untapped potential and greater promise
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UNTAPPED POTENTIAL AND GREATER PROMISE
AgStar Fertilizers PLC
Annual Report 2013/14
AgStar Fertilizers PLC
Annual Report 2013/14
AgStar Fertilizers PLCNo.9, Bawa Place, Colombo 8.
AgS
tar Fertilizers PLC
|
Annual R
eport
2013/14
We live in a time where successful corporate entities embrace
diversification as a means to mitigate risk and stretch their wings
into areas of untapped potential and greater promise.
AgStar as an established and trusted fertilizer brand has now
branched into rice milling, crop care, seeds and export of
spices.
AgStar’s evolution from fertilizer company to an agri inputs
and food products conglomerate is gathering pace, and with it
brings the potential for enhanced stakeholder value ever closers.
UNTAPPED POTENTIAL AND GREATER PROMISE
The Company
AgStar Fertilizers PLC
Legal Form
A Public Quoted incorporated in Sri Lanka
Company Registration No.
PV1618 PB/PQ
Date of Incorporation
25th June 2002
Registered Office
AgStar Fertilizers PLCNo.9, Bawa Place, Colombo 8Tel: +94 11 4812424, +94 11 7708040-3 Fax: +94 11 4810706E-mail: info@agstaragri.comWebsite: www.agstaragri.com
Directors
Mr N G R KarunaratneChairman/ Chief Executive Officer
Mr D N N LokugeDeputy Chairman/ Non-Executive Director
Mr A P WeerasekaraManaging Director
Mr P R SaldinExecutive Director
Mr D S K AmarasekeraNon-Executive Director
Mr I C NanayakkaraNon-Executive Director
Mr W A P PereraNon-Executive Director
Mr A G WeerasingheIndependent Non-Executive Director
Mr H P J de SilvaIndependent Non-Executive Director
Ms S WickramasingheIndependent Non-Executive Director
Audit Committee
Mr H P J de SilvaMr A G Weerasinghe
Remuneration Committee
Mr H P J de SilvaMr A G Weerasinghe
Subsidiaries
AgStar Seeds (Private) LimitedAgStar Cropcare (Private) LimitedAgStar Grains (Private) LimitedAgStar Properties (Private) LimitedMahaweli Rice Processing Industries (Private) LimitedAgStar Exports (Private) Limited
Secretaries
P R Secretarial Services (Pvt) LimitedNo.59, Gregory’s Road, Colombo 7
Registrars
SSP Corporate Services (Private) LimitedNo.101, Inner Flower Road, Colombo 3
Auditors
PricewaterhouseCoopersP O Box 918No.100, Braybrooke Place, Colombo 2
Bankers
Commercial Bank of Ceylon PLCHatton National Bank PLCSampath Bank PLCPeoples’ BankNational Development Bank PLCBank of CeylonSeylan Bank PLCDFCC Vardhana Bank PLCMCB Bank Ltd
Legal Consultants
Nithya PartnersNo.97A, Galle Road, Colombo 3
Paul Ratnayake AssociatesNo.59, Gregory’s Road, Colombo 7
Sudath Perera AssociatesNo.5, 9th Lane, Nawala Road, Nawala
CORPORATE INFORMATION
Produced by Copyline (Pvt) Ltd Printed by Gunaratne Offset Ltd
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History
After a decade long successful journey AgStar is now set for a new phase as a
diversified conglomerate in the agricultural business arena. Our progressive vision has
made it possible for us to position ourselves to meet the diverse needs of the agricultural
community ranging from rural farmers to large commercial projects.
We believe that diversification in to viable new areas of agriculture related business
provide new avenues for business growth and expansion adding greater value to our
shareholders. The natural extension of diversifying into value added agri-related areas of
business has given our company a fresh new strategic outlook.
We strongly believe that AgStar’s visionary leadership combined with her proven
capabilities in the field of agriculture will guide the group to even greater heights in the
future.
VisionTo be the preferred choice for agri inputs, agri
products and related services
MissionTo be the preferred choice for agri inputs, agri
products and related services
Contents
VISION • MISSION • HISTORY
Financial Highlights 02 Chairman / Chief Executive’s message 04
Managing Director’s Review 06 Board of Directors 8
Corporate Management 12 Management Discussion & Analysis 16
Corporate Governance 22 Risk Analysis 30
Statement of Directors’ Responsibility 32 Remuneration Committee Report 33
Directors’ Report on the State of Affairs of the Company 36
Audit Committee Report 40 Independent Auditors’ Report 41 Income Statement 42
Statement of Comprehensive Income 43 Statement of Financial Position 44
Statement of Changes in Equity - Group 45
Statement of Changes in Equity - Company 46 Statement of Cash Flows 47
Notes to the Financial Statements 48 Shareholder and Investor Information 69
Decade at a Glance 72 Notice of Annual General Meeting 73
Form of Proxy 75 Corporate Information IBC
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2,101MnShareholders Funds
289MnOperating Profit
Year ended 31st March 2014 2013 Change
%
Operating Results
Group Revenue (Rs.’000) 1,725,717 1,757,847 (2)%
Gross Profit (Rs.’000) 685,062 684,126 0%
Net Finanace Cost (Rs.’000) 230,675 100,275 130%
Profit before Tax (Rs.’000) 58,399 287,031 (80)%
Profit for the year (Rs.’000) 29,398 217,549 (86)%
Financial Position
Stated Capital (Rs.’000) 1,204,094 1,204,094 0%
Non Controlling Interest (Rs.’000) 21,117 34,597 (39)%
Property,Plant & Equipment (Rs.’000) 1,212,319 948,891 28%
Current Assets (Rs.’000) 3,351,805 3,445,393 (3)%
Total Assets (Rs.’000) 4,569,974 4,399,980 4%
Non Current Liabilities (Rs.’000) 288,566 276,105 5%
Current Liabilities (Rs.’000) 2,180,516 2,016,950 8%
Total Equity (Rs.’000) 2,100,891 2,106,925 0%
Financial Indicators
Earning Per Share (Rs.) 0.13 0.67 (81)%
Dividend Per Share (Rs.) 0.10 0.10 0%
Net Assets Per Share (Rs.) 6.40 6.38 0%
Return on Equity (%) 1.40 10.33 (86)%
Return on Total Assets (%) 0.64 4.94 (87)%
Gross Profit Ratio (%) 39.70 38.92 2%
Net Profit Ratio (%) 1.70 12.38 (86)%
Current Ratio (Times) 1.54 1.71 (10)%
Liquidity Ratio (Times) 1.31 1.63 (20)%
Gearing (%) 64.57 34.08 (89)%
FINANCIAL HIGHLIGHTS
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10 11 12 13 14
Group
Company
Revenue (Rs. Mn)
2,33
72,
189
2,91
92,
529
1,80
51,
358
1,75
81,
407 1,
726
1,37
6
10 11 12 13 14*
Group
Company
Profit Before Tax (Rs. Mn)
216
204
288
231
289
234
287
352
181 20
210 11 12 13 14*
Group
Company
Total Comprehensive Income (Rs. Mn)
129
118
233
178
211
158
284
284
141
117
10 11 12 13 14
Group
Company
Total Assets (Rs. Mn)
1,37
11,
334
2,02
51,
887
4,15
13,
943 4,
400
4,06
1 4,57
03,
900
10 11 12 13 14
Group
Company
Net Assets (Rs. Mn)
353
336
613
543
1,82
31,
700
2,10
71,
969
2,10
11,
989
10 11 12 13 14
Group
Company
Return on Equity (Rs. ‘000)
0.36
60.
350 0.38
00.
328
0.11
60.
093 0.
135
0.14
4
0.01
40.
026
10 11 12 13 14
Group
Company
Net Assets Per Share (Rs. ‘000)
1.77
1.68
3.07
2.72
6.44
6.00 6.
486.
06 6.46
6.12
* Exclude claim on arbitration award on dispute in 2008
FINANCIAL HIGHLIGHTS
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Dear Shareholder,
I welcome you to the Twelfth Annual General
Meeting of AgStar Fertilzers PLC and have
pleasure in presenting to you the Annual
Report and Audited Financial Statements for
the year ended 31st March 2014.
Group Performance
The year under review was turbulent for
the fertilizer industry, with the Government
introducing regulatory changes to the
quota system to control the import of
chemical fertilizer. Consequently, AgStar’s
import allocation was 25% lower than the
previous year’s, which had a direct impact
on our ability to satisfy customer demand.
Furthermore, this change was implemented
in May 2013 with no prior warning to the
fertilizer industry, hence undermining our
ability to transition to the new regime in a
planned manner.
Rs.117 Million, as compared with last year’s
profit figures of Rs. 287 Million and Rs. 217
Million respectively.
AgStar’s ability to remain resilient and
profitable in a turbulent landscape gives me
optimism that the foundations we have laid
are strong and augur well for the future of
your Company. It also reinforces the Board’s
strategy of diversifying from a fertilizer
company to an agri inputs and food products
conglomerate and I am pleased to note that
we continue at pace along this path.
The Board of Directors, taking into
consideration the working capital challenges
posed by the fertilizer subsidy scheme and
the strategic diversification into rice milling,
recommend a first and final dividend of
Rs.0.10 per share for 2013/2014 maintaining
the previous year’s dividend declaration.
The long outstanding dispute with Toepfer
International Asia Pte Ltd on an alleged
breach of contract consequent to the
global financial crisis six years ago in
2008 has now been ruled against the
company. The International Chamber of
Commerce, Singapore arbitration award of
USD.821,200/- was received in April 2014,
after the end of the current financial year.
The financial statement has now been
adjusted to provide for this liability and
presented in accordance with the Sri Lanka
“AgStar’s ability to remain resilient and profitable in a turbulent landscape gives me optimism that the foundations we have laid are strong and augur well for the future of your Company.”
Mr. Rohan KarunaratneChairman
In my 2012/2013 message I commented
that the Company had to incur Rs.125
Million in annual interest charges due to
delayed settlement of subsidy claims. I am
disappointed to note that the current year
witnessed a further deterioration in subsidy
settlements by the Government with AgStar’s
average overdue claims increasing to over
Rs.1.5 Billion and the interest cost of delayed
settlements reaching Rs.190 Million. In this
regard, we continue to urge the Government
to provide a fair and transparent subsidy
scheme and settle claims within the agreed
credit period of 6 months.
Against the above backdrop of restricted
import volumes and delayed settlement of
claims, I am pleased to report that the Group
remained profitable, posting a pre-tax profit
of Rs.181 Million and a post-tax profit of
CHAIRMAN / CHIEF EXECUTIVE’S MESSAGE
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Financial Reporting Standards posting an
amended group pretax profit of Rs.58 Million
and a post-tax profit of Rs.29 Million for the
year under review.
Strategic Diversification
Agriculture remains a cornerstone of the
Sri Lanka economy and the use of high
quality fertilizer is an essential ingredient in
improving productivity, economic growth
and living standards of rural farmers and the
wider population. Having established itself
as a leading fertilizer brand in Sri Lanka over
the past decade, AgStar is well placed to
contribute to this goal and benefit from its
achievement. However, the Board recognizes
the need to expand from our core fertilizer
business into wider agro inputs and food
products sectors to bring new strategic
dimensions to our business. In this regard,
AgStar has already made a number of
strategic investments in rice milling, crop
care, seeds and export of spices.
With regard to rice milling, despite
construction delays, the commissioning
of our state of the art rice milling plant in
Anuradhapura is currently underway and
it is envisaged that the plant will be fully
operational in June 2014. We also continue
to integrate the investment made in Mahaweli
Rice Processing Industries (Pvt) Ltd, the well
known rice milling plant at Mahaweli System
“C” Dehiattakandiya, under the AgStar
umbrella. These two strategic investments
are expected to provide a major impetus to
our diversification program in 2014/2015.
As noted in my message last year, the seed
business continued to be adversely affected
by the free issue of large quantities of seed
and planting material under the Government
initiated “Divi Neguma” program. However, I
am pleased to note that we have streamlined
this business, which remains profitable, and
turned around the crop care business which
returned to profitable in the current year.
Consistent with our diversification strategy,
we established a fully owned subsidiary,
AgStar Exports (Pvt) Ltd, in October 2013
to export value added “true Cinnamon”
products to established markets. Product
development is well advanced and I am
pleased to report that our first order has been
secured from the USA.
Future Outlook
I believe that our continued diversification
into viable new areas of agricultural business
provides new avenues for business growth
and expansion, insulates AgStar from future
turbulence in the regulatory landscape
for fertilizer, and will generate enhanced
economic value to our shareholders.
I am conscious that the current year has
witnessed both a period of adjustment in
the fertilizer business due the challenges
described above, and a focus on completing
the Rs.500 Million investments in rice milling
ventures. As we enter the new financial year,
I am confident that this period of investment
will enable AgStar start to generate greater
shareholder return and move closer to our
strategic goal of becoming a fully diversified
agri inputs and food products conglomerate.
In keeping with this vision, I am pleased to
announce that we will be seeking shareholder
approval at the forthcoming Annual General
Meeting to change the parent company
name from AgStar Fertlizers PLC to AgStar
PLC, thus reflecting the greater breadth of
the AgStar brand.
Acknowledgement
In conclusion, I wish to thank my colleagues
in the AgStar executive management team
and all employees for their unstinted support,
commitment and hard work which has
enabled the Group to withstand a challenging
year and yet deliver value to shareholders.
I also wish to thank our business partners,
customers and financial institutions for their
continued support.
Finally, I take this opportunity to thank
the Board of Directors for their valuable
contribution and guidance over the past year.
I look forward to a promising year and in
particular, to untapping potential from the
AgStar brand and reaping the rewards of our
investments as we continue diversify and
create value for our stakeholders and play
our role in contributing to the prosperity of Sri
Lanka.
Mr. Rohan Karunaratne
Chairman / Chief Executive
CHAIRMAN / CHIEF EXECUTIVE’S MESSAGE
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The period under review proved to be another challenging year for AgStar as a result of new regulatory controls introduced to the fertilizer industry restricting the free import of fertilizer. However, we were successful in facing the challenges by taking timely and farsighted decisions to address the issues at hand.
The Board of Directors having seen the risk of over dependency on the fertilizer sector took a strategic decision to diversify into new areas of agri business in order to mitigate the risk of exposure to one industry. After considering our strengths in the agricultural industry and the significant role of processed rice in the Sri Lankan market a well-considered decision was taken to engage ourselves in the rice industry. We foresee a significant portion of the consolidated revenue in the future will be generated from rice and other agri related business in the coming years.
profit also includes a provision of Rs. 122.7 million as a result of an arbitration award made against the Company on a dispute related to a fertilizer shipment consequent to the drastic drop in world fertilizer prices during the global financial crisis in 2008.
Fertilizer Business
Despite the operational issues experienced by the fertilizer industry following the imposition of a fertilizer import quota and high interest charges resulting from the delays in settlement of subsidy claims, our performance was satisfactory.
We were able to achieve the envisaged productivity and efficiency by streamlining operations as planned with the relocation of our new factory premises to the Ekala industrial zone. As a direct result of this change we were able to enhance our operational synergies.
These improvements were reinforced by taking measures to improve credit management and reduce the debt outstanding to a desirable level congruent with the task at hand. The sales team was restructured to reflect the new marketing challenges facing the Company and the product range was optimized to generate the best possible margins for the business.
As a cumulative result of the actions that were taken we were able to successfully deal with the issues faced and maintain the envisaged profitability and also improve the overall customer service.
“We were able to achieve the envisaged productivity and efficiency by streamlining operations as planned with the relocation of our new factory premises to the Ekala industrial zone. As a direct result of this change we were able to enhance our operational synergies.”
MANAGING DIRECTOR’S REVIEW
The group’s current businesses are fertilizer, crop care products, seeds, rice and other grains and export of spices. AgStar Grains, Mahaweli Rice Industries and AgStar Exports are yet to commence commercial operations. The consolidated revenue for the year was Rs. 1,726 million, marginally lower when compared to the previous year’s revenue of Rs.1,758 million despite the imposition of a reduced fertilizer quota on our imports by nearly 25% during the period under review.
The group reported a net profit after tax of Rs. 29 million which is below the profit of Rs. 217.5 million achieved for the period of 2012/2013. The key reason for the reduction in performance was due to the higher finance charges which was adverse by Rs. 131 million when compared to the previous year net interest figure of Rs. 100 million resulting from the delays in settlement of fertilizer subsidy claims by the Government. The lower
Mr. Pasad WeerasekaraManaging Director
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MANAGING DIRECTOR’S REVIEW
Cropcare Business
The crop care business also faced a turbulent year. In this business too we were successful in achieving an outstanding year in terms of performance. The division grew in both volume and value registering an increase of 50% growth in both areas. Furthermore the business registered the highest ever sales volume in the granular and foliar fertilizer category. This is an area we have been particularly focusing on and it is heartening to note that we are getting traction in the areas of strategic development we are focusing on.
Seed Business
The external environment for the seed business continued to be unfavorable as reported last year. Adverse weather conditions and the Government sponsored “ Divi Naguma” program which distributed free seeds affected the local seeds market. Furthermore the non-settlement of outstanding dues for seed paddy supplied to the government to the value of Rs. 108 million resulted in affecting the profitability of the business.
Grains Business
We have commenced testing of our newly commissioned the state of the art Rajarata rice processing plant in Anuradapura which faced some unexpected delays during the construction stage. The installation and commissioning of the high tech German branded Buhler machinery and equipment has been successfully completed. The commissioning of the parboiling plant is currently in progress. The plant is expected to be fully operational by the end of the 2nd quarter. In the mean time we have purchased the requisite paddy to begin commercial operations.
We are pleased to inform that we have acquired full ownership of Mahaweli Rice Processing Industries Private Limited which we invested in last year and have upgraded and streamlined the process in order to improve the envisaged efficiency and capacity levels. The plant has now been commissioned and is fully operational since April 2014.
Exports Business
The export division was started with a vision of extending our involvement in the agriculture sector to the export market. We have identified value added Cinnamon exports as an area with tremendous marketing potential and as an entry point for this business area. We plan to generate a substantial revenue portion from our export business in the future and we strongly believe that our passion for achievement coupled with sound business planning and execution would drive the success of our new venture.
Conclusion
I am taking this opportunity to express my heartfelt gratitude towards the Chairman and the Board of Directors for their immense support and guidance accorded throughout the financial year. I also thank our shareholders for the trust and support extended during the year. Our employees have always been our greatest asset and I extend my appreciation to our staff members of the AgStar group for their tireless efforts and contributions made towards improving the fortunes of the group. I also want to mention our gratitude to the contributions made by our stakeholders as well as our valued customers for their support throughout the year without which we would not have achieved our successes.
I recognize that the business environment is ever changing. As a dynamic organization we have taken great pains to position ourselves so as to ensure that the AgStar team is prepared to meet any challenges the future may hold for us. I envisage an exciting future for our group and her shareholders.
Mr. Pasad WeerasekaraManaging Director
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Mr. N. G. R. Karunaratne
Chairman /CEO
Mr. D. N. N. Lokuge
Deputy Chairman
Mr Rohan Karunaratne is a Fellow of the
Institute of Chartered Accountants of Sri
Lanka and is the founder Chairman/CEO of
AgStar Fertilizers PLC. He has previously
served on the Boards of Ceylon Tobacco
Company, CIC Holdings PLC and CIC Agri
Business. Mr Karunaratne has a wealth
of experience counting over 35 years of
managing agri business ventures.
As the founder CEO of CIC Agri Business,
Mr Karunaratne successfully spearheaded
the setting up and development of new
agricultural ventures in fertilizer, seed,
planting material, biotechnology, agro
consultancy and agri technology. He was
also instrumental in developing public/private
partnerships in the agricultural sector of Sri
Lanka by transforming the management of
large Government farms and converting ADB
funded perennial crop development projects
to viable business ventures. Mr Karunaratne
has provided the vision and leadership to
introduce pioneering new technologies and
products into the agricultural sector, and has
contributed significantly to its development in
Sri Lanka.
During his tenure at Ceylon Tobacco
Company, Mr Karunaratne functioned as the
Head of Tobacco Business. He thereafter
functioned as the Managing Director of
CTC Services, with responsibility for the
management of diversified businesses.
Mr. A. P. Weerasekera
Managing Director
Mr Pasad Weerasekera is a Fellow of
the Chartered Institute of Management
Accountants, United Kingdom and has
over 20 years of industry experience having
started his carrier in 1988. He has been a
founder Director of AgStar Fertilizers PLC,
initially functioning as Head of Finance and
thereafter as the Chief Operating Officer. He
has contributed significantly to the Company
becoming a viable business entity.
Mr Weerasekera previously was at CIC
Agri business having joined the company
in 1993. He was Finance Manager of CIC
and gathered a wide experience in the
management of agro business related
activities. Mr Weerasekera is also a Director
of Ajax Engineering (Pvt) Ltd, a leading
aluminium fabrication company in Sri Lanka.
Mr. Nimal Lokuge is a founder Director of
AgStar Fertilizers PLC and functioning as the
Deputy Chairman of the Company. He was
also a founder Director of Sierra Construction
PVt Ltd with 30 years of experience in the
construction industry. He is a Director of a
number of Sierra Group Companies.
BOARD OF DIRECTORS
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Mr. Ishara Nanayakkara
Non Executive Director
Mr. D. S. K. Amarasekera
Non Executive Director
W. A. P. Perera
Non Executive Director
Mr. W. A. P. Perera is a founder Director
if AgStar Fertilizers PLC and serves as
the Chairman of Sierra Cables PLC and a
founder Director of Sierra Holdings (Pvt)
Limited and Sierra Construction (Pvt) Limited.
He has over 33 years –experience in the
Engineering and Construction industry.
Mr. Ishara Nanayakkara Joined to the Board of Lanka ORIX Leasing Company PLC in 2002, presently Mr. Nanayakkara is the Deputy Chairman of LOLC PLC and a Director in Lanka ORIX Finance Company PLC. He chairs the Board of Commercial Leasing & Finance PLC and LOLC Micro Credit Limited, backed by the professional expertise in the industry for over a decade. He also serves the Board of PRASAC; Micro Finance Institute; Cambodia’s largest Micro Finance Institute. His interest and expertise in microfinance lead to the inauguration of LOLC Myanmar Micro Finance Company Ltd in which he is the founding Chairman. He was instrumental in the recent joint venture between BRAC and LOLC.
Mr.Nanayakkara is the Deputy Chairman of Seylan Bank, and also hands on in the fields of Insurance, factoring, working capital, Islamic financing, stock broking manifesting his vision of catering to entire value chain of the finance sector.
Mr.Nanayakkara also serves the Board of Sierra Constructions Ltd, Lanka Century Investment PLC and Associated Battery Manufacturers (Cey) Ltd in line with Group’s movement into areas such as Agriculture & Plantation, Leisure and Construction. His need to contribute to growth areas of the economy is highlighted through the vital role played by him in Browns & Company PLC & Browns Investments PLC as the Executive Chairman. Browns Group is a renowned conglomerate with leading market position in trade, leisure, manufacturing, consumer appliances and agriculture equipment.
He holds a diploma in Business Accounting from Australia.
Mr. Kamantha Amarasekera is an eminent
tax consultant and the Senior Tax and Legal
Partner of Amarasekera & Company – a
leading tax consultancy firm in the country.
He is a member of the Institute of Chartered
Accountants of Sri Lanka and is an Attorney-
at-Law of the Supreme Court of Sri Lanka.
He graduated in Business Administration
from the University of Sri Jayawardenapura.
Mr. Kamantha Amarasekera holds the
directorships of various companies in Sri
Lanka.
BOARD OF DIRECTORS
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Mr. H. P. Janaka de Silva
Independent Non Executive Director
Mr. A. G. Weerasinghe
Independent Non Executive Director
Mr.Janaka de Silva is a holder of B.Sc.
(Ceylon) and a MBA (Sri Jayawardenapura)
Degree.He is a Fellow of the Institute of
Chartered Accountants and Institute of
Bankers of Sri Lanka and counts for over 40
years’ experience in Banking and Finance.
Mr.de Silva served as a Consultant to
National Development Bank during the
period of August 2003 to December 2007
and advised the bank on the integration of
financial and accounting systems on the
merger of NDB Bank with NDB.He joined
Union Bank of Colombo Ltd at the pre
operational stage of the bank as General
Manager/Chief Operations Officer and was
appointed as the Managing Director/CEO
in May 2002.During the period April 1992
to April 1995 Mr de Silva Served as the
Director-Operations of American Express
Bank, Colombo and was responsible for all
operational activities and functioned as the
Quality Coordinator of the Colombo Office.
In September 1976 Mr de Silva joined Bank
of Ceylon as Assistant General Manager/
Controller and was elevated to the position of
Corporate Adviser in 1979.In February 1987
Mr de Silva joined Sampath Bank as the
founder General Manager/CEO.
Mr. P. R. Saldin
Executive Director
Mr. Rimoe Saldin is a Fellow of the Institute
of Chartered Accountants of Sri Lanka. He
is also a Fellow of the Chartered Institute
of Management Accountants in the United
Kingdom and a Certified Management
Accountant, Australia. He is an Alumnus of
the Asian Institute of Management, Manila.
He has over 20 years of experience at top
management level in the areas of Finance,
Human Resource Development, General
Management and Operations.
Presently Mr. Saldin serves as the Group
Chief Operating Officer of the Browns Group
of Companies and Managing Director/Chief
Executive Officer of Browns Investments
PLC. He also serves on the Board of
Directors of a number of listed and unlisted
companies.
He was previously Country Controller for
Royal Dutch Shell in Sri Lanka and Finance
Director of Shell Gas Lanka Ltd and Shell
Terminal Lanka Ltd. Mr. Saldin also served
as Group Finance Director and Commercial
Director of CIC Holdings PLC. He also served
on the Board of Directors of number of listed
and unlisted companies in the CIC Group.
Mr. Weerasinghe is an experienced senior banker who joined Taprobane Group of Companies in June 2012. Presently he serves as the Chairman of Taprobane Securities (Pvt) Ltd, Taprobane Investments (Pvt) Ltd, Lexinton Holdings (Pvt) Ltd, Taprobane Wealth Plus (Pvt) Ltd, Heron Agro Products (Pvt) Ltd, Colombo City Holdings PLC, Lanka Century Investments PLC (Former Environmental Resources Investment PLC) and Ascot Holdings PLC. He is an Associate and a Fellow member of the Institute of Bankers, Sri Lanka and also holds a B.A. in Economics from the University of Ceylon, Peradeniya. Mr. Weerasinghe served as an Assistant Lecturer in Economics, University of Ceylon, Peradeniya. He was also a former President of Sri Lanka FOREX Association and a member of the Sri Lanka Cricket Board. Mr. Weerasinghe was the former Deputy General Manager, Corporate Banking at Bank of Ceylon. He has served as Country Manager, Bank of Ceylon, London and Deputy General Manager, International at Seylan Bank. He was a Director and was subsequently appointed as the Chairman of Pan Asia Banking Corporation PLC in March 2008, and continued his service till March, 2012.
At present he serves the Boards of many renowned companies in Sri Lanka, namely, Browns Investments PLC, Ceylon Leather Products PLC, Dankotuwa porcelain PLC and South Asia Textile Industries Lanka (Pvt) Ltd.
BOARD OF DIRECTORS
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Ms. S. N. Wickramasinghe
Independent Non Executive Director
Ms. Siromi Wickramasinghe an Attorney at
Law of the Supreme Court of Sri Lanka and a
Fellow of the Chartered Management Institute
U.K. was appointed as the Chairman of
HDFC Bank in May 2010.
She is a Senior Banker with 35 years of
experience and has held many positions
in financial institutions including the post
of DGM- Hatton National Bank PLC, GM /
CEO-Lankaputhra Development Bank,
Director-Commercial Bank of Ceylon PLC,
and Director-Sri Lanka Banks’ Association
(Guarantee) Ltd.
She was also a Commission Member of the
Securities and Exchange Commission of Sri
Lanka (SEC) and the Chairman of Ceybank
Asset Management (Pvt.) Ltd an Associate
Company of Bank of Ceylon.
Ms. Wickramasinghe is presently a Director
of HNB Assurance PLC, and Head of the
Credit Counselling Centre.
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CORPORATE MANAGEMENT
Mr. Daya Jayasekara
Director - Technical
Mr. Shantha Emithiyagoda
Director/Consultant - Agri Business
Development
Mr. Asela Angammana
General Manager - Marketing
Mr. Aruna Kumarasinghe
Strategic Business Unit Head - Agri
Business
Mr. Rajith Perera
General Manager - Finance
Mrs. Uma Shanmuganathan
General Manager - Accounts & Admin
Mr. Ruwan Marambage
General Manager - Cropcare
Mr. Alex de Vas
General Manager - Commercial
Mr. W. K. Fernando
General Manager - Projects
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CORPORATE MANAGEMENT
Mr. Lakmal Dasanayake
General Manager- Procurement
Mr. Athula Gunarathne
Deputy General Manager - Marketing
Mr. Danushka de Zoysa
Operations Manager - Exports
Mr. Saman Premasiri
Sales Manager
Mr. Chandana Udawela
Sales Manager
Mr. Asela Indika
Sales Manager
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Management Reports
Management Discussion & Analysis 16Corporate Governance 22Risk Analysis 30Statement of Directors’ Responsibility 32Remuneration Committee Report 33
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Economic Environment
It is certain that Sri Lanka is better off without
the war and is carving its development path
by achieving above six percent economic
growth rate for last consecutive four year
period in all sectors of the economy.
The Central Bank’s Annual Report, in 2013
elaborates a growth in the economy of
7.3% against the 6.3% in 2012. The gross
domestic production (“GDP”) reported for
the period was Rs. 8,674 billion. The highest
contribution to the GDP has been by the
service sector, 58.1% during the period
whereas the agricultural sector has made
10.8% compared to the 11.1% made in
2012. Within the agricultural sector, the
contribution from tea, rubber, coconut and
paddy have been approximately 3.5% which
shows no variation in comparison with the
previous year.
The wholesale and retail trade has been the
highest achiever within the service sector
while the transport and communication sector
was the second largest during 2013 reporting
22.7% and 14.6% respectively.
Figure 01: Sectorial Composition of GDP-
2013
Agriculture 18.0%
Industry 31.1%
Services 58.1%
Gross Domestic Production
Figure 02: Economic Growth Rate
09
3.5
108.
011
8.2
12
6.3
13
7.3
Economic Growth Rate (%)
Agriculture
A marginal drop (by 0.5%) in the growth rate
pertaining to the agricultural sector could be
observed during 2013 which accounted for
10.8% of the GDP. Despite moderate growth
in the first half of the year in the paddy sector
it was neutralized due to the crop damage
in the Maha season due to adverse weather
conditions.
According to the Central Bank Annual Report
2013, total national paddy production has
been 4.62 million metric tons which was in
increase of 20% against 2012. In 2013, the
highest growth in paddy production was
recorded in the North Western Province,
which was 108 per cent.
While tea production has recorded an all
times highest to 340.2 million kilograms
showing a 3.6 percent growth against 2012,
the rubber sector has declined by 14.2
per cent to 130,421 metric tons in 2013
compared to 2012.
Agricultural Policies
The annual report reveals that the
Government’s agricultural policies are aimed
at;
• increasing domestic food production to
enhance food security
• reducing import expenditure
• promoting agricultural exports
In achieving above targets,
Government has
deployed several
infrastructure
MANAGEMENT DISCUSSION & ANALYSIS
Rajarata Rice Mill Complex
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development projects to increase the national
production in the country. Meanwhile massive
irrigation projects are being progressed,
the Government continued in providing
paddy subsidy throughout the period which
amounted to Rs. 19.7 billion for 403,000
metric tons.
Price Levels
The overall price levels have been managed
during 2013 also by maintaining the inflation
at 6.9% which was a 0.7% reduction
compared to 2012. 2013 was the fifth
consecutive year the inflation has been
maintained at a single digit. “Year-on-year
headline inflation too has moved on a
decelerating path since March 2013 with
the improvements in supply conditions of
domestic agricultural commodities, easing of
some commodity prices in the international
market and prudent demand management
policies of the Central Bank.” (Annual Report,
Sec. 4)
Figure 03: Movement of Inflation
093.
5010
6.20
11
6.70
12
7.60
13
6.90
Movement of Inflation (%)
Operational Review
The fertilizer business has been under severe
restrictions in its operation in the present
context. The curtailment of quota on imports
for the private sector and overdue delays in
releasing subsidy due to the private sector
has created turmoil in the fertilizer industry
as a whole. The effects of such environment
affected AgStar’s fertilizer business during the
period. Accordingly, the AgStar’s quota for
importing fertilizer has been reduced by 15
percent and it will be further restricted in the
coming year of operations.
Simultaneously, the significant delays in
releasing subsidy due has created immense
financial difficulties in the group. The short
term finance cost has increased by 31%
during 2013/14 due to sourcing through the
banking sector.
Despite of the limitations on fertilizer, AgStar
had achieved 57,636 metric ton volume of
sale during 2013/14 which is 9% less than
2012/13. There is a strong demand for the
Brand name of AgStar as a reliable fertilizer
supplier in the tea sector. The composition of
sales on sector wise is shown in the figure 05.
MANAGEMENT DISCUSSION & ANALYSIS
Interest Rates
In comparison with 2012, the overall interest
rates of the economy were maintained at low.
The six month Treasury bill rates had been
dropped to 7.85% by the end of December
2013 that was comparatively high at 11.32%
in 2012. Simultaneously, the overnight repo
rates also came down from 7.5% to 6.5%
over the same time period and the inter Bank
offer rate (SLIBOR) was reduced by 26.4%
during 2013.
Figure 04: Behaviour of SLIBOR (6 month)
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
13.7
1
13.6
6
13.2
8
13.0
7
12.4
5
12.3
1
12.1
8
11.3
8
11.6
1
10.9
10.6
4
10.2
SLIBOR (%)
Paddy Stocks for Proce
ssin
g
Cropcare Newest L
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Figure 05: Fertilizer Sectoral Performance
Fertilizer Sectoral Performance
Tea 53%
Rubber 4%
Coconut 2%
Other 40%
AgStar plays a key role in the Sri Lankan
fertilizer market and keenly work with the
plantation sector in Sri Lanka. The fertilizer
blending plant and the main distribution
center is at Ekala.
AgStar caters both straight fertilizers as well
as own blended fertilizers to our customers.
However, in the present context our blended
fertilizers are more demanded in the market
due to the right mix of blended fertilizers
which are specifically tailored on customer
necessity. The experienced and subject
matter experts’ contribution has been the key
for the success of the fertilizer business.
The fertilizer business still dominates the
AgStar group business by contributing
78% of the group turnover.
Seed Business
AgStar Seeds Private Limited is the
prime arm of AgStar group dealing
with the seed business.
The Seed business was formally
established in 2006 for primarily to promote
seed paddy and other field crop seeds
and vegetable seeds and key processing
and distribution locations are at Dambulla,
Nuwaraeliya and Embilipitiya.
During the year under review, a drawback
was seen in the seed operations due to being
unsuccessful in winning government bidding
process and the natural restrictions on the
business expansion along with the “Divi
Naguma” programme of the Government.
The revenue has been dropped by 63%
during the year resulting a net loss for the
period. The periodic movement of seeds
business is shown in the figure 06.
Figure 06: Movement of Seeds Revenue
09/10
108
10/11
319
11/12
310
12/13
260
13/14
95
Movement of Seeds Revenue (Rs. Mn)
Agro Cropcare Business
The regulatory enforcement has adversely
affected the agrochemical industry during the
year. Along with the claims of chemicals being
main reason for chronic illnesses and the
adverse public perception has resulted in the
minimum usage of agrochemicals. Year gone
by has been a very challenging one for AgStar
Cropcare private limited due to the said
reasons as well as on the consequent import
restrictions. Cropcare business was set up
in 2006 along with the establishment of the
Seed business as a measure of diversification.
It deals primarily with crop protection items
such as weedicide, insecticide, fungicide and
growth stimulants.
Despite of the hostile situation that prevailed;
the Cropcare business has reported a
commendable growth in business uplifting the
topline by 52% and the net operating profit by
133%. The strategic reach towards the pre
identified sectors in the agrochemical sector
has given results during the year.
Aligning to the environmental forces,
Cropcare business has understood the
importance of discouraging harmful use of
agrochemicals and steps have been taken
to move towards the introduction of safer
MANAGEMENT DISCUSSION & ANALYSIS
Cropcare Foliar F
ertil
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See
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chemicals to the market. More towards
organic based products and range of safer
chemical products would be introduced in
time to come which we strongly believe is the
future of the agro chemical industry.
Figure 07: Revenue - Cropcare Business
09/10
40
10/11
71
11/12
137
12/13
91
13/14
137
Revenue - Cropcare Business (Rs. Mn)
Figure 08: Net Profit - Cropcare
Business
09/10
1
10/11
3
11/12
9
12/13
0
13/14
7
Net profit – Cropcare business (Rs. Mn)
Agro based Commodities
The agro product business is predominantly
lead by AgStar Grains Private Limited and
the Mahaweli Rice Processing Industries
Private Limited. The acquisition of 51%
stake in Mahaweli Rice Processing Industries
Private Limited and the establishment of
the state of art rice mill at Anuradhapura
have given AgStar a new dimension for the
The Export Business
The exports operations of the group
have been struggling to initiate
anticipated growth momentums set
at the beginning of the operations.
Being new to cinnamon export,
we believe more to learn and
more to go in regulating and
standardizing the operation for
better prospects.
The export business is focused
on export of cinnamon in bulk
form at present. However, steps
have been initiated to export value
added cinnamon under the brand name
of AgStar. The best cinnamon is found in the
MANAGEMENT DISCUSSION & ANALYSIS
AgStar group. The total investment is
estimated approximately at Rs. 400
million.
AgStar Rice Products focuses
primarily on rice and other grain
products. Rice milling and sale
which are at present sold under
the brand names of “Mahaweli”
and “Ran Sahal” has given the
initiation for the business. The rice
milling and processing functions are
carried out Dihiaththakandiya (“Mahaweli”)
and Anuradhapura (“Rajarata”) rice mills
out of which
Anuradhapura mill is considered to be one of
the best state of art mills in Sri Lanka with
a capacity of processing 200MT per 2
days by 5 batches.
In addition to the direct sale of
rice, animal feed is expected
to be produced out of the by
products such as broken rice,
paddy husk and empty paddy.
AgStar Rice Products are
expected to generate a decent
net profit margin over a time
horizon of 5 years.
Mahaweli Rice
Fertilizer Blending Plan
t-Eka
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Mahaweli Rice Mill Complex
See
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Sri Lankan geographical landscapes. It is
AgStar’s attempt to be a professional icon in
cinnamon business in the global context.
According to the spice council of Sri Lanka,
cinnamon seems to have originated in
the central hills where several species of
cinnamon grows scattered places such as
Kandy, Matale, Belihull Oya, Haputale and the
Sinharaja forest range.
Although cinnamon cultivation is presently
concentrated along the coastal belt
stretching along from Kaluthara to Mathara,
it has also made inroads to the inland
of Kalutara, Ambalangoda, Matara and
Ratnapura. The extent under cinnamon
cultivation in Sri Lanka is 25,500ha. Although,
the bulk of cinnamon plantations are about
70 - 80 years old, the size of holdings has
been diminishing and only about 5-10% of
the plantations are of sizeable extent ranging
from 8 - 10ha.
Although at present, AgStar is new to the
cinnamon industry, the knowledge we
have gained within a short period of time,
we strongly believe that we are in a better
position to capture the future prospects in
cinnamon business.
Financial Review
The group turnover posted in
2013/14 was Rs. 1.736 billion which
is marginal reduction of 1% against
the previous year. The fertilizer
sectors gave the highest contribution
towards the group performances. The
consolidated revenue has been ended
up with an operating profit of Rs. 378 Mn
showing a 3% whereas the profit after tax
of Rs. 86.8 million showing a decrease of
61% against 2012/13.
The earnings per share for the period
amounts Rs.0.13 per share whereas in
2012/13 it was Rs. Rs.0.67 per share.
There was no new share issue made during
the period under review. The return to
shareholders’ fund has been reduced by
6.3% compared to the previous year due to
the decrease in groups overall profitability.
The debt equity ratio in fact has become
lesser than 2012/13 period due to non-
entering into long term debt agreement with
financiers.
The total asset base of the AgStar group
has been increased by 3% during 2013/14
financial year and the return on assets has
been reported at 8.36%.
MANAGEMENT DISCUSSION & ANALYSIS
Rajarata Rice Mill Complex
Fertilizer Offi ce Complex -
Ekala
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The Interest Cover
The interest cover has been reported at 1
times in 2013 whereas in 2012 reported at 2
times. The resulted reduction was due to the
high interest cost incurred due to delay in the
receipt of Government subsidy.
Figure 09: Interest Cover
10
6
11
9
12
2
13
1
14
1
Interest Cover (Times)
Shareholder information
AgStar Fertilizers PLC was listed in the
Colombo burse on 16 /02/2012. As per
the Listing Rules, Company has submitted
unaudited interim financial statements
to the Colombo Stock Exchange
(CSE) within 45 day period
following the quarter
concern.
The share price has not been significantly
moved during the period and as at 31st
March 2014, it was traded at Rs.4.40 per
share. The figure 10 shows the monthly
variation of AgStar share price during
2013/14 period.
Figure 10: AgStar Share Price A
pr’
2013
May
’201
3
Jun’
2013
Jul’2
013
Aug
’201
3
Sep
’201
3
Oct
’201
3
No
v’20
13
Dec
’201
3
Jan’
2014
Feb
’201
4
Mar
’201
4
7.5 7.7
6.7
5.6
5.5 5
.9
5.5
4.8
4.8
1
4.8
4
4.4
2
4.4
AgStar Share Price (Rs.)
During the financial year 2013/14, the
following regulatory changes were introduced
by the securities exchange commission
making compulsory to comply with by all
listed entities in the CSE.
• Disclosures of director’s dealings in
shares
• Code of best practices on related party
transactions
• Certifications on rules on minimum
public holding as a continuous listing
requirement for listed public companies
Dividends
It has been proposed to declare a dividend
of Rs. 0.10 per share for the period under
review at group level.
The figure 11 depicts the dividend payment
history of AgStar group for last 5 year period.
Figure 11: Dividend Declaration
10
0.5
7
11
0.1
12
0.0
5
13
0.1
14
0.1
Dividend Declaration (Rs.)
MANAGEMENT DISCUSSION & ANALYSIS
Cropca
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Fertilizer Offi ce Complex -
Ekala
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CORPORATE GOVERNANCE
General Governance Policy
The concept of corporate governance covers the entire accountability framework of an organization. It encompasses aspects of both corporate
and business governance and is based on the premise that good governance policy alone cannot make an organization successful. It is only
by having in place good corporate governance practices, which are strategically linked to performance management that an organization is
able to focus on the key drivers of the business. This concept emphasizes the dual role of the Board of Directors in ensuring conformity to good
governance and strategic management for value creation.
It is the firm belief of the Board of Directors that an effective self-regulatory framework is vital to pursue stakeholder confidence in the context
of increasing trends in deregulation and lack of regulations in certain areas. AgStar Fertilizers PLC(“AgStar“) has continued its commitment to
maintain high standards of corporate governance in order to ensure the integrity, accountability and transparency of all transactions and as well
as to ensure equal importance to business performance in order to ensure value creation.
AgStar’s Adoption of Corporate Governance
Being a listed company committed to maintain ethics and professionalism in every sphere of activity, AgStar adheres to high standards of
corporate governance. It defines governance as the set of processes, customs, policies, laws and institutions affecting the way in which the
corporation is directed, administered and controlled. Key aspects of the corporate governance framework established by the Company are
described below.
In keeping with its vision and mission and with the continued goodwill and confidence of customers very much in mind, the Company is careful
not to undertake any business activity that might affect adversely the welfare of the community and the environment.
The governance principles and measures of the Company are described below:
CorporateGovernancePrinciple
PrincipleNo.
Level of Compliance
Directors
The Board A.1 Composition
The Board currently comprises of Ten Directors which include Seven Non-Executive Directors and
Three Executive Directors. Three out of Seven Non-Executive Directors are Independent. The Board
has an appropriate balance of skills, experience, independence and knowledge to enable it to
discharge its duties and responsibilities effectively.
Frequency of Board Meetings
Six Board Meetings are scheduled to evaluate the performance and to discuss strategy and of Board
Meetings other matters of the company. Ad-hoc meetings are scheduled to deal with specific matters
which require the attention of the Board between scheduled meetings.
The table below depicts the attendance of Directors at the Board and Committee meetings held
during the year.
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CORPORATE GOVERNANCE
CorporateGovernancePrinciple
PrincipleNo.
Level of Compliance
The Board A.1Name of Director Board Meetings Audit Committee
MeetingsRemuneration
Committee Meetings
Mr.N.G.R.Karunaratne 6/6
Mr.D.N.N.Lokuge 5/6
Mr.A.P.Weerasaekara 6/6
Mr.A.P.W.Perera 4/6
Mr.D.S.K.Amarasekara 3/6
Mr.I.C.Nanayakkara 2/6
Mr.P.R.Saldin 6/6
Mr.A.G.Weerasinghe 6/6 4/4 1/1
Mr.H.P.J. De Silva 5/6 4/4 1/1
Ms.S.Wickramasinghe 5/6
The Responsibilities of the Board
The Board is ultimately accountable for ensuring that, as a collective body, it has the appropriate
skills, knowledge and experience to perform its role effectively.
The Board is responsible for the following:-
• formulation, implementation and monitoring of strategy
• effective systems to secure integrity of information, internal controls and risk management
• compliance with laws, regulations and ethical standards
• ensuring all stakeholder interests are considered in corporate decisions.
CorporateGovernancePrinciple
PrincipleNo.
Level of Compliance
Directors The Board has delegated several functions to Board Committees, while retaining final decision rights
pertaining to matters under the purview of the Committees. The composition and the functions of
these sub-committees are discussed in detailed under the relevant sections of this Report.
Obtaining Independent Professional advice
In discharging their duties the Directors are permitted to seek independent professional advice from
external parties when necessary at the expense of the Company.
Company Secretary
The Directors have access to the advice and services of the Company Secretary. The Company
Secretary advices on the need to comply with Board Procedures, relevant statutory obligations and
other applicable rules and regulations.
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CorporateGovernancePrinciple
PrincipleNo.
Level of Compliance
Directors Independent Judgment
All Directors employ independent judgment in all decisions pertaining to strategy, performance,
resource allocation and standards of business conduct and acts free from any undue influence and
bias from other parties.
Dedication of adequate time and effort to matters of the Board and the Company
The Board members dedicate adequate time and effort to fulfill their duties as Directors of the
Company and ensure that they are satisfactorily discharged.
Newly appointed Directors who do not have previous public company experience at Board level
are provided with appropriate training on their role and responsibilities. New Directors participate
in a comprehensive and tailored induction program including meetings with members of the senior
management. The induction program includes a fuIl review of corporate responsibility. Subsequent
training is available on an ongoing basis to meet any particular needs.
Chairman &
Managing
Director
A.2 A clear division of responsibility is maintained between the Chairman and the Managing
Director ensuring that the balance of power and authority is preserved.
Chairman’s role A.3 The Chairman being responsible for the running of the Board facilitates the effective discharge
of Board proceedings and ensures that:
• effective participation of both Executive and Non-Executive Directors is secured
• all Directors are encouraged to make effective contributions to proceedings
• the views of Directors on issues under consideration are ascertained
• Board is in control of the affairs of the Company and alert to its obligations to all stakeholders
Financial Acumen A.4 The members of the Board possess the necessary knowledge and competence to offer guidance on
matters of finance
Board balance A.5 The Board considers the independent Directors as free of any business relationship or other
circumstance and independent of management that could materially interfere with or could be
reasonably perceived to materially interfere with the exercise of their, unfettered or independent
judgment.
To determine their independence, the Board reviews all Directors’ interests that may give rise
To a potential or perceived conflict, and any circumstances relevant to their current or ongoing
independence as set out in the Rules and Regulations of the Colombo Stock Exchange.
Mr. H P J de Silva and Mr. A G Weerasinghe meet the criteria for independence specified by Rule
7.10.4 of the Listing Rules of the Colombo Stock Exchange. These Directors have
submitted written declarations of their independence as required by section 7.10.2(b) of the Listing
Rules.
CORPORATE GOVERNANCE
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CorporateGovernancePrinciple
PrincipleNo.
Level of Compliance
Directors
Supply of
Information
A.6 The Board is provided with timely information in an appropriate manner enabling it to
Discharge its duties effectively.
In the event the information volunteered by management is not adequate the Directors make
Further inquiries. The Chairman ensures all Directors are appropriately briefed on issues
Arising at Board meetings.
The minutes, agenda and connected papers required for a Board Meeting are dispatched to the
Directors in advance enabling them with sufficient time to review the papers and request for
any additional information or clarifications on matters when necessary.
Appointments to
the Board
A.7 The Board has not established a Nominations Committee for making recommendations on
Board appointments. Hence appointments to the Board are made collectively and with the
Consent of all the Directors.
Upon the appointment of a new Director to the Board, the Company informs the Colombo
Stock Exchange a brief resume of the Director which includes;
• the nature of his expertise in relevant functional area,
• other Directorships or memberships in Board sub committees,
• whether the Director is considered an Independent Director.
Re-election A.8 In compliance with the Articles of Association of the Company, one third of the Directors
Retire by rotation at every Annual General Meeting. A Director appointed during the year
retires at the next Annual General Meeting of the Company and seeks re-appointment in terms of the
Articles of the Company.
Disclosure of
Information
in respect of
Directors
A.9 Current Directors' biographical details are set out on pages 08-11 of this Annual Report. These
Include their main external commitments.
Appraisal of the
Managing Director
A.10 The Annual appraisal of the Managing Director is carried out by the Board at pre agreed
Performance targets.
Directors’ Remuneration
Remuneration
Procedure
B.1 The Board has established a formal and transparent procedure for developing policy on
Executive remuneration and for fixing the remuneration. In order to avoid potential conflicts of interest,
the Board has delegated powers to the Remuneration Committee to make
recommendations to the Board on remuneration policy and practice that is consistent with the
Objectives of the Company.
The Remuneration Committee consists of two Non-Executive independent Directors. The
names of the members of the Committee are indicated in the Directors’ Report on the state of
Affairs of the Company.
CORPORATE GOVERNANCE
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CorporateGovernancePrinciple
PrincipleNo.
Level of Compliance
Level and makeup
of remuneration
B.2 The level of remuneration for both Executive and Non-Executive Directors is sufficient to attract and
retain the Directors to run the Company successfully. The Remuneration Committee compares the
levels of remuneration of the Company in relation to other companies in the industry.
The Remuneration Committee report appears on page 33 of this Report.
Directors B.3 The total remuneration of the Directors’ disclosed in note 27.3 to the Financial Statements.
Corporate
Governance
Principle
Principle No Level of Compliance
Relations with Shareholders
Constructive
use of
The Annual
General Meeting
C.1 The Shareholders of the Company have the opportunity to meet and question the Board at the
Annual General Meeting. Each item of business to be considered at the Annual General
Meeting is included with the Notice of Meeting which is sent to shareholders at least 15
Working days prior to the meeting.
The Chairpersons of the Audit and Remuneration Committees are present at the Annual
General Meeting to answer any questions raised by the shareholders.
Major transactions C.2 There were no major transactions during the year as defined by Section 185 of the Companies
Act No. 01 of 2007 which materially affect the net asset base of AgStar Fertilizers PLC or
Consolidated Group net asset base.
Accountability and audit
Financial reporting D.1 The Board ensures that the quarterly and annual Financial Statements of the Company are
prepared and published in compliance with the requirements of the Companies Act No 07 of
2OO7, Sri Lanka Accounting Standards and the Colombo Stock Exchange.
The Statement of Directors’ Responsibility in preparation of the Financial Statements is given
on page 32 of this Report.
The declaration by the Board that the Company is a going concern is given in the Directors'
Report on the state of affairs of the Company.
Internal control D.3 The Audit Committee consists of two Independent Directors. The members of the Committee
are indicated in the Directors' Report on the state of affairs of the Company.
The Committee is empowered to examine and report on the following :-
• Review the financial reporting system
• Review internal control framework and identify business risks
• Review the quality of external and internal audit performance
• Review compliance with laws, regulations and professional standards
• Recommend the appointment and fees of external auditors
The Committee met four times during the year The Chairman/Chief Executive, Managing
Director and the Executive Director of the Company attended all meeting by invitation.
CORPORATE GOVERNANCE
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CorporateGovernancePrinciple
PrincipleNo.
Level of Compliance
Code of business
Conduct and
ethics
D.4 The Directors have adopted and adhered to the Code of Business Conduct and Ethics for
Directors.
A set of Guidelines for ethical behavior has also been compiled to help employees to act with
Responsibility and to, make the right decisions in their daily work. This Code of Conduct
explains the principles for dealings with business associates, general partners, colleagues and
In the community in which we operate. Thus it supports all employees in acting ethically not only in
their dealings with one another but also outside the Company.
Institutional and Other investors
Shareholder
voting
E.1 The company is committed to maintaining good communications with investors. The
Chairman conducts a structured dialogue with the shareholders based on the mutual understanding
of objectives and ensures that the views of the shareholders are communicated to the Board as
whole.
All shareholders are encouraged to participate at meetings of the Company, and a form of
Proxy accompanies each notice providing shareholders who are unable to attend such meeting the
opportunity to cast their vote.
Corporate Governance
Disclosures pertaining to Corporate Governance Practices
CSE Rule No Applicable Rule Requirement Status of Compliance
Reference to Annual Report
7.10.1 Non-Executive Directors
(NEDs)
Two or at least one third of the total number of
Directors should be NEDs Corporate Governance
Report
7.10.2(a) Independent Directors Two or one third of NEDs (whichever is higher)
should be independent Corporate Governance
Report
7.10.2(b) Independent Directors Each Non-Executive Director should submit a
declaration of independence/non-independence in
the prescribed format
Corporate Governance
Report
7.10.3(a) and
(b)
Disclosure relating to
Directors
Names of Independent Directors should be
disclosed in the Annual Report Corporate Governance
Report
Disclosure relating to
Directors
The basis for determination of independence of
NEDs, if criteria for independence is met Corporate Governance
Report
7.10.3( c ) Brief Resume of each
Director in the Annual
Report
A brief resume of each Director should be included
in the Annual Report, including his/her area of
expertise
Profiles of the Board of
Directors
7.10.4 Criteria for defining
"independence"
Requirements for fulfilling criteria Corporate Governance
Report
CORPORATE GOVERNANCE
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CSE Rule No Applicable Rule Requirement Status of Compliance
Reference to Annual Report
Rules relating to Remuneration Committee
7.10.5(a) Composition of
Remuneration Committee
The Committee shall comprise of Non-Executive
Directors, a majority of whom shall be independent
The Chairman of the Committee shall be a Non-
Executive Director
Corporate Governance
Report ,Directors' Report
on the state of affairs of
the company
7.10.5(b) Disclosure of the functions
of the Remuneration
Committee
The Committee shall recommend the remuneration
payable to the Executive Directors and Chief
Executive Officer or equivalent role
Corporate Governance
Report ,Remuneration
Committee Report
7.10.5( c)
Disclosure in the Annual
Report
The Report should include the names of the
Remuneration Committee members, a statement
of Remuneration Policy and the aggregate
remuneration paid to Executive and Non-Executive
Directors
Corporate Governance
Report, the Directors'
Report on the state of
affairs of the company
and the Remuneration
Committee Report
Rules relating to Audit Committee
7.10.6(a) Composition of Audit
Committee
The Committee shall comprise of
NEDs, a majority of who shall be
Independent. The Chairman of the
Committee shall be a Non-Executive
Director. The Chairman or a member
should be a member of a recognized
professional accounting body
Corporate Governance
Report, the Directors'
Report on the state of
affairs of the Company
and the Audit Committee
Report
7.10.6(b) Functions of the Audit
Committee
Overseeing the preparation,
presentation and adequacy of the
disclosures in the Financial
Statements in accordance with the
Sri Lanka Accounting Standards
Overseeing compliance with
financial reporting related
regulations and requirements
Overseeing the processes to ensure
that internal controls and risk
management are adequate
Assessing the independence and
performance of the external auditors
Recommending to the Board the
appointment, re-appointment and
removal of the external auditors and
approving their remuneration and
terms of engagement
Corporate Governance
Report, Audit
Committee Report
CORPORATE GOVERNANCE
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CSE Rule No Applicable Rule Requirement Status of Compliance
Reference to Annual Report
7.10.6(c) Disclosure in the Annual
Report
The names of the members of the
Audit Committee
The basis of determination of their
independence
A report of the Audit Committee as
setting out the manner of compliance
with their functions
Directors' Report
on the state of affairs
of the Company,
Audit Committee Report
CORPORATE GOVERNANCE
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RISK ANALYSIS
The mitigating initiations of loss exposure can be identified as management of risk in broader sense and in the present context the risk
management has become part and partial of any business operation due to the complexity prevailing in the business environment. The growingly
frequent uncertainty necessarily leads company management to look for higher levels of safety through continuous supervision and risk
management procedures.
Especially in AgStar which is in the agricultural sector, faces common vulnerabilities operationally as the business itself is a social element which is
affected by the nature. Further, the risk is not restricted merely to the operational risk but risk other than operational as well. Accordingly, following
are some of the risks AgStar encounters in its business and mitigating actions in place.
Description of Risk Risk Mitigation
Business/ Investment Risks
Risk of losses and uncertainties attached to new business
investments as the Group continuously looks diversifying its existing
business portfolio.
• Stringent evaluation of risks associated with each new investment
is carried out by in-house expertise and external resources as
when required
• Formation of strategic alliances with reputed partners to create
synergies and share the investment risk
• Address potential adverse ethical, social and environmental
factors before venturing into such new projects
Default Risk
Default of subsidy component settlements by the Government of Sri
Lanka (GoSL)
Delays in subsidy component settlements
• Currently the likelihood of the default risk is low. However,
continuous representative efforts are being carried out in this
regard
• Constant follow-up with Government authorities to recover the
subsidy component within the stipulated time period
• Carry out necessary and appropriate representative efforts in this
regard
Economic Risk
Risk of an economic downturn negatively impacting the Group’s
investment and business operations.
• Closely monitors domestic and global economic activities that
could have an impact on Group‘s business to take precautions
• Maintain sound relationships with relevant stakeholders
Interest Rate Risk
Adverse impacts on profitability owing to changes in market interest
rates as the Group borrowing are mostly to floating interest rates.
• Ensures maximizing returns on financial investments and
minimizing cost borrowing
• Use of appropriate financial and hedging strategies to minimize
interest rate risk
• Negotiate for concessionary interest rates using AgStar’ s
strength as a listed Company
Exchange Rate Risk
Adverse impact of exchange rate fluctuations on Group’s cash flows,
assets and liabilities, and business activities such as purchase of raw
materials and capital goods.
• Exchange rate fluctuations are considered in the subsidy formula;
hence a natural hedged persist to a reasonable extent
• Monitors the effects of foreign currency movements on the
Group’s business
• Adopt timely and appropriate hedging activities to mitigate foreign
exchange risk
Regulatory and Complains Risk
Introduction of new regulation affecting the business adversely and
complexity in complying with regulatory requirements
• Monitors complain with regulatory requirements
• Participate in representative effort against regulations that could
have a negative impact on business / industry
Credit Risk
The probability of the loss of income owing to default by the
company’s debtors
• Conduct in-depth analysis of debtors on their performance
• Regular follow-up on overdue debtors to minimize potential
losses
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RISK ANALYSIS
Description of Risk Risk Mitigation
Employee Risk
Risk arising from the inability to attract, motivate and retain skilled and
experienced staff, thus impacting the business competitiveness.
• Build strong employer brand
• Implement an effective human resource policy and a plan which is
reviewed by the remuneration committee
• Adopt an open door policy where any employee can speak to the
senior management regarding their concerns
Operational Risk
Losses resulting from fraud, human errors, inefficient processes,
natural perils and loss of sensitive information.
• Conduct periodic internal audit reviews to ensure complains and
the effectiveness of internal control system
• Maintain a business continuity plan to ensure disaster
preparedness
Funding / Liquidity Risk
Difficulty in obtaining required funding for projects.
• Maintain a business continuity plan to ensure disaster
preparedness
• Use of AgStar’s group strength as a listed Company to raise
economical funding as and when required
Lack of Government support
Lack of Government support to promote and encourage the private
participation in the industry
• Appropriate representative efforts
Competitive Risk
Risk of losses from a decline in company’s competitiveness.
• Carry out regular analysis on competitor activities and
performance
• Formulate strategies to enhance AgStar ‘s market share
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STATEMENT OF DIRECTORS’ RESPONSIBILITY
The Directors are responsible, under the
companies Act No 7 of 2007, to ensure
compliance with the requirements set out
therein to prepare Financial Statements for
each financial year giving a true and fair view
of the state of affairs of the Company and the
Group as at the end of the financial year and
of the profit and loss of the Company and the
Group for the financial year.
In preparing financial statements the
Directors are required to ensure that:
• Appropriate Accounting policies have
been selected and applied consistently.
• Financial Statements have been prepared
and presented in accordance with Sri
Lanka Financial Reporting Standards
(SLFRS) and Sri Lanka Accounting
Standards(LKAS);
• The Financial Statements provide the
information required by the Companies
Act and Listing Rules of the Colombo
Stock Exchange; and
• Reasonable and prudent judgments and
estimates have been made.
The Directors have taken reasonable
measures to safeguard the assets of the
Company and of the Group and in this
regard to give proper consideration to the
establishment of appropriate internal control
systems with a view of preventing and
detecting fraud and other irregularities.
The Directors have a reasonable expectation,
that the Company and the Group have
adequate resources to continue in
operational existence for the foreseeable
future and therefore have continued to adopt
the going concern basis in preparing the
Financial Statements.
Further, the Directors have recommended a
final dividend of Rs.0.1 per share, after being
satisfied that the Company would satisfy
the solvency test immediately after such
distribution in accordance with section 56
(2) of the Companies Act No 7 of 2007, and
shall obtain a certificate of solvency from the
Independent Auditors in accordance with
Section 57 of the Companies Act No 7 of
2007.
Messrs PricewaterhouseCoopers, Chartered
Accountants, the Auditors of the Company,
have examined the Financial Statements
made available by the Board of Directors
together with all relevant financial records,
related data, and minutes of Shareholders’
and Directors’ meetings and expressed their
opinion in their Report on page 41 of the
Annual Report.
The Directors confirm that to the best of
their knowledge, all statutory payments
relating to employees and the government
that were due on behalf of the Company and
the Group as at the date of the statement of
financial position have been paid, or where
relevant provided for, except as disclosed in
note 31 to the Financial Statements covering
contingent liabilities.
The Directors are of the view that they have
discharged their responsibilities as set out in
this statement.
By Order of the Board
P.R. Secretarial Services (Private) Limited
Secretaries
Colombo
29th May 2014
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REMUNERATION COMMITTEE REPORT
Composition of Committee
The remuneration committee appointed
by the Board of Directors consists of two
independent non-executive Directors. The
members of the committee during the year
under review were Mr. Janaka de Silva
(Chairman) and Mr. A G Weerasinghe.
Committee Meetings
The committee met once a year under review
as per the table on page 23 of this report and
the minutes of the meeting are presented to
the Board.
Attendance
The Chairman/CEO, Managing Director and
the Executive Director attend the meeting of
the Remuneration Committee by invitation
to discuss the performance if the senior
executives and to make proposals as
deemed necessary except where their own
remunerations are discussed.
Role of the Committee
The role of the Remuneration Committee The
role of the committee is to;
• formulate remuneration policy of the
company to attract and retain high caliber
personnel and motivate them
• make recommendations to the Board
and monitor the level and structure of
remuneration for senior management
• make recommendations to the Board on
the Company’s framework of executive
remuneration and its cost, and to
determine on behalf of the Board specific
remuneration packages and conditions
of employment (including compensation
entitlement) for Executive Directors
• make recommendations to the Board
regarding the content of the Board’s
Annual Report to the shareholders on
Directors’ remuneration (including the
Company’s policy on Executive Director’s
remuneration, details of individual
remuneration and other terms and
conditions)
Remuneration to Directors
The remuneration paid to Directors during the
year under review is indicted in note 27.3 to
the Financial Statements.
Janaka De Silva
Chairman - Remuneration Committee
29th May 2014
Financial Information
Directors’ Report on the State of Affairs of the Company 36Audit Committee Report 40Independent Auditors’ Report 41Income Statement 42Statement of Comprehensive Income 43Statement of Financial Position 44Statement of Changes in Equity - Group 45Statement of Changes in Equity - Company 46Statement of Cash Flows 47Notes to the Financial Statements 48
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DIRECTORS’ REPORT ON THE STATE OF AFFAIRS OF THE COMPANY
The details set out in the following report
provide information required by the
Companies Act No 07 of 2007 and the listing
rules of the Colombo Stock Exchange of
Sri Lanka and are guided by recommended
best practices on Corporate Governance.
This Report was approved by the Board of
Directors by Resolution passed as of 23rd
May 2014.
General
The Directors of AgStar Fertilizers PLC (the
Company) have pleasure in submitting their
report together with the audited Financial
Statements of the Company, and the audited
consolidated Financial Statements of the
Group for the year ended 31st March, 2014
and the Auditors’ Report thereon.
Review of Performance for the year ended 31st March, 2014
The operations of the Company and its
subsidiaries for the year ended 31st March,
2014 are reviewed in the Chairman’s Report
and the Managing Director’s review.
Company Activities and Structure
AgStar Fertilizers (Private) Limited (Reg: No.
N[PVS] 30875) was incorporated in Sri Lanka
on 25th June 2002 under the Companies
Act No. 17 of 1982 and was re-registered
as per the Companies Act No. 07 of 2007
(Reg :No PV 1618) on 26th December, 2007.
The name of the Company was changed to
AgStar Fertilizers Limited (Reg. No. PV 1618
PB) pursuant to the change of its status to a
limited liability company. On 16th February,
2012 the shares of AgStar Fertilizers Limited
were listed on the Diri Savi Board of the
Colombo Stock Exchange and the name
of the Company thus changed to AgStar
Fertilizers PLC with effect from 8th May,
2012.
During the year the principal activity of the
Company was to carry out the business of
importing, blending and marketing of fertilizer
products.
The Company has six subsidiary companies
and their activities are given in note 1.2 to the
Financial Statements on page no. 48 of this
Annual Report.
Directors’ Responsibility for Financial Reporting
The Directors are responsible for the
preparation and presentation of the Financial
Statements of the Company and the Group
as to give a true and fair view of the State of
Affairs of the Company and the Group.
The Statement of Directors’ Responsibility
for Financial Reporting is given on page 32 of
this Report.
The Financial Statements of the Company
and the Group are given on pages 42 to 68
of this Report.
Accounting Policies
The Accounting Policies adopted in
preparation of Financial Statements are given
on pages 48 to 54 There were no material
changes in the Accounting Policies of the
Group during the year under review.
Auditors
The Financial Statements for the year ended
31st March, 2014 have been audited by
Messrs. PricewaterhouseCoopers (Chartered
Accountants).
A resolution relating to the appointment of
KPMG as Auditors and authorizing by the
Directors to determine their remuneration will
be proposed at the Annual General Meeting.
The fees paid to the Auditors are disclosed in
note no 7 to the Financial Statements.
The Auditors of the Company, Messrs.
PricewaterhouseCoopers do not have any
relationship with the Company other than that
of Auditors.
Independent Auditors’ Report
The Auditors’ Report on the Financial
Statements is given on page 41of this
Report.
Results and Appropriations
The profit after tax of the parent Company,
AgStar Fertilizers PLC was Rs 53 million
(2013-Rs 285 million), whilst the Group profit
attributable to the equity holders of the parent
for the year was Rs 43 million (2013- Rs 218
million). Results of the Company and of the
Group are given in the Income Statement.
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DIRECTORS’ REPORT ON THE STATE OF AFFAIRS OF THE COMPANY
Detailed description of the Group results and appropriation is given below.
Financial Results 31st March 2014
Rs’ 000
31st March, 2013
Rs’ 000
Operating profit 289,074,343 387,306,057
Finance cost (244,999,344) (312,682,613)
Finance income 14,324,122 212,407,154
Profit before Tax 58,399,121 287,030,598
Tax expense (29,000,901) (69,481,932)
Profit for the year 29,398,220 217,548,666
Loss attributable to minority shareholders (13,479,906) (2,887)
Profit available to group’s shareholders 42,878,126 217,551,553
Other adjustments (107,573) (455,791)
Balance brought forward from previous year 789,215,918 572,120,156
Amount available for appropriation 797,086,467 789,215,918
Final dividend of Rs. 0.10 per share (2013-Rs.
0.10 per share)
(32,500,000) (32,500,000)
Balance to be carried forward next year 764,586,467 756,715,918
Statutory Payments
The Directors confirm that to the best of
their knowledge and belief, all statutory
payments in relation to all relevant regulatory
and statutory authorities have been paid
or adequately provided for in the Financial
Statements. A statement of compliance by
the Board of Directors in relation to statutory
payments is included in the Statement of
Directors’ Responsibilities on page 32 of this
Report.
Contingent Liabilities
Contingent liabilities outstanding as at 31st
March, 2014 are given in note 30 to the
Financial Statements.
Events after the Reporting Period
The award was issued by the International
Court of Arbitration of International Chamber
of Commerce against AgStar Fertilizers
PLC in relation to the case with Toepfer
International-Asia Pte. Ltd. (Singapore).
Accordingly, the impact has been adjusted
in the current year financial statements
and disclosed in note 28 to the Financial
Statements.
Corporate Governance and Internal Controls
The Board of Directors has acknowledged
the responsibility to ensure good governance
in conducting the Business activities of the
Company and confirms that the Company
is compliant with section 7.10 of the Listing
Rules of the Colombo Stock Exchange and
has also adopted the relevant Corporate
Governance practices recommended by
the Securities and Exchange Commission
of Sri Lanka and the Institute of Chartered
Accountants of Sri Lanka.
An Audit Committee and a Remuneration
Committee function as Board sub
committees with Directors who possess the
requisite qualifications and experience. The
composition of the said committees is as
follows;
Dividends
The final dividend recommended for this
financial year has not been recognized as at
the date of Statement of Financial Position in
compliance with LKAS 10- Events after the
Reporting Period.
Property, Plant and Equipment
An analysis of the property, plant and
equipment of the Company and the Group
is disclosed in note no 15 to the Financial
Statements on pages 58 and 59 of this
Report. The book value of property, plant and
equipment as at the reporting date amounted
to Rs. 1,212 million (2013-Rs. 949 million)
and Rs. 174 million (2013-Rs. 172 million) for
the Group and Company respectively.
Stated Capital
The stated capital of the Company as at
31st March, 2014 was Rs. 1,204,093,678
comprising 307,526,310 ordinary voting
shares and 17,473,690 non-voting shares
(2013- Rs. 1,204,093,678 comprising
307,526,310 ordinary voting shares and
17,473,690 non-voting shares) as given in
note 20 to the Financial Statements.
Donations
The Company and its subsidiaries have not
made any donations during the year. (2013-
Nil)
Capital Commitments
The Capital Expenditure Commitments as at
31st March, 2014 is given in note 29 to the
Financial Statements.
Revenue Reserves
The reserves consist of Retained Earnings.
The revenue reserves as at 31st March 2014
for the Group and Company amounted Rs.
797 million (2013-Rs.789 million) and Rs. 754
million (2013- Rs. 734 million) respectively.
The movement and the composition of
reserves are disclosed in the Statement of
Changes in Equity on pages no 45 and 46 of
this Report.
Provision for Taxation
The provision for taxation is computed at
the rates as disclosed in note 2.20 to the
Financial Statements.
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DIRECTORS’ REPORT ON THE STATE OF AFFAIRS OF THE COMPANY
Audit CommitteeMr. H.P.J. De Silva
(Independent Non-Executive Director)
Mr. A.G. Weerasinghe
(Independent Non-Executive Director)
Remuneration CommitteeMr. H.P.J. De Silva
(Independent Non-Executive Director)
Mr. A.G. Weerasinghe
(Independent Non-Executive Director)
Company’s compliance with rules on
corporate governance are given in
corporate governance report on pages 22
to 29. The Audit Committee Report and
the Remuneration Committee Report are
disclosed on page 40 and 33 respectively of
this Report.
The Board of Directors is satisfied with the
effectiveness of the systems of internal
controls for the year under review and up to
the date of the Annual Report.
Compliance with Rules and Regulations
The Company has complied with tax and
other regulations applicable to the Company
and has submitted all the returns and the
details to the relevant parties by the due
dates.
Going Concern
After considering the financial position as
at 31st March 2014 and considering the
future prospects of the Company and its
subsidiaries, the Directors have a reasonable
expectation that the Group has adequate
resources to continue in operations in
foreseeable future. Therefore the Directors
have adopted the assumption of going
concern in preparing these Financial
Statements.
Employment Policy
The Group policy is to respect the merits
of the individuals and provide career
opportunities, irrespective of sex, race or
religion. The Group’s strength of manpower
as at 31st March, 2014 was 139. (2013-141)
Equitable treatment to Stake Holders and their interest
The Group has taken all steps to ensure the
equitable treatment to all stakeholders. The
Directors assure that the Group has taken
necessary precautions to safe guard the
interest of its stakeholders.
Environmental Protection
The Directors have ensured that every
possible step has been taken to comply
with the relevant environmental laws and
regulations in the country. The Group has
not engaged in any activity that is harmful or
hazardous to the environment.
Directors during the Year
The Directors of the Company during the
year were as follows:
Mr. N. G. R. Karunaratne (Chairman/ Chief
Executive Officer)
Mr. D. N. N. Lokuge (Deputy Chairman)
Mr. A. P. Weerasekera (Managing Director)
Mr. W. A. P. Perera
Mr. D. S. K. Amarasekara
Mr. I. C. Nanayakkara
Mr. P. R. Saldin
Mr. A. G. Weerasinghe
Mr. H. P. J. de Silva
Ms. S. Wickramasinghe
The detailed profiles of the Board of Directors
of the Company are given on pages 08 to 11
of this Report.
Rotation/ Re-Election of Directors
I. Messrs. D. N. N. Lokuge, A. P.
Weerasekara and P. R. Saldin retire
by rotation in accordance with Article
23 (6) of the Articles of Association of
the Company and being eligible, offer
themselves for re-election.
II. Mr. N.G.R. Karunaratne who is
presently 77 years of age will cease
to hold office at the conclusion of
the Annual General Meeting and it is
proposed to move a resolution for his
re-appointment for a further period of
one year or up to the date of the next
Annual General Meeting (whichever
occurs first) and for the non-application
of the age limit referred to in Section
210 of the Companies Act No. 7 of
2007.
III. Mr. A.G. Weerasinghe who is presently
72 years of age will cease to hold office
at the conclusion of the Annual General
Meeting and it is proposed to move a
resolution for his re-appointment for
a further period of one year or up to
the date of the next Annual General
Meeting (whichever occurs first) and
for the non-application of the age
limit referred to in Section 210 of the
Companies Act No. 7 of 2007.
Independent Directors
During the year the following Directors were
acting as the Independent Directors of the
Company;
Mr. A. G. Weerasinghe
Mr. H. P. J. de Silva
Ms. S. Wickramasinghe
Directors’ Interest Register
In terms of the Companies Act No 07 of
2007 an Interest Register was maintained
during the accounting period under review.
Directors’ Interest in Contracts
The Directors in terms of Section 192 of the
Companies Act No 7 of 2007, have declared
their interests in contracts with the Company.
The Directors did not have any material
interest in any contract of significance in
Group’s business except those disclosed in
note 27 to the Financial Statements.
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DIRECTORS’ REPORT ON THE STATE OF AFFAIRS OF THE COMPANY
Directors’ Interest in SharesName of The Director As At
31st March 2014
As At
31st March 2013
Ordinary
voting
shares
Non-voting
shares
Ordinary
voting
shares
Non-voting
shares
Mr. N. G. R. Karunaratne 8,188,310 11,648,140 8,188,310 11,648,140
Mr. D. N. N. Lokuge 3,125,000 - 3,125,000 -
Mr. A. P. Weerasekera 8,053,310 5,824,550 8,053,310 5,824,550
Mr. W. A. P. Perera 3,120,000 - 3,120,000 -
Mr. D. S. K. Amarasekara - - - -
Mr. I. C. Nanayakkara - - - -
Mr. P. R. Saldin - - - -
Mr. A. G. Weerasinghe - - - -
Mr. H. P. J. de Silva - - - -
Mrs. S. Wickramasinghe - - - -
Directors Fees and Remuneration
The amount of the Directors fees and
remuneration paid during the year is given in
note 27.3 to the Financial Statements.
Related Party Transactions
The Directors have disclosed the transactions
with Related Parties in terms of the Sri Lanka
Accounting Standards which are set out in
note 27 to the Financial Statements.
Shareholders
The number of registered shareholders of the
Company, top twenty shaholders and the
distribution and analysis of shareholdings as
at 31st March 2014 are given on pages 69 to
71 of this Report.
Annual Report
The Board of Directors approved the
Company Financial Statements together with
the reviews which forms part of the Annual
Report on 23rd May 2014. The appropriate
number of copies will be submitted to
the Colombo Stock Exchange, Sri Lanka
Accounting and Auditing Standard Monitoring
Board and the Registrar of Companies within
the time frame.
Annual General Meeting
The Annual General Meeting will be held on
30th June 2014 at 10.00 a.m. at The Park
Premier Banquet Hall, Excel World, No. 338,
T.B. Jaya Mawatha, Colombo 10. The notice
of Annual General Meeting is given on page
73 of this Report.
On behalf of the Board of Directors.
Director
Director
P.R. Secretarial Services (Private) Ltd
Company Secretary
Colombo
29th May 2014
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Purpose of the Committee
The committee is vested with the
responsibility to assist the Board of Directors
in the oversight of the effectiveness of the
internal control over financial reporting,
including the integrity of the financial
statements of the company and the group.
The committee ensures the qualifications
and the independence of the External
auditors and monitors the performances of
the internal auditors. The establishment of
the compliance with the legal and regulatory
requirements is also form part of the key
purpose of the committee.
Composition
The committee appointed by the Board
of Directors consists of two independent
non -executive Directors. The committee
is headed by Mr. Janaka De Silva who is
a member of the Institute of Chartered
Accountants of Sri Lanka. Mr. A G
Weerasinghe who represents the committee
is an experienced senior banker.
The Chairman/CEO, Managing Director and
Executive Director attend to the Committee
meeting by invitation.
Meetings
There were 6 meetings of the committee
during the year under review; each
attendance is stated in the table on page 23
of this report.
Financial Reporting
The committee assists the Board of Directors
in fulfilling its oversight responsibility to the
shareholders and other stakeholders relating
to the Company’s financial statements and
the financial reporting process. Further,
the committee holds the responsibility for
reviewing the internal audit function of the
company and the annual independent audit
of the financial statements of the company
and the group.
AUDIT COMMITTEE REPORT
The recommendation of the quarterly annual
financial statements to the board as well as
ensuring company’s compliance with the law
and regulatory affairs of the company are
also part and partial responsibilities of the
committee. Further, the ensuring the reliability
and consistency of the accounting policies
and methods adopted in preparing the
financial statements and their compliance with
the Sri Lanka Financial Reporting Standards
and the adequacy of disclosures required by
other applicable laws, rules and guidelines.
External Audit
The committee has recommended to the
Board of Directors that Messer’s KPMG to be
appointed as the auditors of the company for
the year ending 31st March 2015 subject to
the approval of the shareholders at the Annual
General Meeting.
The Audit committee is satisfied that the
independence of the external auditors has
not been adversely influenced by any event
or service that could result in a conflict of
interest. Due consideration has been given to
the level of audit and non-audit fees received
by the external auditors from the company.
The Audit committee has recommended to
the Board of Directors on the fees payable to
the auditors for the payable to the auditors for
approval by the Board.
Janaka De Silva
Chairman – Audit Committee
Colombo.
29th May 2014
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INDEPENDENT AUDITORS’ REPORT
To the shareholders of AgStar Fertilizers PLC
Report on the Financial Statements
1. We have audited the accompanying
financial statements of AgStar Fertilizers
PLC (the Company), the consolidated
financial statements of AgStar Fertilizers
PLC and its subsidiaries (the Group)
which comprise the statements of
financial position as at 31 March 2014,
the income statements, statements of
comprehensive income, statements of
changes in equity and statements of
cash flows for the year then ended, and
a summary of significant accounting
policies and other explanatory notes, as
set out on pages 42 to 68.
Management’s Responsibility for the Financial Statements
2. Management is responsible for the
preparation and fair presentation of
these financial statements in accordance
with Sri Lanka Accounting Standards.
This responsibility includes: designing,
implementing and maintaining internal
control relevant to the preparation and
fair presentation of financial statements
that are free from material misstatement,
whether due to fraud or error; selecting
and applying appropriate accounting
policies; and making accounting
estimates that are reasonable in the
circumstances.
Scope of Audit and Basis of Opinion
3. Our responsibility is to express an opinion
on these financial statements based
on our audit. We conducted our audit
in accordance with Sri Lanka Auditing
Standards. Those standards require
that we plan and perform the audit to
obtain reasonable assurance whether
the financial statements are free from
material misstatement.
4. 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 principles
used and significant estimates made by
management, as well as evaluating the
overall financial statement presentation.
5. 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
6. In our opinion, so far as appears from our
examination, the Company maintained
proper accounting records for the year
ended 31 March 2014 and the financial
statements give a true and fair view
of the Company’s state of affairs as at
31 March 2014 and of its profit and
cash flows for the year then ended in
accordance with Sri Lanka Accounting
Standards.
7. In our opinion, the consolidated
financial statements give a true and
fair view of the Group’s state of affairs
as at 31 March 2014 and of the profit
and cash flows for the year then
ended in accordance with Sri Lanka
Accounting Standards, of the Group
dealt with thereby, so far as concerns the
shareholders of the Company.
Report on Other Legal and Regulatory Requirements
8. These financial statements also comply
with the requirements of Sections 151 (2)
and 153 (2) to 153 (7) of the Companies
Act, No. 07 of 2007.
COLOMBO
CHARTERED ACCOUNTANTS
29th May 2014
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INCOME STATEMENT
(All amounts in Sri Lankan Rupees)
Group Company
For the Year Ended 31st March 31st March
Note 2014 2013 2014 2013
Revenue 6 1,725,716,540 1,757,846,542 1,376,487,205 1,407,110,053
Cost of sales 7 (1,040,654,609) (1,073,720,226) (764,232,437) (779,347,490)
Gross profit 685,061,931 684,126,316 612,254,768 627,762,563
Distribution expenses 7 (81,687,417) (126,411,650) (67,790,562) (112,773,375)
Administrative expenses 7 (202,011,426) (176,306,434) (176,372,445) (162,526,031)
Claim on arbitration 8 (122,710,596) - (122,710,596) -
Other operating income 9 10,421,851 5,897,825 31,540,917 89,298,280
Operating profit 289,074,343 387,306,057 276,922,082 441,761,437
Finance income 129,732,080 212,407,154 127,908,860 209,833,494
Finance costs (360,407,302) (312,682,613) (325,574,179) (299,600,968)
Net finance costs 11 (230,675,222) (100,275,459) (197,665,319) (89,767,474)
Profit before tax 58,399,121 287,030,598 79,256,763 351,993,963
Income tax expense 12 (29,000,901) (69,481,932) (26,051,897) (66,688,501)
Profit for the year 29,398,220 217,548,666 53,204,866 285,305,462
Profit attributable to :
Oweners of the parent 42,878,126 217,551,553 53,204,866 285,305,462
Non controlling interests (13,479,906) (2,887) - -
29,398,220 217,548,666 53,204,866 285,305,462
Earnings per share - basic 13 0.13 0.67
Dividend per share 14 0.10 0.10
The notes on pages 48 to 68 form an integral part of these financial statements.
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STATEMENT OF COMPREHENSIVE INCOME
(All amounts in Sri Lankan Rupees)
Group Company
For the Year Ended 31st March 31st March
Note 2014 2013 2014 2013
Profit for the year 29,398,220 217,548,666 53,204,866 285,305,462
Other comprehensive income:
Actuarial loss on post employment benefit
obligations 23 (531,775) (879,993) (531,775) (879,993)
Revaluation of land - 67,491,000 - -
Other comprehensive income for the
year, net of tax (531,775) 66,611,007 (531,775) (879,993)
Total comprehensive income for the year net of tax 28,866,445 284,159,673 52,673,091 284,425,469
Attributable to :
- Owners of the parent 42,346,351 284,162,560 52,673,091 284,425,469
- Non -controlling interest (13,479,906) (2,887) - -
28,866,445 284,159,673 52,673,091 284,425,469
The notes on pages 48 to 68 form an integral part of these financial statements.
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STATEMENT OF FINANCIAL POSITION
(All amounts in Sri Lankan Rupees)
Group Company 31st March 31st MarchAs at Note 2014 2013 2014 2013
ASSETSNon current assetsProperty, plant and equipment 15 1,212,318,753 948,890,942 174,396,882 172,262,147Goodwill 5,629,638 5,629,638 - -Investment in subsidiaries 16 - - 635,199,990 630,199,990Deferred tax assets 24 219,842 66,151 - -Total non current assets 1,218,168,233 954,586,731 809,596,872 802,462,137
Current assetsInventories 17 488,209,258 163,969,629 91,690,117 70,108,228Trade and other receivables 18 2,746,116,011 3,121,321,434 2,943,142,999 3,076,294,398Cash and cash equivalents 19 117,480,206 160,102,115 55,596,152 112,306,418Total current assets 3,351,805,475 3,445,393,178 3,090,429,268 3,258,709,044Total assets 4,569,973,708 4,399,979,909 3,900,026,140 4,061,171,181
EQUITY AND LIABILITIESCapital and reservesStated capital 20 1,204,093,678 1,204,093,678 1,204,093,678 1,204,093,678Revaluation reserve 78,594,246 79,018,448 30,000,726 30,424,928Retained earnings 797,086,467 789,215,918 754,791,170 734,193,877Equity attributable to: Owners of the parent 2,079,774,391 2,072,328,044 1,988,885,574 1,968,712,483Non controlling interest 21,117,005 34,596,911Total equity 2,100,891,396 2,106,924,955
Non current liabilitiesLoans and borrowings 22 35,020,012 46,952,757 1,014,802 5,311,810Retirement benefit obligations 23 12,628,200 9,578,902 12,628,200 9,578,902Deferred tax liabilities 24 240,918,173 219,572,930 222,020,693 200,675,450Total non current liabilities 288,566,385 276,104,589 235,663,695 215,566,162
Current liabilitiesLoans and borrowings 22 1,300,535,454 671,015,566 848,829,432 557,216,319Trade and other payables 25 871,616,886 1,293,067,066 823,222,808 1,267,501,704Current tax payable 8,363,587 52,867,733 3,424,631 52,174,513Total current liabilities 2,180,515,927 2,016,950,365 1,675,476,871 1,876,892,536Total equity and liabilities 4,569,973,708 4,399,979,909 3,900,026,140 4,061,171,181
I certify that these financial statements have been prepared in compliance with the requirements of the Companies Act No. 07 of 2007.
A.S. Rajith PereraGeneral Manager-Finance
The Board of Directors is responsible for the preparation and presentation of these financial statements.
Signed for and on behalf of the board
N.G.R. Karunaratne P.R. SaldinChairman/CEO Director
29th May 2014
The notes on pages 48 to 68 form an integral part of these financial statements.
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STATEMENT OF CHANGES IN EQUITY - GROUP
(All amounts in Sri Lankan Rupees)
Equity Attributable to owners of the parent Non
Stated Revaluation Retained Total capital controlling Total
capital reserve earnings & reserves interest Equity
Balance as at 1st April 2012 1,204,093,678 30,849,130 588,370,156 1,823,312,964 - 1,823,312,964
Non controlling interest on
Acquisition of subsidiary - - - - 34,599,798 34,599,798
Profit for the year - - 217,551,553 217,551,553 (2,887) 217,548,666
Other comprehensive
income for the year - 67,491,000 (879,993) 66,611,007 - 66,611,007
Total comprehensive
income for the year - 67,491,000 216,671,560 284,162,560 (2,887) 284,159,673
Deferred tax on
revaluation surplus - (18,897,480) - (18,897,480) - (18,897,480)
Depreciation impact on revaluation
transferred to retained earnings - (424,202) 424,202 - - -
Dividends declared and paid
2011/2012 - - (16,250,000) (16,250,000) - (16,250,000)
Balance as at 31st March 2013 1,204,093,678 79,018,448 789,215,918 2,072,328,044 34,596,911 2,106,924,955
Balance as at 1st April 2013 1,204,093,678 79,018,448 789,215,918 2,072,328,044 34,596,911 2,106,924,955
Profit for the year - - 42,878,126 42,878,126 (13,479,906) 29,398,220
Other comprehensive
income for the year - - (531,775) (531,775) - (531,775)
Total comprehensive
income for the year - - 42,346,351 42,346,351 (13,479,906) 28,866,445
Depreciation impact on revaluation
transferred to retained earnings - (424,202) 424,202 - - -
Dividends declared and paid
2012/2013 - - (34,900,004) (34,900,004) - (34,900,004)
Balance as at 31st March 2014 1,204,093,678 78,594,246 797,086,467 2,079,774,391 21,117,005 2,100,891,396
The notes on pages 48 to 68 form an integral part of these financial statements.
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STATEMENT OF CHANGES IN EQUITY - COMPANY
(All amounts in Sri Lankan Rupees)
Stated Revaluation Retained Total capital
capital reserve earnings & reserves
Balance as at 1st April 2012 1,204,093,678 30,849,130 465,594,206 1,700,537,014
Profit for the year - - 285,305,462 285,305,462
Other comprehensive income for the year - - (879,993) (879,993)
Total comprehensive income for the year - - 284,425,469 284,425,469
Depreciation impact on revaluation transferred to
retained earnings - (424,202) 424,202 -
Dividend declared and paid 2011/2012 - - (16,250,000) (16,250,000)
Balance as at 31st March 2013 1,204,093,678 30,424,928 734,193,877 1,968,712,483
Balance as at 1st April 2013 1,204,093,678 30,424,928 734,193,877 1,968,712,483
Profit for the year - - 53,204,866 53,204,866
Other comprehensive income for the year - - (531,775) (531,775)
Total comprehensive income for the year - - 52,673,091 52,673,091
Depreciation impact on revaluation transferred - (424,202) 424,202 -
to retained earnings
Dividend declared and paid 2012/2013 - - (32,500,000) (32,500,000)
Balance as at 31st March 2014 1,204,093,678 30,000,726 754,791,170 1,988,885,574
The notes on pages 48 to 68 form an integral part of these financial statements.
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STATEMENT OF CASH FLOWS
(All amounts in Sri Lankan Rupees)
Group Company
For the Year Ended 31st March 31st March
Note 2014 2013 2014 2013
Cash flows from operating activities
Cash generated from / (used in) operations 26 (85,438,093) 567,988,084 (62,334,433) 500,880,985
Gratuity paid 23 (326,250) (389,765) (326,250) (389,765)
Interest paid 11 (360,407,302) (312,682,613) (325,574,179) (299,600,968)
Interest received 11 129,732,080 212,407,154 127,908,860 209,833,494
Income tax paid (405,580) (34,396,358) - (30,567,822)
Net cash generated from/(used in) operating activities (316,845,145) 432,926,502 (260,326,002) 380,155,924
Cash flows from investing activities
Acquisition of subsidiaries net of cash and bank overdraft - (24,006,941) - -
Investment in Subsidiaries - - (5,000,000) (629,199,990)
Payments on property, plant and equipment 15 (313,839,020) (586,211,080) (39,639,269) (32,961,001)
Proceeds from disposal of property, plant and equipment 2,975,113 320,335 2,975,113 113,584,916
Dividend income (received) 9 - - 21,599,996 16,250,000
Net cash used in investing activities (310,863,907) (609,897,686) (20,064,160) (532,326,075)
Cash flows from financing activities
Short term borrowing net movement 698,704,196 (386,509,991) 306,542,685 (410,971,273)
Dividend payment 14 (32,500,000) (16,250,000) (32,500,000) (16,250,000)
Repayment of finance lease principal (7,028,618) (6,225,544) (6,252,410) (5,777,553)
Net cash (used in)/generated from financing activities 659,175,578 (408,985,535) 267,790,275 (432,998,826)
Net decrease/increase in cash and cash equivalents for the year 31,466,526 (585,956,719) (12,599,887) (585,168,977)
Moment in cash and cash equivalent
Beginning of the year 19 75,519,133 661,475,852 67,476,184 652,645,161
Increase in cash and cash equivalents 31,466,526 (585,956,719) (12,599,887) (585,168,977)
End of the year 19 106,985,659 75,519,133 54,876,297 67,476,184
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1. General Information
1.1 AgStar Fertilizers PLC is a limited
liability company incorporated in Sri
Lanka and listed on the Colombo Stock
Exchange. The address of its registered
office is No. 9, Bawa Place, Colombo
8.
1.2 The principal activities of Group are as follows:
AgStar Fertilizers PLC - Carry on
business of importing, blending and
marketing of fertilizer products.
AgStar Cropcare (Private) Limited
- Carry on business of importing,
formulating and marketing of
chemicals, fertilizers and specialty
products.
AgStar Seeds (Private) Limited - Carry
on business of producing, trading
and marketing of seeds and planting
materials.
AgStar Grains (Private) Ltd - Carrying
on the business of procurement,
processing and marketing of rice and
other grains.
Mahaweli Rice Processing
Industries (Private) Limited - Carrying
on the business of procurement,
processing and marketing of rice.
AgStar Properties (Private) Limited
- Set up for property development
and construction of warehousing and
storage facilities.
AgStar Exports (Private) Limited -
Carrying on business of exporting
cinnamon
2. Summary of Significant accounting policies
The principal accounting policies
adopted in the preparation of these
financial statements are set out below.
These policies have been consistently
applied to all the years presented,
unless otherwise stated.
liabilities and contingent liabilities
assumed in a business combination
are measured initially at their fair values
at the acquisition date, irrespective of
the extent of any minority interest. The
excess of the cost acquisition over
the fair value of the Group’s share of
the identifiable net assets acquired
is recorded as goodwill. If the cost of
acquisition is less than the fair value
of the net assets of the subsidiary
acquired, the difference is recognised
directly in the income statement.
Goodwill is initially measured as
the excess of the aggregate of the
consideration transferred and the fair
value of non-controlling interest over
the net identifiable assets acquired and
liabilities assumed. If this consideration
is lower than the fair value of the net
assets of the subsidiary acquired, the
difference is recognised in profit or loss.
2.3 Foreign currency transactions The Company’s/Group’s functional
currency is Sri Lankan Rupees.
Foreign currency transactions are
accounted for using the exchange
rates prevailing at the date of the
transactions or valuations where items
are re-measured. Gains and losses
resulting from the settlement of such
transactions and from the translation
of monetary assets and liabilities
denominated in foreign currencies, are
recognized in the income statement.
Such balances are translated at year
end exchange rates.
2.4 Property, plant and equipment(a) Cost and valuation
Land and buildings comprise mainly
factories, retail outlets and offices.
Land and buildings are shown at
fair value, based on valuations by
external independent valuers, less
subsequent depreciation for buildings.
Valuations are performed with sufficient
NOTES TO THE FINANCIAL STATEMENTS
2.1 Basis of preparation The consolidated financial statements
are prepared in accordance with and
comply with Sri Lanka Accounting
Standards (SLFRSs/LKASs). The
financial statements are prepared under
the historical cost basis as modified
by the revaluation of land and financial
assets and liabilities.
The preparation of financial statements
in conformity with SLFRSs/LKASs
and requires the use of certain critical
accounting estimates. It requires
management to exercise their
judgment in the process of applying
the Company’s accounting policies.
The areas where assumptions and
estimates are significant to the
consolidated financial statements are
disclosed in note 4.
2.2 Consolidation Subsidiary 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. Subsidiaries are
consolidated from the date on which
effective control is transferred to the
Group and are no longer consolidated
from the date of disposal. All inter
company transactions, balances,
unrealised surplus and deficits
on transactions between Group
companies have been eliminated.
The purchase method of accounting
is used to account for the acquisition
of subsidiaries by the Group. The
cost of an acquisition is measured
as the fair value of the assets given,
equity instruments issued and
liabilities incurred or assumed at
the date of exchange, plus costs
directly attributable to the acquisition.
Identifiable assets acquired and
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regularity to ensure that the fair value
of a revalued asset does not differ
materially from its carrying amount. Any
accumulated depreciation at the date
of revaluation is eliminated against the
gross carrying amount of the asset,
and the net amount is restated to the
revalued amount of the asset. All other
property, plant and equipment is stated
at historical cost less depreciation.
Historical cost includes expenditure that
is directly attributable to the acquisition
of the items.
Subsequent costs are included in the
asset’s carrying amount or recognised
as a separate asset, as appropriate,
only when it is probable that future
economic benefits associated with the
item will flow to the group and the cost
of the item can be measured reliably.
The carrying amount of the replaced
part is derecognised. All other repairs
and maintenance are charged to the
income statement during the financial
period in which they are incurred.
Increases in the carrying amount arising
on revaluation of land and buildings
are credited to other comprehensive
income and shown as other reserves
in shareholders’ equity. Decreases
that offset previous increases of the
same asset are charged in other
comprehensive income and debited
against other reserves directly in
equity; all other decreases are charged
to the income statement. Each year
the difference between depreciation
based on the revalued carrying amount
of the asset charged to the income
statement, and depreciation based on
the asset’s original cost is transferred
from ‘revaluation reserve’ to ‘retained
earnings’.
Land is not depreciated. Depreciation
on other assets is calculated using
the straight-line method to allocate
their cost or revalued amounts to their
residual values over their estimated
useful lives, as follows:
Plant & Machinery 10 Years
Motor Vehicle 5 Years
Furniture & Fittings 10 Years
Computer Hardware 3 Years
Office Equipment 5-10 Years
Leasehold Motor Vehicles 4 Years
Pallets 5 Years
Building Fittings 4 Years
Buildings 20 Years
An asset’s carrying amount is written
down immediately to its recoverable
amount if the asset carrying amount is
greater than its estimated recoverable
amount.
Gains and losses on disposal of
property, plant and equipment are
determined by comparing the proceeds
with the carrying amount and are
recognised within other operating
income/ (expenses) in the income
statement.
When revalued assets are sold, the
amounts included in other reserves are
transferred to retained earnings.
(b) Borrowing costs
General and specific borrowing
costs directly attributable to the
acquisition, construction or production
of qualifying assets, which are assets
that necessarily take substantial period
of time to get ready for their intended
use are added to the cost of those
assets, until such time as the assets
are substantially ready for their intended
use.
Investment income earned on the
temporary investment of the specific
borrowing pending their expenditure on
qualifying assets is deducted from the
borrowing cost eligible for capitalization.
(c) Impairment of property, plant
and equipment
The carrying value of property,
plant and equipment is reviewed for
impairment when events or changes
in circumstances indicate the carrying
value may not be recoverable. If any
such indication exists and where the
carrying values exceed the estimated
recoverable amount the assets are
written down to their recoverable
amount. Impairment losses are
recognized in the income statement
unless it reverses a previous revaluation
surplus for the same asset.
2.5 Intangible Assets Goodwill
Goodwill arises on the acquisition of
subsidiaries and represents the excess
of the consideration transferred over
the group’s interest in net fair value of
the net identifiable assets, liabilities and
contingent liabilities of the acquiree
and the fair value of the non-controlling
interest in the acquiree. For the purpose
of impairment testing, goodwill acquired
in a business combination is allocated
to each of the CGUs, or groups of
CGUs, that is expected to benefit
from the synergies of the combination.
Each unit or group of units to which
the goodwill is allocated represents the
lowest level within the entity at which
the goodwill is monitored for internal
management purposes. Goodwill is
monitored at the operating segment
level. Goodwill impairment reviews are
undertaken annually or more frequently
if events or changes in circumstances
indicate a potential impairment. The
carrying value of goodwill is compared
to the recoverable amount, which is the
higher of value in use and the fair value
less costs to sell. Any impairment is
recognised immediately as an expense
and is not subsequently reversed.
NOTES TO THE FINANCIAL STATEMENTS
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2.6 Impairment of non-financial assets
Assets that are subject to amortisation
are reviewed for impairment whenever
events or changes in circumstances
indicate that the carrying amount may
not be recoverable. An impairment loss
is recognised for the amount by which
the asset’s carrying amount exceeds its
recoverable amount. The recoverable
amount is the higher of an asset’s fair
value less costs to sell and value in
use. For the purposes of assessing
impairment, assets are grouped at
the lowest levels for which there are
separately identifiable cash flows (cash-
generating units). Non-financial assets
other than goodwill that suffered an
impairment are reviewed for possible
reversal of the impairment at each
reporting date.
2.7 Trade and other receivables Trade receivables are amounts due
from customers for merchandise sold
in the ordinary course of business. If
collection is expected in one year or
less (or in the normal operating cycle
of the business if longer),they are
classified as current assets. If not, they
are presented as non-current assets.
Trade receivables are recognised
initially at fair value and subsequently
measured at amortised cost using the
effective interest method, less provision
for impairment.
2.8 Financial assets2.8.1 Classification
The Company classifies its financial
assets in the following categories: at fair
value through profit or loss, loans and
receivables, available for sale and held
to maturity. The classification depends
on the purpose for which the financial
assets were acquired. Management
determines the classification of its
financial assets at initial recognition and
re-evaluates this designation at every
reporting date.
(a) Financial assets at fair value
through profit or loss
A financial asset is classified into this
category if acquired principally for the
purpose of selling in the short term
designated by management. Assets in
this category are classified as current
assets if expected to settle within 12
months; Otherwise, they are classified
as non current assets. Derivatives are
also categories as financial assets at
fair value through profit or loss unless
they are designated as hedges.
(b) Loans and receivables
Loans and receivables are non-
derivative financial assets with fixed or
determinable payments that are not
quoted in an active market. They are
included in current assets, except for
maturities greater than 12 months after
the end of the reporting period. Loans
and receivables of which maturity
greater than 12 months classified as
non current asset. The company’s
loans and receivables comprise “ Trade
& other receivable and Cash & Cash
equivalents in the statement of financial
position.
2.8.2 Recognition and measurement of
financial asset
Regular purchases and sales of
financial assets are recognised on the
trade-date – the date on which the
company commits to purchase or
sell the asset. Investments are initially
recognised at fair value plus transaction
costs for all financial assets. Financial
assets are derecognized when the
rights to receive cash flows from the
investments have expired or have
been transferred and the company has
transferred substantially all risks and
rewards of the ownership. Loans and
receivables are carried at amortised
cost using the effective interest method.
Gains or losses arising from changes
in the fair value of the ‘financial assets
at fair value through profit or loss’
category are presented in the income
statement within other gains/(losses) –
net, in the year in which they arise.
2.9 Offsetting financial instruments Financial assets and liabilities are offset
and the net amount reported in the
statement of financial position when
there is a legally enforceable right to
offset the recognised amounts and
there is an intention to settle on a net
basis or realise the asset and settle the
liability simultaneously.
2.10 Impairment of financial assets(a) Assets carried at amortised cost
The Company assesses at the end of
each reporting period whether there is
objective evidence that a financial asset
or group of financial assets is impaired.
A financial asset or a group of financial
assets is impaired and impairment
losses are incurred only if there is
objective evidence of impairment as
a result of one or more events that
occurred after the initial recognition
of the asset (a ‘loss event’) and that
loss event (or events) has an impact
on the estimated future cash flows of
the financial asset or group of financial
assets that can be reliably estimated.
Evidence of impairment may include
indications that the debtors or a
group of debtors is experiencing
significant financial difficulties, default
or delinquency in interest or principle
payment, the probability that they will
enter bankruptcy or other financial
reorganization, and where observable
data indicate that there is a measurable
decrease in the estimated future cash
flows, such as changes in arrears or
economic conditions that correlate with
defaults.
NOTES TO THE FINANCIAL STATEMENTS
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For loans and receivables category, the
amount of the loss is measured as the
difference between the asset’s carrying
amount and the present value of
estimated future cash flows (excluding
future credit losses that have not been
incurred) discounted at the financial
asset’s original effective interest rate.
The carrying amount of the asset is
reduced and the amount of the loss is
recognised in the income statement.
If, in a subsequent period, the amount
of the impairment loss decreases
and the decrease can be related
objectively to an event occurring after
the impairment was recognised (such
as an improvement in the debtor’s
credit rating), the reversal of the
previously recognised impairment loss
is recognised in the income statement.
2.11 Financial liabilities The Company’s financial liabilities
include trade and other payables, bank
loans and other borrowings. All financial
liabilities are recognised initially at their
fair values and subsequently measured
at amortised cost, using the effective
interest method, unless the effect of
discounting would be insignificant, in
which case they are stated at cost.
2.12 Inventories Inventories are stated at the lower
of the cost or net realisable value.
Cost is determined by the weighted
average method. The cost of finished
goods and work in progress comprises
raw materials, direct labour, other
direct costs and related production
overheads, but excludes borrowing
costs. Net realisable value is the
estimate of the selling price in the
ordinary course of business, less
the costs of completion and selling
expenses.
2.13 Cash and cash equivalents Cash and cash equivalents includes
cash in hand, deposits held at call with
banks, other short term highly liquid
investments with original maturities
of three months or less, and bank
overdrafts. Bank overdrafts are shown
within borrowings in current liabilities on
the statement of financial position.
2.14 Provisions Provisions are recognised when the
Company has a present legal or
constructive obligation as a result
of past events; it is probable that an
outflow of resources will be required to
settle the obligation; and the amount
has been reliably estimated. Provisions
are not recognised for future operating
losses.
Where there are number of similar
obligations, the likelihood that an
outflow will be required in settlement
is determined by considering the class
of obligations as a whole. A provision
is recognised even if the likelihood of
an outflow with respect to any one
item included in the same class of
obligations may be small.
Provisions are measured at the present
value of the expenditures expected to
be required to settle the obligations
using the pre-tax rate that reflects
current market assessment of the time
value of money and risks specific to
the obligations. The increase in the
provision due to passage of time is
recognised as interest expense.
2.15 Employee benefits(a) Defined benefit obligation
Defined benefit plans define an amount
of benefit that an employee will receive
on retirement, usually dependent on
one or more factors such as age, years
of service and compensation.
The liability recognised in the statement
of financial position in respect of
defined benefit plans are the present
value of the defined benefit obligation
at the statement of financial position
date. The defined benefit obligation
is calculated by the Company using
the projected unit credit method. The
present value of the defined benefit
obligation is determined by discounting
the estimated future cash flows using
the interest rates of government bonds
in the absence of a deep market for
corporate bonds in Sri Lanka. The
government bonds are denominated
in the currency in which the benefits
will be paid, and that have terms to
maturity approximating to the terms of
the related pension liability.
(b) Defined contribution plans
All employees of the Company
in Sri Lanka are members of the
Employees’ Provident Fund and
Employees’ Trust Fund, to which the
Company contributes 12% and 3%
respectively, of such employees’ basic
or consolidated wage or salary.
(c) Short term employee benefits
Wages, salaries, paid annual leave
and sick leave, bonuses and non-
monetary benefits are accrued in the
year in which the associated services
are rendered by employees of the
Company.
2.16 Trade and other payables Liabilities classified as trade and other
payables in the statement of financial
position are those which fall due for
payment on demand or within one year
from the statement of financial position
date. Items classified as non-current
liabilities are those which fall due for
payment beyond a period of one year
from the statement of financial position
date.
NOTES TO THE FINANCIAL STATEMENTS
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2.17 Borrowings Borrowings are recognised initially
at fair value, net of transaction costs
incurred. Borrowings are subsequently
stated at amortised cost; any difference
between the proceeds (net of
transaction costs) and the redemption
value is recognised in the income
statement over the period of the
borrowings using the effective interest
method.
All other borrowing costs are
recognised in profit or loss in the year in
which they are incurred.
2.18 Leases Leases of property, plant and
equipment where the Company
assumes substantially all the risks and
rewards of ownership are classified
as finance leases. Finance leases
are capitalized at the estimated
present value of the underlying lease
payments. Each lease payment is
allocated between the liability and
finance charges so as to achieve a
constant rate on the finance balance
outstanding. The corresponding rental
obligations, net of finance charges, are
included in other long-term payables.
The interest element of the finance cost
is charged to the income statement
over the lease period. The property,
plant and equipment acquired under
finance leasing contracts is depreciated
over the useful life of the asset.
Leases in which a significant portion
of the risks and rewards of ownership
are retained by the lessor are classified
as operating leases. Payments made
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.
2.19 Revenue recognition Revenue is measured at the fair
value of the consideration received or
receivable, and represents amounts,
for goods supplied, stated net of
discounts, Returns, Value added
taxes. The Company recognises
revenue when the amount of revenue
can be reliably measured; when it is
probable that future economic benefit
will flow to the entity; and when
specific criteria have been met for
each of the company’s activities, as
described below. The company bases
its estimates of returns on historical
results, taking into consideration
the type of customer, the type of
transaction and the specify of the each
arrangement.
(a) Sale of goods
Sales of goods are recognised when a
company has delivered products to the
customer, the customer has accepted
the products and collectability of
the related receivables is reasonably
assured.
(b) Interest income
Interest income is recognised on
a time-proportion basis using the
effective interest method unless
collectability is in doubt.
2.20 Taxation(a) Current taxes
Provision for income tax is based
on the elements of income and
expenditure as reported in the
financial statements and computed in
accordance with the provisions of the
Inland Revenue Act.
(b) Deferred income taxes
Deferred tax is provided using the
liability method, for all temporary
differences arising between the tax
bases of assets and liabilities and their
carrying values for financial reporting
purposes. Currently enacted tax rates
are used to determine deferred income
tax.
Deferred income tax asset are
recognised only to the extent that it
is probable that future taxable profits
will be available against which the
temporary differences can be utilised.
Deferred income tax asset & liabilities
are offset when there is a legally
enforceable right to offset current tax
asset against current tax liabilities.
When the deferred income tax assets
and liabilities relate to income taxes
levied by the same taxation authority.
2.21 Contingent liabilities and contingent assets
A contingent liability is a possible
obligation that arises from past events
whose existence will be confirmed by
uncertain future events beyond the
control of the Company or a present
obligation that is not recognised
because it is not probable that an
outflow of resources will be required
to settle the obligation. All contingent
liabilities are disclosed as a note to the
financial statements unless the outflow
of resources are remote.
A contingent asset is a possible asset
that arises from past events whose
existence will be confirmed by uncertain
future events beyond the control of
the Company . Contingent assets are
disclosed where inflow of economic
benefits is probable.
2.22 Segment reporting Operating segments are reported
in a manner consistent with the
internal reporting provided to the chief
operating decision-maker. The chief
operating decision-maker, who is
responsible for allocating resources and
assessing performance of the operating
segments, has been identified as
the steering committee that makes
strategic decisions.
NOTES TO THE FINANCIAL STATEMENTS
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3. Financial risk management
3.1 Financial risk factors The Group is exposed to a variety of financial risks. These include foreign exchange risks, interest rate risks, credit risks and liquidity risks.
Based on our economic outlook and the Group’s exposure to these risks, the Board of Directors approves various risk management
strategies from time to time.
(a) Market risk
(i) Foreign exchange risk
The Company/group pays for Fertilizer imports in foreign currency. The foreign exchange risk is considerably low under present
government subsidy scheme where the Company has to pay on letters of credit within six months since the due date and the
government subsidy is receivable in US Dollars within six months since due. No significant foreign currency exposure arise form the
other transactions.
(ii) Interest rate risk
The Group is exposed to the risk of changes in market interest rates as the Group borrowings are mostly at floating interest rates.
(b) Credit risk
The credit risk arises from trade and other receivables. Refer Note 18 for further disclosures on credit risk.
(c) Liquidity risk
Cash flow forecasting is performed by the finance division. The finance division monitors rolling forecasts of the Group’s liquidity
requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed
borrowing facilities at all times so that the Group does not breach borrowing limits or covenants (where applicable) on any of its borrowing
facilities. Such forecasting takes into consideration the Group’s debt financing plans, covenant compliance, compliance with internal
statement of financial position ratio targets and, if applicable external regulatory or legal requirements – for example, currency restrictions.
The table below analyses the Group’s non-derivative financial liabilities into relevant maturity groupings based on the remaining period
at the statement of financial position date to the contractual maturity date. Derivative financial liabilities are included in the analysis if
their contractual maturities are essential for an understanding of the timing of the cash flows. The amounts disclosed in the table are the
contractual undiscounted cash flows (group).
At 31st March 2014 Less than 1 year Between 1 and 5 years Over 5 years Total
Borrowings (excluding finance lease liabilities) 1,295,505,635 33,524,654 - 1,329,030,289
Trade and other payables (excluding statutory liabilities) 871,616,886 - - 871,616,886
2,167,122,521 33,524,654 - 2,200,647,175
At 31st March 2013 Less than 1 year Between 1 and 5 years Over 5 years Total
Borrowings (excluding finance lease liabilities) 663,760,969 40,653,559 - 704,414,528
Trade and other payables (excluding statutory liabilities) 1,293,083,175 - - 1,293,067,066
1,958,305,108 40,653,559 - 1,997,481,594
3.2 Capital risk management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide
returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In
order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to
shareholders, issue new shares or sell assets to reduce debt. The Group assesses solvency prior to declaration of dividend to maintain the
dividend ratio. Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated
as total debt divided by total capital. Debt is calculated as total borrowings including ‘current and non-current borrowings’ as shown in the
statement of financial position. Total capital is calculated as ‘equity’ as shown in the statement of financial position.
NOTES TO THE FINANCIAL STATEMENTS
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The gearing ratio were as follows
Company
2014 2013
Total borrowings (Note 22) 849,844,234 562,528,129
Total equity 1,988,885,574 1,968,712,483
Gearing ratio 43% 29%
Group
2014 2013
Total borrowings (Note 22) 1,335,555,466 717,968,323
Total equity 2,100,891,396 2,106,924,955
Gearing ratio 64% 34%
4. Critical accounting estimates and judgments
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of
future events that are believed to be reasonable under the circumstances.
4.1 Critical accounting estimates and assumptions The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal
the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are outlined below:
(a) Estimated impairment of non-current assets
The Group tests annually the indicators to ascertain whether non-current assets (including intangibles) have suffered any impairment,
in accordance with the accounting policy stated in policy 2.4 (c) and 2.6 The recoverable amounts of cash generating units have been
determined based on value-in-use calculations. These calculations require the use of estimates.
(b) Defined benefit plan - Gratuity
The present value of the defined benefit plan depends on a number of factors that are determined on an actuarial basis using a number of
assumptions. The assumptions used in determining the net cost (income) for defined benefit plan include the discount rate. Any changes in
these assumptions will impact the carrying amount of defined benefit plan. The Company determines the appropriate discount rate at the
end of each year as explained in the accounting policies note 2.15. This is the interest rate that should be used to determine the present
value of estimated future cash outflows expected to be required to settle the defined benefit obligations. Other key assumptions for defined
benefit plan are based in part on current market conditions. Additional information is disclosed in note 23.
NOTES TO THE FINANCIAL STATEMENTS
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5. Segment information
Management has determined the operating segments based on the reports reviewed by the Executive Board that are used to make strategic
decisions.
Trading - Items which are directly imported and sold without further processing are categorised under this.
Non Trading - This segment includes the items which are further processed at the Company before sold.
2014 2013 Trading Non Trading Total Trading Non Trading Total
Total external segment revenue 459,368,367 1,266,348,173 1,725,716,540 559,728,621 1,198,117,921 1,757,846,542Cost of sales (292,516,424) (748,138,185) (1,040,654,609) (336,374,629) (737,345,597) (1,073,720,226)Gross profit 166,851,943 518,209,988 685,061,931 223,353,992 460,772,324 684,126,316Unallocated expensesDistribution expenses (81,687,417) (132,767,410)Administrative expenses (324,722,022) (169,950,674)Other operating income/(expenses) 10,421,851 5,897,825Operating profit 289,074,343 387,306,057Net finance cost (230,675,222) (100,275,459)Profit before tax 58,399,121 287,030,598Income tax expense (29,000,901) (69,481,932)Profit for the year 29,398,220 217,548,666
Since the information on total assets and liabilities for each reportable segment are not provided to the Executive Board on regular basis, the
segmented assets and liabilities are not provided.
6. Revenue
Group Company 2014 2013 2014 2013
Revenue 1,725,716,540 1,757,846,542 1,376,487,205 1,407,110,053
Revenue of the group consist of local sales of fertilizers, agro-chemicals, seeds, cinnamon and rice which have been disclosed net of taxes.
7. Expenses by nature
Operating profit stated after charging following expenses Group Company 2014 2013 2014 2013
Directors’ emoluments 16,859,699 13,876,453 16,859,699 13,876,453Auditors’ remuneration - Audit fees 831,250 520,000 316,250 275,000Non audit fees 80,000 - 80,000 -Depreciation (Note 15) 50,314,339 43,883,615 37,407,664 42,373,684Staff cost (Note 10) 84,357,340 70,308,753 76,569,144 68,892,278Raw material consumption 993,297,343 1,023,369,206 709,886,074 738,935,342Transport cost 27,425,900 23,637,479 24,073,180 20,918,947Rent expenses 20,696,624 20,681,335 51,050,349 19,841,335Impairment of debtors 8,025,892 29,215,819 4,766,678 22,022,767Stock write-off 4,504,245 - - -Others 117,960,820 150,945,650 87,386,406 127,511,090 1,324,353,452 1,376,438,310 1,008,395,444 1,054,646,896
NOTES TO THE FINANCIAL STATEMENTS
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Group Company 2014 2013 2014 2013
Cost of sales 1,040,654,609 1,073,720,226 764,232,437 779,347,490Distribution expenses 81,687,417 126,411,650 67,790,562 112,773,375Administrative expense 202,011,426 176,306,434 176,372,445 162,526,031 1,324,353,452 1,376,438,310 1,008,395,444 1,054,646,896
8. Claim on arbitration
The claim on arbitration represent the total amount payable to Toepfer International Asia Pte Ltd as claimant in the arbitration proceedings institute against the Company, discussed in Note 28, Events after the reporting period.
9. Other income
Group Company 2014 2013 2014 2013
Sundry income 7,543,608 5,840,590 7,062,678 5,500,045Dividend income - - 21,599,996 16,250,000Profit on disposal of property, plant and equipment 2,878,243 57,235 2,878,243 57,235Profit on transfer of land - - - 67,491,000 10,421,851 5,897,825 31,540,917 89,298,280
10. Staff costs
Group Company 2014 2013 2014 2013
Salaries and wages 72,001,073 60,321,906 64,716,590 58,934,420Defined contribution plan 9,512,494 8,293,086 9,008,781 8,129,327Defined benefit obligations (Notes 23) 2,843,773 1,693,761 2,843,773 1,828,531 84,357,340 70,308,753 76,569,144 68,892,278
11. Net finance costs
Group Company 2014 2013 2014 2013
Finance costsInterest expenses - bank loans and overdrafts 358,932,557 311,830,035 324,613,462 297,931,176Interest on finance leases 1,245,421 839,691 960,717 1,656,905Net foreign exchange loss 229,324 12,887 - 12,887 360,407,302 312,682,613 325,574,179 299,600,968Finance incomeInterest income on investments (124,556,872) (211,924,676) (122,733,652) (209,833,494)Net foreign exchange gain (5,175,208) (482,478) (5,175,208) - (129,732,080) (212,407,154) (127,908,860) (209,833,494) 230,675,222 100,275,459 197,665,319 89,767,474
NOTES TO THE FINANCIAL STATEMENTS
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12. Income tax expense
Group Company
2014 2013 2014 2013
Current income tax 6,610,500 66,974,678 3,424,631 66,389,147
Group dividend tax - 1,637,577 - -
Under/ (over) provisions in previous years 1,198,849 (13,204,721) 1,282,023 (13,204,721)
Deferred income tax expense/ (income) 21,191,552 13,534,221 21,345,243 13,504,075
Deemed dividend tax - 540,177 - -
Income tax expense 29,000,901 69,481,932 26,051,897 66,688,501
The tax on the Company’s profit before tax differs from the theoretical amount that would arise using the basic tax rate of the Company and the
Group as follows:
Group Company
2014 2013 2014 2013
Profit before tax 58,399,121 287,030,598 79,256,763 351,993,963
Tax calculated at a tax rate 28% ( 2013 - 28%) 16,351,754 80,368,567 22,191,894 98,558,310
Expenses not deductible for tax 1,848,199 140,332 1,817,129 22,348
Exempted income (5,517,408) - - -
Effect of tax loss companies 8,310,657 - - -
Income not subject to tax (123,679) - (6,171,678) (18,687,436)
Group dividend tax - 1,637,577 - -
Deemed dividend tax - 540,177 - -
Over / (under) provision previous years 1,198,849 (13,204,721) 1,282,023 (13,204,721)
Deferred tax under provision in previous years 6,932,530 - 6,932,530 -
29,000,901 69,481,932 26,051,897 66,688,501
13. Earnings per share
Basic earnings per share is calculated, based on the net profit attributable to owners of the parent and weighted average number of ordinary
shares in issue during the year. Basic earnings for an ordinary share is as follows:
Group
2014 2013
Net profit attributable to ordinary shareholders 42,878,126 217,551,553
Weighted average number of ordinary shares 325,000,000 325,000,000
Earnings per share 0.13 0.67
14. Dividend per share
Group
2014 2013
Final ordinary dividend recommended 32,500,000 32,500,000
Dividend per share 0.10 0.10
The Directors have recommended a final dividend payment of Rs.0.10 per share for the year ended 31st March 2014 to be approved at the
Annual General Meeting on 30th June 2014. In compliance with Sri Lanka Accounting Standard LKAS-10 Events after the reporting period, the
final dividend recommended is not recognized as a liability in the financial statements as at 31st March 2014.
NOTES TO THE FINANCIAL STATEMENTS
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15.
Prop
erty
, pla
nt a
nd e
quip
men
t - G
roup
La
nd
Build
ing
Plan
t and
Le
aseh
old
Mot
or
Leas
ehol
d Co
mpu
ters
Fu
rnitu
re
Offi
ce
Lab
Cabi
n Pa
llets
Ca
pita
l To
tal
M
achi
nery
Pl
ant
Vehi
cles
M
otor
& F
ittin
gs
Equi
pmen
t Eq
uipm
ent
Unit
W
ork
in
& M
achi
nery
Vehi
cles
Pr
ogre
ss
At 3
1st M
arch
201
2
Cost
69
,410
,700
25
,579
,048
51
,978
,818
15
,567
,500
79
,371
,751
26
,890
,000
12
,074
,764
11
,128
,007
5,
529,
746
4,43
0,48
1 68
3,85
0 1,
928,
473
4,72
3,01
2 30
9,29
6,15
0
Accu
mula
ted
depr
eciat
ion
- (5
,266
,048
) (1
1,19
2,44
9)
(7,6
05,3
75)
(25,
868,
143)
(1
2,85
8,75
0)
(9,2
21,5
99)
(2,9
74,0
64)
(2,5
23,2
10)
(1,6
27,6
66)
(341
,925
) (1
,392
,540
) -
(80,
871,
769)
Net b
ook
amou
nt
69,4
10,7
00
20,3
13,0
00
40,7
86,3
69
7,96
2,12
5 53
,503
,608
14
,031
,250
2,
853,
165
8,15
3,94
3 3,
006,
536
2,80
2,81
5 34
1,92
5 53
5,93
3 4,
723,
012
228,
424,
381
Year
end
ed 3
1st M
arch
201
3
Ope
ning
net b
ook
amou
nt
69,4
10,7
00
20,3
13,0
00
40,7
86,3
69
7,96
2,12
5 53
,503
,608
14
,031
,250
2,
853,
165
8,15
3,94
3 3,
006,
536
2,80
2,81
5 34
1,92
5 53
5,93
3 4,
723,
012
228,
424,
381
Addi
tions
dur
ing th
e ye
ar
4,62
7,00
0 -
612,
397
- -
- 1,
712,
950
1,64
2,99
5 59
0,55
3 10
8,33
5 -
309,
886
558,
340,
924
567,
945,
040
Reva
luatio
n of
land
67
,491
,000
-
- -
- -
- -
- -
- -
- 67
,491
,000
Stam
p du
ty o
n lan
d tra
nsfe
r (4
,479
,000
) -
- -
- -
- -
- -
- -
- (4
,479
,000
)
Acqu
isitio
n of
sub
sidiar
y -
54,8
61,2
26
52,7
45,0
00
- -
3,23
0,75
1 -
170,
562
- -
- -
15,0
43,3
52
126,
050,
891
Tran
sfer
red
from
cap
ital W
IP
- 17
,278
,899
-
- -
- -
- -
- -
- (1
7,27
8,89
9)
-
Recla
ssific
atio
n -
- 15
,567
,500
(1
5,56
7,50
0)
- -
- -
- -
- -
- -
Disp
osals
-
- -
- (4
48,4
00)
- (2
97,7
50)
- (2
0,25
0)
- -
- -
(766
,400
)
Depr
eciat
ion
on D
ispos
al &
writ
e-of
f -
- -
7,60
5,37
5 18
5,30
0 -
297,
720
- 20
,250
-
- -
- 8,
108,
645
Depr
eciat
ion
char
ge (N
ote
7)
- (2
,852
,651
) (1
4,41
6,65
2)
- (1
4,16
8,15
1)
(6,0
28,7
50)
(2,0
22,0
94)
(3,0
08,8
34)
(564
,888
) (5
05,2
80)
(136
,770
) (1
79,5
45)
- (4
3,88
3,61
5)
Clos
ing
net b
ook
amou
nt
137,
049,
700
89,6
00,4
74
95,2
94,6
14
- 39
,072
,357
11
,233
,251
2,
543,
991
6,95
8,66
6 3,
032,
201
2,40
5,87
0 20
5,15
5 66
6,27
4 56
0,82
8,38
9 94
8,89
0,94
2
At 3
1st M
arch
201
3
Cost
/ valu
atio
n 13
7,04
9,70
0 97
,719
,173
12
0,90
3,71
5 -
78,9
23,3
51
30,1
20,7
51
13,4
89,9
64
12,9
41,5
64
6,10
0,04
9 4,
538,
816
683,
850
2,23
8,35
9 56
0,82
8,38
9 1,
065,
537,
681
Accu
mula
ted
depr
eciat
ion
- (8
,118
,699
) (2
5,60
9,10
1)
- (3
9,85
0,99
4)
(18,
887,
500)
(1
0,94
5,97
3)
(5,9
82,8
98)
(3,0
67,8
48)
(2,1
32,9
46)
(478
,695
) (1
,572
,085
) -
(116
,646
,739
)
Net b
ook
amou
nt
137,
049,
700
89,6
00,4
74
95,2
94,6
14
- 39
,072
,357
11
,233
,251
2,
543,
991
6,95
8,66
6 3,
032,
201
2,40
5,87
0 20
5,15
5 66
6,27
4 56
0,82
8,38
9 94
8,89
0,94
2
Year
end
ed 3
1st M
arch
201
4
Ope
ning
net b
ook
amou
nt
137,
049,
700
89,6
00,4
74
95,2
94,6
14
- 39
,072
,357
11
,233
,251
2,
543,
991
6,95
8,66
6 3,
032,
201
2,40
5,87
0 20
5,15
5 66
6,27
4 56
0,82
8,38
9 94
8,89
0,94
2
Addi
tions
dur
ing th
e ye
ar
14,6
32,2
76
2,65
0,25
8 1,
326,
733
- -
- 62
0,10
0 83
7,08
4 2,
073,
705
211,
164
- 12
7,60
0 29
1,36
0,10
0 31
3,83
9,02
0
Tran
sfer
red
from
cap
ital W
IP
299,
573,
280
203,
581,
596
36,9
36,8
40
- -
- -
346,
442
31,4
42
- -
- (5
40,4
69,6
00)
-
Recla
ssific
atio
n -
- -
- -
- -
- -
- -
- -
-
Disp
osals
- Co
st
- -
- -
(276
,049
) (5
,550
,000
) -
- -
- -
- -
(5,8
26,0
49)
Depr
eciat
ion
on d
ispos
als &
writ
e-of
f -
- -
- 17
9,17
9 5,
550,
000
- -
- -
- -
- 5,
729,
179
Depr
eciat
ion
char
ge (N
ote
7)
- (1
1,68
2,54
2)
(12,
323,
001)
-
(14,
694,
258)
(5
,335
,000
) (1
,665
,953
) (3
,131
,958
) (6
58,0
50)
(426
,128
) (1
36,7
70)
(260
,679
) -
(50,
314,
339)
Clos
ing
net b
ook
amou
nt
451,
255,
256
284,
149,
786
121,
235,
186
- 24
,281
,229
5,
898,
251
1,49
8,13
8 5,
010,
234
4,47
9,29
8 2,
190,
906
68,3
85
533,
195
311,
718,
889
1,21
2,31
8,75
3
At 3
1st M
arch
201
4
Cost
/ valu
atio
n 45
1,25
5,25
6 30
3,95
1,02
7 15
9,16
7,28
8 -
78,6
47,3
02
24,5
70,7
51
14,1
10,0
64
14,1
25,0
90
8,20
5,19
6 4,
749,
980
683,
850
2,36
5,95
9 31
1,71
8,88
9 1,
373,
550,
652
Accu
mula
ted
depr
eciat
ion
- (1
9,80
1,24
1)
(37,
932,
102)
-
(54,
366,
073)
(1
8,67
2,50
0)
(12,
611,
926)
(9
,114
,856
) (3
,725
,898
) (2
,559
,074
) (6
15,4
65)
(1,8
32,7
64)
- (1
61,2
31,8
99)
Net b
ook
amou
nt
451,
255,
256
284,
149,
786
121,
235,
186
- 24
,281
,229
5,
898,
251
1,49
8,13
8 5,
010,
234
4,47
9,29
8 2,
190,
906
68,3
85
533,
195
311,
718,
889
1,21
2,31
8,75
3
NOTES TO THE FINANCIAL STATEMENTS
AgS
tar
Fert
ilize
rs P
LC
Ann
ual R
epor
t 20
13/1
4
59
15.
Prop
erty
, pla
nt a
nd e
quip
men
t - C
ompa
ny
La
nd
Build
ing
Plan
t and
Le
aseh
old
Mot
or
Leas
ehol
d Co
mpu
ters
Fu
rnitu
re
Offi
ce
Lab
Cabi
n Pa
llets
Ca
pita
l To
tal
M
achi
nery
Pl
ant
Vehi
cles
M
otor
& F
ittin
gs
Equi
pmen
t Eq
uipm
ent
Unit
W
ork
in
& M
achi
nery
Vehi
cles
Pr
ogre
ss
At 3
1st M
arch
201
2
Cost
69
,410
,700
25
,002
,598
51
,579
,343
15
,567
,500
79
,371
,751
26
,890
,000
11
,924
,934
11
,128
,007
4,
994,
097
4,19
6,62
1 68
3,85
0 1,
914,
973
4,72
3,01
2 30
7,38
7,38
6
Accu
mula
ted
depr
eciat
ion
- (4
,689
,598
) (1
1,06
4,28
6)
(7,6
05,3
75)
(25,
868,
143)
(1
2,85
8,75
0)
(9,0
89,6
05)
(2,9
74,0
64)
(2,2
87,3
80)
(1,5
10,9
60)
(341
,925
) (1
,385
,789
) -
(79,
675,
875)
Net b
ook
amou
nt
69,4
10,7
00
20,3
13,0
00
40,5
15,0
57
7,96
2,12
5 53
,503
,608
14
,031
,250
2,
835,
329
8,15
3,94
3 2,
706,
717
2,68
5,66
1 34
1,92
5 52
9,18
4 4,
723,
012
227,
711,
511
Year
end
ed 3
1st M
arch
201
3
Ope
ning
net b
ook
amou
nt
69,4
10,7
00
20,3
13,0
00
40,5
15,0
57
7,96
2,12
5 53
,503
,608
14
,031
,250
2,
835,
329
8,15
3,94
3 2,
706,
717
2,68
5,66
1 34
1,92
5 52
9,18
4 4,
723,
012
227,
711,
511
Addi
tions
dur
ing th
e ye
ar
36,0
00
- 55
3,39
7 -
- -
1,71
2,95
0 1,
429,
443
584,
254
- -
309,
886
20,7
29,6
96
25,3
55,6
26
Tran
sfer
red
from
cap
ital W
IP
- 17
,278
,899
-
- -
- -
- -
- -
- (1
7,27
8,89
9)
-
Disp
osals
- Co
st
(44,
509,
000)
-
- -
(448
,400
) -
(297
,750
) -
(20,
250)
-
- -
- (4
5,27
5,40
0)
Recla
ssific
atio
n -
- 15
,567
,500
(1
5,56
7,50
0)
- -
- -
- -
- -
- -
Depr
eciat
ion
on d
ispos
als &
writ
e-of
f -
- -
7,60
5,37
5 18
5,30
0 -
297,
720
- (5
11,0
24)
(419
,662
) (1
36,7
70)
(176
,845
) -
6,84
4,09
4
Depr
eciat
ion
char
ge (N
ote
7)
- (2
,852
,651
) (1
4,32
9,89
4)
- (1
4,16
8,15
1)
(6,0
28,7
50)
(2,0
14,9
61)
(2,9
99,5
27)
20,2
50
- -
- -
(42,
373,
684)
Clos
ing
net b
ook
amou
nt
24,9
37,7
00
34,7
39,2
48
42,3
06,0
60
- 39
,072
,357
8,
002,
500
2,53
3,28
8 6,
583,
859
2,77
9,94
7 2,
265,
999
205,
155
662,
225
8,17
3,80
9 17
2,26
2,14
7
At 3
1st M
arch
201
3
Cost
24
,937
,700
42
,281
,497
67
,700
,240
-
78,9
23,3
51
26,8
90,0
00
13,3
40,1
34
12,5
57,4
50
5,55
8,10
1 4,
196,
621
683,
850
2,22
4,85
9 8,
173,
809
287,
467,
612
Accu
mula
ted
depr
eciat
ion
- (7
,542
,249
) (2
5,39
4,18
0)
- (3
9,85
0,99
4)
(18,
887,
500)
(1
0,80
6,84
6)
(5,9
73,5
91)
(2,7
78,1
54)
(1,9
30,6
22)
(478
,695
) (1
,562
,634
) -
(115
,205
,465
)
Net b
ook
amou
nt
24,9
37,7
00
34,7
39,2
48
42,3
06,0
60
- 39
,072
,357
8,
002,
500
2,53
3,28
8 6,
583,
859
2,77
9,94
7 2,
265,
999
205,
155
662,
225
8,17
3,80
9 17
2,26
2,14
7
Year
end
ed 3
1st M
arch
201
4
Ope
ning
net b
ook
amou
nt
24,9
37,7
00
34,7
39,2
48
42,3
06,0
60
- 39
,072
,357
8,
002,
500
2,53
3,28
8 6,
583,
859
2,77
9,94
7 2,
265,
999
205,
155
662,
225
8,17
3,80
9 17
2,26
2,14
7
Addi
tions
dur
ing th
e ye
ar
14,6
32,2
76
2,62
5,25
8 32
0,74
3 -
- -
539,
100
578,
379
805,
401
211,
164
- 12
7,60
0 19
,799
,348
39
,639
,269
Tran
sfer
red
from
cap
ital W
IP
- -
27,9
73,1
57
- -
- -
- -
- -
- (2
7,97
3,15
7)
-
Disp
osals
- Co
st
- -
- -
(276
,049
) (5
,550
,000
) -
- -
- -
- -
(5,8
26,0
49)
Depr
eciat
ion
on
disp
osals
& w
rite-
off
- -
- -
179,
179
5,55
0,00
0 -
- -
- -
- -
5,72
9,17
9
Depr
eciat
ion
char
ge (N
ote
7)
- (3
,490
,501
) (8
,573
,573
) -
(14,
033,
258)
(5
,335
,000
) (1
,599
,076
) (3
,071
,188
) (5
59,3
78)
(350
,941
) (1
36,7
70)
(257
,979
) -
(37,
407,
664)
Clos
ing
net b
ook
amou
nt
39,5
69,9
76
33,8
74,0
05
62,0
26,3
87
- 24
,942
,229
2,
667,
500
1,47
3,31
2 4,
091,
050
3,02
5,97
0 2,
126,
222
68,3
85
531,
846
- 17
4,39
6,88
2
At 3
1st M
arch
201
4
Cost
39
,569
,976
44
,906
,755
95
,994
,140
-
78,6
47,3
02
21,3
40,0
00
13,8
79,2
34
13,1
35,8
29
6,36
3,50
2 4,
407,
785
683,
850
2,35
2,45
9 -
321,
280,
832
Accu
mula
ted
depr
eciat
ion
- (1
1,03
2,75
0)
(33,
967,
753)
-
(53,
705,
073)
(1
8,67
2,50
0)
(12,
405,
922)
(9
,044
,779
) (3
,337
,532
) (2
,281
,563
) (6
15,4
65)
(1,8
20,6
13)
- (1
46,8
83,9
50)
Net b
ook
amou
nt
39,5
69,9
76
33,8
74,0
05
62,0
26,3
87
- 24
,942
,229
2,
667,
500
1,47
3,31
2 4,
091,
050
3,02
5,97
0 2,
126,
222
68,3
85
531,
846
- 17
4,39
6,88
2
NOTES TO THE FINANCIAL STATEMENTS
AgS
tar
Fert
ilize
rs P
LC
Ann
ual R
epor
t 20
13/1
4
60
15. Property, plant and equipment (Contd.)
(a) Property, plant and equipment of the Group and the Company include fully depreciated assets, the original cost of which amounted to
Rs.26,637,989 and Rs.25,933,109 respectively (2013 - Rs.25,239,339 and Rs. 24,534,459 respectively).
(b) The Company’s Property, plant and equipments were revalued in November 2010 by Mr Dinasiri Subasinghe and Land and building was by
Mr Sarath G Fernando an Independent valuer. Valuation was made on the basis of open market.
(c) The Group’s land were revalued by Mr W M Punchibanda Who is an independent valuer. Valuation was made on the basis of open market.
(d) Carrying values of the revalued assets as at 31st March 2014 that would have been recognised had they were carried at cost are, land- Rs
49,968,000, buildings- Rs 4,641,243 ( 2013 - Rs 4,922,531) , plant and machinery- Nil ( 2013 -Rs 700,000 ) and motor vehicles- Nil.
16. Investments in subsidiaries
Company
As at 31st March 2014 2013
AgStar Cropcare (Private) Limited 37,999,990 37,999,990
AgStar Seeds (Private) Limited 500,000 500,000
AgStar Grains (Private) Limited 200,000,000 200,000,000
AgStar Properties (Private) Limited 350,000,000 350,000,000
AgStar Exports (Private) Limited 5,000,000 -
Mahaweli Rice Processing Industries (Private) Limited 41,700,000 41,700,000
635,199,990 630,199,990
17. Inventories
Group Company
As at 31st March 2014 2013 2014 2013
Raw material stock 375,366,330 67,143,038 91,690,117 63,879,827
Finished goods 112,842,928 98,422,409 - 6,273,837
488,209,258 165,565,447 91,690,117 70,153,664
Less: Provision for slow moving items - (1,595,818) - (45,436)
488,209,258 163,969,629 91,690,117 70,108,228
18. Trade and other receivables
Group Company
As at 31st March 2014 2013 2014 2013
Trade receivables 441,433,504 807,951,155 219,566,358 610,952,207
Less: Provision for impairment (119,728,247) (111,702,354) (100,924,038) (96,157,360)
321,705,257 696,248,801 118,642,320 514,794,847
Subsidy receivable 2,302,627,355 2,239,175,408 2,302,627,355 2,239,175,408
Receivables from related parties (Note 27) - - 257,859,743 205,348,457
Tax recoverable 34,884,529 84,888,082 25,680,020 78,491,061
Prepayments and other receivables 86,898,870 101,009,143 238,333,561 38,484,625
2,746,116,011 3,121,321,434 2,943,142,999 3,076,294,398
The fair value of subsidy receivables are based on amortised cost method using the 6 month Treasury Bill rate 8.83% (2013 - 11.88%).
NOTES TO THE FINANCIAL STATEMENTS
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Trade receivables comprise of the following balances as past due but not impaired. These relates to a few of independent customers for whom there is no recent history of default. The aging of such balances are as follows:
Group CompanyAs at 31st March 2014 2013 2014 2013
Less than 1 year 32,692,107 162,437,600 27,224,351 155,684,718Over 1 year 114,466,346 32,911,455 9,274,648 29,878,457 147,158,453 195,349,055 36,498,999 185,563,175
The aging of the impairment provision is as follows Group CompanyAs at 31st March 2014 2013 2014 2013
Less than 1 year 2,085,241 6,612,183 821,974 3,290,408Over 1 year 117,643,006 105,090,171 100,102,064 92,866,952 119,728,247 111,702,354 100,924,038 96,157,360
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivables mentioned above. The Company does not hold any collateral as security.
19. Cash and cash equivalents
Group CompanyAs at 31st March 2014 2013 2014 2013
Cash at bank and in hand 117,480,206 160,102,115 55,596,152 112,306,418Bank overdrafts (Note 22) (10,494,547) (84,582,982) (719,855) (44,830,234)Total cash and cash equivalents for the purpose of the statement of cash flows 106,985,659 75,519,133 54,876,297 67,476,184
20. Stated capital
Company/Group Number of Amount shares Rs.
At 31st March 2013 325,000,000 1,204,093,678At 31st March 2014 325,000,000 1,204,093,678
All issued shares are fully paid.
21. Financial instruments by category
(a) Loans and receivables Group Company 2014 2013 2014 2013
As at 31st March 2014Assets as per statement of financial positionTrade and other receivables(excluding pre-payments,tax and other receivables) 2,624,332,612 2,935,424,209 2,679,129,418 2,959,318,712Cash and cash equivalents (Note 19) 117,480,206 160,102,115 55,596,152 112,306,418 2,741,812,818 3,095,526,324 2,734,725,570 3,071,625,130
NOTES TO THE FINANCIAL STATEMENTS
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(b) Other financial liabilities at amortised cost Group Company 2014 2013 2014 2013
As at 31st March 2014Liabilities as per statement of financial positionBorrowings (excluding finance lease) 1,329,030,289 704,414,528 844,532,429 550,963,914Trade and other payables (excluding non financial liabilities) 871,616,886 1,293,067,066 823,222,808 1,267,501,704 2,200,647,175 1,997,481,594 1,667,755,237 1,818,465,618
Group Company 2014 2013 2014 2013
Cash at bank and short-term bank deposits (Excluding cash in hand) RatingCash at bankCommercial Bank of Ceylon PLC AA 16,495,420 (55,567,973) 12,629,510 (18,941,987)National Development Bank PLC AA- 1,873,754 2,072,754 (719,855) 4,907,617Hongkong and Shanghai Banking Corporation Limited AAA - 71,712 - 71,712Hatton National Bank PLC AA- 13,359,275 (23,936,006) 9,096,224 (24,322,453)Sampath Bank PLC AA- 642,573 (86,202) 642,573 (86,202)People’s Bank AA+ 16,052,281 11,461,835 14,757,904 10,669,138Hatton National Bank PLC AA- 57,221 85,221 57,221 85,221Seylan Bank PLC A- 1,402,963 (1,170,503) 1,378,396 (1,097,570)Bank of Ceylon AA+ 40,598,786 2,500,866 953,815 193,809DFCC Vardhana Bank AA- 152,876 -Muslim Commercial Bank Limited 25,000 - 25,000 90,660,150 (64,568,295) 38,820,789 (28,520,714)
Short-term bank deposits (Excluding cash in hand)Lanka Orix Leasing Company BBB+ - 81,517,220 - 81,517,220Hatton National Bank PLC AA- 15,754,853 14,219,181 15,754,853 14,219,181Bank of Ceylon AA+ - 12,892,671 - -Hongkong and Shanghai Banking Corporation Limited AAA 3,497 3,497 3,497 3,497Commercial Bank of Ceylon PLC AA 31,067,859 - - 15,758,350 139,700,428 15,758,350 95,739,898
Cash in hand 567,160 387,000 297,160 257,000Total cash and cash equivalents 106,985,659 75,519,133 54,876,298 67,476,184
22. Loans and Borrowings
Group CompanyAs at 31st March 2014 2013 2014 2013
Non- current liabilitiesSecured bank loans 33,524,654 40,653,559 - -Lease Liabilities 1,495,358 6,299,198 1,014,802 5,311,810 35,020,012 46,952,757 1,014,802 5,311,810
Current liabilitiesImport loans (short term loan ) 1,274,714,386 568,302,016 843,812,575 506,133,680Secured bank loans 10,296,702 10,875,971 - NilLease Liabilities 5,029,819 7,254,597 4,297,003 6,252,405Bank overdraft (Note 19) 10,494,547 84,582,982 719,854 44,830,234 1,300,535,454 671,015,566 848,829,432 557,216,319Total borrowings 1,335,555,466 717,968,323 849,844,234 562,528,129
NOTES TO THE FINANCIAL STATEMENTS
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Maturity analysis of the borrowings Group CompanyAs at 31st March 2014 2013 2014 2013
6 months or less 1,287,357,434 662,043,776 846,680,930 553,999,0376 - 12 months 13,178,020 8,971,790 2,148,502 3,217,2821- 5 years 35,020,012 46,952,757 1,014,802 5,311,810 1,335,555,466 717,968,323 849,844,234 562,528,129
Weighted average effective interest rates Group Company 2014 2013 2014 2013
Bank overdrafts 15% 16% 15% 16%Secured bank loans (Lease liability) 14% 14% 14% 14%Short term bank facilities 14% 16% 14% 16%
23. Retirement Benefit Obligation
The movement in the defined benefit obligation over the year is as follows; Group CompanyAs at 31st March 2014 2013 2014 2013
At beginning of year 9,578,902 7,394,913 9,578,902 7,260,143Under provision for previous year - (520,758) - (385,988)Current service cost 1,837,988 1,458,362 1,837,988 1,458,362Interest cost 1,005,785 756,157 1,005,785 756,157Actuarial losses 531,775 879,993 531,775 879,993Contributions paid (326,250) (389,765) (326,250) (389,765)
At end of year 12,628,200 9,578,902 12,628,200 9,578,902
The amounts recognised in the income statement are as follows
Group Company
2014 2013 2014 2013
Under provision for previous year - (520,758) - (385,988)
Current service cost 1,837,988 1,458,362 1,837,988 1,458,362
Interest cost 1,005,785 756,157 1,005,785 756,157
Recognised in income statement (Note 10) 2,843,773 1,693,761 2,843,773 1,828,531
This obligation which is not externally funded is based on an actuarial valuation of the defined benefit plan based on the projected unit credit
method, specified in Sri Lanka Accounting Standards No.19 “Employee Benefits”, carried out by a professional actuaries as of 31st March 2014.
The principal assumptions used for this purpose are as follows:
Group Company
2014 2013 2014 2013
Discount rate per annum 10% 10.5% 10% 10.5%
Annual salary increment rate 10% 10% 10% 10%
Retirement age 55 55 55 55
NOTES TO THE FINANCIAL STATEMENTS
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24. Deferred income tax
Deferred income tax - Group
2014 2013
Deferred Deferred Net deferred Deferred Deferred Net deferred
tax assets tax liability tax liability tax assets tax liability tax liability
Property plant and equipment - (1,867,756) (1,867,756) - (3,016,191) (3,016,191)
General provision for bad debts - - - - -
Subsidy receivable - (648,138,050) (648,138,050) - (626,969,114) (626,969,114)
Revaluation reserve - (27,297,683) (27,297,683) - (27,416,460) (27,416,460)
Leasehold assets 64,488 - 64,488 - (617,925) (617,925)
Retirement benefit obligations 3,535,896 - 3,535,896 2,682,093 - 2,682,093
Tax losses carried forward 432,784,933 - 432,784,933 435,764,668 - 435,764,668
Assets / (liabilities) as at 31st March 436,385,317 (677,303,490) (240,918,173) 438,446,760 (658,019,690) (219,572,930)
Deferred income tax - Company
2014 2013
Deferred Deferred Net deferred Deferred Deferred Net deferred
tax assets tax liability tax liability tax assets tax liability tax liability
Property plant and equipment - (1,867,756) (1,867,756) - (3,016,191) (3,016,191)
Subsidy receivable - (648,138,050) (648,138,050) - (626,969,114) (626,969,114)
Revaluation reserve - (8,400,203) (8,400,203) - (8,518,980) (8,518,980)
Leasehold assets 64,488 - 64,488 - (617,925) (617,925)
Retirement benefit obligations 3,535,896 - 3,535,896 2,682,092 - 2,682,092
Tax losses carried forward 432,784,933 - 432,784,933 435,764,668 - 435,764,668
Assets / (liabilities) as at 31st March 436,385,317 (658,406,010) (222,020,693) 438,446,760 (639,122,210) (200,675,450)
The movement in deferred income tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the
same tax jurisdiction, is as follows:
Deferred tax liabilities
Group Company
As at 1st April 2012 187,171,375 187,171,375
Charge/(credited) to the income statement 13,504,075 13,504,075
Transferred from revaluation reserve 18,897,480 -
As at 31st March 2013 219,572,930 200,675,450
As at 1st April 2013 219,572,930 200,675,450
Charge/(credited) to the income statement 21,345,243 21,345,243
At 31st March 2014 240,918,173 222,020,693
NOTES TO THE FINANCIAL STATEMENTS
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Deferred tax assets
Group Company
As at 1st April 2012 96,297 -
Charge/(credited) to the income statement (30,146) -
As at 31st March 2013 66,151 -
As at 1st April 2013 66,151 -
Charge/(credited) to the income statement 153,691 -
As at 31st March 2014 219,842 -
25. Trade and other payables
Group Company
As at 31st March 2014 2013 2014 2013
Trade payables 828,038,658 1,275,116,300 814,655,600 1,256,547,115
Accrued expenses and other payables 43,578,228 17,950,766 8,567,208 10,954,589
871,616,886 1,293,067,066 823,222,808 1,267,501,704
Letter of credits are fair valued based on amortised cost method using the AWPLR 14.23% ( 2013 - 15.32%).
26. Cash generated from operations
Reconciliation of profit before tax to cash (used in)/ generated from operations:
Group Company
For the Year ended 31st March 2014 2013 2014 2013
Profit before tax 58,399,121 287,030,598 79,256,763 351,993,963
Adjustments for:
Dividend income - - (21,599,996) (16,250,000)
Depreciation (Note 15) 50,314,339 43,883,615 37,407,664 42,373,684
Profit on disposal of fixed assets (2,878,243) (57,235) (2,878,243) (57,235)
Profit on transfer of land - - - (67,491,000)
Provision for defined benefit obligations (Note 23) 2,843,773 1,693,761 2,843,773 1,828,531
Net finance costs (Note 11) 230,675,222 100,275,459 197,665,319 89,767,474
Provision/(reversal) for slow moving stocks - (6,160,718) - (1,884,400)
Provision for Impairment of trade receivables 8,025,893 29,215,819 4,766,678 22,022,767
Changes in working capital
- (increase)/ decrease in inventories (324,239,629) 124,290,192 (21,581,889) 106,706,793
- (increase)/ decrease in trade and other receivables 312,871,611 (185,026,277) 106,064,394 (212,853,693)
- (decrease)/ increase in trade and other payables (421,450,180) 172,842,870 (444,278,896) 184,724,101
Cash generated (used in)/ from operations (85,438,093) 567,988,084 (62,334,433) 500,880,985
NOTES TO THE FINANCIAL STATEMENTS
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27. Directors’ interests in contracts and related party transactions
The Company had the following transactions in the ordinary course of business during the year:
27.1 The Company owns 100% of AgStar Cropcare (Private) Limited, AgStar Seeds (Private) Limited, AgStar Grains (Private) Limited, AgStar
Properties (Private) Limited, AgStar Exports (Private) Limited and 51.04% of Mahaweli Rice Processing Industries (Private) Limited.
27.2 Sierra Holdings (Private) Limited holds 31.71% of the total issued share capital of AgStar Fertilizers PLC.
27.3 Key management compensationKey management personnel are members of the Board of Directors of the company and its subsidiaries. The compensation paid/payable to the
Key Management personnel are as follows.
Group Company
2014 2013 2014 2013
Salaries and other short term employee benefits 16,859,699 13,876,453 16,859,699 13,876,453
Termination benefit 417,775 326,362 417,775 326,362
27.4 The related party transactions carried out by the Company within AgStar Group are as follows:
The related party transactions carried out by the Company are as follows: Company 2014 2013
Fund transferred to AgStar Cropcare (Private) Limited - 24,600,000 AgStar Seeds (Private) Limited 37,800,000 28,500,000 AgStar Grains (Private) Limited 92,580,140 122,980,000 AgStar Properties (Private) Limited - 404,720,000 AgStar Exports (Private) Limited 420,000 - Mahaweli Rice Processing Industries (Private) Limited 6,000,000 7,193,542
Fund received from AgStar Cropcare (Private) Limited 24,000,000 - AgStar Seeds (Private) Limited 20,000,000 49,000,000 AgStar Properties (Private) Limited - 4,500,000 AgStar Grains (Private) Limited 26,194,581 - AgStar Exports (Private) Limited 9,000,000 - Mahaweli Rice Processing Industries (Private) Limited 28,918,552 -
Sale of goods to AgStar Cropcare (Private) Limited 12,073,312 -
Other ancillary expenses incurred on behalf of AgStar Cropcare (Private) Limited 7,185,497 5,409,289 AgStar Seeds (Private) Limited 1,253,840 764,501 AgStar Grains (Private) Limited 91,145,677 50,348,052 AgStar Properties (Private) Limited 30,418,427 61,817,622 AgStar Exports (Private) Limited 86,120,739 - Mahaweli Rice Processing Industries (Private) Limited 35,626,787 1,674,946
NOTES TO THE FINANCIAL STATEMENTS
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Company 2014 2013
Share issue AgStar Cropcare (Private) Limited - 37,499,990 AgStar Grains (Private) Limited - 200,000,000 AgStar Properties (Private) Limited - 350,000,000 AgStar Exports (Private) Limited 5,000,000 -
Land transfer AgStar Properties (Private) Limited - 116,479,000
Rent paid in advance AgStar Properties (Private) Limited 240,000,000 -
Rent expense AgStar Properties (Private) Limited 32,000,000 -
AgStar Fertilizers PLC holds shares in subsidiary companies as follows: AgStar Cropcare (Private) Limited 4,999,999 4,999,999 AgStar Seeds (Private) Limited 4,999,999 4,999,999 AgStar Grains (Private) Limited 20,000,000 20,000,000 AgStar Properties (Private) Limited 35,000,000 35,000,000 AgStar Exports (Private) Limited 5,000,000 - Mahaweli Rice Processing Industries (Private) Limited 4,170,000 4,170,000
27.5 Outstanding balances arising from the related party transactions are as follows: Company 2014 2013
Receivables from related parties:
As at 31st MarchAgStar Cropcare (Private) Limited 9,553,949 14,295,140AgStar Grains (Private) Limited 130,859,289 -AgStar Properties (Private) Limited 18,935,049 228,516,622AgStar Exports (Private) Limited 77,540,739 -Mahaweli Rice Processing Industries (Private) Limited 21,576,723 8,868,489 258,465,749 251,680,251
Payables to related parties:
Company
As at 31st March 2014 2013
AgStar Seeds (Private) Limited 606,006 19,659,846
AgStar Grains (Private) Limited - 26,671,948
606,006 46,331,794
Related party receivables - Net 257,859,743 205,348,457
NOTES TO THE FINANCIAL STATEMENTS
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27.6 Transactions with other related companies outside AgStar Group are as follows:
Name of the company Relationship Description of transaction Amount involved Outstanding balance
receivable/(payable)
Browns & Company PLC Common Directors Purchase of batteries 15,358 -
Taprobane Plantations (Private) Limited Common Directors Purchase of refreshments 85,544 -
Sierra Property Development (Private)
Limited
Common Directors Construction contract 22,108,971 -
Sierra Cables PLC Common Directors Purchase of cables, coils and
electric items
1,639,185 -
Seylan Bank PLC Common Directors Short term loan repayment and
interest paid
367,968,803 1,729,396
Balangoda Plantation PLC Common Directors Sale of goods 16,178,200 7,924,757
Gal Oya Plantations PLC Common Directors Sale of goods 11,503,575 19,791,675
Madulsima Plantations PLC Common Directors Sale of goods 28,556,950 2,530,184
28. Events after the reporting period
(a) The final award on arbitration by the International Chamber of Commerce ( the “ICC” ) - Singapore on the action instituted against the Company by Toepfer International Asia Pte Ltd, disclosed as a contingent liability in previous years financial statements, was made on 23rd April 2014. Accordingly, the Company is liable to pay Toepfer International Asia Pte Ltd, USD 821,237.75 (LKR 108,542,993) as compensation together with other reimbursable legal costs totaling to an amount of USD 928,430 ( LKR 122,710,596). This liability as an adjusting event had been recognized in the financial statements in accordance with Sri Lanka Accounting Standards, LKAS -10,Events After the Reporting Period.
(b) The Board of Directors of the Company resolved on 23rd May 2014 to recommend a first and final ordinary dividend of Rs.0.10 per share for the year 2013/14 to be approved at the Annual General Meeting. Details of the dividend is disclosed in Note 14 to the financial statements.
(c) The Board of Directors of the Company recommend by resolution dated 23rd May 2014 to change the name from AgStar Fertilizers PLC to AgStar PLC to be approved at the Annual General Meeting.
(d) The Company has purchased the balance 48.96% of the shareholding of Mahaweli Rice Processing Industries (Private) Limited on 26th May 2014 and as a result it became a fully owned subsidiary of AgStar Fertilizers PLC.
There were no other material events other than above which occurred after the reporting date that require adjustments to, or disclosure in the financial statements.
29. Commitments
Capital commitmentsThere were no material capital commitments outstanding as at the date of statement of financial position.
Financial commitmentsDocumentary credits effected for foreign purchases amounted to Rs. 466,375,221 (2013 - Rs 651,867,469) .
30. Contingencies(a) The guarantees given to banks on behalf of AgStar Seeds (Private) Limited, AgStar Cropcare (Private) Limited and AgStar Grains (Private)
Limited amounting to Rs.212 Mn, Rs.129 Mn and Rs. 344.4 Mn respectively.
Apart from the above, the Company has no material contingent liabilities as of the year ended 31st March 2014 that would affect current and future profits.
NOTES TO THE FINANCIAL STATEMENTS
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SHAREHOLDER AND INVESTOR INFORMATION
Shareholder and Investor Information1. Stock Exchange Listing
AgStar Fertilizers PLC is a Public Quoted Company. The issued share capital of the Company consists of 307,526,310 Ordinary Shares and 17,473,690 Non-Voting Shares listed in the Colombo Stock Exchange.
2. Shareholders
There were 756 Ordinary shareholders and 3 Non-Voting shareholders as at 31st March 2014, distributed into different categories as follows;
2.1 Analysis of Ordinary Voting Shareholders according to the number of shares held
Shares held As at 31st March 2014 As at 31st March 2013
No of
Shareholders
No of Shares % No of
Shareholders
No of Shares %
1 -1,000 413 117,862 0.04% 350 102,003 0.03%
1,001 - 10,000 223 898,124 0.29% 169 592,194 0.19%
10,001 - 100,000 84 2,831,226 0.92% 66 2,545,105 0.83%
100,001 - 1,000,000 22 9,432,027 3.07% 10 5,459,756 1.78%
Over1,000,000 14 294,247,071 95.68% 15 298,827,252 97.17%
Total 756 307,526,310 100.00% 610 307,526,310 100.00%
2.2 Analysis of Ordinary Voting Shareholders according to the category
Shares held As at 31st March 2014 As at 31st March 2013
No of Shareholders
No of Shares % No of Shareholders
No of Shares %
Resident 751 306,770,689 99.75% 608 307,525,110 100.00%
Non Resident 5 755,621 0.25% 2 1,200 0.00%
Total 756 307,526,310 100.00% 610 307,526,310 100.00%
Shares held As at 31st March 2014 As at 31st March 2013
No of
Shareholders
No of Shares % No of
Shareholders
No of Shares %
Individual 723 45,729,889 14.87% 584 40,702,654 13.24%
Institutional 33 261,796,421 85.13% 26 266,823,656 86.76%
Total 756 307,526,310 100.00% 610 307,526,310 100.00%
2.3 Analysis of Ordinary Non-Voting Shareholders according to the number of shares held
Shares held As at 31st March 2014 As at 31st March 2013
No of
Shareholders
No of Shares % No of
Shareholders
No of Shares %
1 -1,000 1 1,000 0.01% 1 1,000 0.01%
1,001 - 10,000 - - - - - -
10,001 - 100,000 - - - - - -
100,001 - 1,000,000 - - - - - -
Over1,000,000 2 17,472,690 99.99% 2 17,472,690 99.99%
Total 3 17,473,690 100.00% 3 17,473,690 100.00%
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2.4 Analysis of Ordinary Non-Voting Shareholders according to the category
Shares held As at 31st March 2014 As at 31st March 2013
No of
Shareholders
No of Shares % No of
Shareholders
No of Shares %
Resident 3 17,473,690 100.00% 3 17,473,690 100.00%
Non Resident - - - - - -
Total 3 17,473,690 100.00% 3 17,473,690 100.00%
Shares held As at 31st March 2014 As at 31st March 2013
No of
Shareholders
No of Shares % No of
Shareholders
No of Shares %
Individual 3 17,473,690 100.00% 3 17,473,690 100.00%
Institutional - - -
Total 3 17,473,690 100.00% 3 17,473,690 100.00%
The percentage of public shareholding in voting and non-voting shares as at 31st March 2014 were 16.59% (2013-16.59%) and 0.1% (2013-0.01%) respectively.
3. Twenty Major Shareholders Ordinary Voting shares - as at 31st March
Name of shareholder 2014 2013
Shareholding % Shareholding
Sierra Holdings (Pvt) Ltd 97,514,400 31.71% 97,514,400
Lanka Orix Leasing Company PLC 60,213,500 19.58% 60,213,500
Browns Investments PLC 39,270,061 12.77% 39,270,061
Sierra Construction (Pvt) Ltd 37,025,290 12.04% 37,025,290
P & K Investments (Pvt) Ltd 20,500,000 6.67% 20,500,000
Mrs.W.D.L.D.Perera 10,087,200 3.28% 10,087,200
Mr.N.G.R.Karunaratne 8,188,310 2.66% 8,188,310
Mr.A.P.Weerasekera 8,053,310 2.62% 8,053,310
FLMC Plantations (Pvt) Ltd 3,150,000 1.02% 3,150,000
Mr.D.N.N.Lokuge 3,125,000 1.02% 3,125,000
Mr.W.A.P.Perera 3,120,000 1.01% 3,120,000
Mrs.A.C.P.Irugalbandara -Joint 1,500,000 0.49% 1,500,000
Mr.S.Karunaratne 1,250,000 0.41% 1,250,000
Ajax Engineers (Pvt) Ltd 1,250,000 0.41% 1,250,000
Mrs.A.C.P.Irugalbandara 1,000,000 0.33% 1,000,000
Miss.G.S.M.Irugalbandara 1,000,000 0.33% 1,000,000
ARRC Capital (Pvt) Limited 1,000,000 0.33% 1,000,000
Mr.B.M.D.T.Basnayaka 857,453 0.28%
Mr.S.A.O.A.Abo Qamaz 738,721 0.24%
Mr.P.A.S.Attygala 647,806 0.21%
Total 299,491,051 97.39%
SHAREHOLDER AND INVESTOR INFORMATION
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SHAREHOLDER AND INVESTOR INFORMATION
Ordinary Non-Voting shares - as at 31st March
Name of shareholder 2014 2013
Shareholding % Shareholding
Mr.N.G.R.Karunaratne 11,648,140 66.66% 11,648,140
Mr.A.P.Weerasekera 5,824,550 33.33% 5,824,550
Mr.A.B.Weerasekera 1,000 0.01% 1,000
Total 17,473,690 100.00% 17,473,690
4. Directors’ direct Shareholding - as at 31st March
Name of Director 2014 2013
Ordinary voting
shares
Non-voting
shares
Ordinary voting
shares
Non-voting
shares
Mr.N.G.R.Karunaratne 8,188,310 11,648,140 8,188,310 11,648,140
Mr.D.N.N.Lokuge 3,125,000 - 3,125,000 -
Mr.A.P.Weerasekera 8,053,310 5,824,550 8,053,310 5,824,550
Mr.W.A.P.Perera 3,120,000 - 3,120,000 -
Mr.D.S.K.Amarasekara - - - -
Mr.I.C.Nanayakkara - - - -
Mr.P.R.Saldin - - - -
Mr.H.P.J.de Silva - - - -
Mr.A.G.Weerasinghe - - - -
Ms.S.Wickramasinghe - - - -
There were no indirect shareholdings of Directors.
5. Market Information on Ordinary shares of the Company
Share information 2014 2013
Highest during the year (Rs.) 8.40 11.30
Lowest during the year (Rs.) 4.20 5.40
As at 31st March (Rs.) 4.40 5.70
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Rs.’000
31st March 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005
OPERATING RESULTS
Group Revenue 1,725,717 1,757,847 1,805,149 2,918,609 2,337,500 1,582,805 1,585,743 1,318,346 806,335 650,153
Net Finance Expense (230,675) (100,275) (54,396) (37,836) (33,858) (52,225) (35,473) (23,156) (11,719) (9,689)
Profit Before Tax 58,399 287,031 289,452 287,607 215,625 92,340 80,239 24,203 33,980 16,945
Tax Expense (29,001) (69,482) (79,211) (54,636) (86,431) (32,931) (29,959) (8,224) (25,927) (266)
Profit After Tax 29,398 217,549 210,241 232,971 129,194 59,409 50,280 15,979 8,053 16,679
Attributable To:
Equity Holders of the parent 42,878 217,552 210,241 232,971 129,194 59,409 50,280 15,979 8,053 16,679
Non Controlling Interest (13,480) (2.9) - - - - - - - -
29,398 217,549 210,241 232,971 129,194 59,409 50,280 15,979 8,053 16,679
FINANCIAL POSITION
Stated Capital 1,204,094 1,204,094 1,204,094 204,094 204,094 114,766 113,266 110,266 58,645 40,000
Reserves 875,680 868,234 619,219 409,364 148,953 120,563 72,486 790 20,522 26,691
2,079,774 2,072,328 1,823,313 613,458 353,047 235,329 185,752 111,056 79,167 66,691
Non Controlling Interest 21,117 34,597 - - - - - - - -
Net Assets 2,100,891 2,106,925 1,823,313 613,458 353,047 235,329 185,752 111,056 79,167 66,691
Non Current Liabilities 288,566 276,105 206,130 142,757 94,321 11,475 8,767 9,852 7,621 11,405
2,389,457 2,383,030 2,029,443 756,215 447,368 246,804 194,519 120,908 86,788 78,096
Represented By;
Property Plant &
Equipment (PPE) 1,212,319 948,891 228,424 131,956 77,078 56,410 62,128 47,968 23,622 24,161
Non Current Assets
(Excluding PPE) 5,849 5,696 96 145 703 842 - - - -
Current Assets 3,351,805 3,445,393 3,922,160 1,892,915 1,293,160 767,322 810,016 851,144 854,642 761,493
Current Liabilities (2,180,516) (2,016,950) (2,121,237) (1,268,801) (923,572) (577,770) (677,625) (778,205) (791,476) (707,558)
Net Current Assets 1,171,289 1,428,443 1,800,923 624,114 369,588 189,552 132,391 72,939 63,166 53,935
2,389,457 2,383,030 2,029,443 756,215 447,369 246,804 194,519 120,907 86,788 78,096
KEY INDICATORS
Annual Revenue growth (%) (1.83) (2.62) (38.15) 24.86 47.68 (0.19) 20.28 63.50 24.02 10.71
Basic earning per share (Rs.) 0.13 0.67 0.74 1.16 6.46 2.97 4.50 1.45 1.69 4.17
Net Profit to net revenue (%) 1.70 12.38 11.65 7.98 5.53 3.75 3.17 1.21 1.00 2.57
Dividend per share (Rs.) 0.10 0.10 0.05 0.10 0.57 0.99 - - 0.87 1.00
Return on Equity (%) 1.40 10.33 11.53 37.98 36.59 25.25 27.07 14.39 10.17 25.01
Net Assets per share (Rs.) 6.40 6.38 5.61 3.07 17.65 20.51 16.40 10.07 13.50 16.67
Gearing ratio (Times) 0.64 0.34 0.54 0.50 0.15 2.18 3.25 6.46 8.74 10.21
Current ratio(Times) 1.54 1.71 1.85 1.49 1.40 1.33 1.20 1.09 1.08 1.08
DECADE AT A GLANCE
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NOTICE OF ANNUAL GENERAL MEETING
AGSTAR FERTILIZERS PLC (Company Registration No. PV 1618)
No. 9, Bawa Place, Colombo 8
NOTICE IS HEREBY GIVEN that the 12th Annual General Meeting of AGSTAR FERTILIZERS PLC will be held on 30th June 2014 at 10:00.a.m. at The Park Premier Banquet hall, Excel World, 338, T .B. Jaya Mawatha, Colombo 10.
AGENDA1) To receive and consider the report of the Directors and the audited financial statements for the year ended 31st March 2014 and the Report
of the Auditors thereon.2) To declare a Dividend as recommended by the Directors.3) To consider and if thought fit to pass the following as an ordinary resolution – To re-elect Mr. N. G. R. Karunaratne as a Director of the
Company “IT IS HEREBY RESOLVED THAT the age limit referred to in Section 210 of the Companies Act No.7 of 2007 shall not apply to Mr. N.G.R
Karunaratne, who is presently 77 (seventy seven) years of age and that he be re-appointed as a Director of the Company for a further period of one year or until the conclusion of the next Annual General Meeting whichever occurs first”
4) To re-elect Mr. A. G. Weerasinghe as a Director of the Company “IT IS HEREBY RESOLVED THAT the age limit referred to in Section 210 of the Companies Act No.7 of 2007 shall not apply to Mr A.G
Weerasinghe, who is presently 72 (seventy two) years of age and that he be re-appointed as a Director of the Company for a further period of one year or until the conclusion of the next Annual General Meeting whichever occurs first”.
5) To re-elect Mr. A. P. Weerasekara who retires in terms of Article 23(6) of the Articles of Association of the Company, as a Director of the Company.
6) To re-elect Mr. P. R. Saldin who retires in terms of Article 23(6) of the Articles of Association of the Company, as a Director of the Company.7) To re-elect Mr. D. N. N. Lokuge who retires in terms of Article 23(6) of the Articles of Association of the Company, as a Director of the
Company.8) WHEREAS Messrs PricewaterhouseCoopers, Charted Accountants have tendered their resignation as Auditors of the Company and have
stated that they have no circumstances that they wish to disclose to the shareholders with respect to their resignation AND WHEREAS Messrs KPMG have given their agreement to be appointed as Auditors of the Company IT IS HEREBY RESOLVED THAT Messrs KPMG be appointed as Auditors the Company for the ensuing year and to authorise the Directors to
determine their remuneration.9) Change of name WHEREAS the Registrar of Companies have approved in writing the name change of the Company. IT IS HEREBY RESOLVED as a Special Resolution that the name of the Company be changed from ‘AGSTAR FERTILIZERS PLC’ to
‘AGSTAR PLC’. 10) To transact any other business of which due notice has been given.
By order of the Board of Directors of AGSTAR FERTILIZERS PLC
P.R. SECRETARIAL SERVICES (PRIVATE) LIMITEDSecretariesAt Colombo, this 23rd day of May 2014
Note:• A Member entitled to attend and vote at the meeting, is entitled to appoint a Proxy to attend and vote instead of him/her.• A Proxy need not be a Member of the Company.• A Member wishing to vote by Proxy at the meeting may use the Form of Proxy form enclosed.• Any member or Proxy holder attending the meeting is kindly requested to bring this report.• The completed Form of Proxy should also be deposited at the Registered Office of the Company, No. 9, Bawa Place, Borella, Colombo 8 not
less than forty eight (48) hours before the time appointed for holding of the meeting.• For security reasons, members. Proxy holders are kindly advised to bring along with them their National Identity Card or similar for of
acceptance identity when attending the meeting.
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NOTES
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I/We……………………………………………………………………………………………………………………………….of…………..............being a
Member/Member* of the above named Company, hereby appoint (1)……………………………………………………….of…………………......……
…………………………………………………………….......................................................................................................………..failing him/her.
(2) Mr. N. G. R. Karunaratne or failing him (7) Mr. I.C.Nanayakkara or failing him(3) Mr. D.N.N.Lokuge or failing him (8) Mr. H. P. J. de Silva or failing him(4) Mr. A. P. Weerasekera or failing him (9) Mr. A. G. Weerasinghe or failing him(5) Mr. D. S. K. Amarasekera or failing him (10) Mr. P. R. Saldin or failing him(6) Mr. W.A.P.Perera or failing him (11) Ms. S. Wickramasinghe
as my/our* Proxy to represent me/us* and vote and speak for me/us* on my/our* behalf at the Annual General Meeting of the Company to be held on 30th June 2014 at 10.00 a.m. at The Park Premier Banquet hall, Excel World, 338, T .B. Jaya Mawatha, Colombo 10 and at any adjournment thereof and at every poll which may be taken in consequence thereof.
I/WE INDICATE MY/OUR VOTE ON THE RESOLUTIONS BELOW AS FOLLOWS;
For Against
1. To receive and consider the report of the Directors and the audited financial statements for the year ended 31st March 2014 and the Report of the Auditors thereon.
2. To declare a Dividend as recommended by the Directors.
3. To re-elect Mr. N.G.R. Karunaratne as a Director of the Company“IT IS HEREBY RESOLVED THAT the age limit referred to in Section 210 of the Companies Act No.7 of 2007 shall not apply to Mr. N.G.R Karunaratne, who is presently 77 (seventy seven) years of age and that he be re-appointed as a Director of the Company for a further period of one year or until the conclusion of the next Annual General Meeting whichever occurs first”
4. To re-elect Mr. A.G. Weerasinghe as a Director of the Company“IT IS HEREBY RESOLVED THAT the age limit referred to in Section 210 of the Companies Act No.7 of 2007 shall not apply to Mr A.G Weerasinghe, who is presently 72 (seventy two) years of age and that he be re-appointed as a Director of the Company for a further period of one year or until the conclusion of the next Annual General Meeting whichever occurs first”.
5. To re-elect Mr.A.P Weerasekara who retires in terms of Article 23(6) of the Articles of Association of the Company, as a Director of the Company.
6. To re-elect Mr.P.R. Saldin who retires in terms of Article 23(6) of the Articles of Association of the Company, as a Director of the Company.
7. To re-elect Mr. D.N.N. Lokuge who retires in terms of Article 23(6) of the Articles of Association of the Company, as a Director of the Company.
8. WHEREAS Messrs PricewaterhouseCoopers, Charted Accountants have tendered their resignation as Auditors of the Company and have stated that they have no circumstances that they wish to disclose to the shareholders with respect to their resignation.AND WHEREAS Messrs KPMG have given their agreement to be appointed as Auditors of the Company.
9. Change of nameWHEREAS the Registrar of Companies have approved in writing the name change of the Company.IT IS HEREBY RESOLVED as a Special Resolution that the name of the Company be changed from ‘AGSTAR FERTILIZERS PLC’ to ‘AGSTAR PLC’.
Signed this ……………day of…………………………..2014.
……………………………………Signature of shareholder
FORM OF PROXY
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Instructions as to completion
1. Kindly perfect the Form of Proxy by filing in legibly your full name, National
Identity Card/ Passport/ Company Registration Number, your address and your
instructions as to voting and by signing in the space provided and filing in the
date of signature. Please ensure that all details are legible.
2. Please mark “X” in appropriate cages, to indicate your instructions as to voting
on each resolution. If no indication is given, the Proxy holder in his/her discretion
will vote as he/her thinks fit.
3. To be valid, the completed Form of Proxy must be deposited at the Registered
Office at No. 9, Bawa Place, Borella, Colombo 8, not less than 48 hours before
the time appointed for the holding of the meeting.
4. If you wish to appoint a person other than the Chairman (or failing him, one of
the Directors) as your Proxy, please insert the relevant details (1) overleaf and
initial against this entry.
5. In the case of a Company/Corporation, the Proxy must be under its Common
Seal, which should be affixed and attested in the manner prescribed by Articles
of Association/ Act of Incorporation.
6. In the case of a Proxy signed by an Attorney, a certified copy of the 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.
FORM OF PROXY
We live in a time where successful corporate entities embrace
diversification as a means to mitigate risk and stretch their wings
into areas of untapped potential and greater promise.
AgStar as an established and trusted fertilizer brand has now
branched into rice milling, crop care, seeds and export of
spices.
AgStar’s evolution from fertilizer company to an agri inputs
and food products conglomerate is gathering pace, and with it
brings the potential for enhanced stakeholder value ever closers.
UNTAPPED POTENTIAL AND GREATER PROMISE
The Company
AgStar Fertilizers PLC
Legal Form
A Public Quoted incorporated in Sri Lanka
Company Registration No.
PV1618 PB/PQ
Date of Incorporation
25th June 2002
Registered Office
AgStar Fertilizers PLCNo.9, Bawa Place, Colombo 8Tel: +94 11 4812424, +94 11 7708040-3 Fax: +94 11 4810706E-mail: info@agstaragri.comWebsite: www.agstaragri.com
Directors
Mr N G R KarunaratneChairman/ Chief Executive Officer
Mr D N N LokugeDeputy Chairman/ Non-Executive Director
Mr A P WeerasekaraManaging Director
Mr P R SaldinExecutive Director
Mr D S K AmarasekeraNon-Executive Director
Mr I C NanayakkaraNon-Executive Director
Mr W A P PereraNon-Executive Director
Mr A G WeerasingheIndependent Non-Executive Director
Mr H P J de SilvaIndependent Non-Executive Director
Ms S WickramasingheIndependent Non-Executive Director
Audit Committee
Mr H P J de SilvaMr A G Weerasinghe
Remuneration Committee
Mr H P J de SilvaMr A G Weerasinghe
Subsidiaries
AgStar Seeds (Private) LimitedAgStar Cropcare (Private) LimitedAgStar Grains (Private) LimitedAgStar Properties (Private) LimitedMahaweli Rice Processing Industries (Private) LimitedAgStar Exports (Private) Limited
Secretaries
P R Secretarial Services (Pvt) LimitedNo.59, Gregory’s Road, Colombo 7
Registrars
SSP Corporate Services (Private) LimitedNo.101, Inner Flower Road, Colombo 3
Auditors
PricewaterhouseCoopersP O Box 918No.100, Braybrooke Place, Colombo 2
Bankers
Commercial Bank of Ceylon PLCHatton National Bank PLCSampath Bank PLCPeoples’ BankNational Development Bank PLCBank of CeylonSeylan Bank PLCDFCC Vardhana Bank PLCMCB Bank Ltd
Legal Consultants
Nithya PartnersNo.97A, Galle Road, Colombo 3
Paul Ratnayake AssociatesNo.59, Gregory’s Road, Colombo 7
Sudath Perera AssociatesNo.5, 9th Lane, Nawala Road, Nawala
CORPORATE INFORMATION
Produced by Copyline (Pvt) Ltd Printed by Gunaratne Offset Ltd
UNTAPPED POTENTIAL AND GREATER PROMISE
AgStar Fertilizers PLC
Annual Report 2013/14
AgStar Fertilizers PLC
Annual Report 2013/14
AgStar Fertilizers PLCNo.9, Bawa Place, Colombo 8.
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