our corporate philosophy · it is a cliché of management to say, “what gets measured gets...
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Our COrpOrate philOsOphy
Our Visionis to be the leading agribusiness plantation Company in sri lanka.
Our Missionis to be at the forefront by enhancing shareholder value by productively
utilising our resources through diversity and innovation and continuously
improving the unique quality of our products to attract and increase our
customer base.
Our ValuesMaintaining the highest ethical standards and discharging our corporate
social responsibilities by supporting initiatives to uplift health, education
and the environment, in the communities in which we operate.
Building an exciting, team-based working environment that will develop
and sustain employees at all levels.
ensuring sustainable socio-economic development by protecting and
developing our natural environment.
1uDapussellaWa plaNtatiONs plC / annual report 2017
CONteNts
2 uDapussellaWa plaNtatiONs plC / annual report 2017
FiNaNCial CaleNDar
Interim Financial Reports 2017 2018
On or Before
First Quarter ended 31st March 12.05.2017 15.05.2018
(unaudited)
second Quarter ended 30th June 11.08.2017 15.08.2018
(unaudited)
third Quarter ended 30th september 08.11.2017 15.11.2018
(unaudited)
Fourth Quarter ended 31st December 22.02.2018 28.02.2019
(unaudited)
annual report for the year ended 31st December 15.03.2018 31.03.2019
(audited)
Meetings
21st annual General Meeting 20.06.2014
22nd annual General Meeting 28.05.2015
23rd annual General Meeting 20.05.2016
24th annual General Meeting 27.04.2017
25th annual General Meeting 27.04.2018
3uDapussellaWa plaNtatiONs plC / annual report 2017
2017 2016 Variance - %
Performance - year ended 31st December (in Rs. ’000)
revenue 2,226,762 1,620,095 37.45
profit/(loss) before interest & tax 334,271 (168,433) 298.46
profit/(loss) after tax 267,821 (181,801) 247.32
total Comprehensive income 323,301 (112,477) 387.44
Financial Position - as at 31st December (in Rs. ’000)
Non-Current assets 1,948,688 1,883,986 3.43
Current assets 411,370 378,147 8.79
total assets 2,360,058 2,262,133 4.33
Current liabilities 794,506 921,027 (13.74)
shareholders’ Fund 813,798 490,497 65.91
stated Capital 340,000 340,000 -
Capital employed 1,982,685 1,935,286 2.45
Key Financial Indicators
earnings per share (rs.) 13.81 (9.37) 247.32
Net assets per share (rs.) 41.95 25.28 65.91
Market price of a share (rs.) 42.50 19.40 119.07
Market capitalisation (rs. ’000) 824,449 376,337 119.07
rOCe (%) 16.86 (8.70) 293.71
Current ratio (times) 0.52 0.41 26.11
FiNaNCial hiGhliGhtsyear ended 31st December
4 uDapussellaWa plaNtatiONs plC / annual report 2017
ChairMaN’s MessaGe
the economythe sri lankan economy has felt the impact of the depressed
agriculture sector due to drought and floods in the first and
second quarters of the year with a lower GDp growth of 4%. the
economic growth in 2018 is forecast at 5%; the turnaround is
expected in the wake of a stronger global economy.
inflation has increased and is estimated to be around 6% in 2017,
compared to 4% in 2016,and is expected to decline in 2018. severe
drought and flooding in the first half of the year combined with
higher goods and services tax rates and currency depreciation
have pushed inflation higher in 2017, but a high base effect and
firmer credit policy are expected to reverse this trend in 2018.
the sri lankan rupee depreciated 2.9% against the us Dollar
with the Dollar ending at lKr 153.15 in December 2017. the
Central Bank has kept policy interest rates unchanged since the
last rise in March 2017.
industry grew by 5.8% and the service sector expanded by 4%
in the first half. an increase in financial services, including
insurance and government services, offset slippage in wholesale
and retail trade and in hospitality. as global trade growth augurs
well for the industry sector in 2017, the higher forecast for GDp
growth in 2018 is maintained as sri lanka pursues economic
adjustment as highlighted in the National Budget, and changes in
the income tax and foreign exchange control arenas.
tea industry retrospective the year 2017 will go down in history as one of the better years
for the tea industry particularly in terms of prices, a fitting
tribute to the 150th year of the tea industry in sri lanka.
the sri lankan tea industry witnessed a better year in 2017
with an increase in production and average prices reaching all-
time high levels, which were very significant to the industry.
Despite the mentioned positivity, the industry continued to be
troubled by the political tension in the Middle eastern countries,
policy decisions, and temperature variability which affected
the production of tea during the year and may have lagged the
industry growth.
the total tea production of sri lanka for the year 2017 recorded
a growth of 14.51 million kg to reach 307.08 million kg in
comparison to 292.57 million kg in 2016. although the tea
production increased by close to 5% (14.5 million kg), exports
have only increased by 0.21 million kg compared to 2016.
the total National average of teas prices for the year 2017 was
lKr 618.14 (usD 4.04) per kg compared to lKr 468.61 (usD 3.14)
in 2016. the 2017 national average tea price recorded was the
highest-ever yearly auction rate, surpassing the recorded price
in 2016.
turkey remained the largest importer of sri lanka tea for 2017,
followed by iraq and russia. More importantly, tea exports
to Vietnam, taiwan, turkey, China and uK have increased
significantly whilst tea exports to syria, Kuwait, iran, ukraine
and u.a.e. have shown a notable decline as against 2016. this is
attributed to the shortfall, mainly of orthodox black tea, from the
major producer-exporting countries in 2016, and the shortfall of
tea from Kenya in the first quarter of 2017 cumulated with the
strengthening of oil prices, which had influence on some key
importing countries of sri lankan teas.
Companythe Company has seen a shortfall in our total tea production
over the years. Firstly, it had to contend with the change in
climatic conditions, then with the ban on glyphosates without
a cost-effective alternative, which has not been resolved to date.
this is a serious concern to all tea growers and is bound to have
serious repercussions on our estates from the perspective of
production, productivity and the discipline of good agricultural
practice.
it is of the utmost importance that the authorities take serious
note of the gravity of the situation, give a hearing to the
stakeholders/organisations that represent the tea growers
and find a solution, failing which the farmers/growers may,
through desperation to sustain their livelihood and business,
find alternatives that could have an impact on the quality of
our product at the marketplace. sri lankan teas then could be
discounted or banned due to exceeding maximum residue levels,
which we are made to understand has already become an issue.
availability of Workersless hands-on harvesting due to shortfall of workers too
brings out the importance of retaining available workers on the
estates. this factor, if not arrested early, could have an impact
on production in the future and is already being seen on some
estates.
timber harvestinganother negative aspect of the business is that once again a
change in policy imposing further restrictions on harvesting of
trees on estates has deprived the Company of over rs 40 million
5uDapussellaWa plaNtatiONs plC / annual report 2017
ChairMaN’s MessaGe (CONt.)
during the year under review. the Company has invested large
sums, planting timber/fuelwood for our own requirements and
for Commercial purposes, diversifying the land unsuitable on
estates for planting in tea or rubber. here again the authorities
that matter have not been able to find solutions or persuade the
decision makers to see reality.
Corporate performanceprofit for the year as determined by the total Comprehensive
income for the year of lKr 323 million represents a 387%
increase over the previous year, and was driven by the strong
tea prices. this together with continuous increase in the returns
from the investments from our strategic diversified business
units have contributed to the profitability.
the revenue records a growth of 37% whilst costs have been
effectively controlled. the estate tea crop increased by 6% in
2017.
acknowledgementDuring the year Messrs Jayampathy Molligoda, Meyan Vamadevan
and Nishantha Wickremasinghe resigned from the Company’s
Board of Directors and Messers D. soosaipillai, Gotabaya
Dasanayaka and Gihan Jayasinghe were appointed to the Board
in april 2017. We thank the former for their long and dedicated
contribution to the Company and welcome Messrs soosaipillai,
Dasanayaka and Jayasinghe to the Board.
i express my thanks to my colleagues on the Board, and to all
our employees, led by the Corporate Management team, who
continue to execute our vision, in accordance with our values to
turn in award-winning results. Our appreciation extends to our
shareholders, who place their confidence in us to grow together,
creating value in mutually beneficial relationships.
Naresh ratwatteChairman
6 uDapussellaWa plaNtatiONs plC / annual report 2017
Dear shareholder,
i am certainly delighted to address you at the exiting of another
financial year managing the agribusiness of your udapussellawa
plantations plC with the utmost resilience and sustainability.
“We focus on the adventure and not merely on the destination and journey. Our passion is engaging in Agribusiness, and it is a continuous process”
in my message for 2016 to the stakeholders of the Company, i
stated that if the tea and rubber prices remained at low ebb,
and political uncertainty, disconcerted peace and harmony
in the overseas market destinations continued to occur, then
compensating the additional cash outlay due to wage increases
must be looked at with a fresh and reinvigorated mind-set.
as we all have experienced, there were many problems, both
locally and globally, in facets of the political and socio-economic
environments which, through world trade, have had knock-on
effects all over the world, including sri lanka.
With the conclusion of yet another year, what attracts the most
attention is, quite evidently, the fact that your Company has
been able to orchestrate a combination of positive financial and
operational results during the year 2017.
i will not bombard the readers with volumes of data and technical
jargon to complicate the matter when we need primarily to
understand the principles and dynamics behind what took place
on the plantations in your Company.
the drought that prevailed in the planting districts, the weather
shocks by way of unprecedented floods in the month of May and
the overall operational risks were all contributory factors to the
narrowing down of your Company’s successful efforts against
key vulnerabilities.
“Planters then need to be able to contemplate how quickly they convert investments into liquid cash by managing plant life”
it is a cliché of management to say, “what gets measured gets
managed”, the phrase belonging to management thinker peter F.
Drucker. the tea crop from our estates during the year was 3.29
million kg made tea. the intake of out-grower green leaf declined
to 493k kg of made tea, averting our stance for maximising
capacity utilisation. We however exited the year with an overall
ChieF exeCutiVe OFFiCer’s reVieW
output of 3.78 million kg made tea, similar to last year’s results.
yatawatte, the only Coconut estate of the Company, produced
merely 653,636 nuts during the year, significantly lower than
the expected pick as experienced elsewhere in the country, and
signposted by the upwardly spiraling demand for the product in
the retail market and the resultant increase in retail prices.
the revenue-earning potential of export crops such as pepper
with Coconut and rubber in the product portfolio makes a
substantial contribution to the overall performance of the
Company. the total Comprehensive income collectively from
tea, rubber, Coconut and ancillary crops is rs. 323 million at the
closure of the year.
With the world population rising and production declining due
to a multiplicity of reasons, an “age of scarcity” where demand
exceeded supply was predictable. We should now take it for
granted that market forces led to the rising tea prices, giving an
improved aspect to 2017.
the food system, comprising agriculture, processing, distribution
and waste disposal, is a huge global industry and a source of
economic growth in which the sri lanka tea industry also has
a role to play. the changes which took place in the overseas
market destinations during the second half of 2016 have exerted
pressure on the food system, both from population growth and
from reliance on healthy non-alcoholic beverages such as tea,
and sowed the seeds of greener pastures, as reflected in the
auction prices.
“We do not strive to fully eliminate the business risks as that eliminates the rewards as well. Rather, Risk and Reward must be kept in the proper proportion”
the Western high Grown price of rs. 496.12 recorded in 2016
rose to rs. 616.74 in the year 2017. Despite the external and
internal factors directly affecting the business, the average
tea price of the Company rose to rs. 566.27 from rs. 406.57
recorded in 2016.
During the year, 280 invoices of various agro-climatic regions
were acknowledged as top prices in appreciation of our
concerted efforts in managing your Company. We are also
pleased to mention that 26 invoices topped the list as all-time
record prices during the year.
7uDapussellaWa plaNtatiONs plC / annual report 2017
ChieF exeCutiVe OFFiCer’s reVieW (CONt.)
“How to deal with inflation is a key question for any business, and needs to be tackled as quickly as possible”
We all agree that at the fall of the checkered flag for the year
2017, the total Comprehensive income from all the streams of
revenue stood at rs. 323 million.
Due to the high degree of stewardship exerted by the Directors,
the Company was on the fast track to plough the hard-earned
cash back into the business in an appropriate manner for capital
development.
the total cash outlay in respect of field, factory and infrastructure
development for the year concerned was rs. 52 million.
the performance orchestrated by the upward trend in the tea
prices does not mean that our enthusiasm for the day-to-day
strategy of laser-like focus on managing your Company with
the utmost resilience and sustainability, has been dampened by
complacency.
producing a kilogram of made tea has cost us rs. 506.00 in the
year and the financial performance has not fully absolved us
from borrowing during the year, where we have incurred a sum
of rs. 43 million as interest. a sum of rs. 5 million was paid
to the Government of sri lanka in taxes and rs. 59 million in
settlement of loans.
“Udapussellawa Plantations PLC is committed to creating a sustainable future. It’s the only future we have”
this concept is based on the three connected dimensions of
“environment”, “society” and “economy”. We as a Company take
a holistic approach to sustainability. in addition to the universal
indicators of Carbon, Waste, energy, Water, and health and safety
we prioritise objectives materially relevant to our operations.
We are trying to continue what we did yesterday with a view to
building a better world. sustainability objectives are aligned with
the business objectives and owned by the relevant function with
clear responsibilities and measurable targets. this is backed up
by accountability and transparency through public reporting of
performance.
the Company was able to retain the certification status of
the rainforest alliance even with the stringent compliance
standards which were imposed subsequently by the Certification
Body. the universal indicators, such as total carbon to decline
by 3.1%, total waste generation to decline by 40.5%, and total
energy consumption to decline by 16.5% yOy, are worthwhile
achievements.
“Zero Harm strategy is not the start of a journey but the start of an Adventure, and Always Safe applies to everybody, everywhere, every day, in everything we do, at work and at home”
Our estates received awards for social Dialogue and Workplace
Cooperation from the Government labour secretariat, driving us
to a high rostrum in creating a healthier business environment.
the total cash outlay for sustainability and health and safety
initiatives for the year was rs. 9.5 million.
the total workforce contingent with whom we are concerned is
4,937 people of all categories and is still the most-treasured off-
balance sheet asset of the Company.
the health and safety strategy engages and empowers all
employees in creating a culture of safety that will deliver its
vision of achieving “Zero harm”, whereby none of its employees
suffer injuries or ill health as a result of their work or workplace.
this is a long-term strategic initiative based on engagement,
inclusivity and empowerment that builds on the seven roots
for success: leadership, engagement, learning, Competence,
Community Culture, risk Management and standards. the
dashboard view shows zero major injuries, with, however, one
fatality at yatawatte estate increasing the lost time by 7% yOy.
the increase of Near Misses reporting by 75% yOy is a positive
sign and affirms the right direction of our adventurous journey.
the total spending for compassionate well-being of the workforce
at the exiting of the year 2017 was rs. 2.9 million.
“All the employees are having to engage with an ever-greater number of day-to-day challenges while coming under increasing demand for quality of performance and multi-tasking”
performance evaluation and training and development
receive high priority on the corporate to-Do list. the training
and development for building a high-performance team is a
continuous process.
the training and development schedule of the Company
has three concepts: Motivation, life skills Development and
technical skills Development. During the year we have provided
training opportunities to our employees at higher education and
research institutions and local training houses, as well as in-
8 uDapussellaWa plaNtatiONs plC / annual report 2017
ChieF exeCutiVe OFFiCer’s reVieW (CONt.)
house training within the conceptual framework of Motivation-
life skills Development-technical skills Development.
“In the struggle for survival, the fittest win out at the expense of their rivals because they succeed in adapting themselves best to the environment” - Charles Darwin
the commercial cultivation of tea in sri lanka commenced in 1867
and in the 150 years since then Ceylon tea has been a buzzword
as the most common non-alcoholic beverage worldwide. We all
are certainly delighted to be in this industry as it celebrates its
sesquicentennial anniversary whilst your Company celebrates its
25th milepost.
your Company is a subsidiary of a multinational conglomerate.
the scale, geography and diversity of the Group naturally
present significant management challenges. the operating unit
management teams and group functions add further potential
for complexity. in order to leverage the size of the group as a
strength rather than a weakness, we are missioned to creating
a global entity termed “One Finlays”, bringing in a range of
economies of scale, unity and strength.
“All the businesses depend on a number of people, often unnoticed and unthanked, without whom nothing really gets done. They all deserve respect and gratitude”
Messrs Jayampathy Molligoda, Meyan Vamadevan and Nishantha
Wickremasinghe resigned from the Company in the month
of March 2017, having served the Company in the capacity
of independent Non-executive Directors. On behalf of the
Board of Directors, i thank Messrs Molligoda, Vamadevan and
Wickremasinghe for the understanding, knowledge and expertise
lavishly extended to us and for being instrumental in bringing
this Company to its present state of existence.
My wholehearted welcome goes to Messrs D. soosaipillai,
Gotabaya Dasanayaka and Gihan Jayasinghe, on board since
april 2017, and who are becoming a great source of strength in
steering this business into the future.
i wish to express my sincere gratitude to the Chairman and the
members of the Board for their active and unstinted cooperation
exerted during the year.
i also wish to place on record my appreciation for the first-rate
cooperation extended by the management, staff, workmen,
shareholders and all other stakeholders.
the impact of adverse weather in 2017 reduced GDp growth to
4.3% from the 4.8% predicted. as the adverse weather recedes,
expert opinion is that GDp growth will pick up to 5% in 2018. the
likely implementation of the inland revenue act in april 2018 is
expected to formalise tax rules, helping companies to make long-
term investment decisions.
the regulatory restrictions on the use of weedicides has a
substanitial negative impact on large scale cultivations of this
nature, especially in the backdrop of lack of fitting alternatives.
the Company however look forward in strengthening the existing
tea by infilling whilst maintaining the replanting cycle with a
view to derive a steady income from tea and manufacturing
rubber.
the plantation Workers Wage Collective agreement was signed in
the year 2016 and due to be renewed in the year 2018, envisage a
Win-Win productivity based wage structure.
i look forward to your unblemished cooperation along with a
high sense of team spirit in the years to come.
Dushanth ratwatteDirector/Chief executive Officer
9uDapussellaWa plaNtatiONs plC / annual report 2017
sustaiNaBility perFOrMaNCe reVieW
sustainability strategy “Finlays is committed to creating a sustainable future. it’s the only future we have”.
the Finlays sustainability strategy was formulated in the year 2009. the Group sustainability Committee reviewed the strategy in the year 2017. the objective was to update and align the strategy with Finlays’ new Global Business strategy of bringing the best from “Bush to Cup” whilst pursuing the vision of creating a sustainable future.
since the year 2017, udapussellawa plantations plC has adopted the Finlays sustainability strategy and the set Objectives are given below.
at Finlays our tea estates are dependent on the people, communities and natural resources in the wider, external landscape. to sustain our operations and licence to operate, we will work towards an integrated landscape approach.
at Finlays we recognise that good land management is essential if we are to be economically and environmentally sustainable. We will practise and demonstrate outstanding land management.
Our employees are at the heart of our business Finlays is committed to being an employer that demonstrates opportunity, fairness and equality, thus providing an inspiring, fulfilling and adaptable workplace.
at Finlays we recognize that effective and efficient management of resources is not only good for the environment but is also good business practice. We will reduce impact by decarbonising and minimising water usage, waste and pollutants.
We recognise and rely on community collaboration across all our regions of operation. We commit to empowering local communities by acting as a catalyst for positive change We aim to be responsible members within the communities in which we operate and, where possible, to generate a positive impact on society.
Finlays recognises the increasing demand to be transparent and responsible. We commit to providing a responsible and traceable supply of all raw materials and to influencing our supply chains through sharing best practice.
udapussellawa plantations plC will be setting up specific targets towards achieving each of the objectives. this is a long-term Vision-Mission-strategy leading up to the year 2022.
During the year 2017 your Company was engaged in the following projects:
Village empowerment as a responsible Company we extend our good work beyond the boundaries of the estates to the surrounding villages. the estates in the ragala Zone have commenced village empowerment activities such as water and waste management programmes, provision of sanitary facilities, the organising of “shramadana” campaigns and the conducting of health camps.
the estate residents of the Company benefitted greatly from self-help housing schemes. this is a leap forward in the Community empowerment of our people.
rainforest allianceWe are pleased to mention that all the estates of udapussellawa plantations plC were awarded rainforest alliance certification status in the month of December 2017. the recent version
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sustaiNaBility perFOrMaNCe reVieW (CONt.)
of the standard has a higher number of critical criteria to be complied with. the new standard focuses on four principles: effective planning and Farm Management systems, Biodiversity Conservation, Natural resource Conservation, and improved livelihood and human Well-being.
Field innovation Group pilot projects were conducted by the Field innovation Group. these pilot projects focus on weed management, experimental block plucking, shear harvesting, forward infilling and manpower contract models. their aim was to find the most appropriate solutions to shortage of workers and carry out research into agro-chemical applications. the learning outcomes were endorsed by the operational management of the Company and were communicated to the estates as policies of best agricultural practices to be adhered to.
Biodiversity survey yatawatte, Madulkelle and Duckwari estates have formulated their management plans in accordance with the ecological survey conducted in the previous years. the priority was to protect the catchment areas and watersheds within the boundaries of the estates. as a prerequisite for rainforest alliance certification, the estates in ragala have developed the baseline identification of fauna and flora. this exercise was conducted by a team of estate junior management.
energy projects We all agree that burning fossil fuel and haphazard felling of trees as a source of fuel is certainly detrimental to the environment and thereby to society at large. Our efforts to find the most appropriate sustainable energy solutions whilst managing the Cost-Benefit equation is a continuous process.
apparently sawdust was identified as a threat to the environment, is wasted and has no economic benefit. trials were conducted at the estates using briquettes made of sawdust as a source of alternate renewable energy for firewood. the usage of briquettes during the year is equivalent to saving 179 trees.
Estate Trees
Gordon 22
Duckwari 58
Madulkelle 99
total trees saved for the earth in 2017 179
Occupational health and safety a novel concept termed “Zero harm” was introduced by Finlays with a view to inculcating the “always safe” culture. all the employees are committed to follow the directions towards achieving “Zero harm”. the awareness sessions were conducted on the estates introducing the new concept. awareness sessions on safe practices and identification of hazards were conducted throughout the year. extensive training was provided to improve the skills and knowledge of both external and internal managers.
Medical checkups and communication programmes on safe driving were conducted at the estates during road safety Week in the month of November 2017 to highlight the importance of safe behaviour whilst engaged in road transportation.
awards and recognition the all-island competition held by the Department of labour on social Dialogue and Workplace Co-operation took place on 14th December 2017 and the silver award was fetched by Concordia estate whilst Courtlodge estate received a Merit award.
a competition on always safe-Zero harm was conducted in the month of November amongst the businesses of Finlays Group in various countries. this competition was led by James Finlay limited in the uK. Delmar, Concordia and Blairlomond estates were awarded Certificates of participation.
Global reporting initiatives (Gri)the measurement and performance of Gri during the last three years are shown in the table 01.
11uDapussellaWa plaNtatiONs plC / annual report 2017
sustaiNaBility perFOrMaNCe reVieW (CONt.)
Table 1
Global Reporting % Index (GRI) Unit 2015 2016 2017 Change Comments
Carbon total carbon tonnes CO2e 2,452 1,952 1,894 -3.0 Overall decrease due to decreased production of tea
total scope tonnes CO2e 544 464 482 3.9 increase due to use of fuel for immovable machinery1 emissions
total scope 2 tonnes CO2e 1,747 1,325 1,278 -3.6 Decrease of electricity consumption due to decreasedemissions production of tea
total scope 3 tonnes CO2e 161 163 135 -17.2 Decrease of emissions due to reduced transportation emissions of tea
Energy total energy GJ 144,682 143,589 123,275 -14.1 Overall decrease of energy use due to decreased
production of tea manufacturedDirect kWh 36,298,408 37,005,835 31,465,322 -15.0 Decrease due to low manufacturing of teaindirect kWh 3,890,899 2,879,888 2,777,780 -3.5 Decrease due to low manufacturing of tea Direct non-renewable kWh 2,217,519 1,889,422 1,961,161 3.8 increase due to use of fuel for immovable machineryDirect renewable kWh 34,080,889 35,116,413 29,504,161 -10.0 Decrease of use of firewood due to lower production
of tea indirect non-renewable kWh 1,766,162 1,478,271 1,583,335 7.1 increase due to use of higher percentage of non-
renewable component of electricity from the national grid
indirect renewable kWh 2,124,737 1,401,617 1,194,446 -14.8 Decrease due to lower production of tea total renewable GJ 130,340 131,465 110,515 -15.9 Decrease due to lower usage of firewood and lower
percentage of renewable energy procured from the national grid
Waste total waste kg 489,419 430,916 306,648 -28.8 Overall decrease of total waste due to decreased
production total landfill kg 136,777 190,105 81,196 -57.3 Decrease due to lower production of tea total waste recovered kg 333,243 204,627 213,724 4.4 increase due to use of dryer ash of paddy husk for
vegetable gardens to enrich the soil total waste recycled kg 7,439 121 2,698 2130.0 increased recycling due to safe disposal of chemical
cans and metallic wastetotal waste reused kg 11,960 36,064 9,031 -75.0 Decrease due to reduced generation of recoverable
waste
Watertotal water use m3 8,261 9,350 8,221 -12.1 Decrease due to decreased production of teaBlue Water m3 8,261 9,350 8,221 -12.1 Decrease due to decreased production of tea Green Water m3 2,286 1,852 1,870 1.0 increase due to harvesting of more rainwater
12 uDapussellaWa plaNtatiONs plC / annual report 2017
FiNaNCial reVieW
Companythe Company recorded a profit of rs. 268 million after tax against the loss of rs. 182 million recorded in the previous year. total comprehensive income also improved, recording a profit of rs 323 million against the loss of rs 112 million the previous year.
summary of key financial performance indicators:
Aspect Performance Measure 2013 2014 2015 2016 2017
revenue turnover (rs. million) 1,612 1,550 1,718 1,620 2,227
revenue Growth revenue Growth (%) 22.76 (3.86) 10.81 (5.67) 37.45
profitability Gross profit ratio (%) 7.88 2.27 (3.55) (1.75) 16.30
eBit ratio (%) 4.04 9.03 (7.64) (10.40) 15.01
Comprehensive income ratio (%) 3.29 6.33 (9.07) (6.94) 14.52
Working Capital Current ratio (times) 0.43 0.47 0.40 0.41 0.52
liquidity Cash flow from operations (rs. million) 75.56 (81.12) 43.34 (134.57) 167.93
investments Capital expenditure (rs. million) (40.78) (43.15) (111.03) (31.66) (52.14)
Financing Debt/equity ratio (%) 27.95 23.72 62.55 84.60 58.07
interest Cover (times) 2.56 9.92 (4.75) (4.04) 7.11
turnoverDespite the adverse weather conditions that prevailed during the first half of the year, the annual turnover increased to rs. 2,227 million compared to rs. 1,620 million in the previous year, an increase of 37%. turnover attributable to tea amounted to rs. 2,162 million and to coconut rs. 47 million. Other crops contributed rs. 18 million to turnover. the increase in revenue was attributable to the increase in tea prices. Despite the marginal decrease in tea production, which declined by 2% against 2016, from 3,844Mt to 3,780Mt, the gross sale average increased by 39% from rs. 407 to rs. 566, resulting in an increase in revenue. revenue from coconut increased from rs. 26 million to rs 47 million by 79% due to the increase in coconut sales average.
profitabilityGross profit increased to rs 363 million compared to rs 28 million loss in 2016. this is mainly due to the increase in the average tea sales price (Nsa).
Gross profit margin from tea increased to 15% from negative 3% last year, while coconut increased to 29% from 6%, recording gross profit of rs. 335 million and 14 million respectively. Gross profit from other sources declined marginally from rs. 15 million to 14 million.
earningsearnings before interest and tax (eBit) increased 3 times from rs. 168 million loss in the previous year to rs 334 million profit.
Segmental Revenue
Rs. Million n
-
500
1,000
1,500
2,000
2,500
2013 2014 2015 2016 2017
Others Coconut Tea
Rs. Million
Segmental Gross Profit
Others Coconut Tea
on
(100)
-
100
200
300
400
2013 2014 2015 2016 2017
13uDapussellaWa plaNtatiONs plC / annual report 2017
FiNaNCial reVieW (CONt.)
total comprehensive income increased by rs. 436 million compared to rs. 112 million loss in the previous year, the main component being the actuarial gain on re-measurement of retirement benefit obligations.
earnings per share (eps) was rs 13.81 compared to a loss of rs. 9.37 per share at the previous year, as a result of the increased profitability.
Finance CostFinance cost has increased by 13% compared to the previous year. Monthly average Weighted prime lending rate (aWplr) has increased from 9.5% in the year 2016 to 11.6% in 2017, an increase of over 22%. however, the Company maintained its cost of borrowings below market rates by close monitoring of the borrowings and prompt response to changes in the market rates.
interest cover for the year is 7 times, a significant improvement over the previous year.
taxationincome tax expenditure for the year under review was rs. 19 million, of which rs. 6 million represents deferred tax expenses. a reconciliation of accounting profit and taxable profit and a summarised computation of income tax and deferred tax are set out in notes 8.2 and 8.3 to the Financial statements on pages 52 and 53 of the Financial statements.
liquidity and Working Capital Free cash flow (cash flow from operations) increased from negative rs. 135 million in the previous year to rs. 173 million, in line with the increase in profitability.
investment in working capital increased, recording a current ratio of 0.52 compared to 0.41 in the previous year. Current ratio, excluding amounts due to and due from related parties, stood at 0.76 compared to 0.57 in the previous year.
assetstotal assets increased by rs. 98 million, attributable to capital expenditure incurred and gain on valuation of consumable biological assets.
Biological assetsBiological assets consist of tea, coconut, cinnamon, ancillary crops and timber plantations, representing 47% of the Company’s total assets. total biological assets increased by rs. 121 million, after depreciation, on account of investment in field development amounting to rs. 22 million and gain on valuation of consumable biological assets (timber)amounting to rs. 120 million.
Earnings Per Share (EPS) RRss..
EPS (15)
(10)
(5)
-
5
10
15
2013 2014 2015 2016 2017
Times
Interest Cover
Interest (5)
-
5
10
15
2013 2014 2015 2016 2017
Rs. Mn.
Cash Flows From Operations
Cash Flows -150
-100
-50
0
50
100
150
200
2013 2014 2015 2016 2017
Times
Current Rato
Current
-
0.10
0.20
0.30
0.40
0.50
0.60
2013 2014 2015 2016 2017
Rs. Million
EBIT and EBIT Ratio
EBIT EBIT Ratio (%)
%
(15)
(10)
(5)
-
5
10
15
20
-200
-100
0
100
200
300
400
2013 2014 2015 2016 2017
14 uDapussellaWa plaNtatiONs plC / annual report 2017
FiNaNCial reVieW (CONt.)
Capital expenditureinvestments in property, plant and equipment increased to rs. 30 million from rs. 15 million the previous year. this related mainly to the installation of new machinery in tea factories.
Capital structurethe Company’s long-term borrowings have increased in order to meet capital expenditure. this related mainly to investments on field development. however, 2017 saw an improvement in the debt-to-equity ratio from 85% in the previous year to 58%, due to repayment of external borrowings and improved equity. long-term external borrowings have declined 12%, from rs. 177 million to rs. 155 million.
shareholder returnsNett assets per share were rs. 42 at the end of 2017 compared to rs. 25 at the end of the previous year. Closing market price of the Company’s share was rs. 42.50 compared with rs. 19.40 in the previous year.
return on capital employed (rOCe), which indicates the return on total invested capital, was 16.86% compared to negative 8.70% in the previous year.
Rs. Million %
Debt / Equity Ratio
Debt Equity Debt/Equity Ratio (%)
-
10
20
30
40
50
60
70
80
90
0
200
400
600
800
1000
1200
1400
2013 2014 2015 2016 2017
Rs. Million
Capital Expenditure
Non - Field Field
-
20
40
60
80
100
120
2013 2014 2015 2016 2017
Return on Capital Employed (ROCE)
ROCE
%%
(10)
(5)
-
5
10
15
20
2013 2014 2015 2016 2017
15uDapussellaWa plaNtatiONs plC / annual report 2017
this is the structure and processes in place to manage likely
future events and challenges to the Company’s business
model, and respond to challenges to the Company’s internal
control framework and processes caused by internal or
external factors.
the objective of the Company’s risk management process is
not necessarily to fully eliminate the risk, but to accurately
identify all risks and manage them in the context of the risk-
reward trade-off at that time.
the risk management process of the Company includes the
following:
• Ownership by the management of the risk management
system
• risk profiling through the risk register and assigning
risk ratings
• periodic review of the risk register
• Formulating and implementing risk management and
mitigation initiatives
• Compliance and control
• internal and external audit review and reporting
• Oversight review and reporting by the Board audit
Committee
headline risks along with their Component risks have been
separately identified, and rated for likelihood of occurrence
and severity of impact on the Company, based on a unified
rating scale across the group. the risk rating is a product
of the severity rating and the likelihood rating reflected in
a point rating recognising the respective ranking of a risk –
both headline and component.
the Company’s audit supervisory Committee and the Board
audit Committee, through the internal audit function review
and the external auditors’ reporting, report to the Board on
the effectiveness and completeness of the Company’s internal
controls with a view to effectively managing the business and
operational risks.
the Company’s established 20/20 vision is viewed through
the prism of its headline risks, Component risks and action
taken to mitigate and manage these risks, which are set out
below. the review of the risk register twice a year is an
important facet of the Company’s boardroom governance.
eNterprise risK MaNaGeMeNt
political risksthe risks related to changes in the Government, public policy,
management of Government relations, terrorist activities and
global risks relating to political instability are considered.
the Company is not politically aligned to any specific political
party or campaign. all the Company executives are guided by
the Group Code of Conduct in this regard. however, political
intervention in wage negotiations is a risk associated with the
industry.
economic riskrisks related to macro-economic policies, economic cycles,
competitive positioning, industry profit margins, market
structure, credit and interest rates, currency and collaterals
are looked at under economic risk.
stock market behaviour, perception of the Company by
the media and general public that could impact liquidity,
perception of the organisation by stakeholders and capital or
credit rating are some of the external factors.
Focus on crop diversification that contributes early returns
and high land productivity (i.e. Coffee, pepper and timber)
and diversification into new products that capture new
markets with higher returns (i.e. Green tea and Oolong tea)
are some risk-mitigation actions introduced to manage the
identified risks.
legal and regulatory riskthe risks relating to meeting legal and regulatory requirements
with respect to corporate governance, labour relations,
industry standards and environment are also considered.
the Company with the active involvement of its Company
secretaries, Messrs ssp Corporate services (pvt) ltd, legal
advisers Messrs Julius & Creasy, external auditors Messrs
KpMG and internal auditors ensures compliance with all
legislative and regulatory requirements.
human resource riskrisks related to demographic changes and social mores,
adequacy and execution of human resource standards,
policies and practices, organisational liability and personal
liability of Directors and managers are also monitored and
managed.
16 uDapussellaWa plaNtatiONs plC / annual report 2017
eNterprise risK MaNaGeMeNt (CONt.)
employees of all operational levels, including estate workmen,
are appropriately trained based on needs assessment by the
human resource development function of the Company.
significant and sustained labour inflation in the plantation
sector in sri lanka is one of the major concerns and the
Company has taken measures to mitigate this risk by
reducing the number of people through factory automation,
mechanisation of field preparation in tea estates and
improving shear harvesting. Moreover, as a long-term strategy,
the Company has extended its product portfolio, introducing
new rubber, timber, Cinnamon and pepper plantations that
are less labour intensive.
the Company’s workforce is unionised. the collective
agreement between the trade unions and employers’
Federation of Ceylon, of which the Company is a member,
and other human resource development initiatives by the
Company have led to industrial harmony and thereby the
Company has been able to maintain a reliable supply chain.
Operational riskthe Company strives to produce true-to-type teas, high
quality rubber latex and other agricultural products in the
right quantity at the right time and thereby retain competitive
positioning in the market whilst maintaining well-controlled
and well-managed product costs for maximum economic
viability. Management time is devoted to uplifting estates
identified as business units of low land-labour productivity.
however, price fluctuations of the products and competition
from lower-cost production countries are industry risks
that the Company is concerned about. Crop diversification,
rainforest alliance Certification and new product
development are strategies that the Company adopts to
mitigate the associated risks.
Good agricultural practices, improving land-labour ratio
and tea infilling adopted by the Company ensure a healthy
plantation crop and minimise the risk of potential loss
due to pests and diseases. the Company is keen to explore
alternative energy sources to mitigate the risk of shortage
of firewood. Well-organised forestry management is being
followed to mitigate the risk of forest fires.
the manufacturing facilities of the Company are maintained
according to industry standards with requisite financial
inputs, along with obtaining and retaining international
quality accreditations. a phased-out five-year investment plan
has been formulated to address the issue of ageing factories.
the internal control system serves as the main mechanism of
identifying and mitigating the organisational risk.
all manufacturing plants are under constant review to
identify and eliminate any potential threat that could result
in damage to buildings, restricted access to raw materials or
loss of human capital. all vulnerable locations are sufficiently
equipped with firefighting equipment and provide appropriate
training to personnel based on expert advice.
the Company strives to maintain a healthy financial
structure at all times whilst obtaining to concessionary
and advantageous borrowing rates, and maintaining a good
relationship with banks and lending institutions.
all the subsidiary projects are subject to stringent preplanning,
technical evaluations and scientific investment appraisals,
thus addressing the risks related to technical difficulties and
commercial obstacles. the post-completion audits serve as
an important tool in managing this aspect of business risk.
every endeavour is made to sustain the rainforest alliance
certificate while working closely with the certification body.
the risk related to employee health and safety in the
workplace receives the foremost attention and the Company
policy is to gain “Zero harm”. safety precautions have been
taken with regard to all the machinery and equipment with
a potential for injury with trained personnel working at each
location and periodic h&s audits. the Company is conscious
of landslide-prone areas and appropriate action is being
taken in consultation with the National Building research
Organisation. personnel protective equipment has been
provided as appropriate with proper training. the Company
is conscious of the declining trend in the availability of
potable water.
all the assets are adequately safeguarded with appropriate
controls for inventory protection against spoilage or theft.
adequate insurance cover is in place as the most effective
risk transfer mechanism. the Company in its Corporate Code
of Conduct has formulated and introduced a whistle-blowing
policy as an anti-fraud mechanism.
the Company is concerned with the risks related to the
perception of the organisation by its stakeholders, the
17uDapussellaWa plaNtatiONs plC / annual report 2017
media, and the general public that could impact liquidity,
capital or credit rating. the Company strives to safeguard
the international standardisation accreditations such as
international Organization for standardization (isO), hazard
analysis and Critical Control point system (haCCp), ethical
tea partnership (etp), Fair trade Certifications, and the
rainforest alliance (ra) certifications held at present by our
factories and estates.
the Company is able to produce quality information,
fulfilling appropriate requirements of each stakeholder
with the aid of the erp system. Keeping pace with the rapid
changes in information technology, the erp system has been
upgraded to the latest software solution to be the source
of business information for the Board of Directors and the
senior management. a well-designed information back-up
procedure is in place along with a Disaster recovery plan to
resume business with the least possible delay. the computer
hardware will be used until vendor support expires.
the Company ensures a sound system of internal controls
maintained to safeguard shareholders’ investments and
Company assets and also to manage business-related risks.
the internal control system is designed, and periodically
reviewed and modified as appropriate, with a view to
achieving data integrity, data and system availability, and
eliminating malpractices by employees or outsiders, such as
theft, deception, forgery or false accounting.
the Board of Directors discharge their stewardship function
effectively for the Company. the Board collectively decide on
the appointment of Directors. the retirement and re-election
of Directors takes place as set out in the articles of association
of the Company. Managers with appropriate qualifications and
experience are recruited through a screening and selection
process and remunerated as recommended by the Company’s
remuneration Committee.
the Company does not foresee any potential risk of
misrepresentation, defamation or corporate insolvency.
eNterprise risK MaNaGeMeNt (CONt.)
18 uDapussellaWa plaNtatiONs plC / annual report 2017
stateMeNt OF COrpOrate GOVerNaNCe
the Board of Directors of the Company have adopted
transparent, ethical and good governance practices during the
year whilst being in compliance with the corporate governance
rules and practices as specified by regulatory bodies and
legislation such as the institute of Chartered accountants of
sri lanka, the securities & exchange Commission of sri lanka
and the Companies act No. 7 of 2007.
Chairman & Chief executive Officerthe balance of power is ensured by segregation of
responsibilities and authority in a distinctive manner between
the Chairman and the Chief executive Officer.
Mr N. K. h. ratwatte functioned as Chairman/NeD of the
Company during the year while Mr D. J. ratwatte served as an
executive Director and the Chief executive Officer.
the Board Balance
Non-executive Directors & independent Non-executive Directorsat the beginning of the year the Board of Directors
contained altogether nine members; seven are Non-
executive Directors and three of the seven Non-executive
Directors are independent. the composition of the Board of
Directors changed during the year with resignations and new
appointments.
at the end of the year the Board of Directors contained nine
members; seven are Non-executive Directors and two of the
seven Non-executive Directors are independent.
all the members of the Board devote their time and effort
to fulfilling their stewardship function, and are available for
consultation and advice in person or via communication
channels whenever necessary.
the Board meet every quarter or more frequently as required
to approve strategic initiatives, provide entrepreneurial and
strategic guidance and to review operational and financial
performance.
the attendance of Directors at the Board meetings during the
year, resignations and new appointments are as follows:
Mr N. K. h. ratwatte NeD/Chairman 4/4
Mr D. J. ratwatte eD/CeO 4/4
Ms M. C. pietersz eD/FD 4/4
Mr h. a. s. Crawford NeD 4/4
Mr G. r. Chambers NeD 4/4
Mr J. M. rutherford NeD 2/4
Mr N. h. G. s. Jayasinghe NeD 3/3
[appointed w. e. f. april 1, 2017]
Mr a. N. Wickremasinghe iNeD 1/1
[resigned w. e. f. March 31, 2017]
Mr J. Molligoda iNeD 1/1
[resigned w. e. f. March 31, 2017]
Mr M. Vamadevan iNeD 1/1
[resigned w. e. f. March 31, 2017]
Mr e. D. p. soosaipillai iNeD 3/3
[appointed w. e. f. april 1, 2017]
Mr G. K. B. Dasanayaka iNeD 3/3
[appointed w. e. f. april 3, 2017]
eD: executive Director
NeD: Non-executive Director
iNeD: independent Non-executive Director
CeO: Chief executive Officer
FD: Finance Director
appointments to the BoardWe consider that the combined knowledge and expertise
of the Board of Directors would be capable of meeting the
strategic objectives of the Company whilst adhering to the
best governance practices. the existing Board of Directors
collectively decide with the full consent relating to new
appointments of Directors in accordance with the articles of
association of the Company.
the Board of Directors, by setting criteria, procedure,
qualifications and any special attributes, collectively decide
the appointments to senior managerial positions of the
Company.
re-election of Directorsthe notice of the annual General Meeting provides sufficient
information for the shareholders to make informed decisions
in re-electing the Directors.
remuneration Committeethe Company has its own remuneration Committee. this
remuneration Committee held its meeting for the year on
February 22, 2017.
the remuneration Committee bases its recommendations on
remuneration of Directors and senior/executive Management
19uDapussellaWa plaNtatiONs plC / annual report 2017
broadly on prevailing market rates and individual performance
and competition.
Major transactions, dialogue with shareholders and annual reportDetails of all major transactions have been disclosed in this
report.
the Company website (www.finlays.net) is updated and
maintained with Company information for the benefit of any
stakeholder.
Ms M. C. pietersz, Finance Director, acts as the designated
officer of the Company to clarify any matters relating to the
annual report.
the Company has made arrangements to notify the convening
of the annual General Meeting and distributed the Financial
statements to all the shareholders well in time as determined
by the relevant statute, and encourages all the shareholders
to attend the annual General Meeting and exercise their
voting rights.
sustainability reportingthe Company uses the Global reporting initiative (Gri)
guidelines in sustainability reporting in respect of all the
estates certified under the rainforest alliance principles.
Compliance with Gri guidelines adequately covers the
National Green reporting system of sri lanka. the Company
uses the Credit 360 reporting mechanism for health and
safety and sustainability reporting.
a separate report on sustainability is provided in this report
for the benefit of all the stakeholders.
Board audit Committeethe Company has its own Board audit Committee separate
from the parent Company’s audit Committee.
a more detailed report by the Chairman of the Board audit
Committee appears on pages 29 and 30 of this annual report.
related party transactions review committeethe Company has its own related party transactions review
Committee. the Committee held four meetings during the
year 2017 to review the related party transactions and the
minutes of the meetings were circulated to the Committee
and to the Board of Directors.
the related party transactions of the Company during
the financial year have been reviewed by the related party
transactions review Committee of the Company and are
in compliance with section 09 of the Cse listing rules.
the related party transactions during the year either non-
recurrent or recurrent were below the threshold specified
under rule 9.1 necessitating approval of the shareholders by
way of special resolution.
a more detailed account of the Committee appears on page
23 of this annual report.
internal controlinternal and management audit function continues to be
outsourced and is being carried out by Messrs B r De silva &
Co., Chartered accountants. the service provided by the firm
of accountants is subject to annual evaluation as an external
service provider and governed by a service level agreement.
periodic reviews of the internal controls covering financial,
operational and compliance requirements and risk exposure
have obtained reasonable assurance of their effectiveness and
adherence.
Group Corporate Code of Conductthe Company adheres to the Group Corporate Code of Conduct.
the Code summarises Finlays standards, expectations and
commitments in those areas which the Company deems key
to its commitments to corporate responsibility and is subject
to review and revision annually. Version 7 for the year 2017
was introduced in the month of January.
the internal whistle-blowing policy and procedure introduced
in the year 2010 as a suggestion scheme and an anti-fraud
mechanism works well, with communication channels open
to any user.
Corporate policy manualthe Company is broadly guided by the Corporate policy
Manual as a governance tool, including the integrated policy
Document.
Directors’ report & statement of Directors’ responsibility in relation to Financial statementsthe Company has not engaged in any activity which
contravenes laws and regulations. all material interests
involving the Company have been properly disclosed in note
28 to the Financial statements on page 67.
stateMeNt OF COrpOrate GOVerNaNCe (CONt.)
20 uDapussellaWa plaNtatiONs plC / annual report 2017
Financial reportingthe Company has disclosed financial and non-financial
information in the form of quarterly financial statements and
the annual report. the quarterly financial statements are
subject to review by the Board audit Committee.
the overall reporting integrity is exhibited by the statement
of Directors’ responsibility in relation to Financial statements
on page 28.
Minimum public holdingthe Company has maintained a public shareholding of 10%
since 30th June 2017 in compliance with the Cse listing rule
7.13.1.
Management Discussion and analytical reportthe reports by the Chairman and the Chief executive Officer
deal with industry structure and developments, opportunities
and threats, risks and concerns, social and environmental
stateMeNt OF COrpOrate GOVerNaNCe (CONt.)
protection activities, financial performance, material
developments in human resources, industrial relations,
prospects for the future and related topics in great detail.
information to the Board of Directorsthe Company’s erp system provides complete, timely,
adequate and relevant information to the Board and senior
management, enabling them to make informed decisions. the
Board meet quarterly as mentioned above and are supplied
with all relevant information prior to the scheduled meetings.
Company secretarya body corporate, Messrs ssp Corporate services (private)
limited, acts as the Company secretary.
Declaration by the Directorsthe Directors of the Company declare that the Cse regulations
on Corporate Governance are complied with as given in table
1.
Table 1—Compliance with CSE regulations on Corporate Governance
Rule Corporate Governance Rules regarding the Board of Directors Status of compliance
7.10 a publishing a statement in the annual report for the financial year confirming Complied
compliance with the Corporate Governance rules
7.10 b Giving an affirmative statement in the annual report with regard to complying with Complied
Corporate Governance rules or vice versa
7.10 c exemption to comply with Corporate Governance rules Not applicable
7.10.1 a presence of Non-executive Directors Complied
7.10.1 b Basis of calculating the total number of Directors Complied
7.10.1 c rectification of changes to the ratio between total and Non-executive Directors Not applicable
7.10.2 a presence of independent Non-executive Directors and the ratio Complied
7.10.2 b Declaration by Non-executive Directors with regard to independence or otherwise Complied
7.10.3 a annual determination of independence or non-independence of Non-executive Directors, Complied
by the Board of Directors and setting out in the annual report the names of Directors
determined to be independent
7.10.3 b Disclosure in the annual report with regard to determination of independence of Not applicable
a Director who does not meet the criteria for being independent
7.10.3 c publishing in the annual report a brief resume of each Director including the nature Complied
of expertise in the relevant functional areas
7.10.3 d providing a brief resume of each Director to the exchange upon appointment Complied
7.10.4 a-h Criteria for defining independence Complied
21uDapussellaWa plaNtatiONs plC / annual report 2017
stateMeNt OF COrpOrate GOVerNaNCe (CONt.)
Rule Corporate Governance Rules regarding the Remuneration Committee Status of compliance
7.10.5 a Composition of the remuneration Committee Complied
7.10.5 b Functions of the remuneration Committee Complied
7.10.5 c Disclosure in the annual report of the names of the Directors on the remuneration Complied
Committee, remuneration policy and setting out the aggregate remuneration paid to
executive and Non-executive Directors
Rule Corporate Governance Rules regarding the Audit Committee Status of compliance
7.10.6 a presence of Non-executive and independent Non-executive Directors on the Complied
audit Committee, parent-subsidiary relationship, Chairmanship of the Committee
and attendance of executive Management at the meetings
7.10.6 b Functions of the audit Committee Complied
7.10.6 c Disclosure in the annual report Complied
7.10.7 a-k Failure to comply with rule 7.10 and resultant regulatory procedures Not applicable
22 uDapussellaWa plaNtatiONs plC / annual report 2017
the remuneration Committee of the Company appointed
and responsible to the Board of Directors consists of two
independent Non-executive Directors and one Non-executive
Director.
the Company has its own remuneration Committee separate
from the parent company’s remuneration Committee.
Compositionthe Committee comprises a combination of independent Non-
executive Directors and a Non-executive Director. the names
of the Directors, appointments and resignations during the
year, their status of independence and positions occupied in
the Committee are as follows:
Mr J. Molligoda — iNeD-Chairman
[resigned w.e.f. March 31, 2017]
Mr a. N. Wickremasinghe — iNeD-Member
[resigned w.e.f. March 31, 2017]
Mr G. r. Chambers — NeD-Chairman
[appointed w.e.f. september 7, 2017]
Mr G. K. B. Dasanayaka — iNeD-Member
[appointed w.e.f. september 7, 2017]
Mr e. D. p. soosaipillai — iNeD-Member
[appointed w.e.f. september 7, 2017]
iNeD: independent Non-executive Director
NeD: Non-executive Director
role of the Committeethe remuneration Committee has reviewed and recommended
to the Board of Directors the policy on remuneration for the
Directors and the executive staff. the aggregate remuneration
to the Directors appears in note 28.2 on page 68.
repOrt OF the reMuNeratiON COMMittee
Committee meetingsthe Committee held its meeting for the year on February 22,
2017
remuneration policythe Committee took into account the market information, as
well as competition and performance evaluation criteria in
deciding the overall remuneration policy of the Company and
thereby the remuneration of Directors and the executive staff.
G. r. ChambersChairman
remuneration Committee
Colombo
15th March 2018
23uDapussellaWa plaNtatiONs plC / annual report 2017
the Company, as a responsible corporate citizen, complies with
relevant legislation and regulations pertaining to related party
transactions. a related party transactions review Committee
has been set up to ensure that the interests of all stakeholders
are taken into account when engaging in transactions with
related parties.
Compositionthe Committee comprises a combination of independent
Non-executive Directors and a Non-executive Director, in
accordance with Cse listing rule 9.2.2. the names of the
Directors, their status of independence, dates of appointments
and resignations, positions occupied in the Committee and
attendance at the meetings are as follows:
Mr J. Molligoda—iNeD-Chairman 0/0[resigned w.e.f. March 31, 2017]
Mr M. Vamadevan—iNeD-Member 0/0[resigned w.e.f. March 31, 2017]
Mr a. N. Wickremasinghe—iNeD-Member 0/0 [resigned w.e.f. March 31, 2017]
Mr G. K. B. Dasanayake—iNeD-Chairman 4/4[appointed w.e.f. april 5, 2017]
Mr e. D. p. soosaipillai—iNeD-Member 4/4[appointed w.e.f. april 5, 2017]
Mr N. K. h. ratwatte NeD-Member 3/4[appointed w.e.f. april 5, 2017]
iNeD: independent Non-executive DirectorNeD: Non-executive Director
all Non-executive Directors have duly declared their
independence by the annual declaration and the Board
of Directors have determined their independence or non-
independence.
the Chief executive Officer, Finance Director and Financial
Controller attend the meetings to update the Committee and
to provide all the necessary information with regard to related
party transactions. the Committee reviewed the related party
transactions during the financial year at its meetings. the
minutes of the meetings were duly recorded and disseminated
to the Committee and to the Board of Directors. there were no
related party transactions, non-recurrent or recurrent, during
the period under review requiring immediate announcement
to the Cse and/or shareholder approval.
repOrt OF the relateD party traNsaCtiONs reVieW COMMittee
Committee meetingsthe Committee held four meetings during the year for the
purpose of reviewing related party transactions.
information to the Board of Directors and to the Committeethe Company’s erp system provides complete, timely,
adequate and relevant information to the Board and senior
management, through which the related party transactions
review Committee is briefed.
policy & procedurethe Committee is constituted and functions as per Cse listing
rules section 9 and lKas 24. the details of related party
transactions were circulated to the Committee in advance.
all transactions with related parties were computed having
regard to the arm’s length price. the calculation of the arm’s
length price is based on any one of the most appropriate
methods as follows:
• Comparable uncontrolled price Method [Cup]
• re-sale price Method [rpM]
• Cost plus Method [CplM]
• profit split Method [psM]
• transactional Net Margin Method [tNMr]
the Committee takes into account the following in selecting
the mosts appropriate method:
• the availability, coverage and reliability of data necessary for the application of the method
• the extent to which reliable and accurate adjustments can be made to account for differences, if any, between the international transaction and the comparable uncontrolled transaction or between the enterprises entering into such transactions
• the nature, extent and reliability of assumptions required to be made in application of a method
the related party transactions entered during the year are
shown in note 28 on page 67.
G. K. B. DasanayakeChairmanrelated party transactions review Committee
15th March 2018
24 uDapussellaWa plaNtatiONs plC / annual report 2017
aNNual repOrt OF the BOarD OF DireCtOrs ON the aFFairs OF the COMpaNy
the details set out herein provide the pertinent information
required by the Companies act No. 7 of 2007 and the Colombo
stock exchange listing rules and are guided by recommended
best accounting practices.
principal activities and Business review/Future Developmentsthe Company is engaged mainly in the cultivation, manufacture
and marketing of tea, rubber, coconut and forestry products,
operating in the Central province.
a review of the business of the Company and its performance
during the year, with comments on financial results and future
strategic developments, is contained in the Chairman’s Message
(pages 4 to 5), Chief executive Officer’s review (pages 6 to 8)
and Financial review (pages 12 to 14). these reports together
with the Financial statements reflect the state of affairs of the
Company.
the Directors, to the best of their knowledge and belief, confirm
that the Company has not engaged in any activities that
contravene laws and regulations.
Financial statementsthe Financial statements of the Company are given on pages
32 to 73 of this annual report.
auditors’ reportthe auditors’ report on the Financial statements is given on
page 31.
accounting policies the accounting policies adopted in the preparation of the
Financial statements are given on pages 36 to 50 there were
no changes in the accounting policies adopted.
Directors’ remunerationDirectors’ remuneration, in respect of the Company for the
financial year ended 31st December 2017, is given in note 28.2
to the Financial statements, on page 68.
Corporate DonationsCorporate Donations by the Company amounted to rs. 8,600.
No donations were made for political purposes.
Directoratethe names of the Directors who held office during the financial
year are given below and their brief profiles appear on page
27.
executive DirectorsMr D. J. ratwatte
Ms M. C. pietersz
Non-executive DirectorsMr N. K. h. ratwatte (Chairman)
Mr J. M. rutherford
Mr h. a. s. Crawford
Mr G. r. Chambers
Mr N. h. G. s. Jayasinghe
Mr e. D. p. soosaipillai
Mr G. K .B. Dasanayaka
Messrs J. M. rutherford and G. r. Chambers retire by rotation
in terms of articles 86 and 87 of the articles of association
and being eligible offer themselves for re-election.
Directors’ interestsDirectors’ interests in contracts of the Company are disclosed
in note 28.4 to the Financial statements on page 68.
the Directors, at their meetings, have declared all material
interest in contracts involving the Company and have refrained
from voting on matters in which they were materially interested.
related party transactionsrelated party transactions are disclosed in note 28 to the
Financial statements on page 67.
the Board of Directors related party transactions review
Committee reviewed the Company’s related party transactions
in compliance with section 9 of the listing rules of the
Colombo stock exchange. More details in this regard is shown
in the report of the related party transactions review
Committee appearing on page 23 of this annual report.
25uDapussellaWa plaNtatiONs plC / annual report 2017
auditorsin accordance with the Companies act No. 7 of 2007, a
resolution proposing the re-appointment of Messrs. KpMG,
Chartered accountants, as auditors to the Company will be
submitted at the annual General Meeting.
the auditors, Messrs. KpMG, were paid rs.2.5 million (2016:
rs. 2.5 million) as audit fees by the Company.
as far as the Directors are aware, the auditors do not have any
relationships (other than that of an auditor) with the Company.
the auditors also do not have any interest in the Company.
turnoverthe total turnover of the Company for the year is rs. 2,227
million (2016: rs. 1,620 million). an analysis of the turnover
is given in note 4 to the Financial statements. the Company’s
turnover has increased by 37% compared to the previous year.
Financial results & appropriationsa pre-tax profit of rs. 287 million was recorded during the
year. profit for the year increased by 237% compared to the
previous year due to favourable trading conditions, mainly the
tea prices, as explained in the Chief executive Officer’s review
on pages 6 to 8 and in the Financial review on pages 12 to 14.
DividendNo dividend is recommended for the year under review.
taxation and statutory paymentsaccording to the inland revenue act, No. 10 of 2006, the
Company is liable for income tax at the rate of 10% on its
agricultural profits. profit other than ‘agricultural profits’ is
liable for income tax at the corporate tax rate of 28%.
all other statutory payments such as epF, etF and other taxes
have been made up to date.
Fixed assetsinformation relating to the movements of fixed assets is given
in notes 10 to 14 to the Financial statements.
property, plant and equipmentthe total capital expenditure incurred during the year
amounted to rs. 52 million compared to rs. 32 million incurred
in the previous year. Further information relating to movement
in property, plant and equipment is given under notes 12, 13
and 14 to the Financial statements.
share Capitalthe stated capital as at the end of the year is rs. 340 million;
there was no change in the stated capital during the year.
Golden sharethe secretary to the treasury has been issued with one golden
share on behalf of the government of sri lanka, carrying special
rights in accordance with the articles of association of the
Company as more fully explained in note 19.1 to the Financial
statements.
Capital reserves the revaluation reserve of rs. 199 million (2016: rs. 206
million) represents reserves arising from the revaluation of
bare land carried out in May 1998.
the movement in the revaluation reserve is disclosed in note
20 to the Financial statements.
Managing agentthe Company is managed by Finlays tea estates lanka (pvt)
ltd. and no management fee is charged.
employment policythe Company’s employment policy is totally non-discriminatory,
which respects individuals and provides career opportunities
irrespective of gender, race or religion. regular performance
appraisal and evaluation schemes are in place and training,
development and promotion opportunities are available to all
employees who qualify.
the total number of employees of the Company is 4,937 (2016:
5,251) persons.
aNNual repOrt OF the BOarD OF DireCtOrs ON the aFFairs OF the COMpaNy (CONt.)
26 uDapussellaWa plaNtatiONs plC / annual report 2017
employees’ health & safetyMore attention has been given to employees’ health and safety
and several training programmes have been conducted to
educate, improve awareness and encourage good practices of
safety and health employees at all levels. a comprehensive
evaluation of health and fire hazards was undertaken in all the
factories by the Company’s engineering division during the
year under review and their recommendations have been
implemented in full.
industrial relationsthe Collective agreement between the Workers trade unions
and the representatives from the regional plantation
Companies was signed with effect from 15th October 2016.
Other matters pertaining to employees and industrial relations
are contained in the Chief executive Officer’s review on pages
6 to 8.
environmental protectionit is the Company’s policy to minimise the adverse effects on
the environment which may result from the Company’s
operations, and to co-operate and comply with the relevant
authorities and regulations. More details in this regard are
shown on pages 9 to 11 of this report under sustainability
performance review.
Corporate Governancethe Directors are responsible for the formulation and
implementation of overall business strategies and policies, and
for setting standards in the short-, medium- and long-term
basis, adopting good governance in managing the affairs of
the Company.
events Occurring after reporting DateNo circumstances have arisen since the balance sheet date that
would require adjustment, or disclosure in the Financial
statements.
Going Concernthe Directors consider that the Company has adequate
resources to adopt a going concern basis in preparing the
Financial statements.
Directors’ shareholdingsthe Directors’ holdings of ordinary shares in the Company are
as follows:
As at As at
31.12.2017 31.12.2016
Mr N. K. h. ratwatte 500 500
Mr J. M. rutherford Nil Nil
Mr D. J. ratwatte Nil Nil
Mr h. a. s. Crawford Nil Nil
Mr G. r. Chambers Nil Nil
Ms M. C. pietersz Nil Nil
Mr N. h. G. s. Jayasinghe Nil Nil
Mr e. D. p. soosaipillai Nil Nil
Mr G. K. B. Dasanayaka Nil Nil
By Order of the Board of Directors of
udapussellawa plantations plC
D. J. ratwatte M. C. pieterszDirector Director
s s p Corporate services (private) limited
secretaries
Colombo
15th March 2018
aNNual repOrt OF the BOarD OF DireCtOrs ON the aFFairs OF the COMpaNy (CONt.)
27uDapussellaWa plaNtatiONs plC / annual report 2017
N. K. h. ratwatte having Joined James Finlay & Company (Colombo) in 1991 and
appointed as an executive Director in 1997, he was also appointed
as an executive Director of hapugastenne plantations plC and
udapussellawa plantations plC in 1998 and its Chairman/ Managing
Director since 1st april 2006. Mr ratwatte continues as a Non-
executive Director of Finlays Colombo plC since 2007 and in several
other companies within and outside the group. he is a Fellow of
the National institute of plantation Management (FipM). age 63.
r. a. D. r. ramanayake executive Director appointed to the Board in June 2010. Joined
the Company as head of Finance in 1992. Counts over 25 years of
experience in the field of finance in the plantation industry. Fellow
member of the institute of Chartered accountants of sri lanka
and the institute of Certified public accountants of sri lanka. he
is also a Director of hapugastenne plantations plC, James Finlay
plantation holdings (lanka) ltd., Finlays tea estates (lanka) limited.,
Newburgh Green teas (pvt) ltd. age 60.
D. J. ratwatte Director/Chief executive Officer of hapugastenne plantations plC
and udapussellawa plantations plC since January, 2015. Joined
the Company in 2013. he counts over 25 years experience in the
plantations industry. age 50.
J. Molligoda independent Non-executive Director appointed to the Board in
December 2007. Director, Chief executive Officer of Bogawantalawa
tea estates plC. Counts over 27 years of experience in the fields
of human resource development, financial management and
strategic planning/projects in the plantation sector. Fellow of the
institute of Chartered accountants of sri lanka, Master of Business
administration (piM), Fellow of the society of Certified Management
accountants of sri lanka. life member of the Organisation of
professional associations of sri lanka, Founder Member of
the institute of Directors of sri lanka, Founder member of the
association of hr professionals. age 60.
M. Vamadevan independent Non-executive Director appointed to the Board in
December 2001. presently advisor to the hon. Minister of plantation
infrastructure Development. holds a Mphil in applied economics
and Ma in Development economics. previously worked for 35 years
in the Ministries of planning, and Finance and planning in various
capacities. age 71.
BOarD OF DireCtOrs
e. r. Croos Moraes Director since November 1998 and Non-executive Director since
2003. executive Director of Finlays Colombo plC since October
1991. an associate Member of the Chartered institute of Marketing
uK (aCiM), a Chartered Marketer. age 59.
a. N. Wickramasinghe appointed to the Board as a non-executive Director in July 2012 upon
his retirement as General Manager – estates. Mr. Wickremasinghe
counts over 39 years experience in the tea industry. age 67.
J. M. rutherford appointed as a Non-executive Director on 1st February 2013 on
becoming Finance Director of James Finlay ltd., london. he is
a qualified Chartered accountant (iCaeW) and holds a Bachelor
of science (Bsc) degree in economics from the university of
southampton. previously he spent 15 years with associated British
Foods, a uK listed company, where he held a variety of senior finance
and other related posts. age 45
h. a. s. Crawford Mr. Crawford joined the swire Group in 1978 and has held a number
of senior positions in the Group including as executive Director of
the trading and industrial Division of swire pacific in hong Kong.
he has worked in australia, papua New Guinea, Japan, the u.s., the
u.K., taiwan and hong Kong. he holds a Ba (honours) Degree in
Modern history from the university of Oxford. Mr. Crawford was
appointed as Managing Director of Finlays Colombo plC with effect
from the 1st of september 2015. age 60.
G. r. Chambers Mr. Chambers became Managing Director of James Finlay limited
in september 2015. since joining John swire & sons in 1993, he has
worked in China, hong Kong and taiwan for swire, most recently
as COO of Damin (the world’s largest tea extract manufacturer) and
COO of swire Beverages (the largest Coca-Cola franchise bottler
in China).
in april 2014, Mr. Chambers was appointed to the hong Kong
Committee for pacific economic Cooperation to advise the hong
Kong secretary for Commerce, economic and Development on
matters relating to the participation of hong Kong in the pacific
economic Cooperation Council. Mr. Chambers has also served as an
advisor to Chatham house, the uK think-tank, on matters relating
to Greater China. age 45.
N. K. h. ratwatte having joined James Finlay & Company (Colombo) in 1991 and appointed as an executive Director in 1997, he was also appointed as an executive Director of udapussellawa plantations plC and hapugastenne plantations plC in 1998, and as its Chairman/Managing Director on 1st april 2006. Mr. ratwatte retired from executive service on 31st December 2015, and was appointed Non-executive Chairman on 1st January 2016. Mr ratwatte has continued as a Non-executive Director of Finlays Colombo limited since 2007, and in several other companies within and outside the group. he is a Fellow of the National institute of plantation Management (FipM). D. J. ratwatte Director/Chief executive Officer of hapugastenne plantations plC and udapussellawa plantations plC since January 2015. Joining the Company in 2013, he was also appointed as a Non-executive Director of Finlays Colombo limited in May 2017. Counts over 30 years of experience in the plantations industry. he is an Ordinary Member of the sri lanka institute of Directors (sliD) and a Graduate of sliD and an Ordinary Member of the institute of Management of sri lanka.
Ms. M. C. pietersz executive Director appointed to the Board in July 2016, Ms. pietersz is an associate member of the institute of Chartered accountants of england and Wales and a fellow member of the institute of Chartered accountants of sri lanka. she holds a Bsc (honours) degree in physics from the university of sussex and an MBa from heriot-Watt university, edinburgh. an executive Director of Finlays Colombo limited since November 2011, she also serves on the Boards of Bogala Graphite lanka plC and seylan Bank plC as an independent Non-executive Director.
J. M. rutherford appointed as a Non-executive Director on 1st February 2013 on becoming Finance Director of James Finlay ltd., london. he is a qualified Chartered accountant (iCaeW) and holds a Bachelor of science (Bsc) degree in economics from the university of southampton. previously he spent 15 years with associated British Foods, a uK listed company, where he held a variety of senior finance and other related posts.
h. a. s. Crawford Non-executive Director appointed to the Board in september 2015. Mr. Crawford joined the swire Group in 1978 and has held a number of senior positions in the Group, including executive Director of the trading and industrial Division of swire pacific in hong Kong. he has worked in australia, papua New Guinea, Japan, the u.s., the u.K., taiwan and hong Kong. he holds a Ba (honours) Degree in Modern history from the university of Oxford. Mr. Crawford was appointed as Managing Director of Finlays Colombo limited with effect from the 1st of september 2015.
G. r. Chambers Non-executive Director appointed to the Board in september 2015 on becoming Managing Director of James Finlay limited
in september 2015. since joining John swire & sons in 1993, he has worked in China, hong Kong and taiwan, most recently as COO of Damin (the world’s largest tea extract manufacturer) and COO of swire Beverages (the largest Coca-Cola franchise bottler in China).
in april 2014, Mr. Chambers was appointed to the hong Kong Committee for pacific economic Cooperation to advise the hong Kong secretary for Commerce, economic and Development on matters relating to the participation of hong Kong in the pacific economic Cooperation Council. Mr. Chambers has also served as an advisor to Chatham house, the uK think tank on matters relating to Greater China.
N. h. G. s. Jayasinghe Non-executive Director appointed to the Board in april 2017. Mr. Jayasinghe joined Finlays in February 2006, as the Chief executive Officer of Finlay Cold storage (pvt) limited and was appointed a Director of the subsidiary in February 2008. Mr. Jayasinghe was appointed an executive Director of Finlays Colombo limited in November 2014. he holds a Masters degree in Business administration (MBa), is a Fellow of the Chartered Management institute – u.K. and a Member of the Chartered institute of logistics and transport – u.K. he also serves on the executive Committee and Council of the sri lanka Branch of the Chartered Management institute and Chartered institute of logistics and transport respectively, and is a member of the Ceylon Chamber of Commerce sector steering committee for ports, shipping, aviation and logistics.
e. D. p. soosaipillai independent-Non-executive Director appointed to the Board in april 2017. Mr. soosaipillai is a fellow of the institute of the Chartered accountants of sri lanka and a fellow of the institute of Certified Management accountants of sri lanka. he is an independent Non-executive Director of hatton National Bank plC and Commercial Credit and Finance plC, where he functions as Chairman and member of many board sub-committees. Mr soosaipillai has over 30 years of experience in Credit, Corporate Governance, risk Management and Compliance, both at the operational and strategic levels.
G. K. B. Dasanayaka independent-Non-executive Director appointed to the Board in april 2017. Mr. Dasanayaka is an attorney-at-law by profession. he is an independent Non- executive Director of aCMe printing and packaging plC. he worked for the international labour Organization (ilO) as the senior specialist, employers’ activities for the south asian region from 2007 to February 2015. prior to joining the ilO he worked with the employer Federation of Ceylon (eFC) from 1979 and was the Director General/CeO from 2000 to 2006. While at the eFC he specialised in employment law and relations and had firsthand experience in dealing with key stakeholders on major labour issues, at operational and policy levels. since his retirement from the ilO he provides consultancy service in employment law and employee relations.
28 uDapussellaWa plaNtatiONs plC / annual report 2017
stateMeNt OF DireCtOrs’ respONsiBility iN relatiON tO FiNaNCial stateMeNts
the following statement, which should be read in conjunction
with the auditors’ statement of their responsibilities, as set
out in their report, is made with a view to distinguishing the
respective responsibilities of the Directors and the auditors,
in relation to the Financial statements.
the Directors are required by the Companies act No. 07 of
2007, to prepare and present the Financial statements for each
financial year, which give a true and fair view of the state of
affairs of the Company as at the end of the financial year and
of the profit and loss for the financial year. the Directors are
required to prepare these Financial statements on the going
concern basis, unless it is not appropriate.
since the Directors are satisfied that the Company has the
resources to continue in business for the foreseeable future,
the Financial statements continue to be prepared on the said
basis.
the Directors consider that in preparing the Financial
statements on pages 32 to 73, the Company has used
appropriate accounting policies, consistently applied, and
supported by reasonable and prudent judgements and
estimates, and that all accounting standards which they
consider to be applicable have been followed.
the Directors have responsibility for ensuring that the
Company keeps accounting records which disclose with
reasonable accuracy the financial position of the Company,
and which enable them to ensure that the Financial statements
comply with the Companies act No. 07 of 2007. the Directors
have general responsibility for taking such steps as necessary
to safeguard the assets of the Company and to prevent and
detect fraud and other irregularities.
the Directors confirm that to the best of their knowledge all
taxes, duties and levies payable by the Company and all
contributions, levies and taxes payable on behalf of and in
respect of the employees of the Company and all other known
statutory dues as were due and payable by the Company as at
the Balance sheet date have been paid, or where relevant,
provided for.
On behalf of the Board of Directors
D. J. ratwatte M. C. pieterszDirector Director
Colombo
15th March 2018
29uDapussellaWa plaNtatiONs plC / annual report 2017
role of the audit Committeethe Board audit Committee of the Company is formed
in compliance with the Cse listing rules, section 7 of the
Continuing listing requirements.
Functionsthe functions of the Board audit Committee include the
following:
(a) Overseeing of the preparation, presentation and
adequacy of disclosures in the Financial statements of
the Company in accordance with sri lanka accounting
standards
(b) Overseeing of compliance with financial reporting
requirements, information requirements of the
Companies act and other relevant financial reporting
related to regulations and requirements
(c) Overseeing the processes to ensure that the internal
controls and risk management are adequate to meet the
requirements of the sri lanka auditing standards
(d) assessment of independence and performance of
external auditors
(e) to make recommendations to the Board pertaining to the
appointment, re-appointment and removal of external
auditors and to approve the remuneration and terms of
engagement of the external auditors
the Board of Directors have mandated explicit terms of
reference for the effective functioning of the Board audit
Committee and are thus duly empowered by the Board.
the performance of the Committee is subject to annual self-
evaluation.
Compositionthe Board audit Committee comprises two independent Non-
executive Directors and a Non-executive Director.
Mr J. Molligoda – iNeD-Chairman
[resigned w.e.f. March 31, 2017]
Mr M. Vamadevan – iNeD-Member
[resigned w.e.f. March 31, 2017]
Mr a. N. Wickremasinghe – iNeD-Member
[resigned w.e.f. March 31, 2017]
repOrt OF the BOarD auDit COMMittee
Mr e. D. p. soosaipillai – iNeD-Chairman
[appointed w.e.f. april 1, 2017]
Mr G. K. B. Dasanayake – iNeD-Member
[appointed w.e.f. april 1, 2017]
Mr. N. K. h. ratwatte – NeD-Member
[appointed w.e.f. april 1, 2017]
[iNeD: independent Non-executive Director, NeD: Non-
executive Director]
the Chairman and his predecessor on the Board audit
Committee are fellow members of the institute of Chartered
accountants of sri lanka.
the Board of Directors, based on the annual declaration, have
determined the independence or non-independence of each
Non-executive Director in accordance with Cse listing rule
No. 7.10.3.
internal audit Functionthe internal audit function of the Company continues to be
outsourced to Messrs B r De silva & Company, Chartered
accountants. the terms of reference are governed by a service
level agreement.
the Board audit Committee ensures that the internal audit
function is free from conditions that threaten the ability to
carry out the internal audit activities in an unbiased manner.
the main focus of internal audit function is to independently
and objectively evaluate and report on the adequacy, integrity
and effectiveness on the overall system of internal control, risk
management and governance for assurance.
the risk-based internal audit plan is developed to cover key
compliance, and financial and operational matters that are
significant to the overall performance of the Company. During
the year the internal audit has carried out eight routine audits.
the Board audit Committee of the Company is supported by
a functional sub-committee, namely the audit supervisory
Committee (asC), as appointed and empowered by the Board
of Directors with specific terms of reference and a reporting
requirement to the Group audit Committee in the uK via the
30 uDapussellaWa plaNtatiONs plC / annual report 2017
repOrt OF the BOarD auDit COMMittee (CONt.)
Group head of internal audit (ia). the Board audit Committee
exercises oversight of the asC by reviewing the asC minutes as
to actions taken on ia findings. the asC, chaired by the Finance
Director, comprises the Chief executive Officer, Financial
Controller, Operational Directors and the internal auditors.
the audit supervisory Committee has held six meetings during
the year 2017 to review the processes, methodology and reports
of the internal audit.
audit Committee Meetingsthe Board audit Committee has held six meetings for the
year 2017.
the annual report for the year 2016 was reviewed at the audit
committee meeting held on March 14, 2017 and was attended
by the engagement partner of KpMG.
the attendance of the Board audit Committee at the meetings
for the year 2017 was as follows:
Mr J. Molligoda 2/2
Mr M. Vamadevan 2/2
Mr a. N. Wickremasinghe 2/2
Mr e. D. p. soosaipillai 4/4
Mr G. K. B. Dasanayake 4/4
Mr N. K. h. ratwatte 4/4
the Chairman, Chief executive Officer, Finance Director,
Financial Controller, external auditors and internal auditors
attended the meetings on invitation.
a meeting was held on september 22, 2017 with the external
and internal auditors without the presence of the executive
management as required by the terms of reference of the Board
audit Committee and the regulatory corporate governance
requirements.
principle activitiesthe Board audit Committee is a sub-committee of the Board
of Directors and reports to the Board at its quarterly meetings.
the Company has compiled a risk register based on a detailed
risk assessment and a risk-profiling exercise and is subject to
review and revision twice a year. the Company’s risk register
forms a part of the group risk register of the parent company
and is subject to oversight by the Director-Corporate affairs
based in the uK.
the Board audit Committee and the audit supervisory
Committee reviewed the risk register of the Company at the
meetings for the year under review and recommendations were
made for improvement.
By their review of the asC minutes, the Board audit Committee
exercises oversight of internal and external audit findings and
the corresponding management action taken, and weighs in on
internal control issues of the Company.
the Board audit Committee additionally reviews the external
audit findings with a view to initiating corrective action on
systemic operational risk issues and also gives oversight to
compliance with legal and regulatory requirements.
the Board audit Committee at its meetings paid special
attention to compliance with the sri lanka Financial reporting
standards (slFrs).
external auditMessrs KpMG, the external auditors, are considered to be
independent as there is no evidence of any interest on their
part in the results published in the financial statements of the
Company other than as external auditors nor is there reason
to believe that such independence has been impaired during
the year.
the Board audit Committee recommend to the Board of
Directors that Messrs KpMG, Chartered accountants, be re-
appointed as external auditors for the financial year ending
December 31, 2018 subject to the approval of the shareholders.
e. D. p. soosaipillaiChairman
Board audit Committee
15th March 2018
31uDapussellaWa plaNtatiONs plC / annual report 2017
iNDepeNDeNt auDitOrs’ repOrt
report on the Financial statementsWe have audited the accompanying Financial statements of
udapussellawa plantations plC, (“the Company”), which
comprise the statement of financial position as at December
31, 2017, and the statement of profit or loss and other
comprehensive income, statement of changes in equity,
statement of cash flows for the year then ended, and a summary
of significant accounting policies and other explanatory
information, set out on pages 32 to 73 of the annual report.
Board’s responsibility for the Financial statements the Board of Directors (“Board”) is responsible for the
preparation of these Financial statements that give a true and
fair view in accordance with sri lanka accounting standards,
and for such internal control as the Board determines is
necessary to enable the preparation of Financial statements
that are free from material misstatement, whether due to fraud
or error.
auditors’ responsibilityOur 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 comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance about
whether the Financial statements are free from material
misstatement.
an audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the Financial
statements. the procedures selected depend on the auditors’
judgement, including the assessment of the risks of material
misstatement of the Financial statements, whether due to fraud
or error. in making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation
of the Financial statements that give a true and fair view in
order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity’s internal control.
an audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting
estimates made by Board, as well as evaluating the overall
presentation of the Financial statements.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
Opinionin our opinion, the Financial statements give a true and fair
view of the financial position of the Company as at December
31, 2017, and of its financial performance and cash flows for
the year then ended in accordance with sri lanka accounting
standards.
report on Other legal and regulatory requirementsas required by section 163 (2) of the Companies act No. 07 of
2007, we state the following:
a) the basis of opinion and scope and limitations of the
audit are as stated above.
b) in our opinion we have obtained all the information and
explanations that were required for the audit and, as
far as appears from our examination, proper accounting
records have been kept by the Company, and the
Financial statements of the Company comply with the
requirements of section 151 of the Companies act.
CHARTERED ACCOUNTANTSColombo
15th March 2018
TO THE SHAREHOLDERS OF UDAPUSSELLAWA PLANTATIONS PLC
32 uDapussellaWa plaNtatiONs plC / annual report 2017
stateMeNt OF prOFit Or lOss aND Other COMpreheNsiVe iNCOMe
2017 2016 Note Rs. Rs.
revenue 4 2,226,762,355 1,620,095,251
Cost of sales (1,863,714,500) (1,648,409,853)
Gross Profit/( Loss ) 363,047,855 (28,314,602)
Other income 5 27,471,875 27,999,854
Change in Fair Value of Biological assets 14.4 120,405,262 (36,638,569)
administrative expenses (176,654,016) (131,480,138)
Net Finance Cost 6 (47,023,845) (41,711,453)
Profit/(Loss) before Taxation 7 287,247,131 (210,144,908)
income tax expense 8 (19,425,924) 28,344,494
Profit/(Loss) 267,821,207 (181,800,414)
Other Comprehensive Income
items that will never be classified to profit or loss:
remeasurement of retirement Benefit Obligation 77,054,855 82,343,123
Deferred tax on remeasurement of retirement Benefit Obligation (21,575,359) (13,019,586)
Other comprehensive income/(loss) for the year, net of income tax 55,479,496 69,323,537
Total Comprehensive Income/(Loss) for the Year 323,300,703 (112,476,877)
Earnings per share 9 13.81 (9.37)
Figures in brackets indicate deductions.
the accounting policies and notes from pages 36 to 73 form an integral part of the Financial statements.
For the year ended 31st December
33uDapussellaWa plaNtatiONs plC / annual report 2017
stateMeNt OF FiNaNCial pOsitiON
2017 2016 Note Rs. Rs.
ASSETS Non-Current Assets right to use of land 10 296,545,629 307,330,132 immovable estate assets on finance lease 11 35,627,035 40,769,255 tangible assets other than biological assets 12 461,890,935 475,905,846 intangible assets 13 14,225,829 12,800,418 Bearer biological assets 14.1 448,523,325 452,654,631Consumable biological assets 14.2 662,911,219 537,502,967 Deferred tax asset 8.3 28,964,438 57,022,845 Total Non-Current Assets 1,948,688,410 1,883,986,094 Current Assets produce on bearer biological assets 14.3 3,975,069 5,004,874 inventories 15 235,493,853 256,607,568 trade and other receivables 16 52,769,867 59,726,201 Other financial assets 2,305,000 - amounts due from related companies 17 108,999,245 52,480,069 Cash and cash equivalents 18.1 7,826,669 4,327,975 Total Current Assets 411,369,703 378,146,687 Total Assets 2,360,058,113 2,262,132,781 EQUITY AND LIABILITIES stated capital 19 340,000,010 340,000,010 revaluation reserve 20 198,653,544 205,810,005 General reserve 21 152,230,438 145,073,977 accumulated profit/(loss) 122,913,888 (200,386,815)Total Equity 813,797,880 490,497,177 Non-Current Liabilities interest-bearing borrowings - payable after one year 22 100,422,239 125,308,654 Deferred income 23 103,482,909 107,646,148 retirement benefit obligations 24 547,727,072 617,530,120 Net liability to the lessor - payable after one year 25 121,632 124,090 Total Non-Current Liabilities 751,753,852 850,609,012 Current Liabilities interest-bearing borrowings - payable within one year 22 54,115,223 51,656,658 Net liability to the lessor - payable within one year 25 2,018 2,018 amounts due to related companies 26 396,429,063 349,552,530 trade and other payables 27 254,266,862 265,034,310 income tax payable 12,942,887 5,473,606 Bank overdraft 18.2 76,750,328 249,307,470 Total Current Liabilities 794,506,381 921,026,592 Total Equity and Liabilities 2,360,058,113 2,262,132,781
Figures in brackets indicate deductions. the accounting policies and notes on pages 36 to 73 form an integral part of the Financial statements these Financial statements have been prepared in compliance with the requirements of the Companies act No. 07 of 2007.
D. s. heenatigalage Financial Controller the Board of Directors is responsible for the preparation and fair presentation of these Financial statements. approved and signed for and on behalf of the Board of Directors of udapussellawa plantations plC.
D. J. ratwatte M. C. pieterszDirector Director
Colombo15th March 2018
As at 31st December
34 uDapussellaWa plaNtatiONs plC / annual report 2017
stateMeNt OF ChaNGes iN eQuity
Stated Revaluation General Accumulated Total Capital Reserve Reserve Profit/(Loss)
Rs. Rs. Rs. Rs. Rs.
Balances as at 01st January 2016 340,000,010 212,966,466 137,917,516 (87,909,938) 602,974,054
loss for the year - - - (181,800,414) (181,800,414)
Other Comprehensive income - - - 69,323,537 69,323,537
transferred to General reserve - (7,156,461) 7,156,461 - -
Balance as at 31st December 2016 340,000,010 205,810,005 145,073,977 (200,386,815) 490,497,177
Profit for the year - - - 267,821,207 267,821,207
Other Comprehensive Income - - - 55,479,496 55,479,496
Transferred to General Reserve - (7,156,461) 7,156,461 - -
Balance as at 31st December 2017 340,000,010 198,653,544 152,230,438 122,913,888 813,797,880
Figures in brackets indicate deductions.
the accounting policies and notes from pages 36 to 73 form an integral part of the Financial statements.
Attributable to equity holders of the Company
For the year ended 31st December 2017
35uDapussellaWa plaNtatiONs plC / annual report 2017
stateMeNt OF Cash FlOWs
2017 2016 Note Rs. Rs.
CASH FLOWS FROM OPERATING ACTIVITIES
profit/(loss) before taxation 287,247,131 (210,144,908)
ADJUSTMENTS FOR
Finance Costs 47,023,845 45,013,931
retirement Benefit Obligations provision 97,076,271 102,206,496
Depreciation and amortisation 72,890,145 71,434,989
provision for impairment 3,092,334 -
amortisation of Capital Grants (4,163,239) (4,163,239)
(profit)/loss on sale of property, plant & equipment (679,250) (435,000)
Gain/(loss) on fair value of Biological assets (120,405,262) 36,638,569
Change in consumable biological assets due to harvest - 5,077,671
provision for bad and doubtful debts 1,010,000 4,108,798
provision/(reversal) for slow-moving and obsolete stocks 1,203,000 (1,237,050)
Operating Profit before Working Capital changes 384,294,975 48,500,257
(increase)/Decrease in inventories 19,910,715 (41,021,308)
(increase)/Decrease in trade and Other receivables (304,988) (691,959)
increase/(Decrease) in trade and Other payables (10,767,448) (30,584,515)
increase/(Decrease) in amounts Due from/to related Companies (81,173,760) (4,415,819)
Cash Generated from Operations 311,959,494 (28,213,344)
retirement Benefit Obligation payments (89,824,464) (69,738,275)
tax paid (5,473,630) (4,386,031)
Finance Costs paid (43,417,562) (32,236,715)
Net Cash from Operating Activities 173,243,838 (134,574,365)
CASH FLOWS FROM INVESTING ACTIVITIES
proceeds from sale of property, plant & equipment 679,250 435,000
Field Development expenditure (22,444,420) (16,992,385)
purchase of property, plant & equipment (29,697,524) (14,665,946)
Net Cash used in Investing Activities (51,462,694) (31,223,331)
CASH FLOWS FROM FINANCING ACTIVITIES
proceeds from external loans 36,974,000 91,045,000
repayment of long term-loans (59,404,308) (66,039,620)
Net proceeds from loan from the parent Company 76,705,000 4,036,848
Government grants received - 304,976
Net Cash from Financing Activities 54,274,692 29,347,204
Net Increase / (Decrease) in Cash & Cash Equivalents 176,055,836 (136,450,491)
Cash & Cash equivalents at the beginning of the year (244,979,495) (108,529,004)
Cash & Cash equivalents at the end of the year 18 (68,923,659) (244,979,495)
Figures in brackets indicate deductions.
the accounting policies and notes from pages 36 to 73 form an integral part of the Financial statements.
For the year ended 31st December
36 uDapussellaWa plaNtatiONs plC / annual report 2017
1. REPORTING ENTITY udapussellawa plantations plC is a public limited
liability Company incorporated and domiciled in sri lanka, under the Companies act No. 17 of 1982 in terms of the provisions of the Conversion of public Corporations or Government-Owned Business undertaking into public Companies act No. 23 of 1987 and re-registered under the Companies act No. 07 of 2007. the registered office of the Company is located at 95a, Nambapana, ingiriya and plantations are situated in the planting districts of Nuwara eliya and Matale.
the ordinary shares of the Company are listed on the Colombo stock exchange of sri lanka.
the Company’s parent undertaking is James Finlay plantation holdings (lanka) limited. in the opinion of the Directors, the Company’s ultimate parent undertaking and controlling party is John swire and sons limited, which is incorporated in england.
1.1 Primary activities and nature of operations the Company primarily is involved in the
cultivation, manufacturing and sale of tea, rubber, Coconut and other agriculture produce.
2. BASIS OF PREPARATION
2.1. Statement of Compliance the Financial statements of the Company such
comprise statement of profit or loss and Other Comprehensive income, statement of Financial position, statement of Changes in equity and statement of Cash Flows together with the significant accounting policies and notes to the Financial statements which have been prepared in accordance with sri lanka accounting standards (lKass) promulgated by the institute of Chartered accountants of sri lanka (Ca sri lanka) and with the requirements of the Companies act No. 07 of 2007 and sri lanka accounting and auditing standards act No. 15 of 1995. these Financial statements except information on Cash Flows have been prepared following the accrual basis of accounting.
2.2 Approval of Financial Statements by Directors the Financial statements were authorised for
issue by the Board of Directors on 15th March 2018.
NOtes tO the FiNaNCial stateMeNts
2.3 Basis of Measurement these Financial statements have been prepared
in accordance with the historical cost convention basis except for the following material items in the statement of Financial position.
- leasehold right to Bare land of JeDB/slspC estates has been revalued as described in note 10: right to use of land
- Consumable Mature Biological assets are measured at fair value less costs to sell.(lKas 41)
- retirement Benefit Obligation recognised based on actuarial valuation (lKas 19)
- agriculture produce harvested from biological assets are measured at fair value. (lKas 41)
2.4 Functional and Presentation Currency these Financial statements are presented in sri
lankan rupees (rs.) which is the Company’s functional and presentation currency. all financial information presented in sri lankan rupees has been given to the nearest rupee, unless stated otherwise.
2.5 Going Concern the Directors have made an assessment of
the Company’s ability to continue as a going concern in the foreseeable future and they do not foresee a need for liquidation or cessation of trading.
2.6 Use of Estimates and Judgements the preparation of Financial statements
in conformity with sri lanka accounting standards (lKass) requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.
Judgments and estimates are based on historical experience and other factors, including expectations that are believed to be reasonable under the circumstances. hence, actual experience and results may differ from
these judgements and estimates.
estimates and underlying assumption are
reviewed on a ongoing basis. revision to
accounting estimates are recongnised in the
For the year ended 31st December 2017
37uDapussellaWa plaNtatiONs plC / annual report 2017
period in which the estimates are revised and in any future period affected.
information about critical estimates and judgements in applying accounting policies that have the most significant effect on the amounts recognised in the Financial statements is included in the following notes:
Note 12 - tangible assets other than immature and Mature
information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year is included in the following notes:
Note 14.2 - Consumable Biological assets Note 24 - retirement Benefit Obligation Note 8.3 - Deferred tax assets
3. SIGNIFICANT ACCOUNTING POLICIES the accounting policies set out below have been
applied consistently to all periods presented in these Financial statements.
3.1 Foreign Currency
3.1.1 Foreign Currency Transactions transactions in currencies other than the
entity’s functional currency (foreign currencies) are recorded in the functional currencies using the exchange rates prevailing at the dates of the transactions.
at each reporting date, monetary items denominated in foreign currencies are translated at the closing rate. Non-monetary items measured at fair value are translated at the rates prevailing on the date when the fair value was determined.
Non-monetary items measured at historical cost are translated at the rates prevailing on the date of transaction.
exchange differences arising on the settlement of monetary items and on the translation of monetary items are included in profit or loss
for the period
exchange differences arising on the translation
of non-monetary items carried at fair value are
included in profit or loss for the period except
for the differences which are recognised in
other comprehensive income.
3.1.2 Foreign exchange forward contracts Foreign exchange forward contracts are
fair valued at each reporting date. Gain and
loss arising from changes in fair value are
recognised in the income statement under the
finance income or finance expense respectively.
3.2 Assets and Basis of their Valuation assets classified as Current assets in the
statement of Financial position are Cash, Bank
balances and those which are expected to be
realised in cash during, the normal operating
cycle of the Company’s business, or within
one year from the reporting date, whichever
is shorter. assets other than current assets
are those which the Company intends to hold
beyond a period of one year from the reporting
date.
3.2.1 Property, Plant and Equipment
3.2.1.1 Recognition and Measurement property, plant and equipment are measured
at cost less accumulated depreciation and
accumulated impairment losses, except for
Bare land on lease which is stated at revalued
amount on 31st May 1998 less subsequent
accumulated depreciation and accumulated
impairment losses.
When parts of an item of property, plant and
equipment have different useful lives, they
are accounted for as separate items (major
components) of property, plant and equipment.
3.2.1.2 Owned Assets the cost of an item of property, plant and
equipment comprises its purchase price and any directly attributable costs of bringing the asset to working condition for its intended use. the cost of self-constructed assets includes the cost of materials, direct labour, and any other costs directly attributable to bringing the asset to the working condition for its intended use.
NOtes tO the FiNaNCial stateMeNts (CONt.)For the year ended 31st December 2017
38 uDapussellaWa plaNtatiONs plC / annual report 2017
this also includes cost of dismantling and removing the items and restoring at the site on which they are located and borrowing costs on qualifying assets.
Capital Work-in-progress is transferred to the respective asset accounts at the time of first utilisation or at the time the asset is commissioned.
3.2.1.3 Leased Assets assets obtained under the finance lease,
which effectively transfer to the Company substantially, all risks and benefits incidental to the ownership of the leased assets, are treated as if they have been purchased outright and are capitalised at their cash price. assets acquired by way of a finance lease are measured at an amount equal to the lower of their fair value and the present value of minimum lease payments at the inception, less accumulated depreciation and accumulated impairment losses. the principal/capital elements payable to the lessor are shown as liability/obligation.
assets held under the finance lease are amortised over the shorter of the lease period or the useful life of equivalent owned assets, unless ownership is not transferred at the end of the leased period.
leases where the lessor effectively retains substantially all the risks and benefits of ownership over the leased term are classified as operating leases. lease payments (excluding costs for services such as insurance and maintenance) paid under operating leases are recognised as an expense in the statement of profit or loss and Other Comprehensive income on a straight-line basis over the lease term.
3.2.1.4 Subsequent Expenditure the Cost of replacing part of an item of
property, plant and equipment is recognised in
the carrying amount of the item if it is probable
that the future economic benefits embodied
within the part will flow to the Company and
its cost can be measured reliably. the carrying
amount of the replaced part is derecognised.
the cost of the day-to-day servicing of
property, plant and equipment are recognised
in the statement of profit or loss and other
comprehensive income as incurred.
3.2.1.5 Borrowing Costs Borrowing costs that are directly attributable
to acquisition, construction or production of
a qualifying asset which takes a substantial
period of time to get ready for its intended use
or sale, are capitalised as a part of the asset.
Borrowing costs that are not capitalised are
recognised as expenses in the period in which
they are incurred and charged to the statement
of profit or loss and Other Comprehensive
income.
the amounts of the borrowing costs which are
eligible for capitalisation are determined in
accordance with lKas 23 - Borrowing Costs.
3.2.1.6 Depreciation / Amortisation Depreciation is calculated over the depreciable
amount, which is the cost of an asset, or other
amount substituted for cost, less its residual
value.
Depreciation is recognised in statement of
profit or loss on a straight-line basis over the
estimated useful life of each part of an item
of property, plant and equipment, since this
most closely reflects the expected pattern of
consumption of the future economic benefits
embodied in the asset.
leased assets are depreciated over the shorter
of the lease term and their useful lives unless
it is reasonably certain that the Company will
obtain ownership by the end of the lease term.
land is not depreciated.
the estimated useful lives for the current and comparative periods are as follows:
Buildings Over 40 years Motor Vehicles Over 05 years plant and Machinery Over 13 years Furniture and Fittings Over 10 years equipment Over 08 years
NOtes tO the FiNaNCial stateMeNts (CONt.)For the year ended 31st December 2017
39uDapussellaWa plaNtatiONs plC / annual report 2017
Water, sanitation and electricity Over 20 years Computer equipment Over 05 years Farm road Over 40 years latrines Over 10 years Workers’ housing Over 40 years
Depreciation of an asset begins when it is available for use and ceases at the earlier of the date that the asset is classified as held for sale and the date that the asset is derecognised.
Depreciation method, useful lives and residual values are reviewed at each financial year end and adjusted, if appropriate.
immovable assets on Finance lease from JeDB/slspC are being amortised in equal amounts over the following periods:
Bare land Over 53 years improvements to land Over 30 years Mature plantations Over 30 years Buildings Over 25 years Machinery Over 15 years Other vested assets Over 25 years 3.2.1.7 Derecognition the carrying amount of an item of property,
plant and equipment is derecognised on disposal or when no future economic benefits are expected from its use or disposal.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised net within other income in profit or loss and the revalued assets are disposed, the amount included in reval- uation surplus reserve is transferred to retained earnings.
When revalued assets are disposed, the amounts included in the revaluation surplus reserve are transferred to retained earnings.
3.2.1.8 Impairment of Non-Financial Assets the Company assesses at each reporting
date whether there is an indication that an asset may be impaired. if any such indication
exists, or when annual impairment testing for an asset is required, the Company makes an estimate of the asset’s recoverable amount. an asset’s recoverable amount is the higher of an asset’s value in use and its fair value less cost to sell and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
in assessing value in use, the estimated future cash flows are discounted to their present value using pre-tax discount rates that reflect current market assessments of the time value of money and the risk specific to the asset. in determining fair value less cost to sell, recent market transactions are taken into account, if available. if no such transaction can be identified, an appropriate valuation model is used.
impairment loss of continuing operations is recognised in the statement of profit or loss and Other Comprehensive income in those expenses categories consistent with the function of the impaired asset.
a previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. if that is the case, carrying amount of the asset is increased to its recoverable amount. that increased amount cannot ‘exceed’ the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. such reversal is recognised in the statement of profit or loss and Other Comprehensive income.
3.2.2 Intangible Assets an intangible asset is recognised if it is
probable that economic benefits attributable to the assets will flow to the entity and cost of the assets can be measured reliably and carried at cost less accumulated amortisation and accumulated impairment losses.
NOtes tO the FiNaNCial stateMeNts (CONt.)For the year ended 31st December 2017
40 uDapussellaWa plaNtatiONs plC / annual report 2017
3.2.2.1 Software purchased software is recognised as an
intangible asset and is amortised on a straight-
line basis over its useful life.
the estimated useful life is as follows:
Asset Category Useful life enterprise resource planning system 8 years
3.2.3 Biological Assets Biological assets are classified as Bearer
Biological assets and Consumable Biological
assets. Bearer Biological assets include tea and
rubber trees, those that are not intended to be
sold or harvested, but are however used to grow
for harvesting agricultural produce from such
Biological assets. Consumable Biological assets
include managed timber trees (those that are to
be sold as Biological assets).
Biological assets are further classified into
Mature Biological assets and immature
Biological assets. Mature Biological assets
are those that have attained harvestable
specifications or are able to sustain regular
harvests. immature Biological assets are
those that have not yet attained harvestable
specifications.
3.2.3.1 Recognition and Measurement the entity recognises the Biological assets
when, and only when, the entity controls the
assets as a result of past events, it is probable
that future economic benefits associated with
the assets will flow to the entity and the fair
value or cost of the assets can be measured
reliably.
the Bearer Biological assets are measured
at cost less accumulated depreciation and
accumulated impairment losses, if any, in terms
of lKas 16 - property, plant and equipment.
the managed timber trees are measured on
initial recognition and at the end of each
reporting period at fair value less cost to sell
in terms of lKas 41. the cost is treated as
approximation to fair value of young plants
(age below 4 years) as the impact on biological
transformation of such plants to price during
this period is immaterial.
3.2.3.2 Bearer Biological Assets the costs of land preparation, rehabilitation,
new planting, replanting, crop diversification,
inter-planting, fertilising etc., incurred
between the time of planting and harvesting
(when the planted area attains maturity), are
classified as immature plantations. these
immature plantations are shown at direct
costs plus attributable overheads including
interest attributable to long-term loans used
for financing immature plantations. the
expenditure incurred on Bearer Biological
assets (tea, rubber and Coconut fields) which
come into bearing during the year is transferred
to mature plantations.
permanent impairments to Bearer Biological
assets are charged to the statement of profit
or loss and Other Comprehensive income in
full and reduce the net carrying amounts of
such assets in the year of occurrence after
ascertaining the loss.
3.2.3.3 Infilling cost on Bearer Biological Assets the land development costs incurred in the
form of infilling are capitalised when infilling
results in an increase in the economic life of the
relevant field beyond its previously assessed
standard of performance and infilling costs
so capitalised are depreciated over the newly
assessed remaining useful economic life of the
relevant mature plantation or unexpired lease
period, whichever is lower.
infilling costs that are not capitalised are
charged to the statement of profit or loss and
Other Comprehensive income in the year in
which they are incurred.
3.2.3.4 Consumable Biological Assets the fair value of timber trees is measured using
Discounted Cash Flow (DCF) method taking
into consideration the current market prices of
timber applied to expected timber content of a
tree at maturity.
NOtes tO the FiNaNCial stateMeNts (CONt.)For the year ended 31st December 2017
41uDapussellaWa plaNtatiONs plC / annual report 2017
the gain or loss arising on initial recognition
of Consumable Biological assets at fair value
less cost to sell and from a change in fair value
less cost to sell of Consumable Biological assets
are included in profit or loss for the period in
which it arises.
3.2.3.5 Produce on Bearer Biological Assets the Company recognises its agricultural
produce prior to harvest separately from its
bearer plant. such agricultural produce prior to
harvest continues to be in the scope of lKas 41
and is measured at fair value less costs to sell.
Changes in the fair value of such agricultural
produce is recognised in profit or loss at the
end of each reporting period.
When deriving the estimated quantity the
Company limits it to one harvesting cycle and
the quantity is ascertained based on the last
day of the harvest in the immediately preceding
cycle. in order to ascertain the fair value of
produce growing on trees, 50% of the estimated
crop in that harvesting cycle is considered.
For the valuation of the produce, the Company
uses the bought leaf rate (current month) less
cost of harvesting and transport.
3.2.3.6 Depreciation Mature plantations (replanting and New
planting) are depreciated on a straight-
line basis over the expected period of their
commercial harvesting or unexpired lease
period, whichever is less.
the expected periods of commercial harvesting
for each category of crops are as follows:
tea Over 33 years
rubber Over 20 years
Coconut Over 50 years
Cinnamon Over 20 years
pepper Over 20 years
No depreciation is provided for immature
plantations.
3.2.4 Financial Instruments
3.2.4.1 Financial Assets
3.2.4.1.1 Initial Recognition and Measurement Financial assets within the scope of lKas 39
are classified as financial assets at fair value
through profit or loss, loans and receivables,
held-to-maturity investments or available-
for-sale financial assets, as appropriate. the
Company determines the classification of its
financial assets at initial recognition.
the classification of financial instruments
at initial recognition is dependent on
their purpose and characteristics and the
management intention in acquiring them.
Financial instruments are initially measured at
fair value. transaction costs that are directly
attributable to the acquisition of financial assets
other than financial instruments recognised at
fair value through profit or loss are added to the
fair value of financial instruments. transaction
NOtes tO the FiNaNCial stateMeNts (CONt.)For the year ended 31st December 2017
the main variables in the DCF model are:
Variable Comment
timber content estimated based on physical verification of girth and height and considering the growth of each species, factoring all the prevailing statutory regulations enforced against harvesting of timber coupled with the Forestry plan of the Company.
economic useful life estimated based on the normal life span of each species by factoring in the forestry plan of the Company.
selling price three year annual rolling average selling prices of managed timber fields of the respective region/group of the Company.
Discount rate Discount rate reflects the possible variations in the Cash flows and the risk related to the biological assets.
Currency rs.
42 uDapussellaWa plaNtatiONs plC / annual report 2017
costs that are insignificant are expensed
immediately to the income statement.
3.2.4.1.2 Subsequent Measurement the subsequent measurement of financial
assets depends on their classification as
follows:
Financial assets at fair value through profit or loss
a financial asset at fair value through profit or
loss includes financial assets held for trading
and financial assets designated upon initial
recognition at fair value through profit or loss.
Financial assets are classified as held for trading
if they are acquired for the purpose of selling
or repurchasing in the near term. Derivatives,
including separated embedded derivatives, are
also classified as held for trading unless they are
designated as effective hedging instruments.
Financial assets at fair value through profit and
loss are carried in the statement of Financial
position at fair value with changes in fair value
recognised in finance income or finance costs
in the statement of profit or loss and Other
Comprehensive income.
the Company has not classified any financial
asset designated as financial asset at fair value
through profit or loss as of the reporting date
and during the reporting period.
Loans and receivables loans and receivables are non-derivative
financial assets with fixed or determinable
payments that are not quoted in an active
market. after initial measurement, such
financial assets are subsequently measured
at amortised cost using the effective interest
rate method (eir), less impairment. amortised
cost is calculated by taking into account any
discount or premium on acquisition and fees
or costs that are an integral part of the eir. the
eir amortisation is included in finance income
in the statement of profit or loss and Other
Comprehensive income. the losses arising
from impairment are recognised in finance
costs in the statement of profit or loss and
Other Comprehensive income.
loans and receivables held by the Company
comprise trade receivables, amounts due from
related parties, deposits, advances and other
receivables and cash and cash equivalents.
Held-to-maturity investments Non-derivative financial assets with fixed or
determinable payments and fixed maturities
are classified as held-to-maturity when the
Company has the positive intention and
ability to hold them to maturity. after initial
measurement, held-to-maturity investments
are measured at amortised cost using the eir
method, less impairment. amortised cost is
calculated by taking into account any discount
or premium on acquisition and fees or costs
that are an integral part of the eir. the eir
amortisation is included in finance income
in the statement of profit or loss and Other
Comprehensive income. the losses arising
from impairment are recognised in finance
costs in the statement of profit or loss and
Other Comprehensive income.
the Company has not classified any financial
assets as held to maturity for the reporting
date or during the reporting period.
Available-for-sale financial investments available-for-sale financial investments include
equity and debt securities. equity investments
classified as available-for-sale are those which
are neither classified as held for trading nor
designated at fair value through profit or loss.
Debt securities in this category are those which
are intended to be held for an indefinite period
of time and which may be sold in response to
needs for liquidity or in response to changes in
the market conditions.
after initial measurement, available-for-
sale financial investments are subsequently
measured at fair value with unrealized gains
or losses recognised as other comprehensive
income in the available-for-sale reserve until
the investment is derecognised, at which time
the cumulative gain or loss is recognised in
other operating income, or determined to be
impaired, at which time the cumulative loss is
reclassified to the finance costs in the statement
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43uDapussellaWa plaNtatiONs plC / annual report 2017
of profit or loss and Other Comprehensive
income and removed from the available-for-sale
reserve. interest income on available-for-sale
debt securities is calculated using the eir and
is recognised in profit or loss.
3.2.4.1.3 Derecognition a financial asset (or, where applicable a part of
a financial asset or part of a group of similar
financial assets) is derecognised when:
- the rights to receive cash flows from the
asset has expired.
- the Company has transferred its rights to
receive cash flows from the asset or has
assumed an obligation to pay the received
cash flows in full without material delay
to a third party under a ‘pass through’
arrangement; and either (a) the Company
has transferred substantially all the risks
and rewards of the asset, or (b) the Company
has neither transferred nor retained
substantially all the risks and rewards of
the asset, but has transferred control of the
asset.
3.2.4.1.4 Impairment of Financial Assets a financial asset not carried at fair value
through profit or loss is assessed at each
reporting date to determine whether there is
objective evidence that is impaired. a financial
asset is impaired if there it is objective evidence
as a result of one or more events that have
occurred after the initial recognition of the
financial asset (an incurred ‘loss event’) and the
estimated future cash flows of the investment
have been affected.
Loans & Receivables the objective evidence of impairment could
include significant financial difficulty of the
issuer or counterparty, breach of contract such
as default in interest or principal payments,
or it becomes probable that the borrower will
enter bankruptcy or financial reorganisation.
the Company considers impairment of trade
receivables at both a specific significant
individual debtor level and collectively. any
Company which has any individually significant
debtors assesses them for specific impairment.
all individually insignificant debtors that are
not specifically impaired are then collectively
assessed for any impairment that has been
incurred but not yet identified by grouping
together based on similar risk characteristics. in
assessing collective impairment, the Company
uses historical trends of the probability of
default, the timing of recoveries and the
amount of loss incurred and adjusted for the
management’s judgement. the carrying amount
of the trade receivables is reduced through the
use of the bad debt provision account and the
amount of the loss is recognised in the income
statement. if there is no realistic prospect of
future recovery of a debt, the amount is written
off.
an impairment loss in respect of other financial
assets measured at amortised cost is calculated
as the difference between its carrying amount
and the present value of the estimated future
cash flows discounted at the current market
rate of return for a similar financial asset.
When a subsequent event causes the amount
of impairment loss to decrease, the decrease in
impairment loss is reversed through the income
statement to the extent that the carrying
amount of the financial asset at the date the
impairment is reversed, does not exceed what
the amortised cost would have been had the
impairment not been recognised.
Available-for-sale For equity instruments classified as available-
for-sale financial assets, a significant or
prolonged decline in the fair value of the
investment below its cost is considered to be
objective evidence of impairment. impairment
losses of an available-for-sale security
investment are recognised by transferring the
cumulative loss that has been recognised in
other comprehensive income to the income
statement as a reclassification adjustment. the
cumulative loss that is reclassified from other
comprehensive income to the income statement
is the difference between the acquisition
cost, net of any principal repayment and
amortisation, and the current fair value, less
NOtes tO the FiNaNCial stateMeNts (CONt.)For the year ended 31st December 2017
44 uDapussellaWa plaNtatiONs plC / annual report 2017
any impairment loss previously recognised in
the income statement. Changes in impairment
provisions attributable to time value are
reflected as a component of interest income.
if, in a subsequent period, the fair value of
an impaired available-for-sale debt security
increases and the increase can be objectively
related to an event occurring after the
impairment loss was recognised in the income
statement, the impairment loss is reversed,
with the amount of the reversal recognised in
the income statement. however, any subsequent
recovery in the fair value of an impaired
available-for-sale equity security is recognised
in Other Comprehensive income
3.2.4.2 Financial Liabilities
3.2.4.2.1 Initial Recognition and Measurement Financial liabilities within the scope of lKas
39 are classified as financial liabilities at fair
value through profit or loss or other financial
liabilities, as appropriate. the Company
determines the classification of its financial
liabilities at initial recognition.
all financial liabilities are recognised initially
at fair value plus other financial liabilities, and
transaction costs that are directly attributable
to the acquisition or issue of such financial
liability.
the Company’s financial liabilities include
trade and other payables, bank overdrafts,
loans and borrowings.
3.2.4.2.2 Subsequent Measurement Financial liabilities at fair value through profit
or loss
Financial liabilities at fair value through profit
or loss include financial liabilities held for
trading and financial liabilities designated
upon initial recognition as at fair value through
profit or loss. Financial liabilities are classified
as held for trading if they are acquired for
the purpose of selling in the near term. Gains
or losses on liabilities held for trading are
recognised in the statement of profit or loss and Other Comprehensive income.
the Company has not designated any financial liabilities upon initial recognition as at fair value through profit or loss.
Other Financial Liabilities after initial recognition, other financial
liabilities and borrowings are subsequently measured at amortised cost using the eir method. Gains and losses are recognised in the statement of profit or loss and Other Comprehensive income when the liabilities are derecognised as well as through the eir method amortisation process.
amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the eir. the eir amortisation is included in finance costs in the statement of profit or loss and Other Comprehensive income.
3.2.4.2.3 Derecognition a financial liability is derecognised when the
obligation under the liability is discharged or cancelled or expired.
3.2.4.3 Offsetting of Financial Instruments Financial assets and financial liabilities are
offset and the net amount reported in the Consolidated statement of Financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.
3.2.5 Inventories
3.2.5.1 Agricultural Produce harvested from Biological Assets
agricultural produce harvested from Biological assets is measured at its fair value less cost to sell at the point of harvest. the finished and semi-finished inventories from agricultural produce are valued by adding the cost of conversion to the fair value of agricultural produce.
NOtes tO the FiNaNCial stateMeNts (CONt.)For the year ended 31st December 2017
45uDapussellaWa plaNtatiONs plC / annual report 2017
NOtes tO the FiNaNCial stateMeNts (CONt.)For the year ended 31st December 2017
3.2.5.2 Agricultural Produce after further processing Further processed output of agricultural
produce is valued at the lower of cost and estimated net realisable value, after making due allowances for obsolete and slow-moving items. Net realisable value is the estimated selling price at which stocks can be sold in the ordinary course of business less the estimated cost of completion and estimated cost necessary to make the sale.
3.2.5.3 Input Material, Consumables and Spares Valued at actual cost on weighted average basis
3.2.5.4 Growing Crop Nurseries Nursery cost includes the cost of direct
materials, direct labour and an appropriate proportion of directly attributable overheads, less provision for overgrown plants.
3.3.6 Trade and Other Receivables trade receivables are stated at the amounts
they are estimated to realise inclusive of provisions for bad and doubtful debts. Other receivables and dues from related parties are recognised at cost less provision for bad and doubtful receivables.
3.2.7 Cash & Cash Equivalents Cash and cash equivalents comprise cash
balances, call deposits, demand deposits and short-term highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of changes in value net of bank overdrafts that are repayable on demand for the purpose of the statement of Cash Flows.
3.3 Liabilities and Provisions liabilities classified as current liabilities on the
statement of Financial position are those which fall due for payment on demand or within one year from statement of Financial position date. Non-current liabilities are those balances that fall due for payment after one year from statement of Financial position date. all known liabilities have been accounted for in preparing
these Financial statements.
a provision is recognised if, as a result of a
past event, the Company has a present legal or
constructive obligation that can be estimated
reliably, and it is probable that an outflow of
economic benefit will be required to settle the
obligation.
3.3.1 Employee Benefits a) Defined Contribution Plans - Employees’
Provident Fund and Employees’ Trust Fund a Defined Contribution plan is a post-
employment benefit plan under which an entity
pays fixed contributions into a separate entity
and will have no legal or constructive obligation
to pay further amounts. Obligations for
contributions to Defined Contribution pension
plans are recognised as an employee benefit
expense in profit or loss in the periods during
which services are rendered by employees.
the Company contributes 12% of gross
emoluments of the employees to the employees’
provident Fund, (epF)/estate staff provident
society (esps).
all of the employees are eligible for the
employees’ trust Fund to which the Company
contributes 3% of gross emoluments of such
employees.
b) Defined Benefit Plans - Gratuity a Defined Benefit plan is a post-employment
benefit plan other than a Defined Contribution
plan. the Company’s net obligation in respect
of Defined Benefit pension plans is calculated
annually using the projected unit Credit
(puC) Method. the liability recognised in the
statement of Financial position is the present
value of the Defined Benefit Obligation at the
reporting date in accordance with the advice of
an actuary. actuarial gains or losses arising are
recognised as Other Comprehensive income in
the period in which they arise. past service costs
are recognised immediately in the statement
of profit or loss and Other Comprehensive
income.
the provision has been made for retirement
gratuities from the first year of service for
all employees, in conformity with lKas 19 -
employee Benefits. however, under the payment
of Gratuity act No. 12 of 1983, the liability to an
46 uDapussellaWa plaNtatiONs plC / annual report 2017
employee arises only on completion of 5 years
of continued service.
the key assumptions used in determining the
retirement Benefit Obligations are given in note
24.
3.3.2 Capital Commitments and Contingencies Contingencies are possible assets or obligations
that arise from a past event and would be
confirmed only on the occurrence or non-
occurrence of uncertain future events, which
are beyond the Company’s control.
all material Capital Commitments and
Contingent liabilities are disclosed in notes 29
and 31.
3.3.3 Deferred Income
3.3.3.1 Government Grants and Subsidies Government grants are recognised where there
is a reasonable assurance that the grant will
be received and all attached conditions will
be complied with. Where the grant relates to
an asset, it is recognised as deferred income
and released to income in equal amounts over
the expected useful life of the related assets.
When the grants relate to an expense item, it is
recognized as income over the period necessary
to match the grant on a systematic basis to the
costs that are intended to compensate.
Grants related to property, plant and equipment
other than grants received for forestry are
initially deferred and allocated to income on
a systematic basis over the useful life of the
related property, plant and equipment. Grants
received for forestry are initially deferred and
credited to statement of profit or loss and
Other Comprehensive income at once when the
related blocks of trees are harvested.
3.3.4 Trade and Other Payables trade and other payables are obligations to pay
for goods or services that have been acquired
in ordinary course of business from suppliers.
trade and other payables are stated at cost.
3.4 Statement of Profit or Loss and Other Comprehensive Income
For the purpose of presentation of the statement
of profit or loss and Other Comprehensive
income the Directors are of the opinion that
function of expenses method presents fairly
the elements of the Company’s performance,
and hence such presentation method is
adopted in line with the provisions of lKas 1
in presentation of Financial statements.
3.4.1 Revenue Recognition revenue is recognised to the extent that it is
probable that the economic benefits will flow
to the Company and the revenue and the
associated costs incurred or to be incurred can
be reliably measured. revenue is measured at
the fair value of the consideration received or
receivable, net of trade discounts and sales
taxes. the following specific criteria are used
for the purpose of recognition of revenue.
3.4.1.1 Sale of Goods revenue from the sale of goods in the course
of ordinary activities is measured at invoice
value net of brokerage, sale expenses and other
levies related to revenue. revenue from sale of
goods is recognised when persuasive evidence
exists, usually in the form of an executed
sales agreement, that the significant risks and
rewards of ownership have been transferred
to the buyer, recovery of the consideration is
probable, the associated costs and possible
return of goods can be estimated reliably, there
is no continuing management involvement
with the goods, and the amount of revenue
can be measured reliably. if it is probable that
discounts will be granted and the amount can
be measured reliably, then the discount is
recognised as a reduction of revenue as the
sales are recognised.
3.4.1.2 Interest Income interest income is recognised as the interest
accrued (taking into account the effective yield
on the asset) unless collectability is in doubt.
3.4.1.3 Rental income rental income arising from operating leases is
recognised on an accrual basis.
NOtes tO the FiNaNCial stateMeNts (CONt.)For the year ended 31st December 2017
47uDapussellaWa plaNtatiONs plC / annual report 2017
3.4.1.4 Gain and Losses on Disposal Gains and losses on disposal of an item of
property, plant and equipment are determined by comparing the net sales proceeds with the carrying amounts of property, plant and equipment and are recognised within other operating income in the statement of profit or loss.
3.4.2 Expenditure Recognition
3.4.2.1 Operating Expenses all expenses incurred in the day-to-day
operations of the business and in maintaining the property, plant and equipment in a state of efficiency has been charged to the statement of profit or loss and Other Comprehensive income in arriving at the profit/(loss) for the year. provision has also been made for impairment of non-financial assets, slow-moving stocks, overgrown nurseries, all known liabilities and depreciation on property, plant and equipment.
3.4.2.2 Finance Cost Finance costs comprise interest expense
on external borrowings and related party loans and payments made under operating leases. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method. payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. lease incentives received may be recognised as an integral part of the total lease expense, over the term of the lease.
3.4.2.3 Income Tax Expense income tax expense comprising current and
deferred tax. income tax expense is recognised in statement of profit or loss and Other Comprehensive income except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
3.4.2.3.1 Current Taxes Current tax expenses for the current and
comparative periods are measured at the amount paid or expected to be payable to the Commissioner General of inland revenue
on taxable income for the respective year of assessment computed in accordance with the provisions of the inland revenue act. No. 10 of 2006 as amended by subsequent legislation enacted or substantively enacted by the reporting date.
3.4.2.3.2 Deferred Taxation Deferred taxation is recognised using the
Balance sheet liability method, in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognised for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. in addition, deferred tax is not recognised for taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.
a deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Deferred tax assets and deferred tax liabilities are offset, if legally enforceable right exists to set off current tax assets against current tax liabilities and when the deferred taxes relate to
the same taxable entity and the same taxation
authority.
NOtes tO the FiNaNCial stateMeNts (CONt.)For the year ended 31st December 2017
48 uDapussellaWa plaNtatiONs plC / annual report 2017
3.5 Statement of Cash Flows the statement of Cash Flows has been prepared
using the ‘indirect Method’. interest paid is
classified as operating cash flows, interest
received and dividends received are classified
as investing cash flows, while dividend paid
and Government grants received are classified
as financing cash flows for the purpose of
presentation of the statement of Cash Flows.
3.6 Segment Reporting segmental information is provided for the
different business segments of the Company.
Business segmentation has been determined
based on the nature of goods provided by
the Company after considering the risk and
rewards of each type of product.
revenue and expenditure directly attributable
to each segment are allocated to the respective
segments. revenue and expenditure not directly
attributable to a segment are allocated on the
basis of their resource utilisation, wherever
possible. unallocated items comprise mainly
income accrued and expenses incurred at head
office level.
assets and liabilities directly attributable to
each segment are allocated to the respective
segments. assets and liabilities which are not
directly attributable to a segment are allocated
on a reasonable basis wherever possible.
the activities of the segments are described
on page 69 in the notes to the Financial
statements.
3.7 Related Party Transactions Disclosure has been made in respect of the
transactions in which one party has the ability
to control or exercise significant influence over
the financial and operating policies/decisions
of the other, irrespective of whether or not a
price is being charged.
a detailed related party transaction analysis is
presented in note 28.
3.8 Earnings per share the Company presents Basic earnings per
share (eps) data for its ordinary shares. Basic
eps is calculated by dividing the profit or loss
attributable to ordinary shareholders of the
Company by the weighted average number of
ordinary shares outstanding during the period,
adjusted for own shares held.
3.9 Events Occurring After the Balance Sheet Date
events after the reporting period are those
events favourable and unfavorable occuring
between the end of the reporting period and
the date when the Financial statements are
authorised for issue. the materiality of the
events occurring after the reporting period
is considered and appropriate adjustments
or disclosures are made in the Financial
statements, where necessary.
3.10 Determination of fair values a number of the Company’s accounting policies
and disclosures require the determination of
fair values, for both financial and non-financial
assets and liabilities.
Fair value is the price that would be received
to sell an asset or paid to transfer a liability
in an orderly transaction between market
participants at the measurement date.
When measuring fair value of an asset or
liability, the Company uses observable
market data as far as possible. Fair values are
categorised into different levels in a fair value
hierarchy based on the inputs used in the
valuation techniques.
level 1 inputs are unadjusted quoted prices in active
markets for identical assets or liabilities.
level 2 inputs are inputs other than quoted prices
included within level 1 that are observable
for the asset or liability either directly (i.e. as
prices) or indirectly (i.e. derived from prices).
level 3 inputs are inputs that are not based on
observable market data (unobservable inputs).
if inputs used to measure the fair value of an
asset or liability fall into different levels of
the fair value hierarchy, then the fair value
measurement is categorised in its entirety in
the same level of the fair value hierarchy as
NOtes tO the FiNaNCial stateMeNts (CONt.)For the year ended 31st December 2017
49uDapussellaWa plaNtatiONs plC / annual report 2017
the lowest level input that is significant to the
entire measurement.
Fair values have been determined for
measurement and disclosure purposes based
on the following methods. Where applicable,
further information about the assumptions
made in determining fair value is disclosed in
the notes specific to that asset or liability.
Fair value of non-financial assets the fair value used by the Company in the
measurement of non-financial assets is based
on the presumption that the transaction to sell
the asset or transfer the liability takes place
either in the principal market for the asset
or liability, or, in the absence of a principal
market, in the most advantageous market that
is accessible by the Company for the asset or
liability.
the fair value of an asset or a liability is
measured using the assumptions that market
participants would act in their economic best
interest when pricing the asset or liability.
a fair value measurement of a non-financial
asset takes into account a market participant’s
ability to generate economic benefits by using
the asset in its highest and best use or by selling
it to another market participant that would use
the asset in its highest and best use.
the Company uses valuation techniques that
are appropriate in the circumstances and for
which sufficient data are available to measure
fair value, maximising the use of relevant
observable inputs and minimising the use of
unobservable inputs.
3.11 Standards issued but not yet effective
SLFRS 9 - Financial Instruments slFrs 9 brings together all three aspects of the
accounting for the financial instruments, i.e.
classification and measurement, impairment,
and hedge accounting. slFrs 9 is effective for
annual periods beginning on or after 1st January
2018, with early application being permitted.
except for hedge accounting, retrospective
application is required, but providing
comparative information is not compulsory.
For hedge accounting the requirements are
generally applied prospectively, with some
limited exceptions.
the Directors of the Company anticipate that
the application of slFrs 9 in the future may have
no major impact on the amounts reported and
disclosures made in these Financial statements.
this assessment is based on currently available
information and may be subject to changes
arising from further analysis.
the Company plans to adopt the new standard
on the required effective date.
SLFRS 15 - Revenue from Contracts with Customers
slFrs 15 establishes a single comprehensive
model for entities to use in accounting for
revenue arising from contracts with customers.
the standard will supersede the current
revenue recognition guidance including
lKas 18 revenue and lKas 11 Construction
Contracts and the related interpretations when
it becomes effective.
the core principle of slFrs 15 is that an entity
should recognise revenue to depict the transfer
of promised goods or services to customers
in an amount that reflects the consideration
to which the entity expects to be entitled
in exchange for those goods or services.
specifically, the standard introduces a 5-step
approach to revenue recognition.
• step 1: identify the contract(s) with a
customer.
• step 2: identify the performance
obligations in the contract.
• step 3: Determine the transaction price.
• step 4: allocate the transaction price to the
performance obligations in the contract.
• step 5: recognise revenue when (or as) the
entity satisfies a performance obligation.
under slFrs 15, an entity recognises revenue
when (or as) a performance obligation is
satisfied, i.e. when ‘control’ of the goods or
NOtes tO the FiNaNCial stateMeNts (CONt.)For the year ended 31st December 2017
50 uDapussellaWa plaNtatiONs plC / annual report 2017
NOtes tO the FiNaNCial stateMeNts (CONt.)For the year ended 31st December 2017
services underlying the particular performance
obligation is transferred to the customer. Far
more prescriptive guidance has been added
in slFrs 15 to deal with specific scenarios.
Furthermore, extensive disclosures are
required by slFrs 15.
the Directors of the Company anticipate
that the application of slFrs 15 in the future
may not have a major impact on the amounts
reported and disclosures made in these
Financial statements. this assessment is based
on currently available information and may
be subject to changes arising from further
analysis.
SLFRS 16 – Leases slFrs 16 replaces lKas 17 leases and related
interpretations (iFriC 4 Determining whether an
arrangement contains a lease, siC-15 Operating
leases-incentives and siC-27 evaluating the
substance of transactions involving the legal
Form of a lease).
slFrs 16 sets out the principles for the
recognition, measurement, presentation and
disclosure of leases and requires lessees to
account for all leases under a single on-balance
sheet model similar to the accounting for
finance leases under lKas 17. the standard
includes two recognition exemptions for
lessees – leases of ’low-value’ assets (e.g.
personal computers) and short-term leases
(i.e. leases with a lease term of 12 months or
less). at the commencement date of a lease, a
lessee will recognize a liability to make lease
payments (i.e. the lease liability) and an asset
representing the right to use the underlying
asset during the lease term (i.e. the right-of-use
asset). lessees will be required to separately
recognise the interest expense on the lease
liability and the depreciation expense on the
right-of-use asset.
lessees will be also required to remeasure the
lease liability upon the occurrence of certain
events (e.g. a change in the lease term, or a
change in future lease payments resulting from
a change in an index or rate used to determine
those payments). the lessee will generally
recognise the amount of the remeasurement of
the lease liability as an adjustment to the right-
of-use asset.
lessor accounting under slFrs 16 is
substantially unchanged from the current
requirements under lKas 17. lessors will
continue to classify all leases using the same
classification principle as in lKas 17 and
distinguish between two types of leases:
operating and finance leases.
slFrs 16 also requires lessees and lessors to
make more extensive disclosures than under
lKas 17.
slFrs 16 is effective for annual periods
beginning on or after 1st January 2019. a lessee
can choose to apply the standard using either
a full retrospective or a modified retrospective
approach. the standard’s transition provisions
permit certain reliefs.
in 2018, the Company plans to assess the
potential effect of slFrs 16 on its consolidated
financial statements.
51uDapussellaWa plaNtatiONs plC / annual report 2017
2017 2016
Rs. Rs.
4. REVENUE
Sale of Produce tea 2,161,613,911 1,574,349,568 Coconut/rubber 47,495,771 26,482,364 Others (note 4.1) 17,652,673 19,263,319 2,226,762,355 1,620,095,251
4.1. revenue classified as ‘Others’ above, mainly comprises revenue generated from timber sales, Firewood sales, intercrop sales and sales of Nursery and timber plants during the year.
2017 2016 Rs. Rs. 5. OTHER INCOME amortisation of Capital Grants 4,163,239 4,163,239 Gain on sale of property, plant & equipment 679,250 435,000 rent income 22,236,725 23,118,425 Others 392,661 283,190 27,471,875 27,999,854
2017 2016 6. NET FINANCE COST Rs. Rs. Finance Income interest income (80,193) (34,797) Finance Cost Overdraft interest 18,557,856 22,862,379 interest on related party loans 8,780,166 9,409,133 interest on term loans 16,159,733 12,777,216 exchange (Gain)/loss 3,606,283 (3,302,478) Net Finance Cost 47,023,845 41,711,453
7. PROFIT/(LOSS) BEFORE TAX 2017 2016 is stated after charging all expenses including the following: Rs. Rs. statutory audit Fees 2,555,454 2,555,454 Depreciation and amortisation right to use of land 10,784,503 10,784,503 immovable estate assets on Finance lease 5,142,220 6,201,967 tangible assets 39,060,605 37,072,316 intangible assets 2,338,532 2,232,626 Bearer Biological assets 15,564,285 15,143,577 total Depreciation and amortisation 72,890,145 71,434,989 provision for impairment of property, plant and equipment 3,092,334 - provision for doubtful debts 1,010,000 4,108,798 provision for slow-moving and obsolete stocks 1,203,000 (1,237,050) provision for retiring Gratuity - staff 11,685,350 11,028,294 - Workers 85,390,921 91,178,202 Defined Contribution plans - provident Funds & etF 107,809,550 91,938,817 Wages & salaries 771,452,470 686,017,687
Corporate Donation 8,600 9,281
NOtes tO the FiNaNCial stateMeNts (CONt.)For the year ended 31st December 2017
52 uDapussellaWa plaNtatiONs plC / annual report 2017
8. INCOME TAX EXPENSE 2017 2016
Rs. Rs.
Current tax expense (note 8.2) 12,942,887 5,473,606
Deferred taxation (note 8.3) 6,483,037 (33,818,100)
19,425,924 (28,344,494)
8.1 Current Tax Expense
in terms of section 16 (1) of the inland revenue act No. 10 of 2006, “specified profits” from cultivation is exempted from
income tax for a period of 5 years commencing from the year of assessment 2006/07. accordingly, the tax exemption period
of the Company has expired in the year of assessment 2010/11. after the exempt period, the Company became liable for
income tax at the rate of 10% on its agricultural profits and 28% on manufacturing profits and other income earned during
the year of assessment.
8.2 Reconciliation Between Accounting Profit 2017 2016
and Taxable Profit Rs. Rs.
accounting profit/(loss) Before tax 287,247,131 (210,144,908)
Fair value gain/(loss) (120,405,262) 36,638,569
aggregate allowable items (176,214,137) (189,068,709)
aggregate disallowable items 149,118,057 185,530,719
adjusted profit/(loss) 139,745,789 (177,044,329)
profit From agriculture taxable at 10% - -
profit/(loss) from Manufacturing 139,745,789 (177,044,329)
Other sources of income 22,709,580 30,074,760
total statutory income 162,455,369 30,074,760
tax losses claimed during the year (56,859,379) (10,526,166)
taxable income 105,595,990 19,548,594
income tax @ 28% 3,707,336 5,473,606
income tax @ 10% 9,235,551 -
tax expense charged in the statement of profit or loss 12,942,887 5,473,606
2017 2016
8.2.1 Tax Losses Rs. Rs.
tax loss Brought Forward 1,028,345,843 861,813,801
adjustment to tax loss brought forward - 13,879
loss incured during the year 9,559,340 177,044,329
tax loss claimed (56,859,379) (10,526,166)
Tax Loss carried forwared 981,045,804 1,028,345,843
8.3 Deferred Tax Asset
Deferred tax is provided using the liability method, providing for temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
2017 2016
Rs. Rs.
at the beginning of the year 57,022,845 36,224,331
Charge/(reversal) recognised in profit or loss (6,483,037) 33,818,100
Charge/(reversal) recognised in Other Comprehensive income (21,575,359) (13,019,586)
at the end of the year 28,964,438 57,022,845
NOtes tO the FiNaNCial stateMeNts (CONt.)For the year ended 31st December 2017
53uDapussellaWa plaNtatiONs plC / annual report 2017
NOtes tO the FiNaNCial stateMeNts (CONt.)
8.3 Deferred Tax Asset (Contd.)
Deferred tax asset as at the year end is made up as follows:
2017.12.31 2016.12.31
Temporary Tax effect on Temporary Tax effect on
difference temporary difference temporary
difference difference
Rs Rs Rs Rs
Biological assets (662,911,219) (185,615,141) (535,728,387) (84,706,065)
property, plant and equipment (762,417,238) (213,476,827) (749,503,306) (118,506,835)
retirement Benefit Obligations 624,781,927 174,938,940 699,873,243 110,659,636
Carried Forward tax losses 981,045,804 274,692,825 1,028,345,843 162,595,695
180,499,274 50,539,797 442,987,393 70,042,431
On remeasurement of retirement Benefit Obligation (77,054,855) (21,575,359) (82,343,123) (13,019,586) 103,444,419 28,964,438 360,644,270 57,022,845
Deferred tax is provided using the liability method, providing for temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax asset has been computed taking into consideration the effective tax rate, which is 28% (2016: 15.81%) for the Company.
9. EARNINGS PER SHARE
Basic Earnings per Share earnings per share is computed based on the profit attributable to ordinary shareholders divided by the weighted average
number of ordinary shares outstanding during the year as follows: 2017 2016 profit/(loss) attributable to the Ordinary shareholders of the Company (rs.) 267,821,207 (181,800,414) Weighted average number of ordinary shares outstanding during the year 19,398,851 19,398,851 earnings/(loss) per share (rs.) 13.81 (9.37)
For the year ended 31st December 2017
54 uDapussellaWa plaNtatiONs plC / annual report 2017
NOtes tO the FiNaNCial stateMeNts (CONt.)as at 31st December 2017
10.
RIG
HT
TO
USE
OF
LAN
D
leas
es h
ave
been
exe
cute
d fo
r a
peri
od o
f 53
yea
rs. a
ll of
the
se le
ases
are
ret
roac
tive
to
22nd
Jun
e 19
92, t
he d
ate
of f
orm
atio
n of
the
Com
pany
. the
leas
ehol
d ri
ght
to
the
land
on
all o
f th
ese
esta
tes
has
been
tak
en in
to t
he b
ooks
of
the
Com
pany
on
22nd
Jun
e 19
92, i
mm
edia
tely
aft
er f
orm
atio
n of
the
Com
pany
, in
term
s of
the
rul
ing
obta
ined
fro
m t
he u
rgen
t is
sues
tas
k Fo
rce
(uit
F) o
f th
e in
stit
ute
of C
hart
ered
acc
ount
ants
of
sri l
anka
. sub
sequ
entl
y, o
n 31
st M
ay 1
998
the
Boar
d of
Dir
ecto
rs d
ecid
ed
to r
eval
ue t
he b
are
land
at
a va
lue
esta
blis
hed
by i
ndep
ende
nt V
alua
tion
spe
cial
ists
, Mes
srs
p. B
. Kal
ugal
aged
ara
and
s. N
. Wije
pala
, Cha
rter
ed V
alue
rs. t
he v
alua
tion
re
port
ref
erre
d to
abo
ve h
as n
ot b
een
subj
ecte
d to
a la
nd s
urve
y ca
rrie
d ou
t in
the
rec
ent
past
.
Adj
ustm
ent
A
ccum
ulat
ed
A
ccum
ulat
ed
Reva
luat
ion
due
to
Bala
nce
Am
ortis
atio
n A
mor
tisat
ion
Am
ortis
atio
n
A
s at
su
b le
ase
As
at
As
at
Dur
ing
the
As
at
W.D
.V
W.D
.V
31.0
5.98
20
05
31.1
2.17
01
.01.
17
year
31
.12.
17
31.1
2.17
31
.12.
16
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Le
aseh
old
righ
t to
bare
land
of
JE
DB/
SLSP
C es
tate
s
54
7,05
4,50
0
(39,
490,
006)
5
07,5
64,4
94
200
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t h
e ca
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ng a
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nt o
f lea
se-h
old
righ
t to
bare
land
of J
eDB/
slsp
C es
tate
s th
at w
ould
hav
e be
en in
clud
ed in
the
Fina
ncia
l sta
tem
ents
had
the
asse
ts b
een
carr
ied
at in
itial
val
uatio
n le
ss d
epre
ciat
ion
is a
s fo
llow
s:
Acc
umul
ated
Acc
umul
ated
Re
valu
atio
n A
mor
tisat
ion
Am
ortis
atio
n A
mor
tisat
ion
W.D
.V
W.D
.V
As
at
As
at
for
the
A
s at
A
s at
A
s at
22
.06.
92
01.0
1.17
Ye
ar
31.1
2.17
31
.12.
17
31.1
2.16
Rs
. Rs
. Rs
. Rs
. Rs
. Rs
.
Leas
e-ho
ld r
ight
to b
are
land
of
JE
DB/
SLSP
C es
tate
s
19
2,28
6,25
2
88,
887,
030
3
,628
,042
9
2,51
5,07
2
99,
771,
180
1
03,3
99,2
22
55uDapussellaWa plaNtatiONs plC / annual report 2017
NOtes tO the FiNaNCial stateMeNts (CONt.)
11. IMMOVABLE ESTATE ASSETS ON FINANCE LEASE in terms of the ruling of the uitF of the institute of Chartered accountants of sri lanka all immovable assets in these
estates under finance leases have been taken into the books of the Company retroactive to 22nd June 1992. For this purpose the Board decided at its meeting on 8th March 1995 that these assets would be taken at their book values as they appear in the books of the JeDB/slspC, on the day immediately preceding the date of formation of the Company. these assets are taken into the 22nd June 1992 statement of Financial position and depreciated as follows:
Improvement Other to Vested Mature Plant & Land Assets Plantations Buildings Machinery Total Rs. Rs. Rs. Rs. Rs. Rs.
Revaluation as at 22nd June 1992 5,364,193 154,829 126,710,854 46,165,014 14,829,250 193,224,140 Balance as at 31st December 2017 5,364,193 154,829 126,710,854 46,165,014 14,829,250 193,224,140 Amortisation
Balance as at 1st January 2017 4,510,725 154,829 87,617,838 45,342,243 14,829,250 152,454,885 Charge for the year 235,281 - 4,121,379 785,560 - 5,142,220 Balance as at 31st December 2017 4,746,006 154,829 91,739,217 46,127,803 14,829,250 157,597,105 Written-Down Value
as at 31st December 2017 618,187 - 34,971,637 37,211 - 35,627,035
as at 31st December 2016 853,468 - 39,093,016 822,771 - 40,769,255
investment in plantation assets which were immature at the time of handing over to the Company by way of estate leases are shown under immature plantation (revalued as at 22nd June 1992). Furthermore, investment in such immature plantations to bring them to maturity are shown under note 14.
as at 31st December 2017
56 uDapussellaWa plaNtatiONs plC / annual report 2017
NOtes tO the FiNaNCial stateMeNts (CONt.)
12. TANGIBLE ASSETS (Other than Biological Assets) Freehold Assets Buildings Motor Plant and Furniture & Equipment Computer Vehicles Machinery Fittings Hardware Rs. Rs. Rs. Rs. Rs. Rs.
Cost
as at 1st January 2017 225,460,779 84,603,153 398,951,219 6,676,354 47,069,560 26,117,696
additions 1,665,373 196,000 2,828,301 412,241 750,331 2,184,147
transfers (1,204,227) - 4,830,872 - (193,500) -
Disposals/Write-off (1,850,462) (66,352) - - (71,501) -
As at 31st December 2017 224,071,463 84,732,801 406,610,392 7,088,595 47,554,890 28,301,843
Depreciation and Impairment Loss
as at 1st January 2017 51,450,755 81,146,869 218,780,981 5,893,757 43,562,431 21,186,599
Depreciation charge for the year 3,954,137 1,087,903 24,560,326 194,597 719,346 2,638,401
transfers - - - - - -
Disposals/Write-off (1,850,462) - - - - -
impairment provision - - - - - -
As at 31st December 2017 53,554,430 82,234,772 243,341,307 6,088,354 44,281,777 23,825,000
Written-Down Value
As at 31st December 2017 170,517,033 2,498,029 163,269,085 1,000,241 3,273,113 4,476,843
as at 31st December 2016 174,010,024 3,456,284 180,170,238 782,597 3,507,129 4,931,097
property, plant and equipment with a cost of rs. 288,761,408/- (2016: rs. 211,042,642/-) have been fully depreciated and continue to be in use by the Company. the assets shown above are those movable and immovable assets vested in the Company by gazette notification at the date of formation of the Company (22nd June 1992) and all investment in tangible assets by the Company since its formation. the assets taken over by way of estate leases are set out in notes 10 & 11.
as at 31st December 2017
57uDapussellaWa plaNtatiONs plC / annual report 2017
as at 31st December 2017
NOtes tO the FiNaNCial stateMeNts (CONt.)
Grant-Funded Assets Workers’ Water, Sanitation Farm Latrines Total Capital work Total Housing & Electricity Roads in progress
Rs. Rs. Rs. Rs. Rs. Rs.
34,936,338 17,050,939 13,802,391 91,839,877 946,508,306 8,882,802 955,391,108
- - - - 8,036,393 20,395,383 28,431,776
76,617,616 - 100,761 (74,321,207) 5,830,315 (8,062,686) (2,232,371)
- - - - (1,988,315) (1,144,629) (3,132,944)
111,553,954 17,050,939 13,903,152 17,518,670 958,386,699 20,070,870 978,457,569
18,893,041 11,340,240 2,216,282 24,885,936 479,356,891 128,371 479,485,262
4,134,347 672,350 338,410 760,788 39,060,605 - 39,060,605
13,627,745 - - (13,627,745) - - -
- - - - (1,850,462) (128,371) (1,978,833)
- - - (400) (400) - (400)
36,655,133 12,012,590 2,554,692 12,018,579 516,566,634 - 516,566,634
74,898,821 5,038,349 11,348,460 5,500,091 441,820,065 20,070,870 461,890,935
16,043,297 5,710,699 11,586,109 66,953,941 467,151,415 8,754,431 475,905,846
58 uDapussellaWa plaNtatiONs plC / annual report 2017
12. TANGIBLE ASSETS
(Other than Biological Assets) (Cont.)
12.1 Leasehold land:
Company Estate name Location No. of Ha. Revaluation (Rs.)
udapussellawa plantations plC Blairlomond udapussellawa 589.75 55,628,499
alnwick udapussellawa 374.00 37,565,501
Delmar udapussellawa 628.82 64,441,500
Gordon udapussellawa 398.75 34,722,499
Waldemar udapussellawa 368.50 36,580,000
Concordia Nuwara eliya 426.80 41,215,036
Courtlodge Nuwara eliya 407.16 39,157,000
park Nuwara eliya 402.15 43,734,459
Duckwari Matale 637.86 53,768,000
Madulkelle Matale 854.14 72,437,500
yatawatte Matale 442.11 28,314,500
507,564,494
12.2 Freehold buildings:
Company Estate name Location No. of buildings Cost (Rs.)
udapussellawa plantations plC Blairlomond udapussellawa 3 9,365,275
alnwick udapussellawa 2 3,584,049
Delmar udapussellawa 3 10,975,056
Gordon udapussellawa 4 8,939,183
Waldemar udapussellawa 3 26,615,385
Concordia Nuwara eliya 36 27,653,684
Courtlodge Nuwara eliya 38 10,884,642
park Nuwara eliya 6 12,877,341
Duckwari Matale 5 10,718,459
Madulkelle Matale 18 97,309,218
yatawatte Matale 16 5,149,171
224,071,463
12.3 Leasehold buildings:
Company Estate name Location No. of buildings Revaluation (Rs.)
udapussellawa plantations plC Blairlomond udapussellawa 227 4,955,119
alnwick udapussellawa 233 4,108,628
Delmar udapussellawa 76 4,286,783
Gordon udapussellawa 212 6,211,078
Waldemar udapussellawa 149 3,253,584
Concordia Nuwara eliya 344 4,818,012
Courtlodge Nuwara eliya 217 3,553,439
park Nuwara eliya 359 5,097,361
Duckwari Matale 138 4,604,896
Madulkelle Matale 205 2,825,818
yatawatte Matale 39 2,450,296
46,165,014
NOtes tO the FiNaNCial stateMeNts (CONt.)as at 31st December 2017
59uDapussellaWa plaNtatiONs plC / annual report 2017
13. INTANGIBLE ASSETS
13.1 Computer Software 2017 2016
Cost Rs. Rs.
at the beginning of the year 18,994,214 18,088,542
additions during the year 3,763,943 905,672
at the end of the year 22,758,157 18,994,214
Accumulated Amortisation
at the beginning of the year 6,193,796 3,961,170
Charge for the year 2,338,532 2,232,626
at the end of the year 8,532,328 6,193,796
Written-Down Value 14,225,829 12,800,418
NOtes tO the FiNaNCial stateMeNts (CONt.)as at 31st December 2017
14. BIOLOGICAL ASSETS 14.1 Bearer Biological Assets IMMATURE BEARER BIOLOGICAL ASSETS Total Total Tea Rubber Coconut Others as at as at 2017 2016 Rs. Rs. Rs. Rs. Rs. Rs. Cost at the beginning of the year 23,113,864 19,743,882 - 12,419,329 55,277,075 64,785,321 additions during the year 13,620,057 3,600,794 - 3,763,819 20,984,670 16,969,034 transfers to Mature Bearer Biological assets (8,263,796) - - (1,951,609) (10,215,405) (26,477,280) impairment/Write-off (4,747,968) (1,378,527) - (911,761) (7,038,256) - at the end of the year 23,722,157 21,966,149 - 13,319,778 59,008,084 55,277,075
MATURE BEARER BIOLOGICAL ASSETS Total Total Tea Rubber Coconut Others as at as at 2017 2016 Rs. Rs. Rs. Rs. Rs. Rs. Cost
at the beginning of the year 464,127,043 2,458,114 57,083,179 4,550,041 528,218,377 501,741,097 transfers from immature Bearer Biological assets 8,263,796 - - 1,951,609 10,215,405 26,477,280 transfer to Mature Consumable Biological assets (3,150,302) - - 636,867 (2,513,435) - at the end of the year 469,240,537 2,458,114 57,083,179 7,138,517 535,920,347 528,218,377
Amortisation at the beginning of the year 120,971,312 338,979 9,019,384 511,146 130,840,821 115,697,244
Charge for the year 14,027,466 122,906 1,141,663 272,250 15,564,285 15,143,577 at the end of the year 134,998,778 461,885 10,161,047 783,396 146,405,106 130,840,821
Written-Down Value 334,241,759 1,996,229 46,922,132 6,355,121 389,515,241 397,377,556
TOTAL BEARER BIOLOGICAL ASSETS 357,963,916 23,962,378 46,922,132 19,674,899 448,523,325 452,654,631
these are investments in immature/mature plantations since the formation of the Company. the assets (including plantation assets) taken over by way of estate leases are set out in Notes 10 and 11. Further investments in immature plantations taken over by way of these leases are shown in the above note.
60 uDapussellaWa plaNtatiONs plC / annual report 2017
NOtes tO the FiNaNCial stateMeNts (CONt.)
14.2 Consumable Biological Assets 2017 2016
Immature Consumable Biological Assets Rs. Rs.
Cost
at the beginning of the year 8,017,377 8,280,550
additions 1,459,750 23,351
transfers to Mature - (286,524)
at the end of the year 9,477,127 8,017,377
Mature Consumable Biological Assets
at the beginning of the year 529,485,590 575,163,107
increase due to transfer from immature - 286,524
increase due to transfer from immature Bearer Biological assets 2,513,435 -
Change in fair value less cost to sell:
Due to price changes 74,888,243 (83,650,078)
Due to physical changes 46,546,824 42,763,708
Decrease due to harvest - (5,077,671)
at the end of the year 653,434,092 529,485,590
total Consumable Biological assets 662,911,219 537,502,967
as per lKas 41 the Company has valued its managed timber plantations at fair value less cost to sell. Managed timber plantation as at 31st December 2017 comprised approximately 302.39 hectares (2016: 310.89 hectares), which are in the range of newly established plantation to plantation that are more than 24 years old.
Managed trees which are less than four years old considered to be immature Consumable Biological assets amounting to rs. 9.5 million as at 31st December 2017 (2016: 6.2 million). the cost of immature trees is treated as approximate fair value particularly on the grounds that little biological transformation has taken place and the impact of the biological transformation on price is not material. When such plantations are mature, the additional investments to bring them to maturity are transferred from immature to mature.
increase of 6,457 m3 in natural growth of the consumable biological assets has contributed to the significant increase in fair value less cost to sell due to physical changes for the year 2017.
Furthermore, a significant number of trees have been subject to a lower discount rate compared to the previous year due to change in the age category, resulting in an increase of rs. 36.9 million included in the changes to fair value due to price changes.
14.2.1 Measurement of Fair value the mature consumable biological assets were valued using Discounted Cash Flow (DFC) method. in ascertaining the fair
value of timber, sample physical verification was carried out covering all the estates.
(i) Fair value hierarchy the fair value measurement of biological assets has been categorised as level 3 fair value based on the inputs to the
valuation technique used.
as at 31st December 2017
61uDapussellaWa plaNtatiONs plC / annual report 2017
NOtes tO the FiNaNCial stateMeNts (CONt.)
(ii) Level 3 fair values the following table shows a breakdown of the total gain / (losses) recognised in repect of level 3 fair value.
2017 2016
Rs. Rs.
Change in Fair Value of Biological assets 121,435,067 (40,886,370)
Key assumptions used in the valuation are:
1. the harvesting is approved by the plantation Management and Monitoring Division and Forestry Department in accordance with the forestry management plan.
2. the prices adopted are net of expenditure
3. risk-adjusted discount rates used in the range of 12% to 17% (2016: 12% to 17% ). Fair value would increase if the discount rate was low and fair value would decrease if the discount rate was high.
4. three-year annual rolling average selling prices of managed timber fields of the Company. Fair value would increase if timber prices were high and fair value would decrease if timber prices were low. the valuation, as presented in the valuation model based on the net present value, take into account the long-term exploitation of the timber plantation. Because of the inherent uncertainty associated with the valuation at fair value of the biological assets due to the volatility of the variables, their carrying value may differ from their realisation value. the Board of Directors retains their view that commodity markets are inherently volatile and their long-term price projections are highly unpredictable. hence, the sensitivity analysis regarding selling price and discount rate variation as included in this note allows every investor to reasonably challenge the financial impact of the assumptions used in the lKas 41 against his own assumptions.
the biological assets of the company are mainly cultivated in leased lands. When measuring the fair value of the biological assets it was assumed that these concessions can and will be renewed at normal circumstances. timber content expects to be realised in the future and is included in the calculation of the fair value that takes into account the age of the timber plants and not the expiration date of the lease.
the Company is exposed to the following risks relating to its timber plantations: Regulatory and environmental risks the Company is subject to laws and regulations in sri lanka. the Company has established environmental policies and procedures aimed at compliance with local environmental and other laws. Management performs regular reviews to identify environmental risks and to ensure that the systems in place are adequate to manage those risks.
Supply and demand risk the Company is exposed to risks arising from fluctuations in the price and sales volume of timber. When possible
the Company manages this risk by aligning its harvest volume to market supply and demand. Management performs regular industry trend analysis to ensure that the Company’s pricing structure is in line with the market and to ensure that projected harvest volumes are consistent with the expected demand. Climate change and other risks
the Company’s timber plantations are exposed to the risk of damage from climatic changes, diseases, forest fires and other natural forces. the Company has extensive processes in place aimed at monitoring and mitigating those risks, including regular forest health inspections and industry pest and disease surveys. the Company also insures itself against natural disasters such as floods, landslides and hurricanes.
as at 31st December 2017
62 uDapussellaWa plaNtatiONs plC / annual report 2017
NOtes tO the FiNaNCial stateMeNts (CONt.)
14.2.1 Sensitivity Analysis Sensitivity Variation on Sales Price Values appearing in the statement of Financial position are very sensitive to price changes with regard to the average
sales prices applied. simulations made for timber prices show that an increase or decrease of 10% of the future selling prices has the following effect on the net present value of the Mature Consumable Biological assets:
-1000 Basis Point - +1000 Basis Point as at 31st December 2017 588,090,683 653,434,092 718,777,502 as at 31st December 2016 476,537,031 529,485,590 582,434,149 Sensitivity Variation on Discount Rate Values appearing in the statement of Financial position are very sensitive to changes of discount rate applied. simulations
made for discount rate show that an increase or decrease by 1% of the future discounting rate has the following effect on the net present value of the Mature Consumable Biological assets:
-100 Basis Point - +100 Basis Point as at 31st December 2017 702,227,007 653,434,092 609,174,480 as at 31st December 2016 573,180,190 529,485,590 490,111,513
2017 201614.3 Produce on Bearer Biological Assets Rs. Rs. at the beginning of the year 5,004,874 757,073 Change in fair value less cost to sell (1,029,805) 4,247,801 at the end of the year 3,975,069 5,004,874 14.4 Change in Fair Value of Biological Assets Change in fair value of consumable biological assets less cost to sell 121,435,067 (40,886,370) Change in fair value of produce on bearer biological assets less cost to sell (1,029,805) 4,247,801 total change in fair value of biological assets 120,405,262 (36,638,569)
2017 201615. INVENTORY Rs. Rs. Nursery stock 4,002,732 9,282,906 produce stock - tea 199,031,253 205,869,432 produce stock - Others 790,458 3,235,979 Consumables and spares 32,878,899 40,158,475 236,703,342 258,546,792 less: provision for obsolete and slow-moving stock (1,209,489) (1,939,224) 235,493,853 256,607,568
2017 201616. TRADE AND OTHER RECEIVABLES Rs. Rs.
trade debtors 555,302 908,265 economic service Charge (esC) receivable 13,857,191 8,933,692 advances and prepayments 30,764,411 44,497,230 Other debtors 30,054,755 22,641,707 75,231,659 76,980,894 less: provision for bad and doubtful debts (22,461,792) (17,254,693) 52,769,867 59,726,201
the Company’s exposure to credit risk and impairment loss related to trade and other receivables is disclosed in note 33.
2017 201617. AMOUNT DUE FROM RELATED COMPANIES Rs. Rs.
hapugastenne plantations plC (interest 6% p.a.) 108,999,245 52,480,069 108,999,245 52,480,069
amount due from related Company stated above is unsecured and the settlement occurs in cash on demand.
as at 31st December 2017
63uDapussellaWa plaNtatiONs plC / annual report 2017
NOtes tO the FiNaNCial stateMeNts (CONt.)as at 31st December 2017
2017 2016 18. CASH AND CASH EQUIVALENT Rs. Rs.18.1 Favourable balances
Cash at bank and Cash in hand 7,826,669 4,327,975 7,826,669 4,327,975 18.2 Unfavourable balances
Bank overdraft (76,750,328) (249,307,470) Cash and Cash equivalent in accordance with the statement of Cash Flows (68,923,659) (244,979,495)
the securities pledged have been disclosed in note 22 to the Financial statements.
19. STATED CAPITAL 2017 2016 Rs. Rs. 19,398,850 Ordinary shares 340,000,000 340,000,000 Golden share held by the secretary to the treasury (note 19.1) 10 10 340,000,010 340,000,010
19.1 The Golden Shareholder the Golden share is currently held by the secretary to the treasury and should be owned either directly by the Government
of sri lanka or by a 100% Government-owned public Company. in addition to the right of a normal ordinary shareholder, in terms of the articles of association of the Company, the following special rights are vested with the Golden shareholder.
(a) the Company shall obtain the written consent of the Golden shareholder prior to sub-leasing, ceding or assigning its rights in part or all of the lands leased/to be leased to the Company by the JeDB/slspC.
(b) the Golden shareholder shall be entitled to call upon the Board of Directors meeting once in three months to meet him or his nominee to discuss matters of the Company of interest to the state of the Government.
(c) the Golden shareholder and/or his nominee shall be entitled to inspect the books of accounts of the Company after giving two weeks’ written notice to the Company.
(d) the Company shall submit to the Golden shareholder, within 60 days of the end of each quarter, a quarterly report relating to the performance of the Company during the said quarter in a pre-specified format agreed to by the Golden shareholder and the Company.
(e) the Company shall submit to the Golden shareholder, within 90 days of the end of each fiscal year, information related to the Company in a pre-specified format agreed to by Golden shareholder and the Company.
20. REVALUATION RESERVE 2017 2016 Rs. Rs. at the beginning of the year 205,810,005 212,966,466 transfers to general reserve (7,156,461) (7,156,461) at the end of the year 198,653,544 205,810,005
20.1 the leasehold right to bare land has been revalued on 31st May 1998 as per the valuation undertaken by Messrs p. B. Kalugalagedera and s. N. Wijepala, Chartered Valuers. the excess over the book value, amounting to rs 376,234,165/-, has been treated as a revaluation reserve.
20.2 since the bare lands were used by the Company, the revaluation surplus is transferred to the general reserve, which is consistent with the amortisation of leasehold right to bare lands as recommended by lKas 16- property, plant and equipment.
21. GENERAL RESERVE 2017 2016 Rs. Rs. at the beginning of the year 145,073,977 137,917,516 transfers from revaluation reserve 7,156,461 7,156,461 at the end of the year 152,230,438 145,073,977
64 uDapussellaWa plaNtatiONs plC / annual report 2017
NOtes tO the FiNaNCial stateMeNts (CONt.)as at 31st December 2017
22. INTEREST-BEARING BORROWINGS 2017 2016
Repayable Repayable Total Repayable Repayable Total
within after as at within after as at
1 year 1 year 31.12.2017 1 year 1 year 31.12.2016
Rs. Rs. Rs. Rs. Rs. Rs.
22.A Sri Lanka Tea Board Loan 21,111,215 31,367,593 52,478,808 18,652,650 23,250,000 41,902,650
22.B Term Loans 33,004,008 69,054,646 102,058,654 33,004,008 102,058,654 135,062,662
54,115,223 100,422,239 154,537,462 51,656,658 125,308,654 176,965,312
Repayable
Repayable after Total Total Effective Terms
within 1 year and less as at as at Rate of of
1 year than 05 years 31.12.17 31.12.16 Interest Repayment
Rs. Rs. Rs. Rs.22.A Sri Lanka Tea Board Loan loan i - - - - 14,902,650 interest Free repayable in 10 equal monthly installments of rs. 1,655,850/- each commencing from 15.12.2016. loan ii - 9,000,000 14,250,000 23,250,000 27,000,000 aWplr+1% repayable in 36 equal monthly installments of rs. 750,000/- each commencing from 31.08.2017. loan iii - 12,111,215 17,117,593 29,228,808 5.00% repayable in 36 equal monthly installments with the interest of rs. 1,108,134/- each commencing from 28.05.2017. 21,111,215 31,367,593 52,478,808 41,902,650 22.B Term Loans DFCC Vardhana Bank 13,000,008 31,416,646 44,416,654 57,416,662 aWplr + 4.75% repayable in 60 equal monthly installments of rs. 1,083,333/- each commencing from 30.09.2016. Commercial Bank of Ceylon plC 20,004,000 37,638,000 57,642,000 77,646,000 1-2 years: 7.5% repayable in 59 equal monthly installments 3-5 years: of rs. 1,667,000/- each and a final aWplr+2% installment of rs.1,647,000 commencing from 25.01.2016. 33,004,008 69,054,646 102,058,654 135,062,662
22.C Securities Pledged the following assets have been pledged as security for liabilities: Nature of liability Facility Outstanding Security Rs. Million Rs. Million Bank Overdraft DFCC Vardhana Bank 100 37 Corporate Guarantee from hapugastenne plantations plC for rs. 100 Mn. Term Loan DFCC Vardhana Bank 65 44 Corporate Guarantee from hapugastenne plantations plC for rs. 65 Mn.
65uDapussellaWa plaNtatiONs plC / annual report 2017
NOtes tO the FiNaNCial stateMeNts (CONt.)
2017 2016
23. DEFERRED INCOME Rs. Rs
at the beginning of the year 107,646,148 111,504,411
Grants received - 304,976
amortisation (4,163,239) (4,163,239)
at the end of the year 103,482,909 107,646,148
the Company has received funding from the plantation housing and social Welfare trust, tea Board subsidy Fund, plantation
reform project, estate infrastructure Development programme and from the plantation Development support project for
the development of workers’ welfare facilities such as re-roofing of line rooms, latrines, water supply and sanitation. the
amounts spent are included under the relevant classification of property, plant & equipment and the grant received for such
is reflected under Deferred income. When the company complies with the condition attached to the grants and subsidies,
the grants will be credited to the statement of profit or loss and Other Comprehensive income over the useful life of the
respective assets. 2017 201624. RETIREMENT BENEFIT OBLIGATION Rs. Rs.
at the beginning of the year 617,530,120 667,405,022
provision made 20,021,416 19,863,373
payments made (89,824,464) (69,738,275)
at the end of the year 547,727,072 617,530,120
The Movement in the present value of Defined Benefit Obligation
at the beginning of the year 617,530,120 667,405,022
interest Cost 67,928,314 70,410,154
Current service Cost 29,147,957 31,796,342
Benefit paid (89,824,464) (69,738,275)
remeasurement of retirement Benefit Obligation (77,054,855) (82,343,123)
at the end of the year 547,727,072 617,530,120
Expenses recognised in the Statements of Profit or Loss
Current service Cost 29,147,957 31,796,342
interest Cost 67,928,314 70,410,154
Expenses recognised in the Statement of Other Comprehensive Income
remeasurement of retirement Benefit Obligation (77,054,855) (82,343,123)
Provision made 20,021,416 19,863,373 the actuarial valuation has been carried out by acturial & Management Consultants (pvt) ltd as at 31st December 2017.
as at 31st December 2017
66 uDapussellaWa plaNtatiONs plC / annual report 2017
NOtes tO the FiNaNCial stateMeNts (CONt.)
The key assumptions used by the actuary include the following:
Company 2017 2016
i) rate of interest 11% 11% per annum
ii) rate of salary increase
- Workers 18% 18% every two years
- staff & executives 7.50% 7.50% per annum
iii) retirement age 60 60 years
iv) Daily wage rate
- tea (rs.) 500 500 per day
- rubber (rs.) 500 500 per day
the actuarial present value of the accrued benefits as at 31st December 2017 is rs. 547,727,072/- (2016: rs.617,530,120/-).
this item is grouped under retirement Benefit Obligation in the statement of Financial position. the liability is not externally
funded.
Sensitivity of Assumptions Used a quantitative sensitivity analysis for significant assumptions used by the Company as at 31st December 2016 is as shown below:
Effect on the Employee Benefit Obligation Discount Rate Salary Escalation Attrition Rate Rate increase by one percentage point 513,590,474 580,904,669 560,533,321 Decerease by one precentage point 602,741,273 531,025,331 549,319,752
the sensitivity analysis above has been determined on a method that extrapolates the impact on employee benefit obliga-tion as a result of reasonable changes in key assumptions occurring at the end of reporting period.
the following payments are expected contributions to the employee benefit obligation in future years:
2017 2016
Rs Rs
Within one year 53,806,753 28,046,882
Between 2 to 5 years 224,581,085 111,647,338
More than 5 years 313,526,982 187,188,562 25. NET LIABILITY TO THE LESSOR OF JEDB / SLSPC ESTATES
Repayable Repayable more than one year Total Total
within After one year After Total as at as at
1 year less than 5 years 5 years 31.12.17 31.12.16
Rs. Rs. Rs. Rs. Rs. Rs.
Gross liability 7,500 30,000 168,534 198,534 206,034 213,534
less: Finance charges (5,482) (21,086) (55,816) (76,902) (82,384) (87,426)
Net liability 2,018 8,914 112,718 121,632 123,650 126,108
the leases of the estates are executed at a rental of rs. 500/- per estate per annum without any contingent rental.
as at 31st December 2017
67uDapussellaWa plaNtatiONs plC / annual report 2017
NOtes tO the FiNaNCial stateMeNts (CONt.)as at 31st December 2017
2017 2016
Rs Rs
26. AMOUNTS DUE TO RELATED COMPANIES
amount due to related Companies - interest bearing (note 26.1) 386,331,613 296,337,925
amount due to related Companies - Non-interest bearing (note 26.2) 10,097,450 53,214,605
396,429,063 349,552,530
26.1 Amounts Due to Related Companies - Interest bearing Interest Rate p.a.
James Finlay limited, uK 3.5% 143,905,483 61,885,170
James Finlay plantation holdings (lanka) ltd 5% 207,000,000 198,000,000
Finlay instant teas (pvt) ltd 6% 35,426,130 36,452,755
386,331,613 296,337,925
related company loans stated above are unsecured and the settlement occurs in cash on the date of maturity.
26.2 Amounts Due to Related Companies - Non-interest bearing
James Finlay limited, uK 10,097,450 53,214,605
above amount is unsecured, free of interest and the settlement occurs in cash on demand.
2017 2016
Rs Rs
27. TRADE AND OTHER PAYABLES
trade Creditors 41,819,731 81,839,101
accrued expenses 4,469,208 3,419,050
payable to employees 116,574,627 108,180,914
Other Creditors 91,403,296 71,595,245
254,266,862 265,034,310 28. RELATED PARTY TRANSACTIONS28.1 the Company carries out transactions in the ordinary course of business with parties who are defined as related parties
in accordance sri lanka accounting standard (lKas) 24 related party Disclosure, the details of which are reported below.
Company Relationship Details of Transactions Amount Received/ (Paid) 2017 2016 Rs. Rs.
hapugastenne plantations plC Common Directors interest income 6,351,864 3,817,238
James Finlay plantation holdings (lanka) ltd intermediary parent interest expenditure (9,000,000) (9,000,000)
Finlay properties (pvt) ltd. Common Directors Warehouse Charges (3,397,678) (3,569,184)
Finlay instant teas (pvt) ltd Common Directors interest expenditure (2,140,246) (2,189,490)
reimbursement of expenditure 1,113,621 1,676,699
James Finlay ltd, uK intermediary parent reimbursement of expenditure (9,675,000) (9,675,000)
Net proceeds on loan 76,705,000 -
interest expenditure (3,991,784) (2,036,880)
Finlay Colombo limited Common Directors reimbursement of expenditure (2,014,800) (931,500)
private sales -tea 10,657,419 4,205,972
Finlay rentokil Ceylon (pvt) ltd Common Directors Maintenance Charges (110,013) (67,959)
68 uDapussellaWa plaNtatiONs plC / annual report 2017
NOtes tO the FiNaNCial stateMeNts (CONt.)as at 31st December 2017
the Company obtained Motor (comprehensive) insurance cover from union assurance General ltd and Motor (third party), Fire all risk, Fire Commercial, Fire & theft Dwelling house, Money in transit, Goods in transit, Boiler & pressure Vessel insurance, electronic equipment, personal accident, Workmen’s Compensation and Fire Consequential loss insurance cov-ers from Janashakthi General insurance ltd in 2017 and in 2016 through Finlays insurance Brokers (private) limited.
this note should be read in conjunction with notes 6, 17 and 26 to the Financial statements.
28.2 Transactions with key management personnel according to sri lanka accounting standard 24 related party Disclosures, key management personnel are those having
authority and responsibility for planning, directing and controlling the activities of the entity. accordingly, the Board of Directors (including executive and Non-executive) have been classified as key management personnel of the Company and during the year the Company paid rs. 7.1 Mn (2016: rs. 6.2 Mn) as remuneration.
28.3 Pricing Policies purchase of goods and services from related parties was made at normal trading terms under arm’s length basis.
28.4 Directors Interest in contracts Ms M. C. pietersz, who is a Director of the Company, is also a Director at seylan Bank plC.
Company Details of Transactions Balance as at 31.12.2017 31.12.2016 Rs. Rs.
seylan Bank plC Demand deposits 564,082 554,000
29. CAPITAL COMMITMENTS there are no capital commitments at the date of the statement of Financial position.
30. EVENTS OCCURING AFTER REPORTING DATE there have been no material events occuring after date of the Financial position that requre adjustments or disclosure in
the Financial statements. 31. CONTINGENT LIABILITIES
1. the Company instituted arbitration proceedings against anglo Ceylon estate (pvt) limited (aCe) in relation to the ter-mination of Management agreement between the Company and aCe. however the matter has not progressed and the Company’s lawyers are not in a position to ascertain the outcome of the case as at the date of the statement of Financial position.
2. udapussellawa plantations plC has issued Corporate Guarantee on behalf of hapugastenne plantations plC amounting to rs. 100,000,000/-.
32. COMPARATIVE INFORMATION to facilitate comparison and where relevant, balances pertaining to the previous year have been reclassified.
69uDapussellaWa plaNtatiONs plC / annual report 2017
NOtes tO the FiNaNCial stateMeNts (CONt.)as at 31st December 2017
33
. S
EGM
ENT
AN
ALY
SIS
Tea
Coc
onut
/Rub
ber
Oth
er
Tota
l
2017
20
16
2017
20
16
2017
20
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2017
20
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Rs.
R
s.
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s.
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R
s.
Rs.
R
s.
Se
gmen
t Res
ult
re
venu
e 2
,161
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1,
574,
349,
568
4
7,49
5,77
1
26,
482,
364
1
7,65
2,67
3
19,
263,
319
2,2
26,7
62,3
55
1,6
20,0
95,2
51
O
pera
ting
Exp
ense
s
re
venu
e ex
pend
itur
e (1
,654
,426
,140
) (1,
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621,
777)
(2
9,34
4,39
3)
(20,
826,
552)
(1
,599
,392
) 1
0,00
5 (1
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) (1,
459,
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324)
D
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mor
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(6
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8)
(66,
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) (3
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(104
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se
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s 3
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(44,
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1
3,95
9,59
6
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13
14,
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1
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5,88
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363
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5
27,
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C
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Fai
r Va
lue
of B
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120
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(3
6,63
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9)
a
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(176
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) (1
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N
et F
inan
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ost
(47,
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845)
(4
1,71
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3)
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ofit/
(los
s) b
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2
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(210
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)
Se
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t Ass
ets
N
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s 1
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1,
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353
7
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6
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1,
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310
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6
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734
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2
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s 5
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7
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91
406
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7
94,5
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921
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84
4,60
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3 1
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9
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10
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6
91,7
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91
662
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1,5
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1,7
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t Cap
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ost
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27,
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3
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9
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1,65
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1
70 uDapussellaWa plaNtatiONs plC / annual report 2017
NOtes tO the FiNaNCial stateMeNts (CONt.)
the Company has the following three strategic divisions, which are its reportable segments. these sectors offer different products and services.
Reportable Segments Operations
tea Cultivation, processing and sale of tea leaves.
Coconut / rubber Cultivation, processing, sale of coconut and rubber.
Other Cultivation and sale of diversified crops such as cultivation and sale of timber trees, shared hydropower revenue, sale of nursery and timber plants.
there are varying levels of integration between each segment.
34. Financial Instruments
34.1 Accounting classification and fair values
Financial assets and financial liabilities are measured on an ongoing basis at either fair value or amortised cost. the fol-
lowing table analyses the carrying amount of financial assets and financial liabilities by category as defined by lKas 39
- Financial instruments:
recognition and measurement under headings reported in the Financial statements.
2017 2016
Financial Assets - Loans & Receivables Rs. Rs.
amount due from related companies 108,999,245 52,480,069
trade and Other receivables 37,685,591 49,539,938
Other financial assets 2,305,000 -
Cash and Cash equivalent 7,826,669 4,327,975
Total Financial assets 156,816,505 106,347,982
Financial Liabilities - Other Financial Liabilities
interest-bearing loans & borrowings 154,537,462 176,965,312
Net liability to the lessor 123,650 126,108
amounts due to related companies 396,429,063 349,552,530
trade and other payables 254,266,862 265,034,310
Bank Overdraft 76,750,328 249,307,470
Total Financial liabilities 882,107,365 1,040,985,730
34.2 Measurement of fair values
the Company measures fair values using the following fair value hierarchy that reflects the significance of the inputs used
in making the measurements.
level i: Quoted market price (unadjusted) in an active market for an identical instrument.
level ii: Valuation techniques based on observable inputs, either directly – i.e. as prices - or indirectly – i.e. derived
from prices. this category includes instruments valued using: quoted market prices in active markets for
similar instruments; quoted prices for identical or similar instruments in markets that are considered less
than active; or other valuation techniques where all significant inputs are directly or indirectly observable
from market data.
as at 31st December 2017
71uDapussellaWa plaNtatiONs plC / annual report 2017
NOtes tO the FiNaNCial stateMeNts (CONt.)
level iii: Valuation techniques using significant unobservable inputs. this category includes all instruments where
the valuation technique includes inputs not based on observable data and the unobservable inputs have a
significant effect on the instrument’s valuation. this category includes instruments that are valued based
on quoted prices for similar instruments where significant unobservable adjustments or assumptions are
required to reflect differences between the instruments.
Level I Level II Level III
2017 2016 2017 2016 2017 2016
Rs. Rs. Rs. Rs. Rs. Rs.
Foreign exchange Forward Contract - - 2,305,000 - - -
34.3 Financial Risk Management
Overview
the Company has exposure to the following risks from its use of financial instruments:
* Credit risk
* liquidity risk
* Market risks (including currency risk and interest rate risk)
this note presents qualitative and quantitative information about the Company’s exposure to each of the above risks, the
Company’s objectives, policies and procedures for measuring and managing those risks.
Risk Management Framework
the Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management
framework. the Company’s risk management policies are established to identify and analyse the risk faced by the Com-
pany, to set appropriate risk limits and controls, and to monitor risk and adherence to limits. risk management policies
and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities.
Credit Risk
Credit risk is the risk of financial loss to the Company, if a customer or counterparty to a financial instrument fails to
meet its contractual obligation, and arises principally from the Company’s receivables from customers and investment
securities.
the carrying amount of financial assets represents the maximum credit exposure. the maximum exposure to credit risk
at the reporting date was as follows:
2017 2016
Loans and Receivables Rs. Rs.
amount due from related Companies 108,999,245 52,480,069
trade and Other receivables 37,685,541 49,539,938
Other financial assets 2,305,000 -
Cash and Cash equivalent 7,826,669 4,327,975
156,816,505 106,347,982
as at 31st December 2017
72 uDapussellaWa plaNtatiONs plC / annual report 2017
NOtes tO the FiNaNCial stateMeNts (CONt.)as at 31st December 2017
Impairment Loss 2017 2016
Gross Impairment Net Gross Impairment Net
Rs. Rs. Rs. Rs. Rs. Rs.
trade and Other receivables 75,231,659 (22,461,792) 52,769,867 76,980,894 (17,254,693) 59,926,201
75,231,659 (22,461,792) 52,769,867 76,980,894 (17,254,693) 59,926,201
the movement in the allowance for impairment in respect of loans and receivables during the year was as follows:
2017 2016
Rs. Rs.
Balance as at 1st January 17,254,693 13,145,895
impairment loss recognised during the year 1,010,000 4,108,798
Written off / transfers 4,197,099 -
Balance as at 31st December 22,461,792 17,254,693
Liquidity Risk
liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its finan-
cial liabilities that are settled by delivering cash or another financial asset. the Company’s approach to managing this
exposure is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under
normal or stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.
to measure and mitigate liquidity risk, the Company closely monitors its net operating cash flow, maintained at a level of
cash and cash equivalents, and secured committed funding facilities from financial institutions.
Non-derivative financial liabilities 2017 2016
Rs. Rs.
interest-bearing & borrowings 154,537,462 176,965,312
Net liability to the lessor 123,650 126,108
amounts due to related companies 396,429,063 349,552,530
trade and other payables 254,266,862 265,034,310
Bank overdraft 76,750,328 249,307,470
882,107,365 1,040,985,730
Market Risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the
Company’s income or the value of its holdings of financial instruments. the objective of the market risk management is
to manage and control market risk exposures within acceptable parameters while optimising the returns.
Interest Rate Risk
interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market interest rates.
the Company has borrowings with aWplr interest rate and would affect the Company’s cash flow/profit as the amount
of interest paid would change depending on market interest rate.
the Company’s exposure to interest rate risk as at 31st December 2017 and sensitivity analysis to profit & loss if the inter-
est rate increased/decreased by 100 basis points is summarised below.
73uDapussellaWa plaNtatiONs plC / annual report 2017
Increase/decrease
in basis points Rs.
increase +100 (2,709,465)
Decrease -100 2,709,465
the above table demonstrates the sensitivity to a reasonable change in interest rates on loans where floating rates are
applicable with all other variables held constant.
Foreign exchange risk
the Company is exposed to foreign exchange risk arising from its borrowings in foreign currency.
For the purpose of disclosure the exposure to currency risk is only provided for the Company’s foreign currency denomi-
nated financial instruments. the Company’s exposure to foreign currency risk as at 31st December 2017 and a sensitivity
analysis of profit and loss and equity, if the exchange rate increased/(decreased) by rs.1/- is summarised below;
Rs.
Foreign currency denominated loans-usD 900,000
Closing conversion rate rate used 153.41
Net exposure in rupees 138,069,000
Sensitivity analysis
Closing conversion rate used with rs. 1.00 increase 154.41
Closing conversion rate used with rs. 1.00 decrease 152.41
Net exposure - in slr with rs. 1.00 increase in closing conversion rate 138,969,000
Net exposure - in slr with rs. 1.00 decrease in closing conversion rate 137,169,000
Impact to Profit and Loss
With rs. 1.00 increase in the closing conversion rate (900,000)
With rs. 1.00 decrease in the closing conversion rate 900,000
NOtes tO the FiNaNCial stateMeNts (CONt.)as at 31st December 2017
74 uDapussellaWa plaNtatiONs plC / annual report 2017
teN--year suMMary
Performance 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 revenue 1,046,095 1,146,844 1,390,746 1,179,279 1,313,248 1,612,181 1,549,968 1,717,498 1,620,095 2,226,762
Gross profit 97,791 130,871 252,812 21,068 129,367 126,989 35,188 (61,025) (28,314) 363,048
pBit 44,482 80,833 188,729 (38,149) 27,520 65,067 139,974 (131,186) (168,433) 334,271
interest 37,701 41,217 38,732 26,498 28,382 25,376 14,112 27,600 41,711 47,024
pBt 6,781 39,616 149,997 (64,647) (862) 39,691 125,862 (158,786) (210,145) 287,247
taxation 447 8,873 11,053 (34,489) 25,711 7,310 26,285 (17,041) (28,344) 19,426
Net profit 6,334 30,743 138,944 (30,158) (26,573) 32,381 99,577 (141,744) (181,801) 267,821
Other comprehensive income - - - (92,497) 82,652 20,665 (1,456) (13,997) 69,324 55,479
total comprehensive
income for the year - - - (122,655) 56,079 53,046 98,121 (155,742) (112,477) 323,301
Assets & LiabilitiesNon-Current assets 1,258,984 1,233,688 1,388,287 1,436,534 1,520,343 1,526,458 1,872,642 1,948,928 1,883,986 1,948,688
Current assets 185,528 339,859 404,926 237,863 286,954 252,789 339,926 322,779 378,147 411,370
total assets 1,444,512 1,573,547 1,793,213 1,674,397 1,807,297 1,779,247 2,212,568 2,271,707 2,262,133 2,360,058
Current liabilities 252,445 265,408 690,765 589,843 655,682 583,196 728,152 809,697 921,027 794,506
Non-Current liabilities 907,258 992,587 528,384 633,145 545,538 536,927 725,699 859,036 850,609 751,754
long-term Borrowings 501,985 509,761 35,662 19,943 4,225 - - 79,996 125,309 100,422
retirement Benefit Obligations 288,333 362,683 373,707 498,203 429,913 429,815 610,243 667,405 617,530 547,727
Other Non-Current liabilities 116,940 120,143 119,015 114,999 111,400 107,112 115,456 111,635 107,770 103,605
Share Capital & Reserves
stated Capital 340,000 340,000 340,000 340,000 340,000 340,000 340,000 340,000 340,000 340,000
revaluation reserve 266,314 258,324 250,333 242,342 234,351 227,214 220,075 212,966 205,810 198,654
General reserve (321,505) (282,772) (16,269) (130,933) 31,726 91,910 198,641 50,008 (55,313) 275,144
total shareholders’ fund 284,809 315,552 574,064 451,409 606,077 659,124 758,716 602,974 490,497 813,798
Financial RatiosrOCe - % 3.73 6.18 17.12 (3.52) 2.39 4.04 7.31 (6.80) (8.70) 8.6
Current ratio - times 0.73 1.28 0.59 0.40 0.44 0.43 0.47 0.40 0.41 0.52
Debt-equity ratio - times 2.39 2.19 0.38 0.48 0.33 0.28 0.24 0.63 0.85 0.58
interest Cover - times 1.18 1.96 4.87 (1.44) 0.97 2.56 9.92 (4.75) (4.04) 7.11
total assets to Current liabilities - % 17.48 16.87 38.52 35.23 36.28 32.78 32.91 35.64 40.71 33.66
Investors’ Ratios
earnings per share - rs 0.33 1.58 7.16 (1.55) (1.37) 1.67 5.13 (7.31) (9.37) 13.81
price earnings ratio 36.75 19.25 6.56 (20.58) (21.24) 15.40 7.71 (3.82) (2.07) 3.08
Market price of a share - rs 12.00 30.50 47.00 32.00 29.10 25.70 39.60 27.90 19.40 42.50
Market Capitalisation - rs ’000 232,786 591,663 911,744 620,762 564,505 498,549 768,192 541,227 376,337 824,449
Net assets per share - rs 14.68 16.27 29.59 23.27 31.24 33.98 39.11 31.08 25.28 41.95
Operating Ratios
annual turnover Growth - % 11.02 9.63 21.27 (15.21) 11.36 22.76 (3.86) 10.81 (5.67) 37.45
No. of employees 4,847 4,569 4,405 4,290 4,070 3,944 5,849 5,578 5,251 4,937
turnover per employee - rs’000 215.82 251.01 315.72 274.89 322.67 408.77 265.00 307.91 308.53 451.04
Fixed-assets turnover ratio - % 0.83 0.93 1.00 0.82 0.86 1.06 0.83 0.88 0.86 1.14
75uDapussellaWa plaNtatiONs plC / annual report 2017
iNVestOr iNFOrMatiON
1. Stock Exchange
the issued Ordinary shares of udapussellawa plantations plC are listed with the Colombo stock exchange of sri lanka.
2. Distribution of Shares 2017 2016
No. of No. of % No. of No. of % Shareholders Shares Shareholders Shares
1 - 1,000 11,952 1,036,258 5.34 11,966 1,041,976 5.37
1,001 - 10,000 97 326,298 1.68 85 264,297 1.36
10,001 - 100,000 17 419,779 2.17 12 267,176 1.38
100,001 - 1,000,000 1 157,550 0.81 - - -
over 1,000,000 3 17,458,966 90.00 3 17,825,402 91.89
total 12,070 19,398,851 100.00 12,066 19,398,851 100.00
3. Distribution of Shareholders 2017 2016
No. of No. of % No. of No. of % Shareholders Shares Shareholders Shares
Non-residents 9 3,780,299 19.49 9 3,805,949 19.62
residents 12,061 15,618,552 80.51 12,057 15,592,902 80.38
total 12,070 19,398,851 100.00 12,066 19,398,851 100.00
individuals 12,000 1,598,816 8.24 12,010 1,526,775 7.87
institutions 70 17,800,035 91.76 56 17,872,076 92.13
total 12,070 19,398,851 100.00 12,066 19,398,851 100.00
4. Golden Shareholder
the Golden share of rs. 10/- is currently held by the secretary to the treasury and should be owned either directly by the Government
or by a 100% Government-owned Company.
5. Investor Information
2017 2016 2015 2014 2013
highest during the year rs. 54.90 27.90 43.50 57.00 32.50
Date (09/10/2017) (04/01/2016) (02/01/2015) (17/10/2014) (02/07/2013)
lowest during the year rs. 16.90 15.50 23.30 21.00 21.10
Date (22/03/2017) (04/04/2016) (02/12/2015) (17/03/2014) (06/09/2013)
Closing price rs. 42.50 19.40 27.90 39.60 25.70
trade Volume No’s 3800 638 790 2,407 1,141
share Volume No’s 2,560,834 196,286 401,229 1,326,659 589,669
turnover rs. 92,626,490 3,973,563 14,474,122 47,548,058 16,919,541
76 uDapussellaWa plaNtatiONs plC / annual report 2017
Value--aDDeD stateMeNt
iNVestOr iNFOrMatiON (CONt)
Twenty Major Shareholders 2017 2016 Name of Shareholder No. of Shares % No. of Shares %JaMes FiNlay plaNtatiON hOlDiNGs (laNKa) liMiteD 11,208,550 57.78 11,208,550 57.78
JaMes FiNlay liMiteD, uK (“JFl”) 3,689,762 19.02 3,689,762 19.02
JaCey trust serViCes (priVate) liMiteD (helD FOr the BeNeFit OF JFl) 2,560,654 13.20 2,927,090 15.09
Capital trust hOlDiNGs ltD 157,550 0.81 - -
Mr. K. M. a. r. K. alMuhairi 66,530 0.34 92,080 0.47
Dr. D. raJaKaNthaN 39,500 0.20 - -
First Capital MarKets liMiteD / Mr. l. K. N. K. KulaWarDeNa 37,885 0.20 - -
Mr. M. Z. rasheeD 37,005 0.19 - -
aDl eQuities liMiteD / Mr. M. Z. rasheeD 36,721 0.19 - -
assetliNe leasiNG COMpaNy ltD / Mr. l. K. N. KKulaWarDeNa 31,553 0.16 - -
Mr. K. G. a. N WiJesiNGhe 22,763 0.12 22,763 0.12
Mr. r. C. WiJeseNa 22,000 0.11 - -
Mr. W. G. preMaratNa (DeCeaseD) 18,600 0.10 18,600 0.10
Mr. M. F. asraFF 16,000 0.08 - -
Mrs. l. s. a. seresiNhe 14,916 0.08 19,916 0.10
Mr. B. M. MiChael 14,600 0.08 14,600 0.08
Mr. e. F. B. u. FerNaNDO 14,397 0.07 - -
Mr. r. e. raMBuKWelle 13,780 0.07 - -
seylaN BaNK plC / Mr. M. M. FuaD 12,259 0.06 - -
Mr. l. M. seNaNayaKe 11,000 0.06 11,000 0.06
Total 18,026,025 92.92 18,004,361 92.82
Other Shareholders 1,372,826 7.08 1,394,490 7.18
Issued Share capital 19,398,851 100.00 19,398,851 100.00
Of the issued ordinary share capital, 10% (2016: 8.11%) is held by the public, representing 12,066 share holders (2016: 12,060).
2017 2016 Rs. ’000 % Rs. ’000 % turnover 2,226,762 1,611,456 Other income 147,877 (8,639) total revenue 2,374,639 100 1,611,456 100 Cost of Materials and services Bought 947,033 40 722,629 45 1,427,606 60 888,827 55Distribution of Value Added a to employees as remuneration 976,338 68 880,163 99 B to Government 17,922 1 7,995 1 C to lenders of Capital 47,024 3 41,711 5 D retained in the Business D1 provision for Depreciation 72,890 5 71,435 8 D2 profit retained 323,301 22 (112,477) (13) 1,437,475 100 888,827 100
77uDapussellaWa plaNtatiONs plC / annual report 2017
seGMeNtal iNFOrMatiON
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Revenue Extent - Hectares
tea 2,017.95 2,006.49 2,023.03 2,013.69 2,055.57 2,054.17 2,005.66 3,273.06 3,251.62 3,263.96
rubber 83.04 75.54 75.54 75.54 75.54 55.12 40.12 38.50 38.50 30.50
Coconut 91.50 114.50 131.50 136.50 136.50 141.50 153.50 164.50 164.50 164.50
total 2,192.49 2,196.53 2,230.07 2,225.73 2,267.61 2,250.79 2,199.28 3,476.06 3,454.62 3,458.96
Production - Kg ’000
tea - Kg’000 3,982 3,343 4,079 3,746 3,669 3,892 3,430 4,670 3,844 3,780
rubber - Kg’000 60 51 46 41 32 30 17 14 17 21
Coconut-Nuts’000 436 539 600 536 719 362 641 804 834 654
GSA - Rs
tea 263.20 321.68 338.57 314.22 356.02 387.94 420.34 375.00 406.57 566.27
rubber 246.91 195.26 348.01 460.62 375.48 342.66 251.36 208.43 207.53 299.09
Coconut 21.88 30.59 32.08 34.84 29.67 59.70
Revenue - Rs’ 000
tea 999,159 1,103,736 1,345,981 1,123,629 1,253,047 1,569,271 1,515,117 1,665,731 1,574,350 2,161,614
Coconut 14,298 9,345 16,008 18,130 21,615 21,058 21,488 30,591 26,482 47,496
Others 32,638 33,763 28,757 37,520 38,586 21,852 13,363 21,176 19,263 17,652
total 1,046,095 1,146,844 1,390,746 1,179,279 1,313,248 1,612,181 1,549,968 1,717,498 1,620,095 2,226,762
Gross Profit - Rs’ 000
tea 90,679 134,140 255,000 15,222 114,456 134,342 35,874 (75,878) (44,967) 334,665
Coconut 3,101 (2,229) 3,438 3,849 1,333 (3,354) (664) 6,269 1,487 13,960
Others 4,011 (1,040) (5,626) 1,997 13,578 (3,999) (22) 8,584 15,166 14,423
total 97,791 130,871 252,812 21,068 129,367 126,989 35,188 (61,025) (28,314) 363,048
78 uDapussellaWa plaNtatiONs plC / annual report 2017
GlOssary
GsaGross sale average. average sale price obtained (over a
period of time, for a kilo of produce) before any deductions
such as Brokerage fees.
NsaNet sale average. average sale price obtained (over a period
of time) after deducting Brokerage fees, etc.
COpCost of production. Generally refers to the cost of producing
one kilo/nut of produce (tea/rubber/Coconut).
earnings per shareprofit attributable to ordinary shareholders divided by the
number of ordinary shares in issue and ranking for divi-
dend.
price earnings ratioMarket price of a share divided by earnings per share.
Market CapitalisationNumber of shares issued multiplied by the market value of
each share.
MnMillion
Net assetssum of Fixed assets and Current assets less total liabilities.
Net assets per shareNet assets divided by the number of Ordinary shares in
issue.
return on equityattributable profits divided by average shareholders’ funds.
interest Coverprofit before Gross interest and tax divided by net interest
cost.
Dividend Coverprofit attributable to shareholders divided by gross dividend.
Current ratioCurrent assets divided by current liabilities.
extent in bearingthe extent of land from which crop is being harvested.
Cropthe total produce harvested.
Mature plantationthe extent of plantation from which crop is being harvested.
immature plantationthe extent of plantation which is under development and is
not being harvested.
infillinga method of field development whereby planting of indi-
vidual plants is done in order to fill the vacancies of existing
revenue fields.
Vp teaVegetatively propagated tea.
yield (yph)the average crop per unit extent of land over a given period
of time (usually kgs. per hectare per year).
isOinternational Organization for standardization.
haCCphazard analysis and Critical Control point system. interna-
tionally accepted food safety standard.
yOyyear over year.
79uDapussellaWa plaNtatiONs plC / annual report 2017
NOtiCe OF MeetiNG
NOtiCe is hereBy GiVeN that the 25th annual General Meeting of udapussellawa plantations plC will be held at the sri lanka
Foundation institute, No. 100, padanam Mawatha, independence square, Colombo 07 on Friday, 27th april 2018 at 11.00 a.m.
and the business to be brought before the meeting will be:
AGENDA
1. to consider and adopt the annual report of the Board of Directors on the affairs of the Company and the statements of accounts for the year ended 31st December 2017 with the report of the auditors thereon.
2. to re-elect Mr. J. M. rutherford who, in terms of articles 86 and 87 of the articles of association of the Company, retires by rotation at the annual General Meeting as a Director.
3. to re-elect Mr. G. r. Chambers who, in terms of articles 86 and 87 of the articles of association of the Company, retires
by rotation at the annual General Meeting as a Director.
4. to authorise the Directors to determine contributions to charities up to a limit of rs. 100,000/- for the financial year ending 31st December 2018.
5. to re-appoint Messrs KpMG as auditors and authorise the Directors to determine their remuneration.
By order of the Board of Directors
s s p Corporate services (private) limitedsecretaries
No. 101, inner Flower road,Colombo 0315th March 2018
Note:-a member is entitled to appoint a proxy to attend and vote instead of himself/herself and a proxy need not be a member of the Company. a Form of proxy is enclosed for this purpose. the instrument appointing a proxy must be deposited at the registered Office of the secretaries, 101, inner Flower road, Colombo 03.
Security Check:-We shall be obliged if the shareholders/proxies attending the annual General Meeting present their National identity Card to the security personnel stationed at the entrance.
80 uDapussellaWa plaNtatiONs plC / annual report 2017
Notes
uDapussellaWa plaNtatiONs plC / annual report 2017
FOrM OF prOxy
i/We........…………………………………………………………………………………………………….. (NiC No....................................................)
of …………………………………………………………………………………………………………….…………………………………….…………
being a member/members of udapussellawa plantations plC hereby appoint
(i) ………………………………………………………………………………………………………………(NiC No....................................................)
of………………………………………………………………………..........................……..............................................…………..failing him/her,
(ii) Naresh KuMar huBert ratWatte, Chairman of udapussellawa plantations plC, or failing him any one of the Directors
of the Company as *my/our proxy to vote as indicated hereunder for *me/us and on *my/our behalf at the 25th annual General
Meeting of the Company to be held on 27th april 2018 at 11.00 a.m. at the sri lanka Foundation institute, No. 100, padanam
Mawatha, independence square, Colombo 07 and at every poll which may be taken in consequence of the aforesaid meeting
and at any adjournment thereof. FOR AGAINST1. to consider and adopt the annual report of the Board of Directors on the affairs of the
Company and the statements of accounts for the year ended 31st December 2017 with the report of the auditors thereon.
2. to re-elect Mr. J. M. rutherford who, in terms of articles 86 and 87 of the articles of association of the Company, retires by rotation at the annual General Meeting as a Director.
3. to re-elect Mr. G. r. Chambers who, in terms of articles 86 and 87 of the articles of association of the Company, retires by rotation at the annual General Meeting as a Director.
4. to authorise the Directors to determine contributions to charities up to a limit of rs. 100,000/- for the financial year ending 31st December 2018.
5. to re-appoint Messrs KpMG as auditors and authorise the Directors to determine their remuneration.
signed this ......................................... day of ...........................two thousand and eighteen.
signature: …………………………….
Note :
(a) *please delete the inappropriate words.
(b) instructions are noted on the reverse hereof.
INSTRUCTIONS AS TO COMPLETION
1. in terms of article 69 of the articles of association of the Company; an instrument appointing a proxy shall be in writing and in the case of an individual shall be signed by the appointor or
by his attorney; or in the case of a corporation shall be either under the common seal or signed by its attorney or by an officer authorised to do so on behalf of the corporation. the Company may, but shall not, be bound to require evidence of the authority of any such attorney or officer. a proxy need not be a Member of the Company.
2. in terms of article 70 of the articles of association of the Company; a non-resident shareholder may appoint and revoke proxies by cable or facsimile provided such cable or facsimile is
received not less than forty-eight (48) hours before the commencement of the Meeting at which it is to be used.
2. in terms of article 71 of the articles of association of the Company; the instrument appointing a proxy shall be lodged and the power of attorney (if any) under which it is signed, or a
notarially certified copy of such power shall, if required, be deposited for inspection at the Office, in each case not less than forty-eight hours before the time appointed for holding the Meeting or adjourned Meeting, or in the case of a poll before the time appointed for the taking of the poll at which the person named in the instrument proposes to vote, and in default the instrument of proxy shall not be treated as valid.
3. in terms of article 75 of the articles of association of the Company; any corporation which is a Member of the Company, may by resolution of its Directors or other governing body
authorise such person as it thinks fit to act as its representative at any meeting of the Company or of any class of Members of the Company, and the person so authorised shall be entitled to exercise the same powers on behalf of such corporation as the corporation could exercise if it were an individual Member of the Company.
4. in terms of article 64 of the articles of association of the Company; in the case of joint-holders of a share the vote of the senior who tenders a vote, whether in person or by proxy, shall be
accepted to the exclusion of the votes of the other joint-holders, and for this purpose seniority shall be determined by the order in which the name stands in the register of Members in respect of the joint-holding.
5. Kindly indicate with an x in the space provided how your proxy is to vote on each resolution. if no indication is given, the proxy in his/her discretion will vote as he/she thinks fit. every alteration or addition to the Form of proxy must be duly authenticated by the full signature of the shareholder signing the Form of proxy. such signature should as far as possible be placed in proximity to the alteration or addition intended to be authenticated.
6. to be valid, this Form of proxy must be deposited at the registered Office of the secretaries, 101, inner Flower road, Colombo 03 by Wednesday, 25th april 2018, being forty-eight hours before the holding of the Meeting.