Kegalle Plantations PLC- Annual Report 2010
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Transcript of Kegalle Plantations PLC- Annual Report 2010
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Year ended 31 March 2011
Kegalle Plantations PLC Annual Report 2010/11
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Year ended 31 March 2011
Annual Report 2010/11 Kegalle Plantations PLC
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ANNUAL REPORT
2010/11ANNUAL REPORT
2010/11
KegallePlantations PLC
Contents
Overview & Business Perormance
Company Profle 2
Financial Highlights 3
Chairman’s Review 5
Segmental Inormation 8
Our Estates 10
Our People 11
Profle o Directors 12
Governance
Sustainability Report 14
Achievements 19
Financial Review 21
Review o Operations 24
Statement o Value Added 29
Corporate Governance 30
Report o the Audit Committee 33
Report o the Remuneration Committee 35
Risk Management 36
Financials
Financial Calendar 40
Annual Report o the Board o Directors 41
Statement o the Directors’ Responsibility 45
Chie Executive Ocer’s and Chie Financial
Ocer’s Responsibility Statement 46
Independent Auditors’ Report 47Balance Sheet 48
Income Statement 49
Cash Flow Statement 50
Statement o Changes in Equity 52
Notes to the Financial Statements 53
Other Reports
Ten Year Summary 84
Historical Note 85
Shareholder & Investor inormation 87
Defnitions 90
Notice o Meeting 91
Form o Proxy Enclosed
Corporate Inormation back inner cover
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Annual Report 2010/11 Kegalle Plantations PLC
he Government o Sri Lanka, as part o its restructuring
plan or the Plantation Industry decided to privatize
this sector and in June 1992 incorporated 22 Regional
However, the Government holds through the Secretary to the
Treasury one share which is called Golden Share and it gives the
Government the title, “Golden Shareholder” o the Company.
The Golden Shareholder has certain special rights than what
is enjoyed by a normal shareholder and these rights are
incorporated in the Articles o Association o the Company. The
Prospectus oered to the public also contained these clauses.
Some o the important clauses are given in this Annual Report
under “Shareholder & Investor Inormation”.
At the time it acquired the 51% stake RPK also invested Rs. 50
Mn in convertible debentures o KPL. In February 1998, these
debentures were converted to 5 million Ordinary Shares o Rs.
10/- each and assigned to RPK, increasing the Share Capital o
the Company to Rs. 250 Mn. In March 2004, Richard Pieris &
Company PLC purchased the balance 50% stake in RPK rom
John Keells Holdings PLC, thereby making RPK, a ully owned
subsidiary. Consequent to the change in the ownership, RPK was renamed as RPC Management Services (Pvt) Limited.
During the year 2008, the ownership o the Company was
transerred rom RPC Management Services (Pvt) Limited to
RPC Plantation Management Services (Pvt) Limited. Currently
RPC Plantation Management Services (Pvt) Limited holds 68%
stake in KPL.
Kegalle Plantations PLC is the largest rubber producing
Company among the Regional Plantation Companies
accounting or 4.5 Mn kgs o average production per annum.
KEGALLE PLANTATIONS PLC 2011
Company Profle
TPlantation Companies. Then the Government assigned these
Companies, Estates that had been previously vested with the
Government and managed by JEDB/SLPC on a 53 year lease.
Separate Managing Agents were also selected to manage each
o these Companies.
Kegalle Plantations PLC (KPL) was one such Company and it
was allotted 21 Estates which in total have a land base o 10,000
Ha in and around Kegalle, Kurunegala Districts and in the
Badulla District. O this land base around 5,400 Ha are Rubber,
1,400 Ha are under Tea and another 500 Ha under Coconut.
The Company produces around 4.5 Mn Kilos o Rubber and 2.8
Mn Kilos o Tea inclusive o bought crop. It has an employee
strength o 7,366.
The Managing Agent appointed by the Government was RPK
Management Services (Pvt) Limited (RPK), which was a 50:50
joint venture Company between Richard Pieris & Company PLC
and John Keells Holdings PLC. The ownership o the Company
changed during the latter part o 1995 when the Government
sold 20% o the shares it held to the public and the majority
stake o 51% to RPK Management Services (Pvt) Limited. It also
gited 10% or 2 Mn shares to over 8,000 eligible employees.
In May 1997 the Government sold urther 19% shares it held
through the Colombo Stock Exchange (CSE), to the public
and thereby, totally exited rom the ownership o Kegalle
Plantations PLC.
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Year ended 31 March 2011
Kegalle Plantations PLC Annual Report 2010/11
1 2 .
4 5
1 7 . 1
0
7 .
1 0
1 5 .
0 4
3 5 .
3 3
5
10
15
20
25
30
35
40
2 0 0 7
2 0 0 8
2 0 0 9
2 0 1 0
2 0 1
1
Earning per share
Rs. 35.33 (2010 - Rs. 15.04)
3 7 . 6
9
4 8 . 7
9
5 3 . 8
9
6 7 . 9
3
9 7 .
7 6
20
40
60
80
100
120
2 0 0 7
2 0 0 8
2 0 0 9
2 0 1 0
2 0 1
1
Net Assets per share
Rs. 97.76 (2010 - Rs. 67.93)
3 1 1
4 2 8
1 7 7
3 7 6
8 8 3
100
200
300
400
500
600
700
800
900
1,000
2 0 0 7
2 0 0 8
2 0 0 9
2 0 1 0
2 0 1 1
Profit After Tax
Rs. 883 Mn (2010 - Rs. 376 Mn)
1 ,
8 1 9
2 ,
1 6 3
1 ,
9 2 8
2 ,
2 1 6
2 ,
9 9 2
500
1,000
1,500
2,000
2,500
3,000
3,500
2 0 0 7
2 0 0 8
2 0 0 9
2 0 1 0
2 0 1 1
Turnover
Rs. 2,992 Mn (2010 - Rs. 2,216 Mn)
Financial Highlights
3 8 . 0
0
3 6 . 0
0
1 3 . 8
2
2 4 . 6
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4 2 . 6
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10
15
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30
35
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45
2 0 0 7
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2 0 1 0
2 0 1
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Return on Average Equity
42.64 % (2010 - 24.69%)
8.50 10.50 13.2522.00 40.00 42.00 60.00
19.0047.00
207.50
50
100
150
200
250
2 0 0 2
2 0 0 3
2 0 0 4
2 0 0 5
2 0 0 6
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2 0 0 8
2 0 0 9
2 0 1 0
2 0 1 1
Growth in Share Price
Rs. 207.50 (2010 - Rs. 47.00)
3 . 0
0
5 . 0
0
1 . 0
0
3 .
0 0
3 .
0 0
1
2
3
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1
Dividend per share
Rs. 3.00 (2010 - Rs. 3.00)
Revenue - Rs. 2.9 Bn
Growth - 35%
Proft Ater Tax - Rs. 883 Mn
Growth - 135%
Net Assets - Rs. 97.76 per share
Growth - 44%
EPS - Rs. 35.33 per share
Growth - 135%
Interest Cover - 8.78 times
Growth - 41%
Price Earnings - 5.87 times
Growth - 88%
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Year ended 31 March 2011
Annual Report 2010/11 Kegalle Plantations PLC
Perormance – Year Ended 31 March 2011 2010 Variance % Turnover 2,991,762 2,216,497
Proft beore Interest and Tax 1,031,593 460,958 123.79
Proft Ater Tax 883,127 376,030 134.86
Gross Dividends 75,000 75,000 -
Capital Expenditure 200,244 183,036 9.40 Financial Position as at 31 March Fixed Assets 1,932,819 1,814,679 6.51
Current Assets 1,999,004 1,325,104 50.86
Total Assets 3,931,823 3,139,783
Current Liabilities 366,372 317,718 15.31
Shareholders’ Funds 2,443,938 1,698,311 43.90
Stated Capital 250,000 250,000 -
Capital Employed 2,815,347 2,103,170 33.86
Financial Highlights Contd….
1,000
2,000
3,000
4,000
5,000
6,000
2008 2009 2010 2011
Cropkg/nut '000
RUBBER TEA COCONUT
298
347
405
344
250
300
350
400
450
2008 2009 2 010 2011
BorrowingsRs / Million
552
354
528
894
100
200
300
400
500
600
700
800
900
1,000
2008 2009 2010 2011
Net Cash Generated from Operations
Rs / Million
1,000
2,000
3,000
4,000
2008 2009 2010 2011
Turnover
Rs / Million
TEA RUBBER
Key Indicators 2011 2010 Variance % Earnings per share Rs 35.33 15.04 134.86
Net Assets per share Rs 97.76 67.93 43.90
Dividends per share Rs 3.00 3.00 -
Market Price per share Rs 207.50 47.00 341.49
Return on Capital Employed % 32.58 18.95 71.90
Market Capitalisation Rs.’000 5,187,500 1,175,000 341.49
Return on Average Equity % 42.64 24.69 72.70
R s . ’ 0
0 0
R s . ’ 0
0 0
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Year ended 31 March 2011
Kegalle Plantations PLC Annual Report 2010/11
Chairman’s Review
ith great pleasure, I herewith present the Annual
Report o Kegalle Plantations PLC or the fnancial year
ended 31 March 2011.
The most excellent and proftable year in the recorded history
o Kegalle Plantations PLC was seen this year. By toppling
every single prediction on rubber prices, your Companyetched the highest ever price or Natural Rubber in Sri Lanka
in February 2011. This year saw an unmatchable proft ater
tax o Rs. 883 Mn, a 135% increase in profts in comparison to
last year. Inclement weather in the highest cropping months,
restricted tapping days to a meager 20 days during November
and December 2010, dampened this growth to a considerable
extent.
However, due to the global plunge in rubber production
experienced during the year resulted in greater demand
or Latex, created high prices or natural rubber and value
additions. With sharp strengthening o the currencies o
Malaysia, Indonesia and Thailand, three main rubber-producing
countries with a production o approximately 87% o the world
rubber supply, exerted strong upward pressure on Natural
Rubber prices rom the beginning o February 2011.
Our Perormance and Financial Results
Company recorded an ater tax proft o Rs. 883 Mn in
comparison to Rs. 376 Mn in the previous year. Total Revenue
in the year under review is Rs. 2.9 Bn. 65.7% or Rs. 1.96 Bn o
this revenue was rom Rubber and 30.4% or Rs. 909 Mn o the
Revenue was rom Tea and the balance rom Other crops such as
Coconut, Cardamom, and Other income. Although production
o Tea saw an improvement o 12%, Rubber production had a
signifcant drop o 11% against previous year.
W
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Chairman’s Review Contd….
Udapussellawa tea prices continued to be strong during theyear and the dual manuacturing acility assisted the Company
to manuacture and maintain a healthy balance o rotovane
and other low grown type teas to cater to varying demand in
the market. 72% o the revenue o Tea was rom Udapussellawa
/ Uva region and mid grown and low grown teas contributed
28% towards this.
Gross Proft o the Company was Rs. 1.17 Bn in comparison to
Rs. 454 Mn in the previous year. 88% or Rs. 1.03 Bn o the Gross
proft was generated rom Rubber crop.
Rubber production declined by 11% in comparison to last year
and stood at 4,082 Mn kg whilst 87% o the production wasrom estate crop. 2,773 Mn kg o tea was produced during the
year and is a 12% increase rom the previous year. 57% or 1,573
Mn kg was rom estate lea.
Rubber Industry and Our Company
Kegalle Plantations PLC continued to maintain its supremacy as
the largest natural rubber producing Plantation Company in Sri
Lanka with a production o 4,082 MT in spite o a 11% decrease
in production in comparison to previous year. Production was
largely hampered by inclement weather patterns during the
latter part o the 3rd Quarter, where a considerable amount o
crop was lost during the main cropping months.
Revenue generating Rubber extent o the Company was 3,798
hectares in the year under review. Crepe asserted the highest
ever recorded price o Rs. 700.00 per kg in the month o
February 2011.
With the intention o reaping the maximum beneft rom
changing demand in the market, a healthy grade mix o
rubber was maintained since the Company has the strength
and the resources to change the product mix depending on
market demand. An extent o 183 hectares will come into
bearing rom immature plantings with an additional rubbercrop o approximately 175,000 kg during the next fnancial
year. Kegalle Plantations has accelerated its rubber replanting
exceeding the recommended 3%, which ell short during the
economic down turn in the previous years.
High yielding new clones have been replanted which will
undoubtedly contribute to an escalated production when such
extents come in to bearing. Further the Company has escalated
its replanting program supported by proper agricultural
practices with 147 hectares being newly planted this year.
An assessment made by the ANRPC (Association o NaturalRubber Producing Countries) who accounts or 92% o global
exports and 48% o the global consumption o natural rubber
that the supply will rise by 4.8% during 2011, 5.2% during 2012,
6.3% during 2013, 7.0% during 2014 and 7.5% during 2015.
Given the current growth in automobile and tyre manuacturing
industries and the huge potential available in China and India,
the demand or rubber should continue to grow in the ensuing
years.
Tea Industry and Our Company
Kegalle contributed positively towards the increase in national
production during the year. All-time high tea production in SriLanka was recorded during the 2010 calendar year. Despite the
act that there was severe competition in the Udapussellawa
area or Bought Lea, coupled with reasonably good weather,
increased made tea production amounting to 2.7 Mn kg, a 12%
increase rom the previous year contributed towards this. Yield
in tea was 1,221 kg/ha. Revenue extent o Tea in the Company
was 1,289 hectares, with 16 hectares o immature planting
undertaken during the year.
The demand or tea may have an eect with the volatile situation
in Middle Eastern countries and Libya in 2011/12. China and
India with their large population and growing income levels
will contribute to the rise in the world tea consumption since
their increasing population will contribute to increase local
consumption o tea thereby reducing their exportable surplus.
Further sources confrm that all major tea producing countries
including India have recorded shortalls in 2011 to end
February, which could increase demand in 2011.
Investments and Capital Expenditure
The Company continued its endeavours in embracing new
inventions or increased productivity and has been rain
guarding its high yielding rubber extents by investing Rs. 6.9 Mn
in this process. The Company continued its replanting programwith 23 hectares o new tea replanting and 147 hectares o
Rubber and expended Rs. 137 Mn or this purpose. Kegalle
Plantations commenced upgrading Doteloya tea actory with
an investment o Rs. 18 Mn. The Company purchased Computer
Note Books to the Estate Executives in its pursuit o escalating
the speed o the computerization o estates.
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Kegalle Plantations PLC Annual Report 2010/11
Chairman’s Review Contd….
Human Resource Development and Training
The Company’s endeavour in enhancing the quality o
employee perormance has been a continuous process.
Proessional training was given on best Agricultural practices
or Superintendents on Rubber and Tea. Progress made in
computerization o the estates has been encouraging which
will enhance the management inormation ow or speedier
and eective decision making at strategic level. All estate
sta members were given several extensive training sessions
on eective usage o computer and the estate accounting
package and awareness programs to enhance their knowledge
on the package.
In addition, an Awards ceremony was organized to recognize
the top perormers o the Plantations Sector o the Richard
Pieris Group where estate level fnancial perormance, best
agricultural practices, highest crop and yield, best cash
management etc were evaluated and rewarded.
Worker Welare
During the year under review, renovations were made to the
Line Rooms and drains, re-roofng was undertaken in several
estates and estate road development work were undertaken
with the assistance o PHDT. Health camps or replacement
o spectacles, Diabetes Detection and control, Nutritionalprograms were also carried out. This will be discussed in detail
in another statement o this Report.
Financial assistance was given to all estate employees’ children
who have qualifed or University education as done in the
previous years. Four students qualifed or University education
this year under the scheme.
Computerization
The eorts in implementing the General ledger, Check Roll,
Tea Crop Ledger and General Inventory were successul and
proved promising. With the issue o Computer Note Books toall Superintendents reassured their commitment towards this
process. It is expected to computerize the Rubber Crop Ledger
and the Production Module during the next fnancial year.
Future or our Company
Strategizing or the uture had always been challenging in a
volatile global economy despite the act that we have been
experiencing post conict optimism in the country. With the
intention o exploring new avenues, initiatives have been
taken to increase the Company’s presence in its present
operating platorm by value additions to both Tea and Rubber
thus creating competitive advantage with increased customerbase. The scenic beauty o the plantations and the Plantation
Bungalows with old world charm will contribute to the latest
venture o the Group in the leisure sector and the tourism
industry.
Crude Oil price inuences natural rubber market on speculation
o a possible substitution between Natural rubber and Synthetic
Rubber. Synthetic Rubber being a product derived rom
petroleum will become more expensive with rising petroleum
products thus creating better demand or natural rubber.
The geopolitical pressure in the oil producing countries and
major tea buying countries may have an eect on demand orRubber and Tea. The anticipated wage hike will pose a threat to
Plantations as a whole, i negotiations take place without the
viability o the industry in mind. Country’s archaic labour laws,
despite being updated early in the year coupled with political
pressures will continue to hinder productivity and eciencies
in the estates i due attention is not given.
Dividends
The Company declared an interim dividend o Rs. 2.50 per share
during the year. Further, a fnal dividend o 50 cents per share
has been proposed subject to approval o the shareholders.
Acknowledgement
The Company’s strong perormance would not have been
possible i not or the commitment, hard work and dedication
o the Workers, Sta, Superintendents, and Senior Management
o the organization. My sincere appreciation is extended to
them. I take this opportunity to thank all stakeholders whose
contribution has made this Company, the success it is today,
including institutions such as Tea Research Institute, Rubber
Research Institute, PHDT, Tea Brokers, Trade Unions, The
Planters’ Association, Employer’s Federation o Sri Lanka and
the Treasury.
I wish to convey my sincere gratitude to my ellow Board
Members who contributed throughout the year and their
continued support whilst welcoming Dr. Jerry Jayawardene,
our newest member on Board.
Dr. Sena Yaddehige
Chairman
27 May 2011
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Year ended 31 March 2011
Annual Report 2010/11 Kegalle Plantations PLC Annual Report 2010/11 Kegalle Plantations PL
0% 20% 40% 60% 80% 100%
2011
2010
Turnover
As a Percentage
Rubber Tea Coconut Others
Segmental Information
68
19
67
0
10
20
30
40
50
60
70
80
Rubber Tea Coconut Others
Cultivated ExtentAs a Percentage
2011
51
26
23
10
20
30
40
50
60
High Grown Low Grown Medium Grown
Tea Mix
As a Percentage
2011
9
27
50
1410
20
30
40
50
60
Sole Crepe Latex Crepe Centrifuged
Latex
Other
Rubber Mix
As a Percentage
2011
47%
30%
3%
20%
Segmental Assets
As a Percentage
Rubber
Tea
Other Crops
Unallocated
4
6
3
5
10
12
26
29
39
30
10
8
8
11
0% 20% 40% 60% 80% 100%
2011
2010
Utilization of ResourcesAs a Percentage
Land Leased Assets
Tangible Assets Plantations
Investments Stocks
Receivables & Others
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Year ended 31 March 2011
Kegalle Plantations PLC Annual Report 2010/11
Segmental Information Contd….
TEA PRODUCTION - kg ‘000 Elevation 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11
Uva 1,567 1,524 1,865 1,715 1,391 1,340 1,109 1,428
Medium 643 724 696 620 571 496 634 630
Low 822 761 858 789 834 653 736 715
NSA - Rs./kg Elevation 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11
Uva 126.30 154.20 151.63 180.30 244.34 234.79 324.06 307.23
Medium 152.25 179.99 168.09 205.59 297.08 288.82 361.08 341.69
Low 155.49 184.93 184.73 200.97 302.74 288.27 368.73 356.75 COP - Rs./kg Elevation 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11
Uva 133.78 163.59 151.10 170.35 225.35 236.13 316.82 289.30
Medium 121.12 146.89 153.35 175.26 224.94 245.74 287.61 285.17
Low 132.61 156.83 161.02 175.15 244.46 254.60 302.14 303.27 YIELD - kg/ha Elevation 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11
Uva 1,297 1,179 1,410 1,287 1,191 1,178 952 1,126
Medium 1,891 1,874 1,948 1,628 1,649 1,341 1,413 1,573
Low 1,387 1,326 1,372 1,199 1,327 1,133 1,255 1,396 REVENUE EXTENT - ha Elevation 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11
Uva 977.42 1,000.04 992.04 975.87 972.37 974.36 972.19 956.04
Medium 191.69 189.69 191.69 190.69 188.69 188.69 188.69 183.69
Low 178.83 183.23 186.13 182.23 172.83 160.93 156.58 148.58 RUBBER
2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11
Production - kg ‘000 5,736 5,486 5,688 5,375 5,436 5,102 4,578 4,082
NSA - Rs./kg 113.22 137.74 163.65 225.00 245.66 237.25 279.12 481.15
COP - Rs./kg 76.65 88.56 102.01 126.75 143.01 152.71 177.47 207.24
Yield - kg/ha 1,020 1,021 1,021 984 1,021 1,013 976 936
Revenue Extent - ha 4,231 4,285 4,292 4,280 4,300 4,178 3,971 3,798
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Year ended 31 March 2011
Annual Report 2010/11 Kegalle Plantations PLC
Annual Report 2010/11 Kegalle Plantations PLC
Employment Strength Workers Clerical & Technical Executives Total
2010 7,171 393 47 7,611
2011 6,913 406 47 7,3662011 6,913 406 47 7,366
Our Estates
Estate Planting Cultivated Area ( ha ) Total Annual Production Factory Details No. of
District Rubber Tea Coconut Others Total Area Rubber Tea Crop Rated Workers
( ha ) Manfd. kg’000/pa
Allagolla Badulla - 175.78 - 38.61 214.39 243.75 - 209 - - 307
Ambadeniya Kegalle 432.85 2.86 20.60 11.79 468.10 583.25 361 - - - 343
Atale Kegalle 796.46 - 32.16 11.16 838.78 1,150.36 477 - Rubber 950 841
Doteloya Kegalle - 192.10 - 121.17 313.27 572.64 - 629 Tea 660 414
Eadella Kurunegala 349.22 - 335.59 10.00 694.81 801.79 349 - - - 332
Etana Kegalle 373.80 - 1.82 11.21 386.83 483.26 306 - Rubber 228 320
Gampaha Badulla - 213.84 - 62.85 276.69 348.99 - 303 Tea 800 386
Hathbawa Kegalle 261.31 - - 5.00 266.31 477.79 181 - - - 199
Higgoda Kegalle 222.00 - - 0.80 222.80 302.23 155 - - - 162Kirklees Badulla - 246.66 - 92.61 339.27 480.70 - 407 Tea 630 414
Luckyland Badulla - 375.85 - 70.20 446.05 488.75 - 510 Tea 850 789
Madeniya Kegalle 439.13 - - 14.19 453.32 551.92 256 - - 332
Pallegama Kegalle 642.47 - 1.88 3.33 647.68 863.91 421 Rubber 800 557
Parambe Kegalle 472.49 33.02 - 2.52 508.03 795.41 351 32 Rubber 636 450
Udapola Kurunegala 357.15 - 37.36 2.73 397.24 577.78 277 - - - 174
Weniwella Kegalle 498.58 - 13.19 23.20 534.97 709.90 370 - - - 400
Yataderiya Kegalle 137.38 121.20 25.90 7.35 291.83 324.30 63 684 Tea 1,161 438
Udapola CLP Kurunegala - - - - - - 515 - Rubber 5,000 55
4,981.84 1,361.31 468.50 488.72 7,300.37 9,756.73 4,082 2,773 - - 6,913
Rubber 4,981.84
51%
Tea 1,361.31
14%
Coconut 468.50
5%
Other Crops464.23
5%
Uncultivated
2,456.36 25%
TOTAL EXTENT 9,756.73 ha.
Forestry 24.490%
Our Estates - Land Base / UtillisationOur Estates - Locations
Employment Strength
Rubber
Tea
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Year ended 31 March 2011
Kegalle Plantations PLC Annual Report 2010/11Kegalle Plantations PLC Annual Report 2010/11
Our People
Name o the Postal Name o the Name o the
Estate Address Superintendent Asst. Superintendent
Allagolla Udapussellawa Mr. Vinoda de Silva -
Ambadeniya Aranayake Mr. A S de Wijethunge Mr. B P Waidyatilleke
Atale Atale Mr. G L D Amarathunge Mr. D L S M Peiris
Mr. S M Cooray
Doteloya Dolosbage Mr. L M C Priyashantha Mr. Buddika Kodagoda
Eadella Polgahawela Mr. A C S Munaweera Mr. D S R Jayasinghe
Mr. C A Jayaratne
Etana Warakapola Mr. S D Munasinghe -
Gampaha Udapussellawa Mr. D V M De Runn Mr. B P D Mahesh
Hathbawe Rambukkana Mr. M W Liyanasekera -
Higgoda Undugoda Mr. H S B Aluvihare -
Kirklees Udapussellawa Mr. S R Aluwihare Mr. W M T C Wedisinghe
Luckyland Udapussellawa Mr. I S Doranegama Mr. P D D S GunawardhanaMr. V S Athauda
Madeniya Warakapola Mr. U D Liyanage -
Pallegama Niyadurupola Mr. B M J A Moonamale Mr. U M U L P Udagedara
Mr. D W Gunawardena
Parambe Undugoda Mr. S A A P Jayathilake Mr. N A M O M Navaratne
Udapola Polgahawela Mr. N B Ranathunge Mr. M R Vaidyakularatne
Centriuged Latex Polgahawela Mr. N B Ranathunge Mr. C N Wickremasinghe
Project - Udapola (Quality Control Ocer)
Weniwella Alawwa Mr. V C Hewage Mr. D A Kurukulasooriya
Yataderiya Undugoda Mr. U K Wanniarachchi Mr. G M B Samaranayake
Middle Management
Head Oce Nawinna Mr. M J Fajr Deen
Maharagama Mr. E S D D Perera
Mr. U P Jayasinghe
Mrs. Maleeha Amit
Mr. E Ranjan
Mr. S Katugaha
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3URÀOHRI'LUHFWRUV
Dr. Sena Yaddehige
Chairman
Mr. J H P Ratnayeke
Deputy Chairman
Dr. Sena Yaddehige is a Sri Lankan born British Scientist/Engineer and a UK based industrialist.He is the Managing Director o an European Company, which is a part o a group involved in the
development o high technology, automated manuacturing, and export o automotive components
and systems to Europe, China and the United States. He holds a large number o worldwide patents
on radiation processing, contactless sensors and drive by wire systems along with a Sri Lankan patent
or slow release ertilizer.
He is the Founder, Chairman and Director o numerous Companies in Sri Lanka and abroad.
Dr. Yaddehige is the Chairman o the Richard Pieris Group o Companies comprising 5 Listed
Companies and almost over 45 companies wholly or majority owned by Richard Pieris and Company
PLC. He was appointed to the Board o Directors o National Development Bank PLC in December
2007 and was in the directorate until his resignation rom the Bank in November 2010.
Dr. Yaddehige was conerred with Doctor o Science (D.Sc.) in consideration o his original research
work in the felds o Radiation, Radiation processing, Electromechanical Sensor technology, noncontact sensor technology and automotive pedal systems a long with numerous patents in the above
felds.
Mr. Paul Ratnayeke is a Senior Corporate Lawyer who is also the precedent partner o Paul Ratnayeke
Associates, a leading law frm in Sri Lanka which he ounded in 1987 handling all areas o law and
international legal consultancy work.
Mr. Ratnayeke is a Solicitor o England and Wales and an Attorney-at-Law o the Supreme Court o Sri
Lanka. He holds a bachelors degree in law with honours and has been awarded a Masters Degree in
Law by the University o London.
Currently Mr. Ratnayeke holds directorships in several Companies o which 8 are public quoted
Companies. He has also been elected/appointed as Chairman/Deputy Chairman to several o these
Companies.
At Paul Ratnayeke Associates, he specializes in corporate and commercial areas o law including
mergers and acquisitions, aviation, insurance and maritime law.
Mr. Sunil Poholiyadde has over 35 years experience in the Plantation Industry, commencing his career
as an Assistant Superintendent. He has been a Senior Superintendent and joined the corporate
management o Kegalle Plantations PLC in 1997 and holds the position o Chie Executive Ocer
since 2009. He also took over the position o Chie Executive Ocer o Namunukula Plantations
PLC with eect rom July 2010. He is a Director o the Boards o Kegalle Plantations, Namunukula
Plantations, Richard Pieris Natural Foams Ltd, Exotic Horticulture Ltd and AEN Oil Palm Processing
(Pvt) Ltd. In addition, he is a member o the Board o Directors o the Rubber Research Board, Wages
Board or the Rubber Growing and Manuacturing Trade, Advisory Committee on Rubber and Plastic
o the Sri Lanka Export Development Board and holds the position o Vice Chairman o the Colombo
Rubber Traders’ Association since 2007.
Mr. S S Poholiyadde
Chie Executive Ocer
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Kegalle Plantations PLCAnnual Report 2010/11
3URÀOHRI'LUHFWRUV&RQWG«
Dr. S S B D G Jayawardena obtained his B.Sc. Degree on Agriculture with Honours rom University o
Ceylon. His M.Sc. on Agronomy was obtained in Kyoto, and his Ph.D. on Agronomy & Physiology rom
University o Kyoto.
Dr. Jayawardena is the Chairman o the Tea Research Board and a member o the Governing Boards
o Sri Lanka Tea Board, Tea Small Holdings Development authority, Tea Shakthi. In addition, he is amember o the National Salaries & Cadre Commission o the Government, the National Science
Foundation National Committee and the Advisory Committee on Plantation Industry appointed by the
Honorable Minister o Plantation Industries. In August 2010 he was appointed as a Director to the Board
o Directors o Kegalle Plantations PLC.
He has joined the Department o Agriculture as a Research Ocer in 1968 and was promoted as
the Deputy Director (Research) in 1997. Director General o Agriculture, Director, Tea Research
Institute, Chairman, Coconut Research Institute, Advisor to the Honorable Minister o Plantation
Industries, Advisor to the Honorable Minister o Agriculture, Chairman, National Institute o Plantation
Management, Chairman, Tea Research Board in 2006.
In addition to the above, Dr. Jayawardena was the FAO Consultant to the Consultative Group in
International Agriculture Research on Bio-diversity and JICA Consultant to the Government o Ghana
on Horticulture Sector Development.
He has over 40 years proessional experience covering agricultural research and development
activities, human resource development, development o oreign unded projects, direct involvement
in ood security and poverty, alleviation programs o the country. He has more than 100 co-authored
publications.
He has participated in more than 75 International Conerences related to agriculture, development,
research management, ood security, bio-diversity, environmental etc., in many countries in the world.
Prof. R C W M R A Nugawela
Director
Dr. S S B D G Jayawardena
Director
Pro. Nugawela joined the Rubber Research Institute in the capacity o an Assistant Botanist in 1980. Hewas awarded a Colombo Plan Scholarship in 1981 to read or his Masters Degree and in 1982 he suc-
cessully completed it in the ield o Applied Plant Sciences at the University o London. He has extensive
experience over 31 years in the capacities o a Botanist, Head o Plant Science Department, Deputy Direc-
tor Research (Biology) and as a Director in Rubber Research Institute. In January 2011, Pro. Nugawela
resigned rom the post o Director o Rubber Research Institute to assume duties as a Proessor in the
Department o Plantation Management, Wayamba University o Sri Lanka.
In 1985 he was oered a scholarship by the Food and Agricultural Organization o the United Nations to
obtain his proessional qualiications. For his research work on Plant Physiology and Bio Productivity in
Hevea brasiliensis (the natural rubber plant) he was awarded a PhD rom the University o Essex, UK in 1989.
His thrust areas o research and development were on nursery and planting practices, exploitation, use
o yield stimulants and rain guards. He has more than 120 publications in both local and oreign research
journals and has addressed many local and international conerences on natural rubber.
Pro. Nugawela was appointed to the Board o Kegalle Plantations PLC with eect rom 26 May 2008.
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Annual Report 2010/11 Kegalle Plantations PLC
Sustainability Report
ustainability can be reerred to as, taking the long-term view o how our actions aect uture generations and
making sure we don’t deplete natural resources, or cause pollution at rates aster than the earth is able to renew
them. Kegalle Plantations PLC recognized that living sustainably is subsisting within the means o the natural
The Company continued to maintain its responsibility towards
the welare o all stakeholders, irrespective o boundaries
in our areas o operation. We believe that establishing and
adhering to priorities, Corporate Social Responsibility should
be extended towards our employees, shareholders, customers
and communities in which we operate.
Social Equity
Economy
Environment
Sustainability
Reporting
Kegalle Plantations PLC
Estate Skill Development - Employees
The Company continued training o Workers, Sta and
Executives on productivity, quality manuacture and
agricultural practices, leadership, teamwork, career growth and
development.
The Company provided in-house training on Inormation
Technology to Sta Members. All estate sta who are involved
in Accounting were trained specifcally on the in-house built
computer package at several regions o the Plantation.
Training Session to employees at Atale Estate by “Social Dialogue & Work Place Co-operation Unit” o Department o Labour, Colombo 05.
Ssystems that belong to nature and developing and meeting up the needs o the present without compromising the ability
o uture generations to meet their needs. Company also believes that, as a corporate entity, owes the community and its
stakeholders, assurance on how this eorts have benefted them. In Sustainability Reporting we capture how the Company
endeavored to match human well-being and nature together with our responsibility to our stakeholders.
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Sustainability Report Contd….
Community Development
As a measure o assistance to the Government, in their Village
expansion programs, an extent o 25 Acres o land was released
rom Hathbawe Estate. In addition, clearing o surroundings
and renovation o wards are undertaken annually at the
Government Hospitals.
Health and Welare
Anti Natal & Post Natal Clinic programs were conducted with
the assistance o the Plantation Human Development Trust
together with the sta attached to the Health and Welare
Division o our estates. Activities in the development o worker
housing, medical care, welare and crèche activities were also
carried out with the assistance o the PHDT with a view to uplit
the housing, childcare, health, and sanitation levels in our
estates.
Health camps were also organised on estates in collaboration
with the PHI o area, Health Department, MOH Ocials and
various other organisations paying much attention to health
o the workers, specially maternal & child health. The Health
Development Sta in the estates with the assistance o
Plantation Human Development Trust make concerted eort
in conducting these camps to be o use to all concerned.
The assistance given to the workers/sta towards medical
acilities, welare activities, cultural and religious unctions,
sports etc during the year included providing necessary goods/
materials and technical inputs.
Some o these Health camps conducted were on the ollowingsubjects:-
Awareness Programmes on HIV, AIDS
Diabetic
Oral Cancer
Dental Clinic
Blood Donation
Eye Clinics providing spectacles
Anti Natal/Poly clinics to pregnant mothers
Health Camp at Doteloya Estate
Celebration o Annual Samikumbudu Festival at Luckyland Estate with the
presence o DGM Administration o the Company
Maintaining a Community Hospital at Kirklees Estate
Alms Giving Ceremony at Luckyland Estate
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Sustainability Report Contd….
Child Development and Welare
Child Care Centres were maintained to provide better care
and maintenance or workers’ and on some estates the Village
children. Mid-day meals and/or Milk, “Kola Kenda” are provided
in most o our estates.
Children’s Day and various other programs were conducted in
some o our estates organized by sta welare societies o the
estates participated by the children o the resident workers and
in some instances, children o the villagers.
To educate the workers and employees on child rights and the
parents’ responsibility, estates conducted programs with the
assistance o the Divisional Secretary o the area.
The sta and workers o the estates participate in ‘Shramadana’
campaigns in cleaning and repairing village roads, cleaning o
wards o the government hospitals and donating unds, goods
etc.
Identifed and rewarded the best rubber harvesters
Employment Opportunities
As a policy o the Company, whenever an employment
opportunity arises both in Estates and Head Oce, priority
is given to children o the existing employees beore outside
recruitments are made.
Sports Activities
The annual Inter-estate Volley Ball and Cricket tournaments
were conducted, with the participation o the workers and sta
o estates.
Assistance or Higher Studies
The Company continues to assist the children o the employees
who pursue higher studies in the national universities. A
fxed monthly scholarship is awarded to all the benefciaries
throughout the period o their higher education. Several
children have been benefted by this scheme and those who
have completed their studies are gainully employed at present.
Co-operative movements
The Estate Workers Co-operative Societies with the enrolment
o the workers in the Society continues to unction. The workersenjoy the acility o obtaining goods and equipment on easy
payment schemes through Co-operative Society. In addition
various types o fnancial assistance including short-term
loans as distress and housing loan etc. with minimum security
requirement are given.
Doteloya and Eadella Estate Celebrations o Pre-School Children
Employee Saety
All the actories in the estates and other work places are
equipped with necessary implements to maintain the
saety standards required. Educational programs have been
conducted to enlighten the employees o the need to take
precautionary measures and to become more aware o the
various issues relating to the saety o the work place.
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Sustainability Report Contd….
Forestry Management
The Company’s orest management plans ormulated or
the sustainable management o orest plantation blocks and
harvestable timber extents on estates continued to be in orce.
Guidelines have been issued to the Superintendents pertaining
to the selection o land, species, cultivation practices and the
need to preserve the environment, having in mind the need to
protect the environment. Planting o dendroid thermal orestry
on very steep or inaccessible land have been prohibited. As
a Company that is engaged in Plantation Agriculture, we
are deeply involved in orestry conservation. The Company
manages rubber plantations in an extent o 5,400 ha; itsel are inact a orest cover. Rivers and stream banks are in conservation
orestry in perpetuity. The same principle applies to sources o
water or industrial and domestic purposes. We are conscious
o the importance o preventing accidental or deliberate orest;
frst and extreme vigilance is being exercised.
Harvesting o Timber
All operations including elling, clearing, extraction &
transportation o timber is undertaken in conormity to
the environmental standards stipulated under the National
Environmental Act with all precautionary measures planned out
to minimize soil erosion and runo uctuation o the ground
water table. It is also mandatory on the part o the Company
to replant the harvested extents almost immediately during
the succeeding monsoon, in addition to the establishment o
conservation orest extents in vulnerable areas. All operations
including elling, clearing, extraction & transportation o timber
Kegalle’s eorts in “Protecting the Environment”
Forest Stewardship
Council Certifcation
ISO 9001:2008 Certifcation
Dotelo ya Estate
K irklees Estate
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Annual Report 2010/11 Kegalle Plantations PLC
is undertaken in conormity to the environmental standardsstipulated under the National Environmental Act with all
precautionary measures planned out to minimize soil erosion
and runo uctuation o the ground water table.
The Inter-Ministerial Committee under the patronage o the
Minister o Plantation Industry together with the Conservator
o Forests regulates all orms o tree harvesting on estates. Clear
elling o trees in extents exceeding 2 ha, elling o wind belts or
any orm o elling o trees in catchments areas or in lands with
high gradients are totally avoided.
Soil Conservation
Soil conservation methods, such as prolieration o leguminous
cover crops, terracing including “live terraces” and draining
have been undertaken in all extents replanted and in other
areas on an annual basis.
Environment Protection - Treatment o Euent
We have commissioned Euent Treatment Plants in our rubber
actories to treat the toxic waste beore it leaves our estates
boundaries. The operating cost o these treatment plants
amounts to an average o over Rs 1/- per kg rubber produced.
Sustainability Report Contd….
U d a pol a C LP F a c t or y
At a l e E s t a t e
Euent Treatment Plant or a Friendly Environment
Trucco Energy Ecient Heater at Kirklees Estate to bring down uel
consumption substantially by way o higher thermal and optimum heat transer
Energy Eciency
It is widely known that power generation leads to
environmental pollution. Hence our commitment or energy
ecient machinery reduces this environmental threat.
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Kegalle Plantations PLC Annual Report 2010/11
Achievements
uman component in an organization is considered themost important resource to that entity. When employed,
how employees’ perormance is monitored, evaluated
them to achieve the goal o the Company as well as theirs. Duringthe year, Kegalle Plantations had many instances, whereby the
top perorming employees were recognized and rewarded.
Richard Pieris Plantations honours
“Exceptional People – Traditional Champions”
Following are the award winners or Kegalle Plantations PLC
1) Lowest Waste Tea Sector – Luckyland Estate - Mr Saman Doranegama
Rubber Sector - Parambe Estate - Mr Asanka Jayathilake
2) Lowest COP Tea Sector – Yataderiya Estate - Mr UK Wanniarachchi
3) Manuacturing Eiciency Rubber – Pallegama Estate - Mr BMJA Moonamale
4) Elevational Average Tea Sector – Gampaha Estate - Mr D V M De Runn
Rubber – Atale Estate - Mr A C Bertus
Special Award - Centriuged Latex Project - Udapola Estate - Mr NB Ranathunge
5) Labour Eiciency Madeniya Estate - Mr UD Liyanage
6) Agricultural Practices Tea Sector – Doteloya Estate - Mr LM Chandana Priyashantha
Rubber Sector – Eadella Estate - Mr Lakshman Amarathunge
7) Total Proitability Doteloya Estate - Mr LM Chandana Priyashantha
8) Best Cash Flow Improvement Yataderiya Estate - Mr UK Wanniarachchi
9) Overall Best Contribution Second Runner-up –Eadella Estate - Mr Lakshman Amarathunge
Overall Best Contribution
2nd Runner-up
Mr. Lakshman Amarathunge,
Former Superintendent
Eadelle Estate o Kegalle
Plantations PLC
Hand rewarded, plays a pivotal role in motivation to encourage
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Achievements Contd….
Annual Report Awards 2010
The Institute o Chartered Accountants o Sri Lanka
Kegalle Plantations PLC was able to obtain awards o excellence
in the presentation o Annual Reports, conrred by the the
Institute o Chartered Accountants since 1997 and are pleased
to report that the Bronze Award has been awarded to our Annual
Report or the year 2010 in the Plantations Sector category. ANNUAL RUGBY SEVENS
BOWL CHAMPIONSHIP - MARCH 2011
Kegalle Plantations Rugby Team emerged victors in the Bowl
Championship o the Annual Rugby Sevens which was organized
by Dickoya & Maskeliya Cricket Club at Dickoya in March 2011.
Annual Report Award 2010 - Plantations Sector - Bronze Award
– The Institute o Chartered Accountants o Sri Lanka
Mr. S S Poholiyadde, Chie Executive Ocer o Kegalle Plantations PLC,
receiving the Bronze Award rom Vice President o ICASL
Mr. S Rajapakse (FCA).
Rugby Team – Kegalle Plantations PLC
Best Contribution - Total Proftability Mr. Chandana Priyashantha, theSuperintendent o Doteloya Estate
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Kegalle Plantations PLC Annual Report 2010/11
Financial Review
he Financial Review discusses an overview o theCompany’s Financial Perormance reected in the
Financial Statements o the Company, which orms
a part o this Annual Report, setting out the fnancial
perormance and the fnancial position o the Company.
Revenue
The Turnover o the Company was Rs 2.99 Bn, an increase o
35% compared to the Turnover o Rs. 2.22 Bn recorded in the
previous year. Turnover contribution o both rubber and tea
increased by 54% & 5% compared to the previous season
respectively.
Proftability
The Gross Proft (GP) Margin or rubber increased rom 29%
to 53% compared to last year whilst the GP margin or tea
remained at 4%, same as last year. Gross Proft or Rubber
achieved 3 times more than the last season.
Total revenue contribution rom Rubber, Tea and Coconut was
65.65%, 30.39% and 1.25% respectively. 2.73% o the Revenue
was rom Other crops and Sale o old Rubber Trees.
RUBBER
The Company produced 4,082 Mt o Rubber and generated a
Revenue o Rs. 1.96 Mn or the year. Gross Proft rom Rubber
was Rs. 1,033 Mn, an increase o almost 3 times in comparison
to that o the previous year. Rubber Production details have
been explained in the Operational Review on Page 24 o this
Report.
TEA
Total revenue generated rom Tea was Rs. 909 Mn arriving
at a Gross Proft o Rs. 40 Mn or the year under review. Total
production was 2.77 Mn kg out o which 43% or 1,199 Mn kg o
made tea was rom Bought Lea operations.
Accordingly, The fnancial perormance o the Company was
exceptional or the year with Proft Ater Tax o Rs. 883 Mn (2010
- Rs. 376 Mn) reecting a growth o 135% compared to the last
fnancial year and also the highest ever proft recorded in the
history o the Company.
Financial Position
The Balance Sheet o the Company has been urther
strengthened during the fnancial year under review. Non
current assets and current assets increased by Rs. 118 Mn
and Rs. 672 Mn respectively. The Company spent Rs. 200 Mn
on capital expenditure. As at the Balance Sheet date the
Company’s long term and short term borrowings decreased by
8% to Rs. 371 Mn rom Rs. 405 Mn rom the previous year.
1002003004005006007008009001,000
500
1,000
1,500
2,000
2,500
3,000
3,500
07 08 09 10 11
P A T - R s . ' 0 0 0
T u r n o v e r - R s . ' 0 0 0
Year
Turnover Vs. Profir After Tax
Turnover Profit After Tax
0%
10%
20%
30%
40%
50%
60%
2008 2009 2010 2011
Gross Profit Margin
In Percentage
Rubber Tea
(500)
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2008 2009 2010 2011
Total Assets & Borrowings
In Rupees Million
Total Assets
Net Borrowings
T
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Annual Report 2010/11 Kegalle Plantations PLC
1 , 3
6 1
1 , 7
9 8
8 2 2
1 , 5
8 0
5 , 5
5 9
1,000
2,000
3,000
4,000
5,000
6,000
07 08 09 10 11Year
Enterprise ValueRs. / Mn.
Earnings Per Share
Basic Earnings per share increased to Rs. 35.33 against Rs. 15.04
and was due to 135% increase in profts over last year.
Net Assets Per Share
Net assets per share at the end o the year was Rs. 97.76, an
increase o Rs. 29.83 per share compared to the previous year.
Financial Review Contd….
Cash Flows
The cash generated rom operations amounted to Rs. 1,008 Mn
as against a Rs. 618 Mn in the previous year. Interest, Dividend
and Income tax payments during the year amounted to Rs. 51
Mn, Rs. 137 Mn and Rs. 29.5 Mn respectively.
Payments relating to the lease rental amounted to Rs. 67.4
Mn. The resultant surplus o Rs. 531 Mn was used to reduce
overdrats and to gain rom short term investments.
Return on Capital Employed
Return on Capital Employed was 32.58% (2010 - 18.95%) which
is a 14% additional return over previous year.
Market Capitalisation
The Company’s Market Capitalization as at 31 March 2011
stands at Rs. 5.2 Bn as against Rs. 1.2 Bn as o 31 March 2010.
During the year under review the share o the Company traded
in the range o Rs. 47.50 to Rs. 280.00.
200 400 600 800 1,000 1,200
Inflow 2010
Inflow 2011
Outflow 2010
Outflow 2011
Cash FlowIn Rupees Million
Inflow Outflow
Inflows from Operations Capital Expenditure & Investments
Proceeds from Loan Loan Repayment/Rentals/Finance Cost
Other Receipts Other
1 , 8
1 9
2 , 1
6 3
1 , 9
2 8
2 , 2
1 6
2 , 9
9 2942
1,2201,347
1,698
2,444
500
1,000
1,500
2,000
2,500
3,000
500
1,000
1,500
2,000
2,500
3,000
3,500
07 08 09 10 11Year
Turnover Vs. Shareholders' Fund
Turnover - Rs.Mn. Shareholders' Fund - Rs.Mn.
1 2 . 4 5
1 7 . 1 0
7 . 1 0
1 5 . 0 4
3 5 . 3 3
5
10
15
20
25
30
35
40
2 0 0 7
2 0 0 8
2 0 0 9
2 0 1 0
2 0 1 1
Earning per share
Rs. 35.33 (2010 - Rs. 15.04)
1 ,
8 1 9
2 ,
1 6 3
1 ,
9 2 8
2 ,
2 1 6
2 , 9
9 2 394
482
351
410
1,032
200
400
600
800
1,000
1,200
-
500
1,000
1,500
2,000
2,500
3,000
3,500
07 08 09 10 11
Year
Turnover Vs. EBIT
Turnover - Rs.Mn. EBIT - Rs.Mn.
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Kegalle Plantations PLC Annual Report 2010/11
QUARTERLY PERFORMANCE AT A GLANCE
Finacial Year 2010/11
Rs. ‘000 1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER TOTAL
Revenue 630,602 743,620 716,578 900,962 2,991,762
GP 167,569 283,473 299,875 422,853 1,173,770
PBI & T 150,336 244,916 259,963 376,378 1,031,593
PBT 134,787 228,514 239,520 314,302 917,123
PAT 130,890 219,886 232,200 300,151 883,127
EPS 5.24 8.80 9.29 12.01 35.33
Last Traded MP/Share 80.75 168.40 161.80 207.50 207.50
Financial Review Contd….
-
0.60
1.20
1.80
2.40
3.00
3.60
4.20
4.80
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Estate Crop
In Million Kilogramms
Rubber Tea
-
500
1,000
1,500
2,000
2,500
3,000
3,500
2007 2008 2009 2010 2011
Turnover & Cost of Sales
In Rupees Million
Turnover Cost of Sales
-
10
20
30
40
50
60
70
80
Field Dev. Factory Mod. Equipment Social Other
Capital Expenditure
In Percentage
2010 2011
2 7 9
5 5 2
3 5 4
5 2 8
8 9 4
-100
200
300
400
500
600
700
800
900
1,000
07 08 09 10 11
Year
Operational Cash Flow
Rs.'000
3 1 1
2 9 8
3 4 8
4 0 5
3 7 1
70
4660
66
117
-
20
40
60
80
100
120
140
-
100
200
300
400
500
07 08 09 10 11
Year
Finance Cost - Rs.Mn.
Total Debt Vs. Finance Cost
Total Debt - Rs.Mn.
50
100
150
07 08 09 10 11
V a l u e - R s . / M n .
Finance Cost Vs. Interest Income
Finance Cost Interest Income
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Annual Report 2010/11 Kegalle Plantations PLC
- 200 400 600 800 1,000
2007
2008
2009
2010
2011
Profit Before Tax - Rs. Mn.
Profit Before Tax
Review of Operations
e have pleasure in reporting that the Company wasable to increase both its productivity and proftability
with an all-time record proft margin. Our perormance
in the stock market saw an all-time high per share price o
Rs. 285.00, an increase o 5.5 times in comparison to the
previous year.
Revenue
Starting rom a somewhat bleak phase, tea prices declined in
the frst hal o the year under review and gradually increased
in the second hal. In contrast, the prices or rubber remained
steady and healthy throughout the year. The Company
continued to establish its direct export market by trading Sole
crepe rubber to world amous manuacturers o Clarks Shoes
Company where attractive prices linked to RSS were etched. The Company also monitored the Grade Mix o Rubber to suit
the demand in the market with its exible manuacturing
capability.
The proft recorded or the year ater tax is Rs. 883 Mn where
the growth rate is over 135% compared to last year. Gross
Profts generated rom Rubber, Tea, Coconut and other Crops
recorded healthy margins amounting to Rs. 1.17 Bn.
Kegalle Plantations earned Rs. 80 Mn rom Sale o Rubber trees
and Rs. 74 Mn as income derived rom interest.
Forest Management Certifcate was obtained or 7 Rubber
Estates and Ethical Tea Partnership was awarded to Doteloya
Estate or tea manuacture.
The Company is in the process o obtaining ISO 22000
certifcation or all fve tea manuacturing actories and will be
completed by May 2011.
Rubber
Production
The climate patterns experienced were not conventional but
peculiar. The erotic pattern o rain with heavy downpours,
common to all over the country, interrupted the production
during peak production periods. The rainall recorded during
the period under review was 4,588 mm experienced in 181
days as against the decennial average o 3,211 mm in 149
days. However, the Company has maintained its position
as the largest natural rubber producer o the Country with
a production o 4,082 MT during the year, which is a drop o
around 11% against last fnancial year. Revenue bearing extent
was reduced by 172 ha compared to last season.
50.00
100.00
150.00
200.00
250.00
300.00
2006/07 2007/08 2008/09 2009/10 2010/111
Share Price
880
900
920
940
960
980
1,000
1,020
1,040
1,000
2,000
3,000
4,000
5,000
6,000
07 08 09 10 11 Y i e l d K g / H e c t a r e
C r o p - K g . ' 0 0 0
Year
Crop Vs. Yield
Rubber
Crop Yield
-
50.00
100.00
150.00
200.00
250.00
300.00
A p r - 1 0
M a y - 1 0
J u n - 1 0
J u l - 1 0
A u g - 1 0
S e p - 1 0
O c t - 1 0
N o v - 1 0
D e c - 1 0
J a n - 1 1
M a r - 1 1
Share Price
W
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Year ended 31 March 2011
Kegalle Plantations PLC Annual Report 2010/11
157.49210.35
247.07 236.78
360.38
543.86
162.68
254.91 243.34 244.43
341.53
594.75
100
200
300
400
500
600
700
05/06 06/07 07/08 08/09 09/10 10/11
Colombo Auction Averages - Rubber
In Rupees per kg
RSS1 LC-1X
Review of Operations Contd….
Small Holder Latex
Small Holders experienced the eect on similar weather
patterns, which in turn inuenced their preerence to sell
processed sheet rubber instead o feld liquid latex since
processed product yielded higher prices. This situation also
made rubber manuacturers to ace sti competition to
purchase feld latex rom the Small Holders. Nevertheless, the
Company was able to collect a quantity o only 526,000 kg rom
the Small Holders, at competitive prices.
Cost o Production
The Cost o Production o estates increased by 9% compared
to last season. The larger extents ertilized during the year,
increase in prices o chemicals and other material are the
main reasons or increase in the COP. Further, 4,055 hectares o
rubber were ertilized during the year in comparison to 2,249
hectares in the previous year.
Product Mix
The product mix or the period under review is given below:
2009/10 2010/11
Centriuged Latex 57% 50%
Latex Crepe 19% 27%
Sole Crepe 9% 9%
Skim & Scrap 15% 14%
Market Outlook
The market trend or processed rubber remained steady and
healthy throughout the year. Pale Crepe Rubber etched high
prices in the market and the highest price ever o Rs. 700/-
per kg was recorded in the month o February 2011. Kegalle
Plantations was able to etch higher prices or Sole Crepe Rubber
by way o direct export to the World amous manuacturers o
Clarks Shoes Company. The production o Centriuged Latex,
though below last season, remained highest with a share o 50% and was sold through the Brokers and to Messrs. Richard
Pieris Natural Foams Ltd, our long-standing customer.
Parambe Estate obtained top prices in the Auctions on 15
occasions while Atale and Pallegama estates recorded one top
price each.
NSA FOR RUBBER
The Company achieved an overall Net Sale Average o Rs.
481.15 per kg or Rubber, which is an increase o 72% over
last season. This is due to the stable market conditions or
rubber throughout the season and also due to the changing o
product/grade mix to suit the Market.
100
200
300
400
500
600
07 08 09 10 11
NSA Vs. COP - Rubber
Rs. / kg.
NSA COP
0.74 0.60 0.83 1.111.28
1.551.93
2.28
2.122.29
4.89
0.88 0.63 1.001.27 1.47
1.602.34
2.242.20 2.33
5.34
0.00
1.00
2.00
3.00
4.00
5.00
6.00
0 0 / 0 1
0 1 / 0 2
0 2 / 0 3
0 3 / 0 4
0 4 / 0 5
0 5 / 0 6
0 6 / 0 7
0 7 / 0 8
0 8 / 0 9
0 9 / 1 0
1 0 / 1
Rubber Market Prices
$/kg
LC 1XRSS 1
0
100
200
300
400
500
600
700
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Colombo Auction Rubber Prices - LC.1X
In Rupees per kg
2011 2010
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Year ended 31 March 2011
Annual Report 2010/11 Kegalle Plantations PLC
Review of Operations Contd….
TEA
The production o tea in Sri Lanka in the year 2010 increasedover 2009 recording 331 Mn kg, an increase o 12% over last
season. The Company’s total tea production was 2,773 Mn kg
o made tea and is equivalent to a 12% increase rom previous
year.
This year too the weather condition in Udapussellawa was
errotic, but despite the act that adverse weather conditions
had an eect on the supply o bought lea, 43% o the total
production consisted o bought lea. In the season 2010/11
Udapussellawa region estates achieved 351,463 kg compared
to 183,511 kg last season.
200
400
600
800
1,000
1,200
1,400
500
1,000
1,500
2,000
2,500
3,000
3,500
07 08 09 10 11
Y i e l d K g / H e c t a r e
C r o p - K g . ' 0 0 0
Year
Crop Vs. Yield
Tea
Crop Yield
NSA FOR TEA
Tea ectched a reasonable good NSA o Rs. 327.64 per kg which
is a 6% drop in comparison to previous year.
TOP PRICES
Gampaha Factory obtained 86 top prices, whilst
Luckyland 35 top prices,
Doteloya 25 top prices,
Kirklees 12 top prices and
Yataderiya 01 top price, during the season under review.
364
313
351
297
350
150
200
250
300
350
400
2 0 0 7
2 0 0 8
2 0 0 9
2 0 1 0
2 0 1 1
Direct Exports - Rubber
In metric tons
50
100
150
200
250
300
350
400
07 08 09 10 11
NSA Vs. COP - Tea
Rs. / kg.
NSA COP
1.521.48 1.43
1.701.71
1.972.16 2.23 2.41
2.86 2.80
1.37 1.33 1.31
1.561.62
1.70
2.172.34
2.483.03 2.95
1.73 1.68 1.671.88 1.98
1.97
2.74
2.953.29
3.52 3.56
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
2 0 0 1
2 0 0 2
2 0 0 3
2 0 0 4
2 0 0 5
2 0 0 6
2 0 0 7
2 0 0 8
2 0 0 9
2 0 1 0
2 0 1 1
Tea Market Prices$/kg
High Medium Low
0
100
200
300
400
500
600
700
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Colombo Auction Rubber Prices - RSS1
In Rupees per kg
2011 2010
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Year ended 31 March 2011
Kegalle Plantations PLC Annual Report 2010/11
100
200
300
400
500
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
ColomboAuction Tea Price
In Rupees per kg
2010/11 2009/10
Review of Operations Contd….
COCONUT
Company produced 1.4 Mn nuts during the year, which is a 10%
drop in production rom last year. Average price etched during
the year was Rs. 26.45 per nut, a 47% increase rom previous
year’s Rs. 17.99 per nut. This resulted in a proft o Rs. 17.9 Mn in
comparison to Rs. 9.5 Mn in the last year.
Factory Development
This year too extensive actory development to oors and roos
was undertaken during the period. Flooring has improved
the hygienic conditions o the actory and as a result has
improved the end product. Further, Doteloya actory capacity
was increased to 18,000 kg by building a new lot with fve new
troughs to increase bought lea intake.
Investments
Replanting o rubber was undertaken in an extent o 147 ha
during the year under review. Company has replanted an
extent o 970 Hectare since the replanting was resumed in year
2004. Subsidy due or Replanting rom the Rubber Cess Fund
has been claimed appropriately.
The Company also increased the crop by installing rain guards
in Atale, Parambe, Madeniya and Udapola Estates at a cost o
Rs. 6.9 Mn during the year.
Euent Treatment Plants commissioned in all our Rubber
Factories were maintained by treating the toxic waste within
the estate boundaries, in keeping with our Environmental
Policy.
Worker Welare
The Company continued to extend fnancial assistance o Rs.
1,500/- per month to each student who qualifed or University
Education and our Children o Workers’ rom Atale and
Pallegama Estates have benefted rom this scheme during the
year.
Estate/Village Integration
An extent o 25 Acres o land was released rom Hathbawe
Estate or village expansion ater obtaining approval rom the
Ministry o Plantation Industries and the Golden Share Holder.
Training & Development
The Company continued training o Workers, Sta and
Executives on productivity, quality manuacture and
agricultural practices, leadership teamwork, career growth and
Development.
1,000
2,000
3,000
4,000
5,000
6,000
200400600800
1,0001,2001,4001,6001,8002,000
07 08 09 10 11
Y i e l d n u t / h a .
C r o p - n u t . ' 0 0 0
Year
Crop Vs.Yield
Coconut
Crop Yield
123
74
74
61
70
107
94
119
166 183
200
0
50
100
150
200
250
2 0 0 1
2 0 0 2
2 0 0 3
2 0 0 4
2 0 0 5
2 0 0 6
2 0 0 7
2 0 0 8
2 0 0 9
2 0 1 0
2 0 1 1
Capital Expenditure
In Rupees Million
5
10
15
20
25
30
07 08 09 10 11
NSAVs. COP - Coconut
Rs. / nut
NSA COP
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Year ended 31 March 2011
Annual Report 2010/11 Kegalle Plantations PLC
Review of Operations Contd….
The ollowing Programs were undertaken during the periodunder review.
Workers Tapping & other agricultural practices
Plucking & other agricultural practices
Rubber Manuacture & Factory practices
Low Grown tea manuacture
Inter Cropping & Cultivation o export
agriculture Institutional Development
(Leadership Team & Attitude)
Fire Protection
Bud Grating
Personal Hygiene
Sta Leadership Teamwork & Tapping
Managing Occupational Stress
Skill Development
Energy Saving Methods
Fire Protection
Executives Personal Development and Career Growth
Leadership Development Competencies
Forestry Management or SGS Certifcation
58%
39%
1%0% 2%
Revenue Drivers
%
Rubber
Tea
Coconut
Other Crops
Sale of Rubber Trees
2010
66%
30%
1%0% 3%
Revenue Drivers
%
Rubber
Tea
Coconut
Other Crops
Sale of Rubber Trees
2011
Revenue Drivers - Rs. Mn. 2011 2010
Rubber 1,964 1,278
Tea 909 864
Coconut 37 28
Other Crops 1 1
Sale o Rubber Trees 80 45
Total 2,992 2,216
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Annual Report 2010/11 Kegalle Plantations PLC
Corporate Governance
oard o Directors is committed to adopt the bestpractices in every sphere o business activity and
complies with the rules listed in the Colombo Stock
Main responsibilities o the Board o Directors are as ollows:
i. Setting the Company’s overall short term and long
term Strategic Goals and Direction and monitor
implementation
ii. Ensuring that a sound and eective internal control
system exists and that all statutory obligations are met.
iii. Approval o the Company’s key matters such as Strategic
Plans, Annual Operating Plans / Budgets and Monitoring
operating and fnancial perormance
iv. Identiy and manage business risks.
v. Succession planning including appointment and training
Senior Management
vi. Appointment and fxing remuneration o the Managing
Agent
vii. Approve the Interim and fnal fnancial statements o the
Company
viii. Sanction all material transactions, contracts, acquisition
or disposal o assets and approve all capital expenditure
The Board collectively decides on the appointment o Directors.
The Directors so appointed retire at the next Annual General
Meeting ollowing their appointments and seek re-election
rom the shareholders along with the other Directors.
The Board o Directors continues to meet every other month or
more requently, i required.
Meetings o the Board o Directors
Five Board Meetings were held during the year. Prior to each
Board Meeting, Directors are provided with all relevantmanagement inormation and background material relevant
to the Agenda to enable inormed decisions. Board Papers
are submitted in advance on Company’s perormance, new
proposals and investments, capital projects and other issues,
which require attention and approval o the Board.
Appoint
SHAREHOLDERS
Board of Directors
CEO
Corporate Management
Management System
(Decision Making,Information Sharing)
Corporate Governance
ExternalAuditors
Compliance, Audit, &
Remuneration
Committees
Appoint
Consults
InternalReporting
System
Audits
Audits
InternalAuditors
Appoints
Advises/Recommendations
BExchange, being a public quoted Company. Kegalle Plantations
PLC is also guided by the principles included in the Code o
Best Practice on Corporate Governance issued jointly by the
Institute o Chartered Accountants o Sri Lanka and Securities
and Exchange Commission o Sri Lanka.
The Board o Directors takes responsibility to maintain highest
standards o Corporate Governance. This Statement describes
the manner in which Kegalle Plantations PLC applied principles
o Corporate Governance practices during the year.
The Board o Directors
The names and a brie profle o the members o the Board are
given under “Profle o Directors” section o this report on Pages
12 & 13.
According to the Directorate the Company has 03 Non
Independent Executive Directors and 02 Independent Non
Executive Directors.
The Directors possess vast experience and expertise in
operating and managing Plantations, marketing agricultural
crops produced by the Company and other relevant subjects
to drive a highly motivated management team to achieve the
Company’s strategic goals. Composition o the Board members
amalgamates a wealth o skills, experience, and diverse
perspectives o the business.
Corporate Governance Structure
The Company’s Governance Framework is depicted in the
ollowing diagram.
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Year ended 31 March 2011
Kegalle Plantations PLC Annual Report 2010/11
Meetings o Management Committee
The Management Committee comprises o the Senior
Managers o the Company. The Chie Executive Ocer o
the Company chairs the Committee which meets every
month and more oten, i necessary. It reviews in detail the
individual perormance o the Estates and the Company as a
whole against the Plan/Budget and makes recommendations
as ound necessary. Management Committee exercises its
authority within the policy ramework established by the Board
o Directors, best practices, and generally accepted norms
inherent to the plantations sector.
Further, all capital expenditure/project proposals etc., are
reviewed by this Committee beore they are recommended
to the Board or approval. No Capital Expenditure is incurred
without the Board approval.
Compliance Statement
Corporate Governance Requirements listed under Section 7 o
the Listing Rules issued by the Colombo Stock Exchange (CSE);
CSE Section Requirement Status o Kegalle
Reerence Plantations PLC
7.10.1 (a) to (c) Non Executive Directors In Compliance
7.10.2 Independent Directors In Compliance
7.10.3 Disclosures relating to Directors In Compliance
7.10.5 Remuneration Committee In Compliance
7.10.6 Audit Committee In Compliance
Strategic Direction and Corporate Structure
The Company strongly pursues the strategic direction identifed
and laid down in its Corporate Plan taking the current business
and political environment into account. The Corporate
Structure enables smooth ow o inormation both upward
and downward and its policy decision approval process.
Employees
All appointments o executive sta are subject to approval by
the Board o Directors. This process entails employment o sta
with high standards o ethics and integrity.
Internal Control
Functions relating to various operations are clearly defned
and ocers are assigned to undertake these unctions in
such a manner so that one single ocer does not carry a
single operation in ull. Procurement o both minor and major
inputs and capital items are executed the Group’s Commercial
Division. Disposal o Sundry/Redundant items, reuse tea etc.,
are all handled by independent Tender Committees set up at
the Head Oce.
Payments to all major suppliers, who provide input materials
and services to the Estates are made rom the Head Oce.
Proceeds rom sale o produce are collected at the Head Oce
through a well streamlined, Auction Prompt Collection method.
Audit Committee
Kegalle Plantations is one o the Group Companies o the
Richard Pieris & Company. Richard Pieris & Company is also the
majority shareholder and as such the Group Audit Committee
acts as the Audit Committee o the Company. Audit Committee
Report on Page 33 to 34 describes the activities carried out
during the Financial Year.
Corporate Governance Contd….
Attendance o the Directors are given below:
Name of Directors Executive Non-Executive Independent No. of
Meeting
Attended
Dr. Sena Yaddehige - - 3
Mr. J H P Ratnayeke - - 3
Mr. S S Poholiyadde - - 5
Mr. R L Kumararatne- Ceased to be a Director w.e.. 08.02.2011 - - - 1
Mr. P D Samarasinghe-Resigned w.e.. 15.02.2011 - - - 5
Mr. L N De S Wijeyeratne-Resigned w.e.. 01.07.2010 - - - 1
Pro. R C W M R A Nugawela - 5
Dr. S S B D G Jayawardena-Appointed w.e.. 16.08.2010 - 3
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Year ended 31 March 2011
Kegalle Plantations PLC Annual Report 2010/11
Internal Audit and Risk Management
The Internal Audit Programme was reviewed by the Committee
to ensure that it covered the major business units o the
Company.
The Chie Internal Auditor was invited to be present at all Audit
Committee deliberations. He presented a summary o the
salient fndings o all internal audits and investigations carried
out by his department or the period. The responses rom the
Chie Executive Ocer o the Company to the internal audit
fndings were reviewed and where necessary corrective action
was recommended and implementation monitored.
Internal Controls
During its meetings, the Committee reviewed the adequacy
and eectiveness o the internal control systems and the
Company’s approach to its exposure to the business and
fnancial risks. Processes are in place to saeguard the assets
o the organisation and to ensure that the fnancial reporting
system can be relied upon in the preparation and presentation
o Financial Statements. A comprehensive Management Report
and Accounts are produced at month end highlighting all key
perormance criteria pertaining to the Kegalle Plantation PLCand its Subsidiary which is reviewed by the Senior Management
on a monthly basis.
Board o Directors review perormance on a quarterly basis or
more oten, i required.
Financial Statements
The Committee reviewed the Company’s Quarterly Financial
Statements, the Annual Report and Accounts or reliability,
consistency and compliance with the Sri Lanka Accounting
Standards and other statutory requirements, including theCompanies Act No 7 o 2007, prior to issuance. It also reviewed
the adequacy o disclosure in published Financial Statements.
External Auditors
The Audit Committee has reviewed the other services provided
by the External Auditors to the Company to ensure their
independence as Auditors has not been compromised.
Report of the Audit Committee
he Audit Committee Charter, approved by the Board o Directors defnes the purpose, authority, composition,
meeting, and responsibilities o the Committee.T The purpose o the Audit Committee is to:
1. Assist the Board o Directors in ulflling its overall
responsibilities or the fnancial reporting process
2. Review the system o internal control and risk
management
3. Monitor the eectiveness o the internal audit unction
4. Review the Company’s process or monitoring
compliance with laws and regulations.
5. Review the independence and perormance o the
external auditors
6. To make recommendations to the board on the
appointment o external auditors and recommend their
remuneration and terms o engagement
The Audit Committee consisted o two independent and Non
Executive Directors o the Richard Peiris & Company PLC, theUltimate Parent Company, namely Pro. Lakshman R. Watawala
and Pro. Susantha Pathirana. The Chairman o the Committee
is a Senior Chartered Accountant. The Company Secretary
unctions as Secretary to the Audit Committee.
The principal activities o the Committee are detailed below.
Meetings
The Audit Committee held our meetings during the year under
review.
The Group Chie Financial Ocer, Group Internal Audit
Manager, Chie Executive Ocer and Chie Financial Ocer
o the Company were invited i deemed necessary or Audit
Committee meetings.
Meetings were held with the external auditors regarding the
scope and the conduct o the annual audits.
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Year ended 31 March 2011
Annual Report 2010/11 Kegalle Plantations PLC
The Committee reviewed the Management Letters issued bythe External Auditors, the Management response thereto and
also attended to matters specifcally addressed to them. The
The Audit Committee is satisfed that the control environment
prevailing in the organisation provides reasonable assurance
regarding the reliability o the fnancial reporting o the
Company, the assets are saeguarded and that the Listing Rules
o the Colombo Stock Exchange have been met.
Pro. Lakshman R Watawala
Chairman
27 May 2011
Report of the Audit Committee Contd….
External Auditors kept the Audit Committee inormed on an
ongoing basis o all matters o signifcance. The Committee met
with the Auditors and discussed issues arising rom the audit
and corrective action taken where necessary.
The Audit Committee has recommended to the Board o
Directors that Messrs. Ernst & Young be re-appointed as
Auditors or the fnancial year ending 31 March, 2012 subject
to the approval o the shareholders at the next Annual General
Meeting.
Conclusion
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Kegalle Plantations PLC Annual Report 2010/11
Report of the Remuneration Committee
he Remuneration Committee, o the Ultimate ParentCompany acted as the Remuneration Committee o
Kegalle Plantations PLC.
The Remuneration Committee consists o two independent
Non Executive Directors o Richard Pieris & Company, the
ultimate holding Company, namely Pro. Lakshman R Watawala
and Pro. Susantha Pathirana. The Committee is chaired by
Pro. Lakshman R. Watawala. The Committee met on several
occasions during the fnancial year.
The Remuneration Committee has reviewed and recommended
the ollowing to the Board o Directors:
1. Policy on remuneration o the Executive Sta
2. Specifc remuneration package or the Executive
Directors
In a highly competitive environment attracting and retaininghigh caliber executives is a key challenge. In this context,
the Committee took into account, competition, market
inormation and business perormance in declaring the overall
remuneration policy.
Pro. Lakshman R. Watawala
Chairman
27 May 2011
T
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Annual Report 2010/11 Kegalle Plantations PLC
Risk Management
egalle Plantations PLC is exposed to a multitude o risks associated with the cultivation and processing
o Tea and Rubber and the economic environment
Risk Management Process
The Company’s risk management process comprises o risk
assessment, risk minimization, risk monitoring, risk reporting,
and risk evaluation o uncertainty in business decision-making.
The diagram below shows the above steps o risk management
in the overall context o Kegalle Plantations PLC.
Key Risk Areas and Risk Exposure
Financial Risk Management:
Risk Exposure Company Objectives Risk Minimisation Strategies
1. Liquidity O Capitalize on opportunities to O Funding o long term assets through
& Cash raise unds at lowest possible cost. Equity and Long Term Loans.
Management O Maximum utilization o the O Ensure availability and eective
concessionary unding available utilization o short term acilities
to Plantation Companies. where necessary.
O Ensuring proper management o
working capital.
O To ensure a strong liquidity
position.
2. Interest O To minimize adverse eects O Structuring the loan portolio to
Rate Risk o interest rate volatility and combine oreign currency and local.
currency denominated borrowings.
O To ensure cost o borrowing O Eective utilization o hedging
is at the optimum level techniques such as interest rate swaps.
with the assistance o Group Treasury.
O Maximum utilization o the
concessionary unding available to
Plantation Companies.
3. Currency Risk O To minimize risk associated O Export proceeds exceeding the import
with the uctuation in oreign payments and oreign currency debt
currency rates in relation to through various hedging techniques
export proceeds, import
payments and oreign currency
debt transactions.
O Ensuring eective utilization by
coordinating with treasury operations
payments act as a natural hedge.
such as orward bookings, orward
sales, swaps etc.
Risk
Assessment
Risk
Evaluation
Risk
Minimization
Risk
Monitoring
Risk
Reporting
K in which it operates. The Board o Directors thereore places
special emphasis on the management o business risks and
together with the management Committee, ensures that a
sound system o controls including fnancial, operational and
compliance are in place, to saeguard shareholder investment
and assets and reviews regularly the eectiveness o such
controls.
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Kegalle Plantations PLC Annual Report 2010/11
Risk Management Contd….
Business Risk Management:
Risk Exposure Company Objectives Risk Minimisation Strategies
1. Credit Risk O To minimize risks associated O Obtaining insurance covers or
with debtor deaults. export debtors.
O Work towards obtaining collaterals
rom major local customers with
high outstanding.
O Follow stringent assessment
procedures to ensure credit
worthiness o the customers prior
to the granting o credit.
2. Asset Risk O To minimize risks rom fre, O Obtaining comprehensive insurance
thet and machinery & covers or all tangible assets.
equipment breakdown. O Adoption o stringent procedures with
regard to the moving o assets rom
one location to another.
O Carrying out mandatory preventive
maintenance programs.
O Carrying out requent employee
training programs in areas such as fre
prevention.
3. Internal O To maintain a sound system O Carrying out o system audits and
Controls o internal control to saeguard other control mechanisms such as
shareholders wealth and inventory counts and cash counts
Company’s assets. throughout the estates by the Central
Internal Audit Department o the main
Group.
4. Reputation O To prevent the causes that O Having in place a budgetary process
Risk damages our reputation. & a budgetary control mechanism on a
monthly basis to ensure that the
Company’s perormance is continuously
in line with its targets.
O Adopting stringent quality assurance
policies with regard to raw and packingmaterials bought out rom third parties.
O Ensure quality in manuacturing process
and compliance with the standards.
Work towards obtaining at least
HACCP standard in every actory.
O Ensuring eective communication with
various stakeholders such as
employees, bankers, regulators,
customers, suppliers and the
shareholders.
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Annual Report 2010/11 Kegalle Plantations PLC
Risk Management Contd….
Risk Exposure Company Objectives Risk Minimisation Strategies
5. Human O To ensure a smooth ow O Maintaining healthy relationships with
Capital & Labour o operations without any trade unions through regular dialogues.
Risk undue disruptions. O Entering in to collective agreements
with trade unions.
O Ensure compliance with all regulatory
requirements with regard to the
benefts applicable to workers at estates.
O To protect oursel as a human
employer being successul in motivating,
developing, retaining and attracting the
best o human capital. O Improving employee benefts by way o
fnancial incentives and welare activities.
O Arrange in-house and external training
in order to develop the human resources.
6. Technological O To keep pace with the current O The continuous investments in new
Risk technological developments and machineries and experiments on new
saeguard against obsolescence. methods.
O Mechanization o estate unctions up to
the highest possible extent.
O Investing in Research & Development
activities whenever necessary.
O
Implementation o the new computersystem in head oce and the estates.
O Investing in hardware resources.
7. Procurement O To minimize risk associated O Continuous replanting activities o both
Risk with price and availability. tea and rubber.
O Establishing relationships with many
suppliers or latex and bought lea in
order to reduce over-dependency on a
single supplier.
O Entering into orward contracts or
purchases o certain raw material items.
8. InventoryO
To reduce stock obsolescenceO
Adopting a monthly declaration policy.and manage stock holding costs. O Identiying slow moving stocks and
O Reducing the risk associated eectively laying out a channel or these
with thet and shrinkage. to be sold o.
9. Risk o O To maximize our market share O Ensuring high standards o quality in
Competition and maintain leadership in the the eyes o the customer.
respective industries. O Increasing productivity and eciency in
order to ensure an adequate margin
despite increasing wage, energy and
transportation cost.
O Carrying out Research & Development
activities whenever necessary in order
to identiy key areas to be ocused.
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Kegalle Plantations PLC Annual Report 2010/11
Risk Exposure Company Objectives Risk Minimisation Strategies
10. Capital O To minimise risk o not meeting O Adopting a stringent approval
Investments Risk proft expectations. procedure or Capital expenditure
based on the level o investment and
the expected pay back.
11. Inormation O To minimise risk associated O Maintaining o spare servers mirroring
Systems Risk with security, Hardware o hard disks with critical data.
communication and sotware. O Data back-ups stored in o site
locations.
O Vendor agreements or support service
and maintenance.
O Regular updating o Virus scanners,
Firewalls etc.
O Compliance with statutory
requirements or environmental
preservations.
12.Environmental O To minimise the negative O Ensure compliance with all regulatory
& Political Risk & Regulatory Risk external impact rom changes in the
environment which are beyond requirements.
our control.
Risk Management Contd….
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Year ended 31 March 2011
Annual Report 2010/11 Kegalle Plantations PLC
a epor t 2010/11 Kegalle Pl n ati ns PLC
Financial Calender 2010/2011
INTERIM QUARTERLY REPORTS
Quarter 2010/11 2009/10
1st Quarter 30 July 2010 07 August 2009
2nd Quarter 03 November 2010 10 November 2009
3rd Quarter 08 February 2011 03 February 2010
4th Quarter 27 May 2011 19 May 2010
MEETINGS
Annual Report Published Meetings Date
1999/00 15 May 2000 7th Annual General Meeting 19 July 2000
2000/01 15 May 2001 8th Annual General Meeting 27 June 2001
2001/02 10 May 2002 9th Annual General Meeting 01 July 2002
2002/03 19 May 2003 10th Annual General Meeting 30 June 2003
2003/04 27 May 2004 11th Annual General Meeting 28 June 2004
2004/05 26 May 2005 12th
Annual General Meeting 27 June 2005
2005/06 29 May 2006 13th Annual General Meeting 29 June 2006
2006/07 21 May 2007 14th Annual General Meeting 29 June 2007
2007/08 15 May 2008 15th Annual General Meeting 23 July 2008
2008/09 09 June 2009 16th Annual General Meeting 28 July 2009
2009/10 19 May 2010 17th Annual General Meeting 29 June 2010
2010/11 27 May 2011 18th Annual General Meeting 30 June 2011
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Year ended 31 March 2011
Kegalle Plantations PLC Annual Report 2010/11
$QQXDO5HSRUWRIWKH%RDUGRI'LUHFWRUV
he Directors o Kegalle Plantations PLC have pleasurein presenting to the Members, their report together
with the Audited Financial Statements o the Company
Turnover
The Turnover o the Company was Rs. 2,991,761,775/- (2010
- Rs. 2,216,496,942/-) which is a 35% increase over last year,
Composition o the Revenue is given in Note 21 to the Accounts.
Financial Results
Year Ended 31 March 2011 2010
Proft rom Operations ater
deducting all expenses,
depreciation and all
known liabilities 917,123,184 398,561,523
Taxation (33,996,358) (22,531,328)
Proft Ater Tax 883,126,826 376,030,195
Un-appropriated Proft
Brought orward 1,223,311,403 872,281,208
Proft available or
distribution 2,106,438,229 1,248,311,403
Appropriation
Dividends paid (137,500,000) (25,000,000)
Un-appropriated ProftCarried orward 1,968,938,229 1,223,311,403
Results and Dividends
The Company has paid an interim dividend amounting to
Rs. 2/50 per share and we are pleased to recommend a fnal
dividend o 50 cents per share (2010 - Rs. 3/-) or the year under
review payable subject to approval at the AGM on the 30 June
2011. The dividend will be subject to a 10% withholding tax
deduction.
Investments
Inormation relating to the movement o the investment is
given in Note 7 to the Accounts.
The Board o Directors o Hamea Kegalle (Pvt) Ltd decided to
discontinue commercial operations with eect rom April 2009
and inormation relating to the discontinued operations o this
Company is given in Note 28 to the Accounts.
Tand its subsidiary or the year ended 31 March 2011 and the
Auditors’ Report thereon.
The Board o Directors approved this report at the Board
meeting held on 27 May 2011.
The details set out herein provide pertinent inormation
required by the Companies Act No. 7 o 2007, Listing Rules
o the Colombo Stock Exchange, Securities and Exchange
Commission and are guided by recommended best Accounting
Practices. The Company’s new registration number is PQ 135.
Principal Activities and Operational Review
The principal activity o Kegalle Plantations PLC is cultivation
and processing o Tea, Rubber, Coconut and other crops and
remains unchanged rom the previous year. The number o
estates manage remained the same as last year - 17 estates
with a total extent cultivated being 6,880 Ha (6,878 Ha in 2010).
The Company continues to be managed by RPC Plantation
Management Services (Pvt) Ltd. The basis o computation o
Management Fees was same as that o the previous year andwas in accordance with the Agreement signed between both
parties.
Future Development
Proound changes take place in the global commodity market.
In order to stay ahead o its competitors, the strategic direction
o the Company is regularly monitored by the Board o Directors
in the key areas o operations and fnancial management, in
pursuit o improving yields, value addition, diversifcation and
product dierentiation to reduce price sensitivity , to improve
quality and get the best return on investment.
Review o the Company Perormance
The Chairman’s Review, Review o Operations, the Financial
Review and other reports attached, briey describe the
perormance o the Company and the Group in the current
fnancial year. These Reports together with the Financial
Statements reect results and the state o aairs o the
Company and its subsidiary.
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Year ended 31 March 2011
Annual Report 2010/11 Kegalle Plantations PLC
Property, Plant and Equipment
The total capital expenditure incurred on the acquisition o
fxed assets during the year amounted to Rs. 200,243,722/-
(2010 - Rs. 183,036,169/-), out o which expenditure
on Replanting and Field Development amounts to Rs.
144,914,598/- (2010 - Rs. 114,438,844/-). Further inormation
relating to the movement o Fixed Assets is given in Notes 5
to 6 o the Accounts. Capital expenditure has been fnanced
by either long or short term borrowings depending on
the pay- back period and or internally generated unds.
Loans & Borrowings
A breakdown o the total loan outstanding as at the Balance
Sheet date is given in Note 13 to the Accounts.
Stated Capital
The Stated Capital o the Company as at 31 March 2011 was Rs.
250,000,010/-. Details o the Stated Capital is given in Note 12
to the Financial Statements.
Reserves
The Reserves o the Company as at 31 March 2011 was Rs.1,968,938,229/- (2010 - Rs. 1,448,311,403/-). The details are
given in the Statement o Changes in Equity on Page 52 to the
Financial Statements.
Donations
The Donations made during the year by the Company
amounted to Rs. 1,148,850/- (2010 – Rs. 89,800/-).
Taxation
As per the Inland Revenue Act, the Company is exempt on itsprofts rom agricultural activities. All other sources o income
will be liable to income tax at the rate o 35%. Further details o
Taxation are given in Note 27 to the Financial Statements.
Share Inormation
Inormation on Earnings, Dividend, Net Assets and Market
Value per share is given on Pages 87 to 89 o this report.
Major Shareholders
The twenty largest shareholders o the Company as at 31
March 2011 together with percentages held are given under
the caption “Shareholder & Investor Inormation” on Page 88.
Directors
The Names o the Directors who held Oce during the year are
given below. Their brie profle appears on Pages 12 to 13.
Name
Dr. Sena Yaddehige Chairman
J H P Ratnayeke Deputy Chairman
S S Poholiyadde Director
P D Samarasinghe (Resigned w.e.. 15.02.2011) Director
R L Kumararatne (Ceased to be a Director w.e.. 08.02.2011) Director
L N De S Wijeyeratne (Resigned w.e..01.07.2010) Director
Pro. R C W M R A Nugawela Director
Dr. S S B D G Jayawardena (Appointed w.e.. 06.08.2010) Director
In accordance with the Provisions o the Article 92 o the Articles
o Association o the Company, Mr. J H P Ratnayake who retires
by rotation at the AGM will oer himsel or re-election.
In accordance with the Provisions o Article 98 o the Articles o
Association o the Company, Dr. Gerry Jayawardena who retires
at the AGM will oer himsel or election.
Directors’ Interest in Contracts
Directors’ interest in Contracts in relation to transactions with
related entities, transactions with Key Management Personnel
and other related disclosures are stated in Note 34 (Related
party disclosures) to the Financial Statements. In addition,
the Company carried out transactions in the ordinary course
o business with the ollowing entities having one or more
directors in common is shown in Page 43.
Interest Register
As required by the Companies Act No. 7 o 2007, an Interest
Register is maintained by the Company.
$QQXDO5HSRUWRIWKH%RDUGRI'LUHFWRUV&RQWG«
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Year ended 31 March 2011
Annual Report 2010/11 Kegalle Plantations PLC
Board Committees
Inormation on Board Committees is given in Pages 30 to
32 under Corporate Governance. Audit Committee and
Remuneration Committee Reports are given on Pages 33 to 35
respectively.
Corporate Governance and Internal Control
The policies adopted by the Company in relation to Best
Practices and Good Corporate Governance are given on Page
30 to 32.
The Board has overall responsibility or the Group’s system
o Internal Financial Control. Although no system o Internal
Control can provide absolute assurance against material
misstatement or loss the Group’s internal control system
has been designed to provide the Directors with reasonable
assurance that assets are saeguarded, transactions authorized
and properly recorded and material errors and irregularities
either prevented or detected within a reasonable period o
time.
Directors’ Responsibility or Financial Reporting
The Statement o Directors’ Responsibility is given on Page 45o this report.
Compliance with Laws and Regulations
The Directors, to the best o their knowledge and belie,
confrm that the Company has not engaged in any activity
that contravene the Laws and the regulations applicable in Sri
Lanka. Financial Statements are published quarterly in line with
the Listing Rules o the Colombo Stock Exchange.
Auditors
The Financial Statements or the year ended 31 March 2011
have been audited by Messrs. Ernst & Young, Chartered
Accountants. The Auditors Report is given on Page 47.
In accordance with the Companies Act No. 7 o 2007, aresolution proposing their re-appointment as Auditors to the
Company and authorizing the Directors o the Company to
fx their remuneration will be proposed at the Annual General
Meeting.
The Audit Fee o Messrs. Ernst & Young or the current year was
Rs.1,744,000/- (2010 Rs.1,627,000/-). In addition Rs. 568,708/-
(2010 Rs. 298,004/-) was paid by the Company or non-audit
related work which consists mainly o certifcations issued to
Inland Revenue Department and Tax related work. As ar as the
Directors were aware the Auditors do not have any relationship
other than that o an Auditor with the Company.
Annual General Meeting
The Annual General Meeting will be held on 30 June 2011 at
the registered oce o the Company at 310, High Level Road,
Nawinna, Maharagama. The notice o the Annual General
Meeting is on Page 91 o the report.
On behal o the Board,
S S Poholiyadde J H P Ratnayeke
Director Director
Mrs. R J Siriweera
Company Secretary
Richard Pieris Group Services (Pvt) Ltd
Secretaries
310, High Level RoadNawinna
Maharagama.
27 May 2011
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Year ended 31 March 2011
Kegalle Plantations PLC Annual Report 2010/11
6WDWHPHQWRI'LUHFWRUV·5HVSRQVLELOLW\
n keeping with the provisions under the CompaniesAct No.7 o 2007, the Directors o Kegalle Plantations
PLC, acknowledge their responsibility in relation to
and transactions properly authorized and recorded, so thatmaterial misstatements and irregularities are either prevented
or detected within a reasonable period o time.
The Directors are o the view that the Company and its
subsidiary have adequate resources to continue operations
in the oreseeable uture, as a going concern. Accordingly, the
Directors have continued to use the going-concern basis in the
preparation o these Financial Statements.
The Directors have provided the Auditors Messrs. Ernst & Young,
Chartered Accountants, with every opportunity to carry out
reviews and tests that they consider appropriate and necessary
or the perormance o their responsibilities. The Company’s
Auditors, Messrs. Ernst & Young, Chartered Accountants have
examined the Financial Statements together with all fnancial
records and related data and express their opinion which
appears as reported by them on page 47 o this report. In
arriving at their opinion, they have carried out reviews and
sample checks on the system o internal controls.
On behal o the Board,
S S Poholiyadde
Director
J H P Ratnayeke
Director
Colombo
27 May 2011
Ifnancial reporting o both, the Company and that o its Group.
These responsibilities dier rom those o its Auditors, Messrs.
Ernst & Young, which are set out in their report, appearing on
Page 47 o this report.
The Financial Statements o the Company and its subsidiary
or the year ended 31 March 2011 included in this report
have been prepared and presented in accordance with the Sri
Lanka Accounting Standards. They provide the inormation
as required by the Companies Act No. 7 o 2007, Sri Lanka
Accounting Standards and the Listing Rules o the Colombo
Stock Exchange. The Directors confrm that suitable accounting
policies have been used and applied consistently and that all
applicable accounting standards have been ollowed in the
preparation o the Financial Statements given on pages rom
48 to 83 inclusive. All material deviations rom these standards
i any have been disclosed and explained. The judgments
and estimates made in the preparation o these Financial
Statements are reasonable and prudent.
The Directors confrm their responsibility or ensuring that all
Companies within the Group maintain adequate accounting
records, which are sucient enough to prepare FinancialStatements that disclose with reasonable accuracy, the
fnancial position o the Company and its subsidiary. They also
confrm their responsibility towards ensuring that the Financial
Statements presented in the Annual Report give a true and air
view o the state o aairs o the Company and its subsidiary as
at 31 March 2011 and that o the proft or the year then ended.
The overall responsibility or the Company’s internal control
systems lies with the Directors. Whilst recognizing the act that
there is no single system o internal control that could provide
absolute assurance against material misstatements and raud,
the Directors confrm that the prevalent internal control
systems instituted by them which comprise internal checks,
internal audit, fnancial and other controls are so designed that,
there is reasonable assurance that all assets are saeguarded
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Year ended 31 March 2011
Annual Report 2010/11 Kegalle Plantations PLC
&KLHI([HFXWLYH2IÀFHU·VDQG&KLHI)LQDQFLDO2IÀFHU·V5HVSRQVLELOLW\6WDWHPHQW
he Financial Statements are prepared in conormitywith requirements o the Sri Lanka Accounting
Standards issued by The Institute o Chartered
The Financial Statements were audited by Messrs. Ernst &Young, Chartered Accountants, Independent Auditors.
The Audit Committee meets periodically with the internal
auditors and the independent auditors to review the manner in
which these auditors are preorming their responsibilities, and
to discuss auditing, internal control and reporting issues. To
ensure complete independence, the independent auditors and
the internal auditors have ull and ree access to the members
o the audit committee to discuss any matter o substance.
S S Poholiyadde
Director/CEO
L C Herath
Chie Financial Ocer
27 May 2011
TAccountants o Sri Lanka, Companies Act No. 7 o 2007, Sri Lanka
Auditing Standards, the Listing Rules o the Colombo Stock
Exchange and Code o Best Practice on Corporate Governance
issued jointly by the Institute O Chartered Accountants o Sri
Lanka and Securities and Exchange Commission o Sri Lanka.
The Board o Directors and the management o our Company
accept responsibility or the integrity and objectivity o these
Financial Statements. The estimates and judgments relating
to the Financial Statements were made on a prudent and
reasonable basis, in order that the Financial Statements reect in
a true and air manner, the orm and substance o transactions,
and reasonably present the Company’s state o aairs. To
ensure this, the Company has taken proper and sucient care
in installing a system o internal control and accounting records,
or saeguarding assets, and or preventing and detecting rauds
as well as other irregularities, which is reviewed, evaluated
and updated on an ongoing basis. Our internal auditors have
conducted periodic audit to provide reasonable assurance that
the established policies and procedures o the Company were
consistently ollowed. However, there are inherent limitations
that should be recognized in weighing the assurances provide
by any system o internal controls and accounting.
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Year ended 31 March 2011
Kegalle Plantations PLC Annual Report 2010/11
INDEPENDENT AUDITORS’ REPORT
TO THE SHAREHOLDERS OF KEGALLE PLANTATIONS PLC
Report on the Financial Statements
We have audited the accompanying Financial Statements
o Kegalle Plantations PLC and the consolidated FinancialStatements o the Company and its subsidiary which comprise
the Balance Sheets as at March 31, 2011 and the Income
Statements, Statements o Changes in Equity and Cash
Flow Statements or the year then ended, and a summary o
signifcant Accounting Policies and other explanatory notes.
Management’s Responsibility or the Financial Statements
Management is responsible or the preparation and air
presentation o these fnancial statements in accordance with
Sri Lanka Accounting Standards. This responsibility includes:
designing, implementing and maintaining internal control
relevant to the preparation and air presentation o Financial
Statements that are ree rom material misstatement, whether
due to raud or error; selecting and applying appropriate
accounting policies; and making accounting estimates that are
reasonable in the circumstances.
Scope o Audit and Basis o Opinion
Our responsibility is to express an opinion on these fnancial
statements based on our audit. We conducted our audit
in accordance with Sri Lanka Auditing Standards. Those
standards require that we plan and perorm the audit to obtain
reasonable assurance whether the fnancial statements are reerom material misstatements.
An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the fnancial statements. An
audit also includes assessing the accounting principles used
and signifcant estimates made by management, as well as
evaluating the overall fnancial statement presentation.
We have obtained all the inormation and explanations which
to the best o our knowledge and belie were necessary or
the purpose o our audit. We thereore believe that our audit
provides a reasonable basis or our opinion.
Opinion
Company
In our opinion, so ar as appears rom our examination, the
Company maintained proper accounting records or the year
ended March 31, 2011, and the fnancial statements give a true
and air view o the Company’s state o aairs as at March 31,
2011 and its proft and cash ows or the year then ended in
accordance with Sri Lanka Accounting Standards.
Group
In our opinion, the consolidated fnancial statements give a
true and air view o the state o aairs as at March 31, 2011 and
the proft and cash ows or the year then ended, in accordance
with Sri Lanka Accounting Standards, o the Company and
its subsidiary dealt with thereby, so ar as concerns the
shareholders o the Company.
Report on Other Legal and Regulatory Requirements
In our opinion, these fnancial statements also comply with the
requirements o Section 151(2) and 153 (2) to 153 (7) o the
Companies Act No. 07 o 2007.
(Sgd.)
Colombo
27 May 2011
Independent Auditors’ Report
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Annual Report 2010/11 Kegalle Plantations PLC
Balance Sheet
Company Group
2011 2010 2011 2010ASSETS Note Rs.’000 Rs.’000 Rs.’000 Rs.’000Non Current Assets Leasehold Property 3 168,036 172,944 168,036 172,944Immovable estates assets on Finance Lease
(other than leasehold Property) 4 135,259 146,179 135,259 146,179Tangible assets other than Immature/Mature Plantations 5 388,585 371,493 460,851 450,778Immature/Mature Plantations 6 1,015,940 899,063 1,015,940 899,063Long Term Investments 7 225,000 225,000 183,307 225,000
1,932,820 1,814,679 1,963,393 1,893,964Current Assets Inventories 8 391,655 247,714 393,378 249,462Trade and Other Receivables 9 230,410 263,662 235,878 269,122VAT Recoverable 20,004 20,188 28,282 28,473Amounts due rom Related Companies 10 57,177 52,862 12,897 9,414
Short Term Investment 11 1,289,494 719,993 1,289,494 719,993Cash and Bank Balances 10,263 20,685 10,307 22,988
1,999,003 1,325,104 1,970,236 1,299,452TOTAL ASSETS 3,931,823 3,139,783 3,933,629 3,193,416
EQUITY AND LIABILITIES Capital and ReservesStated Capital 12 250,000 250,000 250,000 250,000General Reserve 12.1 225,000 225,000 225,000 225,000Retained Proft / (Loss) 1,968,938 1,223,311 1,934,489 1,234,239Shareholders’ Fund 2,443,938 1,698,311 2,409,489 1,709,239
Non Current Liabilities & Deerred Income Interest Bearing Loans & Borrowings 13 303,089 343,570 303,089 343,570Retirement Beneft Obligations 14 335,025 316,754 335,120 316,849Deerred Income 15 196,738 172,656 219,722 199,992Net liability to the lessor payable ater one year 16 286,660 290,773 286,660 290,773
1,121,512 1,123,753 1,144,591 1,151,184Current Liabilities Interest Bearing Loans & Borrowings 13 68,319 61,288 68,319 61,288Net liability to the lessor payable within one year 16 4,113 3,955 4,113 3,955Trade and Other Payables 17 260,034 198,191 264,532 202,688Dividend Payable 18 1,225 1,129 1,225 1,129Amounts due to Related Companies 20 15,798 39,828 24,476 50,605Income Tax Payable 27.2 16,884 13,328 16,884 13,328
366,373 317,719 379,549 332,993TOTAL EQUITY AND LIABILITIES 3,931,823 3,139,783 3,933,629 3,193,416
These Financial Statements are in compliance with the requirements o the Companies Act No. 07 o 2007.
L C Herath
Chie Financial Ocer
The Board o Directors is responsible or the preparation and presentation o these Financial Statements.
Signed or and on behal o the Board o Directors o Kegalle Plantations PLC.
S S Poholiyadde J H P RatnayekeDirector Director
The Accounting Policies and notes on Pages 53 through 83 orm an integral part o the Financial Statements.
Colombo
27 May 2011
As at 31 March 2011
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Income Statement
Company Group
2011 2010 2011 2010
Note Rs.’000 Rs.’000 Rs.’000 Rs.’000
Continuing Operations
Revenue 21 2,991,762 2,216,497 2,991,762 2,216,497
Cost o Sales (1,817,992) (1,762,417) (1,817,992) (1,762,417)
Gross Proft 1,173,770 454,080 1,173,770 454,080
Other Income 22 105,951 82,629 105,951 82,629
Administration Expenses (54,636) (44,516) (54,636) (44,516)
Management Fee (193,492) (82,193) (193,492) (82,193)
Finance Cost 23 (114,470) (62,396) (114,470) (62,396)
Reversal / (Provision) For Doubtull Receivables 24 - 50,958 - 50,958
Proft From Operations 25 917,123 398,562 917,123 398,562
Share o Result o Associate 26 - - (41,676) -
Proft Beore Taxation 917,123 398,562 875,447 398,562
Income Tax Expenses 27 (33,996) (22,532) (34,014) (22,532)
Proft or the year rom Continuing Operations 883,127 376,030 841,434 376,030
Discontinued Operations
Loss ater tax or the year rom discontinued operations 28 - - (3,684) (10,396)
Proft / (Loss) or the year 883,127 376,030 837,750 365,634
Basic Earnings Per Share 29 35.33 15.04 33.51 14.63
Basic Earnings Per Share rom Continuing Operations 35.33 15.04 33.66 15.04
The Accounting Policies and notes on Pages 53 through 83 orm an integral part o the Financial Statements.
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Company Group2011 2010 2011 2010
Note Rs.’000 Rs.’000 Rs.’000 Rs.’000
CASH FLOWS FROM / (USED IN) OPERATING ACTIVITIES
Net Proft/(Loss) beore Taxation rom continuing Operations 917,123 398,562 875,447 398,562
Net Proft/(Loss) beore Taxation rom discontinuing Operations - - (3,684) (10,396)
ADJUSTMENTS FOR
Interest Income 22 (74,240) (55,145) (74,240) (55,145)
Depreciation / Amortization 25 82,104 78,058 82,104 78,058
Provision or Defned Beneft Plan Costs 14 52,223 114,914 52,223 114,914Amortization o Grants 15 (5,758) (5,280) (10,109) (9,631)
Finance Costs 23 114,470 62,396 114,470 62,396
Impairement o Property, Plant & Equipment - - 7,019 13,092
Share o Result o Associate - - 41,676 -(Reversal) / Provision or Bad & Doubtul Receivables 24 - (50,958) - (50,958)
Operating Proft beore Working Capital Changes 1,085,922 542,547 1,084,906 540,892
(Increase)/Decrease in Trade & Other Receivables 33,435 58,000 33,435 60,112
(Increase)/Decrease in Inventories (143,940) (101,341) (143,917) (99,813)
(Increase)/Decrease in amounts due rom Related Companies (4,315) 13,299 (4,315) 13,299
Increase/(Decrease) in Trade & Other Payables 60,882 66,227 60,882 63,575
Increase/(Decrease) in amounts due to Related Companies (24,029) 39,522 (25,294) 41,990Cash Generated rom / (used in) Operations 1,007,955 618,254 1,005,697 620,055
Defned Beneft Plan Costs paid 14 (33,952) (31,637) (33,952) (31,637)
ESC Paid (7,140) (4,772) (7,140) (4,772)
Finance Cost Paid (50,988) (45,442) (50,988) (45,442)
Income Tax Paid (22,341) (8,046) (22,341) (8,046)Net Cash rom / (used in) Operating Activities 893,534 528,357 891,276 530,158
CASH FLOWS FROM / (USED IN) INVESTING ACTIVITIES
Investments - (144,703) - (144,703)
Interest Received 74,240 55,145 74,240 55,145
Grant Received 15 29,839 29,843 29,839 29,843Field Development Expenditure Note A (144,915) (114,438) (144,915) (114,438)
Purchase o Property, Plant & Equipment Note B (55,329) (68,597) (55,329) (68,597)
Net Cash rom / (used in) Investing Activities (96,165) (242,750) (96,165) (242,750)
CASH FLOWS FROM / (USED IN) FINANCING ACTIVITIES Dividend Paid (137,404) (24,611) (137,404) (24,611)
Payment o Government Lease Rentals (63,482) (16,955) (63,482) (16,955)
Payment o Government Lease Rentals - Capital (3,955) (3,803) (3,955) (3,803)
Proceeds rom Loans - 137,323 - 137,323
Repayment o Loans (61,288) (80,005) (61,288) (80,005)
Net Cash rom / (used in) Financing Activities (266,129) 11,949 (266,129) 11,949
Net Increase/(Decrease) in Cash & Cash Equivalents 531,241 297,555 528,982 299,357
Cash & Cash Equivalents at the beginning o the year Note C 740,678 443,123 742,981 443,624
Cash & Cash Equivalents at the end o the year Note D 1,271,919 740,678 1,271,963 742,981
The Accounting Policies and notes on Pages 53 through 83 orm an integral part o the Financial Statements.
Cash Flow Statement
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Cash Flow Statement Contd....
NOTE A Tea Rubber Other Crops Unallocated Total
Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000
Investment in Field Development Expenditure
Investment in Immature Plantations 2010/11 33,619 103,773 1,967 5,555 144,915
Investment in Immature Plantations 2009/10 18,134 86,963 2,197 7,145 114,438
NOTE B
Investment in Property, Plant & Equipment
Investment in Property, Plant & Equipment 2010/11 (Company) 29,240 25,151 - 938 55,329
Investment in Property, Plant & Equipment 2010/11 (Group) 29,240 25,151 - 938 55,329
Investment in Property, Plant & Equipment 2009/10 (Company) 34,954 30,575 - 3,068 68,597
Investment in Property, Plant & Equipment 2009/10 (Group) 34,954 30,575 - 3,068 68,597
Company Group
2011 2010 2011 2010
NOTE C Rs.’000 Rs.’000 Rs.’000 Rs.’000
Cash & Cash Equivalents at the beginning o the year
Cash in Hand & at Bank 20,685 64,033 22,988 64,534
Investment in Treasury Bills, Repo & Others 719,993 379,090 719,993 379,090
740,678 443,123 742,981 443,624
NOTE D
Cash & Cash Equivalents at the end o the year
Cash in Hand & at Bank 10,263 20,685 10,307 22,988
Bank Overdrat (27,838) - (27,838) -
Investment in Treasury Bills, Repo & Others 1,289,494 719,993 1,289,494 719,993
1,271,919 740,678 1,271,963 742,981
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Statement of Changes in Equity
Company Stated Capital General Accumulated TotalReserve Proft/(Loss)
Rs’000 Rs’000 Rs’000 Rs’000
Balance as at 31 March 2009 250,000 225,000 872,281 1,347,281
Net proft or the year - - 376,030 376,030
Dividends paid - - (25,000) (25,000)
Balance as at 31 March 2010 250,000 225,000 1,223,311 1,698,311
Net proft or the year - - 883,127 883,127
Dividends paid - - (137,500) (137,500)
Balance as at 31 March 2011 250,000 225,000 1,968,938 2,443,938
Group Stated Capital General Accumulated Total
Reserve Proft/(Loss)
Rs’000 Rs’000 Rs’000 Rs’000
Balance as at 31 March 2009 250,000 225,000 893,605 1,368,605
Net proft or the year - - 365,634 365,634
Dividends paid - - (25,000) (25,000)
Balance as at 31 March 2010 250,000 225,000 1,234,239 1,709,239
Net proft or the year - - 837,750 837,750
Dividends paid - - (137,500) (137,500)
Balance as at 31 March 2011 250,000 225,000 1,934,489 2,409,489
The Accounting Policies and notes on Pages 53 through 83 orm an integral part o the Financial Statements.
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Kegalle Plantations PLC Annual Report 2010/11
1. CORPORATE INFORMATION
1.1 Domicile and Legal Form
Kegalle Plantations PLC is a Limited Liability Company
incorporated and domiciled in Sri Lanka, under the
Companies Act No. 17 o 1982 (The Company re-registered
under the Companies Act No. 07 o 2007) in terms o the
provisions o the Conversion o Public Corporations or
Government Owned Business Undertaking into Public
Companies Act No. 23 o 1987. The registered oice o
the Company is located at 310, High Level Road, Nawinna,
Maharagama, and Plantations are situated in the plantingdistricts o Kegalle, Kurunegala & Badulla.
1.2 Principal Activities and Nature o Operations
During the year, the principal activities o the Company
were the cultivation, manuacture and sale o Tea, Rubber,
Coconut, Cardamom & other agricultural produce.
1.3 Parent Enterprise and Ultimate Parent Enterprise
The Company’s parent undertaking is RPC Plantation
Management Services (Pvt) Ltd. In the opinion o the
Directors, the Company’s ultimate parent undertaking
and controlling party is Richard Pieris & Co. PLC., which
is incorporated in Sri Lanka.
1.4 Date o Authorization or issue
The Financial Statements o Kegalle Plantations PLC or
the year ended 31 March 2011 were authorized or issue
in accordance with a resolution o the board o directors
on 27 May 2011.
2. BASIS OF PREPARATION
2.1. These Financial Statements have been prepared on a
historical cost basis except or certain Property, Plant
and Equipment which are stated at revalued amounts.
The Financial Statements are presented in Sri Lankan
Rupees and all values are rounded to the nearest Rupee.
2.1.1 Statement o Compliance
The Financial Statements o Kegalle Plantations PLC
have been prepared in accordance with the Sri Lanka
Accounting Standards (SLAS) adopted by the Instituteo Chartered Accountants o Sri Lanka (ICASL) and also
in compliance with the requirements o the Companies
Act No 07 o 2007.
2.1.2 Going Concern
The Directors have made an assessment o the Company’s
ability to continue as a going concern and they do not
intend either to liquidate or cease trading.
2.1.3 Comparative Inormation
The accounting policies have been consistently applied
by the Company and are consistent with those used in
the previous year unless otherwise stated.
2.1.4 Consolidation Policy
Subsidiary – Hamea Kegalle (Pvt) Ltd
2.1.4.1 Kegalle Plantations PLC own 100% ordinary shares o
Hamea Kegalle (Pvt) Ltd which is incorporated in Sri
Lanka.
2.1.4.2 The Consolidated Financial Statements include results,assets & liabilities o Kegalle Plantations PLC and its
subsidiary, Hamea Kegalle (Pvt) Ltd.
2.1.4.3 All companies in the Group have a common inancial
year end on 31 March.
2.1.4.4 Goodwill arising on the acquisition o the subsidiaries
written o to the Income Statements.
Associate - Richard Pieris Natural Foams Ltd
2.1.4.5 Associates are those investments over which the grouphas signiicant inluence and holds 20% to 50% o its
equity.
2.1.4.6 Associates are accounted or using the equity method
and are recognized initially at cost.
2.1.4.7 The Consolidated Financial Statements include the
Group’s share o income and expenses and equity
movements o associates, rom the date on which
signiicant inluence commences until the date on which
signiicant inluence ceases. When the Group’s share o
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losses in an associate equals or exceeds the interest in theundertaking, the group does not recognize urther losses
unless it has incurred obligations or made payments on
behal o the entity. The group ceases to use the equity
method o accounting on the date rom which it no
longer has signiicant inluence in the associate.
2.2 SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES
AND ASSUMPTIONS
Judgments
In the purpose o applying the Company’s accounting
policies, management has made the ollowing judgments,
apart rom those involving estimations, which has the
most signiicant eect on the amounts recognized in
the Financial Statements.
Inventory valuation – Produce stock
Company has valued part o unsold produce stock at
since realized prices. The balance unsold stock remained
as at the Balance Sheet date valued at estimated selling
prices based on most recent selling prices available
subsequent to the year end.
Estimates and Assumptions
The key assumptions concerning the uture and other
key sources o estimation uncertainty at the Balance
Sheet date, that have a signiicant risk o causing a
material adjustment to the carrying amounts o assets
and liabilities within the next inancial year are discussed
below.
Impairment o Goodwill
The Company determines whether goodwill is impairedat least on an annual basis. This requires an estimation o
the “value in use” o the cash generating units to which
the goodwill is allocated. Estimating a value in use
amount requires management to make an estimate o
the expected uture cash lows rom the cash generating
unit and also to choose a suitable discount rate in order to
calculate present value o those cash lows. However, at
present company does not have any recorded Goodwill
balance as at the Balance Sheet date.
Deerred Tax Assets
Deerred tax assets are recognised or all unused tax
losses to the extent that it is probable that taxable
proit will be available against which the losses can be
utilised. Signiicant management judgment is required
to determine the amount o deerred tax assets that
can be recognised, based upon the likely timing and
level o uture taxable proits together with uture
tax planning strategies. The carrying value o the
unrecognised deerred tax assets as at 31 March 2011
was Rs. 27,695,860/- (2010 – Rs. 133,661,865/-).
Deined Beneit Plans
The cost o Deined Beneit Pension Plan is determined
using actuarial valuations. The actuarial valuation
involves making assumptions about discount rates,
expected rates o return on assets, uture salary increases,
mortality rates and uture pension increases. Due to
the long term nature o these plans, such estimates are
subject to signiicant uncertainty. The net employee
liability as per actuary as at 31 March 2011 is Rs.
335,025,357 /- (2010 – Rs. 316,754,295 /-). Further details
are given in Note 14.
2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.3.1 Foreign Currency Translation
The Financial Statements are presented in Sri Lankan
rupees, which is the Company’s unctional and
presentation currency. Transactions in oreign currencies
are initially recorded at the unctional currency rate
ruling at the date o the transaction. Monetary assets
and liabilities denominated in oreign currencies are
retranslated at the unctional currency rate o exchange
ruling at the Balance Sheet date. All dierences aretaken to proit or loss with the exception o dierences
on oreign currency borrowings that provide a hedge
against a net investment in a oreign entity. These are
taken directly to equity until the disposal o the net
investment, at which time they are recognised in proit
or loss. Tax charges and credits attributable to exchange
dierences on those borrowings are also dealt with in
equity. Non monetary items that are measured in terms
o historical cost in a oreign currency are translated
using the exchange rates as at the dates o the initial
transactions. Non monetary items measured at air value
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in a oreign currency are translated using the exchangerates at the date when the air value was determined. Any
goodwill arising on the acquisition o a oreign operation
and any air value adjustments to the carrying amounts
o assets and liabilities arising on the acquisition are
treated as assets and liabilities o the oreign operation
and translated at the closing rate.
2.3.2 Taxation
a) Current Taxes
Current income tax assets and liabilities or the current
and prior periods are measured at the amount expected
to be recovered rom or paid to the Commissioner
General o Inland Revenue. The tax rates and tax laws
used to compute the amount are those that are enacted
or substantively enacted by the Balance Sheet date.
The provision or income tax is based on the elements
o income and expenditure as reported in the Financial
Statements and computed in accordance with the
provisions o the Inland Revenue Act.
Current income tax relating to items recognised directlyin equity is recognised in equity and not in the Income
Statement.
b) Deerred Taxation
Deerred income tax is provided, using the liability
method, on all temporary dierences at the Balance
Sheet date between the tax bases o assets and liabilities
and their carrying amounts or inancial reporting
purposes.
Deerred income tax liabilities are recognised or alltaxable temporary dierences:
rom goodwill amortisation or the initial recognition o
an asset or liability in a transaction that is not a business
combination and, at the time o the transaction, aects
neither the accounting proit nor taxable proit or loss;
and
with investments in subsidiaries, associates and interests
in joint ventures, except where the timing o the reversalo the temporary dierences can be controlled and it is
probable that the temporary dierences will not reverse
in the oreseeable uture.
Deerred income tax assets are recognised or all
deductible temporary dierences, carry-orward o
unused tax assets and unused tax losses, to the extent
that it is probable that taxable proit will be available
against which the deductible temporary dierences, and
the carry-orward o unused tax assets and unused tax
losses can be utilised:
to the deductible temporary dierence arises rom the
initial recognition rom an asset or liability in a transaction
that is not a business combination and, at the time o
the transaction, aects neither the accounting proit nor
taxable proit or loss; and
with investments in subsidiaries, associates and interests
in joint ventures, deerred tax assets are only recognised
to the extent that it is probable that the temporary
dierences will reverse in the oreseeable uture andtaxable proit will be available against which the
temporary dierences can be utilised.
The carrying amount o deerred income tax assets is
reviewed at each Balance Sheet date and reduced to the
extent that it is no longer probable that suicient taxable
proit will be available to allow all or part o the deerred
income tax asset to be utilised.
Deerred income tax assets and liabilities are measured
at the tax rates that are expected to apply to the year
when the asset is realised or the liability is settled, basedon tax rates (and tax laws) that have been enacted or
substantively enacted at the Balance Sheet date.
Deerred income tax relating to items recognised directly
in equity is recognised in equity and not in the Income
Statement.
2.3.3 Borrowing Costs
Borrowing costs are recognised as an expense in the
period in which they are incurred, except to the extent
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decreased as a result o a revaluation, the decrease isrecognised as an expense unless it reverses a previous
increment relating to that asset, in which case it is
charged against any related revaluation surplus, to the
extent that the decrease does not exceed the amount
held in the revaluation surplus in respect o that same
asset. Any balance remaining in the revaluation surplus in
respect o an asset, is transerred directly to accumulated
proits or loss on retirement or disposal o the asset.
c) Restoration Costs
Expenditure incurred on repairs or maintenance o
property, plant and equipment in order to restore
or maintain the uture economic beneits expected
rom originally assessed standard o perormance, is
recognised as an expense when incurred.
d) Depreciation
The provision or depreciation is calculated on the cost
or valuation o all property, plant and equipment other
than reehold land, in order to write o such amounts
over the estimated useul lives by equal instalments as
ollows:
Buildings Over 40 years
Plant & Machinery Over 13 years
Furniture & Fittings Over 10 years
Vehicles Over 05 years
Equipments Over 08 years
Sanitation, Water Supply & Electricity Over 20 years
Computers/Computer Sotware Over 08 years
Lines & Latrines Over 40 years
Replanting and New Planting
Tea Over 33 yearsRubber Over 20 years
Coconut Over 50 years
The leasehold rights are being amortised in equal
amounts over the ollowing periods.
Leasehold Property Over 53 years
Mature Plantations Over 30 years
Buildings Over 25 years
Machinery Over 15 years
Improvements to Land Over 30 years
The asset’s residual values, useul lives and methods o depreciation are reviewed, and adjusted i appropriate,
at each inancial year end.
e) Derecognition
An item o property, plant and equipment is derecognised
upon disposal or when no uture economic beneits
are expected rom its use or disposal. Any gain or loss
arising on derecognition o the asset (calculated as the
dierence between the net disposal proceeds and the
carrying amount o the asset) is included in the Income
Statement in the year the asset is derecognised.
2.3.10 Immature and Mature Plantations
The cost o Replanting and New Planting are classiied as
immature plantations up to the time o harvesting the
crop.
The cost o areas coming into bearing are transerred to
mature plantations and depreciated over their useul lie
period.
2.3.11 Inilling Cost
Where inilling results in an increase in the economic
lie o the relevant ield beyond its previously assessed
standard o perormance, the costs are capitalised in
accordance with Sri Lanka Accounting Standard No. 32
and depreciated over the useul lie at rates applicable
to mature plantation.
Inilling costs that are not capitalised have been charged
to the Income Statement in the year in which they are
incurred.
2.3.12 Leases
a) Finance leases - where the company is the lessee
Property, plant and equipment on inance leases, (which
eectively transer to the company substantially all o the
risks and beneits incidental to ownership o the leased
item) are capitalised at their cash price, and depreciated/
amortised over the period the company is expected to
beneit rom the use o the leased assets.
Year ended 31 March 2011
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The corresponding principal amount payable to thelessor is shown as a liability.
The inance charges allocated to uture periods are
separately disclosed under Note 16.
The interest element o the rental obligation applicable
to each inancial year is charged to the Income Statement
over the period o the lease so as to produce a constant
periodic rate o interest on the remaining balance o the
liability or each period.
The cost o improvements to or on leased property
is capitalised, and depreciated over the unexpired
period o the lease or the estimated useul lives o the
improvements, whichever is shorter.
b) Operating Leases
Leases where the lessor eectively retains substantially
all the risks and beneits o ownership over the leased
term are classiied as operating leases.
Lease payments (excluding costs or services such as
insurance and maintenance) paid under operating leases
are recognised as an expense in the Income Statementon a straight-line basis over the lease term.
c) Leasehold Property
Leasehold property comprising o land use rights
obtained on a long term basis, is stated at the recorded
carrying values as at the eective date o Sri Lanka
Accounting Standard 19 – Leases in line with Ruling o
the Urgent Issues Task Force o The Institute o Chartered
Accountants o Sri Lanka. Such carrying amounts are
amortised over the remaining lease term or useul lie
o the leased property whichever is shorter.
2.3.13 Investments
a) Initial Recognition:
Cost o investment includes purchase cost and
acquisition charges such as brokerages, ees, duties
and bank regulatory ees. The Company distinguishes
and presents current and non current investment in the
Balance Sheet.
b) Measurement
Current Investment:
Current investments are carried at the lower o cost and
market value, determined on the basis o aggregate
portolio.
Unrealized losses arising rom reduction to market
value and reversals o such reduction required to state
current investments at lower o cost and market value
are included in Income Statement.
Long Term Investments
Long term investments are stated at cost. Carrying
amounts are reduced to recognize a decline other than
temporary, determined or each investment individually.
These reductions or other than temporary declines in
carrying amounts are charged to Income Statement.
Disposal o Investment
On disposal o an investment, the dierence between net
disposal proceeds and the carrying amount is recognised
as income or expense.
2.3.14 Provisions
Provisions are recognized when the Company has a
present obligation (legal or constructive) as a result
o a past event, where it is probable that an outlow
o resources embodying economic beneits will be
required to settle the obligation and a reliable estimate
can be made o the amount o the obligation. I the
eect o the time value o money is material, provisions
are determined by discounting the expected uture
cash lows at a pre-tax rate that relects current marketassessments o the time value o money and, where
appropriate, the risks speciic to the liability. Where
discounting is used, the increase in the provision due to
the passage o time is recognized as an interest expense.
2.3.15 Retirement Beneit Obligation
a) Deined Beneit Plans –Gratuity
The Company measures the present value o the
promised retirement beneits o gratuity which is a
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5. TANGIBLE ASSETS OTHER THAN Balance Additions Disposals/Transers BalanceIMMATURE/MATURE PLANTATIONS as at or the during the as at01.04.10 year year 31.03.11
Company Rs.’000 Rs.’000 Rs.’000 Rs.’000
Cost Buildings 44,156 7,402 - 51,558Motor Vehicles 81,067 - - 81,067Furniture & Fittings 5,442 - - 5,442Equipment 55,876 233 - 56,109Water Sanitation 2,150 - - 2,150Computer & Computer Sotware 12,429 1,890 - 14,319Plant & Machinery 245,140 40,912 - 286,052Other Assets on Grants 203,575 6,991 - 210,566
649,835 57,428 - 707,263
Balance Charged Disposals/Transers Balanceas at or the during the as at
01.04.10 year year 31.03.11Depreciation Rs.’000 Rs.’000 Rs.’000 Rs.’000
Buildings 6,321 1,040 - 7,361Motor Vehicles 70,259 5,134 - 75,393Furniture & Fittings 2,970 338 - 3,308Equipment 42,158 3,766 - 45,924Water Sanitation 1,406 120 - 1,526Computer & Computer Sotware 10,159 982 - 11,141Plant & Machinery 122,317 18,625 - 140,942Other Assets on Grants 36,220 7,601 - 43,822
291,811 37,606 - 329,417
WRITTEN DOWN VALUE 358,024 377,846
Assets Acquired on Finance LeasesCostPlant & Machinery 8,417 - - 8,417
8,417 - - 8,417Depreciation
Plant & Machinery 4,435 631 - 5,0664,435 631 - 5,066
WRITTEN DOWN VALUE 3,982 3,350
Balance Additions Capitalised Balanceas at or the during the as at
01.04.10 Year Year 31.03.11Capital Work-in-Progress Rs.’000 Rs.’000 Rs.’000 Rs.’000
Capital Work-in-Progress 9,487 2,459 (4,558) 7,389
TOTAL WRITTEN DOWN VALUE 371,493 388,585
The assets shown above are those movable assets vested in the Company by gazette notifcation on the date o ormationo the Company (22 June 1992) and all investments in tangible assets by the Company since its ormation. The assets takenover by way o estate leases are set out in Notes 3 & 4.
Further, the valuation o immovable JEDB estate assets on fnance lease (other than leasehold property) and tangible assetsother than immature/mature plantations taken over as at June 22, 1992 is based on net book value as at such date. Thesevalues were not available to us by individual asset.
Year ended 31 March 2011
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Kegalle Plantations PLC Annual Report 2010/11
TANGIBLE ASSETS OTHER THAN Balance Additions Disposals/Transers BalanceIMMATURE/MATURE PLANTATIONS as at or the during the as at
01.04.10 year year 31.03.11
Group Rs.’000 Rs.’000 Rs.’000 Rs.’000
Cost
Buildings 84,706 7,402 - 92,107
Motor Vehicles 81,067 - - 81,067
Furniture & Fittings 5,519 - - 5,519
Equipment 56,549 233 - 56,782
Water Sanitation 2,150 - - 2,150
Computer & Computer Sotware 12,806 1,890 - 14,696
Plant & Machinery 314,171 40,912 - 355,083
Other Assets on Grants 203,575 6,991 - 210,566
760,543 57,428 - 817,971
Balance Charged (Disposals)/Impairment loss Balance
as at or the during the as at
01.04.10 year year 31.03.11
Depreciation Rs.’000 Rs.’000 Rs.’000 Rs.’000
Buildings 14,695 1,040 1,609 17,344
Motor Vehicles 70,259 5,134 - 75,393
Furniture & Fittings 2,997 338 - 3,335
Equipment 42,313 3,766 - 46,079
Water Sanitation 1,406 120 - 1,526
Computer & Computer Sotware 10,555 982 - 11,537
Plant & Machinery 144,789 18,625 5,410 168,823Other Assets on Grants 36,220 7,601 - 43,822
323,234 37,606 7,019 367,859
WRITTEN DOWN VALUE 437,309 450,112
Assets Acquired on Finance Leases
Cost
Plant & Machinery 8,417 8,417
8,417 8,417
Depreciation
Plant & Machinery 4,435 631 - 5,066
4,435 631 - 5,066
WRITTEN DOWN VALUE 3,982 3,350
Balance Additions Capitalised Balance
as at or the during the as at
01.04.10 Year Year 31.03.11
Capital Work-in-Progress Rs.’000 Rs.’000 Rs.’000 Rs.’000
Capital Work-in-Progress 9,487 2,459 (4,558) 7,389
TOTAL WRITTEN DOWN VALUE 450,778 460,851
Balanceas at
31.03.11
Rs.’000
92,107
81,067
5,519
56,782
2,150
14,696
355,083
210,566
817,971
Balance
as at
31.03.11
Rs.’000
17,344
75,393
3,335
46,079
1,526
11,537
168,82343,822
367,859
450,112
8,417
8,417
5,066
5,066
3,350
Balance
s at
31.03.11
Rs.’000
7,389
460,851
Year ended 31 March 2011
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Annual Report 2010/11 Kegalle Plantations PLC
6. IMMATURE/MATURE PLANTATIONS - COMPANY/GROUP
Immature Plantations Mature Plantations Total
Tea Rubber Coconut Others Tea Rubber Coconut Others
Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000
Cost
As at 01.04.10 66,478 340,206 35,092 42,706 115,404 467,717 1,741 11,883 1,081,228
Additions 31,779 105,613 1,967 5,555 - - - - 144,915
Transers (9,135) (59,341) - - 9,135 59,341 - - -
As at 31.03.11 89,122 386,478 37,059 48,262 124,539 527,059 1,741 11,883 1,226,143
Depreciation
As at 01.04.10 - - - - 26,270 152,576 245 3,075 182,166
Charge or the year - - - - 3,577 23,891 33 537 28,038
As at 31.03.11 - - - - 29,847 176,467 279 3,611 210,203
Net Book Value
as at 31.03.11 89,122 386,478 37,059 48,262 94,693 350,592 1,462 8,272 1,015,940
Net Book Value
as at 31.03.10 66,478 340,206 35,092 42,706 89,134 315,141 1,496 8,809 899,063
Note: These are investments made in immature/mature plantations since the ormation o the Company. The assets
(including plantations assets) taken over by way o estate leases are set out in Notes 3 and 4. Further, investments made
in immature plantations taken over by way o these leases are shown in the above note all o which have been transerred
to mature plantations as at the Balance Sheet date. Borrowing costs amounting to Rs. 2,963,681/- incurred on long term
loans obtained to meet expenses relating to immature plantations have been capitalised as part o the cost o the immature
plantations.
7. LONG TERM INVESTMENTS
7.1 Investments in Subsidiaries
Company
Unquoted Investments
Hamea Kegalle (Pvt) Ltd
Initial Investment in Hamea Kegalle (Pvt) Ltd stated at cost o Rs. 14 Mn. Since it was provided or diminishing in value o
Rs.14 Mn upto 2008, the carrying amount o investment shows no balance at the end o the year.
Year ended 31 March 2011
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Kegalle Plantations PLC Annual Report 2010/11
7.2 Investments in Associates % Holding No o Shares Value - Rs.’000 31.03.2011 31.03.2010 31.03.2011 31.03.2010 31.03.2011 Movement 31.03.2010
Company
Unquoted Investments
Richard Pieris Natural Foams Ltd 35.11 35.11 22,500,000 22,500,000 183,307 (41,693) 225,000
Company investments in associates
(at cost) 35.11 35.11 22,500,000 22,500,000 183,307 (41,693) 225,000
Summarised Inormation o Associate Value - Rs. ‘000
Richard Pieris Natural Foams Ltd 31.03.2011 31.03.2010
Revenue 806,200 636,216
Proft / (Loss) Beore Tax (118,700) (33,095) Total Assets 612,322 629,532
Total Liabilities 584,727 483,186
7.3 Other Long Term Investments % Holding No o Shares Value - Rs.’000
31.03.2011 31.03.2010 31.03.2011 31.03.2010 31.03.2011 Movement 31.03.2010
Maskeliya Tea Garden Ceylon Ltd - - 1 1 - - -
Exotic Horticulture (Pvt) Ltd - - 1 1 - - -
Total Investment - - 2 2 - - -
Long Term Investments - Total 183,307 (41,693) 225,000
Company Group8. INVENTORIES 2011 2010 2011 2010
Rs.’000 Rs.’000 Rs.’000 Rs.’000
Input Materials 26,403 37,917 34,126 45,665
Growing Crop - Nurseries 6,605 4,877 6,605 4,877
Produce Stock 356,376 201,465 356,376 201,465
Spares and Consumables 2,271 3,455 2,271 3,455
391,655 247,714 399,378 255,462
( - ) Provision or slow moving stocks - - (6,000) (6,000)
391,655 247,714 393,378 249,462
Company Group
9. TRADE & OTHER RECEIVABLES 2011 2010 2011 2010
Rs.’000 Rs.’000 Rs.’000 Rs.’000
Produce Debtors - Related Companies (9.1) 117,749 93,544 117,749 93,544
- Others 48,831 104,881 48,831 104,882
Advances & Prepayments 10,802 9,064 10,802 9,064
Other Debtors 53,028 56,173 58,496 61,632
230,410 263,662 235,878 269,122
011
Rs.’000
26,403
6,605
356,376
2,271
391,655
-
391,655
31.03.2011
5.11
35.11
31.03.2011
22,500,000
22,500,000
31.03.2011
806,200
(118,700)612,322
584,727
31.03.2011
183,307
183,307
011
Rs.’000
117,749
48,831
10,802
53,028
230,410
2011
Rs.’000
34,126
6,605
356,376
2,271
399,378
(6,000)
393,378
2011
Rs.’000
117,749
48,831
10,802
58,496
235,878
Year ended 31 March 2011
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Annual Report 2010/11 Kegalle Plantations PLC
Company Group9.1 TRADE RECEIVABLES FROM RELATED COMPANIES 2011 2010 2011 2010
Rs.’000 Rs.’000 Rs.’000 Rs.’000
Relationship
Richard Pieris Natural Foams Ltd Associate Company 93,465 62,434 93,465 62,434
Arpico Natural Latex Foam (Pvt) Ltd Related Company 32,055 32,055 32,055 32,055
Richard Peiris Export PLC Related Company 21,878 24,808 21,878 24,808
Richard Peiris Rubber Products Ltd Related Company 2,406 4,351 2,406 4,351
Arpico Flexioam (Pvt) Ltd Related Company - 1,950 - 1,950
149,804 125,599 149,804 125,599
( - ) Provision or doubtul receivables (32,055) (32,055) (32,055) (32,055)
117,749 93,544 117,749 93,544
Company Group
10. AMOUNTS DUE FROM RELATED COMPANIES 2011 2010 2011 2010
Rs.’000 Rs.’000 Rs.’000 Rs.’000
Relationship
Namunukula Plantations PLC Related Company 2,389 - 2,389 -
Maskeliya Plantations PLC Related Company 2,319 3,771 2,319 3,771
Hamea Kegalle (Pvt) Limited Subsidiary Company 99,171 98,338 - -
Richard Peiris & Company PLC Ultimate Parent Company 7,789 5,411 7,789 5,411
RPC Management Services (Pvt) Ltd Related Company 400 233 400 233
112,068 107,753 12,897 9,414
( - ) Provision or doubtul receivables (54,891) (54,891) - -
57,177 52,862 12,897 9,414
Company Group
11. SHORT TERM INVESTMENT 2011 2010 2011 2010
Rs.’000 Rs.’000 Rs.’000 Rs.’000
Investment in Treasury Bills, Repo & Others 1,289,494 719,993 1,289,494 719,993
1,289,494 719,993 1,289,494 719,993
Company Group
12. STATED CAPITAL 2011 2010 2011 2010
Rs.’000 Rs.’000 Rs.’000 Rs.’000
Issued and Fully Paid Number o Shares
Ordinary Shares Including one Golden
Share held by the Treasury which
has Special rights 25,000,001 25,000,001 25,000,001 25,000,001
Value o Issued and Fully Paid Shares
Ordinary Shares Including one Golden
Share held by the Treasury which
has Special rights 250,000 250,000 250,000 250,000
Note : Stated Capital represents the amount paid to the Company in respect o issuing 25,000,001 ordinary shares including
one Golden Share which has special rights.
011
Rs.’000
93,465
32,055
21,878
2,406
149,804
(32,055)
117,749
2011
Rs.’000
93,465
32,055
21,878
2,406
-
149,804
(32,055)
117,749
Year ended 31 March 2011
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Kegalle Plantations PLC Annual Report 2010/11
1 2
. 1 G e n e r a l R e s e r v e
G e n e r a l R e s e r v e r e p r e s e n t s a m o u n t s s e t - a s i d e r o m t i m e t o t i m e b y t h e D i r e c t o r s o t h
e C o m p a n y o r p u r p o s e o g e n e r a l a p p l i c a t i o n .
T h e s e h a v e b e e n a p p r o p r i a t e d b y t h e B o a
r d i n c o m p l i a n c e w i t h t h e A r t i c l e s , w h i c h p r o v i d e s o r s u c h a m o u n t s b e i n g s e t - a s i d e o r
u t u r e a n d u t i l i z e d a t e r a p p r o p r i a t e B o a r d A p p r o v a l s .
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I N T E R E S T B E A R I N G L O A N S & B O R R O W I N G S -
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w i t h i n
a f t e r
a f t e r
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1 3 . 2
-
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2 7 , 8
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C o m p a n y / G r o u p
6 8 , 3
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Year ended 31 March 2011
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Annual Report 2010/11 Kegalle Plantations PLC
1 3
. 1 .
L O N G T E R M L O A N S ( S e c u r e d )
A s i a n D e v e l o p m e n t B a n k C r e d i t L i n e
2 0 1 1
2 0 1 1
2 0 1 1
2 0 1 1
2 0 1 1
2 0 1 0
R e p a y a b l e
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a y a b l e
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w i t h i n
w i t h i n
a t e r
a t e r
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1 y e a r
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@ R s . 4 5 9 , 2
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a n d 1 1 9 I n s t a l l m e n t s
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@
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@
D i s b u r s e m e n t 3
R s . 5 2 7 , 7
9 2 a n d
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R e c e i v e d 9 8 / 9 9
R s . 5 2 7 , 8
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c o m m e n c i n g r o m
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a n d 4 7 I n s t a l l m e n t s @
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w i t h i n
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-
-
-
-
-
Year ended 31 March 2011
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Kegalle Plantations PLC Annual Report 2010/11
2 0 1 1
2 0 1 1
2 0 1 1
2 0 1 1
2 0 1 1
2 0 1 0
R e p a y a b l e
R e p a y a b l e
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a y a b l e
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o a n
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%
2 4 I n s t a l l m e n t s @
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6 . 5
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1 m o n t h i n s t a l l m e n t
E - F r i e n d C r e d i t L i n e
@ R s . 2 8 3 , 0
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5 9 i n s t a l l m e n t s @
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1 M o n t h I n s t a l l m e n t
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@ R s .
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a n d 5 9 I n s t a l l m e n t s
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S H O R T T E R M L O A N S
E x o t i c H o r t i c u l t u r e ( P v t ) L t d
-
-
-
-
4 0 8
1 0 . 2
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-
-
-
-
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-
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R e p a y a b l e
R e p a y a b l e
R e p
a y a b l e
T o t a l R e p a y a b l e
w i t h i n
w i t h i n
a t e
a t e r
1 y e a r
2 - 5 y e a r s
5 y e a r s
1 y e a r
T o t a l
R s . ’ 0
0 0
R s . ’ 0
0 0
R s . ’ 0
0 0
R s . ’ 0
0 0
R s . ’ 0
0 0
Year ended 31 March 2011
Notes to the Financial Statements Contd...
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22. OTHER INCOMECompany Group
2011 2010 2011 2010
Rs.’000 Rs.’000 Rs.’000 Rs.’000
Interest Income - Related Parties - - - -
- Others 74,240 55,145 74,240 55,145
Amortisation o Capital Grants 5,758 5,280 5,758 5,280
Sundry Income 25,953 21,304 25,953 21,304
Sale o Property, Plant & Equipment - 900 - 900
105,951 82,629 105,951 82,629
23. FINANCE COST
Company Group
2011 2010 2011 2010
Rs.’000 Rs.’000 Rs.’000 Rs.’000
Overdrat Interest 16 24 16 24
Interest paid to Related Parties 4 357 4 357
Interest on Government Lease 11,789 11,941 11,789 11,941
Variable Lease Rental 14,376 5,014 14,376 5,014
Arrears on Lease Rental 37,317 - 37,317 -
Term Loan Interest 53,932 48,618 53,932 48,618
117,434 65,954 117,434 65,954
Less : Interest Capitalised (2,964) (3,558) (2,964) (3,558)
114,470 62,396 114,470 62,396
24. REVERSAL / (PROVISION) FOR DOUBTFUL RECEIVABLES
This represented a reversal o a provision or doubtul debts totalling Rs. 50,958,056/- being made in respect o Richard
Pieris Natural Foams Ltd and Arpico Natural Latex Foam (Pvt) Ltd, amounting to Rs. 50,000,000/- and Rs. 958,056/-
respectively or the year 2009/10.
25. PROFIT BEFORE TAXATION IS STATED AFTER CHARGING
Company Group
2011 2010 2011 2010
Rs.’000 Rs.’000 Rs.’000 Rs.’000
Auditors’ Remuneration 1,744 1,627 1,744 1,627
Depreciation / Amortization 82,104 78,058 82,104 78,058
Directors’ Remuneration 1,701 4,058 1,701 4,058
Defned Beneft Plan Cost 52,223 114,914 52,223 114,914
Defned Contribution Plans - Provident Funds & ETF 92,266 75,211 92,266 75,211
Others - Sta Cost 898,850 735,426 898,850 735,426
Year ended 31 March 2011
Notes to the Financial Statements Contd...
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27.2 Income Tax Payable Company Group2011 2010 2011 2010
Rs.’000 Rs.’000 Rs.’000 Rs.’000
Income Tax Payable 14,329 11,445 14,329 11,445
ESC Payable 2,276 1,750 2,276 1,750
SRL Payable 279 133 279 133
16,884 13,328 16,884 13,328
28. Discontinued Operations
During the year 2009/10 the group has discontinued the operation o its subsidiary Hamea Kegalle (Pvt) Ltd.
2011 2010Rs.’000 Rs.’000
Revenue - 1,140
Cost o sales - (461)
Gross Proft - 679
Other Income 4,349 3,910
Expenses (999) (1,886)
Provision or impairment loss (7,019) (13,092)
Finance cost (15) (7)
Loss rom discontinued operations (3,684) (10,396)
Taxation - -
Loss or the year rom discontinued operations (3,684) (10,396)
Earnings / (Loss) per share - Basic (1.32) (3.71)
Operating and investing cash ows or the year are presented below:
2011 2010
Rs.’000 Rs.’000
Net cash ows rom / (used in) operating activities (2,258) 1,802
Net cash ows rom investing activities - -
Assets and Liabilities
The Financial Statements o the Hamea Kegalle (Pvt) Ltd stated above have been prepared on a basis other than on a going
concern reecting the closure o operations. The aggregated amount o assets and liabilities o the above company as at
31 March 2011 are as allows;
Total Assets - Rs. 88,710,066/-
Total Liabilities - Rs. 112,442,778/-
Accordingly, adjustments have been made or the diminution in value o all property plant & equipment so as to reduce
their carrying value to their estimated realisable amount, and or any urther liabilities which will arise.
2011
Rs.’000
14,329
2,276
279
16,884
2011
Rs.’000
14,329
2,276
279
16,884
2011Rs.’000
-
-
-
4,349
(999)
(7,019)
(15)
(3,684)
-
(3,684)
(1.32)
2011
Rs.’000
(2,258)
-
Year ended 31 March 2011
Notes to the Financial Statements Contd...
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30. SECURITIES PLEDGED
The ollowing assets have been pledged as securities or liabilities.
Name o Bank Loan Security Nature o Carring Amount Pledged
Facility Liability 2011 2010
Rs. Mn. Rs.’000 Rs.’000
Bank o Ceylon 35.0 Mn Primary mortgage over leaseholdrights o Gampaha Estate. Overdrat 87,940 78,390
Hatton National Bank PLC 50.0 Mn Primary mortgage over leaseholdrights o Luckyland Estate. Overdrat
Hatton National Bank PLC 15.8 Mn Existing primary mortgage over 133,353 128,172
leasehold rights o Luckyland Estate. Term Loan
Asian Development 526.7 Mn Corporate Guarantee by RichardBank / National Pieris and Company PLC or Rs. 33Mn.Development Primary and secondary mortgage overBank PLC leasehold rights o Atale, Pallegama,
Parambe, Weniwella, and YataderiyaEstates. Primary mortgage overleasehold rights o Etana, Doteloya,Kirklees, and urther mortgage overPallegama, Parambe, Weniwella, andYataderiya Estates. Term Loan 869,112 801,166
Asian Development Bank / 55.7 Mn Primary mortgage over leasehold
Seylan Bank PLC rights o Eadella Estate. Term Loan 114,361 109,692
Hatton National Bank PLC 100.0 Mn Board Resolution. Term Loan - -
Lanka Orix Leasing 10.6 Mn Pledged over a Colour SorterCompany PLC o Luckyland Estate. Term Loan 9,580 11,497
National Development 44.0 Mn Securitised Sales Proceeds. Term Loan - -Bank PLC
* Corporate Guarantee by Kegalle Plantations PLC or Rs. 25 Mn given to Maskeliya Tea Gardens Ceylon Ltd.
31. CAPITAL COMMITMENTS
Following are the capital commitments as at the Balance Sheet date;
Company Group2011 2010 2011 2010Rs.’000 Rs.’000 Rs.’000 Rs.’000
Approved by the Board & Contracted or Nil Nil Nil NilApproved by the Board & not Contracted or 408,848 374,839 408,848 374,839
408,848 374,839 408,848 374,83932. CONTINGENT LIABILITIES
No known contingent liabilities exist as at the Balance Sheet date, other than those disclosed in Notes 14 & 16 to theFinancial Statements.
33. POST BALANCE SHEET EVENTS
Final Dividend o Rs. 12.5 Mn (50 cents per share) has been declared ater the Balance Sheet date.
2011
Rs.’000
87,940
133,353
869,112
114,361
-
9,580
-
2011Rs.’000
Nil408,848408,848
011Rs.’000
Nil408,848408,848
Year ended 31 March 2011
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34. Related Party Disclosures
34.1 Transaction with related entities
Nature o Transactions Company Group
2011 2010 2011 2010
Rs.’000 Rs.’000 Rs.’000 Rs.’000
34.1.1 Parent Company
Amount Receivable as at 31 March - - - -
Amount Payable as at 31 March (15,473) (36,629) (15,473) (36,629)
Managing Agent’s Fee (195,503) (82,802) (195,503) (82,802)
Settlement o Management Fee 218,463 41,800 218,463 41,800
Recovery o Expenses (1,804) (3,682) (1,804) (3,682)
34.1.2 Subsidiaries
Amount Receivable as at 31 March 99,171 98,338 - -
Amount Payable as at 31 March - - - -
Sale o Rubber Logs - 1,964 - -
Other Administration Expenses 833 131 - -
34.1.3 Associates
Amount Receivable as at 31 March 93,465 62,434 93,465 62,434
Amount Payable as at 31 March - - - -Investment in Ordinary Shares - (150,000) - (150,000)
Sale o Rubber 559,729 363,368 559,729 363,368
Settlement Amount (528,698) (343,241) (528,698) (343,241)
Reversal/(Provision) or Doubtul Receivable - 50,000 - 50,000
34.1.4 Related Companies
Amount Receivable as at 31 March 69,235 72,579 69,235 72,579
Amount Payable as at 31 March (324) (3,198) (9,003) (13,975)
Recovery o Expenses - (4,569) - (4,569)
Salaries, Rent, Vehicle Repairs & Other Expenses (2,800) (987) (2,800) (987)
Purchase o Goods (81,720) (58,070) (81,720) (58,445)
Settlement o Dues 87,189 55,932 89,287 55,932
Sale o Goods 262,253 138,150 262,253 138,150
Sales Cash Receipts (269,079) (127,663) (269,079) (127,663)
Secretarial Fees (200) (200) (200) (200)
Freight Charges (2,471) (2,446) (2,471) (2,446)
Repo Interest Receivable 68,357 49,905 68,357 49,905
Repo Interest Settlement (62,000) (49,900) (62,000) (49,900)
Reversal/(Provision) or Doubtul Receivable - 958 - 958
Year ended 31 March 2011
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34.1.5 Terms and conditions
Transactions with related parties are carried out in the ordinary course o business. Outstanding balances at the year end
are unsecured and net settlement occurs in cash.
34.2 Transactions with key management personnel o the Company
There were no transactions with the key management personnel o the Company and its parent or the year ended 31
March 2011. Further there were no key management compensation paid during the year other than those disclosed in
Note 25.
34.3 Other related party disclosures
Legal ees amounting to Rs. 369,675/- (2010 - Rs. 407,339/-) by the Company was paid to an entity in which a key
management personnel was a partner.
34.4 Related Party Transactions
There are no related party transactions other than those disclosed in Notes 7,9.1,10,13,20,22,23,24,26,28,30 & 34 to the
Financial Statements.
Year ended 31 March 2011
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Annual Report 2010/11 Kegalle Plantations PLC
Year Ended 3/31/11 3/31/10 3/31/09 3/31/08 3/31/07 3/31/06 3/31/05 3/31/04 3/31/03 3/31/02
Rs ‘000
Operating Results
Turnover 2,991,762 2,216,497 1,927,762 2,163,030 1,819,020 1,513,578 1,294,220 1,112,598 850,368 693,832
Operating Proft beore Mgt Fee 1,225,085 492,193 423,185 589,392 480,736 333,147 228,324 189,315 97,584 10,861
Proft beore Interest and tax 1,031,593 410,000 351,436 481,984 393,599 250,466 173,789 127,866 60,695 (16,545)
Proft/ (Loss) ater Tax 883,127 376,030 177,411 427,597 311,323 191,447 125,217 80,656 (69,489) (56,170)
Dividends 75,000 75,000 25,000 125,000 75,000 62,500 37,500 37,500 nil nil
Capital Expenditure 200,244 183,036 165,940 119,209 94,448 107,168 69,958 61,228 73,540 79,631
Financial Position
Fixed Assets 1,932,820 1,814,679 1,564,998 1,466,538 1,333,664 1,295,555 1,224,646 1,193,426 1,841,541 1,151,144
Investments 225,000 225,000 80,298 75,000 2,401 8,709 12,828 12,908 - 257,543
Current Assets 1,999,003 1,325,104 946,549 863,732 674,825 516,227 350,715 231,085 189,072 156,799
Current Liabilities 366,373 317,718 196,801 214,234 269,562 422,592 310,681 248,562 245,721 359,843
Shareholders’ Funds 2,443,938 1,698,311 1,347,281 1,219,870 942,273 692,118 538,171 450,454 369,798 439,287
Stated Capital 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000
Reserves 2,193,938 1,448,311 1,097,281 969,870 692,273 442,118 288,171 200,454 119,798 189,287
Key Financial Indicators
Current Ratio (Times) 5.46 4.17 4.81 4.03 2.50 1.22 1.13 0.93 0.77 0.44
Quick Asset Ratio (Times) 4.39 3.39 4.07 3.09 1.73 0.82 0.70 0.53 0.43 0.22
Debt Equity Ratio (Times) 0.13 0.19 0.21 0.19 0.25 0.38 0.41 0.44 0.49 0.52
Interest Cover (Times) 8.78 6.22 5.90 10.53 5.65 4.01 2.96 2.10 0.98 0.96Equity /Asset Ratio (Times) 0.62 0.54 0.54 0.52 0.47 0.38 0.34 0.31 0.27 0.28
Earnings per Share (Rs.) 35.33 15.04 7.10 17.10 12.45 7.66 5.01 3.23 (2.78) (2.25)
Market Price o a Share (Rs.) 207.50 47.00 19.00 60.00 42.00 40.00 22.00 13.25 10.50 8.50
Price Earning Ratio (Times) 5.87 3.12 2.68 3.51 3.37 5.22 4.39 4.10 (3.78) 39.71
Dividend Cover (Times) 11.78 5.01 7.10 3.42 4.15 3.06 3.34 2.15 n/a -
Dividend Pay Out Ratio (%) 8.49 19.95 14.08 29.24 24.10 32.64 29.94 46.44 - -
Annual Production
Rubber - kg ‘000 4,082 4,578 5,102 5,436 5,375 5,688 5,486 5,736 5,378 5,434
Tea - kg ‘000 2,773 2,479 2,492 2,797 3,126 3,422 3,021 3,034 2,568 2,596
Coconut - nuts ‘000 1,413 1,572 1,610 1,472 1,788 1,406 1,230 1,392 1,243 1,381
Ten Year Summary
10 20 30 40 50 60 70 80 90 100
Funding
Assets
Assets & FundingIn percentage
In flow Out flow
Current Liabilities LandDeferred Income Other Fixed Assets
Long term Liabilities InvestmentsShareholders' Funds Current Assets
0
500
1,000
1,500
2,000
2,500
3,000
2 0 0 2
2 0 0 3
2 0 0 4
2 0 0 5
2 0 0 6
2 0 0 7
2 0 0 8
2 0 0 9
2 0 1 0
2 0 1 1
Shareholders' Funds
Rs. '000
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Historical Note
ATALE ESTATE - KEGALLE
Atale estate, planted in 1904, was one o the estates originally
owned by Messrs. Grand Central (Ceylon) Rubber Estates Ltd,
which owned 43,000 acres and was managed by Messrs. Carson
Cumberbatch & Company Limited. This estate consisted o six
divisions in Atale, Maboda, Boyagoda, Dickhena, New and Old
Arandara and in 1972 two neighbouring estates namely Dorpet
and Myland, managed by proprietors themselves were handed
over to Messrs. Carson Cumberbatch & Company Limited or
management who amalgamated the estates with Atale Estate
or management purposes and thereater the number o
divisions increased to eight. In the year 1974 the ownership o
Atale Estate was vested with Messrs. Upali Group.
With the implementation o Land Reorm Act in 1976, this estatewas vested with the Government and was managed by one o
the Statutory Boards, the Janatha Estates Development Board
(JEDB) and was under the Kegalle Regional Board o the JEDB.
With the privatization o estates on the 22 June 1992 the estate
was vested with Kegalle Plantations PLC. Ater privatization,
Pindenioya Estate, situated bordering Atale was amalgamated
with Atale Estate or administrative reasons and the present
extent o the estates is 1,150 ha.
Thus Atale Estate becomes the largest Rubber estate in Sri
Lanka situated in Kegalle District o Sabaragamuwa Province
covering seven (7) Gramaniladhari divisions, viz; Atale,
Arandara, Udugama, Bisowela, Nadeniya, Holombuwa and
Bambaragama.
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Kegalle Plantations PLC Annual Report 2010/11
1. Stock Exchange
The issued Ordinary Share o Kegalle Plantations PLC, are listed with Colombo Stock Exchange (CSE) o Sri Lanka. The
Audited Financials o the Company or the year ended 31 March, 2011 have been submitted to the Colombo Stock Exchange
within two months o the Balance Sheet date.
2. Distribution o Shareholders 2011 2010
No o Shares Held No o Share
Holders No o Shares % Holdings % Holdings
1 - 1,000 9,191 2,077,991 8.31% 7.95%
1,001 - 5,000 265 705,785 2.82% 2.37%5,001 - 10,000 59 434,922 1.74% 1.63%
10,001 - 50,000 56 1,153,603 4.61% 4.75%
50,001 - 100,000 20 1,541,900 6.17% 2.61%
100,001 - 500,000 9 1,441,900 5.77% 10.35%
500,001 - 1,000,000 1 628,800 2.52% 2.29%
1,000,001 - & above 1 17,015,100 68.06% 68.06%
Total 9,602 25,000,001 100.00% 100.00%
Resident 9,554 24,248,893 96.99% 96.37%
Non Resident 48 751,108 3.01% 3.63%
Total 9,602 25,000,001 100.00% 100.00%
Individuals 9,460 4,221,420 16.89% 16.98%Company 142 20,778,581 83.11% 83.02%
Total 9,602 25,000,001 100.00% 100.00%
Related Parties 1 17,015,100 68.06% 68.06%
General Public including Employees 9,601 7,984,901 31.94% 31.94%
Total 9,602 25,000,001 100.00% 100.00%
Public Holding : The percentage o shares held by the public is 31.94% o the issued Share Capital o the Company.
3. Dividends
Final dividend o 50 cents per share has been proposed in addition to the Interim Dividend o Rs. 2.50 per share pad inMarch 2011 (2010 – Rs. 3/-).
4. The Golden Shareholder
The Golden Share o Rs.10/- is currently held by the Secretary to the Treasury and should be owned either directly by
the Government o Sri Lanka or by a 100% Government owned public Company. In addition to the rights o the normal
ordinary shareholder, the Golden Shareholder has the ollowing rights;
1) The concurrence o the Golden Shareholder will be required or the Company to sublease any o the estate land leased/to
be leased to the Company by the Janatha Estate Development Board/Sri Lanka State Plantations.
2) The concurrence o the Golden Shareholder will be required to amend any clause in the article o association o the
Shareholder & Investor Information
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Annual Report 2010/11 Kegalle Plantations PLC
Company which grants special rights to the Golden Shareholder.3) The Golden Shareholder or his nominee will have the right to examine the books and accounts o the Company at any time
with two weeks o written notice.
4) The Company will be required to be submitted a detailed quarterly accounts report to the Golden Shareholder in a specifed
ormat within 60 days o the end o each quarter. Additional inormation relating to the Company in a specifed ormat must
be submitted to the Golden Shareholder within 90 days o the end o each fnancial year.
5) The Golden Shareholder can request the Board o Directors o the Company to meet with him/his Nominee, once in every
quarter to discuss issues related to the Company’s operation o interest to the Government.
5. Share Inormation
Market Value 2011 2010
Highest Price - Rs. 285.00 (08 February 2011) 52.00 (02 February 2010)
Lowest Price - Rs. 47.50 (01 April 2010) 19.00 (06 April 2009)
Closing Price - Rs. 207.50 (31 March 2011) 47.00 (31 March 2010)
Share Trading
No. o Shares Traded 18,287,600 6,905,600
No. o Trades 11,488 3,961
Value o Shares Traded - Rs. 2,561,497,450 244,069,325
Key Ratios
Earnings per Share 35.33 15.04
Net Assets per Share 97.76 67.93
Dividends per SHare 3.00 3.00
6. Twenty Largest Shareholders
As at 31 March 2011 31 March 2010
Number o % o the Number o % o theShares Holding Shares Holding
RPC Plantation Management Services (Pvt) Ltd 17,015,100 68.06% 17,015,100 68.06%
J B Cocoshell (Pvt) Ltd 628,800 2.52% 362,500 1.45%
Almar Trading Co. (Pvt) Ltd 221,300 0.89% 77,300 0.31%
HSBC International Nominees Ltd-SSBT-Deustche Bank 200,000 0.80% 205,000 0.82%
Tranz Dominion, L.L.C 185,000 0.74% 185,000 0.74%
Commercial Bank O Ceylon PLC / D.R. Costa 154,600 0.62% - -
Cocoshell Activated Carbon Company Limited 153,500 0.61% 146,100 0.58%
Commercial Bank O Ceylon PLC / D.S.J.V. Costa 140,500 0.56% - -
Mrs. N. Muljie 135,100 0.54% 135,100 0.54%
Waldock Mackenzie Ltd /Hi - Line Towers (Pvt) Ltd 129,600 0.52% - -
Mas Capital (Private) Ltd 122,300 0.49% 99,800 0.40%
Deutsche Bank AG As Trustee or Namal Acuity 100,000 0.40% - -Deutsche Bank AG - National Equity Fund 100,000 0.40% - -
Pershing LLC S/A Averbach Grauson & Co. 95,600 0.38% 296,800 1.19%
Janashakthi Insurance Co. Ltd (Policy Holders) 94,800 0.38% - -
Mr. P. Subasinghe 92,400 0.37% - -
Mr. M.M. Fuad 92,300 0.37% - -
Ceylon Guardian Investment Trust PLC A/C No. 01 87,900 0.35% - -
Mr. M. J. Fernando 85,500 0.34% - -
Askold (Pvt) Ltd. 85,000 0.34% - -
Sub Total 19,919,300 79.68% - -
Balance held by 9,582 Shareholders
(2009/10 - 9,349 Shareholders) 5,080,701 20.32% 4,406,600 18.00%
Total Shares 25,000,001 100.00% 25,000,001 100.00%
Shareholder & Investor Information Contd....
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Kegalle Plantations PLC Annual Report 2010/11
Shareholder & Investor Information Contd....
8. Other Share Inormation
The perormance o Kegalle Plantations PLC’s share is as ollows compared to the perormances o Plantations Sector Index
(PLT), Milanka Price Index (MPL), and All Share Price Index (ASI) in the Share Market during the year.
Kegalle Plantations PLC’s share inormation rom Colombo Stock Exchange (CSE) website:
- Log on to Colombo Stock Exchange - website: www.cse.lk
- Enter Company code(KGAL.N000) in the search box at the top right hand corner o
CSE home page and go to the Company description.
7. Exchange Rates - US $ (Selling)2011 2010 2009 2008
As at 31 March (Rs.) 111.33 114.84 115.50 107.75
Share Volume Share Price
-
50
100
150
200
250
-
500
1,000
1,500
2,000
2,500
3,000
3,500
A p r - 1
0
M a y - 1 0
J u n - 1
0
J u l - 1
0
A u g - 1 0
S e p - 1 0
O c t - 1
0
N o v - 1 0
D e c - 1 0
J a n - 1 1
F e b - 1 1
M a r - 1 1
S h a r e P r i c e ( R s . )
S h a r e V o l u m e ( ' 0 0 0 )
KPL Share Price & Transaction Volume
0
100
200
300
400
500
600
A p r - 1 0
A p r - 1 0
A p r - 1 0
M a y - 1 0
M a y - 1 0
J u n - 1 0
J u n - 1 0
J u l - 1 0
J u l - 1 0
J u l - 1 0
A u g - 1 0
A u g - 1 0
A u g - 1 0
S e p - 1 0
S e p - 1 0
O c t - 1 0
O c t - 1 0
O c t - 1 0
N o v - 1 0
N o v - 1 0
D e c - 1 0
D e c - 1 0
D e c - 1 0
J a n - 1 1
J a n - 1 1
F e b - 1 1
F e b - 1 1
M a r - 1 1
M a r - 1 1
I n d e x V a l u e
KPL Share Price Vs Market Indices
KPL Share PriceMPI
PLT
ASI
17.02
7.98
Shareholder Structure As At March 2011
No of Shares with %
RPC Plantation
Management
Services (Pvt) Ltd
Public Holding
68.06%
31.94%
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Annual Report 2010/11 Kegalle Plantations PLC
'HÀQLWLRQV
ANRPCAssociation o Natural Rubber Producing Countries.
Borrowing CostsBorrowing Costs are interest and other costs incurred by anenterprise in connection with borrowing o unds.
Capital Employed The sum o Shareholders’ Funds, Long Term & Short Term Interestbearing Borrowings.
COPCost o Production. Generally reers to the cost o producing onekilo o produce.
Contingent Liabilities
Condition or situations at the Balance Sheet date, the fnancialeects o which are to be determined by uture events, which mayor may not occur.
Current RatioCurrent Assets divided by Current liabilities.
Dividend CoverProfts ater tax divided by Dividends.
Equity/Assets RatioShareholders Funds divided by Long Term Assets plus CurrentAssets.
Earnings Per ShareProft ater Tax divided by weighted average number o OrdinaryShares outstanding during the period.
Enterprise ValueMarket Capitalization plus net debt.
GearingLong Term Interest bearing Borrowings/Liabilities as a percentageo Shareholders’ Funds plus Long Term Interest bearing Borrowings/Liabilities.
HACCPHazard Analysis and Critical Control Point System, Internationallyaccepted ood saety standard.
ISO
International Standards Organization.
Interest CoverProft beore Tax plus Interest Charges divided by Interest Charges,including Interest Capitalized.
Inflling A method o feld development whereby planting o individualplants is done in order to fll the vacancies o existing revenuefelds.
Net AssetsSum o Fixed Assets and Current Assets less Total Liabilities.
Net price Per ShareNet Assets at the end o period divided by the number o OrdinaryShares issued.
Market CapitalizationNumber o shares in issue, multiplied by the market value o eachshares at the year end.
Price Earning RatioMarket price o a share divided by Earnings per Share.
Related PartiesParties who could control or signifcantly inuence the fnancialand operating policies o the Company.
Return on Average Equity
Net income expressed as a percentage o Average Shareholders’Funds.
Return on Capital Employed (ROCE)Proft ater Tax plus Interest on Loans divided by the Equity Funds,Long Term Loans and Short Term Loans.
General ReserveReserve available or distribution and investment.
RSS-1Ribbed Smoked Sheet - Grade 1
ReplantingA method o feld development where an entire unit o land istaken out o “bearing” and developed by way o uprooting theexisting trees/bushes and replanting with new trees/bushes.
Turnover per EmployeeConsolidated turnover o the Company or the year divided by thenumber o employees at the year end.
GSAGross Sale Average. Average sale price obtained (over a periodo time, or a kilo o produce) beore any deductions such asbrokerage, etc.
NSANet Sales Average per kilo.
Shareholders’ Funds
Funds attributable to Shareholders which consist o Share Capital,Reserves and Retained Proft.
SLASSri Lanka Accounting Standards.
UITFUrgent Issues Task Force o the Institute o Chartered Accountants.
Value Addition The quantum o wealth generated by the activities o the Companyand its application.
Yield (YPH)Average yearly output o produce rom a hectare o plantation.
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Kegalle Plantations PLC Annual Report 2010/11
Notes
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Kegalle Plantations PLC Annual Report 2010/11
OTICE IS HEREBY GIVEN that the Eighteenth (18th) Annual General Meeting o Kegalle Plantations PLC will be held atthe Registered Oce, No. 310, High Level Road, Nawinna, Maharagama on Thursday, 30 June 2011 at 10.00 a.m. and the
business to be brought beore the meeting will be as ollows;
1. To consider the Report o the Directors and the Statement o Accounts or the year ended 31 March 2011 with the
Report o the Auditors thereon.
2. To declare a dividend as recommended by the Directors.
3. To re-elect Mr. J H P Ratnayeke, who retires by rotation in terms o Article 92 at the Annual General Meeting, a Director
4. To elect Dr. Gerry Jayawardena, who retires in terms o Article 98 at the Annual General Meeting, a Director
5. To re - appoint Messrs. Ernst & Young, Chartered Accountants as Auditors o the Company and to authorize the Directors
to determine their remuneration.
6. To authorize the Directors to determine contributions to charities
7. To consider any other business o which due notice has been given.
To consider and i thought ft pass the ollowing Special Resolutions in order to amend the Articles o Association o the Company
in the manner ollowing;
SPECIAL RESOLUTION NO. I
I. That Interpretation o Article No. 2 o the word “Directors “ be amended as ollows;
2. INTERPRETATION
Director a Director o the Company, whether an Appointed Director, Elected Director or an Alternate
Director, Nominee Director
SPECIAL RESOLUTION NO. II
II. That Interpretation o Article No. 2 be amended including the words “Nominee Director “ as ollows
2. INTERPRETATION
Nominee Director a Director o the Company, appointed by nomination
SPECIAL RESOLUTION NO. III
III That the ollowing Article 78 (h) be included immediately ollowing the existing Article 78 (g) to read as ollows,
(a) A shareholder who is holding more than 60% shares in the Stated Capital o the Company shall be entitled to nominate
Directors to the Board o Directors o the Company and Directors so appointed shall in these rules be reerred to as
Nominee Directors.
Notice of Meeting
N
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Notice of Meeting Contd....
SPECIAL RESOLUTION NO. IV
IV. That the existing Article No. 91 be deleted in its entirety and be substituted by the ollowing in its place,
(91) The oce o Director shall, ipso acto, be vacated i the Director —
(a) resigns oce by giving notice in writing to the Company
(b) is removed rom oce in accordance with the provisions o the Act or these articles
(c) becomes disqualifed rom being a director pursuant to section 202 o the Act
(d) dies or
(e) vacates oce pursuant to subsection (2) o section 210 o the Act , on the ground o his age
( ) i being a nominee Director the nomination is revoked by the person (s)/ entity nominating such a director
(g) i requested in writing by a majority o his co-directors to resign
(h) shall or more than six months have been absent without permission o the Directors rom meetings o theDirectors held during that period
(i) being an Appointed Director the appointment o such directors is revoked in writing to the Company by the
Secretary to the Treasury or person authorized to do so in writing by the Secretary to the Treasury
(j) is or becomes a director in any other Company that carries on inter alia the business o managing plantations and
i all other directors constituting the Board o Directors resolve that such director should vacate his position as a
director o the Company
SPECIAL RESOLUTION No. V
V. That the ollowing Article 111 (c) be included immediately ater the existing Article 111(b) to read as ollows,
(c) The Directors who are holding any executive oce in the Company will cease to be a director, consequent on thetermination o his appointment in the Company.
By Order o the Board
(Sgd.)
Richard Pieris Group Services (Private) Limited
Secretaries
No. 310, High Level Road, Nawinna, Maharagama
27 May 2011
Note:
a) A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote instead o him/her.
b) A proxy need not be a member o the Company. The orm o proxy will be ound inserted in the Annual Report.
c) The completed orm o proxy should be deposited at No. 310, High Level Road, Nawinna, Maharagama., not less than 48
hours beore the time appointed or the holding o the meeting.
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