upl corporation limited annual separate financial

UPL CORPORATION LIMITED

Annual separate financial statements For the year ended 31 March 2020

UPL CORPORATION LIMITED Separate financial statements for the year ended 31 March 2020 Contents Pages Corporate data 1 Commentary of the directors 2 Certificate from the secretary 3 Independent auditors’ report 4 -9 Separate statement of profit or loss and other comprehensive income 10 Separate statement of financial position 11 - 12 Separate statement of changes in equity 13- 14 Separate statement of cash flows 15 Notes to the separate financial statements 16 – 68

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UPL CORPORATION LIMITED Corporate data Date of

appointment Date of

resignation

DIRECTORS: Gyaneshwarnath Gowrea 12 January 2009 - Doomraj Sooneelall 13 March 2018 - Roberta Bromberg Bowman 22 January 2019 - Jerome Andre Etienne Peribere 22 January 2019 - Davor Pisk 22 January 2019 - Vikram Rajnikant Shroff 18 January 2019 - Jaidev Rajnikant Shroff 18 January 2019 - Hardeep Singh 04 December 2018 - Puneet Bhatia 30 January 2019 - Uttam Danayah 13 March 2019 - Peter Deane Scala 30 January 2019 - Stephen Gerald Dyer 18 March 2019 - Paul Steven Walsh 12 September 2019 -

ADMINISTRATOR IQ EQ Corporate Services (Mauritius) Ltd & CORPORATE (Formerly known as SGG Corporate Services (Mauritius) Ltd) SECRETARY: 33, Edith Cavell Street

Port Louis, 11324 Republic of Mauritius

REGISTERED & 5th Floor, Newport Building BUSINESS Louis Pasteur Street OFFICE Port Louis ADDRESS: Republic of Mauritius AUDITORS: KPMG KPMG Centre 31, Cybercity Ebène 72201 Republic of Mauritius

BANKERS: Absa Bank (Mauritius) Limited

SBM Bank (Mauritius) Limited Barclays Private Clients International Limited, Isle of Man Citibank NA, Hong Kong Branch Zemen Bank

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UPL CORPORATION LIMITED Commentary of the directors The directors are pleased to present their report together with the audited separate financial statements of UPL CORPORATION LIMITED (the “Company”) for the year ended 31 March 2020. Principal activity of the Company The principal business activities of the Company are international trading, investment holding and providing management and financial support to group companies. Results and dividend The results for the year are shown on page 10. The directors take note that an interim dividend of USD 62,854 thousand as paid during the year (2019: USD 60,000 thousand). The directors do not recommend the payment of any further dividend. Statement of directors’ responsibilities in respect of the separate financial statements Company law requires the directors to prepare separate financial statements for each financial year giving a true and fair view of the financial position, financial performance and cash flows of the Company. In preparing those financial statements, the directors are required to: select suitable accounting policies and then apply them consistently;

make judgements and estimates that are reasonable and prudent;

state whether International Financial Reporting Standards have been followed, subject to any material

departures disclosed and explained in the separate financial statements; and

prepare the separate financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The directors confirm that they have complied with the above requirements in preparing the financial statements. The directors’ responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of these separate financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances. The directors have made an assessment of the Company’s ability to continue as a going concern and have no reason to believe that the business will not be a going concern in the year ahead. Auditors The auditors, KPMG, have been appointed as auditors and have indicated their willingness to continue in office until the next Annual Meeting.

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IQ EQ Corporate Services (Mauritius) Ltd, 33, Edith Cavell Street, Port-Louis, 11324, Mauritius

T: +230 212 9800 [email protected] F: +230 212 9833 www.iqeq.com

Regulated by the Financial Services Commission as holder of a management licence. Licence type – FS-3.1A Management Licence Incorporated in Mauritius No: BRN C09004928.


CERTIFICATE FROM THE SECRETARY UNDER SECTION 166 (d) OF THE MAURITIUS COMPANIES ACT 2001

We certify, to the best of our knowledge and belief, that UPL CORPORATION LIMITED (the“Company”) has filed with the Registrar of Companies all such returns as are required of theCompany under the Mauritius Companies Act 2001, for the year ended 31 March 2020.

……………………………..… For IQ EQ Corporate Services (Mauritius) Ltd Secretary

Les Cascades Building Edith Cavell Street Port Louis Republic of Mauritius

Date: 20 May 2020

3

10

UPL CORPORATION LIMITED Separate statement of profit or loss and other comprehensive income for the year ended 31 March 2020 Notes

2020 2019

Restated* USD’000 USD’000 Revenue 7 335,199 244,633 Direct cost 8 (282,271) (205,913)

------------ ------------ Gross profit 52,928 38,720

Other income 9 33,395 72,370

Expenses Other expenses 10 (15,168) (7,782) Depreciation 15 (13) (12) Amortisation 14 (2,722) (2,967) (Loss)/ gain on disposal of investment in subsidiary 16 (1,447) 293 Expected credit losses on group receivables 19(b)/ 31 (456) (461) Acquisition related costs 35 (3,764) (11,759)

------------ ------------ Operating profit 62,753 88,402 Finance costs 11 (117,801) (73,771) Finance income 12 108,112 42,996 ------------ ------------ Net finance cost (9,689) (30,775) ------------ ------------ Profit before taxation 53,064 57,627 Taxation 13 (1,507) (1,090) ------------ ------------ Profit for the year 51,557 56,537 Other comprehensive income: Items that may be reclassified subsequently to profit or loss Cash flow hedging - effective portion of changes in fair value 25 (18,746) (11,531) ------------ ------------ Total comprehensive income for the year, net of tax 32,811 45,006

======= ======= The Statement of profit or loss and other comprehensive income for last year was presented by function and this year the presentation has been changed to present expenses by nature in order to align with group presentation. * This amount is subject to prior year restatement. Refer to note 32. The notes on pages 16 to 68 form part of these financial statements.

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UPL CORPORATION LIMITED Separate statement of financial position as at 31 March 2020

31 March 2020

31 March 2019

Restated*

01 April 2018

Restated* Notes USD’000 USD’000 USD’000

ASSETS Non-current assets Intangible assets 14 5,173 6,956 5,480 Equipment 15 49 40 42 Investment in subsidiaries 16 2,574,296 2,521,634 671,885 Investment in joint venture 17 329 329 329 Loan receivables 19(a) 2,745,975 2,705,477 191,764 Convertible loan notes 18 5,000 5,000 5,000

------------- ------------- ------------- Total non-current assets 5,330,822 5,239,436 874,500 ------------- ------------- ------------- Current assets Inventories 20 1,325 1,627 2,445 Loan receivables 19(a) 245,816 351,960 402,441 Trade and other receivables 19(b) 370,895 311,925 302,710 Derivative financial assets 30 11,236 2,181 - Cash and cash equivalents 21 302,736 9,083 84,582 ------------- ------------- ------------- Total current assets 932,008 676,776 792,178 ------------- ------------- ------------- TOTAL ASSETS 6,262,830 5,916,212 1,666,678 ======== ======= ======= EQUITY AND LIABILITIES Equity Stated capital 22 18,102 18,102 13,600 Share premium 23 1,314,616 1,314,670 - Perpetual Subordinated Capital Securities 29 394,686 - - Cash flow hedge reserve 25 (30,277) (11,531) - Retained earnings 314,110 328,107 331,570 ------------- ------------- ------------- Total equity 2,011,237 1,649,348 345,170 ------------- ------------- ------------- Liabilities Non-current liabilities Bonds 26 794,041 792,730 792,713 Borrowings 27 2,759,367 3,208,762 344,322 Trade and other payables 28 618 3,659 4,617 ------------- ------------- ------------- Total non-current liabilities 3,554,026 4,005,151 1,141,652 ------------- ------------- ------------- The notes on pages 16 to 68 form part of these financial statements.


Separate statement of financial position (continued) as at 31 Marc/1 2020

Current liabilities Borrowings Trade and other payables Income tax liability

Total current liabilities

Total liab ilities

TOTAL EQUITY AN D LIABILITIES

Notes

27 28 13

3 1 March 31 March 20 19

2020 Restated* USD'000 US D'000

576,619 I 08, 727 116,962 152,342

3,986 644

697,567 261.713

4,251,593 4,266,864

6,262,830 5,9 16,212

Authori sed for issue by the Board of Directors on 20 May 2020 and signed on its behalf by:

• Th is amount is subject to prior year restatemen t. Refer to note 32 .

The notes on pages 16 to 68 form pan of these linancinl statements.

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Uttam Danayah Director

01 April 2018

Restated * uso·ooo

15.000 164, 170

686

179,856

1,321 ,508

1,666.6 78

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Separate statement of changes in equity for the year ended 31 March 2020

Stated Capital

Perpetual Subordinated

capital securities

Share premium

Cash flow hedge reserve

Translation reserve

Retained earnings

Total

USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000

As at 01 April 2018 13,600 - - - (8,040) 342,046 347,606

Prior year adjustment (note 32) - - - - 8,040 (10,476) (2,436) ----------- ----------- ----------- ----------- ------------- ------------- ------------ As at 01 April 2018 (restated*) 13,600 - - - - 331,570 345,170

Transaction with owners of the Company Contributions and distributions Issuance of shares at premium 4,502 - - - - - 4,502 TPG and ADIA contribution - - 1,195,980 - - - 1,195,980 UPL India contribution - - 143,518 - - - 143,518 Share issue expenses - - (24,828) - - - (24,828) Dividend paid - - - - - (60,000) (60,000) ----------- ----------- ----------- ----------- ----------- ----------- ----------- Total transactions with owners of the Company 4,502 - 1,314,670 - - (60,000) 1,259,172 ----------- ----------- ----------- ----------- ----------- ----------- ----------- Total comprehensive income for the year (restated) Cash flow from hedge during the year - - - (11,531) - - (11,531) Profit for the year - - - - - 56,537 56,537 ----------- ----------- ----------- ----------- ----------- ----------- ----------- Total comprehensive income for the year (restated) - - (11,531) - 56,537 45,006 ----------- ----------- ----------- ----------- ----------- ----------- ----------- At 31 March 2019 (restated) 18,102 - 1,314,670 (11,531) - 328,107 1,649,348

IFRIC 23 impact adjustment (Note 13) - - - - - (2,700) (2,700) ----------- ----------- ----------- ----------- ----------- ----------- -----------

At 01 April 2019, adjusted 18,102 - 1,314,670 (11,531) - 325,407 1,646,648

Transaction with owners of the Company Contributions and distributions Issue of bonds - 400,000 - - - - 400,000 Bond issue expenses - (5,314) - - - - (5,314) Share premium expenses - - (54) - - - (54) Dividend paid and proposed - - - - - (62,854) (62,854)

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Separate statement of changes in equity for the year ended 31 March 2020

Stated Capital

Perpetual Subordinated

capital securities

Share premium

Cash flow hedge reserve

Translation reserve

Retained earnings

Total

USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 Total comprehensive income for the year Profit for the year - - - - - 51,557 51,557 Cash flow from hedge during the year - - - (18,746) - - (18,746) ----------- ----------- ----------- ----------- ----------- ----------- ----------- Total comprehensive income for the year - - - (18,746) - 51,557 32,811 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- As at 31 March 2020 18,102 394,686 1,314,616 (30,277) - 314,110 2,011,237 ====== ====== ======= ======= ====== ======== ======= * This amount is subject to prior year restatement. Refer to note 32. The notes on pages 16 to 68 form part of these financial statements

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UPL CORPORATION LIMITED Separate statement of cash flows for the year ended 31 March 2020

Notes

2020

2019 Restated*

USD’000 USD’000 Cash flows from operating activities Profit before tax 53,064 57,627 Adjustments for: Amortisation of intangible assets 14 2,722 2,967 Allowance for expected credit loss 456 461 Finance income (108,112) (42,996) Finance cost 117,801 73,771 Depreciation 15 13 12 Loss / (gain) on disposal of investment in subsidiary 1,447 (293) ------------- ------------- Operating profit before working capital changes 67,391 91,549 Changes in working capital Decrease in inventories 302 818 Increase in trade and other receivables (58,970) (9,215) Decrease in trade and other payables (38,421) (12,786) ------------- ------------- Cash (used in) / from operations (29,698) 70,366 Taxes paid 13 (1,081) (1,132) ------------- ------------- Net cash (used in) / from operating activities (30,779) 69,234 ------------- ------------- Cash flows from investing activity Acquisition of intangible assets 14 (939) (4,443) Acquisition of equipment 15 (22) (10) Loan repaid by / (given to) related parties 38,246 (2,470,855) Interest received 108,112 42,996 Purchase of shares in subsidiaries 16, 34 (57,416) (1,850,788) Proceeds from disposal of investment in subsidiary 16 - 1,332 ------------- ------------- Net cash from/(used in) investing activities 87,981 (4,281,768) ------------- ------------- Cash flows from financing activities Proceeds from issuance of Perpetual Subordinated Capital Securities 29 400,000 - Share premium received on allotment 23 - 1,339,498 Share issue expenses 23 (54) (24,828) Proceeds from issuance of shares - 4,502 Interest paid 33 (109,487) (76,465) Net proceeds of borrowings 33 8,846 2,954,328 Dividend paid (62,854) (60,000) ------------- ------------- Net cash from financing activities 236,451 4,137,035 ------------- ------------- Net increase/ (decrease) in cash and cash equivalents 293,653 (75,499) Cash and cash equivalents at start of the year 9,083 84,582 ------------- ------------- Cash and cash equivalents at end of the year 21 302,736 9,083 ------------- ------------- Refer to Note 34 for non-cash investing activities. * This amount is subject to prior year restatement. Refer to note 32. The notes on pages 16 to 68 form part of these financial statements.

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UPL CORPORATION LIMITED Notes to the separate financial statements for the year ended 31 March 2020 1. General information

UPL CORPORATION LIMITED (the “Company”) was incorporated in Mauritius, under the Mauritius Companies Act 1984, now governed by the Mauritius Companies Act 2001, as a private company on 30 July 1993 with limited liability by shares and subsequently, on 26 September 2016, it was converted into a public company. The Company also holds a Category 1 Global Business License issued by the Financial Services Commission. The Company’s registered office address is at Newport Building, Louis Pasteur, Port-Louis, Mauritius.

The Company’s main activities are international trading, investment holding, providing management and financial support to group companies.

2. Basis of preparation

Statement of compliance The separate financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and in compliance with Mauritius Companies Act 2001. Separate and consolidated financial statements In terms of IFRS 10, the consolidated financial statements are considered the primary financial statements of a company that holds investment in subsidiaries for which consolidation exemption has not been taken. Separate financial statements are presented in addition to the consolidated financial statements. The consolidated financial statements, prepared in accordance with International Financial Reporting Standards (IFRS) and the Mauritius Companies Act 2001, have been approved on 20 May 2020, are available for public use. Basis of measurement The separate financial statements have been prepared on an accrual basis and under the historical cost convention, except for the following assets and liabilities which have been measured at fair value: - Derivative financial instruments which have been measure at fair value. - Certain financial assets and liabilities measured at fair value (refer accounting policy

regarding financial instruments). Use of estimates and judgements The preparation of financial statements in conformity with IFRSs 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. Actual results may differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates are recognised in the period in which the estimate is revised and in any future period affected. Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year, as well as critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements are provided in note 6.

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UPL CORPORATION LIMITED Notes to the separate financial statements for the year ended 31 March 2020 2. Basis of preparation

Going concern Management of the Company is not aware of any material uncertainties that may cast significant doubt on the Company’s ability to continue as a going concern. Therefore, the financial statements continue to be prepared on the going concern basis.

3. Significant accounting policies

The principal accounting policies applied in the preparation of these separate financial statements are set out below. These policies have been consistently applied to all the periods presented in these financial statements, unless otherwise stated. Certain comparative amounts in the statement of profit or loss and OCI have been restated, reclassified or re-presented, as a result of either a correction of a prior-periods error or a change in the classification during the current year. Refer to note 32. Investment in subsidiaries Subsidiary undertakings are those entities in which the Company has control if all of the following elements are present: (i) power over the investee; (ii) exposure to variable returns from the investee, and (iii) the ability of the investor to use its power to affect those variable returns.

Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control. Investment in joint venture

A joint venture is an arrangement in which the Company has joint control, whereby the Company has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities. Accounting for subsidiaries and joint ventures Investments in subsidiaries and joint ventures are stated at cost less accumulated impairment losses.

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UPL CORPORATION LIMITED Notes to the separate financial statements for the year ended 31 March 2020

3. Significant accounting policies (continued)

Foreign currency translation

(i) Functional and presentation currency Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The directors consider the United States Dollar (“USD”) as the currency that most faithfully reflects the underlying transactions, events and conditions that are relevant to the Company. The financial statements are presented in USD which is the Company’s functional currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date. Transactions in foreign currency are recorded applying the exchange rate at the date of transaction. Monetary assets and liabilities denominated in foreign currency remaining unsettled at the end of the year, are translated at the closing rates prevailing on the Balance Sheet date. Non-monetary items which are carried in terms of historical cost denominated in foreign currency are reported using the exchange rate at the date of transaction. Exchange difference arising on the settlement of monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or expenses in the year in which they arise. Exchange difference on such contracts are recognized in the statements of profit and loss in the year in which the exchange rate changes. Any profit and loss arising on cancellation or renewal of forward exchange contract is recognized as income or as expenses for the year. Foreign exchange differences on foreign currency borrowings, loans given/taken, settlement gain/loss and fair value gain/losses on derivative contracts relating to borrowings are accounted and disclosed under ‘finance cost’. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in OCI or statement of profit and loss are also recognised in OCI or statement of profit and loss, respectively). Expenses Expenses are recognised on the accrual basis.

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Current versus non-current classification The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is treated as current when it is: ‐ - Expected to be realised or intended to be sold or consumed in normal operating cycle ‐ - Held primarily for the purpose of trading or ‐ - Cash or cash equivalent unless restricted from being exchanged or used to settle a liability

for at least twelve months after the reporting period

All other assets are classified as non-current. A liability is current when: ‐ - It is expected to be settled in normal operating cycle ‐ - It is held primarily for the purpose of trading or ‐ - There is no unconditional right to defer the settlement of the liability for at least twelve

months after the reporting period The Company classifies all other liabilities as non-current. Deferred tax assets and liabilities are classified as non-current. Based on the nature of products and the time between acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has identified twelve months as its operating cycle for the purpose of current / non-current classification of assets and liabilities.

Revenue recognition The Company derives revenue primarily from sale of agro-chemical and other products and acts as an international distributor of crop protection products. Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. To recognize revenues, the Company applies the following five step approach:

1) identify the contract with a customer, 2) identify the performance obligations in the contract, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract, and 5) recognise revenues when a performance obligation is satisfied. Sale of goods The Company recognizes revenue from sale of goods upon satisfaction of performance obligation which is at a point in time when control of the goods is transferred to the customer, generally on delivery of the goods. Depending on the terms of the contract, which differs from contract to contract, the goods are sold on a reasonable credit term. As per the terms of the contract, consideration that is variable, according to IFRS 15, is estimated at contract inception and updated thereafter at each reporting date or until crystallisation of the amount.

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Revenue recognition (continued)

Sale of goods (continued) Revenue is measured based on the transaction price, which is the consideration, adjusted for volume discounts, rebates, scheme allowances, price concessions, incentives, and returns, if any, as specified in the contracts with the customers. Revenue excludes taxes collected from customers on behalf of the government. Accruals for discounts/incentives and returns are estimated (using the most likely method based on accumulated experience and underlying schemes and agreements with customers). Due to the short nature of credit period given to customers, there is no financing component in the contract.

Income from services are recognized as and when performance obligation is met.

Other Income Dividend income is recognised when the Company’s right to receive the payment is established, which is generally when shareholders approve the dividend. Commission income is recognized based on a percentage as per agreement with the other party when performance obligation is satisfied. Royalty income is recognized based on agreement with the other party when performance obligation is satisfied.

Finance income Interest income is recognised using the effective interest method. Intangible assets Product registration data Product Registration data are measured on initial recognition at cost. Following initial recognition, intangible assets with finite useful lives are carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation Amortisation is calculated to write off the cost of intangible assets less their estimated residual values using the straight-line method over their estimated useful lives and is generally recognised in profit or loss. The estimated useful lives for product registration data is 5 years. The residual value, the amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed at least at the end of each reporting period. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit and loss when the asset is derecognised.

Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete, and the asset is available for use. It is amortised over the period of expected future benefit. Amortisation expense is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.

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UPL CORPORATION LIMITED Notes to the separate financial statements for the year ended 31 March 2020 3. Significant accounting policies (continued)

Equipment Recognition and measurement Items of equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset and to bringing the asset to a working condition for its intended use. Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met. Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company. Depreciation Depreciation is recognised in the statement of profit or loss and other comprehensive income on a straight-line basis over the estimated useful lives of each part of an item of equipment over the useful lives of the respective assets which range from three to five years and is as follows: Computer equipment – 4 years Office equipment – 5 years Items of equipment are depreciated from the date that they are installed and ready for use. In respect of additions to /deletions from the equipment, depreciation is provided on pro-rata basis with reference to the month of addition/deletion of the assets. An item of equipment and any significant part initially recognised is derecognised upon disposal (i.e., at the date the recipient obtains control) or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit or loss when the asset is derecognised. Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. Fair value measurement The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date on a mark-to-market basis. 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. The fair value measurement 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 for the asset or

liability

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Fair value measurement (continued) The principal or the most advantageous market must be accessible by the Company. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. 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.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained in this note. Fair value related disclosures are given in the relevant notes.

Inventories

Traded goods are valued at lower of cost and net realisable value. Cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on a weighted average basis. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

The Company reviews the condition of its inventories and makes provision against obsolete and slow-moving inventory items which are identified as no longer suitable for sale or use. Obsolete and slow-moving items are valued at cost or estimated net realisable value, whichever is lower. Any write-down of inventories is recognised as an expense during the year.

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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 indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating units (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation and amortisation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement of profit and loss. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.

Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets Initial recognition and measurement Financial assets are classified, at initial recognition, are classified as at amortised cost, fair value through other comprehensive income (OCI), and fair value through profit or loss. The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Company’s business model for managing them. The Company initially measures a financial asset at its fair value plus, for an item not at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issue. Debt instruments at amortised cost A ‘debt instrument’ is measured at its amortised cost if both the following conditions are met: a) The asset is held within a business model whose objective is to hold assets for collecting

contractual cash flows, and

b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.

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3. Significant accounting policies (continued) Financial instruments (continued) Financial assets (continued)

Business Model assessment

In making an assessment of the objective of the business model in which a financial asset is held at a portfolio level, the Company considers all of the relevant information about how the business is managed, including:

‐ the documented investment strategy and the execution of this strategy in practice. This includes whether the investment strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realising cash flows through the sale of the assets;

‐ how the performance of the portfolio is evaluated and reported to the Company’s management;

‐ the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;

‐ periods, the reasons for such sales and expectations about future sales activity. ‐ how managers of the businesses are compensated – e.g. whether compensation is based on

the fair value of the assets managed or the contractual cash flows collected.

Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the Company’s continuing recognition of the assets.

The Company has determined that it has below business model:

‐ Held-to-collect business model: this includes cash and cash equivalents, Loan receivables, convertible loan notes, trade and other receivables excluding advances and prepayments. These financial assets are held to collect contractual cash flows.

Assessment of whether contractual cash flows are solely payments of principal and interest

For the purpose of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as profit margin.

In assessing whether the contractual cash flows are SPPI, the Company considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making the assessment, the Company considers: ‐ contingent events that would change the amount and timing of cash flows; ‐ leverage features; ‐ prepayment and extension terms; ‐ terms that limit the Company’s claim to cash flows from specified assets (e.g. non-recourse

loans); and features that modify consideration of the time value of money (e.g. periodical reset of interest rates).

25


Financial instruments (continued) Financial assets (continued) Reclassifications Financial assets are not reclassified subsequent to their initial recognition unless the Company was to change its business model for managing financial assets, in which case all affected financial assets would be reclassified on the first day of first reporting period following the change in the business model. Initial recognition and measurement After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. 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 other income in the statement of profit or loss. The losses arising from impairment are recognised in the statement of profit or loss. Financial assets Derecognition A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised when:

- The rights to receive cash flows from the asset have expired, or - 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.

When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Company’s continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.

26


Financial instruments (continued) Impairment of financial assets In accordance with IFRS 9, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure: a) Financial assets that are debt instruments, and are measured at amortised cost e.g. trade

receivables, loan receivables, convertible loan notes and cash and cash equivalents.

b) Trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of IFRS 15 (referred to as ‘contractual revenue receivables’ in these financial statements).

The Company follows ‘simplified approach’ for recognition of impairment loss allowance. The Company recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition. For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL. Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date. ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original EIR. When estimating the cash flows, an entity is required to consider: - All contractual terms of the financial instrument (including prepayment, extension, call and similar options) over the expected life of the financial instrument. However, in rare cases when the expected life of the financial instrument cannot be estimated reliably, then the entity is required to use the remaining contractual term of the financial instrument

- Cash flows from the sale of collateral held or other credit enhancements that are integral to

the contractual terms - Financial assets measured as at amortised cost, ECL is presented as an allowance, i.e., as

an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the company does not reduce impairment allowance from the gross carrying amount.

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Financial instruments (continued) Impairment of trade receivables The Company has applied an ECL model to determine the allowance for ECL provision on trade receivables at the reporting date. The expected credit loss (ECL) model involves the use of various assumptions and study of historical trends relating to the collection of trade receivables and consideration of forward looking factors. The significant judgements includes Provision matrix based probability of default % for each overdue ageing bucket based on the historical pattern and forward looking data analysis of default or moving into greater than 270 days overdue. Impairment of loan receivables The Company has used a Probability of default (PD)/ Loss given default (LGD) approach to calculate ECLs for Loan Receivables given that these are assessed as being not data-rich. The PD/LGD approach is an advanced approach involving estimates of PDs and LGDs with external benchmark date to calculate ECLs and is considered appropriate.

The Expected Credit Losses (ECL) is measured as below: ECL = PD x LGD x EAD Where: - ECL refers to the Expected Credit Losses; - PD - This is the Probability of Default currently defined as the probability that the Loan

receivable will remain outstanding for more than 90 days; - LGD - Loss Given Default denotes the share of losses, that is, the actual Loan receivable's loss in the event of borrowing group company’s default, or what is expected to be irrecoverable from among the assets in insolvency proceedings; -EAD - Exposure at Default is the amount outstanding at the reporting date less balances owed by the Company to the related party.

The following factors have been considered in determining the PD and LGD:

- An assessment of the historical observed default and loss experience; - Country risk based on the jurisdiction where the intercompany loans are based.

The Company used the simplified impairment approach to calculate for its expected credit losses (ECL). Management has used inferred proxies for the probability of default (PD) based on relevant jurisdictional sovereign Moody’s ratings. An LGD (loss given default) proxy range of 2% to 5% was used for counterparties which is representative of the corporate client’s exposure.

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Financial instruments (continued)

Financial liabilities

Initial recognition and measurement

All financial liabilities are recognised initially at amortised cost and, in the case of bonds borrowings and trade and other payables, net of directly attributable transaction costs. After initial recognition, financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.

The Company’s financial liabilities include bonds borrowings, trade and other payables.

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.

Cash and cash equivalents

Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value. For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously. There is no offsetting of financial instruments applied in the statement of financial position as on reporting date.

Derivative financial instruments

Initial recognition and subsequent measurement

The Company uses derivative financial instruments, such as full currency swaps and interest rate swaps, to hedge its foreign currency risks and interest rate risks, respectively. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value.

A hedging relationship exists where:

• at the inception of the hedge there is formal documentation of the hedge; • the hedge is expected to be highly effective; • the effectiveness of the hedge can be reliably measured; • the hedge is highly effective throughout the reporting year; and • for hedges of a forecasted transaction, the transaction is highly probable and presents an

exposure to variations in cash flows that could ultimately affect profit or loss.

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Derivative financial instruments (continued) Where there is a hedging relationship between a derivative instrument and a related item being hedged, the hedging relationship is classified as cash flow hedge or fair value hedge. A fair value hedge is hedge of the exposure to changes in fair value of a recognised asset or liability or an unrecognised firm commitment, or an identified portion of such an asset, liability or firm commitment, that is attributable to a particular risk and could affect profit or loss whereas a cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognised asset or liability (such as all or some future interest payments on variable rate debt) or a highly probable forecast transaction and could affect profit or loss. The hedging relationships meet the conditions of cash flow hedges during the year and are therefore accounted as cash flow hedges and effective portion will be accounted under other comprehensive income.

Cash flow hedge reserve The hedging reserve includes the cash flow hedge reserve and the costs of hedging reserve, see note 5 for details. The cash flow hedge reserve is used to recognise the effective portion of gains or losses on derivatives that are designated and qualify as cash flow hedges. Amounts recognised in the effective portion of cash flow hedges is reclassified to the statement of profit or loss when the hedged item affects profit or loss. Income tax expense

Income tax Income tax expense comprises of current and deferred tax. Current tax and deferred tax is recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income. Current tax

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.

Current income tax relating to items recognised outside statement of profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. Deferred tax Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are recognised for all taxable temporary differences, except: - When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability

in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss

- In respect of taxable temporary differences associated with investments in subsidiaries and interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

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Notes to the separate financial statements for the year ended 31 March 2020 3. Significant accounting policies (continued)

Income tax expense (continued)

Deferred tax (continued) Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is reasonably certain that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except: ‐ When the deferred tax asset relating to the deductible temporary difference arises from the

initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss

‐ In respect of deductible temporary differences associated with investments in subsidiaries

and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become reasonable certain that future taxable profits will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognised outside profit or loss is recognised outside the statement of profit and loss (either in other comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

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Notes to the separate financial statements for the year ended 31 March 2020


Segment Reporting

Based on "Management Approach" as defined in IFRS 8 -Operating Segments, the CODM evaluates the Company's performance and allocates the resources based on an analysis of various performance indicators by business segments. Accordingly, the CODM believes that they view the business as one reportable segment only. The Company is mainly engaged with agro activities and is the main area of the Company’s operations. It includes the manufacture and marketing of conventional agrochemical products, seeds and other agricultural related products. Non agro activity is immaterial hence there is only one segment which is agro-chemical activities which is applicable for the Company. Management only reviews revenue by regions and the ultimate holding company considers the group as one segment being agrochemical.

Stated Capital Stated capital represents the proceeds received and in consideration for which ordinary shares were issued. Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of tax effects. Perpetual Subordinated Capital Securities

Perpetual subordinated capital securities are recognised at cost, net of transactions costs in the statement of financial position. Securities are perpetual bond that are redeemable at the option of the Company. Company also has rights to defer the interest on its discretion. Hence the securities are classified as equity.

Finance income

Interest income from cash at banks, loan receivables and convertible loan notes is recognised under finance income using the effective interest method.

Finance costs

Finance cost include interest expense to group companies, bond interest, transaction costs, financial service charges, derivative transactions and bank charges and foreign exchange gains/ (losses) and are recognised in statement of profit or loss. Interest expense is recognised using the effective interest method.

New standards, interpretations and amendments to existing standards in issue but not yet effective

A number of new standards are effective for annual period beginning 1 April 2020 and earlier application is permitted; however, the Company has not early adopted the new or amended standards in preparing these financial statements. The following amended standards and interpretations are not expected to have a significant impact on the Company’s financial statements.

Definition of Material – Amendments to IAS 1 and IAS 8

The IASB refined its definition of material to make it easier to understand. It is now aligned across IFRS Standards and the Conceptual Framework.

The changes in Definition of Material (Amendments to IAS 1 and IAS 8) all relate to a revised definition of 'material' which is quoted below from the final amendments.

32


New standards, interpretations and amendments to existing standards in issue but not yet effective (continued) Definition of Material – Amendments to IAS 1 and IAS 8 (continued) “Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general-purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.” The amendment is effective from 1 January 2020 but may be applied earlier. However, the Company does not expect significant changes. The refinements are not intended to alter the concept of materiality. Revised Conceptual Framework for Financial Reporting The IASB has issued a revised Conceptual Framework which will be used in standard-setting decisions with immediate effect. Key changes include:

increasing the prominence of stewardship in the objective of financial reporting reinstating prudence as a component of neutrality defining a reporting entity, which may be a legal entity, or a portion of an entity revising the definitions of an asset and a liability removing the probability threshold for recognition and adding guidance on derecognition adding guidance on different measurement basis, and stating that profit or loss is the primary performance indicator and that, in principle, income

and expenses in other comprehensive income should be recycled where this enhances the relevance or faithful representation of the financial statements.

No changes will be made to any of the current accounting standards. The effective date of the above standard is 01 January 2021 (likely to be extended to 1 January 2022). IFRS 10 and IAS 28 (amendments) Sale or Contribution of Assets between an Investor and its Associate or Joint Venture The amendments to IFRS 10 and IAS 28 deal with situations where there is a sale or contribution of assets between an investor and its associate or joint venture. Specifically, the amendments state that gains or losses resulting from the loss of control of a subsidiary that does not contain a business in a transaction with an associate or a joint venture that is accounted for using the equity method, are recognised in the parent’s profit or loss only to the extent of the unrelated investors’ interests in that associate or joint venture. Similarly, gains and losses resulting from the re-measurement of investments retained in any former subsidiary (that has become an associate or a joint venture that is accounted for using the equity method) to fair value are recognised in the former parent’s profit or loss only to the extent of the unrelated investors’ interests in the new associate or joint venture. The effective date of the amendments has yet to be set by the IASB; however, earlier application of the amendments is permitted. The directors of the Company does not anticipate any impact on the separate financial statement since they do not anticipate any change in classification of investment in subsidiaries and investment in joint venture.

33



4. Changes in significant accounting policies

During the year under review, the following standards were effective. However, the following standards had no impact on the financial statements. IFRIC 23 Uncertainty over Income Tax Treatment The International Accounting Standards Board (IASB) issued IFRS interpretation IFRIC 23 Uncertainty over Income Tax Treatments which is to be applied while performing the determination of taxable profit (or loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under IAS 12. According to IFRIC 23, companies need to determine the probability of the relevant tax authority accepting each tax treatment, or group of tax treatments, that the companies have used or plan to use in their income tax filing which has to be considered to compute the most likely amount or the expected value of the tax treatment when determining taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates. The standard permits two possible methods of transition - i) Full retrospective approach – Under this approach, IFRIC 23 will be applied retrospectively to each prior reporting period presented in accordance with IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors, without using hindsight and ii) Retrospectively with cumulative effect of initially applying IFRIC 23 recognized by adjusting equity on initial application, without adjusting comparatives. The effective date for adoption of IFRIC 23 is annual periods beginning on or after January 1, 2019. The Company has adopted the standard on April 1, 2019 and has decided to adjust the cumulative effect in retained earnings on the date of initial application i.e. April 1, 2019 without adjusting comparatives for this adjustment. The company has recorded an adjustment of USD 2,700 thousand to opening retained earnings balance which represent potential tax liability for the years of assessment 2013, 2014 and 2015 received from the Mauritius Revenue Authority. The effect on adoption of IFRIC 23 is as disclosed in the separate statement of changes in equity of these financial statements. Due to adoption of this interpretation the line item in the financial statements which have been impacted are as follows:

Statement of financial position USD’000 As at 01 April 2019

Decrease in Retained earnings (2,700) Increase in Provision for Income tax 2,700

IFRS 16 Leases

The Company initially applied IFRS 16 Lease from 01 April 2019. On transition and subsequently, a lessee can elect not to apply the lessee accounting model to short-term leases or to leases of low-value items. If a lessee elects either of these recognition exemptions, then it recognises the related lease payments as an expense on a either a straight-line basis over the lease term or another systematic basis if that basis is more representative of the pattern of the lessee’ benefit.

On transition the Company has availed the short-term leases practical expedients, therefore, the Company is not required to calculate lease assets and liabilities on transition. The lease was classified as operating leases under IAS 17 to which the Company has availed short-term practical expedient under IFRS 16, does not require any adjustment as on transition date and the amount of lease is insignificant.

34


Notes to the separate financial statements for the year ended 31 March 2020 5. Financial risk management

The Company’s principal financial liabilities comprise of bonds, borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company’s operations. The Company’s principal financial assets include loan receivables, convertible loan notes, trade and other receivables excluding advances, cash and cash equivalents that derive directly from its operations. The Company also enters into derivative transactions. The Company is exposed to market risk, credit risk and liquidity risk. The Company’s senior management oversees the management of these risks. All derivative transactions for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Company’s policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below. The Company has the following risks arising from financial instruments: Market risk Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk. Financial instruments affected by market risk include loans and borrowings and derivative financial instruments. 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's exposure to the risk of changes in market interest rates relates primarily to the Company’s long-term debt obligations with floating interest rates. The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings and by using interest rate swaps.

Interest rate sensitivity A 50 basis point is the sensitivity rate used internally by key management personnel and represents management's assessment of the reasonably possible change in interest rates.

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Company’s profit before tax is affected through the impact on floating rate borrowings.

The interest rate profile of the Company’s interest-bearing financial instruments as reported to the management of the Company is as follows.

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5. Financial risk management (continued)

Interest rate risk (continued) Interest rate sensitivity The interest rate profile of the Company’s interest-earning financial instruments as reported to the management of the Company is as follows.

31 March 2020 Variable rate instrument

USD’000

Increase/ decrease in basis points

Effect on profit or loss

USD’000

Effect on equity

USD’000

Borrowings 1,071,512 +50 (5,358) (5,358) ------------- -50 5,358 5,358

31 March 2019 Restated*

USD’000



Effect on equity

Borrowings 1,208,727 +50 (6,044) (6,044) ------------- -50 6,044 6,044

Borrowings amounting to USD 405,107 thousand (2019: USD 259,952 thousand) are interest free and borrowings amounting to USD 1,859,367 thousand (2019: USD 1,848,810 thousand) are having fixed interest, therefore these are not exposed to interest rate risk. The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable market environment, showing a significantly higher volatility than in prior years.

31 March 2020 Variable rate instrument

USD’000



USD’000

Effect on equity

USD’000

Loan receivable 278,804 +50 1,394 1,394 ------------- -50 (1,394) (1,394)

31 March 2019 Restated*

USD’000


Effect on

profit or loss

Effect on

equity

Loan receivable 386,726 +50 1,933 1,933 ------------- -50 (1,933) (1,933)

Loan receivable amounting to USD 2,712,987 thousand (2019: USD 2,670,711 thousand) are having fixed interest rate and therefore these are not exposed to interest rate risk.

Bonds, convertible loan notes and cash and cash equivalents are fixed interest financial assets hence does not have interest rate volatility risk.

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Notes to the separate financial statements for the year ended 31 March 2020 5. Financial risk management (continued)

Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities (when revenue or expense is denominated in a foreign currency). The Company manages its foreign currency risk by hedging transactions that are expected to occur within a maximum 12-month period for hedges of actual sales and purchases and 12-month period for foreign currency loans. The Company hedges its exposure to fluctuations on the foreign currency loan by using foreign currency swaps and forwards. At 31 March 2020, the Group hedge position is stated in Note 25. This foreign currency risk is hedged by using foreign currency forward contracts and full currency interest rate swaps. The currency profile of the Company’s financial assets and liabilities is summarised as follows:

Financial

assets Financial liabilities

Financial assets

Restated*

Financial liabilities Restated*

2020 2020 2019 2019 USD’000 USD’000 USD’000 USD’000 Great Britain pound 7,563 1,342 7,953 6,065 Australian dollar 512 3,718 4,783 2,349 Mauritian rupee 2 1 3 3 United States dollar 1,658,836 4,221,620 1,433,028 4,224,628 Japanese yen 412,017 - 401,425 - Indian Rupees - 2 - - Ethiopian Birr 87 56 - - EURO 1,553,003 20,868 1,486,459 33,175

------------- ------------- ------------- ------------- 3,632,020 4,247,607 3,333,651 4,266,220 ======= ======== ======= ========

The above figures exclude advances and prepayments amounting to USD 49,505 thousand (2019: USD 51,000 thousand) and USD 133 thousand (2019: USD 975 thousand) respectively. * This amount is subject to prior year restatement. Refer to note 32.

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Foreign Currency risk (continued) Sensitivity analysis

The following table indicates the approximate change in the Company’s profit or loss and equity in response to reasonable possible changes in the foreign exchange rates to which the Company has significant exposure at the reporting date, with all other variables held constant.

Increase/

(decrease) in USD

Effect on profit or loss Effect on equity

2020 2019 2020 2019 USD’000 USD’000 USD’000 USD’000

Restated* Restated* Appreciation of GBP +10% 622 189 622 189 Depreciation of GBP -10% (622) (189) (622) (189) Appreciation of AUD +10% (321) 243 (321) 243 Depreciation of AUD -10% 321 (243) 321 (243) Appreciation of JPY +10% - - 41,202 40,143 Depreciation of JPY -10% - - (41,202) (40,143) Appreciation of ETB +10% 3 - 3 - Depreciation of ETB -10% (3) - (3) - Appreciation of EUR +10% 3,736 (3,764) 153,214 145,328 Depreciation of EUR -10% (3,736) 3,764 (153,214) (145,328)

* This amount is subject to prior year restatement. Refer to note 32.

Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments. Trade receivables Customer credit risk is managed by each business unit subject to the Company’s established policy, procedures and control relating to customer credit risk management. The Company assesses impairment based on expected credit losses (ECL) model. The Company uses a provision matrix to determine impairment loss allowance on the portfolio of trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivable and is adjusted for forward looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed. The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions. The expected credit loss (ECL) model involves the use of various assumptions and study of historical trends relating to the collection of trade receivables and consideration of forward looking factors.

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Credit risk (continued)

Trade receivables (continued)

Refer to note 3 for significant judgements applied for ECL calculations.

On 11 March 2020 the World Health Organisation confirmed the Coronavirus outbreak (‘COVID-19’) a pandemic. While this event occurred during the year, the government-imposed laws and rules have occurred around and subsequent to reporting date. The Company’s business has remained largely unaffected with minimal disruption to core operations or impact on financial performance or liquidity. The products provided by the Company are predominantly for the food and agriculture sector. This sector is considered an essential service and not subject to government-imposed shutdowns, however retailers and distributors have self-imposed social distancing principals to maintain continuity of operations and supress the Coronavirus Pandemic. While these self-imposed measures have altered the traditional sales processes, there has been no negative impact on trading results. Finally, the Company has seen no disruption in its purchase supply chains, nor is there any indication that these will become materially affected. Refer to note 19(b) for the information about the credit risk exposure on the Company’s trade receivables using a provision.

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:

2020 2019

USD’000 USD’000 Restated*

Convertible loan notes 5,000 5,000 Derivative financial assets 11,236 2,181 Cash and cash equivalents 302,736 9,083 Loan receivables 2,991,791 3,057,437 Trade and other receivables 321,257 259,950

---------------- -----------------

3,632,020 3,333,651 ========== ==========

* This amount is subject to prior year restatement. Refer to note 32. The above figures exclude advances and prepayments amounting to USD 49,505 thousand (2019: USD 51,000 thousand) and USD 133 thousand (2019: USD 975 thousand) respectively.

Cash and cash equivalents

Credit risk from balances with banks and financial institutions is managed by the Company's treasury department. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty’s potential failure to make payments. Impairment on cash and cash equivalents has been measured on a 12-month expected loss basis and reflects the short maturities of the exposures. ECL allowance is not material and therefore not recognised.

Convertible loan notes

Convertible loan notes are issued by reputed counterparty listed in NYSE. ECL allowance is not material and therefore not recognised.

Loan receivable No loss allowance recognised on loan receivable as the possibility of default is insignificant. Refer to note 3 for accounting policy on inter-company loan receivables. Derivative financial assets The derivatives are entered into with reputed banks and financial institution counterparties.

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Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation. The Company manages liquidity risk by maintaining adequate reserves, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of the financial assets and liabilities.

The following are the Company’s contractual maturities of financial liabilities:

Less than Between More than

one year 1 to 5 years 5 years Total 31 March 2020 USD’000 USD’000 USD’000 USD’000

Financial liabilities Bonds - 497,031 297,010 794,041 Borrowings 576,619 2,759,367 - 3,335,986 Trade and other payables 116,962 618 - 117,580 -------------- -------------- -------------- -------------- 693,581 3,257,016 297,010 4,247,607 ======== ======== ======== ======== 31 March 2019 Restated*

Financial liabilities

Bonds - 496,966 295,764 792,730 Borrowings 108,727 3,208,762 - 3,317,489 Trade and other payables 152,342 3,659 - 156,001 -------------- -------------- -------------- -------------- 261,069 3,709,387 295,764 4,266,220 ======== ======== ======== ========


40



Foreign currency exchange risk and interest rate risk The Company has taken a floating rate borrowing in USD and given a loan in EUR and JPY other than its functional currency. In order to hedge its exposure arising from variability of functional currency equivalent cash flows and its interest rate cash flows exposure arising from floating rate of interest, the Company has entered into a Cross Currency Interest Rate Swap ("CCIRS"). Therefore, the Company has established a hedge ratio of 1:1 for all its foreign currency hedging relationships. Hedge effectiveness is determined at the inception of the hedge and through periodic prospective effectiveness assessment to ensure that an economic relationship exists between the hedged item and hedging instruments How the entity’s hedging activities may affect the amount, timing and uncertainty of its future cash flows; The summary of quantitative data about the Company’s holding of cross currency interest rate swap contracts to hedge the foreign currency and interest rate exposure on its loan given and borrowings is as follows.

Particulars Currency 31st March 2020

Average rate Average Notional Value

Foreign exchange contracts

Interest rate Thousands

Cross currency interest rate swap

EUR

1.13

1.47%

1,328,870


JPY

110.750

1.13%

44,300,000

Particulars Currency 31st March 2019

Average rate

Average

Notional Value Foreign exchange contracts

Interest

rate Thousands


EUR

1.13

1.47%

1,328,870


JPY

110.750

1.13%

44,300,000

The effect that hedge accounting has had on the entity’s balance sheet, statement of profit or loss and statement of changes in equity is, as follows on the next page. The impact of hedging instruments designated in hedging relationships on the statement of financial position of the Company is, as follows on the next page:

41



Foreign currency exchange risk and interest rate risk (continued)

Particulars

Currency

31st March 2020 Nominal amount

Carrying amount

Change in fair value of hedging instrument*

Change in fair value of hedging item*

Line item in the statement of financial position where the hedging instrument is included.

Assets


- CCIRS EUR'000 1,328,870 21,391 19,485 (19,485) Derivatives

Liabilities


- CCIRS JPY '000 44,300,000 (10,155) (10,550) 10,550 Derivatives

Particulars

Currency

31st March 2019

Nominal amount

Carrying amount

Change in fair value of

hedging instrument*

Change

in fair value of hedging

item*

Line item in the

statement of financial position

where the hedging

instrument is included.

Assets


- CCIRS EUR'000 995,590 2,399 2,439 (2,439) Derivatives

JPY '000 44,300,000 345 397 (397) Derivatives

Liabilities


- CCIRS EUR'000 333,280 (563) (532) 532 Derivatives

* used as the basis for hedge ineffectiveness

42



Foreign currency exchange risk and interest rate risk (continued)

Cash flow hedges 31 March 2020

Hedging gain or loss recognised in OCI

Amount reclassified from Profit or loss to OCI

Line item in statement of profit or loss

USD '000 USD '000

Foreign currency exchange risk and Interest rate risk

- CCIRS

57,380

(29,636)

Forex gain/ (loss)

(46,490)

Interest on borrowing

Cash flow hedges 31 March 2019

Hedging gain or loss recognised in OCI

Amount reclassified from Profit or loss to OCI

Line item in statement of profit or loss

USD '000 USD '000

Foreign currency exchange risk and Interest rate risk

- CCIRS

2,305

(7,623)

Forex gain/ (loss)

(6,213)

Interest on borrowing

Reconciliation of reserves Cash flow hedge reserves

Particulars 2020 2019 Amount Amount USD'000 USD'000 Opening balance (11,531) -

Hedging gain or loss 57,380 2,305

Amount reclassified to P&L because the hedged item affected P&L

(76,126)

(13,836)

Closing balance (30,277) (11,531)

43

UPL CORPORATION LIMITED Notes to the separate financial statements for the year ended 31 March 2020 5. Financial risk management (continued)

Fair values

As required by IFRS 13, the fair values for the financial instruments appearing in the statement of financial position have been disclosed by the following fair value measurements hierarchy.

(i) Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities (ii) Level 2 -Inputs other than quoted prices as in level 1 that are observable for the asset or

liability, either directly (that is, as prices) or indirectly (that is, derived from prices); and (iii) Level 3 - Inputs for the asset or liability that are not based on observable market date.

Accounting classification and fair values

31 March 2020 Fair value – hedging

instrument Financial assets at

amortised cost USD’000 USD’000 Derivative financial assets 11,236 - Convertible Loan Notes - 5,000 Loan receivables - 2,991,791 Trade and other receivables - 321,257 Cash and cash equivalents - 302,736 -------------- -------------- 11,236 3,620,784 ======== ======== Bonds - 794,041 Borrowings - 3,335,986 Trade and other payables - 117,580 -------------- -------------- - 4,247,607 ======== ======== 31 March 2019 Restated*

Derivative financial assets 2,181 - Convertible Loan Notes - 5,000 Loan receivables - 3,057,437 Trade and other receivables - 259,950 Cash and cash equivalents - 9,083 -------------- -------------- 2,181 3,331,470 ======== ======== Bonds - 792,730 Borrowings - 3,317,489 Trade and other payables - 156,001 -------------- -------------- 2,181 4,266,220 ======== ======== * This amount is subject to prior year restatement. Refer to note 32.

44



Fair values (continued)

The carrying amount of trade and other receivables, cash and cash equivalents and trade and other payables approximate their fair value due to their short nature.

For long term financial asset loan receivables, convertible loan notes, bonds, borrowings, trade and other payables, the carrying amount approximate its fair value since these are at prevailing market rates.

Derivative financial assets

Derivatives of USD 11,236 thousand (2019: USD 2,181 thousand) is measured at fair value based on MTM reports received from the banks. These instruments are categorised under level 2 of fair value hierarchy.

Bonds Financial liabilities include bonds are listed on Singapore Stock Exchange and is valued at amortised cost. The fair value of the bonds are determined from the Singapore Stock Exchange and approximate to fair value.

Borrowing

The carrying amount of borrowings approximately equals to the fair values since the rate of interest charged is considered to at par with prevailing market rates of interest.

Capital management

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for its shareholder and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to its shareholder, return capital to its shareholder, issue new shares or sell assets to reduce debt. The Company monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total equity. Net debt is calculated as total borrowings (including current and non-current borrowings) less cash and cash equivalents. Total capital is calculated as total equity plus net debt. The balances as at 31 March were as follows:

2020 2019 Restated*

USD’000 USD’000

Bonds 794,041 792,730 Borrowings 3,335,986 3,317,489 Less: cash and cash equivalents (302,736) (9,083) ------------- -------------- Net debt 3,827,291 4,101,136 Total equity 2,013,937 1,649,348 ------------- -------------- 5,841,227 5,719,089 ======== ======== Gearing ratio 1.90 2.49 * This amount is subject to prior year restatement. Refer to note 32.

45

UPL CORPORATION LIMITED Notes to the separate financial statements for the year ended 31 March 2020 6. Critical accounting estimates and judgements (continued)

The following are the management’s judgements made in applying the accounting policies of the Company that have the most significant effect on the financial statements. (a) Significant accounting estimates, assumptions and judgements

The preparation of the Company’s financial statements requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

(b) Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, hat have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur. Assumptions and estimation uncertainties as at 31 March 2020 that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities in the next financial year include the following:

Impairment of financial assets Trade receivables The Company assesses impairment based on expected credit losses (ECL) model on trade receivables. The Company uses a provision matrix to determine impairment loss allowance on the portfolio of trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivable and is adjusted for forward looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed. Refer to note 5. The Company has applied an ECL model to determine the allowance for ECL provision on trade receivables at the reporting date. The expected credit loss (ECL) model involves the use of various assumptions and study of historical trends relating to the collection of trade receivables and consideration of forward looking factors. Loan receivables

Judgement is required in determining the quantitative and qualitative analysis used in determining the expected credit loss. When measuring ECL, the Company considers the risk of probability and loss given default that a possibility of a credit loss occurs and the possibility that no credit loss occurs, despite the fact that the possibility of a credit loss occurring is very low.

46

UPL CORPORATION LIMITED Notes to the separate financial statements for the year ended 31 March 2020 6. Critical accounting estimates and judgements (continued)

Impairment of non-financial assets The impairment exists when the carrying value of an asset or cash generating unit exceeds is recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm’s length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the asset’s performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. Cash flows from hedges - effective portion of changes in Fair Value The determination of the accounting treatment of the Company’s hedging relationships is critical since the recording of gains or losses on remeasurement of hedging instruments to fair value at the reporting date gives rise to adjustments directly in profit or loss or other comprehensive income where such relationship is treated as fair value hedge or cash flow hedge respectively. Hedge accounting under IFRS is a complex area and the Company have entered into a number of hedge contracts, necessitating a sophisticated system to record and track each contract and calculate the related valuations at each financial reporting date. The valuation of hedging instruments and consideration of hedge effectiveness involve a significant degree of both complexity and management judgement. Uncertain tax treatments

There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. Where the final tax outcome of these matters is different from the amounts initially recorded, such differences will impact the current and deferred tax provisions in the period in which the tax determination is made. When measuring current and deferred income tax assets and liabilities IFRIC 23 requires an entity to assume that a taxation authority will examine amounts that it has a right to examine and have full knowledge of all related information when making those examinations. The Company has applied estimates and judgements about whether the relevant taxation authority will accept the position taken by the entity in its tax filings. The actual taxes amount may differ from the amount recognised in the financial statements on account of uncertainties. As a result of this Interpretation, the effect of uncertainties on income tax treatment of items or transactions is assessed by the management. Depending on probability of the taxation authorities accepting the treatment in the tax return, the Company discloses the uncertainty in the financial statements. (Refer to note 4).

47


7. Revenue

Revenue streams

The Company’s revenue is generated from the sale of goods. The Company’s revenue is split as follows: 2020 2019 USD’000 USD’000 Revenue to group companies (Note 31) 291,225 240,819 Revenue to non-group companies 43,974 3,814 -------------- -------------- 335,199 244,633 ======== ========

Disaggregation of revenue from contracts with customers

In the following table, revenue from contracts with customers is disaggregated by primary geographical market and timing of revenue recognition.

2020 2019 USD’000 USD’000 Primary geographical markets Africa 29,284 - America 14,305 56,428 Asia Latin America Europe Other regions

91,740 128,405

58,551 12,914

68,364 95,559 14,880

9,402 -------------- -------------- 335,199 244,633 ======== ======== Timing of revenue recognition Goods transferred at a point in time 335,199 244,633

======== ======== Contract balances

The following table provides information about receivables from customers. 2020 2019 USD’000 USD’000

Receivables which are included in trade and other receivables 303,841 256,911 ======== ========

48


8. Direct cost

2020 2019 USD’000 USD’000

Commission expenses 608 22 Rebate and discount 66 20 Sales promotion expenses 33 12 Purchases of finished goods: -Group companies (note 31) 225,684 205,859 -Non group companies 55,880 - ------------ ------------ 282,271 205,913 ======= =======

9. Other income 2020 2019

Restated* USD’000 USD’000

Commission income (note 31) 32,528 39,686 Royalty income (note 31) 867 361 Cash discount (note 31) - 2,323 Dividend income from group company (note 31) - 30,000 ------------ ------------ 33,395 72,370 ======== ========


10. Other expenses 2020 2019 USD’000 USD’000

Auditors' remuneration 213 83 Travelling expenses 344 966 Other expenses 2,009 352 Rent 17 185 Salaries 1,200 879 Management fees (Note 31) 8,365 4,000 Postage 32 21 Printing and stationary 3 2 Other fees and charges 2,985 1,294 ------------- ------------- 15,168 7,782 ======= =======

49


11. Finance costs

2020

2019 Restated*

USD’000 USD’000 Bond interest 29,750 29,750 Transaction costs 12,094 3,856 Bank interest 71,378 9,932 Interest expense on amount owed to group companies (note 31) 2,783 6,917 Financial services charges and bank charges 492 1,044 Unrealised exchange difference 1,303 22,272 ------------- ------------- 117,801 73,771 ======== ======== * This amount is subject to prior year restatement. Refer to note 32.

12. Finance income 2020 2019


Interest income 822 1,661 Interest from group companies (Note 31) 107,290 41,335 ------------- ------------- 108,112 42,996 ======== ========


13. Taxation

The Company, being resident in Mauritius, is liable to income tax in Mauritius on its chargeable income at the rate of 15% (2019: 15%). The Company has received its Category 1 Global Business Licence (‘‘GBL1’’) before 16th October 2017 and is therefore, grandfathered under the provisions of the Finance (Miscellaneous Provisions) Act 2018 (‘‘FA 2018’’) till 30th June 2021. As from 1st July 2021, the Company’s GBL1 licence will automatically be converted to a Global Business Licence (‘‘GBL’’). The Company will therefore operate under the current tax regime up to 30th June 2021. Until 30th June 2021, the Company’s foreign sourced income is eligible for a foreign tax credit which is computed as the higher of the Mauritian tax and the foreign tax on the respective foreign sourced income. The foreign tax for a GBL1 company is based on either the actual foreign tax charged by the foreign jurisdiction or a deemed foreign tax. The deemed amount of foreign tax is based on 80% of the Mauritian tax on the relevant foreign sourced income. In computing its total actual foreign tax credit, the Company is allowed to pool all its foreign sourced income. However, effective from 1 January 2019 and subject to the following transitional provisions, credit in respect of the 80% presumed foreign tax has been abolished:

Corporations issued with a Category 1 Global Business Licence (GBC 1 Licence) on or before:

Transitional Provisions

16 October 2017 Credit in respect of 80% presumed foreign tax available up to 30 June 2021

50


13. Taxation (continued)

Effective 1 January 2019, an 80% partial exemption has been introduced. The partial exemption is available on following specified income, and as applicable, is conditional on the Company satisfying the conditions relating to the substance of its transactions, as prescribed by the Financial Services Commission.

Foreign source dividend Interest income Income attributable to a permanent establishment which a resident company has in a

foreign country Income derived by a collective investment scheme (CIS), closed end fund, CIS Manager,

CIS Administrator, Investment Advisor or Asset Manager Income derived by companies engaged in ship and aircraft leasing Leasing and provision of international fibre capacity Reinsurance and reinsurance brokering activities Sale, financing arrangement, asset management of aircraft and its spare parts and aviation

related advisory services Gains or profits from the sale of units, securities or debt obligations are exempt from tax in Mauritius.

The Company will therefore operate under the current tax regime up to 30th June 2021.

A reconciliation between the profit before taxation and taxable profit is as follows: 2020 2019

Restated* USD’000 USD’000 Profit before taxation 53,064 57,627 ------------- ------------- Tax at 15 % 7,960 8,644 Annual allowance (Note 1) (181) (152) Non-allowable expenses (Note 2) 1,260 3,428 Non-taxable income (Note 3) (1,340) (6,760) ------------- ------------- 7,699 5,160 Less: Foreign tax credit (6,159) (4,128) ------------- ------------- Tax charge for the year 1,540 1,032 Tax paid under Advance Payment System (254) (388) ------------- ------------- Tax liability 1,286 644 ======== ======== * This amount is subject to prior year restatement. Refer to note 32. Note 1: Annual allowance is provided on product registration data, computer and equipment at 5% per annum. Note 2: Non allowable expenses include depreciation, amortisation, acquisition related costs, loss on disposal and expected credit losses. Note 3: Non-taxable income include annual allowances and unrealised exchange gain.

For the year ended 31 March 2020, the Company had an income tax expense of USD 1,507 thousand (2019: USD 1,090 thousand).

51



13. Taxation (continued)

The Company has applied the most appropriate tax credits by reference to each item of foreign source income separately. 2020 2019 USD’000 USD’000

Prior year tax (83) - Current year tax 1,540 1,032 Withholding tax 50 58 ------------- ------------- 1,507 1,090 ======== ========

2020 2019 USD’000 USD’000

01 April 644 686 IFRIC 23 impact adjustment 2,700 - Current year tax expense 1,540 1,090 Previous year tax under provision 183 - Tax paid (1,081) (1,132) ------------- ------------- 31 March 3,986 644 ======== ========

The company has recorded the income tax liability of USD 2,700 thousand at the time of adoption of IFRIC 23 which represent potential tax liability for the years of assessment 2013, 2014 and 2015 received from the Mauritius Revenue Authority.

14. Intangible assets

Product registration data

Software Total

USD’000 USD’000 USD’000 Cost: At 01 April 2018 19,296 - 19,296 Additions during the year 4,443 - 4,443 ------------- ------------- ------------- At 31 March 2019 23,739 - 23,739

Additions during the year 884 55 939 ------------- ------------- ------------- At 31 March 2020 24,623 55 24,678 ======== ======== ======== Amortisation: At 01 April 2018 (13,816) - (13,816) Charge for the year (2,967) - (2,967) ------------- ------------- ------------- At 31 March 2019 (16,783) - (16,783)

52



14. Intangible assets (continued)

Product registration data

Software Total

USD’000 USD’000 USD’000 Charge for the year (2,720) (2) (2,722) ------------- ------------- ------------- At 31 March 2020 19,503 2 19,505 ======== ======== ======== Carrying amounts At 31 March 2020 5,120 53 5,173 ======== ======== ======== At 31 March 2019 6,956 - 6,956 ======== ======== ========

15. Equipment

Total USD’000 Cost: At 01 April 2018 69 Additions during the year 10 ------------ At 31 March 2019 79 Additions during the year 22 ----------- At 31 March 2020 101 ======= Depreciation:

At 01 April 2018 (27) Charge for the year (12) ----------- At 31 March 2019 (39) ----------- At 01 April 2019 (39) Charge for the year (13) ------------

At 31 March 2020 52 ======= Carrying amount: At 31 March 2020 49 ======= At 31 March 2019 40 =======

16. Investment in subsidiaries

2020 2019 USD’000 USD’000 Investments – Unquoted

At start of the year 2,521,634 671,885 Additions 81,509 1,850,788 Disposal (28,847) (1,039) ------------- ------------- 2,574,296 2,521,634 ======== ========

53



16. Investment in subsidiaries (continued)

Name of companies

Country of

incorporation

Type of shares

held

Number of shares held

% holding

2020

2019

UPL Europe Limited

United Kingdom

Ordinary

465,266,514

100

100

Preference 19,812,277 100 100 UPL Australia Limited Australia Ordinary 258,482 100 100 UPL Agro SA DE CV Mexico Ordinary 29,690 99 99 UPL Limited Hong Kong Ordinary 10,000 99.99 100 UPL do Brasil S.A. Brazil Ordinary 4,242 100 100 PT.UPL Indonesia Indonesia Ordinary 58,800 100 100 PT Catur Agrodaya Mandiri Indonesia Ordinary 150,300 90 90 PT Advanta Seeds Indonesia Indonesia Ordinary 2,000,000 95.24 95.24 UPL Limited Korea Korea Ordinary 138,984 99 99 UPL Vietnam Co. Ltd Vietnam Ordinary - 100 100 UPL Colombia SAS Colombia Ordinary 26,416,818 100 100 UPL Japan Gk Japan Ordinary - 95.16 99.91 Decco Worldwide Post-Harvest Holdings Cooperatief U.A.

Netherlands

Ordinary

Member*

99.99

99.99

United Phosphorus Holdings Cooperatief U.A.

Netherlands

Ordinary

Member*

99.90

99.90

United Phosphorus Cayman Limited

Cayman

Ordinary

1

100

100

Advanta Seed International Mauritius Ordinary 10,500,000 90 90 UPL New Zealand Limited New Zealand Ordinary 100 100 100 UPL Limited, Mauritius (formerly known as UPL Agro Limited)

Mauritius Ordinary 5,001 100 100

ArystaLifeScience Global Services Limited

Ireland

Ordinary

102

100

100

Etec Crop Solutions Limited New Zealand Ordinary 100,000 100 -

* These companies are coorperatives incorporated in the Netherlands. The investment made by the Company is in the membership capital of the Netherlands Companies. No shares are allotted to the Company. The Company has the power to control and govern the financial and operating policies of the above subsidiaries.

Disposals

During the year ended 31 March 2020 the Company disposed of 4.75% shareholding in UPL Limited, Japan to a group company for a total consideration of USD 27,400 thousand and made a loss of USD 1,447 thousand. The cost of the investment was USD 28,847 thousand.

Additions

The Company made additions of USD 81,509 thousand during the year, which relates to investment of USD 24,093 thousand in UPL Europe Limited, USD 16,000 thousand in UPL Australia Limited, USD 17,700 thousand in United Phosphorus Holdings Cooperatief U.A., and USD 23,716 thousand Etec Crop Solutions Limited.

On 29 January 2019 UPL Limited, Japan was reorganized from a stock company to a limited liability company (Godo Kaisha) and accordingly there is no concept of shares. The directors are of the opinion that the carrying values of the above investments are fairly stated at cost and have not suffered any impairment in value.

54



17. Investment in joint venture

2020 2019 USD’000 USD’000

United Phosphorus (Bangladesh) Limited 329 329 ======== ========

18. Convertible loan notes

2020 2019 USD’000 USD’000

Amira Nature Foods Limited 5,000 5,000 ======== ========

The Company invested USD 5,000 thousand in 10% convertible loan notes issued by Amira Nature Foods Limited and convertible at USD 10.50 per share. Interest is payable semi-annually on 2 January and 1 July of each year. The maturity date is 3rd August 2021.

The directors are of the opinion that the carrying value of the above investment is fairly stated at cost and has not suffered any impairment in value.

19 (a) Loan receivables 2020 2019 USD’000 USD’000 Restated* Non-current Loan receivable from group companies (note 31 (i)) 2,745,975 2,705,477 ======== ======== Current Loan receivable from group companies (note 31 (i)) 245,816 351,960 ======== ======== The current loan receivables from group companies bears interest between the range of (3.5% to 6 months Libor + 6%) and is repayable within 12 months. The non-current loan receivables from group companies’ bears interest between the range of (3.5% to 6 months Libor + 2.25%) and these are having fixed maturities.

All loan receivables mentioned above are unsecured.


19 (b) Trade and other receivables 2020 2019 USD’000 USD’000 Restated* Trade receivable from non-group companies 16,829 2,604 Prepayment 133 975 Other receivables 587 435 Advance to group company (note 31) 49,505 51,000 Trade receivable from group companies (note 31) 303,841 256,911 ------------- ------------- 370,895 311,925 ======== ======== Trade receivables from group and non-group companies are unsecured, interest free and repayable in 30-180 days. * This amount is subject to prior year restatement. Refer to note 32.

55


19 (b) Trade and other receivables (continued)

There has been a restatement of trade receivables from group companies for the year 2018 (USD’000 2,436) and for the year 2019 (USD’000 461). Refer Note 32.

Advance to group company relates to advances made to ultimate holding company against future supplies of materials. The carrying amount of trade and other receivables approximate their fair value. The average credit period on sales of goods is between 90 - 180 days. No interest is charged on outstanding trade receivables.

The Company assesses impairment based on expected credit losses (ECL) model on trade receivables. The Company uses a hybrid approach where the Loss rate based provision matrix ECL provision (Method A) is adjusted by management overlays due to forward looking data (method B). This policy is in line with the Group’s policy on impairment of financial assets.

The Company writes off a trade receivable or creates a 100% loss provision when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation or has entered into bankruptcy proceedings, whichever occurs earlier. None of the trade receivables that have been written off is subject to enforcement activities. The table in this note details the risk profile of trade receivables based on the Company’s provision matrix. As the Company’s historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision for loss allowance based on past due status is not further distinguished between the Company’s different customer base. The ageing of group trade receivables at the reporting date was as follows: Under Method A – Historical data

31 March 2020

Not past due

0-60 days

60-180 days

181-270 days

Above 270 days

Total

USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 Expected credit loss rate

9.19% 8.32% 9.8% 11.79% 15.33%

Lifetime ECL (1,083) (454) (455) (256) (1,012) (3,260) 31 March 2019 Restated*

Expected credit loss rate

8.59% 7.18% 9.93% 8.38% 15.42%

Lifetime ECL (899) (526) (412) (116) (858) (2,811) * This amount is subject to prior year restatement. Refer to note 32.

56



19 (b) Trade and other receivables (continued)

Under Method B – Qualitative parameters / Forward looking

Under this method, the Company has assessed its customers on three parameters and accordingly assigned scores and graded as Good, Average or Bad:

o Historical payment track record o Credit insurance limit o Customer’s country rating

During the year under review, the Company estimated a 12 month ECL of USD 93 (000’s) under method B (2019: USD 86 (000’s)).

Therefore, total net carrying amount of related parties receivables for the year under review are as follows: 2020 2019


Gross carrying amount (group companies) 307,194 259,808 Less allowances: Under method A (historical) (3,260) (2,811) Under method B (forward looking) (93) (86) --------------- -------------- 303,841 256,911 ========= ========


20. Inventories

2020 2019 USD’000 USD’000 Goods in transit 1,325 1,627 ====== ====== Inventories are measured at lower of cost and net realisable value.

57


Notes to the separate financial statements for the year ended 31 March 2020 21. Cash and cash equivalents

2020 2019 USD’000 USD’000 Cash at bank Current account 302,736 9,083 ======= =======

22. Stated capital

2020 2019 USD’000 USD’000

At start of the year 18,102 13,600 Issue of shares - 4,502 ----------- ----------- At end of year 18,102 18,102 ====== ======

The stated capital of the Company comprises of 181,022 (2019: 181,022) ordinary shares fully paid with a par value of USD 100 per share. These shares are entitled to voting rights and to dividends. The shareholder has various rights under the Company’s Constitution, including the rights to income distributions subject to solvency test and other legal requirements. The directors take note that an interim dividend of USD 62,854 thousand as paid during the year (2019: USD 60,000 thousand)

The equivalent amount of dividend per share is USD 426.06 for the current year (2019: USD 441.18).

23. Share premium

2020 2019 USD’000 USD’000 At start of the year 1,314,670 - TPG and ADIA Contribution - 1,195,980 UPL Limited, India Contribution - 143,518 Share issue expenses (54) (24,828) ------------ ------------ At end of year 1,314,616 1,314,670 ======= =======

During the year ended 31 March 2019, the Company issued 40,198 Ordinary shares of USD 100 each at a premium of USD 29,752.23 per share and 4,824 Ordinary shares of USD 100 each at a premium of USD 29,750.75 per share. The share issue expenses represent cost incurred in relation to additional investments made by TPG and ADIA.

58

UPL CORPORATION LIMITED Notes to the separate financial statements for the year ended 31 March 2020 24. Translation reserve

Translation reserve was wrongly stated in prior years in relation to unrealised loss on exchange arising on conversion of the long term loans advanced to group companies. Therefore, it has been adjusted as at 31 March 2018 and 31 March 2019. Refer to Note 32.

25. Cash flow hedge reserve

2020 2019 USD’000 USD’000 At start of the year (11,531) - Cash flow from hedge during the year (18,746) (11,531) ----------- ----------- At end of year (30,277) (11,531) ====== ======

During the year ended 31 March 2020, the cash flow hedge reserve amounting to USD 30,277 thousand (2019: USD 11,531) represents unrealised loss on derivative transactions.

26. Bonds

2020 2019 USD’000 USD’000 Non-current USD 500m 3.25% Senior Notes Due 2021 497,031 496,966 USD 300m 4.50% Senior Notes Due 2028 297,010 295,764 ----------- ----------- At end of year 794,041 792,730 ======= =======

27. Borrowings

2020 2019 USD’000 USD’000 Non-current Loan from group companies (note (a)) (note 31 (iii)) - 259,952 Loan from Banks (sub-note (b)) 2,759,367 2,948,810 ------------ ------------ 2,759,367 3,208,762 ======== ========

59

UPL CORPORATION LIMITED Notes to the separate financial statements for the year ended 31 March 2020 27. Borrowings (continued)

2020 2019 USD’000 USD’000

Restated* Current Loan from group companies (note (a)) (note 31 (iii)) 576,619 83,727 Loan from Banks (sub-note (a)) - 25,000 ------------ ------------ At end of year 576,619 108,727 ======== ========

* This amount is subject to prior year restatement. Refer to note 32. (a) The loan bears interest at the rate between LIBOR + 2% to LIBOR + 2.5%, is unsecured and

repayable as follows: 2020 2019 USD’000 USD’000 Within one year (interest bearing) Within one year (interest free)

171,512 405,107

83,727 -

After one year and before five years (interest free) - 259,952 ------------ ------------ 576,619 343,679 ======== ========

(b) The loan from banks bears interest at the rate LIBOR + 1.6%, is unsecured and repayable as

follows:

2020 2019 USD’000 USD’000 Within one year - 25,000 After one year and before five years 2,759,367 2,948,810 ------------ ------------ 2,759,367 2,973,810 ======== ========

The carrying amounts of borrowings approximate their fair values. 28. Trade and other payables

2020 2019 USD’000 USD’000 Non-current Other payables 618 3,659 ======== ======== Current Trade payable to group companies (note 31) 43,611 77,895 Trade payables and accruals 73,351 74,447 ------------ ------------ 116,962 152,342 ======== ========

Trade payables are non-interest bearing and are normally settled on 90-360 days terms.

60



29. Perpetual Subordinated Capital Securities

2020 2019 USD’000 USD’000 Issue of Perpetual Subordinated capital securities 400,000 - Perpetual Subordinated capital securities issue expenses (5,314) - ------------ ------------ 394,686 - ======== ========

During the year ended 31 March 2020, the Company issued 5.25% USD 400,000,000. Perpetual Subordinated capital securities which is listed on the Singapore Stock Exchange. These securities are perpetual securities in respect of which there is no fixed redemption date and are callable only at the option of the issuer. As these securities are perpetual in nature and ranked senior only to the share capital of the issuer company and the issuer company does not have any redemption obligation, these are considered to be in nature of equity instruments. Interest is payable at the discretion of the issuer.

30. Derivative financial assets

2020 2019 2019

Restated* As previously

stated USD’000 USD’000 USD’000

Derivatives 11,236 2,181 - ====== ====== ====== * This amount is subject to prior year restatement. Refer to note 32.

It relates to amount receivable from banks in relation to derivative transactions with regards to mark to market position.

61



31. Related party transactions

During the year ended 31 March 2020, the Company traded with related companies. The nature, volume and type of transactions with the companies are as follows:

Name of related companies Nature of transactions 2020

2019

Restated* USD’000 USD’000 Holding company Commission income - 3,596 Cash Discount - 1,967 Equity dividend 60,000 60,000 Issue of Shares - 482

Share premium - 143,518 Interest expense - 5,808

Purchases 193,253 148,937 Sales - 847 Subsidiaries & Sub Subsidiaries

Royalty income 867 361

Commission income 32,528 36,090 Dividend income - 30,000

Interest income Interest expense

107,290 2,783

41,335 1,109

Management fee expense 8,365 4,000 Purchases 32,431 56,922 Sales 291,225 239,972 Cash Discount - 356 Allowance for expected credit loss 456 461 Expense recharge 4 43,119

Management Company Professional fees 19 11 Key management personnel

Short-term benefits: Directors Remuneration

923

150

----------- ------------ 730,144 819,041

======= =======

Refer to note 16 for additions and disposals of investments in subsidiaries during the year.


62

UPL CORPORATION LIMITED Notes to the separate financial statements for the year ended 31 March 2020 31. Related party transactions (continued)

As at 31 March, the balances outstanding with related companies were as follows:

2020 2019 Restated*

USD’000 USD’000 (i) Loan receivables Non-current Amount receivable from Subsidiaries & Sub Subsidiaries (note 19(a))

2,745,975

2,705,477

======= ======== Current Loan receivables from Subsidiaries & Sub Subsidiaries (note 19(a)) 245,816 351,960

------------ ------------ (ii) Amount receivables Amount receivable from holding company (note 19(b)) 1,551 4,317 Advance to holding company (note 19(b)) 49,505 51,000 Trade receivable from Subsidiaries & Sub Subsidiaries (note 19(b)) 302,289 252,594 ------------ ------------ 353,345 307,911 ======= =======

2020 2019 USD’000 USD’000 (iii) Borrowings Non-current Loan from Subsidiaries - 259,952 ------------ ------------ - 259,952 ======= ======= Current Loan from Subsidiaries & Sub Subsidiaries 576,619 83,727 ------------ ------------ 576,619 83,727 ======= =======

Total (note 27) 576,619 343,679 ======= ======= (iv) Trade and other payables Current Amount payable to holding company 31,128 29,774 Amount payable to Subsidiaries & Sub Subsidiaries (Note 28) 12,483 48,121 ------------ ------------ 43,611 77,895 ======= ======= Terms and conditions of transactions with related parties Trade and other payables arising from related Party Transactions entered during the year were in ordinary course of the business. The sales to and purchases from related parties are made on terms mutually agreed in the contract. Outstanding balances at the year-end are unsecured and bears interest as per agreements and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables, payables or advances.


63


Notes to the separate financial statements for the year ended 31 March 2020 32. Corrections of error/reclassification

Impact on financial statements

As previously

stated

Prior period adjustments Restatement

As Restated

USD’000 USD’000 USD’000 Statement of financial position as at 1 April 2018 Current assets Trade and other receivables (Note 2) 305,146 (2,436) 302,710 ======= ======= ======= Equity Retained earnings (Note 1 and 2) 342,046 (10,476) 331,570 Translation reserves (Note 1) (8,040) 8,040 - ======= ======= ======= Statement of financial position as at 31 March 2019 Non-current assets Loan receivables (Note 3) 2,674,082 31,395 2,705,477 Current assets Trade and other receivables (Note 2 and 4)

317,003 (5,078) 311,925

Derivative financial assets (Note 4) - 2,181 2,181 Current liabilities Borrowings (Note 3) 77,332 31,395 108,727 Equity Retained earnings (Note 1 and Note 2) 337,752 (9,645) 328,107 Translation reserves (Note 1) 6,748 (6,748) - Statement of profit or loss and other comprehensive income for the year ended 31 March 2019 Expenses Expected credit losses (Note 2) - (461) (461) Finance costs (Note 1 and note 7) (80,021) 6,250 (73,771) Other income (Note 9) 120,324 (47,954) 72,370 Finance income (Note 6) - 42,996 42,996 ------------ ------------ ------------ (40,303) 831 (41,134)

======== ======== ======== Profit before taxation 56,796 831 57,627 Profit for the year 55,706 831 56,537

Other comprehensive income Translation reserves (Note 1) 1,292 (1,292) - Total comprehensive income for the year 45,467 (461) 45,006

64


Notes to the separate financial statements for the year ended 31 March 2020 32. Corrections of error/reclassification (continued)

Impact on financial statements (continued)

As previously

stated Restated 2019 Adjustment 2019

USD'000 USD'000 USD'000

Cash flows from operating activities Profit before taxation 56,796 831 57,627 Allowance for expected credit losses (Note 2) - 461 461 Amortization of bonds and bank loan (Note 5b) 3,856 (3,856) -

Finance income (Note 6) -

(42,996) (42,996) Trade and other receivables (Note 8) (11,857) 2,642 (9,215) Finance cost (Note 5b) - 73,771 73,771 Cash flows from investing activities Loan to related parties (Note 3 and Note 5a) (2,431,837) (39,018) (2,470,855)

Interest received (Note 6) -

42,996 42,996 Cash flows from financing activities Net proceeds of borrowings (Note 3) (2,922,933) 31,395 2,954,328 Interest paid (Note 5b) - (76,465) (76,465) Cash and cash equivalents reconciliation Effect of exchange rate changes 1,292 (1,292) -

Effect of cash flow hedge (Note 5a) (11,531) 11,531 -

Note 1 – Translation Reserves Previously, management incorrectly accounted for the quasi loan to group companies as net investment in foreign operations in the separate financial statements. As a result, the exchange differences arising on the revaluation of these loans were recognised in equity under translation reserve while the foreign exchange differences should have been accounted in profit or loss, in finance costs. There is no income tax impact as a result of this prior period adjustment. Note 2 – Expected Credit Loss Upon adoption of IFRS 9 Financial Instruments, management did not recognise an impairment allowance on intercompany trade receivables as at 1 April 2018 and 31 March 2019 respectively. There is no income tax and deferred tax impact as a result of this prior period adjustment. Note 3 – Loan Receivables

During year 2019, the Company obtained a loan from a related party which was incorrectly netted off against receivable from same group company (non-current assets) as at 31 March 2019. There was no legally enforceable right and intention to settle the loan on a net basis. As such, borrowings and loan receivable should have been grossed up and disclosed separately.

65



32. Corrections of error/reclassification (continued)

Note 4 – Derivatives

Derivatives receivables from banks in relation to MTM on derivative transactions were presented in “trade and other receivables” and in the explanatory note it was clubbed with other receivable previously. This presentation is not appropriate as it does not reflect the different characteristics of the trade and other receivables which is measured at amortised cost while derivative financial assets are measured at fair value. Note 5 – Statement of cash flows

(a) In the prior year, the Company incorrectly presented effect on cash flow hedge reserve as a movement

of the balances of cash and cash equivalents between the beginning and end of the year. The effect of cash flow hedge should have been disclosed within the underlying derivative financial asset movement.

USD'000 MTM Derivatives* (2,181)

Interest Expense Hedge Accounting

6,089

Loan receivables revaluation

7,623 Effect of cash hedge 11,531

* The amount of MTM Derivatives is a non-cash movement and it’s not part of profit before taxation, therefore, it is not required to be presented in the statement of cash flows.

(b) In the prior years, management did not disclose separately Finance cost amounting to USD 73,771

thousand as a non-cash adjustment to operating activities and interest paid amounting to USD 76,465 thousand for cash outflow in financing activity in the statement of cash flows. Also amortization of bonds and bank loan amounting to USD 3,856 thousand was shown incorrectly on the face of cash flow statement instead of being considered as adjustment in finance cost.

Note 6 – Interest income In the prior years, the Company incorrectly presented interest income from loan to group companies and on convertible loan notes under other income. Since the interest income from loan to group companies is financing in nature, it should have been presented under finance income. Note 7 – Unrealised exchange difference In the prior year, an amount of USD 4,958 thousand related to unrealised exchange difference was incorrectly accounted in other income. This is not in accordance with the company’s accounting policy to recognise foreign exchange differences in finance cost. Note 8 - Trade and other receivables The adjustment represents ECL amount of USD 461 thousand and USD 2,181 thousand for derivatives which has been presented separately now in the statement of financial position.

Note 9 – Other income In the prior year, interest income and exchange difference amounting to USD 42,996 thousand and USD 4,956 thousand were included in other income. Same has been reclassified to finance income and finance cost respectively.

66


Notes to the separate financial statements for the year ended 31 March 2020 32. Corrections of error//reclassification (continued) Reclassification of expenses resulting from change in presentation from function to nature

Separate statement of profit or loss and other comprehensive income for the year ended 31 March 2019

As previously stated Reclassification Restated

2019 2019

USD'000 USD'000 USD'000

Revenue - 244,633 244,633 Turnover 244,633 (244,633) -

Cost of sales (205,859) 205,859 - Direct cost - (205,913) (205,913)

Gross profit 38,774 38,720 Other income 120,324 (47,954) 72,370

Administrative expenses

(10,761) 10,761 - Selling and distribution expenses (54) 54 - Gain on disposal of investment in subsidiary

293 - 293

Acquisition related costs (11,759) - (11,759) Other expenses - (7,782) (7,782) Depreciation - (12) (12) Amortisation - (2,967) (2,967) Expected credit losses on group receivables

- (461) (461)

Operating profit 136,817 88,402 Finance costs (80,021) 6,250 (73,771) Finance income - 42,996 42,996

Profit before taxation 56,796 831 57,627

Taxation (1,090) - (1,090)

Profit for the year after tax 55,706 56,537 Other comprehensive income: Items that will not be reclassified subsequently to profit or loss

Currency translation differences 1,292 (1,292) - Items that may be reclassified subsequently to profit or loss

Cash flow hedging (11,531) - (11,531)

Total comprehensive income for the year

45,467 (461) 45,006

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Notes to the separate financial statements for the year ended 31 March 2020 33. Reconciliation of movements of liabilities to cash flows arising from financing activities

01 April 2019

Financing cash flows

Non -cash 31 March 2020

USD’000 USD’000 USD’000 USD’000 Borrowings 3,317,489 8,846 9,651 3,335,986 Bonds 792,730 - 1,311 794,041

01

April 2018 Financing

cash flows Non -cash 31

March 2019 Restated* USD’000 USD’000 USD’000 USD’000 Borrowings 359,322 2,954,328 3,839 3,317,489 Bonds 792,713 - 17 792,730

* This amount is subject to prior year restatement. Refer to note 32. Interest Payable 2020 2019

USD’000 USD’000

01 April 23,410 9,463

Finance cost 117,801 73,771

Non cash (21,182) 16,641 Interest paid (109,487) (76,465)

31 March 10,542 23,410

The Non-cash amount relates to unrealized exchanges differences and amortization of Bond, transaction cost etc.

68


Notes to the separate financial statements for the year ended 31 March 2020 34. Non-cash investing activities

During the year ended 31 March 2020, as part of internal restructuring of the Company: 1. The Company has assigned its trade receivables (UPL Argentina SA) amounting to 24,093

thousand to UPL Europe Limited as non-consideration for additional investments in UPL Europe Limited. Refer to note 16.

2. Disposed of 4.75% shareholding in UPL Japan Gk to a Advanta Holding BV, for a total

consideration of a 5 year loan note of USD 27,400 thousand to Advanta Holding BV. The loss on disposal amounted to USD 1,447 thousands.

35. Acquisition-related costs

The Company has incurred cost of USD 3,764 thousand (2019: USD 11,759 thousand) in relation to the acquisition and integration of Arysta LifeScience Inc. and its subsidiaries which one-time cost in nature.

36. Employees

As at year end, the Company had 15 full time and 20 contract employees (2019: 9 full time employees and 20 contract employees).

37. Holding and ultimate holding company The directors consider UPL Limited, a company incorporated in India and listed on Bombay Stock Exchange and National Stock Exchange, as the Company’s holding and ultimate holding company.

38. Events after the reporting date

There have been no material events after the reporting date which would require disclosure or adjustment to the financial statements for the year ended 31 March 2020.

upl corporation limited annual separate financial

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