ceylon grain elevators plc- annual report 2010
TRANSCRIPT
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REAPING / HARVESTING PROSPERITY
A n n u a l R e p o r t
2 0 1 0
G r o
w i n
g W
i th C o n
f i d
e n
c e
Ceylon Grain Elevators PLC
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Our corporate philosophy is centred upon the 3H principles of building
a Healthy Organisation, being an Honourable Winner and making an
Honest Fortune. This business philosophy is derived from our Parent
Company, Prima Limited of Singapore.
Healthy Organisation
Developing a sound, effective and efficient organisation system.
Promoting team sprit and reaching out to create a “PRIMA FAMILY”identity.
Honest Fortune
Establishing trust, fairness and mutual benefits with all within our
business circle. Contributing to the well-being of society.
Honourable Winner
Achieving success through fair competition.
Striving towards excellence.
Our Corporate Goals
In line with our Chairman’s directives and Prima Group corporate
philosophy, we will continue to grow steadily in our primary activities
with the ultimate goal of reaching the status of an integrated
feedmilling business.
Our future expansion plans shall be within our management capability
and financial resources.
To establish “PRIMA” and “FARMERS’ CHOICE” as a brand name
synonymous with the very best in high quality products.
To establish high standards of good corporate governance, improve
transparency and the standards of accountability to shareholders.
Brief History
Life began for Ceylon Grain Elevators PLC (CGE) way back in
December 1982, when the Government of Sri Lanka and Prima
Limited of Singapore inked an agreement beginning a partnership that
has endured two decades of yeoman service to the poultry industry in
the country.
Today, CGE is the largest operator in the poultry industry of Sri Lanka,
establishing 6 subsidiary companies operating not only in the field of
poultry, but also offering products and services in diverse fields.
CGE and the companies under its umbrella manufacture & distribute a
wide range of feeds under the “PRIMA” and “FARMERS’ CHOICE”
brands.
They also operate poultry and hatchery breeder farms, commercial
poultry and livestock farms. They also engage in the processing,
packaging and retailing of poultry and other meat products, the import
and sale of poultry equipment, veterinary products, produce aqua feed
and provide a state-of-the-art laboratory and consultancy service to
customers and farmers throughout the island.
Ceylon Grain Elevators PLC subsidiaries are:
• Three Acre Farms PLC
• Ceylon Pioneer Poultry Breeders Limited
• Ceylon Livestock & Agrobusiness Services (Pvt) Limited
• Ceylon Warehouse Complex (Pvt) Limited
• Ceylon Aquatech (Pvt) Limited
• Millennium Multibreeder Farms (Pvt) Limited
Ceylon Grain Elevators PLC associate companies are:
• Ceylon Agro Industries Limited
• Prima Management Services (Pvt) Limited
Our Vision“To achieve complete poultry integration
synergies, ultimately gaining export market
competitiveness”
Our MissionTo tap and harness business opportunities by expanding into
various vertical integration projects.
This will lead to increase in Agriculture, Aquaculture and Livestock
production, thus encouraging national progress through nutritious
protein-rich food to the people of this Nation.
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Ceylon Grain Elevators PLC | Annual Report 2010
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G r o w i n g W i t h
C o n f i d e n c eThe past year has seen Ceylon Grain Elevators PLC reap the fruits of innovation, efficiency and hard work put in
during difficult times. In 2010, we have proven again that we look beyond profit making and go an extra mile to
bring only the best for our stakeholders.
While our financial performance has reached new heights, we continue to focus on discovering new directions and
horizons. With the current stable and favorable economic climate, this is the optimal time for us to grow using the
opportunities presented to us. Our products have continued to be the favorites among our valued customers, at a
competitive price, exemplary quality and act as our foundation for future growth.
Over the past years, Ceylon Grain Elevators PLC has grown with abundance through creativity, innovation and
perseverance. The Company is now geared to provide sustained value to our shareholders.
In 2010, CGE is growing with confidence…
CONTENTS
2 - Chairman and Chief Executive
Officer's Review
5 - Management Discussion and Analysis
9 - Human Resources Review
10 - Corporate Social Responsibility Review11 - Corporate Governance
14 - Audit Committee Report
15 - Remuneration Committee Report
16 - Board of Directors
17 - Risk Management Review
20 - Report of the Directors on the State of
Affairs of the Company
23 - Statement of the Directors’ Responsibility
24 - Independent Auditors’ Report25 - Income Statement
26 - Balance Sheet
27 - Statement of Changes in Equity
28 - Cash Flow Statement
29 - Notes to the Financial Statements
60 - Five Year Financial Summery
61 - Group Structure
62 - Shareholder Information
63 - Statement of Value Added64 - Notice of Meeting
Enclosed - Form of Proxy
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Ceylon Grain Elevators PLC | Annual Report 2010
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Dear Shareholder,
It is with great pleasure that I
present you the Annual Report and
the audited financial statements of
Ceylon Grain Elevators PLC (CGE)
and its subsidiaries for the financial
year ended 31st December 2010
and inviting you for the 28th Annual
General Meeting, which will be held
on 21st April 2011 at the ICASLAuditorium, 30A, Malalasekara
Mawatha, Colombo-07 at 10.00 a.m.
When a tornado strikes, only the most
firmly rooted structures can withstand
its force. Flimsier the foundations, the
greater the damage will be. In 2009,
economies of all size across the
world felt the tornado-like force of the
financial crisis. The battering taken
by the world economy was as bad
as anything in the last 70 years and
countries and all industries struggled
to weather the storm created by the
financial crisis. Fortunately CGE is
Chairman and Chief Executive Officer’s Review
We have added four new and modern environ-
mentally controlled broiler houses during the same
period, and will continue to increase our farm
capacity in the coming years.
anchored on strong foundations.
During 2010, CGE increased its profits
by several folds, demonstrating the
resilience of the company to weather
difficult times and to recover rapidly.
The year under review has been about
leading the CGE through the post
recession and recovery without losing
sight of our long-term plans and core
values.
Global Recovery
Output growth in most major
advanced economies collapsed at
the end of 2008 as the financial crisis,
which followed the bankruptcy of the
US investment bank Lehman Brothers,
hit confidence, trade and credit.
Through the first half of 2009,
North America, Europe and the UK
experienced the deepest recessionssince the 1930’s, with unemployment
reaching 10% of the workforce in both
the United States and Europe, and
government debt vastly increasing due
to bailouts and stimulus packages. A
slow but durable economic recovery in
North America, and to a lesser extent
in the UK and Europe, became evident
by 2010. The expansion was slower in
the mature industrial economies than
in emerging economies, a divergence
that is expected to continue.
Moving into 2010, almost all economiesstarted once again expanding, with
nearly all the emerging economies
of Asia, South America and Eastern
Europe expanding somewhat faster.
In the three major mature economies
of Japan, the US and Germany, capital
goods orders are rebounding, profit
shares were increasing and consumer
confidence is beginning to recover.
China, the second largest economy
in the world, expanded at just below
12 per cent in the year to March 2009.
Even so, there remains some hesitancy
in global growth forecasts. Most of
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Ceylon Grain Elevators PLC | Annual Report 2010
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Chairman and Chief Executive Officer’s Review Cont.
the developing world has weathered
the financial crisis well, and, by the
end of 2010, many emerging market
economies had recovered or were
close to resuming the growth potential
they had attained prior to the crisis.
In the back drop of market recovery,
increase of human population have
taken place and will continue to
maintain its growth uninterrupted for
the next two decades. In Asia this
growth will be seen at 26% setting
the necessary background to house
an estimated 86% of the world
population by 2030. All-in-all it will be
a challenging effort to accommodate
an estimated 8.1 billion people by
2030 and catering to their food
requirements.
Meat consumption has a strong
correlation with the GDP per capita.
With the increase of purchasing power
the consumption of meat and poultry
products tends to go up in tandem. In2010 the world GDP per capita grew to
US$ 5,611 pushing the consumptions
to 38Kg per person. In 2030, GDP per
capita is expected to reach US$7,600
where the consumption could go as
high as 45Kg per person opening
doors much wider for us.
Sri Lanka
Sri Lanka has been one of the few
countries that enjoyed a significant
growth (8%) in 2010. There have been
considerably improved performances
in all sectors and the country returned
to the high growth trajectory, which is
encouraging.
The policies implemented by the
Central Bank of Sri Lanka have borne
fruit by gaining economic and price
stability, average inflation, come back
to a low interest regime, historically high
foreign reserves, stability of exchange
rates assuring people to continue in
their business with a strengthened
rupee, fiscal consolidation, decline in
unemployment rate, rapid decrease
in poverty, attain “middle income
emerging market country” status,
upgrade sovereign credit ratings,
doubling the GDP from US$24 billion
in 2005 to US$50 billion. There has
been a sharp increase in the GDP
at current prices and at purchasing
power parity. The per capita income
has reached almost US$2,400.
A commendable performance was
seen in all sectors. Agriculture grew
at 6.3% due to favorable weather
conditions, attractive prices,
improvement in support services,
continuation of fertilizer support
program of the government, and
significant contribution from the
Northern and Eastern provinces
which is an excellent beginning. The
industry sector has grown by 8.7%
and the services sector experienced a
7.9% growth. Key growth areas in the
services sector were tourism, hotels
and restaurants. Up to November last
year the tourist arrivals have increased
by 46%.
With the market recovery the domestic
per capita income has also increased
improving the purchasing power of Sri
Lankans. Expenses on food play a key
role in all these purchases. Currently
consumption of chicken meat for
Sri Lanka is approximately 5Kg per
person. With the fast development
and change in lifestyle as well as the
purchasing power; we expect the
consumption will increase to more
than 8 Kg per capita within the next
five years, which is highly favorable
for the local poultry industry in general
and CGE in particular.
Challenges for us
During the year under review, the
local market experienced shortage
in supply of layer chicks and chicken
meat during the first half of 2010.
This is the consequence of the glut
in DOC supply in 2009, during then
all the breeder farms incurred huge
losses and were forced to scale down
their DOC production. The import
restriction and high import CESS on
maize also deprived feedmillers from
optimising their cost of production.
Local farmers also took advantage of
import restriction to manipulate supply
to the market, although they have no
proper storage facility. As a result the
price of local maize shot up from Rs.
34 per kg in March to Rs. 42 per kg in
4th quarter last year. This led to high
cost of production, which would have
to be passed down to the consumers
eventually. CGE purchased more than
35,000 mt of local maize in 2010.
Our operations
We foresee the local poultry industry
to grow in tandem with the per capita
income, and we need to be ready
for this by continually improving our
capacity and capability.
In 2010, CGE has obtained the
ISO9001-2008 certification awarded
by SLSI. This will lay a solid foundation
for other productivity improvement
initiatives. We have added four
new and modern environmentally
controlled broiler houses during the
same period, and will continue to
increase our farm capacity in the
coming years. The Company also
recognises the importance of accurate
and timely information for businessesefficiency and decision making. In
view of this, we have further enhanced
our Enterprise Resource Planning
(ERP) system through the addition of
Business Intelligence (BI) tools. This
enables us to organise data into useful
information for analysis.
Financial Review
Our financial accomplishments for the
year under review recorded revenue
of Rs. 8,009.41 million, which is an
increase of 16% against Rs. 6,899.32
million in 2009. The overall gross profits
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Ceylon Grain Elevators PLC | Annual Report 2010
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Chairman and Chief Executive Officer’s Review Cont.
increased by 145% to Rs.848.23
million from Rs.346.73 million. With
stringent cost control measures, and
prudent treasury management CGE
was able to maximize its profits. During
the year in focus the Sri Lankan Rupee
appreciated from Rs.113/- to Rs.110/-
against the US dollar. The average
bank interest rates were hovering
around 9.0%. These are some of the
key factors that kept our financial
costs low. The operating profits were
Rs.592.08 million.
As a result of both macro and
micro economic conditions as well
as the favorable global financial
recovery your company has reported
Rs. 474.89 million in profit after tax
attributable to equity holders for the
year ended 31st December 2010,
compared to Rs. 133.87 million
reported in year 2009.
Future
With Sri Lankan economy predictedto reach over 9% p.a. growth during
the next few years CGE is optimistic
about its growth potential. We hope
that infrastructure development will
continue as expected during 2011
allowing new markets to come up
throughout the country while creating
necessary background for new farms
to be established, especially in the
North and East of the island.
Dividends
I am pleased to announce that the
Board of Directors recommends afirst and final dividend of Rs. 1.00
per share for the financial year ended
31st December 2010, subject to the
approval of the shareholders at the
forthcoming Annual General Meeting.
This would entail a maximum dividend
payout of Rs. 60 million for year 2010.
As we are in the process of expanding
our capacities , we trust our decision
will be understood and appreciated
by shareholders as being one that will
bode well for the Group in the future.
Acknowledgements
Finally on behalf of the Board of
Directors I take this opportunity to
thank you for the trust placed on
CGE as its valued shareholders.
I would also like to express my
sincere appreciation to our dedicated
employees, growers and customers
for their determination during 2010
and the continued support given to
meet the high growth standards. I
wish to convey to all our shareholders
and investors the future is bright for
CGE and lot of potential waits to be
exploited in the coming years.
Cheng Chih Kwong, Primus
Chairman & Chief Executive Officer
Colombo, Sri Lanka
21 March 2011
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Ceylon Grain Elevators PLC | Annual Report 2010
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Management Discussion and Analysis
Industry Overview
The economy of Sri Lanka bounced back after decades
showcasing a significant growth, which is estimated at 8%
in 2010. It is for the first time in the history the island nation
enjoyed the benign macro economic fundamentals while
double its growth compared to year before. During the first
half of last year the growth was maintained at 7.8% compared
to 1.9% recorded during the corresponding period of 2009.
The improved performance in all key sectors of the economy
contributed towards this growth.
Inflation has continued to remain at relatively low and stable
levels since early 2009. On a year-on-year basis, inflation was
5.8% in September 2010. Demand management policies aswell as improved domestic supply conditions and supportive
fiscal policies have helped maintain inflation at subdued
levels. Inflation, on a year-on-year basis, is expected to
remain within single digits at around 6% at end 2010.
The agriculture sector contributes around 16.8 percent of
National Gross Domestic Production (GDP). The livestock
sub sector contributes around 1.2% of National GDP
supported by some 1.5 million cattle, 0.3 million buffalo, 13
million poultry, 0.8 million pigs in the country with negligible
number of sheep, ducks other species. Livestock are spread
throughout all regions of Sri Lanka with concentrations of
certain farming systems in particular areas due to cultural,market and agro climatic reasons.
About 70% of the contribution to livestock sub-sector in Sri
Lanka comes from chicken meat and eggs. Chicken meat
and eggs remain the cheapest source of animal protein.
With the country’s economy progresses, the domestic per
capita income will also increased improving the purchasing
power of Sri Lankans. Expenses on food play a key role in
all these purchases. Currently the annual consumption of
chicken meat for Sri Lanka is approximately 5Kg and 57
eggs per person which is relatively low compared with other
developing countries in Asia. With the fast development and
change in lifestyle as well the purchasing power; we expect
the consumption to increase exceeding 8Kg per capita
within the next five years, which is highly favorable for the
local poultry industry in general and CGE in particular.
During the year under review, the local market experienced
shortage in supply of layer chicks and chicken meat in the
first half of 2010. This is a consequence of the glut in Day Old
Chicks (DOC) demand in 2009, during then all the breeder
Ceylon Grain Elevators PLC | Annual Report 2010
Animal PopulationPoultry 13,000,000
Cattle 1,500,000
Pigs, goats & sheep 800,000
Buffalos 300,000
Source - Ministry of Livestock and Rural Community Development
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Ceylon Grain Elevators PLC | Annual Report 2010
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Management Discussion and Analysis
Feed Milling
Feed milling is the Group’s largest sector, accounting for
61% of the Groups revenue. The sector faced many daunting
challenges during the year. Though the Government’s policy
of restricting maize imports was aimed at assisting the local
maize grower, the policy also allow maize farmers to take
advantage of the import restriction to manipulate supply and
price. In addition, due to poor post harvesting practices and
lack of storage facilities, a large proportion of the maize sold
locally is not of the desired quality.
Presented with a challenging environment and contracting
market, CGE marshalled its feed milling segment around
cost-cutting through creative formulation, productivity andmanufacturing quality improvements. As a result, the Group
was able to increase its market share to 32% (as of Dec’10)
and firmly maintaining its market leadership.
The segment saw an impressive turnaround in its Earnings
before Income and Taxes (EBIT) to Rs.145 million. This is a
marginal improvement from the Rs.142 million recorded in
2009. The improved results stand witness to the Company’s
commitment to seize opportunities in challenging times.
(Rs' 000) 2010 2009 Change
%
Sales Value 5,579,617 4,897,282 13.93%
EBIT 144,568 141,508 2.16%
Total assets 3,391,159 4,011,370 (15.46%)
Return on
total assets
employed
4.3% 3.5% 20.68%
Segment Sales Value 2010(Rs’ 000)
2009(Rs’ 000)
Feed milling 5,579,617 4,897,282
Poultry breeder farmingoperation
1,157,777 836,457
Broiler farming andprocessed chicken sales
2,227,544 2,050,456
Poultry equipment 114,902 100,600
Silo & warehouse complexrental income
61,704 62,838
farms incurred huge losses and were forced to scale down
their DOC production.
The government imposed a 20% cess on the imported maize
to influence a better producer price for maize growers. There
is a greater interest now by the private sector in maize growing
using contract farmers and this will soon have a positive
effect on the poultry industry. The import restriction and
high import CESS on maize has deprived feed millers from
optimizing their cost of production. Local maize farmers also
took advantage of import restriction to manipulate supply to
the market, although they have no proper storage facility. As
a result the price of local maize has shot up from Rs. 34 per
kg in March 2010 to Rs. 42 per kg in 4th quarter 2010. last
year. This leads to high cost of feed production, which will
have to be passed down to the consumers eventually. CGE
has purchased more than 35,000 mt of local maize in 2010
to support of the government’s initiative.
All-in-all 2010 was a challenging but good year for the local
poultry industry.
Segmental Review
During 2010, CGE increased its profits by several folds,
demonstrating the resilience of the company through difficult
times. The year under review has been about leading the
CGE through the post recession and recovery without losing
sight of our long-term plans and core values.
Animal Number
Cock Birds 1,966,780
Hens 7,433,910
Chicks 4,617,630
Ducks 13,485
Source – Department of Census and Statistics 2010
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Ceylon Grain Elevators PLC | Annual Report 2010
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Management Discussion and Analysis
Broiler Farming and Processed Chicken Sales
Broiler Farming and Processed Chicken Sales is the Group’s
second largest revenue generator during financial year 2010.
The sale of processed chicken has increased from Rs. 2.0
billion in 2009 to Rs. 2.23 billion in 2010, contributed 22% of
the Group’s turnover. The continued challenge for the sector
is the Government mandated maximum retail price (MRP).
During the year 2010 the government allowed the maximum
retail price to be increased from Rs. 320/- to Rs. 350/- per kg,
which helped the industry to sustain their business.
The total production for the year was healthy, with a significant
increase in the EBIT from Rs. 81.6 million in 2009 to Rs.137.6
million in 2010. This is an increase of over 69%. The goodresult is attributed to our increased focus on value added
products as well as better trade and distribution efforts to
increase sales.
Breeder Farming Operations
The sale of Day Old Chicks (DOC’s) is a significant part of
the Group’s operations contributing 9.2% of Group turnover
in 2010.
This segment is made up of the sale of Broiler and Layer
DOC’s. The shortage of DOC for both the broiler and layer
during certain part of the year has driven the price of DOC
to a record high. This has prompted the government to
encourage importation of layer hatching eggs to increase
supply of layer DOC during 4th Quarter 2010.
The sales revenue was up by 38% from Rs.836.46 million in
2009 to Rs.1,157.78 million in 2010. Various breeder farmshave since increased their input and we expect a better
balance in the supply and demand of DOC in 2011, which
will lead to normalization of DOC prices.
(Rs' 000) 2010 2009 Change
%
Sales Value 2,227,544 2,050,456 8.64%
EBIT 137,614 81,599 68.65%
Total assets 394,139 325,296 21.16%
Return ontotal assets
employed
34% 25% 39.19%
(Rs' 000) 2010 2009 Change
%
Sales Value 1,157,777 836,457 38.41%
EBIT 244,731 (197,702) NA
Total assets 1,980,071 1,872,566 5.72%
Return ontotal assets
employed
12.4% -10.6% NA
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Ceylon Grain Elevators PLC | Annual Report 2010
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Management Discussion and Analysis
Poultry Equipment
The poultry equipment segment of the Group’s operations
serves to supply related poultry equipment, vaccines
and drugs to the industry. During the year under review
the segment recorded an EBIT of Rs.13 million against
Rs. 2 million reported in the previous year. Going forward,
the Company plans to further increase the growth and profit
in this segment. Sales value saw a slight increase from
Rs.101 million in 2009 to Rs. 115 million in 2010.
Silo & Warehouse Comple
The Company’s state of the art silos and warehouses provide
a distinct advantage for the Group, enabling us to exercise
great flexibility in the storing and purchasing of key raw
materials. Purchasing in bulk also ensures a better priceadvantage. During the year of reduced imported raw material,
the segment saw a lower rental income in conjunction with
an added inventory cost burden. Rental Income fell by 1.8%
from Rs. 63 million in 2009 to Rs. 62 million in 2010. For 2010
the segment’s EBIT saw a decrease of 11.65% from Rs. 40
million in 2009 to Rs. 35 million in 2010.
Ceylon Grain Elevators PLC remains focus on the key
areas for success in our business - efficient operations; a
favourable product mix and a disciplined growth strategy;
exceptional customer service, strong product brand anddistribution network along with the highest quality products
available in our industry; and a strong financial position.
With these we are well positioned for continual growth in the
coming years.
(Rs' 000) 2010 2009 Change
%
Sales Value 114,902 100,600 14.22%
EBIT 13,059 2,073 529.96%
Total assets 32,706 31,567 3.61%
Return on
total assets
employed
39.9% 6.6% 507.76%
(Rs' 000) 2010 2009 Change%
Rental Income 61,704 62,838 (1.80%)
EBIT 35,301 39,957 (11.65%)
Total assets 428,008 438,994 (2.50%)
Return on
total assets
employed
8% 9% (9.38%)
Ceylon Grain Elevators PLC | Annual Report 2010
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Ceylon Grain Elevators PLC | Annual Report 2010
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Human Resources Review
We at Ceylon Grain Elevators PLC
recognize Human Resources as one
of our most imperative resources and
always strive to maintain a ‘Healthy
Organization’ in line with the “Prima
Family” concept which is also one of
our corporate philosophies.
Recognizing the value and importance
of a well trained and skilled staffer
CGE has conducted training sessions
for over 300 man-days in 2010.
Group continued to invest more time,
expertise and money for the learning
and development of its employees in all
categories both locally and overseas.
To foster employee participation and
contribution in decisions that affects
their work, the Group facilitates the
functioning of the Employee Council
with regular meetings through which
we continuously emphasize the need
for safe working environments for
all our employees. With respect to
non-financial rewards, the Group
continues to provide a host of welfare
benefits that ensure employees are
truly rewarded beyond industry norms.
Looking to the future, CGE’s focus
is on providing its employees with
greater opportunities for training and
development so as to enable them
to reach and operate at their full
potential. We are also in the process of
identifying and nurturing successors
for key positions in the Company. With
this objective in view, we have aligned
the performance appraisal system
with Prima Group, Singapore and a
clearly defined career path geared to
retain and nurture talent.
Staff Analysis by Gender Staff Analysis by Age Staff Analysis by Designation
Training Programmes for Employees
60yrs and above
51yrs to 60yrs
41yrs to 50yrs
31yrs to 40yrs
21yrs to 30yrs
Below 21yrs
NonExecutives
Snr. Executives &Exes
Managers &Asst.Mgrs
Snr. Managers &above
Male
Female
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Ceylon Grain Elevators PLC | Annual Report 2010
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Corporate Social Responsibility Review
Corporate Social Responsibility (CSR)
is an integral part of what we do at
CGE. Our objective is to serve major
proportion of society in the localities of
CGE installations, and to make them
benefit from our CSR initiatives.
Product Leadership
We at CGE aim to provide continuous
assurance in relation to the safety of our
customers and consumers by offering
products of the highest standard. To
achieve this task, we have set strict
safety standards for our operations,
complying with statutory regulations
such as the Animal Feed Act and
other international standards such as
HACCP. In 2010 CGE has obtained the
ISO9001-2008 certification awarded by
SLSI. Our aim is to go beyond, always
delivering a product of exceptional
quality.
A Sustainable Poultry Industry
We aim to contribute to the food security
of Sri Lanka. Being the largest player
in the poultry industry, we continue to
provide the industry with quality feed,
chicks, processed chicken and poultry
equipment. Over the years, we have
invested in enhancing the technical
knowhow in the industry, by sending
our employees and partners to various
technical symposiums and seminars
which has also contributed greatly in
helping farmers to improve production
yield by means of technical assistance
and knowhow transfer.
People and Communities
We believe in contributing towards
the benefit of local communities
where we operate by helping people
to augment their living standards.
In villages surrounding our farms in
Bulathsinghala and Beruwala, we have
provided assistance two key projects.
CGE together with the Bulathsinghala
Pradeshiya Sabah embarked on a road
development and upgrade project in
2010. The scope of this project was to
upgrade the Egal Oya road of 1.8 km
leading to Rajalimanna village, which
is off the main Bulathsinghala highway.
The Rajalimanna village lies adjacent
to the Bulathsinghala farm and theupgrading of this road will greatly
benefit the people of the area.
CGE also partnered with the Beruwala
Pradeshiya Sabaha in its second CSR
project. In this project the Company
funded the cost of building material
for the construction of the new public
library in Beruwala.
The Group’s ongoing commitment to
Junior Cricket continued through to
its second year, in 2010 as well. The
Under 15 Prima Champions Trophy is
a district tournament organized by Sri
Lanka Cricket with the aim of providing
opportunities for a well rounded
education for Sri Lankan children.
Environment
Throughout the years, we have
remained committed to protecting
the environment in and around our
installations, especially in our poultry
farms. The Company’s poultry farms
operate under a Central Environmental
Authority (CEA) license which stipulates
the national standard, and monitor
compliance by regular inspections.
All of CGE farms conform to stringent
waste management protocols, hygieneand sanitation standards.
Under 15 Prima Champions Trophy
New Public Library in Beruwala Egal Oya Road Construction Taking Place in
Bulathsinghala
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Corporate Governance
Ceylon Grain Elevators PLC is
committed to adhering to the
highest ethical standards and your
Board of Directors are committed to
ensuring that the Group has a robust
governance structure in place. This
structure, the comprehensive set
of rules and guidelines, ensures
that we act with integrity, fairness,
transparency and responsibility at all
times in keeping with the trust of our
shareholders, customers, employees
as well as other stakeholders. The
Board believes that any system
which is adopted must also reflect
necessary standards of governancefor the Group and its corporate social
responsibilities. The Board also
sincerely believes that the systems in
place must meet those requirements.
The Group governance structure
fully reflects the best practices of
good corporate governance as
published by the Institute of Chartered
Accountants of Sri Lanka.
Board of Directors
The Board of Directors are responsible
to shareholders for ensuring that the
Group is appropriately managed
and that it achieves its objectives.
It meets regularly to determine the
Company’s strategic direction, to
review the Group’s operating and
financial performance and to provide
oversight that the Group is adequately
resourced and effectively controlled.
Role and Function of the Board of
Directors
The role and function of the Board of
Directors addresses a wide range of
supervision and corporate governance
issues. All members of the Board take
collective responsibility for the overall
management and performance of the
Group. The Board’s principal role and
functions are listed below.
Strategic Direction
The Board is responsible for
establishing corporate policies, overall
strategic objectives & corporate plans
and providing general direction to
the Company and Management
Committee. The Group has laid down
schedule of issues and decisions
which may only be approved by the
Board as monitoring controls. These
include approval by the Board on
all matters relevant to an overall
strategy, annual budget, business
plan, management information,
reported financial statements,
dividends, investments and business
acquisitions.
The Directors also review and monitorthe Group’s performance against set
objectives on an ongoing basis and
direct the management committee onspecific action points.
Communication with Shareholders
The Group places considerable
importance on communication withshareholders and engages with themon a wide range of issues.
The Board bears the responsibilityof reporting statutory and relevant
information to shareholders in atimely and accurate manner. To
ensure transparency at all times,the Board has laid down policiesin relation to the keeping of proper
books of accounts and preparation of
financial statements so as to give anaccurate and fair picture of the statusof the Group. Quarterly and annualresults are prepared and presented
in accordance with the Sri LankaAccounting Standards, the CompaniesAct No. 07 of 2007, Colombo StockExchange and Securities & Exchange
Commission regulations.
Risk Management
Board members evaluate the Group’srisk factors and current control systemsand make policy recommendations
on risk elements and improvement ofcontrols.
The Board oversees the setting upof the Risk Management Process so
that there is an ongoing system inplace for identifying, evaluating andmanaging the significant risks facedby the Group in protecting its assets
and processes. The risk managementprocess is regularly reviewed by theBoard on the basis of the guidelinesset by the relevant regulatory bodies.
The Board of Directors, whilst
maintaining its overall responsibilityfor managing risk within the Group,
has delegated the detail, designand operation of the system ofinternal controls to the ManagementCommittee.
Ceylon Grain Elevators PLC hasin place a well designed controlframework comprising of clear
structures and accountabilities, wellunderstood policies, procedures andbudgeting & review processes. Eachbusiness segment of the Group has
a formal management structure with
clear definition of responsibilitieswhich operates within well definedpolicies, covering the areas of
product safety, financial matters,health and safety, the environment,human resources, operations matters,purchasing and engineering.
Compliance
The Board is responsible for
ensuring that the Group is in alwaysin compliance with laws, regulationsand other standards as laid downby regulatory bodies of the country.
The Board is regularly updated withinformation pertaining to complianceand directs the ManagementCommittee with regard to requiredaction steps.
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Corporate Governance Cont.
Appointments to Board Committees
The Board of Directors are responsible
for appointing members to the various
Board Committees and ensure the
Committees act as per Terms of
Reference provided by the Board.
The Board appoints Directors to the
Audit and Remuneration Committee.
The Board also appoints Directors
and key senior management staff to
the Management Committee. Each
Committee acts by its own set of
Terms of Reference. An expanded
review of each Committee functionsis provided further down in this report.
Board Composition
The Board of Directors comprises of
six (6) members. CGE is committed
to having a balanced Board to
ensure long-term value addition for
all stakeholders. The Group believes
the correct mix of Executive, Non-
Executive and Independent Non-
Executive Directors with an intimate
knowledge of the industry and
business will enable the Company tomake better decisions. In keeping with
this belief, the Board is comprised of
two (2) Executive Directors, two (2)
Non-Executive Directors, and two (2)
Independent Non-Executive Directors.
The Board composition complies with
the Listing Rules of the Colombo
Stock Exchange, which requires
composition of a minimum of 2 or 1/3
of the Board to be Independent Non-
Executive Directors. A brief profile of
each Board member is presented onpage 16 of this report.
Board minutes and reports are
circulated prior to Board meetingsso as to enable the Directors to studyand familiarise themselves with theinformation beforehand. The Directors
seek clarification or amplificationwhere necessary.
Board Committees
To ensure a good governancepractices within the Group, theBoard of Directors have established
special committees at the Boardlevel to monitor, review and enhanceaccountability. These Board
Committees of CGE are as follows;
· Management Committee· Audit Committee· Remuneration Committee
These Committees carry out theirduties and responsibilities as perTerms of Reference set out by the
Board. The proceedings of themeetings are regularly communicatedto the Board.
Board Meetings
The Board met once during the yearto discuss and review the overall
strategic development of the Group.The Chairman is responsible forleading the Board, facilitating theeffective contribution of all members,
leading the business, implementingstrategies and ensuring that the Boardoperates effectively in the interests ofshareholders.
The Company Secretaries, SSPCorporate Services, are responsible,on behalf of the Chairman, for ensuring
that all Board meetings are properly
conducted and that Directors receiverelevant information prior to themeetings. They also guide the Board
in ensuring that good governancerequirements are considered andimplemented.
At Board meetings the Group GeneralManager updates the Board oncurrent business matters and reportson the latest financial position. The
Board reviews the key performanceindicators. (KPIs)
The Management Committee
The Management Committee isresponsible for implementingthe Group strategy, monitoringbusiness performance, approving
The Chairman of the Board
The Chairman of the Board is Mr.Cheng Chih Kwong, Primus. He is theExecutive Chairman. The Chairman is
responsible for leadership of the Boardand ensuring its effectiveness on allaspects of its role. He chairs Boardmeetings and provides direction
during meetings. He is responsible forthe Board’s composition and focus.The Chairman facilitates the effectivecontribution of Non-Executive
Directors in particular and ensurespositive relations between Executiveand Non-Executive Directors. With
a view to have a proper balance ofpower on the Board, the posts ofChairman and Executive Directorhave been separated with clear rolesdefined for each.
Training and Development
The Board believes strongly in the
development of all members ofits team, including Directors. Oninduction, each new Director goesthrough an induction programme
to ensure that he has the requiredknowledge base to carry out his
functions effectively. The programmeis conducted over a series of months
with presentations from key membersof senior management and visits to theGroup’s main operating businesses.Further follow-up meetings are
arranged where a Director requires adeeper understanding on a particularitem.Supply of Information
Board members are supplied withinformation in a timely, accurate& comprehensive manner so as
to discharge its duties effectively.
Name of Director Capacity Shareholding
Mr. Cheng Chih Kwong,
Primus
Executive
Chairman
397
Mr. Tan Beng Chuan Executive Director & Group
General Manager
Nil
Mr. Cheng Chih Cheng,
Robert
Non-Executive Director 397
Mr. Cheng Chih Hui,
Peter
Non-Executive Director 397
Dr. Wickrema Sena
Weerasooria
Independent Non-Executive
Director
Nil
Mr. Sunil
Karunanayake
Independent Non-Executive
Director
Nil
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Corporate Governance Cont.
budgets and capital expenditure for
recommendation to the Board and
ensuring efficient management of the
Group.
The Management Committee is
selected and appointed by the
Board of Directors. The Board has
delegated adequate authority to the
Management Committee in order to
implement the Board decisions and
the Committee exercises this authority
within the policy framework stipulated
by the Board.
The Management Committee meetsonce a month to discuss and evaluate
the segmental performance of the
group, business development plans,
financial and operating budget
and forecasts, capital expenditure
proposals, management issues and
key performance indicators (KPI).
Reports from the Management
Committee on segmental performance
are reviewed by the Board. The Board
also receives regular reports fromexecutives and sectional heads onkey risk areas.
In addition to mentioned corporateguidelines, the ManagementCommittee has the freedom to run thebusiness as they deem fit to meet the
demands of the Group’s customersand the strategic & financial targetsthat have been set by the Board. Thederegulated structure enables the
Group to take decisions quickly, toinnovate at a speed demanded bythe customer and to give customers a
product and service that is tailored totheir requirements.
Remuneration Committee
The Remuneration Committeeis responsible to the Board fordetermining the remuneration policyfor Executive Directors and SeniorManagers. The detailed Remuneration
Compliance Status with the Corporate Governance Rules of the Colombo Stock Echange (Section 7 of the Listing
Rules of Colombo Stock Exchange.)
Committee report appears on page 15
of this Report.
Audit Committee
The Audit Committee is responsiblefor assisting the Board of Directors infulfilling its oversight responsibilitiesin the financial reporting process.The detailed Audit Committee reportappears on page 14 of this Report.
Going Concern
The Group has considerable financialresources together with a diversified
business model, with a spread ofbusinesses. After making enquiries,the Directors have a reasonableexpectation that the Company andthe Group as a whole have adequateresources to continue in operationalexistence for the foreseeable future.For this reason, they continue to adopt
the going concern basis in preparing
the accounts.
Corporate Governance Principle Compliance Details
Non-Eecutive Directors
Two or one third of the total number of Directors shall beNon-Executive Directors, whichever is higher.
Four of the Directors are classified as Non-ExecutiveDirectors (out of a total of six)
Independent DirectorsTwo or one third of Non-Executive Directors which ever ishigher shall be independent.
Each Non-Executive Director should submit a declarationof independence/ non-independence in the prescribedformat.
Two of the Directors are classified as IndependentDirectors (out of a total of six).
Each Non-Executive Director has submitted hisdeclaration of independence in the prescribed formto the Board.
Disclosure relating to Directors
Names of independent Directors should be disclosed inthe Annual Report.
A brief resume of each Director should be included in theAnnual Report including the area of Expertise.
The names of the Independent Directors are providedon page 16 of the Annual Report.
A synopsis of the Directors is provided on pages 16of the Annual Report.
Disclosure relating to DirectorsThe basis for the Board to determine a Director isIndependent, if criteria specified for Independent is notmet.
The Board has determined that only Two of the NonExecutive Directors out the Six satisfy the criteria for“Independence” as set out in the Listing Rule.
Remuneration Committee
A Listed Company shall have a Remuneration Committee.The Committee shall comprise of Non-Executive Directors.A majority of who shall be independent.
The Committee consists of three members of whichtwo are Independent Non-Executive Directors.
Please refer page 15 of the Annual Report for moredetails on the Committee and its functions.
Audit CommitteeA Listed Company shall have an Audit Committee. Shallcomprise of Non-Executive Directors majority of whom
shall be independent. Chairman of the Committee shouldbe a Member of a recognized professional accountingbody.
The Committee consists of three members of whichtwo are Independent Non-Executive Directors. TheChairman of the Committee is also a member of a
recognised accounting body (ICASL).
Please refer page 14 of the Annual Report for moredetails on the Committee and its functions.
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Audit Committee Report
The Audit Committee is responsible for maintaining
an appropriate relationship with the Group’s external
auditors and for reviewing the Company’s internal financial
resources, controls and the audit process. The Committee
assists the Board in seeking to ensure that the financial and
non-financial information supplied to shareholders presents
a balanced assessment of the Company’s position.
The members of the Audit Committee are appointed
by the Board of Directors from amongst the Directors of
the Company and consist of two (2) members. Both the
members of the Audit Committee are Independent Non-
Executive Directors, including the Committee Chairman.
In addition, Mr. Sunil Karunanayake is a Member of the
Institute of Chartered Accountants of Sri Lanka. The
composition of the Committee fulfils the requirements set
out by the Listing Rules of the Colombo Stock Exchange.
Meetings of the Audit Committee were held at such times as
the Audit Committee deemed appropriate and necessary.
It is required that the Committee meet at least once a year.
In the year under review the Committee met four (4) times.
Name Capacity No. of
meetings
held
No. of
meetings
attended
Mr. SunilKarunanayake
Chairman / Independent
Non-Executive
Director
4 4
Dr. Wickrema
Sena
Weerasooria
Mr. Darshana
De Silva
Member /
Independent
Non-Executive
Director
Secretary /
Group Internal
Auditor
4
4
4
4
The Company’s Internal Auditor acts as the Secretary to the
Audit Committee. The Executive Director of the Company,
Mr. Tan Beng Chuan , the General Manager, Mr. Tan Hoe
Lai, and the Financial Controller, Mr. K. A. R. S. Perera,
were also present at the meetings upon invitation.
During the year, the Audit Committee received reports from
and held discussions with management and the auditors.
In discharging its duties during the year the Committee
engaged in the following activities.
· The Committee has approved the auditors’ terms
of engagement, including their remuneration and in
discussion with them, has assessed their independence
and objectivity and recommended their re-appointment
at the annual general meeting.
· The Committee also reviewed;
· The financial statements published in the name of
the Board and the quality and acceptability of the
related accounting policies, practices and financial
reporting disclosures
· The scope of the work of the Group finance
department, reports from that department
· The effectiveness of the systems for internal control,
risk management and compliance with financial
services legislation and regulations
· The results of the external audit
· The reports from the internal and external auditors
on audit planning and their findings on accounting
and internal control systems
Sunil Karunanayake
Chairman, Audit Committee
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Remuneration Committee Report
The overall remuneration policy of the Company aims to:
· Provide alignment between remuneration and the
Company’s business objectives, so as to attract and
retain executive management personnel of a high
caliber.
· Motivate executive management personnel to achieve
challenging performance levels and reward them for
doing so.
· Align executive rewards with shareholder value.
· Recognise both individual and corporate achievement.
During 2010, the Remuneration Committee reviewed
the incentive arrangements for senior executives andconcluded that the current framework was satisfactory.
The total of Directors’ remuneration paid during the
year under review is set out in Note 35 to the Financial
Statements.
Dr. Wickrema Sena Weerasooria
Chairman, Remuneration Committee
The Remuneration Committee is responsible to the Board
for determining the remuneration policy for Executive
Directors and senior managers.
The members of the Remuneration Committee are appointed
by the Board of Directors from amongst the Directors of the
Company and consist of two (2) members. Both members
of the Remuneration Committee are Independent Non-
Executive Directors. The composition of the Committee
fulfils the requirements set out by the Listing Rules of the
Colombo Stock Exchange.
Meetings of the Remuneration Committee were held at such
times as the Remuneration Committee deemed appropriate
and necessary. It is required that the Committee meet atleast once a year. In the year under review the Committee
met four (4) times. During its deliberations, the Committee
sought inputs and for some meetings invited the Company’s
Executive Director, General Manager and Financial
Controller.
Name Capacity No. of
meetings
held
No. of
meetings
attended
Dr. WickremaSena
Weerasooria
Chairman / Independent
Non-Executive
Director
4 4
Mr. Sunil
Karunanayake
Mr. M. C. M.
De Costa
Member /
Independent
Non-Executive
Director
Secretary /
AGM (Person-
nel, Security &
General Affairs)
4
4
4
4
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Board of Directors
Mr. Cheng Chih Kwong, Primus
Chairman and Chief Executive Officer
Mr. Cheng Chih Kwong, Primus is the
Chairman of the Prima Group and
its subsidiary companies. He is a
Certified Practicing Accountant (CPA)
- Australia and also holds a Diploma
in Business Studies. Mr. Cheng Chih
Kwong, Primus is the Patron of Yunhua
Citizens’ Consultative Committee and
has served has the former Patron of
the Ulu Pandan Community Centre
Building Fund Committee (1996) and
as the Vice-Chairman (general Affairs
Committee), Singapore Chinese
Chamber of Commerce & Industry.
Mr. Tan Beng Chuan
Executive Director & Group General
Manager
Mr. Tan Beng Chuan has been a
Director of the Company & its subsidiary
companies since 2003. He serves as
a Director of Three Acre Farms PLC
and its subsidiaries and also Ceylon
Agro-Industries Ltd since 2003. He is
the Group General Manager of Prima
Group of Companies, Sri Lanka since
2003. He holds a B.Sc. Hon in Chemical
Engineering from University of Surrey,
UK and a MBA in Management &
Marketing from University of Warwick,
UK. Mr. Tan Beng Chuan is currently
the President Mentor & ex President
of Singapore (Sri Lanka) Club and
Executive Committee Member of Sri
Lanka-Canada Business Council.
Mr. Cheng Chih Cheng, Robert
Non-Executive Director
Mr. Cheng Chih Cheng, Robert has
been a Director of the Company since
1983. He also serves as a Director
at Setia Pte Ltd (Singapore), Supra
Limited (Hong Kong), Supra Finance
(Hong Kong), Prima Ceylon Limited (Sri
Lanka), Cheng Wang Holding Limited
(Hong Kong), Hapiways Management
Services Pte Ltd (Singapore) and also
as the Assistant to the CEO at Prima
Limited (Singapore).
Mr. Cheng Chih Hui, Peter
Non-Executive Director
Mr. Cheng Chih Hui, Peter has been a
Director of the Company since 1995.
He also serves as a Director at Setia
Pte Ltd (Singapore), Supra Limited
(Hong Kong), Supra Finance (Hong
Kong), Prima Ceylon Limited (Sri
Lanka), Cheng Wang Holding Limited
(Hong Kong), Hapiways Management
Services Pte Ltd (Singapore) and also
as the Assistant to the CEO at Prima
Limited (Singapore).
Mr. Sunil Karunanayake
Independent Non-Executive Director
Mr. Sunil Karunanayake has been
a Director of the Company since
2009. He holds fellowships of the
Institute of Chartered Accountants
of Sri Lanka & Chartered Institute of
Management Accountants (UK) and a
MBA from the Post Graduate Institute
of Management of the University of
Sri Jayawardenapura. He has also
obtained a Diploma in Commercial
Arbitration from the Institute of
Commercial Law and Practice. Mr.
Sunil Karunanayake was formerly a
Director/Secretary of Brooke Bond
Ceylon Limited and Commercial
Controller of Unilever Ceylon Ltd -
Tea Division. Currently he serves
as the Chief Financial Consultant at
Associated Newspapers of Ceylon Ltd.
in addition, he also serves two other
listed companies in the capacity of
Non - Executive Director.
Dr. Wickrema Sena Weerasooria
Independent Non-Executive Director
Dr. Wickrema Sena Weerasooria
has been a Director of the Company
since 2009. He holds LLB (Hons.)
and Ph.D (London). He is an Attorney-
at-law - Supreme Court of Sri Lanka,
a Barrister and Solicitor - Supreme
Court of Victoria. Dr. Wickrema Sena
Weerasooria is the well known lawyer
and legal academic. He was formerly
Secretary of the Ministry of Plan
Implementation, Sri Lanka’s High
Commissioner to Australia, Consultant
to the Central Bank and a former
Associate Professor of Law Monash
University, Australia. He is currently a
Senior Consultant to the Post Graduate
Institute of Management (PIM).
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Risk Management Review
The purpose of the Risk Management
Review of the annual report is to focus
on the risk management systems and
processes that are in place operation
across Ceylon Grain Elevators PLC
(CGE). The Risk Management Review
also aims to provide assurance that
the activities undertaken leads to the
consummation of an organization
which is progressing towards better
understanding and thereby more
efficient mitigation of various risk
factors.
Risk management can be definedas the systematic application of
management policies, procedures
and practices for the establishment
of relevant context, identification,
analysis, mitigation, monitoring and
thereby communication of all risks.
The risk management framework at
CGE is effectively integrated into
the planning process. This planning
process focuses on efficient delivery
and achievement of objectives via
effective mitigation of relevant and
related risks.
Risks are identified and evaluated
at appropriate levels throughout
the organisation through an agreed
process. The process is reviewed by
the Management Committee as part
of an the Company’s organisational
and operational approach to risk
management.
CGE’s risk management process
ensures thorough identification and
understanding of the risks to which
we are exposed. Our process also
guarantees that we create and
implement an effective plan to prevent
losses or pauperize the impact of
any loss in the event that it occurs.
The Group’s risk managementprocess includes strategies and
techniques targeted at recognition
and appropriate confrontation of these
threats.
The Group’s system of internal control
covers policies and procedures,
enabling significant strategic and
operational risks which require
efficient management. This includes
the system of financial controls which
operate throughout the Group, and
processes and systems which focus
on monitoring and reporting matters
related to the continuing effectiveness
of the system of internal controls.
The risk management process at
CGE provides a clear and structured
approach to identifying risks. Having a
clear understanding of all risks, allows
the Group to measure, prioritise and
thereby take the pertinent actions to
truncate losses. Risk management
has other benefits for the Group,
including saving resources such as
time, assets, income, property and
people, protecting the reputation
and public image of the organisation
and preventing or reducing legal
liability and increasing the stability of
operations.
To be effective, risk management must
be recognised as being an integral
part of good management practice
and should be part of an organisations’
business, and thereby become a part
of its practices, business planning
and continuity. When this is achieved,
risk management becomes a matter of
concern for individuals throughout the
organisation .CGE’s risk management
structure, its planning and reporting
systems and review processes provide
a robust and tenacious basis for the
integration of risk management into the
entity’s entire management process.
The principal risks associated with the
Group’s activities are:
Risk Factor Risk Mitigating Strategies
Echange Rate Risk
Exchange rate risk arises from negative changes in
exchange rates in terms of foreign currency transactions.
The Group imports a large percentage of raw materials and
possesses and also has substantial loans denominated in
foreign currencies. In the event of a decline in the value of
the Rupee against foreign currencies, there is an increase in
raw material prices affecting sales margins and increasing
in the debt burden in rupee terms.
As a policy, changes in the international prices of raw
materials are passed on to the selling prices of the Group’s
products in the domestic market. This in effect provides
a natural hedge against changes to global prices and
fluctuations in the value of the rupee. A substantial fall
of the Rupee against the US Dollar however can have a
negative impact on the Group’s operations and finances.
Although the Group is able to increase its products’ selling
prices, these adjustments may require time depending on
the severity of the currency fall and existent government
price controls.
The Group also utilises effective treasury operation
strategies such as forward bookings, swaps etc. to negate
unfavorable effects of current fluctuations.
Credit Risk
Credit risk is the risk of financial losses arising due to the
unwillingness or inability of counter-parties to meet their
financial or contractual obligations in time and in full.
The Group encourages customers to purchase goods on
cash terms by providing discounts for cash payments. This
strategy has proved extremely successful.
In addition to this, thorough credit checks pertaining to
credit worthiness are performed on customers pertaining
to credit worthiness before granting sales on credit. The
Group’s Finance and Sales Divisions closely monitor credit
sales to ensure repayment on due dates and also tie future
sales based on outstanding value.
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Risk Management Review Cont.
Risk Factor Risk Mitigating Strategies
Human Capital & Labour Risk
Human capital risk is associated with losing talented
employees and environment of unpleasant labour relations .
The Group uses a series of strategies in motivating,
developing, and retaining its human capital.
The Group continuous provision of a comprehensive and
ongoing career development programme for its staff and
workers. The programme focuses on helping employees to
achieve their optimum potential and there by improve job
performance and satisfaction. CGE lays greater emphasis
on training and development of staffs with potential for
career development, providing them with the necessary
know-how and appropriate for personal development.
CGE strives to maintain healthy relationships with all
employees through regular dialogues and discussions.
The Group ensures compliance with all regulatory
requirements with regard to the benefits applicable to
employees.
Finally CGE provides attractive financial and performance
based incentives which are in line with or above the industry
standards.
Information Technology Risk
Technology risk is the risk associated with computer
security, hardware, software and other information
technology systems failing and causing disruption to
business operations of the Group.
A well thought-out and secure Information Technology
security infrastructure has been implemented organisation
wide. The security structure includes; recovery strategies,
data back-ups stored in off site locations, regular updating
of virus scanners and firewalls, maintenance of spare
servers and other critical ICT hardware components, andregular IT audits to ensure compliance relevant to security
structure.
Procurement Risk
Procurement risk relates to the availability of quality raw
materials, in the needed quantity, on the required date
and at the right price. Obtaining the right raw materials in
the desired manner is essential for the Group’s operation.
Any supply shortfall could adversely affect the ability of the
Group to fulfil the demands of customers, which will in turn
impact the bottom line.
The Group strives to address procurement risk by having
multiple sources from diverse geographic regions (both
locally and internationally) for all raw materials. CGE also
fosters the development of long term relationships with
its suppliers to gain influence and thereby enters into
contractual agreements.
Risk of Outbreaks of Disease
Outbreaks of communicable animal diseases can result
in significant losses to poultry flocks within a very short
period of time. In the past few years, the possibility of
Avian Influenza transmitting to human beings has caused
some concerns among the public about consuming poultry
products.
The management of the Group extends the services of staff
in providing training to the farmers and out growers with
regard to identifying and controlling disease outbreaks.
The staff also offer other services such as veterinarian
services in order to ensure the general health of animals.
These services have proved invaluable to both the farmer
and the Group in monitoring the development of the birds
and mitigating the risk of disease.
Regulatory and Compliance Risk
Regulatory risk is associated with changes in Government
policies, laws, regulations and statutes. Compliance risk
relates to a company being able to comply with all the
rules and laws applicable to a country. Both regulatory and
compliance risk factors can affect the business activities of
the Group.
The Group closely monitors changes to the regulatory
framework and ensures that CGE is always in compliance
with all requirements.
The Group works in a collaborative manner with trade
associations in the industry, the All Island Poultry
Association, and other trade chambers in advising andassisting regulatory bodies on developing and adjusting
regulations.
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Risk Management Review Cont.
Risk Factor Risk Mitigating Strategies
Competitive Risk
Competitive risk is the risk that customers will purchase
competitor or alternative products due to variances in the
product offering. The Group recognises the importance
of sustaining mutually beneficial relationships with its
customers, poultry farmers, dealers’ and out growers.
Providing customers with a high quality product, as and
when they require it, is the basis of customer satisfaction. In
the event of failing to do so, the Group runs a risk of losing
market share and thereby incurring financial losses.
The Group and its individual companies are in a continuous
dialogue with its customers to keep abreast of changing
trends, needs and purchasing behaviour of the market
place. By closely monitoring customers, CGE is in a position
to realign its product offering to match current customer
needs and wants.
CGE captures customer feedback on future needs, tracks
social and cultural trends that influence consumer demand
and focuses on building customer loyalty to ensure the
continuation of repeat purchasing trends. A number
of indicators such as product return data, customer
complaint indices, the number of interactions between
the Group and its customers, the churn rate amongst
the top twenty percent of customers and revenue growthfactors amongst targeted customer groups, are regularly
measured to gauge progress in managing these risks
effectively. Customer satisfaction in terms of products and
services is also monitored carefully, through initiatives to
establish customer satisfaction as the Group’s number
one priority and to use customer feedback as a catalyst for
improvement.
Key management personnel also work closely with the
farmers and the out growers to ensure birds of the highest
quality possible. This involves various activities including
sharing technical know-how, guiding them in setting up
farm infrastructure in accordance with the latest rearing
techniques.
In addition, CGE has put in place the industries’ best quality
standard process and ensures, via its quality assurance
systems, that a high level of quality is maintained in all
products and services marketed by the Group.
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Report of the Directors on the State of Affairs of the Company
The Board of Directors is pleased to present their Report and
the Audited Financial Statements of the Company for the year
ended 31 December 2010. The details set out herein provide
pertinent information required by the Companies Act, No.7
of 2007, the Colombo Stock Exchange Listing rules and are
guided by recommended best accounting practices.
1. Principal Activities
The principal activities of the Company are
· manufacture and sale of poultry feed and other
animal feed
· manufacture and sale of aquatic feed
· import and sale of poultry equipment and vaccines
· operation of outgrower farms; and· poultry processing and distribution
2. Review of Performance for the year ended 31
December 2010 and Future Developments
A review of the Company’s performance during the
year, with comments on financial results for the year
ended 31 December 2010 and future developments
is contained in the Chairman’s and Chief Executive’s
Review (pages 2 to 4) and Management Discussion and
Analysis (pages 5 to 8). These reports, together with the
Financial Statements reflect the state of affairs of the
Company.
3. Financial Statements
The financial statements of the Company are given in
pages 25 to 59.
4. Independent Auditors’ Report
The Independent Auditors’ Report on the financial
statements is given on page 24.
5. Accounting Policies
The accounting policies adopted in preparation of
financial statements are given on pages 29 to 34. There
were no material changes in the Accounting Policies
adopted.
6. Interest Register
The Company maintains an Interest Register and the
particulars of those Directors who were directly or
indirectly interested in a contract of the Company are
stated there in.
7. Directors’ Interest
None of the Directors had a direct or indirect interest in
any contracts or proposed contracts with the Company
other than as disclosed in the Note 35 to the financial
statement.
8. Directors Remuneration and Other Benefits
Directors’ remuneration in respect of the Company for
the financial year ended 31 December 2010 is given in
Note 35 to the financial statements.
9. Corporate Donations
Donations made by the Company amounted to Rs.
35,000/- (2009 - Rs. 137,197/-). No donations were made
for political purposes.
10. Directorate
The names of the Directors who held office during the
year are given below.
Mr. Cheng Chih Kwong, - Chairman & Chief
Primus Executive Officer
Mr. Tan Beng Chuan - Executive Director &
Group General Manager
Mr. Cheng Chih Cheng, - Non Executive Director
Robert
Mr. Cheng Chih Hui, Peter - Non Executive Director
Dr. Wickrema Sena - Independent Non
Weerasooria Executive Director
Mr. Sunil Karunanayake - Independent Non
Executive Director
In accordance with the provisions of Article 87 of the
Articles of Association of the Company, Mr. Cheng Chih
Cheng, Robert retires by rotation and offers himself for
re-election.
A Resolution for the re-appointment of Dr. Wickrema
Sena Weerasooria, who was 70 years of age on 17th
July 2009 will be proposed at the Annual General
Meeting in terms of Section 211 of the Companies Act
No.7 of 2007. A Special notice has been given of this
intention.
11. Directors’ Shareholdings
As at As at
31/12/2010 31/12/2009
Mr. Cheng Chih Kwong, Primus 397 397
Mr. Tan Beng Chuan Nil Nil
Mr. Cheng Chih Cheng, Robert 397 397
Mr. Cheng Chih Hui, Peter 397 397
Dr. Wickrema Sena Weerasooria Nil Nil
Mr. Sunil Karunanayake Nil Nil
12. Auditors
The financial statements for the year ended 31
December 2010 have been audited by Messrs KPMG
Ford Rhodes Thornton & Co., Chartered Accountants,
who express their willingness to continue in office.
In accordance with the Companies Act No.07 of
2007, a resolution relating to their re-appointment
and authorising the Directors to determine their
remuneration will be proposed at the forthcoming
Annual General Meeting.
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Report of the Directors on the State of Affairs of the Company Cont.
The Auditors Messrs KPMG Ford Rhodes Thornton &
Company were paid Rs. 1,950,000 (2009 - Rs.
1,800,000) as audit fees by the Company. No non audit
work was performed by them during the year.
As far as the Directors are aware, the Auditors do not
have any relationship (other than that of an Auditor) or
any interest in the Company.
13. Group Turnover
Group Turnover amounted to Rs. 8,009 Million (2009 -
Rs. 6,899 Million).
14. Dividends
The Directors propose for payment a First and Final
Dividend of Rs. 1.00 per share for the year ended 31st
December 2010.
15. Investments
Details of investments held by the Company are
disclosed in Note 16 & 17 to the Financial Statements.
16. Intangible Assets
An analysis of the intangible assets of the Company,
additions and impairments during the year and
amortisation charged during the year are set out in Note
15 to the financial statements.
17. Property, Plant and Equipment
An analysis of the property, plant and equipment of the
Company, additions and disposals made during the
year and depreciation charged during the year are set
out in Note 13 to the financial statements.
18. Capital Commitments
Capital expenditure contracted for as at 31 December
2010 for which no provision has been made in the
financial statements are set out in Note 30 to the
financial statements.
19. Stated CapitalThe issued and fully paid up stated capital of the
Company is Rs. 1,017,996,000/- divided into 60,000,000
ordinary shares. There was no change in the stated
capital of the Company during the year.
20. Reserves
Total reserves as at 31 December 2010 amounted to Rs.
572.8 million (2009 - Rs. 352.9 Million). The movement of
reserves is shown in the statement of changes in equity
on page 27.
21. Events subsequent to the Balance Sheet date
No significant events have occurred since the BalanceSheet date other than those disclosed in Note 36 to the
financial statement.
22. Employment Policies
The Company identifies Human Resources as one of
the most important factors bequeathing the survival
and growth of the Company in the current competitive
business environment. While appreciating and valuing
the service of our employees, a greater effort is being
made to hire the best talent from external sources, to
bolster weak areas and continue to maintain the highest
standards prevalent in the industry. Human Resource
Head Count is considered as a key indicator and
recruitment is based on annual manpower planning.
The Company provides equal opportunities. Greater
emphasis is given to the areas of training, professional
development and ethical business practices. All
rewards and career opportunities are based on merit
and on performance.
23. Taation
The tax position of the Company is given in Note 11 to
the financial statements.
24. Share Information
Information relating to earnings, dividend, net assets
and market price per share is given on page 60
and Information on share trading is given on page 60.
25. Disclosure as per CSE Rule No.8.7 (i) (5)
2010 2009Rs. Cts. Rs. Cts.
Market price per share as at
31 December 74.70 14.25
Highest/lowest share price 75.50/12.75 16.00/6.75
Earnings per share 3.66 2.35
Dividend per share -. -
Net assets per share 26.51 22.85
26. Shareholding
The number of registered shareholders of the Company
as at 31 December 2010 was 3,714. The distribution
and analysis of shareholdings are given on page 62.
27. Major Shareholders
The twenty largest shareholders of the Company as at
31 December 2010, together with an analysis are given
on page 62.
28. Statutory Payments
The Directors to the best of their knowledge and belief
are satisfied that all statutory payments in relation to the
Government and the employees have been made on
time.
29. Environment, Health and Safety
Company policy continues to ensure that allEnvironmental, Health and Safety regulations are
strictly adhered to, minimizing any adverse effects
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Report of the Directors on the State of Affairs of the Company Cont.
to the environment. Recycling of waste is carried out
where ever possible. Employees are provided with
all personal protective equipment as Health and well
being which are our prime concerns. Fire fighting and
safety systems are in place to safeguard the Company
interest. Plans are in progress to introduce emission
free machinery for in-house operations to eliminate air
pollution.
30. Corporate Governance / Internal Control
The Corporate Governance and Internal Control
Policies of the Company are given on pages 11 to 13.
31. Contingent Liabilities
Contingent Liabilities as at 31 December 2010 are set
out in Note 29 to the financial statements.
32. Annual General Meeting
The 28th Annual General Meeting of the Company
will be held at ICASL Auditorium, 30 A, Malalasekera
Mawatha, Colombo-07 on Thursday 21 April 2011 at
10.00 a.m.
By Order of the Board of
Ceylon Grain Elevators PLC
(Sgd.) (Sgd.)
Cheng Chih Kwong, Primus Tan Beng Chuan
Chairman & Executive Director &
Chief Executive Officer Group General Manager
(Sgd.)
S S P Corporate Services (Private) Limited
Secretaries
Colombo
21 March 2011
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Statement of the Directors’ Responsibility
The responsibility of the Directors in
relation to the financial statements of
the Company and the Group, is set
out in the following statement. The
responsibility of the auditors, in relation
to the financial statements, is set out in
their report appearing on page 24.
The Companies Act No. 07 of 2007
requires the Directors to prepare
financial statements for each financial
year which give a true and fair view of
the status of affairs of the Company and
the Group and of the profit or loss forthat year.
In preparing these financial statements
the Directors are required to:
* Select suitable accounting policies
and then apply them consistently;
* Make judgments and estimates that
are reasonable and prudent;
* State whatever applicableaccounting standards have been
followed, subject to any material
departures and explained in the
financial statements; and
* Prepare the financial statements on
a going concern basis unless it is
inappropriate to presume that the
Group will continue in business.
The Directors are responsible for
keeping proper accounting records
which disclose with reasonable
accuracy at any time the financial
position of the Company and the Group
and to ensure that the financial
statements comply with the Companies
Act.
The Directors are also responsible
for taking such steps as they deem
reasonable or required in order to
safeguard the assets of the Company
and the Group and in this regardto give proper consideration to
the establishment of appropriate
internal control systems with a view
to prevent and detect fraud and other
irregularities.
The Directors are required to prepare
the financial statements to provide
the auditors with every opportunity to
take whatever steps and undertake
whatever inspections they may
consider to be appropriate to enablethem to express their audit opinion.
Compliance Statement
The Directors are of the view that they
have discharged their responsibilities
as set out in this statement. They also
confirm that to the best of their
knowledge, all statutory payments
payable by the Company and its
subsidiaries as at the Balance Sheet
date have been paid or where relevant,
provided for.
Ceylon Grain Elevators PLC
(Sgd.)
Cheng Chih Kwong, Primus
Chairman &
Chief Executive Officer
(Sgd.)
Tan Beng Chuan
Executive Director &
Group General Manager
Colombo
21 March 2011
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Independent Auditors’ Report
TO THE SHAREHOLDERS OF CEYLON GRAIN ELEVATORS PLC
Report on the Financial Statements
We have audited the accompanying financial statements of Ceylon
Grain Elevators PLC (the “Company”), and the consolidated
financial statements of the Company and its subsidiaries (the
“Group”) as at December 31, 2010 which comprise the balance
sheet as at December 31, 2010, and the income statement,
statement of changes in equity and cash flow statement for the year
then ended, and a summary of significant accounting policies and
other explanatory notes as set out on pages 25 to 59 of this Annual
Report.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair
presentation of these financial statements in accordance withSri Lanka Accounting Standards. This responsibility includes:
designing, implementing and maintaining internal control relevant
to the preparation and fair presentation of financial statements
that are free from material misstatement, whether due to fraud or
error; selecting and applying appropriate accounting policies;
and making accounting estimates that are reasonable in the
circumstances.
Scope of Audit and Basis of Opinion
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in
accordance with Sri Lanka Auditing Standards. Those standards
require that we plan and perform the audit to obtain reasonable
assurance whether the financial statements are free from materialmisstatement.
An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting policies used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation.
We have obtained all the information and explanations which
to the best of our knowledge and belief were necessary for the
purposes of our audit. We therefore believe that our audit provides
a reasonable basis for our opinion.
Opinion
Company
In our opinion, so far as appears from our examination, the
Company maintained proper accounting records for the year
ended December 31, 2010 and the financial statements give a
true and fair view of the Company’s state of affairs as at December
31, 2010 and its profit and cash flows for the year then ended in
accordance with Sri Lanka Accounting Standards.
Group
In our opinion, the consolidated financial statements give a true and
fair view of the state of affairs as at December 31, 2010, the profit
and cash flows for the year then ended, in accordance with SriLanka Accounting Standards, of the Company and its subsidiaries
dealt with thereby, so far as concerns the members of the Company.
Emphasis of Matter
Without qualifying our opinion, we draw attention to.
The disclosures made in Note 29(a) to the financial statements
which states the position regarding the charge made against the
Company by the Director General of Custom. The outcome of this
matter can not presently be determined.
Report on Other Legal and Regulatory Requirements
These financial statements also comply with the requirements ofSections 153(2) to 153(7) of the Companies Act No. 07 of 2007.
KPMG Ford, Rhodes, Thornton & Co.
Chartered Accountants
Colombo
21 March 2011
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All amounts in Sri Lanka Rupees thousands
Notes Consolidated Company
For the year ended 31 December, 2010 2009 2010 2009
Revenue 4 8,009,409 6,899,316 7,807,161 6,947,738
Cost of sales (7,161,178) (6,552,583) (7,203,396) (6,490,098)
Gross profit 848,231 346,733 603,765 457,640
Other operating profit / (loss) 8 38,752 (37,687) - -
Other income 9 14,810 40,869 19,303 34,788
Selling & distribution expenses (121,369) (69,338) (117,423) (67,448)
Administrative expenses (188,346) (128,147) (245,432) (175,410)
Operating profit 5 592,078 152,430 260,213 249,570
Net finance expenses 10 (29,063) (120,735) (29,081) (119,964)
Share of profit of associate 16 (c) 42,409 24,042 - -
Profit before ta 605,424 55,737 231,132 129,606
Income tax expenses 11 (32,525) (3,965) (11,290) 11,381
Profit for the year 572,899 51,772 219,842 140,987
Attributable to:
Equity holders of the parent 474,872 133,870 219,842 140,987
Minority interest 32 98,027 (82,098) - -
Profit for the year 572,899 51,772 219,842 140,987
Basic earnings per share (Rs) 12 7.91 2.23 3.66 2.35
The notes on pages 29 to 59 are an integral part of these consolidated financial statements.
Income Statement
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All amounts in Sri Lanka Rupees thousands
Notes Consolidated Company
As at 31 December, 2010 2009 2010 2009
ASSETS
Non-current assets
Property, plant and equipment 13 1,781,450 1,860,963 202,521 290,879
Leasehold right over land & buildings 14 520,885 542,522 120,615 124,371
Intangible assets 15 87,912 850 87,912 -
Investment in associate companies 16 230,064 187,655 128,484 128,484
Investment in subsidiary companies 17 - - 361,625 361,625
Livestock 18 355,087 224,287 - -
Amount due from affiliated companies 20 - - 1,339,622 1,647,068
Total non-current assets 2,975,398 2,816,277 2,240,779 2,552,427
Current assets
Inventories 21 1,206,253 1,507,100 1,112,117 1,370,660
Trade and other receivables 22 452,327 460,649 400,267 389,988
Current tax receivable 34,322 35,212 1,906 1,444
Cash and cash equivalents 23 47,462 34,173 30,229 22,147
Total current assets 1,740,364 2,037,134 1,544,519 1,784,239
Total assets 4,715,762 4,853,411 3,785,298 4,336,666
EQUITY
Stated capital 31 1,017,996 1,017,996 1,017,996 1,017,996
Share premium of subsidiaries 213,133 213,133 - -
Revaluation reserve 33 231,142 231,142 37,579 37,579
Retained earnings 654,811 179,939 535,255 315,413
Total equity attributable to equity holders of the parent 2,117,082 1,642,210 1,590,830 1,370,988
Minority interest 32 178,062 80,035 - -
Total Equity 2,295,144 1,722,245 1,590,830 1,370,988
LIABILITIES
Non-current liabilities
Deferred tax liabilities 27 78,350 71,146 20 20
Employee benefits 28 28,052 23,946 19,654 16,676
Amount due to affiliated companies 25 1,065,944 1,081,576 1,065,944 1,081,576
Total non-current liabilities 1,172,346 1,176,668 1,085,618 1,098,272
Current liabilities
Trade and other payables 24 394,343 211,425 267,792 134,239
Amount due to affiliated companies 25 407,454 986,239 405,876 985,083
Interest bearing borrowings 26 446,475 756,834 435,182 748,084
Total current liabilities 1,248,272 1,954,498 1,108,850 1,867,406Total liabilities 2,420,618 3,131,166 2,194,468 2,965,678
Total equity and liabilities 4,715,762 4,853,411 3,785,298 4,336,666
The notes on pages 29 to 59 are an integral part of these consolidated financial statements.These financial statements are in compliance with the requirements of the Companies Act No. 07 of 2007.
(Sgd.) K. A. R. S. Perera
Financial Controller
These financial statements were approved by the Board of Directors on 21 March 2011.
(Sgd.) Cheng Chih Kwong, Primus (Sgd.) Tan Beng Chuan
Chairman & Chief Executive Officer Executive Director & Group General Manager
Balance Sheet
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Statement of Changes in Equity
CONSOLIDATED
For the year ended 31 December, Stated Share Revaluation Retained Minority Total
capital premium of reserve earnings interest equity
subsidiaries
Balance as at 1 January 2009 1,017,996 213,133 61,237 44,899 46,958 1,384,223
Revaluation surplus - - 171,075 - 115,175 286,250
Depreciation transfer - - (1,170) 1,170 - -
Profit for the year - - - 133,870 (82,098) 51,772
Balance as at 31 December 2009 1,017,996 213,133 231,142 179,939 80,035 1,722,245
Profit for the year - - - 474,872 98,027 572,899
Balance as at 31 December 2010 1,017,996 213,133 231,142 654,811 178,062 2,295,144
COMPANY
For the year ended 31 December, Stated Revaluation Retained Total
capital reserve earnings equity
Balance as at 1 January 2009 1,017,996 38,639 173,256 1,229,891
Revaluation surplus - 110 - 110
Depreciation transfer - (1,170) 1,170 -
Profit for the year - - 140,987 140,987
Balance as at 31 December 2009 1,017,996 37,579 315,413 1,370,988
Profit for the year - - 219,842 219,842
Balance as at 31 December 2010 1,017,996 37,579 535,255 1,590,830
The notes on pages 29 to 59 are an integral part of these consolidated financial statements.
All amounts in Sri Lanka Rupees thousands
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Cash Flow Statement
All amounts in Sri Lanka Rupees thousands
Notes Consolidated Company
For the year ended 31 December, 2010 2009 2010 2009
Operating activities
Cash generated from operations 34 948,867 500,217 386,721 192,230
Exchange gain/ (loss) 22,943 (26,886) 21,969 (26,463)
Interest received 10 1,511 840 1,132 648
Dividend received 9 - 1,168 - 1,168
Interest paid 10 (53,517) (94,689) (52,182) (94,149)
Employee benefits paid 28 (1,723) (2,023) (1,040) (1,456)
Tax paid - (528) - -
Net cash generated from operating activities 918,081 378,099 356,600 71,978
Investing activities
Purchase of property, plant and equipment (147,434) (50,475) (35,616) (30,996)
Proceeds from disposal of PPE - 512 - 179
Purchase of livestock 18 (446,999) (287,680) - -
Disposal of other investment - 24,695 - 24,695
Net cash used in investing activities (594,433) (312,948) (35,616) (6,122)
Financing activities
Net borrowings (334,900) 33,900 (334,900) 33,900
Net cash (used in) / generated from financing activities (334,900) 33,900 (334,900) 33,900
(Decrease) / increase in cash and cash equivalents (11,252) 99,051 (13,916) 99,756
Movements in cash and cash equivalents
At the start of the year (27,761) (126,812) (31,037) (130,793)
(Decrease) / increase in cash and cash equivalents (11,252) 99,051 (13,916) 99,756
Cash and cash equivalents as at 31 December 23 (a) (39,013) (27,761) (44,953) (31,037)
The notes on pages 29 to 59 are an integral part of these consolidated financial statements.
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Notes to the Financial Statements
1. REPORTING ENTITY
1.1 General
Ceylon Grain Elevators PLC (the "Company") is a "Quoted
Public Company" with limited liability, incorporated and
domiciled in Sri Lanka. The address of the Company's
registered office is No.15, Rock House Lane, Colombo - 15, Sri
Lanka. The consolidated financial statements of the Company
as at and for the year ended 31 December 2010 comprise
the Company and its subsidiaries and the Group's interest in
associates, listed below.
Subsidiaries
" Three Acre Farms PLC
" Ceylon Pioneer Poultry Breeders Limited
" Ceylon Livestock and Agrobusiness Services (Private) Limited
" Ceylon Warehouse Complex (Private) Limited" Ceylon Aquatech (Private) Limited
" Millennium Multibreeder Farms (Private) Limited
Associates
" Ceylon Agro Industries Limited
" Prima Management Services (Private) Limited
Ceylon Grain Elevators PLC (CGE) was incorporated in
1982, when the government of Sri Lanka & Prima Limited of
Singapore signed an agreement. The company was listed in
the Colombo Stock Exchange on 27th January 1992 in the
Food & Beverage Sector. Prima Limited, Singapore, holds
45.45% of the issued share capital of the Company.
1.2 Principal activities and nature of the operationThe main business of the Group is feed milling, broiler farming,
poultry processing and distribution, poultry breeder farming
operations, manufacture and sale of aquatic feed, buying
and selling of poultry equipment and provision of silo and
warehouse facilities and transshipment.
1.3 Number of employees
The average numbers of employees of the group and company
for the year are as follows.
Group
Full time 451 (2009 - 453)
Part time 805 (2009 - 957)
Company
Full time 254 (2009 - 268)Part time 141 (2009 - 258)
2. BASIS OF PREPARATION
2.1 Statement of compliance
The consolidated financial statements have been prepared in
accordance with Sri Lanka Accounting Standards (SLAS) as
issued by the Institute of Chartered Accountants of Sri Lanka
(ICASL) and the requirements of the Companies Act No.7 of
2007. The consolidated financial statements were authorized
for issue by the Board of Directors on 21 March 2011.
2.2 Basis of measurement
The consolidated financial statements have been prepared
on the historical cost concept, except for the revaluation of
property as stated in note 3.3 and measurement of investmentproperty at revalued amounts (fair value method) as stated in
note 3.6.
2.3 Functional and presentation currencyThe consolidated financial statements are presented in Sri
Lanka Rupees, which is the Company's functional currency,
rounded to the nearest thousand, unless otherwise stated.
2.4 Use of estimates and judgments
The preparation of financial statements in conformity with Sri
Lanka Accounting Standards (SLAS) requires management to
make judgments, estimates and assumptions that affect the
application of accounting policies and the reported amounts
of assets, liabilities, income and expenses. Actual results may
differ from these estimates.
Estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates are
recognized in the period in which the estimates are revised
and in any future periods affected.
Information about critical judgements in applying accounting
policies that have the most significant effect on the amounts
recognized in the financial statements is included in the
following notes:
· Note 3.6 - classification of investment property
· Note 3.4 - lease classification.
· Note 3.12 - key assumptions used in discounted cash flow
projections
· Note 3.19 - utilization of tax losses
· Note 3.13 - measurement of defined benefit obligations
· Note 3.24 - provisions and contingencies.2.5 Materiality and Aggregation
Each material class of similar items is presented separately in
the financial statements. Items of a dissimilar nature or function
are presented separately unless they are immaterial.
3. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied
consistently to all periods presented in these consolidated
financial statements, and have been applied consistently
by Group entities. Certain comparative amounts have been
reclassified to conform with the current year's presentation.
3.1 Basis of consolidation
SubsidiariesSubsidiary undertakings, which are those companies in which
the Group, directly or indirectly, has an interest of more than
one half of the voting rights or otherwise has power to exercise
control over the operations, have been consolidated. In
assessing control, potential voting rights account. Subsidiaries
are consolidated from the date on which effective control is
transferred to the Group and are no longer consolidated from
the date of control ceases. Accounting policies of subsidiaries
have been changed when necessary to align them with the
policies adopted by the Group.
Minority Interest
The total profit and loss for the year of the Company and
its subsidiaries included in consolidation are shown in the
consolidated income statement with the proportion of profitand loss after taxation pertaining to minority shareholders of
subsidiaries being deducted as "minority interest". All assets
and liabilities of the Company and of its subsidiaries included
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Notes to the Financial Statements Cont.
in consolidation are shown in the consolidated balance sheet.
The interest of minority shareholders of subsidiaries in the fair
value of net assets of the Group are indicated separately in
the consolidated balance sheet under the heading "minority
interest".
Associates
Associates are entities in which the Group has significant
influence, but not control, over their financial and operating
policies. Significant influence is presumed to exist when the
Group holds between 20 and 50 percent of the voting power of
another entity. The consolidated financial statements include
the Group's share of the gains and losses of associates on
an equity accounted basis, after adjustments to align their
accounting policies with those of the Group, from the date that
significant influence commences until the date that significant
influence ceases. When the Group's share of losses exceeds
its interest in an associate, the Group carrying amount is
reduced to nil and recognition of further losses is discontinued
except to the extent that the Group has incurred legal or
constructive obligations or made payments on behalf of an
associate.
Transactions eliminated on consolidation
Intra-group balances, and any unrealized gains and losses or
income and expenses arising from intra-group transactions, are
eliminated in preparing the consolidated financial statements.
Unrealized gains arising from transactions with equity
accounted investees are eliminated against the investment to
the extent of the Group's interest in the investee. Unrealized
losses are eliminated in the same way as unrealized gains, but
only to the extent that there is no evidence of impairment.
Accounting for Investment in subsidiaries and associates
When separate financial statements are prepared, investments
in subsidiaries and associates are accounted for using the cost
method. Investments in subsidiaries and associates are stated
in the Company's balance sheet at cost less accumulated
impairment losses.
3.2 Foreign currency
Foreign currency transactions
Transactions in foreign currencies are translated to the Sri
Lankan Rupees at the foreign exchange rate prevailing at
the date of the transactions. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet dateare retranslated to the Sri Lankan Rupees at the exchange
rates on that date Foreign exchange differences arising on
retranslation are recognized in the income statement.
3.3 Property, plant and equipment
Recognition and measurement
Items of property, plant and equipment are measured at cost
less accumulated depreciation and accumulated impairment
losses.
Cost includes expenditure that is directly attributable to the
acquisition of the asset. The cost of self-constructed assets
includes the cost of materials and direct labour, any other
costs directly attributable to bringing the asset to a working
condition for its intended use, and the cost of dismantlingand removing the items and restoring the site on which
they are located. Purchased software that is integral to the
functionality of the related equipment is capitalized as part of
that equipment.
When parts of an item of property, plant and equipment have
different useful lives, they are accounted for as separate items
(major components) of property, plant and equipment.
Gains and losses on disposal
Gains and losses on disposal of an item of property, plant
and equipment are determined by comparing the proceeds
from disposal with the carrying amount of property, plant and
equipment, and are recognised net within "other income/other
expenses" in profit or loss. When revalued assets are sold,
the amounts included in the revaluation surplus reserve are
transferred to retained earnings.
Reclassification to investment property
When the use of a property changes from owner-occupied toinvestment property, the property is remeasured to fair value
and reclassified as investment property. Any gain arising on
remeasurement is recognised in profit or loss to the extent
that it reverses a previous impairment loss on the specific
property, with any remaining gain recognised in the statement
of changes in equity and presented in the revaluation reserve
in equity. Any loss is recognized in the statement of changes
in equity and presented in the revaluation reserve in equity to
the extent that an amount had previously been included in the
revaluation reserve relating to the specific property, with any
remaining loss recognised immediately in profit or loss.
Revaluation
Revaluations are carried out by independent professional
valuers regularly such that the carrying amount of these assetsdoes not differ materially from that which would be determined
using fair values at the balance sheet date.
The Group revalues Land & Buildings at least once in every 4
years which is stated at its fair value at the date of revaluation
less any subsequent impairment losses. On revaluation, any
increase in the revaluation amount is credited to the revaluation
reserve unless it offsets a previous decrease in value of the
same asset that was recognised in the income statement.
A decrease in value is recognized in the income statement
where it exceeds the increase previously recognized in the
revaluation reserve. Upon disposal, any related revaluation
reserve is transferred from the revaluation reserve to retained
earnings and is not taken into account in arriving at the gain
or loss on disposal. The details of revaluation are disclosed in
Note 13 to the financial statements.
Company has been discontinued transfer of revaluation
reserved based on usage.
Subsequent costs
The cost of replacing a part of an item of property, plant and
equipment is recognised in the carrying amount of the item
if it is probable that the future economic benefits embodied
within the part will flow to the Group, and its cost can be
measured reliably. The carrying amount of the replaced part
is derecognised. The costs of the day-to-day servicing of
property, plant and equipment are recognised in profit or loss
as incurred.
Derecognition
The carrying amount of an item of Property, Plant & Equipment
is derecognized on disposal or when no future economic
benefits are expected from its use or disposal. The gain or
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Notes to the Financial Statements Cont.
loss arising from the derecognition of an item of Property,
Plant & Equipment is included in profit or loss when the item
is derecognized. When replacement costs are recognized
in the carrying amount of an item of Property, Plant and
Equipment, the remaining carrying amount of the replaced
part is derecognized. Major inspection costs are capitalized.
At each such capitalization, the remaining carrying amount of
the previous cost of inspections is derecognized.
Depreciation
Depreciation is based on the cost or revaluation of an asset
or other amount substituted for cost, less its residual value.
Significant components of individual assets are assessed
and if a component has a useful life that is different from
the remainder of that asset, that component is depreciated
separately.
Depreciation is recognised in income statement on a straight-
line basis over the estimated useful lives of each part of an
item of property, plant and equipment. Leased assets are
depreciated over the shorter of the lease term and their useful
lives unless it is reasonably certain that the Group will obtain
ownership by the end of the lease term. No depreciation is
provided on assets under construction.
The estimated useful lives for the current and comparative
years are as follows:
Freehold building 50 years
Plant and machinery 16 2/3 years
Electrical and factory equipment 2 - 5 - 10 - 20 years
Farm equipment 5 - 20 years
Furniture and fittings and office equipment 10 yearsMotor vehicles 5 years
Land is not depreciated as it is deemed to have an indefinite
life.
Depreciation of an asset begins when it is available for use
and ceases at the earlier of the date that the asset is classified
as held for sale and the date that the asset is derecognized.
Depreciation methods, useful lives and residual values are
reviewed at each reporting date and adjusted if appropriate.
Where the carrying amount of an asset is greater than its
estimated recoverable amount, it is written down immediately
to its recoverable amount.
Capital work in progress
Capital expenses incurred during the year which are notcompleted as at the Balance Sheet date are shown as capital
work-in-progress, while the capital assets which have been
completed during the year and put to use are transferred to
property, plant and equipment.
3.4 Leased assets
Leases in terms of which the Group assumes substantially all
the risks and rewards of ownership are classified as finance
leases. Upon initial recognition the leased asset is measured
at an amount equal to the lower of its fair value and the present
value of the minimum lease payments. Subsequent to initial
recognition, the asset is accounted for in accordance with the
accounting policy applicable to that asset.
Other leases are operating leases and any prepayments arerecognised in the Group's balance sheet as lease hold rights.
The lease hold rights under operating leases are charged to
the income statement on a straight- line basis over the period
of the lease. When an operating lease is terminated before the
lease period has expired, any payment required to be made
to the lessor by way of penalty is recognised as an expense in
the period in which termination takes place.
The cost of improvements to or on leased property is
capitalized, and depreciated over the unexpired period of the
lease or the estimated useful lives of improvements, whichever
is shorter.
3.5 Intangible assets
Goodwill
Goodwill and negative goodwill arise on the acquisition of
subsidiaries. Goodwill represents the excess of the cost of
the acquisition over the Group's interest in the net fair value
of the identifiable assets, liabilities and contingent liabilities of
the acquiree. When the excess is negative (negative goodwill),
it is recognized immediately in the consolidated income
statement.
Goodwill is stated at cost less accumulated impairment losses.
Goodwill is allocated to cash generating units and is no longer
amortised but annually tested for impairment. In respect of
associates, the carrying amount of goodwill is included in the
carrying amount of the investment in the associates. Goodwill
on the acquisition of subsidiaries is presented as intangible
assets.
Goodwill is tested for impairment as described in accounting
policy (3.12).
Other intangible assets
Other intangible assets that are acquired by the Group and
have finite useful lives are measured at cost less accumulated
amortisation and accumulated impairment losses.
Subsequent ependiture
Subsequent expenditure is capitalised only when it increases
the future economic benefits embodied in the specific asset to
which it relates. All other expenditure, including expenditure
on internally generated goodwill and brands, is recognised in
profit or loss as incurred.
Amortisation
Amortisation is based on the cost of an asset less its residual
value.
Amortisation is recognised in profit or loss on a straight-linebasis over the estimated useful lives of intangible assets, other
than goodwill, from the date that they are available for use. The
estimated useful lives for the current and comparative years
are as follows:
· Computer software 10 years
Amortisation methods, useful lives and residual values are
reviewed at each reporting date and adjusted if appropriate.
3.6 Investment Property
Investment properties are those which are held either to
earn rental income or for capital appreciation or for both.
Investment properties are stated at fair value. An external,
independent valuation Company, having an appropriate
recognized professional qualification and recent experiencein the location and category of property being valued, values
the portfolio every 3 years. The fair values are based on market
values, being the estimated amount for which a property could
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Notes to the Financial Statements Cont.
be exchanged on the date of valuation between a willing buyer
and a willing seller in an arm's length transaction after proper
marketing wherein the parties had each acted knowledgeably,
prudently and without compulsion.
Valuations reflect, where appropriate; the type of tenants
actually in occupation or responsible for meeting lease
commitments or likely to be in occupation after letting of
vacant accommodation and the market's general perception
of their credit-worthiness; the allocation of maintenance and
insurance responsibilities between lessor and lessee; and the
remaining economic life of the property. It has been assumed
that whenever rent reviews or lease renewals are pending
with anticipated reversionary increases, all notices and where
appropriate counter notices have been served validly and
within the appropriate time.
Any gain or loss arising from a change in fair value is
recognized in profit or loss. Rental income from investment
property is accounted for as described in accounting policy.
When an item of property, plant and equipment is transferred
to investment property following a change in its use, any
differences arising at the date of t ransfer between the carrying
amount of the item immediately prior to transfer and its fair
value is recognized directly in equity if it is a gain. Upon
disposal of the item the gain is transferred to retained earnings.
Any loss arising in this manner is recognized in profit or loss
immediately.
If an investment property becomes owner-occupied, it is
reclassified as property, plant and equipment and its fair value
at the date of reclassification becomes its deemed cost for
subsequent accounting.
3.7 Investments
Short Term Investments
Other investments include investments in marketable securities
which are listed on the Colombo Stock Exchange. These
investments are valued at cost or market price whichever is
lower. Any diminution in value is provided for in the financial
statements.
On disposal of an investment, the difference between the net
disposal proceeds and the carrying amount is charged or
credited to the income statement.
3.8 Livestock
Livestock represents the unamortized parent and grandparent
livestock, used to breed day old commercial chicks. Parent
and grandparent birds include the growing birds and the
laying birds.
The growing birds are valued at directly attributable cost
incurred up to the commencement of laying period. The laying
birds are valued at cost less subsequent amortizations. The
amortization is made on straight line basis over the laying
period after making due allowances for carcass value.
Livestock is not valued at its fair value as the fair value cannot
be measured reliably due to non existence of active markets
for parent and grandparent birds at different age categories
and the complexity in determining expected future cash flows
for parent and grandparent birds in different age, breed and
genetic merit.
3.9 Inventories
Inventories are measured at the lower of cost and net realizable
value after making due allowances for obsolete & slow moving
items.
Net realizable value is the estimated selling price in the ordinary
course of business, less the estimated costs necessary to
make the sale.
The cost incurred in bringing inventories to its present location
and conditions are accounted as follows.
Compounded feed
Cost is calculated using the weighted average cost formula
and the cost of finished goods and work in progress comprises
raw materials, direct labour, other direct costs and related
production overheads, but excludes interest expenses.
Processed Chicken
Processed Chicken inventory is valued at direct cost togetherwith a directly attributable proportion of overheads.
Eggs
Hatching eggs are valued at direct cost together with an
appropriate proportion of production overheads.
Live Stock held for sale (Parent birds)
The value of livestock held for sale is based on the market
price of livestock of similar age, breed and genetic merit.
Poultry equipment, drugs, vaccine and sundry inventories
Poultry equipment, drugs, vaccine and sundry inventories are
valued at actual cost on weighted average basis after making
due allowance for obsolete and slow moving items.
Out grower stock
Out grower stock represents the company's birds reared at
outside farms and is valued at directly attributable cost.
3.10 Trade and other receivables
Trade receivables are carried at anticipated realizable value.
An estimate is made for doubtful receivables based on a
review of all outstanding amounts at the year end. Bad debts
are written off during the year in which they are identified.
3.11 Cash & cash equivalents
Cash & cash equivalents comprise cash in hand, deposits
held at call with banks, and investments in money market
instruments.
For the purposes of the cash flow statement, cash and cash
equivalents comprise cash in hand, deposits held at call with
banks, and investments in money market instruments, net of
bank overdrafts. In the balance sheet, bank overdrafts are
included in borrowings in current liabilities.
Cash Flow Statement is prepared under the "direct" method as
per Sri Lanka Accounting Standard 09 - Cash Flow Statements.
3.12 Impairment of assets
The carrying amounts of the Group's assets are reviewed at
each balance sheet date to determine whether there is any
indication of impairment. If any such indication exists, the
assets' recoverable amounts are estimated. For goodwill,
recoverable amount is estimated at each balance sheet date
and impairment loss is recognized whenever the carrying
amount of an asset or its cash generating unit exceeds itsrecoverable amount.
An impairment loss is recognized if the carrying amount of
an asset or its cash-generating unit exceeds its recoverable
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Notes to the Financial Statements Cont.
amount. A cash-generating unit is the smallest identifiable
asset group that generates cash flows that largely are
independent from other assets and groups. Impairment losses
are recognized in the income statement. Impairment losses
recognized in respect of cash-generating units are allocated
first to reduce the carrying amount of any goodwill allocated to
the units and then to reduce the carrying amount of the other
assets in the unit (group of units) on a pro rata basis.
Calculation of recoverable amount
The recoverable amount of an asset or cash-generating unit
is the greater of its value in use and its fair value less costs to
sell. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value
of money and the risks specific to the asset or cash-generatingunit.
Reversal of impairment
An impairment loss in respect of goodwill is not reversed.
In respect of other assets, impairment losses recognized in
prior periods are assessed at each balance sheet date for any
indications that the loss has decreased or no longer exists. An
impairment loss is reversed if there has been a change in the
estimates used to determine the recoverable amount.
An impairment loss is reversed only to the extent that the
asset's carrying amount does not exceed the carrying amount
that would have been determined, net of depreciation or
amortization, if no impairment loss had been recognized.
Reversals of impairment losses are recognized in the income
statement.
3.13 Employee benefits
Defined benefit plan - gratuity
A defined benefit plan is a post employment benefit plan other
than a defined contribution plan. The liability recognised in the
balance sheet in respect of defined benefit plan is the present
value of defined benefit obligation at the balance sheet date.
Benefits falling due more than 12 months after the balance
sheet date are discounted to present value. The defined
benefit obligation is calculated by independent actuaries
using Projected Unit Credit (PUC) method as recommended
by SLAS 16 - "Employees benefits". The present value of the
defined benefit obligation is determined by discounting the
estimated future cash outflows. The gratuity liability is based
on the actuarial valuation carried out once in 3 years.
The actuarial gains and losses are charged or credited to
income statement in the period in which they arise.
The assumptions based on which the results of the actuarial
valuation was determined, are included in Note 28 to the
financial statements.
However, according to the Payment of Gratuity Act No.12
of 1983, the liability for the gratuity payment to an employee
arises only on the completion of 5 years of continued service
with the Company.
Defined contribution plan
A defined contribution plan is a post employment plan under
which an entity pays fixed contributions into a separate entity
and will have no legal or constructive obligation to pay a further
amount. Obligations for contributions to defined contribution
plans are recognized as expense in income statement as and
when they are due.
The Group contributes 12% and 3% of gross emoluments
of employees as provident fund and trust fund contribution
respectively.
3.14 Stated capital
Ordinary shares and share premium are classified as stated
capital.
3.15 Interest bearing borrowings
Borrowings are recognized initially at the proceeds received.
3.16 Provisions
A provision is recognised if, as a result of a past event, theGroup has a present legal or constructive obligation that can
be estimated reliably, and it is probable that an outflow of
economic benefits will be required to settle the obligation.
3.17 Revenue recognition
Sale of goods
Revenue from the sale of goods in the course of ordinary
activities is measured at the fair value of the consideration
received or receivable, net of returns, trade discounts and
volume rebates. Revenue is recognised when persuasive
evidence exists, usually in the form of an executed sales
agreement, that the significant risks and rewards of
ownership have been transferred to the customer, recovery
of the consideration is probable, the associated costs andpossible return of goods can be estimated reliably, there is
no continuing management involvement with the goods,
and the amount of revenue can be measured reliably. If it is
probable that discounts will be granted and the amount can
be measured reliably, then the discount is recognised as a
reduction of revenue as the sales are recognised. Revenue
excludes value added taxes or other sales taxes.
Rental income
Rental income received or receivable in the course of ordinary
activities is recognized as revenue in the income statement
on a straight-line basis over the term of the lease. Lease
incentives granted are recognized as an integral part of the
total rental income.Rental income from investment property is recognised as
other income in profit or loss on a straight-line basis over the
term of the lease.
Interest income
Interest income from time deposits and other interest-bearing
assets is accrued on a time-apportioned basis on the principal
outstanding and at the rate applicable unless collectability is
in doubt.
Dividend income
Dividend income is recognised in the income statement when
the right to receive payment is established.
Other income / Other operating profits/losses
Gains/losses on the disposal of investments held by the Group
have been accounted for as other income in the income
statement.
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Notes to the Financial Statements Cont.
Gains/losses on the disposal of property, plant & equipment
determined by reference to the carrying amount and related
expenses, have been accounted for as other income in the
income statement.
Other operating profits/losses consist of profits/losses arising
from out grower operations carried out by the companies that
use farms for out grower operations.
3.18 Epenses
Operating lease payments
Where the Company has the use of assets under operating
leases, payments made under the leases are recognised in
the income statement on a straight line basis over the term
of the lease. Lease incentives received are recognised in the
income statement as an integral part of the total lease expense
over the term of the lease. Contingent rentals are charged to
the income statement in the accounting period in which they
are incurred.
Net finance epenses
Net financing costs comprise interest payable on borrowings
calculated using the effective interest rate method, interest
receivable on funds invested and foreign exchange gains and
losses that are recognised in the income statement.
3.19 Income ta epenses
Income tax expense comprises current and deferred tax.
Income tax is recognized in the income statement except to
the extent that it relates to items recognized directly in equity,
in which case it is recognized in equity.Current ta
Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted at the balance sheet
date, and any adjustment to tax payable in respect of previous
years.
Deferred ta
Deferred tax is recognized using the balance sheet liability
method, providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The
following temporary differences are not provided for: goodwill
not deductible for tax purposes, the initial recognition of assets
or liabilities that affect neither accounting nor taxable profit,and differences relating to investments in subsidiaries to the
extent that they will probably not reverse in the foreseeable
future. The amount of deferred tax provided is based on the
expected manner of realization or settlement of the carrying
amount of assets and liabilities, using tax rates enacted or
substantively enacted at the balance sheet date.
The principal temporary differences arise from depreciation
on property, plant and equipment, tax losses carried forward
and provisions for defined benefit obligations. Deferred tax
assets relating to the carry forward of unused tax losses are
recognised to the extent that it is probable that future taxable
profit will be available against which the unused tax losses can
be utilized.
A deferred tax asset is recognized only to the extent that it is
probable that future taxable profits will be available against
which the asset can be utilized. Deferred tax assets are
reviewed at balance sheet date and are reduced to the extent
that it is no longer probable that the related tax benefit will be
realized.
Deferred tax assets and liabilities are offset if there is a legally
enforceable right to offset current tax liabilities and assets, and
they relate to income taxes levied by the same tax authority on
the same taxable entity, or on different tax entities, but they
intend to settle current tax liabilities and assets on a net basis
or their tax assets and liabilities will be realised simultaneously.
Additional income taxes that arise from the distribution of
dividends are recognized at the same time as the liability to
pay the related dividend is recognized.3.20 Earnings/(Loss) per share
The Group presents basic earnings/ (loss) per share (EPS)
data for its ordinary shares. Basic EPS is calculated by
dividing the profit or loss attributable to ordinary shareholders
of the Company by the weighted average number of ordinary
shares outstanding during the period.
3.21 Segment reporting
A segment is a distinguishable component of the Group that
is engaged either in providing products or services (business
segment), or in providing products and services within a
particular economic environment (geographical segment),
which is subject to risks and rewards that are different from
those of other segments.
3.22 Events occurring after the balance sheet date
All material post balance sheet events have been considered
and where appropriate adjustments or disclosures have been
made in respective notes to the financial statements.
3.23 Comparative figures
Where necessary, comparative figures have been reclassified
to conform to the current year's presentation.
3.24 Commitments and contingencies
Contingencies are possible assets or obligations that arise from
a past event and would be confirmed only on the occurrence
or non-occurrence of uncertain future events, which are
beyond the Company's control. Contingent liabilities aredisclosed in Note 29 to the financial statements. Commitments
are disclosed in Note 30 to the financial statements.
3.25 New Accounting Standards issued but not Effective as At
Balance Sheet Date
The Institute of Chartered Accountants of Sri Lanka (ICASL)
has issued a new volume of Sri Lanka Accounting Standards
- 2011, applicable for financial periods beginning on or after
1 January 2012. These Standards have many changes and
consequential changes from the adaption of SLAS 44 and 45.
These new Accounting Standards are prefixed both SLFRS
and LKAS which correspond to the relevant IFRS and IAS.
Disclosure requirement under SLAS 10.30 and 10.31 have
been exempted by the ICASL and therefore all differences and
impacts arising from the new Standards are not presented in
these financial statements.
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Notes to the Financial Statements Cont.
(In the notes all amounts are shown in Sri Lanka Rupees thousands unless otherwise stated)
(4). SEGMENT INFORMATION(a) Business segments Feed Poultry Shrimp Poultry Silo and
milling and breeder farming equipment warehouse Elimination Consolidated
broiler farming complex /adjustment
operations
Year ended 31 December 2010
Sales to outsiders 7,227,142 733,546 - 38,182 10,539 - 8,009,409
Inter segment sales 580,019 424,231 - 76,720 51,165 (1,132,135) -
Total revenue 7,807,161 1,157,777 - 114,902 61,704 (1,132,135) 8,009,409
Segment results 260,213 244,731 (11,054) 13,059 35,301 49,828 592,078
Finance (expenses) / income (29,081) 133 - (100) (15) - (29,063)
Profit / (loss) before tax 231,132 244,864 (11,054) 12,959 35,286 49,828 563,015
Income tax (expenses)/release (11,290) (15,780) - (3,146) (2,309) - (32,525)
Share of results of associate company - - - - - 42,409 42,409
Net profit / (loss) 219,842 229,084 (11,054) 9,813 32,977 92,237 572,899
Year ended 31 December 2009
Sales to outsiders 6,374,130 499,956 - 25,230 - - 6,899,316
Inter segment sales 573,608 336,501 - 75,370 62,838 (1,048,317) -
Total revenue 6,947,738 836,457 - 100,600 62,838 (1,048,317) 6,899,316
Segment results 249,570 (197,702) (5,468) 2,073 39,957 64,000 152,430
Finance (expenses) / income (119,964) (448) 3 (317) (9) - (120,735)
Profit / (loss) before tax 129,606 (198,150) (5,465) 1,756 39,948 64,000 31,695
Income tax (expenses)/release 11,381 6,289 - (1,073) (20,562) - (3,965)
Share of results of associate company - - - - - 24,042 24,042
Net profit / (loss) 140,987 (191,861) (5,465) 683 19,386 88,042 51,772
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Notes to the Financial Statements Cont.
(4). Segment information (Contd)
(b) Business segments (Contd) Feed Poultry Shrimp Poultry Silo and
milling and breeder farming equipment warehouse Elimination Consolidated
broiler farming complex /adjustment
operations
As at 31 December 2010
Segment assets 2,317,192 1,980,071 89,346 32,706 428,008 (361,625) 4,485,698
Associate 128,484 - - - - 101,580 230,064
Inter segment assets 1,339,622 - - - - (1,339,622) -
Total assets 3,785,298 1,980,071 89,346 32,706 428,008 (1,599,667) 4,715,762
Segment liabilities 2,194,468 187,876 3,297 10,369 24,608 - 2,420,618Inter segment liabilities - 1,376,067 94,304 422 186,991 (1,657,784) -
Total liabilities 2,194,468 1,563,943 97,601 10,791 211,599 (1,657,784) 2,420,618
Capital expenditure 35,616 108,663 - - 3,155 147,434
Depreciation/amortization 39,749 74,930 4,929 - 20,001 20,995 160,604
Impairment of intangible assets - 850 - - 850
As at 31 December 2009
Segment assets 2,561,114 1,872,566 102,674 31,567 438,994 (341,159) 4,665,756
Associate 128,484 - - - - 59,171 187,655
Inter segment assets 1,647,068 - - - - (1,647,068) -
Total assets 4,336,666 1,872,566 102,674 31,567 438,994 (1,929,056) 4,853,411
Segment liabilities 2,965,678 126,237 3,572 12,610 22,780 289 3,131,166
Inter segment liabilities - 1,559,283 96,303 6,861 232,783 (1,895,230) -
Total liabilities 2,965,678 1,685,520 99,875 19,471 255,563 (1,894,941) 3,131,166
Capital expenditure 30,996 19,479 - - - - 50,475
Depreciation/amortization 29,561 61,239 4,290 - 15,768 - 110,858
Amortization of intangible assets - 1,803 - - - - 1,803
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Notes to the Financial Statements Cont.
(4). Segment information (Contd)
(c) Business segments (Contd)
The Group is organized into five main business segments:
• Feed milling and broiler operations - manufacture and sale of poultry feed, poultry broiler farming, packing and distribution of
chicken.
• Poultry breeder farming operations - operation of grand parent, parent poultry breeder farms and hatcheries and commercial
farms.
• Shrimp farming - Rental of shrimp farm
• Poultry equipment - import and sale of poultry equipment and vaccine.
• Silo warehouse complex and transshipment operations - operation of ultra modern silo and warehouse complex.
Segment assets consist primarily of property, plant and equipment, intangible assets, inventories, receivables and operating cash, and
exclude investments in subsidiaries. Segment liabilities comprise current and non-current liabilities. Capital expenditure comprises
additions to property, plant and equipment.
(d) Sales are made up as follows:
Consolidated Company
2010 2009 2010 2009
Process chicken 2,569,396 2,341,953 2,569,396 2,341,953
Feed milling 6,452,830 5,592,413 6,452,830 5,592,413
Poultry breeder farming 1,293,843 934,549 -
Parent birds 4,140 6,907 -
Poultry equipment & vaccine 116,062 101,617 -
Silo warehouse complex and transshipment 71,246 72,054 -
10,507,517 9,049,493 9,022,226 7,934,366
Elimination / adjustment (1,132,135) (1,048,317) - -9,375,382 8,001,176 9,022,226 7,934,366
Sales taxes (1,365,973) (1,101,860) (1,215,065) (986,628)
8,009,409 6,899,316 7,807,161 6,947,738
Sales taxes consist of Group - Turnover Tax Rs 1,160,644/- (2009 - Rs 1,016,172/- ), NBT Rs. 240,889,033/- (2009-159,246,000) and
Value Added Tax Rs 1,123,923,493/- (2009 -Rs 941,598,000/-), Company - NBT Rs 238,981,588/- (2009 - 157,749,000) and Value
Added Tax Rs.976,083,283/-(2009 - Rs 828,879,000/-).
5 OPERATING PROFIT
The following items have been charged / (credited) in arriving at operating profit :
Consolidated Company
2010 2009 2010 2009
Directors’ emoluments 480 400 360 300
Auditors’ remuneration - Audit 3,300 2,985 1,950 1,800
Depreciation on property, plant and equipment (Note 13) 129,200 94,072 26,227 25,817
Revaluation Deficit - 7,761 - -
(Profit)/ loss on disposal of property, plant and equipment (Note 9) 68 (445) 68 (112)
(Profit) on disposal of quoted investment (Note 9) - (17,373) - (17,373)
Amortization of leasehold right (Note 14) 21,637 16,254 3,756 3,744
Amortization of livestock (Note 18) 316,199 284,505 -
Provision for bad and doubtful debts 31,439 (3,671) 27,957 (3,671)
Operating lease rentals - property 29,970 28,567 17,599 16,824
Staff expenses (Note 7) 486,792 441,239 334,991 299,640
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Notes to the Financial Statements Cont.
6. TEMPORARY CESSATION OF OPERATION
On 1 November 2004 the directors temporarily ceased the operation of breeding, hatching and growing of prawns and sea
cucumber of Ceylon Aquatech (Private) Limited, a subsidiary of the Company.
The Management of the Company is of the view that the commercial operations of the Chilaw Farm could be recommenced. The assets
and liabilities as at the balance sheet date of the division were as follows:
As at 31 December
2010 2009
property, plant and equipment 68,154 70,081
Other receivables 2,368
Total assets 68,154 72,449
Total liabilities - -
Net assets 68,154 72,449
7. STAFF ExPENSES
Consolidated Company
2010 2009 2010 2009
Salaries and wages 464,674 357,880 315,518 223,534
Social security costs 971 3,759 768 2,026
Defined contribution plans 15,318 76,194 14,687 71,723
Employee benefits (Note 28) 5,829 3,406 4,018 2,357
486,792 441,239 334,991 299,640
Average monthly number of persons employed by the Company and Group during the year:
- Full time 451 453 254 268
- part time 805 957 141 258
1,256 1,410 395 526
Part time employees include contracted labourers hired from third parties and those who work on shift basis.
8. OTHER OPERATING PROFIT / (LOSS)
Other operating Profit / (loss) wholly consist of profit / (loss) arising from out grower operations carried out at the commercial farms of
Three Acre Farms PLC, which is a subsidiary of the Company.
9. OTHER INCOME
Consolidated Company
2010 2009 2010 2009
Sundry Income 14,878 21,883 19,371 16,135
(Loss) / profit on disposal of fixed assets (68) 445 (68) 112
Profit on disposal of Shares - 17,373 - 17,373
Dividend Income - 1,168 - 1,168
14,810 40,869 19,303 34,788
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Notes to the Financial Statements Cont.
10. NET FINANCE ExPENSES
Consolidated Company
2010 2009 2010 2009
Interest income (1,511) (840) (1,132) (648)
Net foreign exchange transaction (gain) / losses (22,943) 26,886 (21,969) 26,463
Interest expense - bank borrowings 53,517 94,689 52,182 94,149
29,063 120,735 29,081 119,964
11. INCOME TAx ExPENSES
Consolidated Company
2010 2009 2010 2009
Current tax 14,679 - - -
Over provision in previous year (1,176) - - -
Deferred tax charge / (release) (Note 27) 7,204 (4,330) - (17,801)
ESC write off 11,818 8,295 11,290 6,420
32,525 3,965 11,290 (11,381)
Under an agreement dated 12 February 2004, entered into by the Company and the Board of Investment of Sri Lanka (BOI), the Com-
pany is entitled to an additional tax holiday of 3 years and a further additional tax exemption period of 5 years commencing from 17
December 2005 on profit and income earned by the Company from transshipment and bulk cargo operations and the operations of the
feed mill and the animal husbandry project.
The Company is liable to pay 35 % as income tax on interest income earned by the Company.
Three Acre Farms PLC is liable to pay income tax on profits and income earned at 15%. The tax losses available to carry forward as of
31 December 2010 amounted to Rs. 453,875,777/- (2009 - Rs. 479,481,472/-).
Ceylon Livestock and Agro business Services (Private) Limited is l iable to pay income tax at 35% on the profits and income earned by
the Company.
Ceylon Pioneer Poultry Breeders Limited is liable to pay income tax at 35% on the profits and income earned by the Company. The tax
losses available to carry forward as of 31 December 2010 amounted to Rs.227,682,800/- (2009 - Rs 227,807,598/-).
Millennium Multibreeder Farms (Private) Limited is liable to pay income tax at 15% on the profits and income earned by the Company.
The tax losses available to carry forward as of 31 December 2010 amounted to Rs.171,012,766/- (2009 - Rs 181,533,000/-).
Ceylon Aquatech (Private) Limited is liable to pay income tax at 15% on the profits and income earned by the Company. However, the
tax losses available to carry forward as of 31 December 2010 amounted to Rs.21,921,158/- (2009 - Rs 14,591,515/-)
Ceylon Warehouse Complex (Private) Limited is exempt from income tax on trading profits for a period of seven years reckoned from
the year in which the Company commences to make profits in relation to its transactions or any year of assessment not later than five
years from the date of its commercial operations, whichever is the earlier. The Company commenced commercial operations on 1
October 2000. Hence the tax holiday commenced from 30 September 2004. However the Company is liable for income tax for other
income for the year of assessment 2009/2010 at the rate of 15%.
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Notes to the Financial Statements Cont.
11. Ta (Contd)
Reconciliation of effective tax rate
The tax on the results of the Group’s operations and the Company’s profit/(loss) before tax differs from the theoretical amount that
would arise using the basic tax rate as follows:
Consolidated Company
2010 2009 2010 2009
Profit before tax 605,424 55,737 231,132 129,606
Share of profit of associate (42,409) (24,042) - -
Profit before tax, after adjustments 563,015 31,695 231,132 129,606
Add : disallowable expenses 678,377 1,214,137 263,716 1,047716
Deduct : allowable expenses (1,075,637) (1,245,832) (494,848) (1,177,322)
Add : interest income 88 - - -
Deduct :consolidation adjustments (49,172) - - -
Deduct : tax losses setoff (36,395) - - -
Taxable Income 80,276 - - -
Income tax using the domestic corporation tax rate
Rs. 67,093,333 at 15% 10,065 - - -
Rs. 13,183,857 at 35% 4,614 - - -
Current tax 14,679 - - -
Over provision (1,176) - - -
Deferred tax (charge)/release 7,204 (4,330) - 17,801
ESC writeoff 11,818 8,295 11,290 (6,420)
32,525 3,965 11,290 11,381
Further information about deferred tax is presented in Note 27.
12. BASIC EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the net profit attributable to shareholders by the weighted average
number of shares in issue during the year.
Consolidated Company
2010 2009 2010 2009
Net profit attributable to shareholders 474,872 133,870 219,842 140,987
Weighted average number of ordinary shares in issue
(thousands) 60,000 60,000 60,000 60,000
Basic earnings per share (Rs.) 7.91 2.23 3.66 2.35
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Notes to the Financial Statements Cont.
13. PROPERTY, PLANT AND EQUIPMENT
(a) Consolidated As at Additions / Revaluation Disposals/ As at
01.01.2010 WIP transfer write off 31.12.2010
Cost / Valuation
Land 327,136 - - - 327,136
Building 1,170,915 21,381 - - 1,192,296
Hatchery equipment 69,381 - - - 69,381
Plant and machinery,electrical and farm equipments 1,038,887 88,221 - (139) 1,126,969
Furniture and fittings, and office equipmets 102,364 8,054 - (410) 110,008
Motor vehicles 105,273 18,893 - - 124,166
Capital work in progress 96,707 (86,794) - - 9,913
2,910,663 49,755 - (549) 2,959,869
As at Charge Adjustment or Disposals/ As at
01.01.2010 for the year revaluation write off 31.12.2010
Depreciation
Building 143,660 27,104 - - 170,764
Hatchery equipment 8,709 1,213 - - 9,922
Plant and machinery,electrical and farm equipments 726,735 97,262 - (99) 823,898
Furniture and fittings, and office equipmets 80,944 (3,568) - (382) 76,994
Motor vehicles 89,652 7,189 - - 96,841
1,049,700 129,200 - (481) 1,178,419
As at As at
01.01.2010 31.12.2010
Carrying amount
Land 327,136 327,136
Building 1,027,255 1,021,532
Hatchery equipment 60,672 59,459
Plant and machinery,electrical and farm equipments 312,152 303,071
Furniture and fittings, and office equipmets 21,420 33,014
Motor vehicles 15,621 27,325
Capital work in progress 96,707 9,913
1,860,963 1,781,450
(b) Property, plant and equipment include fully depreciated assets, the cost of which as at 31 December 2010 amounted toRs. 481,493,447/- (2009 - Rs. 458,899,510/-).
(c) The recoverable amount of property (excluding land), plant and equipment is determined based on value-in-use calculation. These
calculations use cash flow projections based on financial budgets approved by management covering a five-year period. The growth
rate does not exceed the long-term average growth rate for the business in which the Three Acre Farms PLC group operates.
Key assumptions used for value-in-use calculations:
%
Gross margin 15
Growth rate 5
Discount rate 20
These assumptions have been used for the whole Three Acre Farms PLC group. Management determined budgeted gross margin
based on past performance and its expectations for the market development. The weighted average growth rate used is consistent
with the forecasts included in industry reports. The discount rates used are pre-tax and reflect specific risks relating to the industry.
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Notes to the Financial Statements Cont.
13. Property, plant and equipment (Contd)
(d) Capital work in progress at the balance sheet date includes value of work not certified for farm buildings amounting to Rs 1,665,637/-
(2009 - 2,182,700/-) and the purchase of capital equipment in the process of being installed Rs 8,247,000/- (2009 - Rs 97,679,722/-).
(e) Property, plant and equipment include assets of the temporarily ceased division of Ceylon Aquatech (Private) Limited , the net book
value of which as of the balance sheet date amounted to Rs 68,154,178/- (2009-Rs 69,998,000/-).
(f) In compliance with the accounting policy, the Group revalued some of the land and buildings owned by the Group companies
by an independent, professional valuer Mr. J. M. J. Fernando, A.M.I.V. (Sri Lanka) as at 31 December 2009. The lands have been
revalued on the basis of current market value and buildings were revalued at net present value. There are no tax implications or tax
liabilities due to revaluation of land and building. The Group’s share of the revaluation in excess of Rs.336,635,236/- over the net
book values as at 31 December 2009 has been placed to the credit of the revaluation reserve.
On reassessment of fair value of the Groups assets it has been identified that there is no permanent impairment of property plant
& equipment which requires provision in the financial statements.
Company Location Last Land Carrying value as at
Revaluation date Extent 31/12/2010
Freehold Land
Ceylon Grain Elevotors PLC Attanagalla Farm-Attanagalla 31/12/2009 12 A - 2R - 15.7 P 39,900,000
39,900,000
Three Acre Farms PLC Meegoda farm, Meegoda 31/12/2009 24A - 0R - 3.17P 13,800,000
Kosgama farm, Aluthambalama, Kosgama 31/12/2009 20A - 3R - 27.05P 5,750,000
Halwathura farm, Halwathura 31/12/2009 50A - 0R - 16.76P 2,000,000
Bulathsinhala farm,
Agaloya Bulathsinhala 31/12/2009 60A - 3R - 27P 70,178,000
Hijra farm, Pagoda,Beruwala 31/12/2009 50A - 3R - 8.5P 133,315,000
Makuluwatta farm, Waga 31/12/2009 13A - 1R - 23.56P 5,750,000
230,793,000
Ceylon Pioneer Poultry Aswatte Farm, Kosgama 31/12/2009 6A -3R -35.07P 1,958,000
Breeders Ltd Nilambe Farm,Office Junction,Galaha 31/12/2009 33A -0R - 28.82P 32,012,000
Wewelpanawa Farm,Wewelpanawa 31/12/2009 27A -1R - 1.54P 11,853,000
45,823,000
Ceylon Aquatech (Pvt) Ltd Chilaw Farm 31/12/2009 50A - 1R -34P 10,620,000
10,620,000
Freehold Land carried at revalued amount
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Company Location Last No of Carrying value as at
Revaluation date Building 31/12/2010
Freehold Building
Ceylon Grain Elevotors PLC Attanagalla Farm-Attanagalla 31/12/2009 52 22,536,000
52 22,536,000
Three Acre Farms PLC Meegoda farm, Meegoda 31/12/2009 61 124,372,838
Kosgama farm, Aluthambalama, Kosgama 31/12/2009 39 33,717,797
Halwathura farm, Halwathura 31/12/2009 31 68,680,114
Bulathsinhala farm, Agaloya
Bulathsinhala 31/12/2009 92 185,203,786
Hijra farm, Pagoda,Beruwala 31/12/2009 69 210,848,157
Makuluwatta farm, Waga 31/12/2009 36 91,610,784328 714,433,476
Ceylon Pioneer Poultry Aswatte Farm, Kosgama 31/12/2009 19 21,193,600
Breeders Ltd Nilambe Farm,Office Junction,Galaha 31/12/2009 10 7,793,081
29 28,986,681
Millennium Multibreeder Wewelpanawa Farm,Wewelpanawa 31/12/2009 30 175,761,948
Farms (Pvt) Ltd 30 175,761,948
Ceylon Aquatech (Pvt) Ltd Chilaw Farm 31/12/2009 15 57,525,775
15 57,525,775
Company Location Land Extent Carrying value as at
31/12/2010
Leasehold Land
Ceylon Grain Elevotors PLC Head office premises - Colombo-15 5A - 1R -20P 54,001,144
54,001,144
Company Location No of Carrying value as at
Building 31/12/2010
Leasehold Building
Ceylon Grain Elevotors PLC Head office premises - Colombo-15 14 66,613,856
66,613,856
Ceylon Warehouse Head office premises - Colombo-15 19 400,270,000
Complex (Pvt) Ltd 400,270,000
Company Cost as at 01/01/2010 Accumulated Depreciation NBV 31/12/2010
Land 39,879,024 - 39,879,024
Building 26,707,329 4,280,551 22,426,778
66,586,353 4,280,551 62,305,802
Group Cost as at 01/01/2010 Accumulated Depreciation NBV 31/12/2010
Land 334,873,907 - 334,873,907
Building 909,045,444 175,530,343 733,515,101
1,243,919,351 175,530,343 1,068,389,008
(g) Freehold Building carried at revalued amount
(h) Leasehold Land carried amount
i). Leasehold Building carried amount
Notes to the Financial Statements Cont.
(j) Freehold Land carried at revalued amount
The carrying amount of revalued assets that would have been included in the Financial Statements had the assets been carried
at cost less accumulated depreciation is as follows:
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13. Property, plant and equipment (Contd)
(k) Company As at Additions / Disposals/ As at
01.01.2010 WIP transfer write off 31.12.2010
Cost / valuation
Land 39,900 - - 39,900
Building 26,816 - - 26,816
Plant and machinery, factory, electrical and farm equipments 378,731 10,405 (139) 388,997
Furniture and fittings, and office equipments 92,425 8,044 (410) 100,059
Motor vehicles 49,187 8,920 - 58,107
Capital work in progress 97,679 (89,432) - 8,247
684,738 (62,063) (549) 622,126
As at Charge Disposals/ As at
01.01.2010 for the year write off 31.12.2010
Depreciation
Building 3,716 564 - 4,280
Plant and machinery, factory, electrical and farm equipments 290,293 15,981 (99) 306,175
Furniture and fittings, and office equipments 60,709 6,749 (382) 67,076
Motor vehicles 39,141 2,933 - 42,074
393,859 26,227 (481) 419,605
As at As at
01.01.2010 31.12.2010
Carrying amount
Land 39,900 39,900
Building 23,100 22,536
Plant and machinery, factory, electrical and farm equipments 88,438 82,822
Furniture and fittings, and office equipments 31,716 32,983
Motor vehicles 10,046 16,033
Capital work in progress 97,679 8,247
290,879 202,521
(l) Property, plant and equipment include fully depreciated assets, the cost of which as at 31 December 2010 amounted to Rs. 264,134,058/-
(2009 - Rs 243,603,336/-).
(m) The Company has disposed cost of office equipments Rs 410,073/-, factory equipment Rs 121,739/-,electrical equipment Rs 17,111/-
during the year and the loss from disposal amounting to Rs.67,725/- have been recognized under other operating expenses.
14. LEASEHOLD RIGHT OVER LAND & BUILDING
Consolidated Company
2010 2009 2010 2009
Balance as at beginning of the year 542,522 557,681 124,371 127,020
Transfer from capital working progress - 1,095 - 1,095
Amortization for the year (21,637) (16,254) (3,756) (3,744)
Balance as at end of the year 520,885 542,522 120,615 124,371
The Company has an agreement to mortgage for Rs. 495mn over leasehold land & building, plant & machinery equipment at No.15,
Rock House Lane, Colombo-15 as security for credit facilities.
The leasehold land and building which was recognized previously as finance lease are accounted as operating lease based on
substance of lease agreement.
The management represents that the previous treatment was in accordance with Accounting Standards prevalent at that time and this
amount will be treated similar to lease prepayment and amortized over the remaining period of the lease.
Notes to the Financial Statements Cont.
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14. Leasehold right over land & building (Contd)
The lease period of the leasehold land expires on 19 September 2012 and the Company has the option of renewing the lease for a
further period of 30 years.
The Company’s leasehold land and buildings were revalued in 1992, by independent valuers. Valuations were made on the basis of
the market value for existing use. The book values of the property were adjusted to the revalued amount and the result-ant surplus was
credited to the revaluation reserve.
If the leasehold land and buildings were stated on the historical cost basis, the amounts would be as follows:
2010 2009
Cost 115,980 115,980
Accumulated depreciation (46,392) (44,072)
Net book value 69,588 71,908
15. INTANGIBLE ASSETS
Consolidated Company
2010 2009 2010 2009
a) Goodwill
Cost
Balance as at beginning of the year 17,938 17,938 - -
Additions during the year - - - -
Balance as at end of the year 17,938 17,938 - -
Impairment
Balance as at beginning of the year 17,088 15,286 - -
Impairment for the year 850 1,802 - -
Balance as at end of the year 17,938 17,088 - -
Carrying Amount - 850 - -
Notes to the Financial Statements Cont.
The excess of the purchase consideration paid over the value of the net assets of the Kosgama Farm on acquisition is fully impaired
during the year.
The recoverable amount of property (excluding land), plant and machinery equipment is determined based on value-in-use calculation.
These calculations use cash flow projections based on financial budgets approved by management covering a five-year period. Cash
flows beyond the five-year period are extrapolated using the estimated growth rates stated below. The growth rate does not exceed the
long-term average growth rate for the industry in which the Group operates.
Key assumptions used for value-in-use calculations:
%
Gross margin 15Growth rate 5
Discount rate 20
These assumptions have been used for the whole CGE Group. Management determined budgeted gross margin based on past
performance and its expectations for the market development. The weighted average growth rates used are consistent with the
forecasts included in industry reports. The discount rates are pre-tax and reflect specific risk relating to the industry.
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Notes to the Financial Statements Cont.
(a.2) Summarized financial information of Ceylon Agro Industries Limited
Balance Sheet 2010 2009
Total assets 2,249,229 1,525,285
Total liabilities (1,053,057) (815,302)
Net assets 1,196,172 709,983
Preference dividend not accrued (254,802) -
Revenue and profits 2010 2009
Revenue 2,652,180 2,256,408
Profit/(loss) 306,198 111,134
(b.1) Prima Management Services (Private) Limited (PMS)
2010 2009
Balance at the beginning of the year 33 33
Share of results after tax 31 -
Balance at the end of the year 64 33
(b.2) Summarized financial information of Prima Management Services (Private) Limited
Balance Sheet 2010 2009
Total assets 71,052 87,394
Total liabilities (70,857) (88,273)
Net assets 195 (879)
Revenue and profits 2010 2009
Revenue 98,399 64,062
Profit/(loss) 1,074 835
15. Intangible assets (Contd)
Consolidated Company
2010 2009 2010 2009
(b) ERP Software
Cost
Additions during the year 97,679 - 97,679 -
97,679 - 97,679 -
Amortisation
Amortisation for the year (9,767) - (9,767) -
Carrying Amount 87,912 - 87,912 -
16. INVESTMENT IN ASSOCIATE COMPANIES
Consolidated Company
2010 2009 2010 2009
Ceylon Agro Industries Limited (CAIL) (16 a) 230,000 187,622 128,451 128,451
Prima Management Services (Private) Limited (PMS) (16 b) 64 33 33 33
230,064 187,655 128,484 128,484
(a.1) Ceylon Agro Industries Limited (CAIL)
Consolidated
2010 2009
Balance at the beginning of the year 187,622 163,580
Share of results 42,378 24,042
Balance at the end of the year 230,000 187,622
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Notes to the Financial Statements Cont.
17. INVESTMENT IN SUBSIDIARY COMPANIES
(a) Investment in subsidiary companies - quoted
Number of Company Groupshares holding Holding 2010 2009
% %
Three Acre Farms PLC 13,469,980 57.21% 57.21% - -Net book value as at 31 December 148,625 148,625
Market Value as at 31 December 1,214,992 124,597
(b) Investment in subsidiary companies - unquoted
Number of Company Groupshares holding Holding 2010 2009
Ceylon Warehouse Complex (Private) Limited 15,000,002 100% 100% 150,000 150,000
Ceylon Aquatech (Private) Limited 6,000,000 100% 100% 60,000 60,000
Ceylon Livestock & Agrobusiness
Services (Private) Limited 300,002 100% 100% 3,000 3,000
Net book value as at 31 December 213,000 213,000
(d) Investment in associate companies - Unquoted
No of Shares Holding % 2010 2009 No of Shares Holding % 2010 2009
Ceylon Agro Industries Limited (CAIL) 22,831,718 23% 230,000 187,622 22,831,718 23% 128,451 128,451Prima Management
Services (Private) Limited (PMS) 3,334 33% 64 33 3,334 33% 33 33
Net book value as at 31 December 230,064 187,655 128,484 128,484
Share of movement in equity value - - - -
Equity value in investments 230,064 187,655 128,484 128,484
The associate company, Ceylon Agro Industries Limited (CAIL), is a company incorporated in Sri Lanka. it is engaged in the manufac-
ture of noodles, bakery products and value added poultry products. It is also in the distribution and retail of flour in addition to agricul-
tural development of maize and forage crops. CAIL has Rs.300 million of convertible preference shares. The litigation that delayed the
conversion has been settled, and CAIL shareholders are in the process of converting such preference shares into ordinary shares. If
such conversion takes place, the percentage holding of the Company will reduce to 23%. The Group’s share of profit/(loss), net assets
and goodwill on consolidation has been accounted for on the basis that the Company’s share is 23%.
On 3rd March 2011, subject to its shareholders’ approval, the Directors of CAIL have resolved to capitalize the Company’s reserves byissuing 6,107,143 ordinary shares at a price of Rs. 28 per share. Accordingly company’s holdings may reduce to 21.5%.
The Company has invested Rs. 33,334/- in Prima Management Services (Private) Ltd (PMS) acquiring 33% stake during 2006.
Consolidated Company
16. Investment in associate companies (Contd)
(c) Share of profit of associate companies
Group’s share of
profit/(loss) after tax
2010 2009
Ceylon Agro Industries Limited (CAIL) 42,378 24,042
Prima Management Services (Private) Limited (PMS) 31 -
42,409 24,042
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17. Investment in subsidiary companies (Contd)
(c) Details of the companies incorporated in Sri Lanka, in which the Company held an interest of 50% or more are set out below:
Name of Company Proportion of
ordinary shares held Business
2010 Movement 2009
Ceylon Livestock & Agrobusiness Services 100.00% 100.00% Import and sale of poultry equipment and
(Private) Limited - vaccines
Ceylon Warehouse Complex (Private) Limited 100.00% 100.00% Provide storage facilities
Ceylon Aquatech (Private) Limited 100.00% - 100.00% Integrated shrimp business
Three Acre Farms PLC 57.21% - 57.21% Hatching and sale of day old chicks and
- commercial farming
Ceylon Pioneer Poultry Breeders Limited 57.21% 57.21% Operation of poultry breeder grand parent and
- parent farms and hatcheries and commercial
farming
Millennium Multibreeder Farms (Private) 57.21% 57.21% Operation of modern poultry and hatcheries
Limited - utilizing advanced technologies.
The financial year of all above companies are ended on 31 December and they are audited by Messrs KPMG Ford Rhodes
Thornton & Co. These companies were incorporated in Sri lanka.
18. LIVESTOCK
Consolidated Company
2010 2009 2010 2009
Opening net book value 224,287 221,112 - -
Additions 446,999 287,680 - -
Amortization (Note 5) (316,199) (284,505) - -
Closing net book value 355,087 224,287 - -
19. OTHER INVESTMENTS
Quoted investments No. of shares Consolidated/Company
2010 2009 2010 2009
Hatton National Bank PLC (non-voting ordinary shares) - 137,500 - 7,322
Disposal of shares - (137,500) - (7,322)
Market value of other investments - - - -
Notes to the Financial Statements Cont.
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20. AMOUNT DUE FROM AFFILIATED COMPANIES
Consolidated Company
2010 2009 2010 2009
Three Acre Farms PLC - - 964,318 1,055,472
Ceylon Aquatech (Private) Limited - - 94,304 96,303
Ceylon Pioneer Poultry Breeders Limited - - 348,005 345,591
Ceylon Warehouse Complex (Private) Limited - - 186,992 232,783
Ceylon Livestock Agrobusiness Services - - 422 6,861
Millennium Multibreeder Farms (Private) Limited - - 63,743 158,220
- - 1,657,784 1,895,230
Less-provision for receivables - - (318,162) (248,162)
- - 1,339,622 1,647,068
Provision have been made for receivables from Three Acre Farms PLC, Ceylon Aquatech (Private) Limited and Ceylon Pioneer Poutry
Breeders Ltd amounting to Rs. 123,850,000/-, Rs. 94,312,000/- and Rs 100,000,000, respectively.
21. INVENTORIES Consolidated Company
2010 2009 2010 2009
Raw materials and consumables 1,060,681 1,376,000 975,294 1,243,261
Work in progress 4,103 4,418 4,103 4,302
Hatching eggs 4,118 3,585 - -
Finished goods
- Feeds 21,003 41,699 21,003 41,699
- Chicken 25,378 11,150 25,378 11,150
- Broiler DOC 4,632
Out grower stock 104,185 88,095 104,186 88,095
1,224,100 1,524,947 1,129,964 1,388,507
Less: provision for slow moving and obsolete items (17,847) (17,847) (17,847) (17,847)
1,206,253 1,507,100 1,112,117 1,370,660
Inventories are on an “agreed to mortgage” condition, against short term bank borrowings from the bank.
22. TRADE AND OTHER RECEIVABLES
Consolidated Company
2010 2009 2010 2009
Trade receivables 565,281 488,581 555,064 480,285
Less: provision for bad & doubtful debts (260,391) (228,952) (250,040) (222,083)304,890 259,629 305,024 258,202
Prepayments 34,909 35,587 20,841 23,429
Other receivables [Note (22.a)] 112,528 165,433 74,402 108,357
452,327 460,649 400,267 389,988
Trade receivables have been pledged as securities for short term bank borrowings
Notes to the Financial Statements Cont.
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22. Trade and other receivables (Contd)
(a) Other receivables Consolidated Company
2010 2009 2010 2009
Deposits and advances 14,410 14,987 8,464 10,451
Staff loans 813 622 141 80
Other receivables 97,305 149,824 65,797 97,826
112,528 165,433 74,402 108,357
23. CASH AND CASH EQUIVALENTS Consolidated Company
2010 2009 2010 2009
Cash at bank and in hand 32,520 28,315 30,229 22,147
Short term bank deposits 14,942 5,858 - -47,462 34,173 30,229 22,147
The weighted average effective interest rate on short term bank deposits was Group- 3.26% (2009- Nil%).
For the purposes of the cash flow statement, the year-end cash and cash equivalents comprise the following:
(a) Net cash and cash equivalents
Consolidated Company
2010 2009 2010 2009
Cash and bank balances 47,462 34,173 30,229 22,147
Bank overdrafts (Note 26) (86,475) (61,934) (75,182) (53,184)
(39,013) (27,761) (44,953) (31,037)
24. TRADE AND OTHER PAYABLES Consolidated Company
2010 2009 2010 2009
Trade payables 116,947 68,921 77,966 26,841
Accrued expenses 104,234 70,770 55,377 46,857
Dividend payable 561 561 561 561
Other payables 172,601 71,173 133,888 59,980
394,343 211,425 267,792 134,239
25. AMOUNT DUE TO AFFILIATED COMPANIES Consolidated Company
2010 2009 2010 2009
Non current
Hapiways Management Services Pte Ltd 1,065,944 1,081,576 1,065,944 1,081,576
1,065,944 1,081,576 1,065,944 1,081,576
Current
Ceylon Agro Industries Limited 27,975 41,164 27,975 41,164
Prima Ceylon (Private) Limited 245,773 326,137 245,773 326,137
Prima Management Services (Private) Limited 13,080 28,563 13,080 28,563
Hapiways Management Services Pte Ltd 117,986 587,735 116,408 586,579
Colombo Sea Foods Limited 2,640 2,640 2,640 2,640
407,454 986,239 405,876 985,083
Notes to the Financial Statements Cont.
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26. INTEREST BEARING BORROWINGS Consolidated Company
2010 2009 2010 2009
Bank overdraft 86,475 61,934 75,182 53,184
Bank borrowings 360,000 694,900 360,000 694,900
446,475 756,834 435,182 748,084
The interest rate exposure of the borrowings of the Group and the Company was as follows:
Consolidated Company
2010 2009 2010 2009
Total borrowings:
- at fixed rates - - - -
- at floating rates 446,475 756,834 435,182 748,084
446,475 756,834 435,182 748,084
Consolidated/Company
2010 2009
Weighted average effective interest rates:
- bank overdrafts AWPLR+0.75% AWPLR+0.75%
- bank borrowings
- fixed - -
- floating 9.00% 14.30%
Current bank borrowings were obtained to finance the import of raw materials relating to the production of poultry and animal feed.
Security for these borrowings are inventories and receivables and agreement to mortgaged for Rs. 495mn over leasehold land &
building, machinery equipment at No.15, Rock House Lane, Colombo-15.
27. DEFERRED TAxATION
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against tax liabilities
and when the deferred income taxes relate to the same fiscal authority. The offset amounts are as follows:
Consolidated Company
2010 2009 2010 2009
Deferred tax assets 27( b) (111,741) (86,466) (34,505) (38,491)
Deferred tax liabilities 27 (a) 190,091 157,612 34,525 38,511
78,350 71,146 20 20
The gross movement on the deferred income tax account is as follows:
Consolidated Company
2010 2009 2010 2009
As at beginning of the year 71,146 24,981 20 17,801
Income statement release (Note 11) 7,204 (24,821) - (17,801)
Transfer from revaluation reserve - 50,495 - -
Prior year adjustments (Note 37) - 20,491 - 20
As at end of the year 78,350 71,146 20 20
The movement in deferred tax assets and liabilities during the year, without taking into consideration the offsetting of balances within
the same tax jurisdiction, is as follows:
Notes to the Financial Statements Cont.
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27. Deferred taation (Contd)
(a) Deferred tax liabilities:
Deferred tax liabilities of the Group and the Company wholly arose from accelerated tax depreciation. The deferred tax liability of the
Group and the Company as at 31 December 2010 are Rs.190,091,000/- and Rs. 34,525,000/- respectively.
(b) Deferred tax assets:
Consolidated Provision Tax Employee Total
on assets losses benefit
obligations
As at beginning of the year (525) (85,560) (381) (86,466)
Credited to income statement (32,864) 10,573 (2,985) (25,275)
As at end of the year (33,389) (74,987) (3,366) (111,741)
Provision Tax Employee Total
on assets losses benefit
Company obligations
As at beginning of the year (35,990) - (2,501) (38,491)
Credited to income statement 3,844 - 143 3,986
As at end of the year (32,146) - (2,358) (34,505)
(c) Tax losses of Rs. 227,682,000/- and Rs. 21,921,158/- as disclosed in the note 11 to the financial statements have not been
recognised as deferred tax assets due to uncertainty regarding availability of future taxable profit in the respective companies.
28. EMPLOYEE BENEFITS Consolidated Company2010 2009 2010 2009
Present value of unfunded obligations 28,052 23,946 19,654 16,676
Present value of funded obligations - - -
Total present value of obligations 28,052 23,946 19,654 16,676
Fair value of plan assets - - -
Total employee benefits 28,052 23,946 19,654 16,676
Movement in the present value of the employee benefits
Employee benefit as at 1 January 23,946 22,563 16,676 15,775
Benefits paid by the plan (1,723) (2,023) (1,040) (1,456)
Current service cost 2,377 1,306 1,632 823
Interest cost 3,452 2,100 2,386 1,534
Actuarial gain during plan year - - - -
Transition obligation/(asset) recognized in Income statement - - - -
Employee benefit as at 31 December 28,052 23,946 19,654 16,676
Notes to the Financial Statements Cont.
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28. Employee benefits (Contd) Consolidated Company
2010 2009 2010 2009
Expense recognized in income statement
Current service costs 2,377 1,306 1632 823
Interest on obligation 3,452 2,100 2,386 1,534
Transition obligation/(asset) recognized in Income statement - - - -
Actuarial gain during plan year - - - -
5,829 3,406 4,018 2,357
The actuarial valuation was carried out by professionally qualified actuary, Piyal S Gunathilake of P&G Associates.
The actuarial valuation was made on 31 December 2010
The liability is not externally funded.
Actuarial assumptions
Principal actuarial assumptions at the reporting date (expressed as weighted averages):
Discount rate as at 31 December 2010 10%
Expected return on plan assets as at 1 January 2010 0%
Future salary increases 10%
Assumptions regarding future mortality are based on published statistics and mortality tables.
The average life expectancy of an individual retiring at age 55.
Staff turnover sliding scale by the age of employee retiring from 10%-1%.
The provision for retiring gratuity for the year is based on the actuarial valuation made on 31 December 2010.
29. CONTINGENT LIABILITIES
(a) After Inquiry, the Director General of Customs by Order dated 22nd July 1998 has imposed on the Company a forfeiture under the
provisions of the Customs Ordinance of approximately Rs. 1,198 million. This sum comprises of Rs. 548 million being treble the value
of a quantity of maize supplied by the Company to the Thriposha Programme allegedly without any specific approval or authority being
granted by the Ministry of Finance and a sum of Rs. 650 million being treble the value of quantities of maize converted and categorized
as special feeds “C” and “CC” and sold in the open market, allegedly in contravention of the declaration made in respect thereof to
the Controller of Imports and Exports and the Sri Lanka Customs and also in breach of the Agreement between the Company and the
Government of Sri Lanka.
The Company has totally denied the alleged contraventions and has instituted actions in the Court of Appeal (Case No. CA 839/98)
on 27th August 1998 by way of an application for Writs of Certiorari and Prohibition to quash the Order imposing the forfeiture and
to prohibit any steps being taken in pursuance of the said Order, and in the District Court of Colombo (Case No. 5195/Spl) on 21st
September 1998 for a declaration that the said Order is wrongful, unlawful, null and void and of no force or avail in law.
The Honorable Attorney General has filed objections in the Court of Appeal (Case No.CA 839/98) and the Company has been granted
permission to file its counter objections and accordingly the Company has filed the same. When the case was called on 31st January
2005, the Attorney General took up preliminary objections about the maintainability of this action and after hearing both sides, Court
dismissed the preliminary objections of the Hon. Attorney General and fixed the matter for argument. Being aggrieved by the said Order,
the Hon. Attorney General appealed to the Supreme Court seeking Leave to Appeal against the said Order (SC Appeal 01/2006). When
the case was taken up on 18th January 2008, the Honorable Chief Justice laid aside the case in view of a possible settlement but the
Honorable Attorney General filed a motion, supported on 26th November 2008, to re-open the case. This case was fixed for hearing
and same was postponed for several dates and now it is fixed for hearing on 11th May 2011. CA 839/98 case also getting postponed
in view of the appeal pending in the Supreme Court and the same will be called on next in the Court of appeal on 30th March 2011
After several postponements in DC Colombo case No. 5195/Spl, the Company took up a preliminary objection and both parties
having tendered their respective written submissions, the Order was delivered on 21st February 2007 stating that the Issues would
be answered at the end of the case after hearing the evidence. On the advice of the Company’s legal counsel, the Company appealed
Notes to the Financial Statements Cont.
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against this Order to the High Court of the Western Province (Case No. WP/HCCA/07/2007), which was supported on 19th July 2007.
The Order of the Provincial High Court was delivered on 02nd April 2009 against the Company.
Aggrieved by the said Order, a Special Leave to Appeal Application was filed by the Company against the said Order of the Provincial
High Court to the Supreme Court on 12/05/09 on the basis that the High Court Judge has not considered or decided on the main
question raised in the case (Appeal Case No. is SC (HC) CALA 94/2009). After lengthy arguments the Supreme Court refused Leave
to Appeal and confirmed the order of the Provincial High Court
On an application made by the Attorney General in SC (HC) CALA 94/2009,(prior to the Order) the Supreme Court directed the parties
to proceed with the trial in DC Colombo case No. 5195/ Spl pending appeal. Accordingly this case was called on 19th November 2009
for trial and the same was laid by. Thereafter this case was called on 07th October 2010 to pronounce the Judgment of the Supreme
Court and thereafter the matter was fixed for trial for 21st January 2011. On that date, DSG representing the Hon AG informed Court
that there is a possibility of a settlement and that the terms are presently being negotiated. Accordingly, Court re-fixed the case for trial
or settlement on 13th May 2011 and directed the parties that in the event of a settlement, to agree on the terms before that date.
(b) The Attorney General’s Department has filed a Debt Recovery Action in the District Court of Colombo (Case No 866/DR) on behalf of Sri
Lanka Customs for the recovery of the said sum together with interest. The Company promptly filed papers denying the State’s claim.
After Inquiry, the District Judge made Order on 29th March 2005 granting permission for the Company to defend the action upon
depositing a sum of Rs. 400 million before 29th May 2005. On the advice of the Company’s legal Counsel, Company has filed action
in the Court of Appeal bearing No. CA/LA 142/2005 to set a side or vary the said Order in DC Colombo Case No. 866/DR. The Court
of Appeal has granted Leave to Appeal to the Company and stayed proceedings in 866/DR and on an application made by the Hon
Attorney General fixed the matter before a Divisional Bench and was to be taken up for argument on 09th May 2006. However, it was
not taken up for argument on that date and the case was postponed on several occasions to re-constitute the Bench. The case is now
due to be called on 21st March 2011
The DC 866/DR case will be next called on 19th May 2011 and the outcome of the appeal is awaited.
(c) 284/2008 MR
This is the case where Green Valley Farm has sued CGE claiming Rs 195,775,305.91 as losses resulted from the business affairs had
with CGE.
Inquiry was commenced and first witness on behalf of Green Valley Farm is giving evidence. Witness is currently under cross
examination. Next hearing is on 12th May 2011.
(d) 796/2007
Court of Appeal pronounced its judgment against CGE where the court held that preliminary objection taken up by CGE against the
Ministers Reference is not valid. Accordingly the case (A 3175) was referred back to Industrial Court for hearing.
(e) A-3175Further to Court of Appeal judgment of 796/2007 Industrial Court took up the case for hearing but there were several postponements
in view of the parties’ agreement - to seek possibility of a settlement. Case is due to be taken up on 31st March 2011 for hearing.
Notes to the Financial Statements Cont.
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30. COMMITMENTS
No capital commitments outstanding as at the balance sheet date except the followings
Within one 1-5 years More than Total
year 5 years
Company
(a) Hapiways Management Services Pte Limited -
for the management services rendered outside Sri Lanka. 26,628 106,512 718,956 852,096
(b) Operating lease commitment - The Ministry of Finance
and planning for the use of land and buildings at
15, Rock house lane, Colombo 15. 14,170 56,680 382,590 453,440
(c) Sri Lanka Ports Authority - operating lease rentals for the
use of Woodland Warehouse. 3,429 13,716 92,583 109,728
Group(d) Ceylon Warehouse Complex (Private) Limited operating lease
rentals to Sri Lanka Ports Authority for the use of land. 12,371 49,484 334,017 395,872
56,598 226,392 1,528,146 1,811,136
(e) Amount due from the Three Acre Farms PLC is Rs. 964,317,694/- which is classified as non-current receivable in the company’s
financial statements.
The company is the parent company of Three Acre Farms PLC, and confirms their commitment, in present circumstances to
continue financial support in the business operations of Three Acre Farms PLC, and to meet financial obligations. As the major
share holder in Three Acre Farms PLC, the Company has no intension or inclination of withdrawing their support or reducing the
scale of operations of the Three Acre Farms PLC in the forth coming 12 months.
(f) The Company has provided a corporate guarantee of Rs. 45,000,000/- to its associate Ceylon Agro Industries Limited for a bank-
ing facility obtained from Sampath Bank PLC.
31. STATED CAPITALIn accordance with Section 58 of Companies Act No 7 of 2007, which became affective from 3 May 2007, share capital and share
premium of the Company have been reclassified as stated capital.
Company
2010 2009
60,000,000 Ordinary shares 600,000 600,000
Share premium 417,996 417,996
Stated capital as at 31 December 1,017,996 1,017,996
32. MINORITY INTEREST
Consolidated
2010 2009
As at beginning of the year 80,035 46,958Additions due to revaluation of assets - 115,175
Share of net profit/ (loss) of subsidiaries 98,027 (82,098)
As at end of the year 178,062 80,035
33. REVALUATION RESERVE
The revaluation reserve relates to property, plant and equipment.
Revaluation reserve can be analyzed as fol lows:
Consolidated Company
2010 2009 2010 2009
As at beginning of the year 231,142 61,237 37,579 38,639
Revaluation surplus - 221,570 - 110
Depreciation transfer - (1,170) - (1,170)
Transfer to deferred tax - (50,495) - -
As at end of the year 231,142 231,142 37,579 37,579
Notes to the Financial Statements Cont.
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34. CASH GENERATED FROM OPERATIONS
Reconciliation of profit / (loss) before tax to cash generated from operations:
Consolidated Company
2010 2009 2010 2009
Profit / (loss) before tax 605,424 55,737 231,132 129,606
Adjustments for:
Depreciation (Note 5) 129,200 94,072 26,227 25,817
Amortization of leasehold right (Note 14) 21,637 16,786 3,756 3,744
Revaluation deficit - 7,761 -
Amortization of intangible assets (Note 15) 10,617 1,802 9,767 -
Amortization of livestock (Note 18) 316,199 284,505 - -
(Profit) / loss on disposal of property, plant and equipment (Note 5) 68 (445) 68 (112)
(Profit) on disposal of other investment ((Note 5) - (17,373) (17,373)
Exchange Gain/(loss) ( Note 10) (22,943) 26,886 (21,969) 26,463
Interest received (Note 10) (1,511) (840) (1,131) (648)
Interest expense (Note 10) 53,517 94,689 52,182 94,149
Dividend income (Note 9) - (1,168) - (1,168)
Provision for bad debts (Note 5) 31,439 (3,671) 27,957 (3,671)
Share of associate profit [Note16(c)] (42,409) (24,042) - -
Changes in working capital
- trade and other receivables (44,404) 78,550 257,457 49,487
- inventories 300,847 282,645 258,543 272,905
- payables (414,643) (399,083) (461,286) (389,326)
Employee benefits (Note 7) 5,829 3,406 4,018 2,357
Cash generated from operations 948,867 500,217 386,721 192,230
35 RELATED PARTY TRANSACTIONS
35.1 Key management personnel information
Key management personnel include all the members of the Board of Directors of the Company having authority and responsibility for
planning, directing and controlling the activities of the Company as well as the subsidiaries, directly or indirectly.
Compensation paid to / on behalf of key management personnel of the companies are as follows:
Consolidated Company
2010 2009 2010 2009
Short-term employee benefits 480 400 360 300
Post employment benefits - - - -
480 400 360 300
Mr. Cheng Chih Kwong, Primus, Mr. Cheng Chih Cheng,Robert, Mr. Tan Beng Chuan, Mr. Cheng Chih Hui, Peter, Dr. Wickrema Sena
Weerasooria and Mr. Sunil Karunanayaka the directors of the Company are also directors of the following companies as set out below
and with transaction in note number 35.2 have been carried out.
Notes to the Financial Statements Cont.
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35.1 Key management personnel information (Contd)
Name of the related party Name of the director Nature / Rationale of transaction
Three Acre Farms PLC Mr. Cheng Chih Kwong, Primus CGE sells feeds to TAF. Also company purchases
Subsidiary Mr. Cheng Chih Cheng,Robert broiler DOC and culled birds from TAF.
Mr. Tan Beng Chuan
Mr. Cheng Chih Hui, Peter
Dr. Wickrema Sena Weerasooria
Mr. Sunil Karunanayaka
Ceylon Pioneer Poultry Breeders Mr. Cheng Chih Kwong Primus, No inter-company transactions has been recorded
Limited Mr. Cheng Chih Cheng, Robert during the year.
Subsidiary Mr. Tan Beng Chuan
Ceylon Aquatech (Private) Limited Mr. Cheng Chih Kwong, Primus, No inter-company transactions has been recorded
Subsidiary Mr. Tan Beng Chuan during the year.
Ceylon Livestock and Agrobusiness Mr. Cheng Chih Kwong, Primus, CLAS supplies veterinary drugs, medicine and
Services (Private) Limited Mr. Tan Beng Chuan poultry equipments to the company’s outgrower farms.
Subsidiary Also company sells drugs and vaccines to CLAS.
Ceylon Warehouse Complex Mr. Cheng Chih Kwong, Primus, CWCL provides storage facilities to the Company.
(Private) Limited Mr. Tan Beng Chuan
Subsidiary
Ceylon Agro Industries Limited Mr. Cheng Chih Kwong, Primus, The company is hiring the poultry processing plant,
Associate Mr. Tan Beng Chuan rendering Plant and Storage facilitations from CAI.
Also company sells process chicken to CAI.
Millennium Multibreeder Farms Mr. Cheng Chih Kwong, Primus, CGE sells feeds to MMFL. Also company purchases
(Private) Limited Mr. Tan Beng Chuan broiler DOC and culled birds from MMFL.
Subsidiary
Prima Ceylon (Private) Limited Mr. Cheng Chih Kwong, Primus, The CGE purchases Brand Pallet and Wheat pollard.
Group Company Mr. Cheng Chih Cheng, Robert
Mr.Tan Beng Chuan
Hapiways Management Services Mr. Cheng Chih Kwong, Primus, Purchase of all kind of imported raw materials, feed
Pte Ltd Mr. Cheng Chih Cheng, Robert additives, spare parts and other significant imports.
Group Company Mr. Cheng Chih Hui, Peter
Prima Management Services (Private) Limited is an associate company of CGE and has provided IT related services to group
companies during the year. The Company has outsourced the IT function to PMS and pays an agreed fee. Further, PMS maintains the
ERP system on behalf of the Company and charged accordingly. (See note number 35.2 for related party transactions),
35.2 Related party transactions
The Group has a related party relationship with its subsidiaries, associates and related group companies as disclosed in note number
35.1 Companies within the Group engage in trading transactions. The following transactions were carried out with related parties
during the year ended 31 December 2010.
Notes to the Financial Statements Cont.
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35.2 Related party transactions (Contd)
(a) Sales of goods and services
Consolidated Company
2010 2009 2010 2009
Sales of goods:
Three Acre Farms PLC - - 422,667 398,400
Ceylon Pioneer Poultry Breeders Limited - - - -
Millennium Multibreeder Farms (Pvt) Limited - - 130,640 132,778
Ceylon Livestock and Agrobusiness Services - - 26,713 42,430
(Private) Limited
Prima Ceylon (Private) Limited 4,455 6,943 4,455 6,943
Ceylon Agro Industries Limited 19,088 18,403 19,088 18,403
23,543 25,346 603,563 598,954
Sale of services:
Ceylon Agro Industries Limited 628 3,151 628 3,151
Ceylon Warehouse Complex (Private) Limited - - 1,500 1,500
Ceylon Livestock and Agrobusiness Services - - 360 360
(Private) Limited
Three Acre Farms PLC - - 3,300 3,300
Prima Ceylon (Private) Limited 718 580 718 580
1,346 3,731 6,506 8,891
(b) Purchases of goods and services
Consolidated Company
2010 2009 2010 2009
Purchase of goods:
Three Acre Farms PLC - - 310,483 216,234
Ceylon Livestock and Agrobusiness Services - - 27,447 24,409
(Private) Limited
Ceylon Pioneer Poultry Breeders Limited - - - -
Millennium Multibreeder Farms (Pvt) Limited - - 113,748 120,206
Hapiways Management Services Pte Ltd 3,160,036 3,514,500 3,141,784 3,504,943
Prima Ceylon (Private) Limited 265,687 195,751 265,687 195,751
Ceylon Agro Industries Limited 4,805 15,271 4,805 15,271
3,430,528 3,725,522 3,863,954 4,076,814
Purchases of services:
Ceylon Warehouse Complex (Private) Limited - - 51,166 62,838Hapiways Management Services Pte Ltd 27,221 27,648 27,221 27,648
Ceylon Agro Industries Limited 213,117 198,230 213,117 198,230
Prima Ceylon (Private) Limited 7,212 6,618 7,212 6,618
Prima Management Services (Private) Limited 26,691 27,892 26,691 27,892
Ceylon Aquatech (Private) Limited - - 3,064 3,044
274,241 260,388 328,471 326,270
Notes to the Financial Statements Cont.
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35.2 Related party transactions (Contd)
(c ) The receivables from related companies and payables to related companies on sale/purchase of goods/services are set out in
note 20 and 25 respectively. These receivables and payables are unsecured, interest free and have no fixed repayment terms.
(d) The subsidiary companies use some facilities of the Company free of charge and part of the accounting and administrative
functions of the subsidiary companies are also performed by the Company for which charges are made.
36. EVENTS OCCURRING AFTER BALANCE SHEET DATE
There are no events which require adjustment to, or disclosure in the financial statements except for the following :
The Directors propose for payment a First and Final Dividend of Rs. 1.00/- per share for the year ended 31st December 2010 on 16th
March 2011.
37. COMPARATIVE INFORMATION
Comparative information in financial statements have been restated as follows ,
(a) Reclassification of Leasehold right over land & buildings as Freehold
Land amounting to Rs.39,900,000 and building amounting to Rs.23,100,000 of Attanagalla farm has been transferred to Property Plant
& Equipment from leasehold right over land & buildingsproperties ,since the land and building qualifies as Property Plant & Equipment
under SLAS 18- Property Plant & Equipment.In addition the following two restatements were also affected.
1) Recognition of previously unrecognised revaluation of land & Building of Attanagalla farm amounting to Rs.130,000.
2) Defered tax liability arised upon revaluation stated above (1) of amounting to Rs.20,000
(b) Minority Interest
Revaluation reserve relating to minority interest of Rs.115,175,000 to was allocated to the relevant heading on the balance sheet.
(c) Deferred Tax Liability
Recognition of previously unrecognised deferred tax liability amounting to Rs. 20,491,164 of Ceylon Warehouse Complex (Private)
Limited.
38. DIRECTOR’S RESPONSIBILITY
The board of Directors are responsible for the preparation and fair presentation of these financial statements.
Notes to the Financial Statements Cont.
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Five Year Financial Summary
For the years ended 31 December 2010 2009 2008 2007 2006
CONSOLIDATED
OPERATING RESULTS FOR THE PERIOD
Group revenue 8,009,409 6,899,316 7,209,585 5,756,856 4,563,003
Operating profit 592,078 152,430 36,946 212,905 259,737
Net finance expenses (29,063) (120,735) (217,972) (86,437) (172,625)
Share of results of associate 42,409 24,042 34,787 11,825 (11,483)
Profit / (loss) before taxation 605,424 55,737 (146,239) 138,293 75,629
Taxation (32,525) (3,965) 20,804 (43,546) 1,519
Profit from ordinary activities 572,899 51,772 (125,435) 94,747 77,148
Minority interest (98,027) 82,098 72,840 (26,301) (1,394)
Profit attributable to the company 474,872 133,870 (52,595) 68,446 75,754
BALANCE SHEET
Stated capital & share premium of subsidiaries 1,231,129 1,231,129 1,231,129 1,231,129 1,231,129
Revaluation reserve 231,142 231,142 61,237 62,407 63,577
Retained earnings 654,811 179,939 44,899 96,324 26,708
Minority interest 178,062 80,035 46,958 119,798 93,497
Non - current liabilities 1,172,346 1,176,668 1,198,142 1,779,809 1,258,181
3,467,490 2,898,913 2,582,365 3,289,467 2,673,092
Intangible assets 87,912 850 2,652 4,455 6,258
Property, plant and equipment and investments 2,302,335 2,403,485 2,134,921 2,100,248 2,103,244
Investment in an associate company 230,064 187,655 163,613 128,826 117,001
Other investments 355,087 224,287 228,434 160,862 113,220
Non current receivables - - - - 24,851
Current assets 1,740,364 2,037,134 2,395,332 2,405,188 1,465,655
Current liabilities (1,248,272) (1,954,498) (2,342,587) (1,510,112) (1,157,137)
3,467,490 2,898,913 2,582,365 3,289,467 2,673,092
COMPANY
RATIOS AND OTHER INFORMATION
Earnings /(loss) per share (Rs) 3.66 2.35 (1.91) 0.07 1.64
Market price per share (Rs) 74.70 14.25 6.50 13.00 13.50
Price earnings ratio 20.41 6.06 (3.40) 185.71 8.23
Net dividend pay out (Rs 000) - - - - -Bonus issue (Ratio) - - - - -
Rights issue (Ratio) - - - - -
Rights price (Rs) - - - - -
Debt / equity ratio 0.23 0.55 0.67 0.71 0.38
Interest cover (No of times) 0.03 2.38 0.16 1.23 1.97
Net assets per share (Rs) 26.51 22.85 20.50 22.41 22.33
Current ratio (No of times) 1.39 0.96 0.94 1.54 1.16
Shares traded 103,961,000 11,519,900 5,303,700 13,435,100 13,804,800
US $ Exchange rate - average 113.42 115.20 108.60 110.72 104.24
US $ Exchange rate - year end 110.95 114.38 113.00 108.65 107.72
All amounts in Sri Lanka Rupees thousands
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Group Structure
33%
33%
100%
100%
100%
Ceylon
Agro-Industries Limited.
Ceylon Livestock &
Agrobusiness Services
(Private) Limited.
Ceylon Aquatech
(Private) Limited.
Three Acre
Farms PLC
Ceylon WarehouseComplex
(Private) Limited.
Activities
Provide storage facilities.
Activities
Poultry grand parent
operation.
Activities
Poultry Breeder
Farming & Hatchery
(Application of
Advance
Poultry Technologies)
Activities
Integrated shrimp operation including feed milling,
breeding, processing and culture of shrimp.
Activities
Import & sale of poultry equipment, vaccines,
pet foods and vet. pharmaceutical.
Activities
Manufacture of noodles, bakery products, value added
poultry products, distribution and retail of flour and agriculturaldevelopment of maize and forage crops.
Activities
ICT solution & services
Activities
Poultry breeder
farms, hatcheries &
commercial farms.
Ceylon
Pioneer Poultry
Breeders Ltd.
MillenniumMultibreeder
Farms
(Pvt) Ltd.
57.21%
Prima Management Services
(Private)
Limited .
A c t i v i t i e s
I n t e g r a t e d p o u l t r y
a c t i v i t i e s i n c l u d i n g f e e d m i l l i n g ,
c o m m e r c i a l f a r m i n g
a n d t r a d i n g o f p r o c e s s e d c h i c k e n .
C G E
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Shareholder Information
ANALYSIS OF SHAREHOLDERS ACCORDING TO THE NUMBER OF SHARES AS AT 31 DECEMBER 2010
RESIDENT NON RESIDENT TOTAL Shareholdings Number of No of Percentage Number of No of Percentage Number of No of Percentage
shareholders share (%) shareholders share (%) shareholders share (%)
1 to 1,000 2,467 887,601 1.48 34 15,554 0.03 2,501 903,155 1.51
1001 to 10,000 978 3,566,041 5.94 22 91,830 0.15 1,000 3,657,871 6.09
10,001 to 100,000 173 5,261,569 8.77 8 381,200 0.64 181 5,642,769 9.41
100,001 to 1,000,000 26 5,688,226 9.48 0 - 0.00 26 5,688,226 9.48
Over 1,000,000 2 3,339,300 5.56 4 40,768,679 67.95 6 44,107,979 73.51
3,646 18,742,737 31.23 68 41,257,263 68.77 3,714 60,000,000 100.00
Categories of Shareholders No of Shareholders No of Shares
Individual 3,523 9,535,171Institutional 191 50,464,829
3,714 60,000,000
LIST OF 20 MAJOR SHAREHOLDERS BASED ON THEIR SHAREHOLDINGS AS AT 31 DECEMBER 2010
31 December 2010 31 December 2009
No Name Number of shares Percentage Number of shares Percentage
1 Prima Limited, Singapore 27,270,800 45.45 27,270,800 45.45
2 Japfa Comfeed International Pte Ltd, Singapore 6,052,829 10.09 6,052,829 10.10
3 Supra Limited, Hong Kong 5,179,797 8.63 5,179,797 8.63
4 Eka Limited, Singapore 2,265,253 3.78 2,265,253 3.78
5 Perpetual Capital (Private) Limited 2,134,300 3.56 - -
6 Perpetual Asset Management (Pvt) Limited 1,205,000 2.01 - -
7 AVIVA NDB Insurance PLC A/C No. 07 778,500 1.30 - -
8 Waldock Mackenzie Ltd/Hi-Line Trading (Pvt) Ltd 670,900 1.12 210,000 0.35
9 Seylan Bank PLC / Symphony Capital Ltd 409,000 0.68 - -
10 Commercial Bank of Ceylon PLC / A.L Devasurendra 378,100 0.63 - -
11 NDB AVIVA Wealth Management Ltd S/A
Hatton National Bank PLC 352,800 0.59 - -
12 Mr. Z.Alif 234,400 0.39 - -
13 AVIVA NDB Insurance PLC A/C No. 03 220,000 0.37 - -
14 Waldock Mackenzie Ltd / Symphony Capital Limited 207,900 0.35 - -
15 Dr. R.M. Peiris 200,000 0.33 200,000 0.33
16 Mrs. D.R. Costa 185,900 0.31 - -
17 Pan Asia Banking Corporation PLC / Mr. A.F. Munas &
Mrs. N.M. Munas 179,400 0.30 - -
18 Mr. D.S.J.V. Costa 167,700 0.28 - -
19 Waldock Mackenzie Ltd/ Hi-Line Towers (Pvt) Ltd 162,500 0.27 - -
20 Mrs. L. Bandaranayake 150,000 0.25 - -
Total 48,405,079 80.69 41,178,679 68.64
The percentage of shares held by the public 2010 - 44.46%
The percentage of shares held by the public 2009 - 44.46%
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Statement of Value Added
In Rs. 000 2010 2009 2008 2007 2006
Revenue 8,009,409 6,899,316 7,209,585 5,756,856 4,563,003
Adjustment for other income 14,810 40,869 32,107 16,748 18,130
8,024,219 6,940,185 7,241,692 5,773,604 4,581,133
less: Cost of materials and services purchased
from external sources 5,580,488 4,975,571 5,327,251 4,147,795 3,238,484
Value Added 2,443,731 1,964,614 1,914,441 1,625,809 1,342,649
Consolidated Value Added Statement
Distributed as follows:
In Rs. 000 2010 % 2009 % 2008 % 2007 % 2006 %
To employees as remuneration 486,792 19.92 441,239 22.46 389,730 20.36 359,332 19.29 303,678 22.62
To the government as taxes 1,365,973 55.90 1,101,860 56.09 1,265,154 66.08 998,977 66.46 768,205 57.22
To the providers of capital
as Interest on loans 53,517 2.19 94,689 4.82 136,600 7.14 78,631 4.44 103,150 7.68
as Minority Interest (98,027) (4.01) 82,098 4.18 72,840 3.80 26,301 1.51 1,394 0.10
To Shareholders as Dividends - - - - - - - - - -
Retained within the business
as Depreciation & Amortization 160,604 6.57 110,858 5.64 102,712 5.37 94,122 4.40 90,468 6.74
as Reserves 474,872 19.43 133,870 6.81 (52,595) (2.75) 68,446 3.90 75,754 5.64
2,443,731 100.00 1,964,614 100.00 1,914,441 100.00 1,625,809 100.00 1,342,649 100.00
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Notice of Meeting
NOTICE IS HEREBY GIVEN that the 28th Annual General Meeting of the Company will be held on 21 April 2011 at the Insti-
tute of Chartered Accountants of Sri Lanka, Auditorium, 30A, Malalasekara Mawatha, Colombo - 07 at 10.00 a.m. and the
business to be brought before the Meeting will be:
1. To receive and consider the Report of the Board of Directors on the State of Affairs of the Company and the Statement
of Accounts for the year ended 31 December 2010, with the Report of the Auditors thereon.
2. To declare a First & Final Dividend of Rs. 1.00 per share in respect of the financial year ended 31st December 2010
as recommended by the Directors.
3. To re-elect Mr. Cheng Chih Cheng, Robert a Director who retires the Annual General Meeting in terms of Article 87 of
the Articles of Association of the Company
4. To re-appoint Dr. Wickrema Sena Weerasooria, who retires having attained the age of 70 years on 17th July 2009, andthe Company has received special notice to pass the under noted ordinary resolution in compliance with Section 211
of the Companies Act No.7 of 2007 in relation to his re-appointment.
Ordinary Resolution:
“That Dr. Wickrema Sena Weerasooria, a retiring Director, who has attained the age of 70 years on 17th July 2009 be
and is hereby re-appointed a Director of the Company, in terms of Section 211 of the Companies Act No.7 of 2007 and
it is hereby declared that the age limit of 70 years referred to in Section 210 of the Companies Act, shall not apply to
the re-appointment of the said Director.”
5. To re-appoint Messrs KPMG Ford Rhodes Thornton & Company, Chartered Accountants as Auditors and to authorise
the Directors to determine their remuneration.
6. To authorise the Directors to determine contributions to charities and other purposes.
BY ORDER OF THE BOARD
S S P CORPORATE SERVICES (PRIVATE) LIMITED
SECRETARIES
Colombo 03
21 March 2011
Note:-
(a) A member entitled to attend and vote at the above mentioned meeting is entitled to appoint a Proxy to attend and vote
instead of him/her. Such Proxy need not be a member of the Company.
(b) A Form of Proxy is annexed to this notice.
(c) The completed Form of Proxy should be deposited at the Registered Office of the Company, No. 15, Rock House Lane,
Colombo 15 not later than 48 hours before the time appointed for the holding of the meeting.
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Form of Proy
I/We ………............................................…………………………………………………...………………………………………… of
………………...……………………………………………………………..………….......................................being a member/s of
Ceylon Grain Elevators PLC, hereby appoint ………….………………..….....………………………………….............................
……..……………………..........…………….. of ……………………………………................................……………..or failing him
Mr. CHENG CHIH KWONG, PRIMUS of Colombo or failing him
Mr. TAN BENG CHUAN of Colombo or failing him
Mr. CHENG CHIH CHENG, ROBERT of Colombo or failing him
Mr. CHENG CHIH HUI, PETER of Colombo or failing him
Dr. WICKREMA SENA WEERASOORIA of Colombo or failing him
Mr. SUNIL KARUNANAYAKE
as my/our Proxy to represent me/us and vote on my/our behalf at the Annual General Meeting of the Company to be held on
21 April 2011, and at any adjournment thereof and at every poll which may be taken in consequence of the aforesaid meetingand to VOTE as indicated below:
FOR AGAINST
1. To receive and consider the Report of the Board of Directors
on the State of Affairs of the Company and the Statement of
Accounts for the year ended 31 December 2010, with the
Report of the Auditors thereon.
2. To declare a First and Final Dividend of Rs. 1.00 per share in
respect of the financial year ended 31st December 2010 as
recommended by the Directors.
3. To re-elect Mr. Cheng Chih Cheng, Robert a Director who retires by
rotation at the Annual General Meeting in terms of
Article 87 of the Articles of Association.
4. To re-appoint Dr. Wickrema Sena Weerasooria, who retires having
attained the age of 70 years on 17th July 2009, a Director by
passing the ordinary resolution set out in the notice.
5. To re-appoint Messrs KPMG Ford Rhodes Thornton & Company,
Chartered Accountants as Auditors and to authorise the
Directors to determine their remuneration.
6. To authorise the Directors to determine Contributions to charities.
As witness my/our hand/this ……………….day of ………………………… Two Thousand and Eleven.
Signature: …………………………….
Note : Please delete the inappropriate words.
1. Instructions for completion of proxy are noted on the next page
2. A proxy need not be a member of the Company
3. Please mark “X” in appropriate cages, to indicate your instructions as to voting
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Form of Proxy Cont.
INSTRUCTIONS TO COMPLETION OF FORM OF PROxY
1. Kindly perfect the Form of Proxy by filling in legibly your full name and address, your
instructions as to voting, by signing in the space provided and filling in the date of
signature.
2. Please indicate with a ‘X’ in the cages provided how your proxy is to vote on the Resolutions.
If no indication is given the Proxy in his/her discretion may vote as he/she thinks fit.
3. The completed Form of Proxy should be deposited at the Registered Office of the
Company at No. 15, Rock House Lane, Colombo 15, at least 48 hours before the time
appointed for holding of the Meeting.
4. If the form of proxy is signed by an attorney, the relative power of attorney should
accompany the completed form of proxy for registration, if such power of attorney has not
already been registered with the Company.
Note:
If the shareholder is a Company or body corporate, Section 138 of the Companies Act No.7
of 2007 applies to Corporate Shareholders of Ceylon Grain Elevators PLC. Section 138
provides for representation of Companies at meetings of other Companies. A Corporation,
whether a Company within the meaning of this act or not, may-where it is a member of another
Corporation, being a Company within the meaning of this Act, by resolution of its Directors or
other governing body authorise such person as it thinks fit to act as its representative at any
meeting of the Company. A person authorised as aforesaid shall be entitled to exercise the
same power on behalf of the Corporation which it represent as that Corporation could exercise
if it were an individual shareholder.
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Company Name
Ceylon Grain Elevators PLC
Company Registration No. PQ 161
Registered Office
No. 15, Rock House Lane, Colombo 15, Sri Lanka.
Tel : 2522556 or 8/2523580/2526378 to 2526383
Fax : +(94) (11) 2524163
E-mail : [email protected]
Subsidiary Companies
Three Acre Farms PLC
Ceylon Livestock & Agrobusiness Services (Pvt) Limited
Ceylon Pioneer Poultry Breeders Limited
Ceylon Warehouse Complex (Pvt) Limited
Ceylon Aquatech (Pvt) Limited
Millennium Multibreeder Farms (Pvt) Limited
Associate CompaniesCeylon Agro Industries Limited
Prima Management Services (Pvt) Limited
Bankers
Hatton National Bank PLC
Nations Trust Bank PLC
National Development Bank PLC
Sampath Bank PLC
Union Bank of Colombo Limited
Bank of Ceylon
Commercial Bank of Ceylon PLC
Lawyers
Varners Lanka Law Office
D. L. & F. De Saram
H. E. Nevil Joseph
Auditors
KPMG Ford, Rhodes, Thornton & Co.
Company Secretary
S S P Corporate Services (Pvt) Limited
No. 101 Inner Flower Road, Colombo 3.
Name of Directors
Mr. Cheng Chih Kwong, Primus - Chairman &
Chief Executive Officer
Mr. Tan Beng Chuan - Executive Director
& Group General Manager
Mr. Cheng Chih Cheng, Robert - Non Executive Director
Mr. Cheng Chih Hui, Peter - Non Executive Director
Dr. Wickrema Sena Weerasooria - Independent
Non Executive Director
Mr. Sunil Karunanayake - Independent
Non Executive Director
Management
Mr. Tan Hoe Lai - General Manager
Mr. K. A. R. S. Perera - Financial Controller
Mr. Chng Sun Tick - AGM (Farms)
Mr. Ang Kian Huat - AGM (Farms)
Mr. M. C. M. De Costa - AGM (Personnel,
Security & General Affairs)
Mr. Neil Jayaweera - AGM (Processing)
Mr. Lalith Abeywardena - AGM (Sales)
Corporate Information
Designed & Printed by Ceylon Printers PLC
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