costs and an appropriate portion
of relevant overheads. Computer software development
costs recognised as assets are amortised over their estimated
1.3.3.5
Inventories
Inventories are valued at the lower of cost and net realisable
value. Net realisable value is the estimated selling price
Operating leases
When the lessor effectively retains substantially all the risks
and rewards of an asset under the lease agreement, such
leases are classified as operating leases. Payments under
operating leases are recognised as an expense in the income
statement over the period of lease on a straight line basis.
1.3.3.3
in the normal course of business less estimated cost of
realisation and/or cost of conversion from their existing
state to saleable condition.
The cost of each category of inventory of the Group is
determined on the following basis.
Raw Materials
- Actual cost on a First In First Out
Finished goods and
- Directly attributable
(FIFO) basis
Investments
Quoted and unquoted investments held on long term basis
are classified as non-current investments and are measured
at cost less impairment losses. The cost of the investment
is the cost of acquisition inclusive of brokerage and cost
work-in-progress
manufacturing cost
Merchandising goods - Actual cost on a First In First Out
(FIFO) basis
Other inventories
- Actual cost
Annual Report 2011
41
1.3.3.6
Receivables
Trade receivables are recognised at the amounts that they
are estimated to realise less provision for impairment. A
provision for impairment of trade receivables is established
when there is objective evidence that the Group will not be
able to collect all amounts due according to the original terms
of receivables. Significant financial difficulties of the debtor,
probability that the debtor will enter bankruptcy or financial
reorganisation, and default or delinquency in payments are
considered indicators that the trade receivable is impaired.
The amount of the provision is the difference between the
asset’s carrying amount and the estimated realisable value.
The amount of the provision is recognised in the income
statement within selling and distribution costs. When a
1.3.4.3
Employee benefits
Defined benefit plan – retiring gratuity
A defined benefit plan is a post employment benefit
plan other than a defined contribution plan. The liability
recognised in the balance sheet, in respect of defined benefit
plan is the present value of defined benefit obligation at the
balance sheet date. Benefits falling due more than 12 months
after the balance sheet date are discounted to present value.
The defined benefit obligation is calculated annually
by independent actuaries using Projected Unit Credit
Method (PUC) as recommended by SLAS 16 - “Employees
benefits”.
trade receivable is uncollectible, it is written off against
The actuarial gains and losses are credited or charged to
the allowance account for trade receivables. Subsequent
income statement in the period in which they arise.
recoveries of amounts previously written off are credited in
the income statement.
1.3.3.7
Cash and cash equivalents
The assumptions based on which the results of the actuarial
valuation was determined, are included in Note 27 to the
financial statements.
Cash and cash equivalents comprise cash in hand and at
However, according to the Payment of Gratuity Act No.12
bank and short term highly liquid investments, readily
of 1983, the liability for the gratuity payment to an employee
convertible to known amounts.
arises only on the completion of 5 years of continued service
For the purpose of cash flow statements, cash and cash
with the Company.
equivalents comprise cash in hand and at bank net of
outstanding bank overdraft.
Cash flow statement is prepared based on the indirect method.
1.3.3.8
Impairment of assets
Assets that have an indefinite useful life, for example land,
are not subject to amortisation and are tested annually for
Defined contribution plan - Employees’ Provident Fund
and Employees’ Trust Fund
A defined contribution plan is a post employment benefit
plan under which an entity pays fixed contribution into
a separate entity and will have no legal or constructive
obligations to pay further amounts.
impairment. Assets that are subject to amortisation are
All the employees who are eligible for Employees’ Provident
reviewed for impairment annually or at an earlier date
Fund and Employees’ Trust Fund are covered by relevant
where events or changes in circumstances indicate that the
contribution funds in line with the respective statutes.
carrying amount may not be recoverable. An impairment
Employer’s contribution to the defined contribution plans
loss is recognised in the income statement for the amount by
are recognised as an expense in the income statement when
which the asset’s carrying amount exceeds its recoverable
incurred.
amount. The recoverable amount is the higher of an asset’s
fair value less costs to sell and value in use.
1.3.4.4
Provisions, contingent assets and contingent
liabilities
1.3.4
Equity and liabilities
1.3.4.1
Stated capital
Provisions are recognised when the Group has a legal
or constructive obligation, as a result of past events, it is
Incremental costs directly attributable to the issue of new
probable that an outflow of resources embodying economic
shares are shown in equity as a deduction, net of tax, from
benefits will be required to settle the obligation and a reliable
the proceeds.
estimate of the amount of such obligation can be made.
1.3.4.2
All contingent liabilities are disclosed, as notes to the
Borrowings
Borrowings are classified as current liabilities unless the
Company has an unconditional right to defer settlement
financial statements unless the outflow of resources is
remote.
of the liability for at least 12 months after the balance sheet
Contingent assets if exist, are disclosed, when inflow of
date.
economic benefit is probable.
42
Annual Report 2011
1.3.4.5
Commitments
All material commitments as at the balance sheet date have
been identified and disclosed in the notes to the financial
statements.
the property, plant and equipment in a state of efficiency has
been charged to the income statement.
1.3.5.5
Borrowing costs
Borrowing costs are recognised as an expense in the period
1.3.5
1.3.5.1
Income statement
Presentation
The income statement is presented on the “function of
expenses” method, as it represents fairly the elements
of Company performance and prescribed by Sri Lanka
Accounting Standards.
1.3.5.2
Revenue
The turnover of the Company and Group represents invoiced
value of goods to customers other than to companies in the
Group, net of discounts and returns.
1.3.5.3
Revenue recognition
Revenue is recognised to the extent that it is probable that
the economic benefit will flow to the Group and the revenue
can be measured reliably. Revenue is measured at the fair
value of the consideration received or receivable, net of
trade discounts and value added taxes, net of sales within
the Group.
The following specific criteria are used to recognize
revenue.
Revenue from sale of goods is recognised when the significant
risk and reward of ownership have been transferred to the
buyer, the consideration is recoverable, the associated costs
and possible return of goods can be estimated reliably and
there is no continuing management involvement with the
goods.
Rental income is recognised on an accrual basis.
Interest income is recognised as it accrues.
Dividend income is recognised in the income statement on
an accrual basis when the company’s right to receive the
dividend is established.
in which they are incurred.
1.3.5.6
Disposal of property, plant and equipment
Gain or losses on the disposal of property, plant and
equipment have been accounted for in the income
statement.
1.3.5.7
Grants and subsidies
Grants and subsidies related to assets are immediately
recognised in the balance sheet as a deferred income and
recognised in the income statement on a systematic and
rational basis over the useful life of the asset.
1.3.5.8
Income tax expense
Current tax
The provision for income tax is based on the element of
income and expenditure in the financial statements and is
computed in accordance with the provisions of the Inland
Revenue Act.
Deferred taxation
Deferred taxation is the tax attributable to the temporary
differences that arise when the carrying amounts of assets
and liabilities and their value derived based on the taxation
rules (tax base).
Deferred taxation is provided based on the balance sheet
liability method on the temporary differences at the balance
sheet date between the tax bases of assets and liabilities
and their carrying amounts in the financial statements.
Deferred tax assets are recognised for all deductible
temporary differences, carry forward of unused tax credits
and unused tax losses only to the extent that it is probable
that future taxable profits will be available against which
Gains or losses of revenue nature arising from the disposal of
property, plant and equipment and other non-current assets,
including investments, are accounted for in the income
statement, after deducting from the net sales proceeds on
disposal the carrying amount of such assets.
All other income is recognised on an accrual basis.
1.3.5.4
Expenditure
Expenses are recognised in the income statement on the
basis of a direct association between the cost incurred
and the earning of specific items of income. All expenses
incurred in the running of the business and in maintaining
the asset can be utilised.
The carrying amount of deferred tax assets is reviewed at
each balance sheet date 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 tax assets to be
utilised.
Deferred tax assets and liabilities are measured at tax rates
that are expected to apply to the year when the assets is
realised or liability is settled, based on the tax rates that
have been enacted or substantively enacted as at the
balance sheet date.
Annual Report 2011
43
1.3.5.9
Segment information
A business segment is a group of assets and operations
engaged in providing products or services that are subject
to risks and returns that are different from those of other
business segments. A geographical segment is engaged in
providing products or services within a particular economic
environment that are subject to risks and returns that
are different from those of segments operating in other
The Group is currently in the process of evaluating the
potential effect of the adoption of these standards on its
financial statements. Such impact has not been quantified as
at the reporting date.
2 Risk Management
Credit risk
that are different from those of other segments.
Credit risk arises from cash and cash equivalents, deposits
with banks as well as credit exposure to customers including
outstanding receivables. For bank and financial institutions
only rated financial institutions are accepted. The credit
control assess the credit quality of customers, taking into
account their financial position, past experience and other
factors. The individual risk limits are set based on internal
ratings in accordance with limits set by the Board. The
utilisation of credit limits are regularly monitored.
The activities/businesses of the Group fall under the Food
Liquidity risk
economic environments.
A segment is a distinguishable component of the Group
that is engaged either in providing products or services
(business/industry segment) or in providing products
or services within a particular economic environment
geographical segment), which is subject to risks and rewards
& Beverages and Distributor categories. There are no
distinguishable components to be identified as geographical
segment for the Group. The business segments are reported
based on the Group’s management and internal reporting
structures.
Inter segment pricing is determined at prices mutually
agreed by the companies.
Segment results, assets and liabilities include items directly
attributable to a segment as well as those that can be allocated
on a reasonable basis. Unallocated items mainly comprise
income earning assets and revenues, interest bearing loans,
borrowings and expenses, corporate assets and expenses.
Segment capital expenditure is the total cost incurred during
the period to acquire segment assets, which are expected to
be used for more than one accounting period.
1.3.6
Events occurring after the balance sheet date
All material post balance sheet events have been considered,
disclosed and adjusted where applicable.
1.3.7
New accounting standards issued but not
effective as at balance sheet date
The Institute of Chartered Accountants of Sri Lanka issued a
new volume of Sri Lanka Accounting Standards which will
become applicable for annual periods beginning on or after
1 January 2012. Accordingly these standards have not been
applied in preparing these financial statements as they are
not effective for the year ended 31 March 2011.
These Sri Lanka Accounting Standards comprise accounting
standards prefixed both SLFRS (corresponding to IFRS)
and LKAS (corresponding to IAS). Apllication of Sri Lanka
Accounting Standards prefixed SLFRS and LKAS for the
first time shall be deemed to be an adoption of SLFRSs.
Effective liquidity risk management includes maintaining
sufficient cash and marketable securities and the availability
of funding from adequate amount of committed credit
facilities. The Group maintains flexibility in funding by
maintaining sufficient cash reserves and committed credit
lines.
Interest rate risk
The Group’s income and operating cash flows are
substantially independent of changes in market interest
rates.
The Group’s interest rate risk arises from long-term
borrowings. The borrowings at variable rates expose the
Group to cash flow interest rate risk whilst borrowings at
fixed rates exposes the Group to interest rate risk. The Group
analyses its interest rate exposure on a dynamic basis.
44
Annual Report 2011
3 Revenue
3.1 Gross revenue
Gross revenue
Turnover tax
Net turnover
3.2 Business segment analysis
Food and beverages
Wholesale distribution
Leisure
Photo processing
Inter segment sales
Group
Company
2011
Rs. ‘ 000
2010
Rs. ‘ 000
2011
Rs. ‘ 000
2010
Rs. ‘ 000
38,156,172
(1,027,511)
37,128,661
31,772,821
(898,024)
30,874,797
30,150,911
(481,251)
29,669,660
17,624,661
(296,519)
17,328,142
36,861,287
3,172,727
65,085
72,878
40,171,977
(3,043,316)
37,128,661
30,559,093
2,792,425
45,935
61,350
33,458,803
(2,584,006)
30,874,797
29,653,892
15,768
29,669,660
29,669,660
17,306,716
21,426
17,328,142
17,328,142
3.3 Geographical dispersion of turnover
The Group does not distinguish its turnover into significant geographical segments. The almost total turnover consists of turnover
within Sri Lanka.
4 Cost of sales
Cost of sales of the Company and Group include direct operating costs of super markets, factories and restaurants.
5 Other income
Dividend income
Rental income
(Loss) / profit on sale of property, plant and equipment
Merchandising income
Profit on sale of investments
Exchange gain
Amortisation of capital grant
Sundry income
Group
2011
Rs. ‘ 000
2010
Rs. ‘ 000
2011
Rs. ‘ 000
2010
Rs. ‘ 000
8
19,150
(151)
534,032
7,768
6,329
477
14,837
582,450
14,100
8,604
473,675
10,899
3,175
510,453
48,603
32,188
(113)
544,602
7,768
633,048
275,382
21,710
2,825
333,457
747
634,121
6 Finance costs
Interest expense on
- Commercial papers and loans
- Bank overdrafts
- Other loans and bank charges
- Staff security deposits
Company
Group
Company
2011
Rs. ‘ 000
2010
Rs. ‘ 000
2011
Rs. ‘ 000
2010
Rs. ‘ 000
139,814
107,545
116,186
401
363,946
150,647
85,309
192,486
377
428,819
120,243
95,452
78,152
401
294,248
122,183
63,696
110,978
377
297,234
45
Annual Report 2011
7
Group
Company
2011
Rs. ‘ 000
2010
Rs. ‘ 000
2011
Rs. ‘ 000
2010
Rs. ‘ 000
1,995,461
1,664,220
1,452,358
912,508
3,981
462
851,291
114
7,785
(6,329)
11,355
10,967
74,625
2,345
270
772,852
72
7,478
(10,899)
6,276
40,883
690
255
535,586
9
70,113
575
80
455,641
72
39,458
1,808,132
28,454
158,875
1,995,461
1,458,132
79,693
126,395
1,664,220
1,311,277
24,753
116,328
1,452,358
768,261
75,816
68,431
912,508
6,790
5,267
5,007
4,285
Profit before taxation is stated after charging all expenses
including the following :
Staff costs (Note 7 (a))
Auditors’ remuneration
- audit
- non audit services
Depreciation on property, plant and equipment (Note 12)
Donations
Amortisation of intangible assets (Note 13)
Foreign exchange gain (Note 5)
Provision for inventories
Impairment of property, plant and equipment (Note 12)
Directors’ emoluments
(a) Staff costs
Salaries, wages and other costs
Pension costs - retirement benefit obligations (Note 27)
Defined contribution plan cost - EPF and ETF
Number of employees as at 31 March
8 Income tax expense
(a) Current tax charge
Income tax
Social Responsibility Levy
Irrecoverable ESC
Dividend tax
(Over)/ under provision
Deferred tax [Note 8 (f)]
Group
Company
2011
Rs. ‘ 000
2010
Rs. ‘ 000
2011
Rs. ‘ 000
2010
Rs. ‘ 000
322,094
4,434
2,439
6,864
(15,243)
(8,058)
312,530
217,597
3,024
852
20,708
92,828
(46,675)
288,334
226,324
3,395
(12,452)
(16,445)
200,822
57,126
856
7,125
(35,063)
30,044
(b) The Company and its subsidiaries other than which enjoy a tax holiday or are exempt from income tax as referred below in note
8 (c), are liable for income tax at 35% on their taxable income.
(c ) Subsidiary companies enjoying tax holiday / exempt from income tax.
Cargills Quality Dairies (Private) Limited, Cargills Quality Foods Limited, Cargills Agrifoods Limited, Cargills Food Processors
(Private) Limited and Cargills Food Services (Private) Limited are exempt from income tax in accordance with the provisions of
the Inland Revenue Act No. 38 of 2000 and Act No. 10 of 2006 and subsequent amendments thereto.
Diana Biscuits Manufactures (Private) Limited is exempt from income tax in accordance with the provisions of the Inland
Revenue Act No. 10 of 2006 and subsequent amendments thereto.
Cargills Quality Dairies (Private) Limited, Cargills Quality Foods Limited and Cargills Agrifoods Limited are on tax holiday till
the year of assessment 2010/11 and subject to a concessionary tax rate of 10% thereafter.
Cargills Food Processors (Private) Limited and Cargills Food Services (Private) Limited are on tax holiday till the year
of assessment 2010/11. Cargills Food Processors (Private) Limited is subject to a concessionary tax rate of 10% from year
of assessment 2011/12. However, after reviewing the position as at the balance sheet date, a tax provision of Rs. 31 Mn
(2010 - Rs. 81.1 Mn) has been made for the above two companies for the financial year ended 31 March 2011.
Diana Biscuits Manufactures (Private) Limited is on a tax holiday till the year of assessment 2017/18 and subject to a normal tax
rate thereafter.
46
Annual Report 2011
(c ) Subsidiary companies enjoying tax holiday / exempt from income tax (Contd.).
Kotmale Milk Products Limited, Kotmale Dairy Products (Private) Limited and Kotmale Kiri (Private) Limited are on tax holiday
till the year of assessment 2010/11 and subject to a concessionary tax rate of 10% thereafter.
(d) During the year the Company and the subsidiaries paid Economic Service Charge (ESC) amounting to Rs. 106.41 Mn
(2010 - Rs. 68.68 Mn) and Rs. 31.73 Mn (2010 - Rs. 60.83 Mn) respectively.
Group
(e) Reconciliation between income tax charge
and profit before tax is given below :
Profit before tax
Aggregate disallowed expenses
Aggregate allowable expenses
Aggregate other income
Aggregate exempt income
Adjusted profit (a)
Tax losses brought forward
Tax losses added (b)
Tax losses acquired ( c )
Tax losses utilised (d)
Tax losses carried forward
Taxable income (a+b+d)
Income tax @ 35%
Income tax @ 15%
Income tax expense
2011
Rs. ‘ 000
2010
Rs. ‘ 000
2011
Rs. ‘ 000
2010
Rs. ‘ 000
1,406,703
1,226,405
(843,616)
(7,961)
(757,859)
1,023,672
1,000,726
1,079,558
(653,095)
(1,427)
(646,839)
778,923
756,107
628,778
(631,341)
(56,371)
(34,382)
662,791
345,487
574,263
(416,535)
(275,382)
(7,726)
220,107
459,625
44,653
373,468
(28,924)
848,822
523,551
(63,926)
459,625
16,150
(16,150)
-
73,040
(56,890)
16,150
1,039,401
290,821
31,273
322,094
714,997
193,108
24,489
217,597
646,641
226,324
226,324
163,217
57,126
57,126
Group
(f) Deferred tax
Deferred tax expense arising from;
Accelerated depreciation for tax purposes
Retirement benefit obligation
Tax losses
Decrease in future tax rate
Deferred tax release
Company
Company
2011
Rs. ‘ 000
2010
Rs. ‘ 000
2011
Rs. ‘ 000
2010
Rs. ‘ 000
33,782
(2,794)
1,361
(40,407)
(8,058)
(44,500)
(24,549)
22,374
(46,675)
33,790
(4,000)
(46,235)
(16,445)
(30,997)
(23,977)
19,911
(35,063)
Deferred tax has been computed taking into consideration the revised tax rates effective from 1 April 2011 which is 28% for all
standard rate companies. The deferred tax effect on undistributed reserves of subsidiaries has not been recognized since the parent
can control the timing of the reversal of these temporary differences.
Temporary differences associated with Cargills Retail (Private) Limited, Cargills Agrifoods Limited, Cargills Quality Dairies
(Pri vate) Limited, Kotmale Dairy Products (Private) Limited and Kotmale Milk Foods Limited, subsidiary companies for which a
deferred tax assets have not been recognized, are disclosed as follows.
2011
Temporary
Tax effect on
difference
temporary
difference
Rs. ‘ 000
Rs. ‘ 000
Carried forward losses
332,427
9,976
435,959
778,362
93,080
1,072
45,435
139,587
2010
Temporary
Tax effect on
difference
temporary
difference
Rs. ‘ 000
Rs. ‘ 000
379,145
8,649
389,125
776,919
120,152
3,027
136,194
259,373
47
Annual Report 2011
(f) Deferred tax (Contd.).
The Management recognises deferred tax assets only when it is probable that taxable profit will be available against which the
deductible temporary differences can be utilized. It is probable that taxable profits will not be available against which the above deductible temporary differences amounting to Rs. 778.4 Mn (2010 - Rs. 776.9 Mn) can be utilized in accordance with SLAS 14 (Revised
2005) - “Income taxes”.
9 Segment profit
Group
Company
2011
Rs. ‘ 000
2010
Rs. ‘ 000
2011
Rs. ‘ 000
2010
Rs. ‘ 000
Unallocated overheads
Dividend income
Rental income
Profit from sale of investment
(Loss) / Profit from sale of property, plant and equipment
2,197,584
68,223
2,805
11,582
2,280,194
(473,742)
8
19,150
7,768
(151)
1,581,406
141,840
3,166
8,701
1,735,113
(320,794)
14,100
8,604
1,456,482
3,154
1,459,636
(497,727)
48,603
32,188
7,768
(113)
591,243
4,285
595,528
(252,724)
275,382
21,710
-
Amortisation of intangible assets
Finance costs
Share of Associate result
Income tax expense
(7,785)
(363,946)
(54,793)
(312,530)
1,094,173
(7,478)
(428,819)
(288,334)
712,392
(294,248)
(200,822)
555,285
Segment profit before unallocated overheads
Food & beverages
Wholesale distribution operation
Photo processing
Leisure
10 Earnings per share
Group
Profit attributable to ordinary shareholders (Rs. ‘000)
Weighted average number of ordinary shares in issue
Basic earnings per share (Rs.)
2,825
(297,234)
(30,044)
315,443
Company
2011
2010
2011
2010
1,088,550
224,000,000
4.86
712,392
224,000,000
3.18
555,285
224,000,000
2.48
315,443
224,000,000
1.41
Basic earnings per share is calculated based on the net profit attributable to ordinary shareholders of Cargills (Ceylon) PLC
divided by the weighted average number of ordinary shares in issue during the year.
11 Dividend per share
Dividend for the year
Interim
Final - proposed
Group
Company
Rs.
2011
Rs. ‘ 000
2010
Rs. ‘ 000
Rs.
2011
Rs. ‘ 000
2010
Rs. ‘ 000
0.50
1.00
1.50
112,000
224,000
336,000
67,200
179,200
246,400
0.50
1.00
1.50
112,000
224,000
336,000
67,200
179,200
246,400
An interim dividend of 50 Cents per share (Rs. 112,000,000) was paid on 7 February 2011 for the year ended 31 March 2011. A final
dividend of Rs. 1 per share is proposed for the year ended 31 March 2011. The final dividend proposed on 17 August 2011 has not
been recognised as at the balance sheet date in compliance with SLAS 12 (Revised 2005) - “Events after the Balance Sheet Date”.
48
Annual Report 2011
12 Property, plant and equipment
Freehold
land
Rs. ‘ 000
Freehold Expenditure
building incurred on
leasehold
building
Rs. ‘ 000
Rs. ‘ 000
Plant,
machinery
and others
Motor
vehicles
Total
2011
Total
2010
Rs. ‘ 000
Rs. ‘ 000
Rs. ‘ 000
Rs. ‘ 000
Group
Cost / revaluation
As at 1 April
Additions
Revaluation
Disposals
Impairment
As at 31 March
4,030,820
250,758
49,000
4,330,578
1,292,223
3,212
32,000
1,327,435
1,428,245
300,462
215,500
1,944,207
4,643,156
791,976
842,762
(3,181)
(10,967)
6,263,746
370,775
62,530
33,388
(1,239)
465,454
11,765,219
1,408,938
1,172,650
(4,420)
(10,967)
14,331,420
7,610,401
602,720
3,571,724
(19,626)
11,765,219
Depreciation / amortisation
As at 1 April
Charge for the year
Disposals
As at 31 March
-
227,218
45,225
2,582
275,025
795,842
162,464
4,690
962,996
2,457,182
588,398
80,658
(2,203)
3,124,035
241,610
55,204
16,290
(1,239)
311,865
3,721,852
851,291
104,220
(3,442)
4,673,921
2,966,209
772,852
(17,209)
3,721,852
4,330,578
4,330,578
1,052,410
1,052,410
981,211
981,211
3,139,711
3,139,711
153,589
153,589
9,657,499
1,447,098
11,104,597
4,030,820
4,030,820
1,065,005
1,065,005
632,403
632,403
2,185,974
2,185,974
129,165
129,165
Freehold
land
Freehold Expenditure
building incurred on
leasehold
building
Rs. ‘ 000
Rs. ‘ 000
Plant,
machinery
and others
Motor
vehicles
Total
2011
Total
2010
Rs. ‘ 000
Rs. ‘ 000
Rs. ‘ 000
Rs. ‘ 000
Net book value
As at 31 March 2011
Capital work in progress
As at 1 April 2010
Rs. ‘ 000
8,043,367
648,349
8,691,716
Company
Cost / revaluation
As at 1 April
Additions
Revaluation
Disposals
As at 31 March
Depreciation / amortisation
As at 1 April
Charge for the year
Disposals
As at 31 March
Net book value
As at 31 March 2011
As at 1 April 2010
3,590,420
3,590,420
529,154
529,154
762,201
249,739
1,011,940
2,672,886
573,662
(622)
3,245,926
140,178
53,804
193,982
7,694,839
877,205
(622)
8,571,422
4,172,279
458,414
3,072,021
(7,875)
7,694,839
-
21,073
10,584
31,657
410,736
132,222
542,958
1,141,675
361,998
(509)
1,503,164
70,306
30,782
101,088
1,643,790
535,586
(509)
2,178,867
1,194,240
455,641
(6,091)
1,643,790
3,590,420
3,590,420
497,497
497,497
468,982
468,982
1,742,762
1,742,762
92,894
92,894
6,392,555
1,078,643
7,471,198
3,590,420
3,590,420
508,081
508,081
351,465
351,465
1,531,211
1,531,211
69,872
69,872
6,051,049
464,713
6,515,762
49
Annual Report 2011
(a) Expenditure incurred on leasehold building represent the cost incurred in setting up new outlets.
(b) Freehold land owned by the Group was revalued as at 31 March 2010 by Mr. T Weeratne (FIV), an independent professional
valuer on a depreciated replacement cost basis for buildings and market value basis for land as at the date of valuation. The
revalued amount was accordingly incorporated in the financial statements.
This revaluation has been carried out in conformity with the requirements of the Sri Lanka Accounting Standard No. 18 (Revised
2005) - “Property, plant and equipment”. The surplus on revaluation was credited to the revaluation reserve account.
(c ) The details of assets mortgaged for banking facilities obtained have been given in the note [24 ( c)] to the financial statements.
(d) If land and buildings were stated at the historical cost basis, the amounts would have been as follows:
Land
Building
2011
Rs. ‘ 000
2010
Rs. ‘ 000
2011
Rs. ‘ 000
2010
Rs. ‘ 000
Group
Cost
Accumulated depreciation
Net book value
213,163
213,163
213,163
213,163
711,014
(273,617)
437,397
711,014
(227,218)
483,796
Company
Cost
Accumulated depreciation
Net book value
137,122
137,122
137,122
137,122
263,431
(26,342)
237,089
263,431
(21,073)
242,358
(e) Depreciation expense of Rs. 669 Mn (2010 - Rs. 629.8 Mn) for the Group and Rs. 478.1 Mn (2010 - Rs. 416.7 Mn) for the Company
has been charged in cost of goods sold, Rs. 182.3 Mn (2010 - Rs. 143.0 Mn) for the Group and Rs. 57.5 Mn (2010 - Rs. 38.9 Mn) for
the Company in distribution and other expenses.
(f)
Capital work in progress consists of expenditure incurred on projects where operations had not completed as at the balance sheet
date.
(g) Fully depreciated assets of the Group as at the year end is Rs. 1,281 Mn (2010 - Rs. 863.2 Mn) and that of Company is Rs. 412.8
Mn (2010 - Rs. 188.5 Mn).
(h) It was identified that machinery purchased on an agreement with Tetra Pak Singapore and Emerging Markets, a division of Tetra
Pak South Asia (Pte) Ltd, has been impaired. Consequently an impairment loss of Rs. 11 Mn has been charged in the financial
statement of Kotmale Milk Products Limited.
13 Intangible assets
Group
Gross value
As at 1 April
Additions
As at 31 March
Amortisation
As at 1 April
Amortisation for the year
As at 31 March
Net book value as at 31 March
Goodwill
Franchisee fee
Software
Total
2011
Rs. ‘ 000
2010
Rs. ‘ 000
2011
Rs. ‘ 000
2010
Rs. ‘ 000
2011
Rs. ‘ 000
2010
Rs. ‘ 000
2011
Rs. ‘ 000
2010
Rs. ‘ 000
294,043
764,393
1,058,436
294,043
294,043
65,801
65,801
65,801
65,801
9,314
5,853
15,167
9,314
9,314
369,158
770,246
1,139,404
369,158
369,158
36,450
36,450
36,450
36,450
36,013
5,148
41,161
30,864
5,149
36,013
4,772
2,637
7,409
2,443
2,329
4,772
77,235
7,785
85,020
69,757
7,478
77,235
1,021,986
257,593
24,640
29,788
7,758
4,542
1,054,384
291,923
Goodwill as at the balance sheet date has been tested for impairment and found no impairment in carrying value. Recoverable values
have been estimated based on the value in use or fair value less cost to sell, as applicable.
During the year addition to the Goodwill reflects the excess of the purchase consideration made for the fair value of assets and
liabilities acquired in acquiring the Kotmale Holdings PLC and Diana Biscuits Manufactures (Private) Limited.
50
Annual Report 2011
13 Intangible assets (Contd.).
Amortisation of intangible assets of Rs. 5.1 Mn (2010 - 5.1 Mn) has been charged in cost of goods sold and Rs. 2.6 Mn (2010 - 2.3 Mn)
in administrative expenses.
14 Investments
No. of Holding Market
Shares
%
Value
Rs. ‘ 000
14.1 Investments in subsidiaries
Unquoted :
Cargills Retail (Pvt) Ltd
47,500,002
Cargills Quality Foods Ltd
4,860,291
Millers Brewery Ltd
1,002
Dawson Office Complex (Pvt) Ltd
1
14.2 Investment in associates
Unquoted :
C T Properties Limited
14.3 Short term investments
Quoted :
Lanka IOC PLC
Sierra Cables PLC
Aitken Spence PLC
Group
Company
2011
Rs. ‘ 000
2010
Rs. ‘ 000
2011
Rs. ‘ 000
2010
Rs. ‘ 000
100%
100%
100%
100%
-
-
475,000
1,193,453
100
1,668,553
475,000
1,193,453
1,668,453
25%
161,282
161,282
216,075
216,075
216,075
216,075
216,075
216,075
5,400
150
45,170
50,720
(3,635)
47,085
5,400
150
5,550
(1,791)
3,759
5,400
30
45,170
50,600
(3,635)
46,965
5,400
30
5,430
(1,758)
3,672
28,502
75,587
3,759
46,965
3,672
21,500,000
200,000
49,500
267,500
3,520
267
43,415
47,202
Provision for falling value
47,202
Unquoted :
REPO Investments
(a) Cargills Quality Foods Limited, Cargills Retail (Private) Limited, Millers Brewery Limited and Dawson Office Complex (Private)
Limited are subsidiaries of Cargills (Ceylon) PLC.
(b) During the year, Cargills Quality Foods Limited a wholly owned subsidiary of Cargills (Ceylon) PLC, acquired 100% ownership
of Diana Biscuits Manufactures (Private) Limited with an investment of Rs. 342.89 Mn. The main business activity of the Company
is manufacture and distribution of biscuits.
(c) During the year, the Company acquired majority shareholding of Kotmale Holdings PLC at a purchase consideration of
Rs. 1,038 Mn. Initially, the shareholding increased to 73.4% and subsequently with the mandatory offer closing on 30 December
2010, the shareholding was increased to 81.72%.
As at 31 March 2011, Cargills (Ceylon) PLC transferred the ownership of Kotmale Holdings PLC to its wholly owned subsidiary
Cargills Quality Foods Limited. This transaction was done outside the trading floor of Colombo Stock Exchange consequent to a
special approval from the Securities and Exchange Commission of Sri Lanka. The sales consideration amounted to Rs. 1,038 Mn
and was accounted as intercompany receivable.
(d) During the year, the Company incorporated Millers Brewery Limited to set up a brewery venture, which would commence
business in the next financial year. The initial share capital issued amounted to Rs. 100,020/-.
(e) Dawson Office Complex (Private) Limited incorporated with an initial share investment of Rs. 100 for the purpose of building an
office complex to be utilised as head office of Cargills (Ceylon) PLC.
Annual Report 2011
51
(f) Cargills Agrifoods Limited, CPC (Lanka) Limited, Cargills Quality Dairies (Private) Limited, Cargills Distributors (Private)
Limited, Cargills Food Processors (Private) Limited, Millers Limited and Diana Biscuits Manufactures (Private) Limited
are subsidiaries of Cargills Quality Foods Limited (CQF). The financial statements of the said subsidiaries of CQF have been
consolidated as 100% subsidiaries in view of the minority shareholders (subscriber shares) confirming that they hold the shares
in trust for CQF.
(g) Kotmale Holdings PLC is a subsidiary of Cargills Quality Foods Limited (CQF) in which CQF has 81.72% stake and the financial
statements of the said subsidiary has been consolidated.
(h) The financial statements of Cargills Food Services (Private) Limited (CFS) has been consolidated with that of Cargills Food Processors
(Private) Limited (CFP) as a 100% subsidiary in view of the two shareholders of CFS holding the shares in trust for CFP.
(i) The financial statements of Kotmale Products Limited, Kotmale Marketing (Private) Limited, Kotmale Dairy Products (Private)
Limited, Kotmale Milk Products Limited, Kotmale Kiri (Private) Limited and Kotmale Milk Foods Limited have been consolidated
with that of Kotmale Holdings PLC as 100% subsidiaries.
(j) The market value of quoted short term investments as at 31 March 2011, as quoted by the Colombo Stock Exchange amounted to
Rs. 47,202,550 (2010 - Rs. 3,758,900)
14.4 Investment in associates
As at 1 April
Acquisition
Share of loss incurred
As at 31 March
Group
2011
2010
Rs. ‘000
Rs. ‘000
216,075
(54,793)
161,282
216,075
216,075
14.5 Summarised financial information of associates
Group share of;
Revenue
Operating expenses
Finance expenses
Income tax expense
Loss for the year
Group share of;
Total assets
Total liabilities
Net assets
Goodwill
Group
2011
Rs. ‘000
2010
Rs. ‘000
183,728
(203,156)
(33,331)
(2,034)
(54,793)
-
329,218
(375,279)
(46,061)
207,343
161,282
461,061
(452,329)
8,732
207,343
216,075
52
Annual Report 2011
14.6 Acquisitions during the year
A detailed disclosure as required by SLAS 9 - Cash Flow Statements, is given below for the two acquisitions made during the
year. Kotmale Holdings PLC (KHP) and Diana Biscuits Manufactures (Private) Limited (DBML) were acquired by the Group.
Total purchase consideration
Cash paid for acquisition
Cash and cash equivalents acquired
Net cash flow from acquisition of subsidiaries
Net assets attributable to parent on acquisition
Goodwill on acquisition
Net assets holding %
KHP
DBML
Rs. ‘000
Rs. ‘000
1,037,785
(1,037,785)
(2,662)
(1,040,447)
375,919
661,866
81.72%
342,883
(342,883)
(193,885)
(536,768)
240,356
102,527
100%
296,993
89,064
284,981
1,369
672,407
(36,891)
(19,872)
(152,963)
462,681
790,976
21,934
16,329
829,239
(301,246)
(93,752)
434,241
Summary of net assets as of acquisition date is as follows;
Inventories
Trade and other receivables
Total assets
Borrowings
Retirement benefit obligations, deferred tax and capital grant
Trade and other payables
Net assets acquired other than cash and cash equivalents
Buildings, plant and machinery owned by the Diana Biscuits Manufactures (Private) Limited was revalued as at 17 October 2010
by Mr. M C Abdul Malick (FIV), an independent professional valuer on a depreciated replacement cost basis to determine the
fair value of assets as at the acquisition date. The revalued amount was accordingly incorporated in the financial statements of
Diana Biscuits Manufactures (Private) Limited.
15
During the financial year, newly formed wholly owned subsidiary of Cargills (Ceylon) PLC, Millers Brewery Limited
entered in to an agreement for the sale and purchase of the business and business assets, including the brands, of McCallum
Breweries (Ceylon) (Private) Limited, McCallum Brewing Company (Private) Limited and Three Coins Company (Private)
Limited at a purchase consideration of Rs. 1,415 Mn. In relation to this agreement, payments made up to the balance sheet date
amounted to Rs. 1,187.7 Mn. Further sum of Rs. 17.7 Mn was advanced to acquire various assets.
Advance paid (Rs.’000)
1,205,425
16 Prepayment on leasehold land and building
Group
2011
Rs. ‘000
2010
Rs. ‘000
35,000
35,000
4,375
875
5,250
3,500
875
4,375
Balance as at 31 March
29,750
30,625
Current portion of the prepayment
Non- current portion of the prepayment
875
28,875
29,750
875
29,750
30,625
Gross value
As at 31 March
Amortisation
As at 1 April
Amortisation for the year
As at 31 March
53
Annual Report 2011
17 Deferred tax assets
Group
As at 1 April
(Charge) / release for the year
As at 31 March
2011
Rs. ‘ 000
2010
Rs. ‘ 000
21,777
(7,462)
14,315
21,573
204
21,777
2,644
11,671
14,315
2,163
591
19,023
21,777
Deferred tax assets as at the year end is made up as follows:
Deferred tax assets arising from
- temporary difference of property, plant and equipment
- temporary difference of retirement benefit obligations
- carried forward tax losses
18 Inventories
Raw materials
Work in progress
Finished goods
Merchandising stock for sale
Food and beverages - restaurant operations
Consumables
Provision for obsolete inventories
Goods in transit
Group
Company
2011
Rs. ‘ 000
2010
Rs. ‘ 000
2011
Rs. ‘ 000
2010
Rs. ‘ 000
471,446
8,253
77,730
2,918,880
34,131
81,352
3,591,792
(61,087)
3,530,705
45,617
3,576,322
337,915
8,879
38,192
2,638,907
21,295
30,336
3,075,524
(37,918)
3,037,606
21,783
3,059,389
2,630,352
58,760
2,689,112
2,689,112
18,801
2,707,913
1,803,966
19,369
1,823,335
1,823,335
1,823,335
Inventories amounting to Rs. 194 Mn has been mortgaged for bank facilities obtained [refer note 24 (C)]
19 Trade and other receivables
Trade receivables
Provision for bad & doubtful debts for trade receivables
Prepayments and deposits
Other receivables
Loans and advances [refer note 19 (a)]
Tax recoverable [refer note 19 (b)]
Group
Company
2011
Rs. ‘ 000
2010
Rs. ‘ 000
2011
Rs. ‘ 000
2010
Rs. ‘ 000
830,553
(96,592)
733,961
355,545
125,947
20,607
348,029
1,584,089
548,842
(71,230)
477,612
228,926
84,848
7,513
320,850
1,119,749
126,905
(3,546)
123,359
281,335
33,275
6,819
255,035
699,823
98,991
(3,546)
95,445
183,215
41,466
7,389
147,056
474,571
54
Annual Report 2011
19 (a) Loans and advances represents loans to employees
and the movement during the year is as follows :
As at 1 April
Loans granted
Repayments
As at 31 March
Group
Company
2011
Rs. ‘ 000
2010
Rs. ‘ 000
2011
Rs. ‘ 000
2010
Rs. ‘ 000
7,513
10,656
21,523
39,692
(19,085)
20,607
6,007
14,022
20,029
(12,516)
7,513
7,389
18,156
25,545
(18,726)
6,819
5,839
13,852
19,691
(12,302)
7,389
19 (b) Tax recoverable
This includes Economic Service Charges, VAT recoverable, WHT recoverable and Income tax overpayments.
20 Amounts due from / due to related companies
Amounts due from subsidiaries
Millers Limited
Millers Brewery Limited
Dawson Office Complex (Private) Limited
Amounts due from holding company
C T Holdings PLC
Amounts due from other related companies
Ceylon Hotels Corporation PLC
Ceylon Printers PLC
C T Properties Limited
Ceylon Theatres (Private) Limited
C T Land Development PLC
Dialog Telekom PLC
Galle Face Hotel Co. Limited
Kalamazoo Systems PLC
Kandy Hotels Co.(1938) PLC
Lanka Tiles PLC
Total amounts due from related companies
Amounts due to subsidiaries
Cargills Retail (Private) Limited
Cargills Distributors (Private) Limited
C P C (Lanka) Limited
Kotmale Dairy Products Limited
Amounts due to other related companies
Dialog Telekom PLC
Lanka Ceramics PLC
Paragon Ceylon PLC
Unidil Packaging (Private) Limited
Total amount due to related companies
Group
Company
2011
Rs. ‘ 000
2010
Rs. ‘ 000
2011
Rs. ‘ 000
2010
Rs. ‘ 000
-
-
1,112,836
21,302
1,221,688
249,599
2,605,425
17,421
17,421
17,865
17,796
17,254
17,252
404
8
94,251
2,228
77,002
3,887
435
325
674
179,214
197,079
23
23
80,900
2,257
150,875
886
36
145
235,145
252,941
94,242
2,208
77,002
3,887
6
674
178,019
2,800,698
23
80,891
2,213
150,937
20
234,084
268,757
-
-
857,245
18,604
59,961
34,037
17,329
2,998
45,378
1,035,552
103,149
134,327
13,972
40,843
47,007
6,759
346,057
251
1,385
1,636
1,636
3,247
400
1
518
4,166
4,166
251
251
1,035,803
3,247
400
3,647
349,704
55
Annual Report 2011
21 Stated capital
Issued and fully paid :
224,000,000 Ordinary shares
Group
2011
Rs. ‘ 000
2010
Rs. ‘ 000
2011
Rs. ‘ 000
2010
Rs. ‘ 000
130,723
130,723
130,723
130,723
22 Reserves
Capital reserves
Revaluation reserve
Capital reserve
Revenue reserve
General reserve
Company
Group
Company
2011
Rs. ‘ 000
2010
Rs. ‘ 000
2011
Rs. ‘ 000
2010
Rs. ‘ 000
4,115,464
7,928
4,123,392
4,094,259
7,928
4,102,187
3,618,106
3,618,106
3,598,018
3,598,018
485,500
4,608,892
385,500
4,487,687
485,500
4,103,606
385,500
3,983,518
Revaluation reserve consists of net surplus resulting from the revaluation of property, plant & equipment.
Capital reserve consists of share of capital reserve resulting from consolidation.
General reserve represents the amount set aside by the directors for general applications.
23 Cash and cash equivalents
Cash at bank and in hand
Group
Company
2011
Rs. ‘ 000
2010
Rs. ‘ 000
2011
Rs. ‘ 000
2010
Rs. ‘ 000
303,645
261,763
246,161
160,051
For the purpose of the cash flow statement, the year end
cash and cash equivalents comprise the following:
Cash and bank balances
Bank overdraft
303,645
261,763
246,161
160,051
(2,574,088)
(1,068,192)
(2,182,882)
(979,245)
(2,270,443)
(806,429)
(1,936,721)
(819,194)
For the purpose of the cash flow statement, following major non-cash transactions have been eliminated.
- Transfer consideration of Kotmale Holdings PLC
-
-
1,037,785
-
- Dividend received from subsidiary companies
-
-
48,603
275,382
56
Annual Report 2011
24 Borrowings
Group
Current
Current portion of long term loan
Commercial papers and short term loans
Bank overdraft
Non-current
Bank borrowings
Total borrowings
(a) Non current
As at 1 April
Repayments
As at 31 March
Falling due within one year
Repayment during 1-2 years
Repayment during 2-5 years
Company
2011
Rs. ‘ 000
2010
Rs. ‘ 000
2011
Rs. ‘ 000
2010
Rs. ‘ 000
127,427
3,532,960
2,574,088
6,234,475
130,399
1,600,980
1,068,192
2,799,571
3,289,960
2,182,882
5,472,842
49,999
1,249,980
979,245
2,279,224
384,167
384,167
6,618,642
198,499
198,499
2,998,070
5,472,842
2,279,224
328,898
326,472
(143,776)
511,594
(127,427)
384,167
1,030,235
(701,337)
328,898
(130,399)
198,499
49,999
(49,999)
-
600,000
(550,001)
49,999
(49,999)
-
141,289
242,878
384,167
130,800
67,699
198,499
-
-
(b) Details of all loans outstanding at the balance sheet date are set out below:
Institution & facility
Principal
amount
Rs. ‘ 000
Repayment terms & interest rate
Bank Overdrafts
- Bank of Ceylon
94,000
Average interest rate of 14.17 %
- Commercial Bank
200,000
- Commercial Bank
500,000
- Deutsche Bank
200,000
- Hatton National Bank
500,000
- HSBC Bank
500,000
- MCB Bank
200,000
- Nation Trust Bank
700,000
- Sampath Bank
100,000
- Seylan Bank
100,000
10,000
- Standard Chartered Bank
Bank Loans
Long Term Loan
- Sampath Bank
500,000
59 monthly installments of Rs. 8.33 Mn per month, commencing from
April 2009 and final installment of Rs. 8.24 Mn, at average interest rate
of 9.68 %
400,000
Short Term Loans
- Commercial Bank
- DFCC Bank
200,000
1,000,000
500,000
- NDB Bank
100,000
465,000
525,000
Annual Report 2011
57
Principal amount
Rs. ‘ 000
Repayment term & interest rate
Bank Loan
- DFCC Bank
150,000
March 2009 at average interest rate of 11.71 %
Bank Overdraft
- Commercial Bank
40,000
Average interest rate of 8.8%
Bank Loan
- Commercial Bank
300,000
July 2007 and final installment of Rs. 1.8 Mn at average interest rate of
9.58 % for the year
Bank Overdraft
- Seylan Bank
80,000
50,000
Bank Overdraft
- Commercial Bank
Cargills Food Processors (Private) Limited
Bank Overdraft
- Commercial Bank
50,000
- Commercial Bank
165,000
175,000
- HSBC Bank
200,000
250,000
Repayable on maturity at average interest rate of 9.15%
Millers Limited
Bank Overdrafts
Bank Loan
Short Term Loan
Bank Overdrafts
- Bank of Ceylon
176,450
- Bank of Ceylon
47,540
11,115
54 monthly installments of Rs. 205,835 per month , commencing from
July 2011, at average interest rate of 6% for the year. Grace period of 6
months available
Bank Loans
- Bank of Ceylon
58
Annual Report 2011
Principal amount
Rs. ‘ 000
Repayment term & interest rate
- Bank of Ceylon
282,560
64 monthly installments of Rs. 4.42 Mn per month , commencing from
July 2011, at average interest rate of 7.67% for the year. Grace period
of 6 months available
- Bank of Ceylon
7,482
January 2011, at average interest rate of 6.5% for the year
Kotmale Dairy Products (Private) Limited
Bank Overdraft
- Bank of Ceylon
10,000
40,000
Repayable on maturity at average interest rate of 11.75%
11,196
March 2009, at average interest rate of 14% for the year
-Peoples Leasing Co.
3,549
September 2009, at average interest rate of 6.5 % for the year
- Peoples Leasing Co.
4,500
August 2010, at average interest rate of 6.5 % for the year
Import Loan
- Bank of Ceylon
Bank Loans
- Lankaputhra Development Bank
Bank Overdraft
- DFCC Vardana Bank
25,000
Average interest rate of 15%
5,000
Average interest rate of 16%
Kotmale Milk Products Limited
Bank Overdraft
Pan Asia Bank
Bank Loan
Short Term Loan
Pan Asia Bank
(c)
20,000
The security offered to each loan are set out below:
Loan
Security offered
Bank of Ceylon
- Overdraft facility of Rs. 94 Mn
Trading stock of 15 locations
Commercial Bank
MCB Bank
Sampath Bank
- Long term loan facility of Rs. 500 Mn
An agreement to mortgage land and building at Kandy for Rs. 100 Mn and
Corporate guarantee from C T Holdings PLC for Rs. 50 Mn
Demand promissory note for Rs. 200 Mn.
Primary mortgage for Rs. 400 Mn over Machinery and equipments of
Rs. 535 Mn, imported and locally purchased. Undertaking to execute
mortgage bond for Rs. 100 Mn over equipments to be imported during
2009 to a total value of Rs. 135 Mn.
Annual Report 2011
59
Loan
Security offered
Seylan Bank
Standard Chartered Bank
- Short term loan facility of Rs. 465 Mn
Stock mortgage for Rs. 100 Mn and Demand promissory note for Rs. 100
Mn
}
DFCC Bank
Commercial Bank
Undertaking to mortgage land and building at Staple Street, Colombo-2 for
Rs. 75 Mn and Corporate guarantee from C T Holdings PLC for Rs. 75 Mn.
Corporate guarantee from Cargills (Ceylon) PLC for Rs. 150 Mn
Primary mortgage for Rs. 300 Mn over leasehold land, building and project
assets at Bandigoda, Ja -Ela
Millers Limited
Commercial Bank
Hatton National Bank
Corporate guarantee from Cargills (Ceylon) PLC for Rs. 335Mn
HSBC Bank
Standard Chartered Bank
Bank of Ceylon
- Overdraft facility of Rs. 176.45 Mn
- Overdraft facility of Rs. 47.54 Mn
- Long term loan facility of Rs. 11.12 Mn
Bank of Ceylon
- Letter of credit facility of Rs. 40 Mn
- Import loan facility of Rs. 40 Mn
Lankaputhra Development Bank
Corporate guarantee from Cargills (Ceylon) PLC for Rs. 176.45 Mn
Corporate guarantee from Kotmale Holdings PLC over stocks and book
debts.
debts.
debts.
Primary mortgage on project machinery along with relevant insurance covers and a corporate guarantee from Kotmale Holdings PLC.
Peoples Leasing Co.
Corporate guarantee from Kotmale Holdings PLC.
Corporate guarantee from Kotmale Holdings PLC.
60
Annual Report 2011
25 Deferred tax liability
As at 1 April
Group
Company
2011
Rs. ‘ 000
2010
Rs. ‘ 000
2011
Rs. ‘ 000
2010
Rs. ‘ 000
360,352
310,358
324,195
266,256
4,831
-
-
-
On revaluation surplus of building
(21,205)
96,465
(20,088)
93,003
Release for the year
(15,520)
(46,471)
(16,445)
(35,064)
As at 31 March
328,458
360,352
287,662
324,195
Group
Deferred tax provision as at the year end is made up as follows.
Deferred tax provision from
- temporary difference of property plant and equipment
- temporary difference of revaluation surplus of building
- temporary difference of retirement benefit obligations
Company
2011
Rs. ‘000
2010
Rs. ‘000
2011
Rs. ‘000
2010
Rs. ‘000
303,399
75,259
(50,200)
328,458
317,446
96,465
(53,559)
360,352
260,822
72,915
(46,075)
287,662
283,787
93,003
(52,595)
324,195
26 Capital grant
Group
2011
Rs. ‘ 000
2,866
(477)
2,389
As at 1 April
Amortisation
As at 31 March
Grant represents funds received in the form of plant. Grant is amortised on straight line basis over the useful life of such asset.
27 Retirement benefit obligations
At beginning of year
Income statement charge
Contributions paid
At end of year
(a)
The amount recognised in the balance sheet is as follows
Present value of unfunded obligations
Present value of funded obligations
Total present value of obligations
Fair value of plan assets
Recognised liability for defined benefit obligation
Group
Company
2011
Rs. ‘ 000
2010
Rs. ‘ 000
2011
Rs. ‘ 000
2010
Rs. ‘ 000
163,360
12,175
28,454
(11,228)
192,761
91,555
79,693
(7,888)
163,360
150,270
24,753
(10,470)
164,553
81,763
75,816
(7,309)
150,270
192,761
192,761
192,761
163,360
163,360
163,360
164,553
164,553
164,553
150,270
150,270
150,270
61
Annual Report 2011
Group
2011
Rs. ‘ 000
(b)
2010
Rs. ‘ 000
2011
Rs. ‘ 000
2010
Rs. ‘ 000
163,360
12,175
24,515
17,137
(11,228)
(13,198)
192,761
91,555
21,583
10,988
(7,888)
47,122
163,360
150,270
21,398
16,530
(10,470)
(13,175)
164,553
81,763
20,626
9,812
(7,309)
45,378
150,270
24,515
17,137
(13,198)
28,454
21,583
10,988
47,122
79,693
21,398
16,530
(13,175)
24,753
20,626
9,812
45,378
75,816
The movement in retirement benefit obligations over the year as follows
At beginning of year
Current service cost
Interest cost
Benefit paid
Actuarial (gain)/loss
Present value obligation as at the year end
(c)
Company
The amount recognised in the income statement as follows
Current service cost
Interest cost
Net actuarial (gain)/loss
(d)
This obligation is not externally funded.
(e)
The Gratuity liability is based on the actuarial valuation carried out by Messrs. Actuarial and Management Consultants
(Private) Limited, Actuaries, on 29 April 2011. The principal assumptions used in the actuarial valuation were as follows:
2011
%
2010
%
1. Discount rate (the rate of interest used to discount the future cash flows in order to
determine the present value)
11
11
2. Future salary increase
- Executives
- Staff
10
10
12
8
In addition to the above, demographic assumptions such as mortality, withdrawal and disability, and retirement age were
considered for the actuarial valuation. “A 67/70 mortality table” issued by the Institute of Actuaries London was used to
estimate the gratuity liabilities of the Company.
28 Trade and other payables
Trade payables
Other payables
Accrued expenses
Group
2011
Rs. ‘ 000
2010
Rs. ‘ 000
2011
Rs. ‘ 000
2010
Rs. ‘ 000
3,560,049
718,404
538,717
4,817,170
3,022,209
607,090
457,185
4,086,484
3,143,698
513,520
186,414
3,843,632
2,744,763
438,295
250,769
3,433,827
29 Dividend payable
Unclaimed dividend
Company
Group
Company
2011
Rs. ‘ 000
2010
Rs. ‘ 000
2011
Rs. ‘ 000
2010
Rs. ‘ 000
17,610
14,080
17,609
14,080
62
Annual Report 2011
30 Segment information - Group
Food & Beverage
Assets and liabilities
Segment assets
Unallocated assets
Unallocated investments
Consolidated assets
Segment liabilities
Unallocated liabilities
Consolidated liabilities
Capital expenditure
Segment depreciation
Unallocated depreciation
Total depreciation
Non cash expenses other
than depreciation
Distribution
Photo processing
Leisure
Total
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
Rs. ‘ 000
Rs. ‘ 000
Rs. ‘ 000
Rs. ‘ 000
Rs. ‘ 000
Rs. ‘ 000
Rs. ‘ 000
Rs. ‘ 000
Rs. ‘ 000
Rs. ‘ 000
16,933,755
-
12,310,493
-
1,068,669
-
1,088,470
-
3,851
-
27,941
-
26,154
-
22,734
-
18,032,429
1,036,301
236,870
19,305,600
13,449,638
279,370
219,834
13,948,842
11,270,683
-
6,817,117
-
650,404
-
626,169
-
-
-
6,622
-
4,050
-
11,927,709
328,458
12,256,167
7,447,336
360,351
7,807,687
2,086,719
801,931
97,878
30,768
3,851
617
515
1,950
2,188,963
835,266
801,720
-
735,582
-
34,642
-
23,232
-
9,584
-
8,312
-
745
-
725
-
846,691
4,600
851,291
767,851
5,001
772,852
106,245
79,265
19,827
428
-
-
-
-
126,072
79,693
31 Commitments
Group
Company
2011
Rs. ‘ 000
2010
Rs. ‘ 000
2011
Rs. ‘ 000
2010
Rs. ‘ 000
395,553
-
168,254
-
320,792
1,674,997
1,844,745
3,840,534
213,444
868,353
1,572,407
2,654,204
214,971
1,131,292
1,397,082
2,743,345
153,842
622,097
1,239,222
2,015,161
Capital commitments
Approved and contracted
Financial commitments
Future payments of operating lease rentals :
- within 1 year
- between 1 - 5 years
- more than 5 years
32 Contingent liabilities
The Company has given letters of guarantee to commercial banks on behalf of the subsidiary companies amounting to Rs. 2.1 Bn.
Kotmale Holdings PLC, a subsidiary of the Company has given letters of guarantee to Commercial Banks on behalf of its subsidiary
companies amounting to Rs. 109 Mn.The Directors do not expect any claim on these guarantees. Accordingly, no provision has been
made in the financial statements.
There are no material pending litigations as at the balance sheet date which would result in material liability.
There are no other material contingent liabilities as at the balance sheet date.
Annual Report 2011
63
33 Transfer of operations within the Group
With effect from 1 June 2010, the operations of Cargills Retail (Private) Limited, a wholly owned subsidiary of Cargills (Ceylon) PLC,
was transferred to Cargills (Ceylon) PLC as part of a restructuring process of the Group. Consequently the business assets of Cargills
Retail (Private) Limited is now used by the Company for which a rent is paid to the subsidiary. The Company expects to purchase all
the assets and liabilities of Cargills Retail (Private) Limited.
The operations of Cargills Food Services (Private) Limited was transferred to Cargills Food Processors (Private) Limited, the parent
of Cargills Food Services (Private) Limited, with effect from 1 October 2010. Cargills Food Processors (Private) Limited expects to
purchase all the assets and liabilities of Cargills Food Services (Private) Limited.
34 Events after the balance sheet date
Millers Brewery Limited (MBL), wholly owned subsidiary of Cargills (Ceylon) PLC, finalised the sale and purchase agreement with
MaCallum Breweries (Ceylon) (Private) Limited, MaCallum Brewing Company (Private) Limited and Three Coins Company (Private)
Limited, and commercial operations commenced in May 2011. With the finalisation of agreement, the business and business assets of
above companies were transferred to MBL.
The Board of Directors has proposed a final dividend of Rs. 1 per share (on the 224,000,000 shares now in issue) for the year ended 31
March 2011 which is to be approved by the shareholders at the Annual General Meeting.
As required by Section 56 (2) of the Companies Act No. 7 of 2007, the Board of Directors has confirmed the Company satisfies the
Solvency test, and has obtained a certificate from the auditors. In accordance with SLAS 12 (Revised 2005) - “Events after the Balance
Sheet Date”, the proposed dividend has not been recognised as a liability in the financial statements.
Dawson Office Complex (Private) Limited made a share issue to Cargills (Ceylon) PLC amounting to Rs. 100,000 subsequent to the
balance sheet date.
Subsequent to the balance sheet date, the name of Diana Biscuits Manufactures (Private) Limited, a sub-subsidiary of the Company,
was changed to Cargills Quality Confectionaries (Private) Limited.
No events other than the above, have occurred since the balance sheet date which would require any adjustment to, or disclosure in
the financial statements.
35 Transactions with group companies
The Company has provided corporate guarantees for term loans and banking facilities obtained by its subsidiary companies, the
details of which have been disclosed under note 24 (c ) to the financial statements.
The Company provides Secretarial and Management services to its subsidiary companies free of charge.
Companies within the Group engage in trading and business transactions under normal commercial terms which give rise to related
company balances. The balances have been disclosed under note 20 to the financial statements.
(a) Transactions with key management personnel (KMP)
According to SLAS 30 (revised 2005) - “Related Party Disclosure”, KMP are those having authority and responsibility for planning,
directing, controlling the activities of the entity. Accordingly, the Directors of the Company and its parent (including executive and
non - executive Directors) and their immediate family members have been classified as KMP of the Group.
The Company has provided an owned apartment to the Deputy Chairman/Chief Executive Officer for the due performance of his
office.
The Group has paid Rs. 74.63 Mn (2010 - Rs. 40.88 Mn) to the Directors as emoluments during the year. There are no other payments
made to key management personnel apart from the disclosed amount.
64
Annual Report 2011
(b) The Directorates of Directors of the group companies
The Directors of the Company are also directors of the following companies with which the Company had regular business transactions as disclosed in below.
Mr. Anthony Mr. L R Mr. A T P Mr. S E C Mr. Sunil Mr. J C Mr. E A D Mr. Jayantha Mr. V R
Mr. M I Mr. S V Mr. P S
A Page
Page Edirisinghe Gardiner Mendis Page
Perera
Danapala
Page Abdul Wahid Kodikara Mathavan
Group Companies
Cargills (Ceylon)PLC
Cargills Distributors (Pvt) Ltd
Cargills Food Processors (Pvt) Ltd
Cargills Food Services (Pvt) Ltd
Cargills Quality Dairies (Pvt) Ltd
Cargills Quality Foods Ltd.
C P C (Lanka) Ltd
Cargills Agrifoods Ltd
Dawson Office Complex (Pvt) Ltd.
Diana Biscuits Manufactures (Pvt) Ltd.
Kotmale Dairy Products (Pvt) Ltd.
Kotmale Kiri (Pvt) Ltd.
Kotmale Marketing (Pvt) Ltd.
Kotmale Milk Products Ltd.
Kotmale Milk Foods Ltd.
Kotmale Products Ltd.
Millers Brewery Ltd.
Millers Ltd
Mr. Anthony Mr. L R Mr. A T P Mr. S E C Mr. Sunil Mr. J C Mr. E A D Mr. Jayantha Mr. V R
Mr. M I Mr. S V Mr. P S
A Page
Page Edirisinghe Gardiner Mendis Page
Perera
Danapala
Page Abdul Wahid Kodikara Mathavan
Other companies
Ceylon Printers PLC
Ceylon Theartres (Pvt) Ltd
C T Holdings PLC
C T Capital Ltd
C T Properties Ltd
Dialog Telekom PLC
Galle Face Hotel Co. Ltd
Kandy Hotels Co. (1938) PLC
Lanka Ceramics PLC
Lanka Tiles PLC
Lanka Walltiles PLC
Paragon Ceylon PLC
Unidil Packaging Ltd
Directors have no direct or indirect interest in any other contracts with the Company. The above interest in contracts have been
declared at Board Meeting by the Directors concerned.
Annual Report 2011
65
(c) Transactions with related companies
Company
2011
Sales
Transactions with subsidiaries
Cargills Quality Foods Ltd.
Cargills Distributors (Pvt) Ltd
Cargills Food Services (Pvt) Ltd
Cargills Food Processors (Pvt) Ltd
Cargills Quality Dairies (Pvt) Ltd
Cargills Agrifoods Ltd
C P C (Lanka) Ltd
Millers Ltd
Diana Biscuits Manufactures (Pvt) Ltd
Kotmale Dairy Products (Pvt) Ltd
Purchases
Rs. ‘ 000
Other
income
Rs. ‘ 000
1,819
8,146
9,108
2,312
6,922
18,018
35,002
5,335
-
1,437
712
2,242
10,310
3,289
3,455
28,278
-
340,011
245,417
668,079
290,514
76,661
357,240
8,044
50,499
64,950
18
-
1,385
902
892
3,687
24,286
-
4,771
7,794
20,637
-
297,607
185,808
600,431
254,357
60,468
398,895
-
18
-
-
-
-
-
72
-
-
-
117
31
122
714
-
99,998
-
1,258
-
979
23,846
8,590
1,991
22
704
142
16
289
137
-
52,304
-
396
-
243
347
14,889
7,562
633
2,000
29
424
2011
Rs. ‘ 000
2010
Rs. ‘ 000
48,603
71,250
204,132
1,037,785
-
Transactions with holding company
C T Holdings PLC
Transactions with other related companies
Ceylon Printers PLC
Ceylon Theatres (Pvt) Ltd
C T Capital Ltd
Dialog Telekom PLC
Lanka Tiles PLC
Lanka Walltile Meepe (Pvt) Ltd
Lanka Ceramics Ltd
Lanka Walltiles PLC
Dividend received from subsidiary companies
Transfer of investment
2010
Rs. ‘ 000
Other
expenses
Rs. ‘ 000
Sales
Rs. ‘ 000
Other
income
Rs. ‘ 000
Purchases
Rs. ‘ 000
Other
expenses
Rs. ‘ 000
Cargills Quality Foods Limited. This transaction was done outside the trading floor of Colombo Stock Exchange consequent to a
special approval from the Securities and Exchange Commission of Sri Lanka. The sales consideration amounted to Rs. 1,038 Mn
and was accounted as intercompany receivable. As at the balance sheet date, the entire amount was due to the Company.
Advance for funding investment
Millers Brewery Ltd
Dawson Office Complex (Pvt) Ltd
1,205,425
249,599
-
Cargills (Ceylon) PLC has advanced a sum of Rs. 1,205 Mn to Millers Brewery Limited to fund the purchase of assets. This
amount is reflected as an intercompany receivable pending the issue of shares in Millers Brewery Limited.
Company has advanced a sum of Rs. 250 Mn to Dawson Office Complex (Private) Limited to fund the purchase of assets. This
amount is reflected as an intercompany receivable pending the issue of shares in Dawson Office Complex (Private) Limited.
66
Annual Report 2011
Group
2011
Sales
Transactions with holding company
C T Holdings PLC
Transactions with associate
C T Properties Ltd
Transactions with other related companies
Ceylon Printers PLC
Ceylon Theatres (Pvt) Ltd
C T Capital Ltd
Dialog Telekom PLC
Kalamazoo Systems Ltd
Kandy Hotels Co. (1938) PLC
Lanka Tiles PLC
Lanka Walltile Meepe (Pvt) Ltd
Lanka Ceramics PLC
Lanka Walltiles PLC
Paragon Ceylon Ltd
Unidil Packaging (Pvt) Ltd
2010
Purchases
Rs. ‘ 000
Other
income
Rs. ‘ 000
Rs. ‘ 000
Other
expenses
Rs. ‘ 000
497
-
-
-
-
928
87
395
2,680
894
714
-
99,998
-
Sales
Purchases
Rs. ‘ 000
Other
income
Rs. ‘ 000
Rs. ‘ 000
Other
expenses
Rs. ‘ 000
-
632
-
-
629
-
-
4
-
-
-
1,258
4,705
979
48,521
61
8,590
2,106
22
789
-
890
23
80
2,605
139
432
137
-
80,792
-
396
9,569
243
347
31,462
7,593
10
633
2,230
2,303
424
495
-
Panadaria (Private) Limited
Mrs. R Page, wife of the Deputy Chairman/CEO is a Director of the above company with which the Company had the following
transaction during the year and the amount outstanding as at 31 March 2011 was Rs. 2,055,684 (2010 - Rs. 2,146,032).
- Purchases for re-sale in the ordinary course of business of Rs. 27,953,221 (2010 - Rs. 23,023,373)
- Rental income of Rs. 1,560,000 (2010 - Rs. 780,000)
There are no material related party transactions other than those disclosed above.
(d) Amounts due from / due to related companies
Amounts due from and due to related companies as at the year end have been disclosed under note 20 to these financial
statements.
Annual Report 2011
67
Statement of value added
Group
2011
Rs. ‘ 000
%
%
2010
Rs. ‘ 000
Creation of value added
Gross revenue
Cost of good and service
38,156,172
(33,019,093)
31,772,821
(27,476,535)
5,137,079
8
582,450
5,719,537
4,296,286
510,453
4,806,739
Value added from operation
Dividend received
Other income
Total value added
Distribution of value added
To associates
Salaries, wages and other related costs
Directors’ fees and remuneration
To government
Government levies
Corporate taxes
To lenders of capital
Interest
Minority interest
To shareholders
Dividends
Retained for growth
Depreciation
Retained earnings
34.89
1.30
36.19
1,995,461
74,625
2,070,086
34.62
0.88
35.50
1,664,220
42,098
1,706,318
17.97
5.46
23.43
1,027,511
312,530
1,340,041
18.68
6.00
24.68
898,024
288,334
1,186,358
6.36
0.10
6.46
363,946
5,623
369,569
8.92
8.92
428,819
428,819
5.09
291,200
3.73
179,200
14.88
13.95
28.83
100.00
851,291
797,350
1,648,641
5,719,537
16.08
11.09
27.17
100.00
772,852
533,192
1,306,044
4,806,739
Value addition for 2011
Value addition for 2010
Retained for growth
Retained for growth
28.83%
36.19%
35.50%
To associates
%
%
To shareholders
27.17%
9
5.0
To shareholders
3.73
8.92%
6.46%
23.43%
To government
24.68%
To government
To associates
68
Annual Report 2011
Five year financial summary
Group
Financial results
Revenue
Minority interests
Profit attributable to Equity shareholders of the parent
Financial position
Stated capital
Reserves
Minority Interest
Current assets
Current liabilities
Working capital
Non current assets
Minority interest
Net assets
Key Indicators
Growth in turnover (%)
Growth in earnings (%)
Return on total assets (%)
Growth in total assets (%)
Growth in capital and reserves (%)
Return on capital and reserves (%)
Return on investment (%)
Earnings per share (Rs.)
Dividends per share (Rs.)
Net assets per share (Rs.)
Dividend pay out (%)
Dividends paid
Debt equity ratio (times)
Interest cover (times)
Current ratio (times)
Quick assets ratio (times)
Capital additions
Market capitalisation
2007
Rs. ‘ 000
2008
Rs. ‘ 000
2009
Rs. ‘ 000
2010
Rs. ‘ 000
2011
Rs. ‘ 000
17,936,712
675,013
394,924
337,454
(75,419)
262,035
23,142,619
947,199
607,152
491,016
(43,169)
447,847
28,692,481
1,232,186
702,586
539,900
(40,446)
499,454
30,874,797
1,429,545
1,000,726
712,392
712,392
37,128,661
1,825,442
1,406,703
1,094,173
(5,623)
1,088,550
130,723
1,153,889
183,731
1,468,343
130,723
1,410,967
353,818
1,895,508
130,723
2,001,981
2,132,704
130,723
6,010,432
6,141,155
130,723
6,828,987
89,723
7,049,433
2,681,012
(4,578,529)
(1,897,517)
4,091,504
(725,644)
(183,731)
1,284,612
3,627,091
(5,548,754)
(1,921,663)
4,712,094
(894,923)
(353,818)
1,541,690
4,249,141
(6,371,303)
(2,122,162)
5,411,594
(1,156,728)
2,132,704
4,697,601
(7,085,476)
(2,387,875)
9,251,241
(722,211)
6,141,155
5,736,722
(11,348,392)
(5,611,670)
13,568,878
(907,775)
(89,723)
6,959,710
27.30
61.70
3.87
23.42
24.99
22.98
25.53
1.17
0.30
5.73
25.65
67,200
4.13
2.41
0.59
0.18
954,353
2,520,000
29.02
70.91
5.37
23.13
29.09
25.90
29.19
2.00
0.39
6.88
19.38
67,200
4.18
1.79
0.65
0.19
1,058,914
11,198,600
23.98
11.52
5.17
15.85
12.51
25.32
26.81
2.23
0.50
9.52
22.42
86,800
3.53
2.33
0.67
0.25
1,096,392
5,264,000
7.61
42.63
5.11
44.39
187.95
11.60
17.22
3.18
1.10
27.42
34.59
179,200
1.27
3.33
0.66
0.23
602,720
15,792,000
20.26
52.83
5.67
38.40
14.79
15.52
16.59
4.86
1.50
31.07
30.87
291,200
1.74
5.02
0.51
0.19
1,408,938
51,139,200
(a) Return on investment is computed by dividing the profit for the year by total average assets employed.
(b) Debt equity ratio is computed by dividing the total liabilities by the shareholders’ funds.
(c ) Above ratios have been computed based on 224,000,000 shares in issue as at 31 March 2011.
Annual Report 2011
69
Group real estate portfolio
Location
Land extent
Building area
(Sq. ft.)
Valuation / Costs
Rs. ‘ 000
Year of
valuation
Colombo 01
Colombo 02
Kandy
Maharagama
Nuwara Eliya
Mattakuliya
Park Road
Boralasgamuwa
141 Perches
82 Perches
94 Perches
145 Perches
57 Perches
330 Perches
2.5 Acres
140,000
12,450
6,729
6,384
6,900
65,000
4,332
-
1,640,000
473,000
750,000
382,000
106,000
552,000
28,000
167,500
2010
2010
2010
2010
2010
2010
2010
2010
1.5 Acres
5.1 Acres
6,667
23,067
188,500
294,000
2010
2010
Katana
11.3 Acres
10,210
183,680
2010
Millers Limited
Bandarawela
Kelaniya
85 Perches
1.2 Acres
6,345
62,985
100,000
197,600
2010
2010
4 Acres
550
4,159
-
Dawson Office Complex (Private) Limited
Colombo 02
99 Perches
-
249,599
-
Mulleriyawa
Bogahawatta
1.7 Acres
1.7 Acres
29,615
17,442
69,000
12,000
-
Mattakuliya
Ja - Ela
C P C (Lanka) Limited
Katoolaya estate, Thawalantenne
Note:
Current year addition to the real estate portfolio from C P C (Lanka) Limited, Dawson Office Complex (Private) Limited and
Kotmale Dairy Products (Private) Limited are stated at their respective historical cost for which no valuation has been made
during the financial year.
70
Annual Report 2011
1.
General
Stated capital
Issued shares
Class of shares
Voting rights
2.
Rs. 130,723,000
224,000,000
Ordinary shares
One vote per ordinary share
Stock exchange listing
The issued ordinary shares of Cargills (Ceylon) PLC are listed in the Colombo Stock Exchange.
3.
Distribution of shareholders
31 March 2011
Shareholders
Holding
Number
%
Number
Size of
1 -
1,307
1,000
0.19
1,056
54.94
338,875
0.15
1,001 -
10,000
638
28.45
2,436,337
1.09
561
29.19
2,255,985
1.01
100,000
242
10.79
6,885,808
3.07
254
13.22
7,347,258
3.28
100,001 -
1,000,000
42
1.87
11,731,632
5.24
40
2.08
10,973,882
4.90
14
0.62
202,512,700
90.41
11
0.57
203,084,000
90.66
2,243
100.00
224,000,000
100.00
1,922
100.00
224,000,000
100.00
Analysis of shareholders
Group of
Institutions
31 March 2011
Shareholders
Holding
Number
%
Number
177
7.89
185,265,631
%
82.71
31 March 2010
Shareholders
Holding
Number
%
Number
111
5.78
184,952,040
%
82.57
Individuals
2,066
92.11
38,734,369
17.29
1,811
94.22
39,047,960
17.43
Total
2,243
100.00
224,000,000
100.00
1,922
100.00
224,000,000
100.00
Residents
2,146
95.68
217,441,965
97.07
1,844
95.94
221,662,440
98.96
Non residents
Total
5.
433,523
%
10,001 -
1,000,001 and over
4.
58.27
%
31 March 2010
Shareholders
Holding
Number
%
Number
97
4.32
6,558,035
2.93
78
4.06
2,337,560
1.04
2,243
100.00
224,000,000
100.00
1,922
100.00
224,000,000
100.00
Group companies
During the year Company acquired majority shareholding of Kotmale Holdings PLC at a purchase consideration of Rs. 1,038
Mn. Initially, the shareholding increased to 73.4% and subsequently with the mandatory offer closing on 30 December 2010, the
shareholding was increased to 81.72%.
Cargills Quality Foods Limited.
During the year, Cargills Quality Foods Limited a wholly owned subsidiary of Cargills (Ceylon) PLC, acquired 100% ownership
of Diana Biscuits Manufactures (Private) Limited with an investment of Rs. 343 Mn.
During the year, the Company incorporated Millers Brewery Limited to set up a brewery venture, which would commence business in the next financial year. The initial share capital issued amounted to Rs. 100,020/-.
Dawson Office Complex (Private) Limited incorporated with an initial share investment of Rs. 100 for the purpose of building an
office complex to be utilised as head office of Cargills (Ceylon) PLC.
6.
Annual Report 2011
71
contd...
Share Valuation
The market price per share recorded during the year ended 31 March
Highest
Lowest
Last traded price
7.
2010
Rs.
253.00
70.00
228.30
73.50
23.00
70.50
Top 20 shareholders
The holdings of the top 20 shareholders
31 March 2011
Number of
Shares
C T Holdings PLC
156,749,240
Mr. V R Page
14,380,200
Ceylon Guardian Investment Trust - A/C No.1
6,558,700
Employees Provident Fund
6,263,600
Mr. Anthony A Page
5,050,000
Odeon Holdings (Ceylon) Limited
4,622,920
Ms. M M Page
2,648,400
Mr. J C Page
1,705,500
Est. of Mrs. M M Udeshi
1,536,640
BNY - CF Ruffer Investment Funds : CF Ruffer Pacific Fund
1,500,000
HINL - JPMCB - Butterfield Trust (Bermuda) Limited
1,497,500
The Gilpin Fund Limited
864,000
The Associated Newspapers of Ceylon Limited
799,840
Bank of Ceylon No.1 Account
799,600
Northern Trust Co S/A - Northern Trust Fiduciary Services (Ireland) Ltd
- as Trustee
787,500
Mr. C Gardiner, The Bishop of Jaffna, The Archbishop of Colombo
563,040
National Savings Bank
548,300
Pictet & Cie
500,000
Mr. P E Muttukumaru
393,500
Sri Lanka Insurance Corporation Ltd - Life Fund
382,100
Deutsche Bank -Employee Provident Fund
Deutsche Bank AG - National Equity Fund
Nikan (Private) Limited
Mr. B N Shiner
Mr. M M Udeshi
Total
208,150,580
8.
2011
Rs.
%
31 March 2010
Number of
Shares
%
69.98
6.42
2.93
2.80
2.25
2.06
1.18
0.76
0.69
0.67
0.67
0.39
0.36
0.36
156,749,240
14,285,000
6,949,700
4,838,500
4,622,920
2,280,400
1,705,500
1,536,640
1,597,500
864,000
799,840
-
69.98
6.38
3.10
2.16
2.06
1.02
0.76
0.69
0.71
0.39
0.36
-
0.35
0.25
0.24
0.22
0.18
0.17
92.93
563,040
500,000
356,040
8,518,600
511,600
500,000
466,800
492,000
387,500
208,524,820
0.25
0.22
0.16
3.80
0.23
0.22
0.21
0.22
0.17
93.09
Public holding
The percentage of shares held by the public as at 31 March 2011 was 18.38 % (2010 - 18.49%)
72
Annual Report 2011
Notice of Annual General Meeting
Notice is hereby given that the sixty fifth Annual General Meeting of the Company will be held at the Sri Lanka Foundation Institute,
No. 100, Independence Square, on Thursday, 29 September 2011, at 10.00 a.m. and the business to be brought before the meeting will
be:
1
To consider and adopt the Annual Report of the Board and the Statements of Accounts for the year ended 31 March 2011, with
the Report of the Auditors thereon
2. To declare a dividend as recommended by the Directors
3.
To re - elect Directors
a) A. T. P. Edirisinghe,
b) E. A. D. Perera,
c) Sanjeev Gardiner, who retire by rotation, and
d) Jayantha Dhanapala, who retires in terms of Section 210 (2) (b) of the Companies Act No. 7 of 2007 having attained
the age of seventy two years and offers himself for re-election in terms of Section 211 (1) and (2) of the Companies Act
No. 7 of 2007.
Ordinary Resolution
“Resolved that Jayantha Dhanapala, a retiring Director, who has attained the age of seventy-two years be and is hereby
reappointed a Director of the Company and it is hereby declared that the age limit of seventy years referred to in
Section 210 of the Companies Act No. 7 of 2007 shall not apply to the appointment of the said Director”
4.
To authorise the Directors to determine contributions to charities for the financial year 2011/12
5.
To authorise the Directors to determine the remuneration of the Auditors, Messrs. KPMG Ford, Rhodes, Thornton & Co., who are
deemed reappointed as Auditors at the Annual General Meeting of the Company in terms of Section 158 of the Companies Act
No. 7 of 2007
By Order of the Board
S L W Dissanayake
Company Secretary
17 August 2011
Notes :
i.
A member is entitled to appoint a proxy to attend and vote at the meeting in his or her stead and the proxy need not be a
member of the Company.
ii. A form of proxy is enclosed for this purpose.
iii. The instrument appointing a proxy must be completed and deposited at the registered office of the Company not less than
48 hours before the time fixed for the meeting.
73
Annual Report 2011
Proxy form
For use at the sixty fifth Annual General Meeting
*I / We ………………………..................................................................................…………….......................................................………………
of ……………………………………....................….........................………………………............................................................................. being
a *member/members of Cargills (Ceylon) PLC hereby appoint …...............................................................................................................…..
of …................................................................…..…………...........................................……......................….......………….……......whom failing
.........................….......………......................................................................………........................................................................…....…………of ..
........................................................................................................................... or failing him / her,
the Chairman of the Meeting as *my/our Proxy to represent *me/us and to vote for on *my/our behalf at the sixty fifth Annual
General Meeting of the Company to be held on Thursday, 29 September 2011 and at any adjournment thereof and at every Poll which
may be taken in consequent thereof in the manner indicated below:
Ordinary resolutions
Resolution number
1
2
3 (a)
3 (b)
3 (c)
3 (d)
4
5
For
Against
..............................................
Date
...............................................................
Signature of member (s)
NOTES:
(a) *Strike out whichever is not desired
(b) Instructions as to completion of the Form of Proxy are set out in the reverse hereof
(c) A Proxy holder need not be a Member of the Company
(d) Please indicate with an “X” in the cage provided how your Proxy holder should vote. If no indication is given, or if there is, in
the view of the Proxy holder, any doubt (by reason of the manner in which the instructions contained in the Proxy have been
completed) as to the way in which the Proxy holder should vote, the Proxy holder in his/her discretion may vote as he/she thinks
fit
74
Annual Report 2011
Proxy form contd...
Instructions as to completion of the proxy form
1.
To be valid, the completed Form of Proxy should be deposited at the Registered Office of the Company at No: 40, York
Street, Colombo 1, not less than 48 hours before the time
appointed for the holding of the Meeting.
2.
In perfecting the form, please ensure that all details are legible. If you wish to appoint a person other than the Chairman
as your proxy, please fill in your full name and address, the
name and address of the proxy holder and sign in the space
provided and fill in the date of signature.
3.
The instrument appointing a Proxy shall, in the case of an
individual, be signed by the appointer or by his Attorney
and in the case of a Corporation must be executed under
its Common Seal or in such other manner prescribed by its
Articles of Association or other constitutional documents.
4.
If the Proxy Form is signed by an Attorney, the relevant
Power of Attorney or a notarially certified copy thereof,
should also accompany the completed Form of Proxy, if it
has not already been registered with the Company.
5.
In the case of joint holders, only one need sign. The votes of
the senior holder who tenders a vote will alone be counted.
6.
In the case of non-resident Shareholders, the stamping will
be attended to upon return of the completed form of proxy
to Sri Lanka.

Annual Report - Cargills (Ceylon)

Transcription

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