Talawakelle Tea Estates
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Talawakelle Tea Estates PLC Annual Report 2018/19 As our cover portrays, we have mastered the art of producing premium teas, specialising in three distinct varieties, high grown as our core, followed by low grown and green tea to a lesser extent. Our report this year will tell the story on how we stand resilient amidst the challenges of our industry to make the finest cuppa, with ‘two leaves and a bud’. 1 Talawakelle Tea Estates PLC | Annual Report 2018/19 Cultured They say tea is the beverage of the cultured. We believe that it is our culture that makes it transcend to new heights. Having persevered through a trial-filled year, we at Talawakelle Tea Estates PLC attribute our unceasing growth to the performance oriented culture that we have strive to create. Our team is a diverse one, but united in achieving our goals even amidst challenges. Apart from the passion that exudes from every member of our collective, we are also wholeheartedly invested in maintaining processes and financials that are impeccable while adhering to the regulations that have not only raised our standards but also won us acclaim. We are cultured for growth. | Overview | Management Discussion and Analysis | Stewardship | Financial Reports | Appendices Contents Overview Stewardship About This Report 4 Our Commitment towards Sustainable Development Goals 188 Vision, Mission and Business Philosophy 7 Risk Management 190 Financial Highlights 8 Corporate Governance Report 199 Non Financial Highlights 10 Report of the Audit Committee 206 Chairman’s Statement 12 Related Party Transactions Review Committee Report 207 Managing Director’s Review 16 Annual Report of the Board of Directors on the Map of Estates 22 Affairs of the Company 211 Independent Assurance Report 24 Statement of Directors’ Responsibility 216 Our Estates and Factories 25 Managing Director’s & Chief Financial Officer’s Our Awards for the Year 2018/19 26 Responsibility Statement 217 Milestones 28 Board of Directors 30 Financial Reports Corporate Management 33 Financial Calendar - 2018/2019 220 Estate Management 34 Independent Auditor’s Report 221 Subsidiary Review 36 Statement of Profit or Loss 224 Value Creation 37 Statement of Comprehensive Income 225 Value Chain 38 Statement of Financial Position 226 Integrated Sustainability Objectives, Goals and Achievements 40 Statement of Changes in Equity 227 Stakeholder Engagement 41 Statements of Cash Flow 228 Materiality Analysis 45 Notes to the Financial Statements 230 Management Discussion & Analysis Appendices Business Review 51 Investor Information 274 Economic Review 63 Code of Best Practice on Corporate Governance and Tea Industry 66 Listing Rules 276 Economic Value Creation 70 GRI Content Index 291 Operations Review 75 Index for ISO 26000, SDG, UNGC & NGRS 300 10 Year Summary 301 Capital Management Reports Glossary 302 Financial Capital 88 Manufactured Capital 96 Corporate Information 305 Intellectual Capital 101 Notice of Meeting 306 Relationship Capital - Buyers, Brokers and Customers 111 Form of Proxy Enclosed Relationship Capital - Suppliers 119 Relationship Capital - Investors 124 Social Capital 129 Human Capital 140 Natural Capital 164 Future Outlook 186 3 TalawakelleTalawaa kekelellele TeaTeT EstatesEsstattatess PLCLCC | AnnualAAnnual ReportReport2t 2018/192018/19 Cultured reaching more heights in quality and value Talawakelle Region With an extent of over 2,946.69 hectares and a total factory capacity of 4.08 million kilograms, our eight estates in the Talawakelle region specialise in high grown orthodox black tea, much sought after by our key markets, Russia, Japan and European Union. With over 3,205 employees, mainly living as residents within our estates, the cluster is our largest contributor, accounting for nearly half of our total tea production. | OverviewOvOveverrvvivieeww | ManagementMMaManaannageaagggeemmeeennttD DiscussionDisciisssccussussssionioionon andananddA AnalysisAnnanalalalysiysyssiis | StewardshipSSteSttteewwaaarrddshdsshshipip | FinancialFinF nanancnciaiaall ReportsReReppoporororttss | AppendicesAApAppppppeenddiiceicces 4 Talawakelle Tea Estates PLC | Annual Report 2018/19 About This Report GRI: Disclosures: 102-10, 12, 45, 46, 48, 49, 50, 51, 52, 53, 54 & 56 Reporting Period Reporting Boundary “The report sets out The annual report of Talawakelle Tea Estates This report covers our tea plantations our principal risks and PLC (TTE) follows a reporting cycle of 12 and processing operations spanning 16 opportunities, business months, covering 1st April to 31st March. estates and 15 factories in the high and This annual report is published for the low grown areas in the country along with model, strategy, along financial year ended 31st March 2019. our corporate office located in Colombo. In with the progress we Building on our reporting, we draw relevant the reporting year there were no significant have made in the financial data and information from the annual changes to the organisation and its supply year under review and report published in the preceding year as chain. The report also covers our two references and for comparisons. We also subsidiary operations in the hydro-power our future outlook in a make pertinent comparisons against the sector, when deemed material, particularly, volatile plantation industry industry performance. Future outlook and in terms of operational and financial backdrop.” our way forward including our strategy, performance and within the natural capital plans, targets and forecasts are set out for section of this report. the ensuing financial year, 2019/20. Content and Scope Reporting Guidelines and Frameworks Following the integrated reporting I principles, this year, we continue to provide a balanced, fair and a holistic account on how we create shared value over short, medium to long-term. We highlight and Overall Reporting discuss in detail on material matters from an economic, environmental, social and Integrated Reporting <IR> Framework, IIRC, 2013 governance standpoint. According to our material assessment, three material topics were changed as per mentioned in page 46 Sustainability Reporting over the preceding year. GRI Standards, 2016 - Comprehensive The report sets out our principal risks and UN Global Compact Principles opportunities, business model, strategy, National Green Reporting System (NGRS) Sri Lanka - Tier 5 along with the progress we have made Recognised ISO 26000 as a reference document that provides guidance in the financial year under review and our future outlook in a volatile plantation industry backdrop. We discuss at length on how we Financial/Operational engage our stakeholders, manage our core capitals and the trade-offs we make in our Company’s Act No. 07 of 2007 decision-making process to optimise value International Financial Reporting Standards,iIFRS Foundation and ensure sustainability of operations. We Sri Lanka Accounting Standards, Institute of Chartered Accountants also elaborate on our risk management, internal controls and good governance practices and the latest initiatives. With Corporate Governance equal emphasis to both quantitative and qualitative information and data, the report Code of Best Practice on Corporate Governance, 2017 content is prioritised as per the materiality Continuous Listing Rules, Colombo Stock Exchange analysis as set out on pages 45 to 49. | Overview | Management Discussion and Analysis | Stewardship | Financial Reports | Appendices 5 Talawakelle Tea Estates PLC | Annual Report 2018/19 For the fifth consecutive year, our report Information Sources is prepared in line with the Integrated Reporting <IR> guidelines published by I the International Integrated Reporting Council (IIRC). As was the case since 2011, our sustainability reporting continues Operations and Finance to follow the guidelines set out by the Interim financial statements Global Reporting Initiative (GRI) and we Past and present audited annual financial statements and notes report in line with the latest Standards Management information reports published in 2016 in accordance with the Board progress reports ‘comprehensive’ option. The GRI content index is given on pages 291 to 300 We also give due considerations to the ten principles Economy and Industry covering human rights, labour, social and environmental issues, as guided by the UN World Economic Outlook, International Monetary Fund Global Compact Framework. Annual Report, Central Bank of Sri Lanka Industry sources This report is in compliance with NGRS Tier 5 and recognised ISO 26000 as a reference Workforce and labour relations document that provides guidance. HR clusters at estates Aside from sustainability reporting guidelines, HR department - corporate office our operational and financial reporting Collective agreements conforms with the guidelines set by the Company’s Act No. 07 of 2007 and the relevant accounting standards. The report Product Responsibility on governance complies with the latest code Buyer review reports on corporate governance and the regulatory ISO certification requirements as a listed entity. Targeted Stakeholders Community development and relations Our annual report is principally aimed at supporting information requirements of our ‘A Home for Every Plantation Worker’ programme shareholders and prospective investors. Ethical Tea Partnership As an integrated report, this report is also intended to address other stakeholders Environmental issues including our buyers, employees, resident communities and regulators. Rainforest Alliance-Sustainable Farm Ethical