Annual Report 2018/2019

CARGILLS (CEYLON) PLC ANNUAL REPORT 2018 | 2019 Contents

About this Report 02

Overview Vision and Mission 03 Our Progress 04 Vision to Transform : The Journey 06 The Group Structure 08 Financial Highlights 11 Non-Financial Highlights 13 Our Businesses 14 Chairman’s Message 16 Profile of Directors 19

Management & Financial Review 22

Stewardship Corporate Governance 27 Enterprise Risk Management 55

Sustainability Report 63

Financial Statements Annual Report of the Directors' on the Affairs of the Company 103 Statement of Directors’ Responsibility 107 Independent Auditor’s Report 108 Financial Performance 112 Statement of Profit or Loss and Other Comprehensive Income 113 Statement of Financial Position 114 Statement of Changes in Equity - Group 115 Statement of Changes in Equity - Company 116 Statement of Cash Flows 117 Notes to the Financial Statements 119

Supplementary Information Five Year Financial Summary 191 Group Real Estate Portfolio 193 Investor Relations Supplement 195 Notice of Annual General Meeting 197 Notes 198 Proxy Form 199 Corporate Information Inner Back Cover (IBC) 01

At the core of Cargills’ over 170 years old story is our passion to be the helping hand the everyday heroes of our nation need to reach their fullest potential. Our relationship with our farmers who help us nourish the nation is strengthened by the various projects, schol- arship programmes for farmers’ children and environmental initiatives we conduct to assist them in further- ing their personal and business growth. Entrepreneurs form a critical part of our supply chain, bringing success to themselves while contributing to the local-economy. We take pride in helping encourage entrepreneurship in the country and improving the quality of life enjoyed by the communities they impact.

Our employees’ hard work and determination has consistently put smiles on the faces of our valued customers. We consider our employee our family and we make it a priority to provide them with opportunities for development in both their professional and personal lives. Our customers’ have facilitated the transforma- tion of countless lives for the better with their unwa- vering loyalty towards us. In return, we reward them with quality products made accessible to all, at the best possible prices. Our farmers, entrepreneurs, employees and customers are all heroes who inspire us to transform the ordinary into the extraordinary and as such, are our heroes. We continue to take great pride in empowering them. CARGILLS (CEYLON) PLC Annual Report | 2019 2018 02 About this Report

SCOPE AND BOUNDARIES by the International Integrated Report- INTEGRATED REPORTING In a progressive journey towards inte- ing Council (IIRC) and consolidated set APPROACH grated reporting Cargills (Ceylon) PLC of GRI standards. This is our 4th Report In adopting an integrated reporting for- presents its Annual Report for the year presenting information in accordance mat, we provide a concise communica- ended 31 March 2019 covering the op- with the GRI Guidelines and where ap- tion of the organization’s strategy, gov- erations of Cargills (Ceylon) PLC (Com- plicable we have compared performance ernance, performance and prospects, in pany) and its subsidiaries as listed out in with our previous report published as at the context of its external environment, the inner back cover of the compilation March 31st 2018. This report has been leading to the creation of value over the (collectively addressed as the “Group”). prepared in accordance with the GRI short, medium and long term. All financial and non-financial reviewing is Standards: Core Option. Assurance on within the scope of sectoral operations the sustainability reporting was provided The integrated report also shows how and where necessary and material the by M/s KPMG. the organization uses and affects its im- report details out business units within portant capitals as well as the trade-offs sectors. The information covered is for The Report also adheres with the re- between the capitals, in its value creation the period from 1 April 2018 to 31 March quirements of the Code of Best Practice process. 2019 which is the annual reporting cycle on Corporate Governance issued joint- of the Cargills Group. ly by the Chartered Accountants of Sri This report is an attempt to align the prin- Lanka and the Securities and Exchange ciples of International Integrated Report- FINANCIAL REPORTING Commission of Sri Lanka. ing Framework developed by the The In- The financial information has been pre- ternational Integrated Reporting Council REPORTING STRUCTURE pared and presented in accordance with (IIRC). the Sri Lanka Accounting Standards The Reporting structure enables the (SLFRS and LKAS) laid down by the In- Group’s businesses to be reviewed by stitute of the Chartered Accountants of Sector in terms of operations, strategy Sri Lanka in compliance with the require- and performance while GRI reporting is ments of the Companies Act No. 07 of compiled herein at Group level through a 2007 and the listing rules of the Colombo process of data gathering and review by Stock Exchange and have been audited operation and by sector. Therefore, the by M/s KPMG. main entity for which the social and environmental information is presented in the NON-FINANCIAL REPORTING narrative reports unless otherwise stated at the Group level. We present our non-financial information for the financial year 2018/19 with the The material aspects and boundaries are aim of informing our stakeholders of our based on internal assessments cover- role in society related to our Vision of being the Group’s operations in Sri Lanka. ing a “Global Role model in community We have provided both quantitative and friendly National Development” the core qualitative data and it has been our inten- foundation of our business and sustain- tion to provide quantitative data where ability strategy and objectives. We define possible to facilitate comparisons and ‘non-financial information’ as information further analyses. pertaining to the non-financial issues emerging from our determination of materiality. The Report is based on the Inte- grated Reporting Framework published CARGILLS (CEYLON) PLC Annual Report | 2019 2018 03

Vision Overview To be a global corporate role model in community – friendly national development.

Mission Serve the rural community, our customers and all other stakeholders, through our core business – food with love – and other related businesses, based on the three main principles of; • Reducing the cost of living • Enhancing youth skills • Bridging regional disparity by enhancing local and global markets. CARGILLS (CEYLON) PLC Annual Report | 2019 2018 04 Our Progress

In 1844, William Miller and David plant and thereby expanded its outgrow- In 2017, Kotmale launched its new Sime Cargill commenced a gener- er network to include dairy farmers. Car- Dairy plant in Banduragoda, which is al warehouse, import and wholesale gills Magic ice cream was the outcome Sri Lanka’s first fully integrated dairy business in Colombo, Fort. The es- of this endeavour. In the same year Car- processing facility. tablishment was named the ‘House gills diversified into agri-processing with of Cargills’. A successful bid by Sir Cargills Kist which created further market In 2018, Cargills Foods Company Pri- Chittampalam A. Gardiner saw the opportunities for farmers. vate Limited launched its 350th super House of Cargills being incorporated market outlet in Pilimathalawa. as a Public Limited Liability Company In 2008 Cargills acquired Millers Limited on 1 March 1946. consolidating its marketing and distribu- Cargills opened its first gourmet spe- tion operation. cialty supermarket, Cargills Food Hall, In 1981 Ceylon Theatres acquired at the Colombo City Centre Shopping controlling interest of the Company In 2010 Cargills undertook an aggres- Mall in December 2018. and Mr. Albert A. Page was appoint- sive expansion plan in the FMCG sector ed the Managing Director. Mr. Albert to ride the growth potential of a growing In 2019, Cargills established " Cargills Page went on to become the Chair- economy. During that year the Company Foundation" to undertake social devel- man of Cargills on 26 November expanded its interests in the dairy sector opment initiatives of the Group. 1982. by acquiring Kotmale Holdings PLC and entered another growing category with Under the new management, Cargills the acquisition of Diana Biscuits now explored the potential of innovating marketed under the Kist brand. on its trading legacy. As a result, in 1983 Cargills established the first In 2011, the Company secured a provi- supermarket chain in Sri Lanka with sional commercial banking license from the opening of its first outlet at Staple the Central Bank of Sri Lanka. Street. In 2013, Cargills acquired the franchise Cargills ventured into the production license for TGIF and opened its first res- of processed meats in 1993 when the taurant at Fort in October 2013. Company invested in its first manufacturing facility Cargills Quality Foods, in Cargills Bank commenced formal opera- Mattakkuliya. tions in 2014. In the same year the Com- pany commenced operations of Cargills In 1996 Cargills acquired the fran- Square mini mall in Jaffna. chise license for KFC and innovated on its secret recipe to deliver products In 2016, Cargills Agrifoods Limited ac- that suited the local palate. quired Ceylon Agro Development Com- pany (Private) Limited. The Company is Cargills began sourcing fruits and engaged in the distribution of local and vegetables directly from farmers in imported seeds. 1999 when it established its first collection centre in Hanguranketha. In 2002 it invested in a dairy processing CARGILLS (CEYLON) PLC Annual Report | 2019 2018 05 Overview CARGILLS (CEYLON) PLC Annual Report | 2019 2018 06 Vision to Transform : The Journey

1983 1844 Establishment of General warehouse, im- 1981 first supermarket at Staple Street port and wholesale busi- Ceylon theatres ac- ness quires controlling interest. 1946 Incorporated as a 1993 public limited liabil- Entering into FMCG ity Company business with the acquisition of Gol- di meat processing business

2008 2011 Launch of Receiving Commercial fair-trade concept of Banking license as part investing back into 2010 of vision to build inclu- the communities Rapid expansion in retail sive financial services for sourced from business outside the small farmers, SME’s and Western Province, driv- low to middle income ing regional recruit- groups ment and sourcing. 2014 Launch of Cargills Bank Substantial investments in FMCG business with acquisition of ‘Kotmale’ brand and entering into 2005 confectionaries industry Establishment of Albert A. Page institute of Food Business to develop regional youth skills CARGILLS (CEYLON) PLC Annual Report | 2019 2018 07

1996 2000

Receiving the Sri Taking super marketing to Overview Lankan franchise for the masses thereby evolv- KFC and establishing ing supermarket model first KFC at Majestic to take quality of life and City affordable nutrition to the 1999 general consumer 2002

Developing direct sourcing Entering the dairy industry with the model with small holder farm- acquisition of ice cream plant and ers in Hanguranketha ad- sourcing from small dairy farm- dressing access to markets ers, expanding outgrower base. and providing foundation for sustainable sourcing Expanding small holder network model with acquisition of fruit and vegetable processing facility.

2017 2019 Launch of the Kotmale Cargills opened its first Dairy plant, Sri Lanka’s gourmet specialty su- first fully integrated dairy permarket, Cargills Food processing facility Hall, at the Colombo City 2018 Centre Shopping Mall. Launch of the 350th super market outlet in Cargills established Pilimathalawa. "Cargills Foundation" to undertake social devel- 2016 opment initiatives of the Group. Launch of Cargills Sarubima and Farmer Citizens Award.

Integrated banking services to Cargills touch points in a journey towards digitized and inclusive financial services CARGILLS (CEYLON) PLC Annual Report | 2019 2018 08 The Group Structure

The Group consists of three key operating segments covering Retail, Food Manufacturing and Restaurant industries.

The Retail operations of the Group are executed through Cargills Foods Company (Pvt) Ltd (CFC) wherein IFC holds an equity stake of 8%. The Company has a focused management structure headed by its Chief Executive Officer. The business has a dedicated operation for the sourcing of fresh produce from small holder farmers. The system includes two central processing units and 24 hour distribution operation maintaining cold-chain across the value-chain. The dry goods warehouse is a separate operation while direct store deliveries are also carried out by selected suppliers. As at 31 March 2019, 380 Cargills Food City outlets are operational across all 25 districts of Sri Lanka.

Retail Operation Online Commodity Direct Store shopping packing deliveries

Loyalty base of 964,149 Customers Imports 24 x 7 DELIVERY OPERATION Central warehouse Direct vendor deliveries 380 Outlets

10,000 farmer network

10 collection centers 2 Central Processing centres for 130 MT per day Vegetables/fruits and Seafood

Seafood 6.7 MT per day CARGILLS (CEYLON) PLC Annual Report | 2019 2018 09

The FMCG segment of the Group led FMCG Operation by dedicated Operational Heads holds 8 production units and 1 primary pro- Overview cessing facility along with 25 collection IMPORTS centres for the sourcing of fresh milk. The Group’s FMCG Brands are largely 9 FOOD PROCESSING distributed within Sri Lanka with limit- FACILITIES ed exports to India, Maldives and the

Raw Materials Middle East.

Direct delivery to Cargills Foodcity, other modern trade, general 15,500 trade and HoReCa Dairy farmer network

Fruit and vegetable farmers

The Restaurants business consist of YUM! franchise KFC and the TGI Friday’s Restaurants business operating under a dedicated operational heads and focused management structure for the two entities. KFC operates 39 restaurants as at 31 March 2019 with dine-in, take away and delivery channels. A central commissary is in operation to service the preparatory activities of the chain.

Restaurant Operation

Commissary Dine-in

Imports 24 x 7 Delivery 40 operation Restaurants Take away

Raw Materials

Delivery CARGILLS (CEYLON) PLC Annual Report | 2019 2018 10 The Group Structure

Support services that cover Information are transported to the Cargills Vegetable lected suppliers of dry, frozen and chilled technology, human resources, corporate Processing Unit and the Cargills Fruit products. management and legal are provided cen- Processing Unit, both of which are cen- trally to all business sectors while market- tralized units which facilitate the consol- These extensive food categories are ing and promotions functions are dedicat- idation, processing and dispatch of pro- made available to citizens across the ed by Brand. duce to Cargills Food City Outlets across entire country, mainly through the is- Sri Lanka and other sectors of the Group. land-wide network of Cargills Food City BUSINESS OPERATION Outlets. The retail chain delivers full prod- Cargills Group operates the most diverse The Group sources its requirements for uct availability across all product cate- and extensive food and agriculture, fo- the Dairy Sector from over 15,500 small gories and across all outlets, through an cused, end-to-end supply chain in Sri holders, a majority of whom are organized integrated replenishment system. The Lanka. Working together with a wide into farmer societies, being concentrated FMCG sectors of the Group also reach number of supply chain partners, the in the Central, North Western, North Cen- out to a vast population of Sri Lankans Group has been able to powerfully ex- tral, Northern and Western province of Sri through a dedicated distributor network, ecute a 24 hour, 365 day operation, to Lanka. The small holders are integrated who are partners of the Cargills Group seamlessly connect a large number of into the Group’s supply chain through an and support the FMCG brands to reach farmers and suppliers with end consum- island-wide network of over 720 collec- out to over 50,000 General Trade outlets. ers across the Country. tion points, which are directly linked to 25 Having invested in a Sales Force Auto- Cargills Milk Chilling Centers. mation system for secondary distribution, Cargills Group’s primary sectors comprise and having built up significant analytical Retail, Dairy (Milk, Cultured Products, Ice- The Group sources its requirements for capabilities, the Group’s sales teams have cream), Beverages, Culinary Products, the meat processing sector from sev- significant visibility over the performance Meat Processing, Confectionary, Restau- eral medium and large scale suppliers of outlets across the country. rants, and Distribution. The FMCG sector engaged in the poultry and livestock in- encompasses 8 production facilities. In dustry, some of whom manage their own Cargills is also engaged in direct customer order to facilitate the safe and efficient out-grower operations. The Seafood op- delivery services, primarily in the Restau- movement of products from such diverse eration is undertaken by the Cargills Fish rants sector, and this is operated through sectors, Cargills Group manages several Collection Unit, which is located in Ne- a Group owned fleet. distinct supply chains, namely for vege- gombo. tables and fruits, milk, seafood, pharma- Successfully managing several diverse ceuticals, chilled dairy products, frozen The Group is engaged in the direct im- supply chains, the Group has developed dairy products, frozen meat products, portation of selected commodities, while leading capabilities in various aspects commodities, vegetable seeds and other also directly connecting with thousands of such as replenishment and sourcing, in- dry goods. small, medium and large scale suppliers, ventory optimisation across the supply for the procurement of various products chain, end-to-end temperature and hu- The Group sources its vegetables and for the Group’s sectors. The dry goods midity controlled logistics, etc. The Group fruits from a farmer network comprising operation is undertaken through 3 perma- is focused on continuous improvements, over 10,000 farmers, and procurement nent Cargills Distribution Centers, where by leveraging data and technology to of farmer produce takes place through a combined storage capacity exceeds identify and execute initiatives to eliminate de-centralised network of 10 Cargills Col- 400,000 sqft, and temporary Distribution all forms of waste across the supply chain. lection Centers. These Collection Centers Centers to cater to seasonal demand. enable the Group to maintain very close Supplementing the function of the Dis- relationships with the community of farm- tribution Centers, direct deliveries to the ers and the locality as well. The produce Cargills Food City Outlets are undertaken

CARGILLS (CEYLON) PLC Annual Report | 2019 2018 sourced through these Collection Centers by the Group’s FMCG sectors and se- 11 Financial Highlights

Group Company 2019 2018 Change 2019 2018 Change Rs.000 Rs.000 % Rs.000 Rs.000 % Overview

Opreations Continuing Operations Revenue 94,662,991 91,293,127 3.69 18,743 30,210 (37.96) Profit from operations 4,682,326 6,262,937 (25.24) 1,930,826 3,860,096 (49.98) Profit before taxation 3,402,935 5,245,334 (35.12) 1,617,803 3,300,452 (50.98) Profit after taxation 2,033,813 3,330,921 (38.94) 1,540,019 3,174,834 (51.49)

Financial Position Non-current assets 36,642,556 33,676,707 8.81 14,569,994 14,226,706 2.41 Current assets 21,486,371 19,115,574 12.40 2,962,283 1,577,980 87.73 Current liabilities 34,219,401 30,523,915 (12.11) 4,250,709 3,716,838 (14.36) Non - current liabilities 5,966,625 5,448,055 (9.52) 639,378 577,470 (10.72) Capital and reserves,Minority Interest and other equity 17,942,901 16,820,311 6.67 12,642,189 11,510,378 9.83

Per share data (Rs.) Earnings per share (Basic) 7.74 12.50 (38.12) 6.02 12.40 (51.46) Dividends per share 1.90 6.00 (68.33) 1.90 6.00 (68.33) Net assets per share 68.05 63.78 6.69 49.38 44.96 9.83 Market value per share 200.00 194.90 2.62 200.00 194.90 2.62

Cash Flow Net cash generated from/ (used in) - Operating activities 4,465,728 3,694,478 (118,490) (744,220) - Investing activities (5,091,642) (681,155) 393,979 6,314,262 - Financing activities 1,634,205 (2,123,113) (40,647) (4,849,753)

LKR. MN 94,663 LKR. 4,682 MN GROUP REVENUE GROUP OPERATING PROFIT CARGILLS (CEYLON) PLC Annual Report | 2019 2018 12 Financial Highlights

Revenue - Group Profit Before Taxation Profit After Taxation - Total Assets - Group (Rs. Bn) - Group (Rs. Mn) Group (Rs. Mn) (Rs. Bn)

6,000 3,500 100 70 3,000 5,000 60 80 2,500 50 4,000 60 2,000 40 3,000 1,500 30 40 2,000 1,000 20

20 1,000 500 10

- - - - 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019

Revenue - Company Profit Before Taxation- Profit After Taxation - Total Assets - (Rs. Mn) Company (In Rs. Mn) Company (In Rs. Mn) Company (In Rs. Bn)

180 3,500 4000 20

150 3,000 3000 15 2,500 120 2,000 90 2000 10 1,500 60 1,000 1000 5 30 500

- - - - 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019

LKR. 3,403 MN LKR. 2,034 MN GROUP PROFIT BEFORE TAX GROUP PROFIT AFTER TAX CARGILLS (CEYLON) PLC Annual Report | 2019 2018 13 Non-Financial Highlights

HUMAN CAPITAL Overview New Recruits Compared to Permanent Prior Year Employees 5,768 8,932

SOCIAL AND RELATIONSHIP CAPITAL

Educational Community Development Farmers Recognized for Registered Scholarships Projects Farmer Citizen Awards Suppliers 501 1 1 587

NATURAL CAPITAL

Energy Consumption: Diesel/Petrol 843,835 L Furnace Oil 2,867,410 L Water Consumption Gas 357,995 Kg Electricity 116,792,022 Kwh 842,697,253 L

MANUFACTURED CAPITAL

Food City Outlets Fruit and Vegetable Milk Chilling Centre Litres of Milk Procured Daily 380 Collection Centres 25 113,150 10 Food Processing Plants Fruit and Vegetables Delivery Operation 9 Purchased Daily 24x7 130 MTs

INTELLECTUAL CAPITAL

Experience No. of employees with more than 15 years of service over 170 Years approximately 600 employees CARGILLS (CEYLON) PLC Annual Report | 2019 2018 14 Our Businesses

Retail Dairy Beverage and Culinary Processed Meats Cargills Food City is Sri Lan- Magic and Kotmale are Sri Kist is one of the most trust- Cargills entered into food ka’s largest modern retailer. Its Lanka’s most widely con- ed brand names in Sri Lanka manufacturing through the pioneer venture into modern sumed dairy brands re- which entered into the Car- acquisition of the ‘Goldi’ trade in 1983 was an innova- nowned for its quality and gills fold in 2002 through the meats facility in 1993. Today tion of the company’s trading freshness. Cargills Quali- acquisition of an international the range consists of ‘Goldi’ legacy. ty Dairies & Kotmale Dairy processing facility. The brand and ‘Sams’ catering to mass Products produce ice cream, is known by generations for market demand and the ‘Fin- Thereafter Cargills Food City fresh and flavoured milk, yo- its true Sri Lankan flavours est’ premium deli range. Car- continued to challenge the ghurt, yoghurt drinks, curd, and high standards of qual- gills is rapidly gaining market norm by taking to the mass- cheese and butter. Through ity. Kist which is traditionally share in this category through es what was traditionally an its innovation driven focus renowned for its delectable its product innovation, qual- affluent focused business and Magic and Kotmale have selection of jams, sauces ity and unique taste. Cargills offering ‘Higher Value for the expanded market share ex- and cordials has expanded Quality Foods has secured the Lowest Price’. ponentially. The ‘Heavenly’ its 100% fruit based product ISO 9001: 2000 Quality Man- range is the premium seg- range introducing fruit based agement System certification, Today the Cargills retail opment of the Magic offering. nectars and fresh juices to ISO 22000: 2005 Food Safety eration is spread across the Cargills Quality Dairies is the market. Today the nutri- Management System certifi- island in two formats as ‘Car- accredited with all three ISO tious and delicious Kist nec- cation and ISO 14001: 2004 gills Food City’, 'Cargills Food certifications; ISO 9001:2000 tar range has revolutionised Environment Management Hall' supermarkets and ‘Car- Quality Management System the industry and is popular for System certification. gills Food City Express’ mi- certification, ISO 22000:2005 its genuine fruity taste. The ni-market stores. Food Safety Management Brand has made further ex- Cargills Foodcity footprint has System certification and ISO tensions. reached 380 stores covering 14001:2004 Environment all districts of Sri Lanka. Management System certifi- CARGILLS (CEYLON) PLC Annual Report | 2019 2018 cation. 15 Overview

Confectionery Marketing and Distribution Restaurants Originally a regional biscuit The Company’s marketing Cargills secured the KFC fran- facility, the company was and distribution arm Millers chise in 1996 and today KFC acquired in 2010 and was is one of the oldest distribu- Sri Lanka is the largest and renamed as Cargills Quali- tion and logistics operations most popular international ty Confectionaries (Private) in the country geared with a restaurant chain in the country Limited. The Company is en- network spread across the 25 with 39 outlets islanwide. The gaged in the manufacturing, districts of Sri Lanka. Millers is success of KFC was in the fu- distribution and marketing the island wide distributor for sion of an international brand of biscuits and confection- international brands such as with well - loved Sri Lankan aries under the Brand name Kraft, Cadbury, Bonlac, Oreo, recipes. ‘Kist’. The factory located at Tang, Toblerone, Rauch, The locally inspired additions the Nalanda Industrial Estate Lorenz, Lotte etc., and is also to the KFC menu have now in Matale presently manufac- the mass market distributor been included into the region- tures soft & hard dough bis- for its own brands Classic al product portfolio. cuits & wafers. Mackerel and Milca Cheese. Cargills secured the ‘TGI Fri- days’ franchise for Sri Lanka in 2012 and opened its flagship Restaurant in October 2013. CARGILLS (CEYLON) PLC Annual Report | 2019 2018 16 Chairman’s Message

Dear Shareholder, "There is tremendous potential for On behalf of the Board of Directors of Cargills (Ceylon) PLC, I am growth in modern trade, which is pleased to present the Annual Report and Financial Statements of estimated to account for only 15-20% the Company for the year ended 31st March 2019. of the grocery trade market. The Sri Lankan economy showed signs of recovery during the year, driven by a recovery in the Agriculture and Services sectors. The Agriculture sector is especially important as over a quarter of the country’s workforce depends on this sector, and it has degrown for Our key brands continued to enhance the past two consecutive years. Economic growth in the 4th quarter their value and positioning, with of 2018, however, was impacted by increased political uncertainty from end-October 2018. expansion into new categories and The performance of the Retail and Restaurants sectors was weak segments including butter, cheddar during the period on account of the volatile consumer environment cheese, impulse ice-cream bars, as disposable income remained constrained and political uncertainty impacted consumer confidence. The Retail sector was particularly chocolate enrobed biscuits and affected as performance usually benefits from strong seasonal sales; however the key 3rd quarter was spoilt due to the uncertain political wafers, cookies, seafood products, climate during the period. and carbonated fruit drinks. Cargills Food City is the only retail chain with geographic representa- tion across the country through its 380 supermarkets. Our commitment to improving the customer experience by providing quality Through the Cargills Sarubima fund, items at affordable prices in a clean environment has established we commenced the Cargills Sarubima the brand as a household name in the minds of the consumer. This brand strength has resulted in several unrelated retail stores infring- Agriculture Modernization Program ing upon our valued “Food City” trademark. We continue to take with the objective of improving farmer action to protect our brand from such unlawful infringement. livelihoods through higher farmer There is tremendous potential for growth in modern trade, which is estimated to account for only 15-20% of the grocery trade market. yields and lower input costs. To support our continued growth, the business also commenced construction of a new centralized logistics centre, which is expected to be completed in the 1st half of 2020/21. Within the context of our contribution The Group’s FMCG sector performance was exceptional within the to the upliftment of society, it gives operating environment, with growth sustained across categories for our nutritious and high-quality products. Our key brands continued me great pleasure to inform you to enhance their value and positioning, with expansion into new cat- of the incorporation of the Cargills egories and segments including butter, cheddar cheese, impulse ice-cream bars, chocolate enrobed biscuits and wafers, cookies, Foundation." seafood products, and carbonated fruit drinks. CARGILLS (CEYLON) PLC Annual Report | 2019 2018 17

Cargills Bank consolidated on its perfor- sioned in 2Q 2019/20 and will substan- er, with Cargills Bank participating to pro- mance of the previous year, with after-tax tially reduce our energy footprint. vide low cost funding to the farmers. profit for the year growing 20% over the Overview previous year on a recurring basis. A We are taking active measures to reduce The 1st phase of the Agriculture Modern- central pillar of the Bank’s growth strate- our usage of plastics. During the year, ization Project concluded successfully gy is built out of the substantial retail net- KFC moved to non-plastic packaging with farmers experiencing higher yields work of Cargills Food City, and the Bank alternatives, as is planning to become with lower input requirements in their first continues to leverage on this footprint to plastic-free during this coming year. Car- cultivation. We are now planning for the connect and engage with customers on gills Food City meanwhile continues to 2nd phase of the Project. a scale and format unseen in the arena engage with its customers to reduce the of Retail Banking in Sri Lanka. Custom- use of plastic bags and now provides a We also encouraged our farmers to fol- ers could interact with the Bank through range of re-usable bags at varying price low Good Agriculture Practices (GAP), its 19 standalone branches, 5 Digi Zones points in order to encourage customers and many are now eligible for certifica- (which provide digital access to an array to reduce plastic usage. tion. For the first time in Sri Lanka, farm- of banking services available at branch- ers who meet the requirements of GAP es) and over 380 Cargills Food City out- Through the Cargills Sarubima fund, we certification are now able to market their lets. Further, Fitch Ratings recently up- commenced the Cargills Sarubima Agri- produce under the Cargills’ Good Har- graded the National Long-term Rating culture Modernization Program with the vest brand of agricultural produce. of Cargills Bank to ‘A-(lka)’ from ‘BB(lka)’ objective of improving farmer livelihoods with a stable outlook on account of the through higher farmer yields and lower Within the context of our contribution strong parental support and integration input costs. Produce in Sri Lanka is ex- to the upliftment of society, it gives me with Group operations. pensive compared with regional peers, great pleasure to inform you of the in- while farmers are also at the mercy of the corporation of the Cargills Foundation. The Group reported a growth in revenue climate. The Foundation will undertake the social of 3.7% over the corresponding period to development initiatives of Cargills, with Rs. 94,663 Mn. Operating profit declined We worked with Jain Irrigation Systems a focus to support access to education, 25.2% to Rs.4,682Mn, although when of India to introduce proven practices health, funding and basic needs, and adjusted for one-off items in the previous from India that have been successful in promote gender equality, entrepreneur- year, operating profit on a recurring basis reducing manpower and agri-inputs us- ship, sustainable resource management, has declined 10.9%. Group profit after age. For the 1st Phase of the Program art and culture. tax was reported at Rs.2,034Mn for the 80 small-scale farmers were selected year, a de-growth of 12.3% over the cor- from three Collection Centres in different The Company declared a 1st interim div- responding period on a recurring basis. ecological zones. In partnership with Jain idend of Rs. 1.90 per share in November The financial performance of the Group Irrigation, we provided overseas training 2018. A final dividend of Rs. 4.10 per is further elaborated in the Management and field visits to some of these farmers share has been declared, subject to ap- Discussion & Analysis section of this An- as seeing is believing. A team comprising proval at the upcoming Annual General nual Report. experts from Jain Irrigation and Cargills Meeting. thereafter worked with the farmers to Sustainability is at the heart of our busi- install drip and sprinkler irrigation equip- Mr. Sidath Kodikara, the long-stand- ness. Enhancing our commitment to ment and supported them with training ing Chief Executive Officer of our Retail the environment, Cargills invested in the and monitoring during the cultivation pe- business, will retire from the Group in installation of 2.5MW of Rooftop Solar riod. The investment cost to install the August 2019. Sidath has been with the panels at our FMCG facilities. The solar irrigation systems was shared between group for almost 24 years, having joined projects are expected to be commis- the Cargills Sarubima fund and the farm- Cargills to run the KFC franchise opera- CARGILLS (CEYLON) PLC Annual Report | 2019 2018 18

Chairman’s Message contd.

tion in 1996 following a successful stint In the coming year, Cargills will celebrate in the hospitality industry. He thereafter its 175th year of operations, a milestone extended his services to Food City oper- I am humble to precede over. During this ations, and was appointed an Executive period, the Company has responded to Director of the Company in May 2002, tremendous change by remaining cur- which he relinquished 17 years later, in rent, evolving to meet the needs of the January 2019. I would like to place on customer and community through our record our immense appreciation for his unique business model, and serving the contribution to Cargills and, along with population across the country. This cul- the Board, extend our best wishes for his ture of creating value for all stakeholders future endeavours. is the foundation upon which the Group will continue to strive forward, and re- I also take this opportunity to welcome main our core belief. Mr. Yudhishtran Kanagasabai and Mr. Asoka Pieris, who were appointed to the On behalf of the Board, I would like to Board of Cargills (Ceylon) PLC as Inde- take this opportunity to thank our share- pendent Non-Executive Directors with holders for their unstinting belief in our effect from 25th February 2019. business model and continuing to invest in the future of Cargills, our business This review would be incomplete if I did partners who continue to provide goods, not mention the devastating events that services and financing to expand our op- took place on the 21st of April 2019. erations, and most importantly, we thank While in the sanctity of prayer and the our customers and team, without whose joy of family time, hundreds of innocent trust and loyalty this journey would not lives were lost, and many others irrepa- have been possible. rably changed. At Cargills, we remember and reflect on these lives. We commit to bringing this nation together and en- (Signed) suring that these precious lives are not Louis Page forgotten. We project this commitment Chairman and hope for the future throughout the operations of our businesses and the 1 July 2019 Foundation.

The coming year will likely see near-term uncertainty in the lead-up to another election cycle, with Provincial, Presiden- tial and General elections expected to take place over the next 12-15 months. Nevertheless, these cycles are temporary and cannot weaken the inherent long-term growth potential of Sri Lanka, a potential we firmly believe in and invest behind. CARGILLS (CEYLON) PLC Annual Report | 2019 2018 19 Profile of Directors

LOUIS PAGE IMTIAZ ABDUL WAHID PRIYA EDIRISINGHE Chairman, Non-Executive Director Managing Director/Deputy CEO, Execu- Independent Non-Executive Director tive Director Overview Louis R Page is a Fellow Member of the Mr. A. T. Priya Edirisinghe is a Fellow Institute of Chartered Accountants of Sri Mr. M. Imtiaz Abdul Wahid is an Associ- Member of the Institute of Chartered Ac- Lanka and a Fellow Member of the Char- ate Member of the Institute of Chartered countants of Sri Lanka, Fellow Member tered Institute of Management Account- Accountants of Sri Lanka and a Fellow of the Chartered Institute of Management ants (UK). He is the Chairman of the CT Member of the Chartered Institute of Accountants (UK), and holds a Diploma Holdings Group of Companies. He has Management Accountants (UK). He has in Commercial Arbitration. He was the also held a number of Board and Sen- been involved in the operations of the Senior Partner of BAKER TILLY Edirisin- ior Management positions at the highest company in an executive capacity at ghe & Co., Chartered Accountants and level in overseas public companies and different intervals progressively at higher currently serves as Consultant/Advi- public institutions. levels (appointed Director 1997 and Dep- sor. He is the Managing Director of PE uty Managing Director in 2001) spanning Management Consultants (Pvt) Ltd. He a period of over 30 years, leaving the counts over 50 years’ experience in both services of the company for employment public practice and in the private sector. abroad on two occasions in between He serves on the boards of a number of RANJIT PAGE whereby he also gained valuable expo- other listed and non-listed companies Deputy Chairman/CEO, Executive Direc- sure holding a number of senior manage- where in some companies he also serves tor ment positions in overseas companies. as Chairman/Member of the Audit Com- He was appointed Managing Director/ mittee, Related Party Transactions Re- Mr. V. Ranjit Page possesses over 35 Deputy CEO of Cargills (Ceylon) PLC in view Committee, and Member of the Re- years of management experience with May 2010, and appointed a Director of muneration Committee. Mr. Edirisinghe expertise in food retailing, food service, the holding company C T Holdings PLC is the Chairman of the Company’s Audit and manufacturing, having introduced in December 2016. Committee, Related Party Transactions the concept of super marketing to the Sri Review Committee, and a member of the Lankan masses. He also serves on the company’s Remuneration Committee. boards of several other companies, and is the Deputy Chairman/Managing Direc- tor of the parent company, C T Holdings PLC. CARGILLS (CEYLON) PLC Annual Report | 2019 2018 20

Profile of Directors contd.

SANJEEV GARDINER YUDY KANAGASABAI SUNIL MENDIS Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director

Mr. Sanjeev Gardiner who has been a Mr. Y. Kanagasabai (Yudy Kanagasabai) Desamanya Sunil Mendis was former- Director of Cargills (Ceylon) PLC since was appointed a Director of the Compa- ly the Chairman of Hayleys Group, and 1994 is the Chairman and Chief Exec- ny on 25 February 2019. a former Governor of the Central Bank utive Officer of the Gardiner Group of of Sri Lanka. He possesses around 50 Companies including the Galle Face He was the Senior Partner of Pricewa- years of wide and varied commercial ex- Hotel Co Limited, Galle Face Hotel 1994 terhouseCoopers, Sri Lanka and the perience, most of which has been in very (Pvt) Ltd, Ceylon Hotels Holdings (Pvt) Maldives with a career span of over thirty senior positions. Mr. Mendis is the Chair- Ltd (holding Co of Ceylon Hotels Cor- years including two years with the Singa- man of the Company’s Remuneration poration PLC) Kandy Hotels Company pore Firm. Yudy was also the Chairman Committee and a member of the Com- (1938) PLC (which owns the Queen’s of the Board Audit Committee until 31 pany’s Audit Committee and Related and Suisse Hotels in Kandy ) and, Unit- December 2018. Party Transactions Review Committee, ed Hotels Co (Pvt) Limited which owns and also serves on the boards of several the The Surf ( Bentota), The Safari (Tis- Yudy currently serves as the Chairman of other Group companies. sa) and The Lake – (Polonnaruwa) and the Board Audit Committee of Ceylon To- Co-Chairman of Suisse Hotels Kandy bacco Company PLC, a Non-Executive (Pvt) Ltd who owns OZO Hotel in Kandy. Independent Director of Cargills Food He is also a Director of several public Company Limited, Millenium Information JOSEPH PAGE and private companies and counts over Technologies (Private) Limited, Hunters Non-Executive Director 25 years of management experience in Limited PLC, Lanka Canneries Limited a diverse array of business. He holds a and Easwaran Brothers Exports (Private) Mr. Joseph C. Page is the Deputy Chair- Bachelor of Business Degree from the Limited, and as a Commissioner of The man/Managing Director of C T Land De- Royal Melbourne Institute of Technol- Insurance Regulatory Commission of Sri velopment PLC. He is also a Director of ogy, Australia and, a Bachelor of Busi- Lanka. C T Holdings PLC, Ceylon Theatres (Pvt.) ness Degree (Banking and Finance) from Ltd. and C T Properties Limited. Prior to Monash University, Australia. He has He is a Fellow of the Institute of Chartered joining C T Land Development PLC, he been a Council Member of HelpAge Sri Accountants of Sri Lanka, and serves as was Executive Director of Millers Limited. Lanka for several years. a member of the Company’s Audit Com- He has over 35 years of management mittee and Related Party Transactions experience in the private sector. Review Committee. He also serves on the Board of subsidiary company Cargills Foods Company (Private) Limited, and its Audit Committee and Corporate Govern- ance & Nominations Committee. CARGILLS (CEYLON) PLC Annual Report | 2019 2018 21

ERROL PERERA ASOKA PIERIS DEVA RODRIGO Independent Non-Executive Director Non-Executive Director Independent Non-Executive Director Overview Mr. Errol A. D. Perera has held senior Mr. H. A. Pieris (Asoka Pieris) was ap- Mr. Parakrama Devasiri Rodrigo, a char- management positions overseas and in pointed a Director of the Company on 25 tered accountant, had a career with the Sri Lanka. He obtained Board of Invest- February 2019. international accounting and consulting ment approvals with Pioneer Status for firm PwC joining it in east Africa in 1974 Directory Publishing, Pay Phones and He was also appointed to the Board and serving in its London offices in 1980. Paging projects and was instrumental in of subsidiary company Cargills Foods He was a Founder Partner when PwC promoting Venture Capital and Unit Trust Company (Private) Limited as Director established its Sri Lankan firm in 1981, ‘start-ups’ with foreign collaboration. Consultant Advisor and Member of the and held the position of senior partner Mr. Perera was the proud winner of the Audit Committee and Corporate Govern- from 1992 to 30 June 2006. He was GTE (now Verizon USA) Presidents Inter- ance & Nominations Committee. the chairman of the Ceylon Chamber of national Trophy in 1990. In 1995 under Commerce from 2004 to 2006. He has his stewardship, the Directory Publish- He is an Associate Member of The In- previously held public office as a mem- ing Team won the first-ever Sri Lanka stitute of Chartered Accountants of Sri ber of the Telecommunication Regulato- National Quality Award. He is at present Lanka and a Fellow Member of the Char- ry Commission and as a member of the an Independent Director of several other tered Institute of Management Account- Monetary Board of the Central Bank of companies in Sri Lanka and was recent- ants, UK and a Certified Global Manage- Sri Lanka. He is a director of Ambeon ly appointed a Director of the Insurance ment Accountant. Capital PLC and has served on the Board of Sri Lanka. boards of Chevron Lubricants, Cargills He has wide and varied experience in the Bank, Ceylon Tobacco, Holcim and John fields of Marketing, Finance, and Manu- Keells Holdings. facturing both in Sri Lanka and overseas.

He was the Group Chief Executive Officer of Singer Group in Sri Lanka, from July 2010 to October 2018. He also has overseas working experience in Hong Kong as the Vice President Finance of Singer Asia Limited for two years and in Mar- keting in Singer Jamaica. He has been a Director of Public Quoted Companies in Sri Lanka, Bangladesh and Indonesia and a Director of Non Quoted Compa- nies in India and Hong Kong. CARGILLS (CEYLON) PLC Annual Report | 2019 2018 CARGILLS (CEYLON) PLC 22 Annual Report 2018 | 2019 tor (down2.1%, 6.8%ofGDP)duetothe the declineinConstruction sub-sec- growth inthepastdecadeonaccountof The Industries sector recorded its lowest period. weather conditionsprevailed duringthe (up 11.2%, 0.6%ofGDP) as favourable fruits sub-sectorcontinuedtoberobust 5.3%, 0.7% of GDP), while growing of 6.3%, 0.6%ofGDP)andspices(up of GDP),coconut&palmproducts (up the sub-sectorsrice(up33.9%,0.7% mance wasbolstered byarecovery in is reliant onagriculture. Sectorperfor as over25%ofthecountry’s workforce portant tothehealthofeconomy The Agriculture sectorisespecially im- sector accountedfor56.8%ofGDP. accounted for27.0%andtheServices GDP in 2018, whiletheIndustries sector accounted for7.9%ofSriLanka’s total on nominal GDP, the Agriculture sector grew by4.7%(vs.3.6%in 2017).Based 4.1% in2017)andtheServicessector Industries sector grew by 0.9% (vs. 4.8% in2018(vs.-0.4%2017),the Overall, theAgriculture sector grew by crisis from October–December 2018. in the2ndhalfofyearandapolitical conditions, sharpcurrency depreciation ment environment duetotightmonetary by an uncertain consumer and invest- activity in the 4thquarter was impacted strained duringtheperiod.Economic the Industriessectorgrowth wascon- riculture andServicessectors,although Growth was led by arecovery of the Ag- formance inthe4thquarterofyear. previous yearonaccountofweakper in 2018,withgrowth slightlybelowthe The SriLankaneconomygrew 3.2% Operating Environment Management andFinancialReview - - formats, ‘Cargills FoodHall’and‘Cargills lets spread across the countryinthree retail operationpresently has380out- commenced operations in 1983.The Lanka’s retailer, largest modern having ation, CargillsFoodCity, whichisSri the Group’s trade retail modern oper The RetailsectorofCargillsconsists Retail Operations inflation recorded at4.8%. flation recorded at-1.5%andNon-food flation was2.8%in2018,withFood- items duringtheyear. Point-to-pointin- tion ensuring price deflation inkeybasket Lanka, andimproved Agriculture produc- icy maintained by the Central Bank of Sri digit levelsduetothetightmonetarypol- the year, ranging from lowtomid-single theless remained broadly incheckduring US Dollarduring the year. Inflationnever 2018, depreciating over19% againstthe The SriLankanRupeefacedavolatile US$4.3Bn fortheyear. fromearnings tourism growing 11.6% to rising 10.3%YoY to2.3mntourists,and show strong results withtouristarrivals GDP). The tourism industry continued to tourism activities(up5.5%,1.6%of activities (up4.8%,9.9%ofGDP)and 10.8% of GDP), other personal service GDP), wholesale&retail trade(up 5.0%, financial services(up11.8%,7.0%of Services sectorgrowth was drivenby ing theyear. products (5.7%ofGDP)grew 5.5%dur ufacture ofFood,Beverages&Tobacco the budgetdeficit.Meanwhile,Man- sought to contain as the Government penditure contracted during theperiod Country. Further, capitalex- Government consumer andinvestorsentimentinthe tight liquidityconditionswhichimpacted - - - couraging ouremployeestocontinue on important assetoftheorganization, en- the company’s humancapital,themost being puttowards thedevelopmentof Greater emphasisofthemanagementis tices. tect thebrandfrom suchunlawfulprac- are dilutingourbrandequity, andwillpro- to takeactionagainsttheseoutletsthat by misleadingthecustomer. We continue their stores as‘FoodCity’outlets,there- tempts byunrelated businessestoguise we haveencountered numerous at- to thestrength ofthe‘FoodCity’brand, ing standards ofretail inalllocalities.Due nized throughout thecountry forimprov- all DistrictsofSriLanka,andare recog- with geographicalrepresentation across year. We are theonlysupermarketchain number to380bytheendoffinancial permarkets in2018/19,takingthetotal The Companyopenedafurther27su- it prepared bythein-store chefs. ray offresh meatandseafood andhave which customerscanselectfrom anar cream van,andaliveaction stationin and café,saladjuicebars,anice the store alsohasapharmacy, bakery range oflocalandimportedproducts, cember 2018.Inadditiontoanextensive lombo City Centre shopping mall in De- 12,000 sqftofretail space, attheCo- gourmet specialtysupermarketwithover gills openedthe1stCargillsFoodHall,a new experiencestoourcustomers,Car In keepingwithourtraditionofbringing goods. tion centres thathandleFresh andDry retail operationissupportedbydistribu- Food CityExpress’ minimarkets.The Food City’supermarkets,and‘Cargills - - tion withtheDepartment ofAgriculture. agriculture produce, workinginconjunc - Agriculture Practice (SL-GAP) certified Good Harvest’brandofSriLanka Good Lanka, Cargillslaunchedthe ‘Cargills cheaper thanorganicproduce inSri duce option,whichissubstantially To provide customerswithasaferpro- nized standards forfoodquality. for consumption,meetinggloballyrecog- methods thatensure thatproduce issafe certification. GAPare specificagriculture etables, andmanyare noweligiblefor by providing higherpricesfortheirveg- low GoodAgriculture Practices(GAP) We alsoencouragedourfarmerstofol- er farmeryieldsandlowerinputcosts. improve farmerlivelihoods through high- puts. The objective of the Program is to tilizer, pesticides andotheragriculture inproductivity andminimize the useoffer the cultivationperiodtoimprove their installation andmonitoringthroughout nical training,financialassistance,field three collectioncentres toreceive tech- selected 80small-scalefarmersfrom Agriculture Program, Modernization we niques. Through theCargills Sarubima ing proper irrigationandfertigation tech- farmingpracticesinSriLankaus- ernize Systems ofIndiatoeducateandmod- gills Sarubima worked with Jain Irrigation our localfarmers.Duringtheyear, Car tion of sustainable farming practices by Cargills haslongchampionedtheadop- developed markets. tail alongtermcareer optionasinmore ka toimprove theskillssetandmakeRe- the RetailServices profession in SriLan- are alsotakingstepstoprofessionalize growth of the brand and the country. We ganization whilecontributingtowards the their career pathstorisewithintheor - - - political uncertaintyfurtherdented con- in thekeythird quarter of 2018/19 as ing theperiod.Thelargestimpact was consumer basketvaluescontracteddur de-growth insamestore salesgrowth as line growth. We recorded lowsingle-digit environment continuedtoimpactontop- previous year, astheweakconsumer Rs.74,004Mn, agrowth of3%overthe The Retail sector recorded of turnover Financial Review needs fortheforeseeable future. site tomeetourdistributionandlogistics space forexpansion,andweexpectthis 1H 2020/21.Thelocationhassufficient erations are scheduledto commencein project is estimated at Rs 3 Bn, and op- The investmentforthefirstphaseof all logisticsoperationsofthebusiness. centre thatwouldeventually centralize construction ofastate-of-the-artlogistics tomers. Duringtheyear, wecommenced provide thebestexperience forourcus- pillars onwhichwecontinuallyinvestto ciples of price, quality and convenience, The retail operationisbuilt ontheprin- up-country region. a largerecologicalzone,includingthe expand the farmer base to encompass into thesecondphaseinwhichwewill far beenasuccessandweare moving programThe modernization hasthus consuming GAP-certifiedproduce. educate thecustomeronbenefitsof We are alsoundertakinginitiativesto opment in the Sri Lankan environment. the pointoffarmer, auniquedevel- kind andproduce hastraceabilityupto Cargills GoodHarvestisthefirstofits - Cheese. Therange ofourdairyportfo- Drinking Yoghurt, ButterandCheddar Magic IceCream Bar, KotmaleLowFat added totheDairyportfolio,such asthe number ofnewproduct categorieswere ing marketconditions.During the year, a growth despitethecontinuedchalleng- the sector, reporting doubledigitrevenue ‘Kotmale’, consolidatedonitspositionin es market leading brands ‘Magic’ and The keyDairysegment,whichcompris- and distributionofleadingglobalbrands. and ConvenienceFoods,thetrading Beverages, Culinary, Confectionaries ufacturing ofproduct categoriesDairy, erations. FMCG comprises of the man- food manufacturinganddistributionop- (FMCG) sector of the Group consists of The FastMovingConsumerGoods Fast MovingConsumerGoods 61% YoY to Rs.621Mn. factors, sector profit for the yeardeclined prevailed inthemarket.Due totheabove due tothetightliquidityconditionsthat ness, andlendingratestrackingupward rowings for the capex needs of the busi- to Rs.622Mnamidstanincrease inbor Sector netfinancecostsrose 120%YoY expansion andviceversa. therefore benefitduringperiodsofsales relatively highoperating leverage, and the previous year. Retail businesses have profit of Rs.1,487Mn, down 41% over growth, thesectorreported anoperating As aresult ofthelackluster topline in the4thquarterofyear. growth momentumrecovered marginally businesses inSriLanka.Nevertheless, ber monthsare keyperiodsforallretail sonal sales.ThefestiveAprilandDecem- sumer confidence resulting in low sea- -

CARGILLS (CEYLON) PLC 23 Annual Report 2018 | 2019 Management & Financial Review CARGILLS (CEYLON) PLC 24 Annual Report 2018 | 2019 egories represents ourfocusindriving The alignment towards three broad cat- culinary andconfectionaries products. ‘Kist’ comprisesarangeofbeverages, completed bySeptember2019. Kotmale ison-goingandexpectedtobe The expansionofourCheesefacilityat sumption ofdairyproducts. people, especiallychildren, through con- and fulfilthenutritionrequirements ofthe other stakeholders to address this need are and working with the Government below globallyrecommended levels.We sumption ofdairyproducts inSriLankais nutritional diet. However, per capita con- Milk isakeycomponentofbalanced ucts peryear. over US$300mn of milk and milk prod- its totalmilkrequirement, andimports Lanka onlyproduces around 40-45%of reduce the costof milk production. Sri yields, ensure higherqualityofmilk and to improve animalhusbandry, enhance providing technicalandmaterial inputs work continuouslywithourfarmers, self-sufficiency inthedairysector, and the Government’s objectiveofreaching economy. We are committedtoachieve generating overRs.3.7Bntotherural year collectedover50Mnlitres ofmilk, holder dairyfarmersandduringthe lect fresh milkfrom over 15,000small- with locally sourced fresh milk.We col- local farmers as allproducts are made strengthened our commitmentto The growth ofMagicandKotmalehas drinking yoghurt,cheeseandbutter. and UHTliquidmilk,set,stirred and cream, plainandflavoured pasteurized comprises impulseandtake-homeice lio issecondtononeinSriLanka,and Management andFinancialReview to theintroduction ofthepriceceiling. Kist KnuckleswaspricedatRs.50/- prior water was set; thecomparative bottle of ing from Rs.35/- for a 500ml bottle of a consideration, and a price ceiling start- in themarket.Unfortunately, qualityisnot a premium tootherbottledwaterbrands of theKnucklesrange,andcommanded sourced directly from afacilityatthefoot les bottledwaterisapremium product, the KistKnucklesbusiness.Knuck- period, impactingtheperformanceof retail priceforbottledwaterduringthe introducedThe Government amaximum ranges. an entryintothemore premium biscuit cookies rangesduringtheyear, marking moved intothechocolate-enrobed and Meanwhile, the Confectionaries segment product hasbeenabove expectations. with fiveflavoroptions,anduptakeofthe the ‘Kizz’rangeofsparklingfruitdrinks eners. Further, the businesslaunched tive whichdoesnothaveaddedsweet- provide- consumersalow-sugar alterna duced sugar“Lite”rangeofnectarsto the nectarrangewithlaunchofare - entrants inthemarket.Kistexpanded of ‘nectar’hasbeenusedbyallother neer inthecategory, thegenericname Fruit’. Althoughthecompanyisapio- identity through thesub-branding ‘Fun er nectarsinthemarketandcementits has looked to differentiate itself from oth- reported growth during the period. Kist and thefruitbeverageproduct range wards dairyandfruit-based beverages, Consumer preferences are shifting to- ing environment. the periodlargelyduetotightoperat- ported amarginaltoplinegrowth during tive target audience. The segment re- each ofthesesegmentstotheirrespec- contd. efficiency and focus.Further, ourfocus ment insectormarginsdueto improved Rs.2,632Mn onaccountofan improve- Operating Profit increased 21%YoY to previous year. Rs.16,786Mn, agrowth of7%overthe The FMCGsectorrecorded of turnover Financial Review local market. introduce leadingglobalbrandsintothe We continuetopursueopportunities improved performanceofthebusiness. tions in‘Loaker’and‘Lotte’,resulting in was supplementedbynewintroduc- brands ‘Kraft’and‘Cadbury’s’ products ciation duringtheyear. Growth inkey impacted bythesharpcurrency depre- market environment, withproduct costs Millers performedcommendablyinthe The Trading and Distributionoperationof product portfolioduringthe comingyear. business willcontinuetoenhanceits move intotheseafoodcategory, andthe introduction ofIsland’s Finestmarksour glutamate from theproduct range.The salt contentandremoving Monosodium with ahealthierproduct, reducing the tor hasfocusedonproviding consumers ble digitgrowth duringthe year. Thesec- and meatballscategoriesreported dou- a challengeforthesector. Thesausages terial procurement constraintsremained growth duringtheyear, althoughrawma- The segmentreported high singledigit products. portfolio, comprisesarangeofseafood land’s Finest’,thenewestadditionto ‘Island’s Finest’rangesofproducts. ‘Is- sists ofthe‘Goldi’,‘Sam’s’, ‘Finest’and The ConvenienceFoodssegmentcon- present on these platforms. have embracedthischange, andare delivery platforms. Both KFC and TGIF of localandglobalonlinefood order and the yearunderreview withtheentrance livery spacehadgrown rapidlyduring growth ofourdeliverychannel.Thede- Meanwhile, wecontinuetofocuson markets. chicken has seenstrong growth innew ity foritscore product offreshly prepared potential toexpandthechainaspopular There neverthelessremains significant especially impactingestablishedstores. ed discretionary spendinthemarket, the weakconsumerenvironment impact- 13 districts across Sri Lanka. However, KFC outlets,andisnowpresent in During theyear, weopenedafurther8 in ColomboFortOctober2013. 2012, and opened its flagship restaurant gills secured theTGIFriday’s franchisein country with 39 outlets islandwide. Car restaurantlar international chainsinthe is amongthelargestandmostpopu- KFC franchisein1996,andtoday and TGIFriday’s. Cargillssecured the ally recognized QSRfranchises KFC The Restaurantssectorcomprisesglob- Restaurants Operations tax rose 38%YoY toRs.1,235Mn. Due totheabove,sectorprofit after the periodwasrecorded atRs.749Mn. environment. Capitalexpenditure during largely duetotheincreasing interest rate Sector netfinancecostsrose 13%YoY preciation duringtheyear. some oftheimpactcurrency de- manufacturing facilitieshasmitigated on locallysourced rawmaterialsforour - - ing undertaken for expansion of group year hadapositiveimpacttooffset gear ment properties intheprevious financial Rs.1,425Mn asthedisposal of invest- Net financecostsrose 9%YoY profit declinedby11%fortheperiod. the non-recurring gain,group operating down 25%YoY. However, adjustedfor group operatingprofit ofRs.4,682Mn, the corresponding period,resulting ina operating expensesrose by8%over erty of Rs.1,010Mn in 2017/18. Group off gainondisposalofinvestmentprop- Rs.2,180Mn, largelyonaccountofaone- Other incomedeclined28%YoY to to Rs.10,449Mn. Gross profit howeverdeclinedmarginally up 4%overthecorresponding period. of Rs.94,663Mnforthefinancialyear, The CargillsGroup recorded turnover Financial Review Group FinancialReview and Outlook to Rs.222Mn. Sector profit aftertaxdeclined 8%YoY in 2017/18). for theyearwasRs.461Mn(vs.Rs.81Mn increased capexduringthe year. Capex year, (vs.Rs.10Mn in2017/18)dueto cost meanwhilerose toRs.14Mn inthe growth.of thelowturnover Netfinance of Rs.319Mn,down16%YoY asaresult The sectorrecorded anoperatingprofit ronment. largely duetothetightconsumerenvi- franchise was negative during the period Same store sales growth ofthe KFC largely drivenbynewstore openings. ver ofRs.3,873Mn,agrowth of7%YoY, The Restaurantssectorreported- turno Financial Review - over onemillion people,i.e.approximate- industry isestimatedtoemploy orbenefit the recovery ofconsumerspending.The sector willlikelybeakeydeterminant in The speedofrecovery ofthetourism business activityispickingup. returning toasenseofnormalcy, and situation inthecountryisalsogradually utive yearsofmonetarytightening.The nomic fundamentalsfollowingconsec- year onthebackofimproved macroeco- cover duringthecourseoffinancial attacks, weexpecttheeconomytore- impacted bytheEasterSundayterror prospects ofthecountryhavebeen While thenear-term economicgrowth Outlook ported atRs.2,034Mnfortheyear. declined by16%.Profit after taxwasre- non-recurring items,profit before tax YoY toRs.3,403Mn, whileadjustedfor Reported Profit before taxdeclined35% basis toRs.2,358Mn. income rose 37%YoY onanadjusted 6% YoY toRs.19,903Mn. Total operating Rs.23,917Mn, and deposits increasing year, withloans increasing 15%YoY to solidated onitspositionoftheprevious Properties Limited.Cargills Bankcon- sociates CargillsBankLimitedandCT results includecontributions from associate results grew 152%YoY. The Adjusted forthedisposal,Share ofAs- lombo Trust Finance PLC in 2017/18. listed financecompanysubsidiaryCo- Rs.190Mn onaccountofthedisposal to aconsolidatednon-recurring gainof over theprevious yeartoRs.54Mndue Share ofAssociateResultsdeclined was recorded atRs.4,251Mn. businesses. Group capexfortheyear

CARGILLS (CEYLON) PLC 25 Annual Report 2018 | 2019 Management & Financial Review CARGILLS (CEYLON) PLC 26 Annual Report 2018 | 2019 throughout thecountry. TheRetailop- and allowustocontinueour expansion City channelfortheforeseeable future, the requirements of the CargillsFood art logisticscentre willallowustomeet improvement. Theplannedstate-of-the- structure todriveefficiency andprocess are investinginimproved back-endinfra- To catertothisexpecteddemand,we stantial potentialforgrowth. cery spendinthecountry, indicatingsub- for onlyaround 15-20%ofthetotalgro- present, thesectoristhoughttoaccount motions, andshoppingenvironment. At to betterqualityproducts, pricing,pro- tradeformatdue shifting tothemodern supermarkets and consumer preference to gather pace amidstgreater accessto The growth retail ofmodern isexpected continue toimprove asthe yeargoeson. consumer environment is expectedto dence asweenteranelectioncycle,the certainty mayweighonconsumerconfi- economic growth. Althoughpolitical un- room forCentralBankintervention tospur ing vis-à-vis the US Dollar, there is further within limits,andthecurrency appreciat- inflationexpectedtoremain 2019. With policy ratesby50basispointsinMay icy, andmost recently reduced itskey adopted anexpansionarymonetarypol- the CentralBankofSriLanka(CBSL)has encourage investment and consumption, In amovetoimprove marketliquidity and to promote thedestination. have recommenced marketing activities ther, thetourismdevelopmentauthorities were issuedfollowingtheattacks.Fur or removed thetraveladvisorieswhich Many countries have now revised down ly 5% of the population of the country. Management andFinancialReview - Lanka. enhance theconsumeroffering inSri We are also exploring other offerings to clean andhygieniceatingenvironments. cially asconsumersincreasingly prefer acceptance throughout SriLanka,espe- ly prepared chickenoffering ofKFChas ducing perstore capex.Thecore fresh- would allowfor faster expansion while re- rants sectorthrough newmodelsthat consolidate the position of the Restau- Cargills isexploringavenuestofurther all categoriesweoperatein. building themostsought-afterbrandsin across categories.We are focusedon ket distributionchannel,extendingreach have alsostrengthened ourmass mar served through imported products. We the HORECA channel which is presently tion andtargetnewchannels,including will allow‘Kotmale’toexpandproduc - year. Meanwhile, thenewcheeseplant range willtakeplaceduringthefinancial and furtherexpansionoftheBeverage strong customeracceptance thusfar, beverage product, ‘Kizz’, has seenvery range inthesecategories.Ourlatest and willcontinuetoexpandtheproduct our brands ‘Magic’, ‘Kotmale’ and ‘Kist’, dairy andbeveragecategoriesthrough We seesignificantgrowth potentialinthe growth categories. are inmarketleadershippositions inhigh paid dividendandmostofourbrands tritious products ataffordable priceshas by providing consumerswithqualitynu- Our focustobuildstrong FMCGbrands expansion. mendous growth potentialtocontinue during thecomingyear, andseestre- eration expects to open its 400th outlet contd. - holders across ourvaluechain. the countrytocreate value forallstake- and buildonourecosystemthroughout our businessestorealize thispotential agement themandatetoinvestbehind of operation.TheBoard hasgivenman- siderable upsidepotentialinallourareas tions toremain challenging,weseecon- While weexpectneartermmarketcondi- oldest corporate entities in Sri Lanka. years inoperationforCargills,oneofthe The 2019/20financialyearwillmark175 ard principles,policies,structures, andpracticesthatare cascadeddowntoallouroperatingsubsidiaries. systemasillustratedinthediagrambelowconsistsofeightmainpillarswhichareOur CorporateGovernance supported by stand- 2. ance needpropelled bytherapid changesinthebusinessenvironment. worldwide. Overtheyears,wehavestrengthened structure, ourgovernance practicesandprocesses- tomeettheevolvinggovern We are principlesandconstantlystrivetoembraceemergingbestpracticesadopted committedtosoundCorporateGovernance practicesaresound CorporateGovernance essentialtocreate sustainablevalueandtosafeguard theinterest ofthestakeholders. affairs are beingmanagedinamannerwhichensures accountability, transparencyin alltransactions.We believethat andfairness atCargillsencompassesasetofsystems,processesCorporate Governance andpracticesinplacetoensure thatthecompany’s 1. Corporate Governance Compliance Regulatory Legal & THE CORPORATE GOVERNANCESYSTEM EXECUTIVE SUMMARY

Transparency Disclosure &

& Risk Management Risk & Controls, Assurance Controls,

Engagement Stakeholder

o Management Performance Strategy &

v Structure Governance e rn an ce Ethics Practices & Business Leadership

CARGILLS (CEYLON) PLC 27 Annual Report 2018 | 2019 Stewardship CARGILLS (CEYLON) PLC 28 Annual Report 2018 | 2019 Board compositionandmakeschangesifnecessary. ence oftheBoard, andmanagement.TheGroup andtoseparateitsfunctionsofgovernance Board periodicallyevaluatesthe The Group policyistohaveanappropriate mixofExecutive,Non-ExecutiveandIndependent Directors tomaintain theindepend- pendent inaccordance withapplicableregulations andtherequirement oftheCSEListingRules. appropriate structure. The Board establishes principles and procedures to determine whether or not any particular Director is inde- The Board ismadeupofasubstantialmajorityIndependent,Non-ExecutiveDirectors andtheBoard considersthistobethe subject totheCompany’s ArticlesofAssociation. The Board ofDirectors comprisessuchnumberofDirectors astheBoard deemsappropriate tofunctionefficiently as abody, 3.1.1 Boar and twoExecutiveDirectors. The Company currently has eleven Directors in the Board comprising nine Non-Executive Directors (of whom six are independent) 3.1 some ofitsresponsibilities totheBoard Committeestodischarge itsresponsibilities inaneffective manner. system. The Board of Directors appointed by the shareholders is primarily responsible The Board for good governance. delegates structureThe Group governance withdefinedroles hasputinplaceaninternal andresponsibilities ofeveryconstituentthe 3. Corporate Governance INTERNAL GOVERNANCESTRUCTURE The Board ofDirectors Committee Risk Management & Audit Internal Audit Internal d SizeandComposition Remuneration Remuneration Committee Core Business Business Core Teams contd. Committee (CTH)Committee Nomination Board Committees Human Re BOARD sources Group Management Committees Group Management

- Related Party TransactionsRelated Party Finance Review Committee IT & IT Projects Sustainability Committee Executive Executive financial issues, abilitytoexercise sound perience, understandingofbusiness and ing, amongotherthings,breadth ofex- factors itconsidersappropriate, includ- ship, theBoard willtakeintoaccountall In consideringcandidates for Director are toretire byrotation atsuchmeeting. determining the number of Directors who but shallnotbetakenintoaccountin ing andshallthenbeeligibleforelection, fice until the nextAnnual General Meet- Any Director soappointedshallholdof- Articles ofAssociationtheCompany. Director, subjecttotheprovisions inthe to fill a casual vacancy or as an additional mends anypersontobeaDirector either ent Company(CTHoldingsPLC)recom- The NominationCommitteeofthePar 3.1.3 material transactionwiththeGroup. terest theyhaveinamaterial contractor writing thenature andextent ofanyin- Cargills, they are required to disclosein utive Officers mayconflict withthoseof ships orinterests ofDirectors andExec- Where thepersonalorbusiness relation- tions oftheirindependence. rectors havesubmittedsigned confirma- The sixIndependentNon-ExecutiveDi- requirements oftheCSEListingRules. Independent Directors isin linewiththe present composition of Non-Executive the criteriaofCSEListingRulesand has beendeterminedinaccordance with ment. IndependenceoftheDirectors andstrategicmanage- in governance tors whosupporttheExecutiveDirectors represented bytheIndependentDirec- OurBoardporate Governance. iswell pendence isakeyfeature ofgoodCor The Group considers that Board inde- 3.1.2 Conflict ofInterest Board Independenceand Appointment ofDirectors - - - ers whethersufficient timeandattention mance oftheindividualDirector, consid- The Group, inassessingtheperfor 3.1.5 General Meeting. to standforre-election atthenextAnnual to theBoard duringtheyearisrequired In addition, any new Director appointed since their appointment /reappointment. those whohavebeenlongestinoffice re-election. TheDirectors whoretire are ation oftheCompanyandare eligiblefor basis prescribed intheArticlesofAssoci- of theDirectors, retire byrotation onthe each Annual General Meeting one third visions atthetimeofre-appointment. At ject to the age limit as per statutory pro- and recommended forre-election sub- Non-Executive Directors are appointed to theirprescribed retirement agewhilst and recommended forre-election subject The ExecutiveDirectors are appointed Board Profiles sectionoftheReport). well asintheAnnualReport(Pleaserefer appointment bypublicannouncementas to theshareholders atthe timeoftheir Details ofnewDirectors are disclosed Director. would interfere withperformance asa matters, andnoconflictofinterest that setting, sufficient timetodevote Board and understandingofstrategypolicy est characterandintegrity, experience should satisfythefollowingcriteria:high- lieves thatataminimumeachnominee of eachcandidate’s credentials andbe- tion Committeeconsiderstheentirety ing businessandindustry. TheNomina- ments andexperienceinmattersaffect- judgment, diversity, leadership,achieve- 3.1.4 Board Tenure, Retirement and Other Board Memberships Re-election ofDirectors - 4) RelatedPartyTransactions Review 3) RemunerationCommittee 2) NominationCommittee 1) AuditCommittee mittees; The Group hasthefollowingBoard Com- 3.2 the Board andreviewed annually. Executive Directors are determinedby necessary. Thefeesreceived byNon- rable companiesandisadjustedwhere in reference tofeespaidbythecompa- Non-Executive Directors’ is determined market comparators.Remunerationof neration isreviewed periodically against approval. ExecutiveDirectors’ Remu- Board ofDirectors oftheCompanyfor appropriate recommendations to the Directors oftheCompany andmakes perquisites applicableto the Executive and recommends theremuneration and The RemunerationCommitteestudies Policy 3.1.6 Boards. of interest causedbyservingon other avoiding actualorpotentialconflicts ing theirdutiesandresponsibilities and mitment andeffectiveness indischarg- Directors havedemonstrated theircom- may holdinothercompanies. Board representations whichaDirector it doesnotimposelimitonthenumberof time intheaffairs oftheCompanythough expects Directors todevotesufficient membership inothercompanies.Group affairs oftheGroup whileholdingboard has beengivenbytheDirector tothe Committee (RPTRC) Board Committees Directors’ Remuneration

CARGILLS (CEYLON) PLC 29 Annual Report 2018 | 2019 Stewardship CARGILLS (CEYLON) PLC 30 Annual Report 2018 | 2019 Audit Committeeaswell. non-listed companywhichhasitsown other thaninthecaseofsignificant subsidiary companieswithintheGroup, the AuditCommitteeofnon-listed the listed holding Company functions as mittees aswell.TheAuditCommitteeof members oftheothertwoAuditCom- Committee oftheParent Company are and oneothermemberoftheAudit Audit Committees,where theChairman within theCargillsGroup have separate and asignificantnon-listedsubsidiary holding Company, onelistedsubsidiary addition totheAuditCommitteeof policies adoptedacross the Group. In and its subsidiaries is set out in the Group of theAuditCommitteeCompany The policyframeworkforthefunctioning Policy Framework ing itsresponsibilities. assists the Board in effectively discharg- Board ofDirectors oftheCompanyand processgovernance establishedbythe Committee functionswithintheoverall reports directly totheBoard. TheAudit Board ofDirectors oftheCompanyand The AuditCommitteeisappointedbythe 3.2.1 ers oftheBoard ofDirectors. to whichtheyhavebeendelegatedpow- tailing their responsibilities and the extent All committeeshavewrittenchartersde- Corporate Governance Audit CommitteeReport ticipation oftheCompany’s Auditors. The AuditCommitteemetfourtimesduringtheyear, twoofwhichwere withthepar Officer (GCRO),aswelltheCFOsofsignificantclusters. ny, withtheparticipation of Group Chief Financial Officer (GCFO) andGroup ChiefRisk ings were alsoattendedbytheGroup ManagingDirector/Deputy CEOoftheCompa- quarter, ofwhichtheCompanyAuditorswillattendtwosuchmeetings.Themeet - In termsoftheGroup policy, theAuditCommitteesshouldmeetatleastonceinevery Meetings circular resolutions. members oftheAuditCommittee.Where necessary, approvals mayalsobegiven by place tocirculate thevarious documentsandforclarificationofmattersraisedbythe and whenrequested soto dobytheAuditCommittee.Besidesthis,procedure isin scheduled andfortheDeputyChairman/CEOtoattendAuditCommitteemeetingsas cial Officer (GCFO),andGroup ChiefRiskOfficer (GCRO)toattendallmeetingswhen The procedure inplaceisfortheGroup ManagingDirector (GMD),Group ChiefFinan- Procedure the Secretary totheCommittee. ards for listed companies. The Company Secretary on Corporate Governance acts as of themembersAuditCommitteesatisfiescriteriaasspecifiedinstand- Member oftheChartered Institute ofManagementAccountants,UK.Thecomposition a FellowMemberoftheInstituteChartered AccountantsofSriLankaandaFellow are Independentordeemed Independent.TheChairmanoftheAuditCommitteeis The AuditCommitteecomprisesfivememberswhoare Non-ExecutiveDirectors who Mr. Y. Kanagasabai Mr. P. D.Rodrigo Mr. E.A.DPerera Mr. SunilMendis (Chairman) Mr. A.T.P. Edirisinghe Name /Independence The MembersoftheAuditCommittee: Composition contd. - Independent - Independent - Independent - Independent - Independent (w. e.f.25 th February2019) - present the stateofaffairs ofthe Group. TheAudit Committee had discussionswith Group priortopublicationassure thatthepublished Financial Statements fairly The AuditCommitteereviewed thequarterlyandannual FinancialStatementsofthe Financial Reporting • • • • • • • • • following: The functionsoftheAuditCommittee,assetoutinGroup policies,includethe Scope is setoutbelow: Details oftheparticipationmembersAuditCommitteeatsuchmeetings Mr. Y. Kanagasabai Mr. P. DevaRodrigo Mr. Errol A.D.Perera Mr. SunilMendis Mr. A.T. PriyaEdirisinghe,Chairman recommendations asappropriate. Report regularly totheBoard withrespect totheCommittee’s activitiesandmake compliance withapplicablelawsandregulations; Advise theBoard withrespect totheCompany’s policiesandprocedures regarding other relevant lawsandregulations; Statements toensure compliancewiththeSriLankaAccountingStandards and Review theCompany’s annualauditedFinancial StatementsandquarterlyFinancial the provision Auditors; ofnon-auditservicesbytheExternal supply non-auditservices,takingintoaccountrelevant ethicalguidanceregarding Auditor to Develop and implement policy on the engagement of the External effectiveness oftheauditprocess; Auditor’sReview andmonitortheExternal independenceandobjectivitythe engagement; and removalauditorsapproval ofexternal oftheremuneration andtermsof make recommendation to theboard pertaining to appointment, re-appointment Auditorsand Assessment oftheperformanceandindependenceExternal mitigated; management procedures are adequatetoensure thevariousriskexposures are Oversight of theprocesses to ensure thatthe Company’s controls internal andrisk regulatory bodies; information requirements oftheCompaniesActandSECotherrelated Oversight of the Company’s compliance with financial reporting requirements, financial statementsinaccordance with SLFRS/LKAS; Oversightofthepreparation, presentation andadequacyofdisclosures inthe Name Meetings Held Appointed on25 4 4 4 4 th February2019 Meetings Attended 4 3 3 4 plan forthefinancialyear2019/20. AuditandRiskManagement nual Internal tee alsoreviewed andapproved thean- out inaneffective manner. TheCommit- that riskmanagementprocess iscarried the AuditCommitteetogiveassurance different businessunitswere reviewed by and riskmitigationactionspertainingto containing detailedriskassessments cedures. TheRiskManagementreport regulations, establishedpoliciesandpro- audit coverage,compliancetothelaws, nal AuditReportscontainingdetailsofthe The AuditCommitteereviewed theInter Management Audit,ControlsInternal andRisk Report submittedbytheGCRO. Audit with aRiskManagement&Internal and reasons for, non-compliance,along ing anyinstances(where applicable) of, perfected bytheAuditCommittee,stat- standardized exceptionreporting format secretarial divisionsoftheCompany ona also obtainedfrom thefinance, legal,and Quarterly ComplianceCertificateswere Group policies,(ifany). cial reporting, statutoryrequirements and further statesanydepartures from finan- quarter oryearasthecasemaybe,and are consistentwiththoseof theprevious entation ofsuchFinancialStatements rules and thatthepresrate Governance - law andotherstatuesincludingCorpo- plicable accountingstandards, company Statements are inconformity with theap- stating thattherespective Financial obtained adeclarationfrom theGCFO In all instances, the Audit Committee tors ontheannualFinancialStatements. Audi- the managementandExternal -

CARGILLS (CEYLON) PLC 31 Annual Report 2018 | 2019 Stewardship CARGILLS (CEYLON) PLC 32 Annual Report 2018 | 2019 1 July2019 Chairman –AuditCommittee A .T. P. EdirisingheFCMA, FCA, (Signed) for thefinancialyearending31March 2020. Auditorsofthe Company be continuedasExternal Board thatMessrsKPMG,Chartered Accountants, The AuditCommitteehasrecommended tothe the CompanyandCargillsGroup. sive income,changesinequity, andcashflowsof statements ofprofit orlossandothercomprehen- statement offinancialpositionandtherelated panies ActNo.07of2007ontheaudit ence asrequired bySection163(3)oftheCom- ment’ from Messrs.KPMG confirmingindepend- The AuditCommitteeobtainsan‘Auditor’s State- impaired. that theirindependenceasAuditorshasnotbeen AuditorstotheCompanyensurethe External quantum ofnon-auditservices(ifany)provided by ing so,theAuditCommitteereviewed thetypeand made recommendations to the Board. When do- Auditorsand terms ofengagementtheExternal the Companyandapproved theremuneration and Audit Committeealsoreviewed theauditfeesfor pertaining toappointment/re-appointment. The ditors andmaderecommendations totheBoard and performanceoftheCompany’s Au- External The AuditCommitteeassessedtheindependence Audit andAuditors’Independence guarding ofassetstheCompany. accuracy oftheFinancialStatementsandsafe- ance regarding the monitoring of the operations, ment withintheGroup provide reasonable assur opinion that the control procedures and environ- Based onitswork,theAuditCommitteeisof Conclusion Corporate Governance contd. - 1 July2019 Chairman –RemunerationCommittee Sunil Mendis (Signed) The Committeemetonceduring theyearunderreview. Meeting 2017/18. ee Share OptionScheme(ESOS)whichwasinitiatedintheFinancialYear The Committeealsooverseestheadministrationaspectsof theEmploy- the remunerations are inlinewithmarketconditions. approval. TheCommitteealsocarriesoutperiodicreviews toensure that appropriate recommendations totheBoard ofDirectors oftheCompanyfor quisites applicabletotheExecutiveDirectors oftheCompanyandmakes quired. TheCommitteestudies andrecommends theremuneration andper the ManagingDirector may alsobeinvitedtojoininthedeliberationsasre- risinghe and Deva Rodrigo. The Chairman, Deputy Chairman &/ CEO, and Non -ExecutiveDirectors - Messrs.SunilMendis(Chairman),A.T. P. Edi- The RemunerationCommitteeofCargills(Ceylon)PLCconsiststhree 3.2.3 The Committeemeetsonceeachyearorasrequired. Meetings to theBoard andrecommend totheBoard ofDirectors forappointment. Scope oftheNominationCommitteewouldbetoreview allappointments Scope (Deputy Chairman/CEO) Mr. RanjitPage Mr. SunilMendis Mr. ATPEdirisinghe (Chairman) Mr. LouisPage ing members; The NominationCommitteeoftheParent Companyconsistsofthefollow- Composition ination CommitteeofCargills(Ceylon)PLC. The NominationCommitteeoftheParent Company(CTH)actsastheNom- 3.2.2 Remuneration Committee Nomination Committee - ExecutiveDirector - Independent - Independent - NonExecutive/Independent - Secretary actsastheSecretary totheCommittee. for listed companies. The Company Corporate Governance RPTRC satisfies the criteria as specified in the standards on ment Accountants.Thecomposition ofthemembers and aFellowMemberofChartered InstituteofManage- ber oftheInstituteChartered AccountantsofSriLanka independent. TheChairmanoftheRPTRCisaFellowMem- Non-Executive Directors whoare independentordeemed The RPTRCommitteecomprisefivememberswhoare Mr. Y. Kanagasabai Mr. P. D.Rodrigo Mr. E.A.DPerera Mr. SunilMendis (Chairman) Mr. A.T.P. Edirisinghe Name /Independence The MembersoftheRPTRC: Composition panies withintheGroup. functions astheRPTRCofnon-listedsubsidiarycom- listed subsidiary. TheRPTRCofthelistedholdingCompany of theParent Companyare membersoftheRPTRC where theChairmanandone othermemberoftheRPTRC in theCargillsGroup ofcompanies hasaseparateRPTRC, RPTRC oftheholdingCompany, onelistedsubsidiarywith- policies adopted across the Group. In addition to the the CompanyanditssubsidiariesissetoutinGroup The policy framework for the functioning of the RPTRC of Policy Framework in effectively dischargingits responsibilities. Board ofDirectors oftheCompanyandassists Board processwithin theoverallgovernance establishedby reports directly totheBoard. TheCommitteefunctions is appointedbytheBoard ofDirectors oftheCompanyand The RelatedPartyTransactions ReviewCommittee(RPTRC) 3.2.4 Report Related PartyTransactions ReviewCommittee (w. e.f.25 - Independent - Independent - Independent - Independent - Independent th February2019) actions. and to inform the SEC/CSE on the applicable non-recurrent trans- need toobtainshareholder approval forspecifiedtransactions Likewise, procedures are alsoinplacefortheassessmentof • • • and haveobtained: Procedures are alsoinplacefortheRPTRCommitteetoobtain • • • • • The functionsoftheRPTRCommitteeincludefollowing: actions (RPT)carriedoutbytheCompany. The RPTRCassiststheBoard inreviewing allRelated PartyTrans- Scope non-recurrent transactionswithintheGroup Companies. equivalent positioninGroup companiesonrecurrent and/or Quarterly declarationsofGroup ChiefFinancialOfficer or associate companiesofGroup companies; is outsidetheGroup companiesand/orofthesubsidiariesand ownership inacompanyorpartnershipproprietorship which of allGroup companieswhohasasignificantshareholding/ Quarterly declarationsofDirectors &SeniorManagement by theirclosefamilymembers; recurrent &non-recurrent transactionsundertakenbythemor Directors &SeniorManagement ofallGroup companieson Quarterly declarationsofrelated partytransactionsfrom and intheAnnualReport. to theCSEwhere immediatemarket disclosures are required, Ensuring thatappropriate disclosures are madeasapplicable management forcompliancewiththeRPTCode; Reviewing allrelated party transactionsasreported by Personnel withappropriate level of authority; in asystematicmannerandcertified by KeyManagement transactions that are captured withinthesystemare reviewed Establishing procedures toensure thatrelated party in atimelymanneraccordance withtheapplicablerules; transactions are identified, adequately captured and reported ensure that all recurrent and non-recurrent related party Reviewing andupdatingthecontrol procedures inplaceto RPT CodeoftheSEC; party transactionspolicyconsistentwiththatproposed bythe Directors of the Company and its listed subsidiaries, a related Developing andrecommending foradoptionbytheBoard of

CARGILLS (CEYLON) PLC 33 Annual Report 2018 | 2019 Stewardship CARGILLS (CEYLON) PLC 34 Annual Report 2018 | 2019 is setoutbelow: Details oftheparticipationmembersRPTRCommitteeatsuchmeetings as welltheCFOsofsignificantclusters. the participationofGroup Chief FinancialOfficer (GCFO)andChiefRiskOfficer (CRO), year. The meetings were also attended by the Managing Director of the Company, with The RelatedPartyTransactions ReviewCommittee(RPTRC)metfourtimesduringthe Meetings tee deemstobesignificant. independent expertadviceonvaluationoranyotherrelated mattersthattheCommit- In respect ofnon-recurrent transactions,ifany, theCommitteeisempowered toseek the sameinaccordance withthemandatesetoutabove. transactions from theGroup ChiefFinancialOfficer oftheCompanyanddisposes within theGroup. TheCommitteereceives and reviews detailsofallrelated party Companies withintheGroup regularly engageintransactions withothercompanies Related PartyTransactions Corporate Governance to terms or practices over the previous year and general terms and conditions applica- tions, thetransactionswere intheordinary courseofbusiness,there were nochanges ranted priorshareholder approval. Itisalsonotedthatinrespect ofrecurrent transac- there were nonon-recurrent transactionswithrelated partiesduringtheyearthatwar Based onitswork,theRelatedPartyTransactions ReviewCommitteeconfirms that Conclusion and theextentofarea occupied,etc. count, ifany, dueconsiderationoffactorssuchasthelong-termnature oftheleases related parties are similar to those entered into with non-related parties taking to ac- and generaltermsconditionsapplicabletoallleaseagreements entered intowith The Committeenotedthatthere were nochangestopracticesfollowedovertheyears non-recurrent transactionstobeinlinewiththeapplicableCSERules. ty transactionsateachquarterlymeeting,(b)identifying&reporting onrecurrent & The Committeeadoptedpoliciesandprocedures for(a)reviewing therelated par Mr. Y. Kanagasabai Mr. P. DevaRodrigo Mr. Errol A.D.Perera Mr. SunilMendis Mr. A.T. PriyaEdirisinghe,Chairman Name Meetings Held Appointed on25 contd. 4 4 4 4 th February2019 Meetings Attended 4 3 3 4 - - 1 July2018 Review Committee Chairman –RelatedPartyTransactions A .T. P. EdirisingheFCMA,FCA (Signed) Statements. disclosed in Note34.3 to theFinancial entered intowithrelated partiesare The details of the recurrent transactions the Board ofDirectors. Committee havebeencommunicated to transactions. Theobservationsofthe efits whichformpartandparcel ofsuch volume, costandanyotherspecialben- any, dueconsiderationoffactorssuchas non-related parties taking into account, if ties are similartothoseentered intowith ble tosuch transactions with related par - fiduciary responsibilities, bothindividuallyandcollectively. Thekeyfunctionsandresponsibilities oftheBoard are: ly, the Board and the Senior Management Team ensure the long-term success of the Company and discharge their statutory and The Board overseestheaffairs oftheCompanyandprovides leadershipandguidance totheSeniorManagementTeam. Collective- 4.1.2 business inorder toachieveGroup’s longterm goals. the performancemanagementofbusinessunits.Heisentrustedwithleadinginday-to-dayrunning ofthe functions are carriedoutat alltimesbytheBoard members.Group CEOisresponsible fordeveloping,implementingstrategiesand The Chairmanisresponsible forproviding leadershiptotheBoard andensuring thatproper order andeffective dischargeofBoard each othertoensure thatthere isabalanceofpowerandauthoritynoindividualhasunfettered powersofdecisionandcontrol. and responsibility between theChairmanandGroup ChiefExecutiveOfficer. Eachplaysdistinctiverole butcomplementing promoting thehigheststandards ofintegrity, transparency andaccountability, there isaclearandeffective divisionofaccountability Whilst theGroup Chairman andGroup ChiefExecutiveOfficer are collectivelyresponsible fortheleadershipofGroup andfor 4.1.1 on aday-to-daybasis,guidedbyanapproved delegationofauthority. oversight role overtheGroup, theGroup CEOandhisexecutivemanagement are empowered tomanageandleadthebusiness who are capableofsteering thebusinesstowardsWhileBoard achievingthecompanygoalsandgoodgovernance. playsan experience intheBoard. Our Board atpresent comprisesDirectors withdiverseskillsandvastexperienceinthefieldofbusiness creating sustainablevalue forallstakeholders.TheGroup isconsciousoftheneedtomaintainanappropriate mixofskillsand TheBoard’sthe qualityofgovernance. actionsanddecisionsare alignedwiththeCompany’s bestinterests andfocusedtowards that an enlightened Board consciously creates a culture of leadership to provide a long-term vision and policy approach to improve ness performancedelivery. frameworksupportsintegrateddecisionmakingandriskmanagement.We Ourgovernance believe across thewholebusiness.Theseare designedtosafeguard long-termshareholder value,through strategicexecutionandbusi- frameworkensuresaccountabilities. Ourgovernance thatpoliciesandprocedures setatBoard levelare effectively communicated the shareholders on its stewardship of the Group. The Board framework with defined responsibilities has a clear governance and The role of our Board of Directors includes setting the strategic direction of theGroup, providing strong leadership and reporting to 4.1 4. Risk Management Strategy LEADERSHIP Board Leadership Board Responsibilities Role ofGroup ChairmanandGroup CEO • • • • • • controls andcompliance Reviewing, ratifyingandassessing theintegrityofGroup’s systemsofriskmanagement,internal Ensuring aprocess isinplacetoidentifytheprincipalrisksof Group’s business Review andapprove theannualoperatingplansandfinancialbudgets. divestments Approving andmonitoringcapitalmanagementincludingmajorexpenditure, acquisitionsand Directing, monitoringandassessingtheGroup’s performanceagainststrategicandbusinessplans developed byManagement Providing direction, guidelines,andapproval of,theGroup’s strategicdirection andbusinessplansas Roles andResponsibilities

CARGILLS (CEYLON) PLC 35 Annual Report 2018 | 2019 Stewardship CARGILLS (CEYLON) PLC 36 Annual Report 2018 | 2019 Corporate Governance Corporate Governance The Board metfivetimesintheyearunderreview, andthefollowingtableshowsattendancerecord forsame. monthly andyeartodateperformanceofeachunit. and financial plan for each business at the beginning of the financial year. Managementpresentations are madeto the Board on tors toprepare fordiscussionofmattersatthemeeting.TheBoard reviews andapproves thestrategicplanandannualoperating items forinclusionintheagenda.Board papersrelating toagendaare provided toBoard membersinadvancetoallowtheDirec - The Chairman establishes the agendas for the Board meetings in conjunction with the Group CEO. Each Director is free to suggest 4.1.3 Mr. L.R.Page disclosure Reporting and Governance Corporate Performance Management Mr. V. R.Page Mr. M.I.AbdulWahid Mr. A.T. P. Edirisinghe Mr. S.E.C.Gardiner Mr. Y. Kanagasabai Mr. SunilMendis Mr. P. S.Mathavan Mr. S.V. Kodikara Mr. J.C.Page Mr. AnthonyA.Page Board meetings Name • • • • • • • • • • • Establishing procedures toensure adherence totheCompany’s continuousreporting policy. stakeholders Approving andmonitoring financialandotherreporting, includingreporting to shareholders andother policies. Establishing appropriate standards and encouraging ethical behaviour and compliance with the Group’s financial reporting andcompliance. To overseetheprocesscontrols, andframeworkforevaluatingtheadequacyofinternal riskmanagement, Monitoring theCompany’s standards. compliancewithCorporateGovernance Monitor corporateperformanceandevaluateresults compared tothestrategicandannualplans. Executive Directors andSeniorManagement; To review the performance of the Senior Management and the compensation framework for theBoard, Establishing andreviewing succession plansforBoard membership. Evaluate theperformanceofBoard CommitteesandindividualDirectors. delegating authoritytotheGroup CEO. Ensuring thataprocess isinplaceforExecutivesuccessionplanning,andmonitoringthatprocess in placesuchthattheremuneration andconditionsofserviceExecutivesare appropriate; Appointment andtermsofengagementtheGroup ChiefExecutiveOfficer ensuringthataprocess is Chairman/ Non-ExecutiveDirector Deputy Chairman/CEO Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Managing Director Position contd. Roles andResponsibilities w. e.f.25Feb2019 Exit 27Aug2018 Exit 31Jan2019 Exit 31Jan2019 Meetings Held 5 5 5 5 5 5 5 Meetings Attended 5 5 5 5 3 3 4 5 2 - - employees are aware oftheir roles andresponsibilities. pany therefore takesutmost care ineffectively communicatingthestrategies atalllevelsoftheorganizationandmakessure the The Group understandsthatthewaychosenstrategiesare implementedcanhave asignificantimpactonitssuccess.TheCom- effective selectionofsuitablestrategies. environment Thecareful andinternal ofthecompanyenables all stakeholdersconcerned. analysisandscanning ofexternal in placeconsidersallstakeholdersgoalsettingandaims at effective useofresources inorder tooptimizethedeliverables strategic planningprocess oftheGroup setsthestrategicdirection andintegratesallbusinessactivities.Theplanningprocess The Group considersstrategicplanningasanessentialfirststepinthedevelopmentof aresults-based accountability system.The 6.1 The Group hasarobust strategicmanagementprocess stakeholdersandledbytheGroup whichinvolvesallkeyinternal CEO. can bedecidedbymanagersandwhichdecisionsmust bytheBoard ofDirectors orshareholders. how acompanyisdirected. TheGroup’s guidelines clearlydefine,forexample,whichstrategicdecisions CorporateGovernance in the context of strategic management, refers rules and policies that determine The Corporate Governance, to theset of internal nal controls, andtoensure thebestperformanceofresources forstakeholders istoprovideCorporate Governance entrepreneurial leadership,tosetandimplementstrategywithinaframeworkofeffective inter playsanimportantroleThe CorporateGovernance instrategicandperformancemanagementoftheGroup. Theprimaryrole of 6. personal conduct. a standard ofperformance, behaviour andprofessionalism for its peopleandstakeholderswithrespect totheirprofessional and value to our shareholders. The Group’s Code of Conduct aims to promote and strengthen the reputation of Cargills by establishing The Group iscommittedto theinterests ofouremployees,customers,suppliersandthecommunitywhilstfocusingonproviding the expectationsinmanagingenterpriseanditsresources effectively withthehigheststandards ofethics. systematCargillsdemandsouremployeestoenhancetheircompetenceandcapabilitylevelsmeet The CorporateGovernance Company attheforefront ofalldecisionmaking. recognise theirresponsibility tosetthetonefrom thetop,byavoidinginstances ofconflictinterest andhavingtheinterests ofthe The board continued to strive to ensure that ethics are the foundation of how the Company operates. Accordingly, the directors predictable andsustainable manner. isembeddedintheGroup’sorganization. Goodgovernance culture creating anenablingenvironment forgrowth inastructured, lies in promotingThe essence of Corporate Governance and maintaining integrity, transparency and accountability across the 5. Mr. E.A.D.Perera Mr. H.A.Pieris Mr. P. D.Rodrigo STRATEGIC ANDPERFORMANCEMANAGEMENT BUSINESS PRACTICESANDETHICS Strategic Management Name Non-Executive Director Non-Executive Director Non-Executive Director Position w. e.f.25Feb2019 Meetings Held 5 5 Meetings Attended 3 5 - -

CARGILLS (CEYLON) PLC 37 Annual Report 2018 | 2019 Stewardship CARGILLS (CEYLON) PLC 38 Annual Report 2018 | 2019 their professional training. ated havebecomeanessential aspectof tion oftheresults thereof to those evalu- Employee evaluationsandcommunica - take corrective actions. periodically in order toidentify gaps and ates theperformanceofemployees The Companyalsocontinuouslyevalu- duties tothebestoftheirability. cies and engagement to perform their knowledge, skills,behaviour, competen- services anddemonstratetherequired ployees are productive, provide efficient atic mannerwhichensures thattheem- ed results inatransparent andsystem- their best.Thesystempromotes target- fective andmotivatethemtoperformat talents, organizingpeopletobemore ef- agement systemfocusesondeveloping The Group through itsperformanceman- measures are taken,wherever required. budget onamonthlybasisandcorrective performances are reviewed againstthe integrated cross- functional level. The mechanism ofbuildingbudgetsatan ly reviews. The Company has a robust each businessunitintheformofmonth- company toevaluatetheperformanceof ment system of the Group enables the The structured performance manage- 6.2 track toprovide desired results. order to make sure the strategies are on actions are takenassoonpossiblein stances affect thecompany, corrective and threats mayarise.Ifthenewcircum- strengths, weaknesses,opportunities environmentas wellexternal asnew quires continuousreview ofbothinternal Constantly changingenvironment re- Corporate Governance Performance Management following measures: compliance theGroup haslaiddownthe To ensure effective controls internal and assuring theindependence. Board directly through AuditCommittee Risk Managementfunctionsreport to terms. TheGroup’s Auditand Internal the majorityoftransactionsinvalue and complianceconcurrently audit controlsuate the adequacy of internal Auditorsindependently eval- The Internal tion. preparation ofreliable financialinforma- of theaccountingrecords, andthetimely errors, theaccuracyand completeness prevention anddetection of fraudsand policies, safeguarding of its assets, the ness, includingadherence tocompany’s orderly andefficient conductofitsbusi- controlsinternal inplacetoensure the The Group has adequate systems of 7.1 7. risking theirindependence. incentives to their dedication while not ecutive Directors issuchthat itprovides amount oftheremuneration ofNon-Ex- The Board ofDirectors ensure thatthe to retain andmotivatethem. and SeniorManagementare competitive remuneration totheExecutiveDirectors plays anactiverole inmakingsure the petitors. TheRemunerationCommittee a keyfactordifferentiating itfrom com- strengthening ofitshumancapital,as the remuneration systemtofavourthe The Group considersitapriorityfor contd. Internal Compliance Internal RISK MANAGEMENT CONTROLS, ASSURANCEAND Systems of Internal ControlSystems ofInternal and • • • • • • • • mitigation strategy; key risksandtakenecessary risk risk managementprocess toidentify The Group hasacomprehensive with applicablelawsandregulations; to ensure thattheGroup complies coordinates withallbusinesssectors The centralised legal department disseminated; information thatare reported and reviews allfinancialandrelated operations. TheAuditCommittee reporting unit independent from out bythecentralisedcorporate Group’s financialreporting iscarried controls onaregular basis; process andsystemsof internal the effectiveness ofthe risk review The AuditCommitteealsoassesses basis the Audit Committee on a regular of theAuditReportisforwarded to service unit.Thesummarizedversion respective headofthebusiness / and subsequentlyreviewed bythe business /functionalunitlevels such auditsare discussed atthe manner. The reports arisingoutof compliance auditsinastructured extensive transaction, process and The Group’s Auditcarriesout Internal periodically; transactions whichare reviewed delegation are setforall material Pre-approved levelofauthorityand (SOPs) inallfunctionalactivities; Standard OperatingProcedures All operationsare executedthrough validated periodically; The SOPmanualsare updatedand value chainforeverybusinesssector. enforced for all key processes in the (SOPs) were developedandstrictly The Standard OperatingProcedures and control processes encompassing and effectiveness ofriskmanagement tions covertheevaluationof adequacy by the IA and ensures that IA examina- approves theannualworkplanprepared verse. The Audit Committee reviews and processes are captured in theaudituni- plan ensuringthatallrisks,mappedto proach in developing its annual work Group IAadoptsarisk-basedauditap- the Group CEO. Audit Committeeandadministratively, to functionally totheBoard, through the dependent ofmanagementandreports controls. Auditfunctionisin- TheInternal continuously byreviewing theinternal Audit assistsandsupportsmanagement processes.ernance TheGroup Internal controlmanagement, internal andgov- evaluating the effectiveness of our risk ers, through asystematicapproach in and enhancingvalueforourstakehold- sharing ourcommongoalofcreating assurance andconsultingfunction vice, providing anindependent,objective Auditisaser ance practices.Internal - damental partofourCorporateGovern Audit(IA)functionasafun- an Internal It isourpolicytoestablishandsupport 7.2 • • documentation periodically. stock verification and process such asfixedassetsverification, firms tocarryoutnon-auditservices The Group engages professional and regulations; compliance with financial standards and theLegalOfficer toconfirm Risk Officer, AuditManager Internal Chief FinancialOfficer, Group Chief programme requiring theGroup A quarterlyself-certification Internal Audit Internal - services havebeen provided withthefull the independenceofauditor. Allsuch in any services which may compromise ever, Auditorwould notengage External non-audit servicestotheGroup. How- professional firms,alsoprovided certain audit services,KPMGandtheother companies. In addition to the normal Group aswelloftheallsubsidiary Auditorof the KPMG istheExternal integrity andthereporting process. sight responsibility offinancialstatement the AuditCommitteewhichhasover auditors directly report theirfindingsto terial misstatements. The independent relevant disclosures are free from ma- on whetherthefinancialstatementsand audit andobtainreasonable assurance Auditorstoconductan pendent External The Group engagestheservices ofinde- 7.3 assurance andimprovement programs. indicators' accomplishments and quality status of IA activities, key performance also receives periodicreports onthe and complianceissues. The Committee controls,agement, internal regulatory manner, including addressing riskman- propriate corrective actionsinatimely ensuring that management is taking ap- and discussestheresults oftheiraudits, The Audit Committee meets withthe IA, areas. located to and focused on thehigh-risk that auditresources are adequatelyal- tions. The Audit Committee also ensures compliance withlaws,rulesandregula- operations, safeguarding ofassetsand mation, effectiveness andefficiency of tegrity offinancialandoperationalinfor information systems,reliability andin- operations, the Company'sgovernance, External Audit External - - Process. Group’s EnterpriseRiskManagement al Reportcarryadetaileddiscussionof to thefinancialstatementsofAnnu- Risk Management section and the notes manages therisksfacingGroup. agement frameworkthrough whichit The Group hasanEnterpriseRiskMan- 7.4 od underreview. auditing scopeorprocedures intheperi- tices, financialstatementdisclosures, or matter ofaccountingprinciplesorprac- Company's independent auditors onany There were nodisagreements withthe during themeeting. ble torespond toappropriate questions auditors are alsoexpected tobeavaila- of operationsiftheydesire todo so.The pany's financialstatementsandresults tunity tomakeastatementontheCom- present attheAGMandhave theoppor dependent auditorsare expected tobe (AGM). Therepresentatives ofthein- proval attheAnnualGeneral Meeting submitted tothestockholdersforap- the shareholders. Theendorsement is Board forendorsementand approval of Auditorstothe pointment oftheExternal results theCommitteeproposes theap- annual basis.Basedontheevaluation Auditors onan appraisal of theExternal The Group conductsaperformance Auditor.External compromise ontheindependenceof are assessedtoensure thatthere isno knowledge oftheAuditCommitteeand Risk Management -

CARGILLS (CEYLON) PLC 39 Annual Report 2018 | 2019 Stewardship CARGILLS (CEYLON) PLC 40 Annual Report 2018 | 2019 atCargills. The diagrambelowillustratestheprinciplesofITGovernance ensure effective andefficient useofITinorder toenabletheCompanyachieveitsobjectives. cesses and actions relating to Information Technology (IT) within the Group. The framework is made upof processes designed to The InformationTechnology PolicyoftheGroupandmanagementpro establishesanoverallframeworkforthegovernance - objectives oftheGroup. nature oftheITanditsrelated andmanagedtoensure risksshouldbewellgoverned thatitsupportstheachievementofstrategic Information Technology, inadditionto being a strategic asset to the Company also associated with significant risks. The strategic by ITsystemsfortheirdecisionmaking. practicesoftheGroupGovernance asourcriticalbusinessprocesses are automatedandDirectors rely oninformationprovided mental forthebusinessprocesses, sustainabilityandgrowth oftheGroup. Italsohasapivotalrole toplayinimproving Corporate Group recognizes thefactthatInformationTechnology (IT)hasbecomeanintegralpartofitsbusinessoperations,asitisfunda- 7.5 Corporate Governance pected future business requirements. funding ofITatenterpriselevel. Furtheritensures there isanadequateITcapability andinfrastructure tosupport current andex- Effective resource managementpracticesprovide high-leveldirection forsourcing anduseofITresources, overseetheaggregate part ofcontinuousimprovement oftheGroup. planoftheITGovernance The ITSteeringCommitteeperiodically reviews principlesandrecommends conformance toitsgovernance corrective actionasa InformationTechnology Governance Mangement Compliance Ris IT Governance Measurement IT Allignment Performance contd. Business - Management Resource Practices Best

financial statements. timeliness ofpublishedinformation andinpresenting an honestandbalancedassessmentofresults inthequarterlyandannual The Board ofDirectors, inconjunctionwiththeAuditCommitteewhere applicable,isresponsible inensuringtheaccuracyand a mannerwhichgivesallstakeholdersequalaccesstoinformation. The Group haspoliciesandprocedures theprovision thatgovern oftimely, accurateandcompleteinformationtostakeholders,in ensure accountabilitytostakeholdersandsupporttheminmakinginformeddecisions. Disclosure, reporting and transparency are fundamental components of the Company’s framework which Corporate Governance 9. Company acknowledgesthatitiscompliantwithallotherfinancial, legalandregulatory compliancerequirements. The Companyemployeesactivelymonitortheregulatory environments inorder tokeepintouchwiththeregulatory changes.The Sri Lanka(CALanka). jointlyissuedbytheSECandInstituteofCharteredwith theCodeofBestPracticesonCorporateGovernance Accountants of Stock Exchange(CSE)andrulesoftheSecuritiesCommissionSriLanka(SEC).TheGroup practicesare inline The Group isfullycompliant withallthemandatoryprovisions oftheCompaniesActNo.72007,ListingRulesColombo 8. to achievecontinuousimprovements intheseareas. management regularly. Theperformancerelated tosustainabilityare tracked,measured andreported bythemanagementinorder The adherence tothe standard operating procedures pertaining to the sustainabilityby the businessunitsare reviewed by the that channelsourexpertiseandknowledgetocreate sustainablevalueforeverydirect andindirect stakeholderwetouch. Our sustainabilitystrategyistoembedsocialresponsibility anintegralpartofeverythingwedo.Itisacompany-widecommitment stakeholders’ engagementisoneofthekeyprioritiesforgroup. es andsocietyisgoingtobethekeydrivingforce behindthelongtermsustainablevaluecreation foranybusinessassuchwider impacts manyofthechallengesfacedbysocietyasawhole.We acknowledgethefactthatinterconnection betweenbusiness- in whichbusinessesareandtherelationships governed, betweenmanagement,theBoard, shareholders andoutsidestakeholders The Groupisnotjustaboutrulesandcompliance,italsopeoplesustainability. believesthatgood governance Theway 7.6 not endangered byITfailures, suchasanoperationalcrash,securitybreach, orafailedproject. atCargills,ensuringthatthestrategicobjectivesofbusinessare ofITgovernance The managementofITrisksisacornerstone ments. The ITdepartmentoftheGroup hasadoptedanintegratedapproach legalandregulatory tomeetexternal, compliancerequire- Performance Indicators. Performance measurement reviews asakeycomponentofITGovernance, theachievementstrategicobjectivesagainstKey DISCLOSURE ANDTRANSPARENCY LEGAL ANDREGULATORY COMPLIANCE Sustainability Governance

CARGILLS (CEYLON) PLC 41 Annual Report 2018 | 2019 Stewardship CARGILLS (CEYLON) PLC 42 Annual Report 2018 | 2019 Stock Exchange: Company’s adherenceRulesasrequired totheCorporateGovernance bySection7.10oftheListingRulesColombo by theCompany. attend itsAGMandcommittedtodealingwithshareholder queriesinarespectful andtimelymannerwhenevertheyare received holders mayalsoaskquestionstotheCompany’s Auditorsatthe meeting. TheCompanyencouragesitsshareholders External to formance, toaskquestions,andexpress aviewandvoteonthevariousmattersofCompanybusinessagenda.Share- The shareholders are giventheopportunityatAGMtogetupdatesfrom the ChairmanandGroup CEOontheGroup’s per consideration whenbusinessdecisionsare made. two-way communication, transparency, active listening and equal treatment. This allows their legitimate interests to be taken into The Companyseekstoengageallstakeholdersinaccordance withGroup’s stakeholders’engagementpolicywhichisbasedon improve Group’s relationship withitsstakeholders. decisions. Thisnotonlyenablesittoanticipateandmanageriskeffectively, butalsohelpsitidentifynewbusinessopportunitiesand The Board valuestheCompany’s andinterests stakeholdersandstrivestotaketheirconcerns intoaccountwhenmakingbusiness 10. Corporate Governance 7.10.1 7.10.2 b./c. a./ b. a. STAKEHOLDERS ENGAGEMENT Non-Executive Director (NED) Independent Directors independence ornon-independence. Each NEDshouldsubmitannuallyasignedanddateddeclaration ofhis/her At least 2 or one third of the NEDs, whichever is higher shall be independent. NEDs. Anychangetothisratioshouldberectified within90days. At least 2 members or one third of the Board, whichever is higher should be CSE Rule contd. Compliance Compliant Compliant Compliant Status of independence asperthe All NEDshavesubmitted criteria laiddowninthe their confirmationson are determinedtobe Six outofnineNon- Directors are NEDs Executive directors Details/Reference Nine outofeleven independent listing rules - 7.10.3 7.10.5 7.10.6 a./b. a.1 a.2 a.2 a.1 a.4 a.3 d. b. c. c. Disclosures RelatingtoDirectors Remuneration Committee Audit Committee be ‘independent” and discloseintheAnnualReportnamesofNEDsdeterminedto The Board should determine the independence or otherwise of the NEDs should beincludedintheAnnualReport A briefresume ofeachDirector withinformationonhis/herarea ofexpertise or more than2NEDsmajority ofwhomshallbeindependent. Remuneration Committeeshouldcompriseofatleast2independentNEDs be provided totheexchange fordisseminationtothepublic. Upon appointmenttotheBoard, abriefresume ofthenewdirector should of Directors One NEDshallbeappointedaschairmanoftheCommitteebyBoard of Directors One NEDshallbeappointedasChairmanoftheCommitteebyBoard than 2NEDsmajorityofwhomshallbeindependent. Audit Committeeshouldcompriseatleast2independent NEDs ormore and ExecutiveDirectors totheBoard Remuneration Committeeshallrecommend theremuneration oftheCEO recognized professional accountingbody The Chairman of the AC or one member should be a member of a CFO shallattendtheACmeetings,andCEOwhenrequested toattend remuneration paidtoExecutive andNon-ExecutiveDirectors Committee members,astatementofremuneration policyandtheaggregate The AnnualReportshouldincludethenamesofRemuneration CSE Rule Compliance Compliant Compliant Compliant Compliant Compliant Compliant Compliant Compliant Compliant Compliant Compliant Status of Remuneration Committee given intheNote34.1to page 19andNote01on Audit CommitteeReport the financialstatements. Report onpage32.The aggregate remuneration paid totheDirectors is Profile ofDirectors on Details/Reference on page30. page 44

CARGILLS (CEYLON) PLC 43 Annual Report 2018 | 2019 Stewardship CARGILLS (CEYLON) PLC 44 Annual Report 2018 | 2019 Corporate Governance Corporate Governance (SEC) andtheInstituteofChartered AccountantsofSriLanka(CA-Lanka). IssuedJointlyby the SecuritiesandExchangeCommissionofSriLanka Code ofBestpracticeCorporate Governance sidering theircredentials andintegrity. a significantshareholding intheCompany, theBoard hasneverthelessdeterminedasintheprevious yeartobeindependentcon- who, inspiteoftheirserviceontheCompany’s Board forovernine yearsand/orbeingDirectors inanotherCompanywhichhas who haveservedontheCompany’s Board foraperiodinexcessofnineyears Messrs. S.E.C.Gardiner andE.A.D.Perera has asignificantshareholding intheCompany, and who haveservedontheCompany’s Board foraperiodinexcessof nineyearsandare also Directors ofCTHoldingsPLCwhich Messrs. A.T. P. Edirisinghe andSunilMendis Messrs. P. D.RodrigoandY. Kanagasabai,and independent: Based onthedeclarationsprovided bytheNon-ExecutiveDirectors, theBoard hasdecidedthefollowingDirectors as Note 01: B. b.1 b.2 b.3 b.4 b.5 C Functions oftheAuditCommittee adequacy ofdisclosures inaccordance withSLFRS/LKAS Overseeing thepreparation, presentation ofthefinancialstatements and information requirements asperlawsandregulations Overseeing thecompliancewithfinancialreporting requirements and Standards functions are adequateto meettherequirements ofSriLankaAuditing Overseeing theprocesses to ensure controls internal andriskmanagement Assessing the independence and performance of the External Auditors Assessing theindependenceandperformanceofExternal remuneration andtermsof engagement. reappointment or removal Auditors and to approve of External their Making recommendations to the Board pertaining to appointment or compliance withtheaboverequirements duringthespecifiedperiod Auditorsandareportthe External oftheACsettingoutmanner members, thebasisfordeterminationofindependence The AnnualReportshouldincludethenamesofAuditCommittee CSE Rule contd. Compliance Compliant Compliant Compliant Compliant Compliant Compliant Status of on page30. Audit CommitteeReport Details/Reference A.1 A. Directors A.1.8 A.1.7 A.1.6 A.1.5 A.1.2 A.1.1 A.1.4 A.1.3 The Board agree onthetraininganddevelopmentneedsofDirectors. Board andsubsequentlynecessary. TheBoard shouldregularly review and Every Director shouldreceive appropriate trainingwhenfirstappointedtothe where theyfeelitisinbestinterest ofthecompanytodoso. One third of directors can call for a resolution to be presented to the Board Board andtheCompany Every Director shoulddedicateadequatetimeandeffort tomattersofthe strategy, performance,resources andbusinessconduct All Directors shouldbringindependentjudgementtobearonissuesof • • • • • • • • • • responsibilities for The Board istoprovide entrepreneurial leadershipbyundertaking information Regular Board meetings,atleastonceineveryquarterandsupplyof Secretary All Directors shouldhaveaccesstotheadviceandservicesofCompany where necessary with thelawsofcountryandobtainindependentprofessional advice The Board collectively and the Directors individually must act in accordance and quarterlybasisormore asrelevant tothecompany. Ensuring thatprocess is established forcorporatereporting onannual implementation, budgets,plansandrelated risks Establish aprocess ofmonitoring andevaluationofprogress onstrategy regulations Adopting appropriate accounting policies and compliance with financial Sustainable businessdevelopment Consideration ofallstakeholderinterests indecisionmaking Compliance withlaws,regulations andethicalstandards management controls,Integrity ofinformation,internal businesscontinuityandrisk Approving budgetsandmajor capitalexpenditure Skills andsuccessionofthekeymanagementpersonnel Strategy formulation&implementation Principle In place In place In place In place In place In place In place In place Status Governance Report– Governance Governance Report– Governance Details/Reference Section 4.1.3 Section 4.1.3 Corporate Corporate

CARGILLS (CEYLON) PLC 45 Annual Report 2018 | 2019 Stewardship CARGILLS (CEYLON) PLC 46 Annual Report 2018 | 2019 Corporate Governance Corporate Governance A.5 A.4 A.3 A.2 A.5.4 A.5.3 A.5.2 A.5.1 A.3.1 A.2.1 A.4 Board Balance Financial Acumen Chairman’s Role Chairman andChiefExecutiveOfficer independence ornon-independence. Each NEDshouldsubmitannually asignedanddateddeclarationofhis/her that couldmateriallyinterfere. independent ofmanagement and free ofanybusinessorother relationship For adirector tobedeemed‘independent’such director shouldbe Definition ofindependentDirectors three suchNEDsshouldbeindependent Where theconstitutionofBoard ofDirectors includesonlythree NEDs,all NEDs. Anychangetothisratioshouldberectified within90days. At least3membersoronethird oftheBoard, whicheverishighershouldbe • • • • • • • • financial acumenandknowledgetooffer guidanceonmattersoffinance The Board shouldensure theavailabilitywithinitofthosewithsufficient Justification forcombiningthepostsofChairmanandCEOinoneperson ensure, The Chairmanshouldconductboard proceedings inaproper mannerand obligations toallstakeholders The Board isincompletecontrol oftheCompany’s affairs andalertstoits The viewsofDirectors onissues underconsiderationare ascertained maintained. A balanceofpowerbetweenExecutive and Non-Executive Directors is ontheagenda. matters ofcorporateconcern discuss mattersontheagendaofmeetingsandtorequest inclusionof All directors are encouragedtoseekinformationconsidered necessaryto The effective participation and contributionoftheDirectors issecured responsibilities. committee structures through whichitwilloperateindischargingits All directors are madeaware oftheirdutiesandresponsibilities and be provided toDirectors inatimelymanner. Sufficiently detailed information of mattersincluded in theagendashould management andcompliance. matters relating tostrategy, performance,resource allocation,risk The agendaforboard meeting isdevelopedtakingintoconsideration Principle contd. In place In place In place In place In place Status N/A N/A Governance Report– Governance Report– Governance Governance Report– Governance Details/Reference Section 3.1.2 Section 3.1.2 Section 3.1 Corporate Corporate Corporate A.7 A.6 A.5.10 A.7.3 A.7.2 A.7.1 A.6.2 A.6.1 A.5.9 A.5.8 A.5.7 A.5.6 A.5.5 Appointments totheBoard Supply ofinformation in theBoard ofthenewDirector shouldbedisclosedtoshareholders details of directorship in other companies, independence/non-independence Upon theappointmentofanewDirector, abriefresume, thenature ofexpertise, and experienceoftheBoard. The Nominations Committee should annually assess the combined knowledge members shouldbedisclosedintheAnnualReport A NominationsCommitteeshouldbeestablishedanditsChairman should beprovided totheDirectors atleastsevendaysbefore themeeting. The agenda,Minutesofprevious meetingandpapersrequired forameeting information The managementshouldprovide theBoard withappropriate andtimely recorded intheBoard minutes cannot beunanimouslyresolved, theyshouldensure are theirconcerns Where Directors aboutthematters of theCompany which haveconcerns least onceineachyear The ChairmanshouldholdmeetingsonlywithNEDsasnecessaryandat Directors whomayhaveconcerns The SID should make himself available for confidential discussions with other (SID) appoint oneoftheIndependentNEDstobe“SeniorDirector” In theeventChairmanandCEOissameperson,Board should independence by anindependentDirector suchDirector alsoshouldmeetthecriteriaof be anExecutiveofthecompany. Director Ifanalternate isappointed DirectorIf analternate isappointedbyaNEDsuchDirector shouldnot based ontheguidelinesprovided The Board should determine the independence or otherwise of the NEDs Principle In Place In Place In place In place In place In place In place In place Status N/A N/A N/A Governance Report– Governance Governance Report– Governance Details/Reference Section 3.2.2 Section 3.1.2 Corporate Corporate

CARGILLS (CEYLON) PLC 47 Annual Report 2018 | 2019 Stewardship CARGILLS (CEYLON) PLC 48 Annual Report 2018 | 2019 Corporate Governance Corporate Governance B.1 B. A.11 A.10 A.8 A.11.2 A.11.1 A.10.1 B.1.5 B.1.4 B.1.3 B.1.2 B.1.1 A.8.3 A.8.2 A.8.1 Directors’ Remuneration Re –Election Remuneration Procedure Appraisal ofChiefExecutiveOfficer (CEO) Disclosure ofInformationinrespect ofDirectors about itsproposals relating to theremuneration ofotherEDs. The RemunerationCommittee shouldconsulttheChairmanand/orCEO The Board asawholeshoulddeterminetheremuneration ofNEDs listed intheAnnualReport. The ChairmanandmembersoftheRemunerationCommittee shouldbe Non-Executive Director andshouldbeappointedbytheBoard. the majorityshouldbeindependent.TheChairman anIndependent The Remuneration Committee should consist exclusively of NEDs of whom by theBoard attheendof eachfiscalyear. The performanceoftheCEOinmeetingsettargetsshouldbeevaluated The Board ShouldsetupaRemunerationCommittee. CEO shouldsetfinancialandnon-financialtargetsfortheyear. At thecommencementofeveryfiscalyear, theBoard inconsultationwiththe meetings andcommitteeifrelevant. membership inBoard Committees anddetailsofattendancetoBoard other Directors, statusofindependence, directorship inothercompanies, qualifications, expertise,immediatefamily/materialbusinessrelationship with The AnnualReportshoulddisclosedetailsofeachDirector suchas the board ofhis/herreasons forresignation. term, the director should provide a written communication to be provided to In theeventofresignation of director priortocompletionofhis/herappointed intervals ofnomore thanthree years at thefirstopportunityaftertheirappointment,andtore-election thereafter at All Directors includingChairmanshould be subject to electionbyshareholders and theirre-appointment shouldnotbeautomatic NEDs shouldbeappointedforspecifiedtermssubjecttore-election/removal Principle contd. In place In place In place In place In place In place In place In place In place In place Status N/A Governance Report– Governance Report– Governance Governance Report– Governance Profile ofDirectors on Governance Report– Governance Report– Governance Details/Reference Section 3.2.3 Section 3.2.3 Section 3.2.3 Section 3.1.4 Section 3.1.4 Corporate Corporate Corporate Corporate Corporate page 19 B.3 B.2 B.2.10 B.3.1 B.2.8 B.2.7 B.2.6 B.2.5 B.2.4 B.2.3 B.2.2 B.2.1 Disclosure ofRemuneration The levelandmakeupofRemuneration and marketpractices. The Remuneration of NEDsshould reflect the time commitment, responsibilities paid toExecutiveandNon-ExecutiveDirectors. members, astatementofremuneration policyandtheaggregate remuneration The AnnualReportshouldincludethenamesofRemuneration Committee commitments ofDirectors. The RemunerationCommitteeshouldappropriately decideoncompensation schemes ofperformancerelated remuneration The Remuneration Committee should follow thegiven guidelines in designing Executive share optionshouldnot beoffered atadiscount incentives toperformatthehighestlevels. Company andmainstakeholderstogivetheseDirectors appropriate should bedesignedandtailored toaligntheirinterests withthoseofthe The performance-related elements of remuneration of Executive Directors part, especiallywhendeterminingannualsalaryincreases. employment conditions elsewhere in the Company or Group of which it is a The RemunerationCommitteeshouldbesensitivetoremuneration and remuneration oftheCompany, relative toothercompanies. The RemunerationCommitteeshouldjudgewhere topositionlevelsof term successofthecompany. Executive Directors’ remuneration shouldbedesigned topromote thelong- than necessary. attract, retain andmotivateExecutiveDirectors andshould avoidpayingmore The RemunerationCommitteeshouldprovide thepackagesneededto Principle In place In place In place In place In place In place In place In place In place Status N/A Governance Report– Governance Report– Governance 34.1 tothefinancial Details/Reference remuneration paid committee Report to theDirectors is given intheNote The aggregate Remuneration Section 3.2.3 Section 3.2.3 on page32. statements. Corporate Corporate

CARGILLS (CEYLON) PLC 49 Annual Report 2018 | 2019 Stewardship CARGILLS (CEYLON) PLC 50 Annual Report 2018 | 2019 Corporate Governance Corporate Governance C.3.2 C.3.1 C.3 C.2 C.1 C. C.2.3/ C.2.2/ C.2.7 C.2.6 C.2.5 C.2.4 C.2.1 C.1.5 C.1.4 C.1.3 C.1.2 C.1.1 Relations withshareholders Major andMaterialTransactions Communication withshareholders Constructive useofAnnualGeneralMeeting(AGM)andconductgeneralmeetings the rulesandregulation oftheSECandbyCSE. requirements and shareholder approval by specialresolution as required by Public listedcompaniesshouldinadditioncomplywith thedisclosure including related partytransactions. Directors shoulddisclosetoshareholders allproposed materialtransactions the Board anddisclosed. The process forresponding toshareholder mattersshouldbeformulatedby matters. The Company should decide the person to contactin relation to shareholders’ shareholders shouldbein place anddisclosed. A process tomakeallDirectors awareof ofmajorissuesandconcerns • • • The Companyshoulddisclose timely information. There shouldbeachannel toreach allshareholders inorder todisseminate Notice ofGeneralMeeting. A summaryofproceedingsvotingshouldbecirculated governing withevery answer questions. Chair personsofBoard Committees shouldbeavailableattheAGMto The Companyshouldcountallproxy votes withrespect toeachresolution substantially separateissue. The Companyshouldpropose aseparateresolution attheAGMoneach before themeetingasperrelevant statute. The NoticeforAGMandrelated papersshouldbesenttotheshareholders The contactpersonforsuchcommunication How theabovepolicyandmethodologywillbeimplemented Policy andmethodologyforcommunicationwithshareholders Principle contd. In place In place In place In place In place In place In place In place In place In place In place In place Status Details/Reference D.1 D. D.1.8 D.1.7 D.1.6 D.1.5 D.1.4 D.1.3 D.1.2 D.1.1 Accountability andAudit Financial andBusinessReporting transactions intheAnnualReport. The Board should adequately and accurately disclose the related party remedial actionbeingtaken. Extraordinary GeneralMeetingtonotifyshareholders ofthepositionand the Company’s shareholders’ funds,theDirectors shallforthwithsummonan In theeventnetassetsofCompanyfallbelow50% ofthevalue The AnnualReportshouldcontaina“ManagementDiscussion andAnalysis”. The AnnualReportShouldcontainastatementofDirectors’ responsibility. • • • • • • • The AnnualReportshouldcontainafrom Directors declaring, and fairviewofthefinancialpositionperformance. statements complywiththeappropriate accountingstandards andgivetrue records oftheentityhavebeenproperly maintainedandthatthefinancial obtain from itsCEOandCFO adeclarationthat,intheiropinion,thefinancial The Board should,before itapproves theCompany’s financialstatements reports toregulators. The Board should present the interim, other price sensitive reports and the relevant lawsandregulations andanydeviationbeingclearly explained. is trueandfair, balancedandunderstandableprepared accordance with The Board shouldpresent anannualreport includingfinancialstatementsthat The businessisagoingconcern controlsThe Reviewofinternal andriskmanagement from fairvalueadequatedisclosures are made Property, plantandequipmentisreflected atfairvalue,where itisdifferent The Directors have compiled with best practices of Corporate Governance. The equitabletreatment ofshareholders All materialinterests ofDirectors incontractsinvolvingtheCompany The Companyhasnotengagedinanyunlawfulactivities Principle In place In place In place In place In place In place In place In place Status Governance Report– Governance analysis onpage22. financial statements Company onpage Details/Reference responsibilities on Annual Reportof the Directors’ on the affairs ofthe discussion and Note 34tothe Section 3.2.1 Management of Directors’ Statement page 107. Corporate 103.

CARGILLS (CEYLON) PLC 51 Annual Report 2018 | 2019 Stewardship CARGILLS (CEYLON) PLC 52 Annual Report 2018 | 2019 Corporate Governance Corporate Governance D.2 D.3 D.2.4 D.2.3 D.2.2 D.2.1 D.3.3 D.3.2 D.3.1 Risk Management and Internal ControlRisk ManagementandInternal Audit Committee management and internal controls.management andinternal Audit Committeetocarryoutreviews oftheprocess andeffectiveness of risk The Boardcontrols shouldmaintain asoundsystemofinternal andrequire auditfunction. Companies shouldhaveaninternal liquidity. that wouldthreaten itsbusiness model,future performance,solvency, or robust assessmentofthe principal risksfacingthecompany, includingthose The directors shouldconfirminthe annualreport thattheyhavecarriedouta the Companyandeffectiveness controls. ofthesysteminternal The Directors should,atleastannually, conduct a review oftherisksfacing requirements duringthespecifiedperiod. and areport oftheACsettingoutmannercompliancewithabove Auditors the basisfor determination of the independence of theExternal The annualreport shouldincludethenamesofAuditCommitteemembers, with itsauthorityandduties. The AuditCommitteeshouldhaveawrittentermofreference, dealingclearly executive director. be independent.Thecommitteeshouldshared byanindependentnon- independent. Ifthere are more non-executivedirectors, themajorityshould a minimumofthree Non-executive directors ofwhomatleasttwoshouldbe The AuditCommitteecompriseofexclusivelyNon-executivedirectors with Principle contd. In place In place In place In place In place In place In place Status Governance Report– Governance Governance Report– Governance Report– Governance Report– Governance Management Report Management Report Management Report Report –Section7 Report –Section7 Report –Section7 Details/Reference & EnterpriseRisk & EnterpriseRisk & EnterpriseRisk Section 3.2.1 Section 3.2.1 Section 3.2.1 Governance Governance Governance Governance on page55. on page55. on page55. Corporate Corporate Corporate Corporate Corporate Corporate Corporate Section 7 D.4 E.1 E. D.6.1 D.6 D.5 E. 2 D.4.3 D.4.2 D.4.1 D.5.2 D.5.1 E.1.1 E.2.1 Institutional Investors Shareholder Voting Related PartyTransactions Reviewcommittee Corporate Governance DisclosuresCorporate Governance Code ofBusinessConductandEthics Evaluation of Governance DisclosuresEvaluation ofGovernance has compliedwiththeprinciplesandprovisions ofsuchcode. Reportsettingoutthemannerandextenttowhichcompany Governance The Directors shouldinclude intheCompany’s AnnualReport,aCorporate of Directors. clearly withitsauthorityanddutieswhichshouldbeapproved bytheBoard RPT Review Committee should have written terms of reference dealing by theBoard. The ChairmanshouldbeanIndependentNon-ExecutiveDirector appointed Three Non-ExecutiveDirectors ofwhomthemajority shouldbeindependent. Committee consistingexclusivelyofNon-ExecutiveDirectors withaminimum The board shouldestablishaRelatedPartyTransactions (RPT)Review A related partyandrelated partytransactionswillbeasdefined inLKAS24. communicated totheBoard asawhole. such dialogue,theChairmanshouldensure theviewsofshareholders are shareholders basedonamutualunderstandingofobjectives.Arisingfrom A listed company should conduct a regular and structured dialogue with with therelevant regulations. price sensitiveinformationispromptly identifiedandreported inaccordance The Companyshouldhaveaprocess inplacetoensure thatmaterialand with suchcodes. all Directors and key management personnel have declared their compliance ethics forDirectors andkey managementpersonnelisinplaceandwhether The companyshoulddisclosewhetherthecodeofbusinessconductand encouraged togivedueweightallrelevant factorsdrawntotheirattention. relating toBoard structure andcomposition,institutionalinvestorsshouldbe arrangements,particularlythose When evaluatingCompanies’governance Principle In place In place In place In place In place In place In place In place Status Governance Report– Governance Governance Report– Governance Governance Report– Governance Details/Reference Section 3.2.1 Section 3.2.1 Section 10 Corporate Corporate Corporate

CARGILLS (CEYLON) PLC 53 Annual Report 2018 | 2019 Stewardship CARGILLS (CEYLON) PLC 54 Annual Report 2018 | 2019 Corporate Governance Corporate Governance G. .2 F. .1 F. F.

H.1 to H.1.5 Other Investors

G.4 G.3 G.1 F.1. F.2 Internet ofThingsandCybersecurity Internet H. Shareholder Voting Investing/Divesting Decisions Annual Report. Adherence to ESG principles are disclosed in the sustainability section of the Environment, (ESG) Societyand Government management through independent periodicreview andassurance. The Board should ensure theeffectiveness of thecybersecurityrisk agenda fordiscussionsaboutcyber- riskmanagement. The Board shouldallocate regular andadequatetimeontheboard meeting cybersecurity risksthatmayaffect the business. organization’s networktosendandreceive informationandtheconsequent model, ITdeviceswithinandoutsidetheorganizationcanconnectto The Board shouldhaveaprocess toidentifyhowintheorganization’s business Meetings ofcompaniesandexercise their votingrights. Individual shareholders should beencouragedtoparticipateinGeneral investing ordivestingdecisions. encouraged tocarryoutadequateanalysisorseekindependentadvicein Individual shareholders, investingdirectly inshares ofcompaniesshouldbe Principle contd. In place In place In place In place In place In place Status Governance Report– Governance Sustainability report Details/Reference on page64.- Section 10 Corporate Company are summarizedasfollows: sponsibilities regarding riskmanagement in the levels across theenterprise.Thekeyroles andre- Our riskmanagementframework worksatvarious ties havebeendelegatedtoBoard Committees. ing theireffectiveness. Someoftheseresponsibili- controlsment, thesystemofinternal andforreview- The Board has overall responsibility for risk manage- ployees intheGroup. guiding andsupportingthemanagersem- Department leadtheRiskManagementprocess by Audit tee, RiskManagement team andthe Internal appetite. TheBoard ofDirectors, AuditCommit- risk adjustedreturns whileremaining withinrisk prise-wide risks,withtheobjectiveofmaximising framework, through which itmanagesenter The Group hasanintegrated riskmanagement the businessunits. risks emergedthrough theoperational activitiesof through socioeconomic activities aswellthe environment. ERM framework covers risks emerged ability, thestrategic priorityinthecurrent business triple bottomlineperspectivetoaddress sustain- management policy, whichare developedbasedon structure bytheriskgovernance and erned The Group’s riskmanagementframeworkisgov- Risk ManagementFramework business. cess isvitaltoachieveasustainablegrowth inthe are exposedtonumerous risks,arobust ERMpro - complex businessenvironment where businesses At Cargillswebelievethat,inthecurrent volatileand long-term competitiveadvantage. market opportunitieseffectively andenhanceits of theserisks,thusenablingtheGroup toleverage risks. ERMhelpstominimizetheadverseimpact and operational of the strategic, financial, external tion, analysis,evaluation,mitigationandmonitoring gills encompasses practices relating to the identifica- Enterprise RiskManagement(ERM)process atCar Enterprise RiskManagement - -

ROLES & RESPONSIBILITIES Audit Team & Compliance of Directors Management Committee Internal Internal Board Audit Team Risk • • • • • • • • • • • • • • risk appetite investment proposals againstthe Reviewing risk profile of major Auditors External weaknesses highlightedbythe Reviewing controls andsystems Control mechanism. Risk ManagementandInternal Reviewing theeffectiveness ofthe tolerance levels. Determining riskappetiteand Policy andFramework. Oversight ofRiskManagement Committee with thesupportofAudit entire RiskManagementprocess Oversight role ofmonitoring them wherever necessary. mitigation strategiesandimprove Reviewing theeffectiveness ofthe impact, andmitigationstrategies. Reporting onkeyriskexposures, assessment across theorganization. Carrying outcomprehensive risk Policies andFramework. Developing RiskManagement conduct. policies, procedures andcodeof compliance related tocompany Monitoring andreporting on Committee andBoard ofDirectors. weaknesses identified,totheAudit controlsReporting internal required Assuaring controls are in place as effective controls. systems of internal Developing andimplementing

CARGILLS (CEYLON) PLC 55 Annual Report 2018 | 2019 Stewardship CARGILLS (CEYLON) PLC 56 Annual Report 2018 | 2019 objectives ofthe businessunits. business operates,legal,social, politicalandculturalthestrategicoperational Risks are identifiedthrough clearunderstanding of the marketconditionsinwhich of risksisacontinuoustaskfor theriskowners. ronments. As the risk landscape is dynamic and changes constantly, the identification tion ofcurrent andfuture envi- existingandpotentialrisksfrom andexternal internal The risk management process begins with the identification of risks,i.e.thecompila- Risk Identification,AnalysisandEvaluation that theyare compliantwiththeGroup’s riskmanagementstandards. businesses andforensuringthatappropriate riskmitigationprograms are inplaceand Business unitheadsare primarilyresponsible formanagingriskwithineachoftheir risks andtheirimpacts. sively tobusinessimprovement byproviding managementwithagreater insightinto Risk managementisaniterativeprocess that,witheachcycle,contributesprogres- the business. like anyothertoolinthecomplianceprocess, functions as amethodforstreamlining analyses, evaluates,mitigatesandcommunicatesrisks.RiskmanagementatCargills, Risk managementprocess consistsofstepsthrough whichtheCompanyidentifies, prehensive reporting. and relies onbothindividualresponsibility andcollective oversight,supportedbycom- The Group’s approach to riskmanagement is based onwell-established processes Risk ManagementProcess Enterprise RiskManagement

Communication and Consultation Risk Assessment Risk Identification Establishing the Risk Evaluation Risk Treatment Risk Analysis Context

Monitoring and Review contd. ing ariskHeatMapasindicatedbelow; tion. Theidentifiedrisksare mappedus- significance oftherisktoorganiza- This step will assist in determining the rating from 1to25. bination ofwhichprovides thetotalrisk two scales,bothfrom 1to5,thecom- The riskassessmentiscarriedoutusing timated. pany and/oritssubsidiariescanbees- potential monetaryimpactontheCom- The quantitativerisksare thosewhose tude andtheirsignificance. estimates are madeabout theirmagni- tative risksassystematicallypossible, indeed atall.Inorder toevaluate quali- generally notbequantifiedprecisely or is oftennotavailable,theseriskscan subsidiaries. As concrete information consequences fortheCompanyandits and challengeswithpotentiallyadverse tative risksare longterm developments qualitative andquantitativerisks.Quali- the CargillsGroup distinguishes between The methodologicalevaluationofrisksat uation. past experiencesare used fortheeval- objective criteriaorfigures derivedfrom to thatparticularrisk.Forthispurpose, occurrence inorder toassignariskscore severity ofimpactandthelikelihood is thoroughly analysedtounderstandits evaluation whereby everyidentifiedrisk Risk identificationisfollowedbyrisk controls andmitigationmeasures are inplaceorprogress inorder tomanagematerial risks. process, compileaquarterlyriskmanagementreport forthediscussionatAudit Committeewhichreviews whetherappropriate risk management and monitoring. Group Risk Management function, through aggregation, prioritizationaswellconsultation agement atanearlystage.Steps are designedandimplemented as necessarytocreate androll outthemeasures required for Continuous riskmonitoringwithintheprocess identifieschangesinindividualrisksand anynecessaryadjustmentstoriskman- procedures, delegationofauthority, annualstrategicplanningreviews, monthlyoperatingreviews andhedging. uses awidevarietyofriskmitigationstrategiesincludingpurchase ofinsurancecovers,implementation ofstandard operating pany willavoid,transfer, reduce oraccepttherisk.Dependingonnature oftherisksandriskscores calculated,theGroup The Group hasinplacegeneralriskresponse strategyformitigatingrisks,whichcategorisesrisksaccording towhethertheCom- tinuously monitor, evaluateandreport onrisksforwhichtheybearresponsibility. heads andGroup functionalheadsinorder toassignresponsibility fortheriskstobusinesses.Theassignedriskownerscon- The risks identified, analysed and evaluated are periodically discussed at the senior management level comprising business unit Risk MitigationandMonitoring one totalrisk,whichisthenevaluatedasawhole. This evaluationexercise also formsthebasisforriskconsolidation,inwhichindividualrisksofsametypeare combinedtoform Based ontheriskscore, therisks are priortisedandmitigationactionsare initiatedwiththe supportoftheManagement. Occurrence/ Likelihood Moderate Remote Unlikely Certain Almost Likely 1 2 3 4 5 Very Low 1 1 2 3 4 5 Impact/ Consequences Low 10 2 4 6 8 2 Moderate 12 15 3 6 9 3 High 12 16 20 4 8 4 Very High 10 15 20 25 5 5 Ratings and Risk Colour code - Low - Moderate - High - Very High

CARGILLS (CEYLON) PLC 57 Annual Report 2018 | 2019 Stewardship CARGILLS (CEYLON) PLC 58 Annual Report 2018 | 2019 Overview ofKeyRisksAffecting theBusiness Enterprise RiskManagement Competition • • Customer Satisfaction • Employee RetentionandCapabilities potential ofthebusiness. seriously impactthelong-termgrowth people with right capabilities could Failure toattract,retain anddevelop leadership. retain marketshare andmarket Customer satisfaction is critical to and leadership. service tosustainthemarketshare of price,product range, quality and us tobecompetitivealwaysinterms FMCG andRestaurantsectorscompel Increased competitionintheRetail, Risk • • • • • • • • • • • • • • • programs are structured toaddress theskillgapsidentified. Training needs are identified through skill gap analysis and appropriate training to ensure thatweare inparorbetterthantheindustrynorms. Our employmentpoliciesandrewards schemesare regularly reviewed inorder grievances. We have atransparent mechanisminplacetohandleemployeesneedand planning. Processes are alsoinplacetoidentifytalentandactivelymanagesuccession employees livingclosetothebusinesslocations. We liaise withrelevant authoritiesandinstitutionsintheregions torecruit shortages. Through proper HRplanningandrecruitment processes weminimisestaff of thecustomers. Systems are inplacetocapture customerfeedbackandaddress theconcerns engagement withcustomersandmarketingactivities. Processes are in placetobuildstrong customerrelationship through continuous preferences. Innovative products are introduced regularly tosatisfycustomers’changing buying patterns. Regular marketsurveysare conductedtoidentifycustomerpreferences and service according tothetargetmarket andthecompetitiveenvironment. Clear strategiesare implemented in terms ofpricing,product range,qualityand are benchmarkedandmeasured againstkeycompetitors. Our performanceintermsofcustomersatisfaction,perception andexperience research anddevelopmenttocaterthechangingcustomerpreferences. To beaheadwithourcompetitors,wefocuscontinuouslyoninnovationthrough employees withrightcaliber. Higher servicestandards are maintainedbyrecruiting, trainingandcoaching cost. leadership positionwhileensuringmarginsare maintainedbycontrolling input Our products are pricedcompetitivelyinthemarket tomaintainthemarket contd. Risk MitigationActions performance. confidence and to maintain our business are criticaltomaintaincustomertrustand The safety and quality of our products Product QualityandSafety • Business Strategy • Reputational Risk performance. effectively couldimpactthe business or failure toimplementthe strategies Selection ofawrong business strategy high-caliber people. affects theabilitytorecruit andretain an erosion ofthecustomerbaseand and confidence.Thiscouldresult in and brandscouldleadtoalossoftrust Failure toprotect theGroup’s reputation Risk • • • • • • • • • process auality Required qualityandstandard certificationare obtainedtoaffirm theproduct and order to respond appropriately tochangingcustomer trends andnewlegislations. Developments intheareas ofhealth,safetyandnutritionare monitored closelyin Review ofcompliancethequalityandsafetyprocedures are conductedregularly. safety checksbefore beingreleased tothemarket. Products produced in our manufacturing facilities go through stringent quality and procuring products from vendors. Quality andsafetyaspectsare strictlymonitored atthetimeofmanufacturingand are maintainedthroughout ourvaluechain. We havedetailedandestablishedprocedures toensure product integrityandsafety suppliers andotherstakeholders’engagementprocesses. Cargills Values andCodeofConductare embeddedintoourcustomers, views andconcerns. We maintaincontinuousdialoguewithstateandotherauthoritiesto obtaintheir to obtaintheirviewsandfeedback. Continuous communicationwithcustomersandotherstakeholdersismaintained and servicestothecustomers. We alwaysstrivetoexceedcustomerexpectationbyoffering betterproducts assess itseffectiveness. Outcome ofeachstrategyiscriticallyreviewed againstitsobjectivesinorder to as planned. Implementation ofstrategiesismonitored regularly toensure theyare executed Strategies are communicatedclearly totheemployeesatalllevels. Strategies are scrutinizedindetailed bytheBoard before beingapproved. sector undertheguidanceofcorporateoffice. High priorityisgivenfortheformulationofstrategicplaneachbusiness Risk MitigationActions

CARGILLS (CEYLON) PLC 59 Annual Report 2018 | 2019 Stewardship CARGILLS (CEYLON) PLC 60 Annual Report 2018 | 2019 Enterprise RiskManagement Inventory andSupplyChainRisk • • • Regulatory andPoliticalEnvironment • Health andSafety • • products andservices. issues, andregulations overtheGroup’s employment, taxlaws,environmental Key areas subjecttoregulation include reputational damage. In addition,abreach couldleadto operations. a substantialimpactonourbusiness Failure ofkeyITsystemscouldhave financial terms. loss oflifethatcannotbemeasured in environment wouldresult ininjuriesor to us.Theinabilityprovide such and customers is utmost importance Provision ofadequatesafety forourstaff stock holdingcosts stock adjustmentsandincreasing increase theriskofobsolete inventory, Poor managementofinventorywould uninterrupted supplyofrawmaterials. dairy sectorishighlydependenton manufacturing businessesespecially flows ofgoodsandmaterials.Our impacts in smooth and uninterrupted effectively wouldleadtoadverse Failure tomanagesupplychains Risk • • • • • • • • • • • • • • • • consideration whenpoliciesand regulations are enacted. the interest ofourcustomersandemployeesare expressed andgivendue institutionstoensureWe andnon-government that engagewithgovernment the changes. appropriate strategiesare developedtomitigateanyadverseimpactsdue Changes intheregulatory andpoliticalenvironment are closelymonitored and environment fortheemployees. Health andSafetyauditsare conductedtoensure safetyandhazard free regulations control andinternal procedures. Regular review isconductedtoensure thecompliancetohealthandsafety our businesspremises, whichare monitored andauditedregularly. Stringent health andsafetyprocesses inlinewithbestpractices are inplaceall of inventoryandanyunforeseen losses are adequatelycovered byinsurance. Our warehouses andretail locationsare adequatelyprotected toprevent anyloss prevent losses. inventorycontrol proceduresTight are implementedinallbusinesssectorsto stocks forretail chainwithoutany delay. Our round the clockcentralwarehouse operationisgeared to replenish the single supplierorasmallgroup of suppliers. The Group hasanetworkof suppliersanddoesnotconsiderablydependonany farmer network. We secure bulkofourdairyandproduce requirements thorough established replenishment ofstocks. Effective categorymanagement isinplacetheretail sectortoensure efficient to maintainstablebuyingprices. Forward bookingsare doneforcommodityprocurement toavoidstockoutsand contracts. Strong relationships are builtandmaintainedwithsuppliersthrough longterm contracts. Strong relationships are builtandmaintainedwithsuppliersthrough longterm The Group hasaneffective vendorselectionandevaluation process inplace. and efficiency The group’s Procurement functioniscentralisedtoachieveeconomiesofscale contd. Risk MitigationActions IT systemsandinfrastructure • Credit risk • Interest RateRisk • Funding andLiquidityRisk • • and non-paymentbydebtors. position asaresult ofpaymentdelays be adverseimpactsontheliquidity nature ofthebusiness.There would is exposedtohighcredit riskbythe The Group’s FMCGsectorinparticular financial performanceoftheGroup. rate could have severe impact to the Steep upward movement in theinterest other investments. the expansionprojects and alsofor funds forongoingbusinessoperations, if we are unable to source adequate Business couldbeimpactedbadly prosecution andfinesorimprisonment. regulations couldlead tolegal Failure tocomplywithlawsand the businessefficiently. and infrastructure inorder toconduct The Group isreliant onitsITsystems Risk • • • • • • • • • • • • • • • • • • All exportsalesare covered bycredit insurance to businessspecificcredit policies. The Group haseffective followupandcollectionprocesses andstrictlyadheres We minimise thecredit riskthrough therigorous process ofcredit management. The credit giventoallourdistributorsare covered byBankGuarantees. worthiness ofthecustomersbefore grantingcredit facilities. Stringent customerevaluationprocesses are inplaceorder toensure credit are takentomitigatethefinancialimpactdueinterest ratefluctuations. Interest ratesmovementsare monitored bythetreasury andappropriate steps rates. Centralised treasury function enablespoolingoffundsandnegotiatingbetter term loansandshortwithfloatinginterest rates. The Group operationsare fundedbymixture offixedinterest ratebearinglong funding requirements ifnecessary. The Group ownslandand buildingswhichcanbeoffered ascollateralforfuture institutions toobtainfundasandwhenrequired. The Group hasestablishedbanking facilitieswithallmajorbanksandfinancial Average CostofCapitalis maintained atlowestlevelaspossible. Borrowings are controlled withintheauthorisedcapitalstructure andWeighted long termandshortborrowings. The Group financesitsoperations byacombinationofretainedandvia earnings maintenance agreements. All third partysuppliedhardware andsoftware are covered byuptodate Investment inITandrelated infrastructure are reviewed atBoard level. at seniormanagementlevelinorder to ensure proper implementation. Development andimplementationofnewITsystemsare reviewed anddiscussed level ofinformationsecurity. The Group hasappropriate policiesandprocedures inplacetoensure higher Our staff are trainedandeffectively engagedtomitigateITrelated risks. IT infrastructure andtoensure consistencyofdelivery. We haveadequatecontrols inplacetomaintaintheintegrity andefficiency ofour Risk MitigationActions

CARGILLS (CEYLON) PLC 61 Annual Report 2018 | 2019 Stewardship CARGILLS (CEYLON) PLC 62 Annual Report 2018 | 2019 Enterprise RiskManagement Foreign ExchangeRateRisk • • Risk ofNaturalDisasters • Commodity PriceRisk • Sustainability human wellbeing. impacts toenvironment and tothe Reputational Riskarisingfrom adverse Group’s businessoperation. the Group couldadversely affect the other factorsbeyondthecontrol of accidents, actsofterror, infectionand storms, andfloods,aswell Natural disasterssuchasearthquakes, products soldthrough ourretail chain prices ofrawmaterialaswellthe the commoditypricescouldaffect the Upward movementandfluctuations in equipment imported. our retail chainandcosts ofcapital of theimportedproducts soldby respect toour FMCG sector, prices impact onrawmaterialpriceswith exchange rateswouldhaveadverse Steep upward movementintheforeign Risk • • • • • • • • • • such eventstohumanlifeaswellthebusiness Employees are adequatelytrainedinorder tominimiseanyharmfuleffect of affecting theassetsofGroup andoperationalmatters. Insurance coversare obtainedagainstallidentifiedrisksandnatural disasters The Companyhasstringentpoliciesandprocedures tominimisefoodwastages. achieving sustainablefarmingpractices. We closelyworkwithfarmersinorder toeducateandencouragethemtowards way toprevent adverseimpact toenvironment. Manufacturing, retail, restaurant and warehouse facilities are designed in such a market. Forward bookingiscarried outtomitigateupward pricefluctuationsinthe depending toomuchonfewsuppliers. Sourcing isdonefrom widerangeofsuppliersfrom different marketswithout commodities atbestprices. Market pricesare regularly monitored bytheprocurement divisiontosource steps are takentominimisetheadverseimpacts. Foreign exchange rates are monitored by our import division and necessary the exposure toForex islimited The Group’s Consumptionofimportedrawmaterialsisconsiderablylowhence contd. Risk MitigationActions enhancing youthskills,andbridgingregional disparities. ity programs, projects, andinitiativesare geared towards reducing thecostofliving, community-friendly nationaldevelopment.Stemmingfrom thisvision,oursustainabil- stakeholder, and is encapsulated in our vision to be a global, corporate role model in wide commitmenttocreating trulysustainablevalueforeverydirect andindirect tainability anintegralpartofeverythingwedo.Itisapositionthatreflects aGroup- Our sustainabilitystrategyentailsmakingsocial,environmental, andeconomicsus- Sustainability Strategy our stakeholders. training andeducation.We are confidentthatourfootprintcreates uniquevalue forall supply chains;saveenergyandlimitwaste;supportimproved nutrition;andinvestin suppliers todeliverbetterproducts andservices;empowerourfarmerstostreamline tally sustainable,andeconomicallymeaningful.We collaboratewithcustomersand working tirelessly toensure thatourinvestments are sociallyresponsible, environmen- to sustainabilityrelies largely ontheefforts anddedicationoftheseindividuals;each across theGroup, andits8,932employees.Theachievementofourcommitment We are committedtosupportingandpromoting thissustainability-drivenculture growth hasbeenfundamental toourbusinessculture. around us,maintainingasound balancebetweeneconomicsuccessandsustainable nity. Whether itismanagingourenvironmental impactorimproving thecommunities deepened trustandrespect forourbrandsamongstdiversestakeholdercommu- not onlyconsolidatedourpositionasaleaderincorporatesustainability, butalso our unwaveringcommitmenttosustainableandresponsible businessoperationshas multiple sectorsinthefoodandbeverageindustrytoday. Throughout thisjourney, seen usevolvefrom awholesaleandretail business in1844,toakeyplayeracross As Cargillscelebrates175yearsin2019,weare proud toreflectthathas onajourney 1. Sustainability Report OUR COMMITMENTTOSUSTAINABILITY

CARGILLS (CEYLON) PLC 63 Annual Report 2018 | 2019 Sustainability Report CARGILLS (CEYLON) PLC 64 Annual Report 2018 | 2019 • • • • gills sustainabilitystrategyinclude: The key features and objectives of Car Sustainability Report sustainable growth. services tofacilitateandenhance Improving businessoperationsand and goals. achievement of sustainability targets Monitoring andevaluatingthe economic sustainability. on social, environmental, and Assessing theimpactofinvestments every direct andstakeholder. Creating trulysustainablevaluefor Bridging RegionalDisparity Remain grounded inaculture of trustandrespect, integrity way, reducing environmental consumers inaresponsible and accountability, serving impact andimproving the communities. VALUES - contd. sustainability indicators in themeasure- of seniormanagement.Theinclusion of the Group CEOandactiveinvolvement and strengthened under the direction of growth isregularly monitored, reviewed, strategic approach towards sustainable tal, and economic needs. Therefore, our ing rapidlyevolvingsocial,environmen- aptable strategythatiscapableofmeet- value forallstakeholdersrequires anad- The commitmenttocreating sustainable • and international fora. and international sustainability across diverse national Sharing best-practiceson rate role modelincom- munity-friendly national To beaglobalcorpo- Enhancing YouthSkills development. VISION To servetheruralcommunity, workplace, and environment. Whether impacts extendacross themarketplace, ble valueforthecommunity, ourpositive primarily focusedoncreating sustaina- of Sri Lanka. Driving an agenda that is key player in the national development around sustainability, today, Cargillsisa Having operationalized the strategy OUR IMPACT operational performance. countable for more thanjust financial and our businessleadersare regularly ac- such efforts andservestoensure that ment ofbusinessperformancesupports our customersandallother stakeholders, through our core business'Foodwith Love'– andotherrelated Reducing theCostofLiving businesses. MISSION portunities. have accesstoworld-classtraining op- Albert A.PageInstitute—ouremployees tered byournon-profit trainingarm—the ing anddevelopmentprograms adminis- diversity. Through comprehensive- learn practice, managetalent,andcelebrate and initiativestoimprove employment place, andhaveinvestedinprograms a supportive,safe,andinclusivework- recognize theimportanceoffostering opment ofourcountry. To dothis,we success ofourcompanyandthedevel- individually contributetothecollective a diverseandtalentedteam,whoeach to attracting,developing,andretaining In theworkplace,Cargillsiscommitted such commoditiesataffordable prices. and best produce, but alsoto provide to notonlyoffer consumers thefreshest munities andentrepreneurs enableus choices. Ourdirect linksto farmingcom- that consumerscanmakeinformed on product packaging, we aim toensure pliers. Byincludingnutritionalinformation ents sourced from responsible local sup- nutritious products withquality ingredi- constantly strivetodevelophealthyand research anddevelopmentinitiatives,we ing affordable nutrition.Through robust scious ofitskeyresponsibility infacilitat- and FMCGbusiness,remains con- its positionastheforemost foodretail In themarketplace,Cargillsisproud of Lanka. lives and livelihoods ofpeople across Sri ment ofcommunitiesandimproved the investments havesupportedtheuplift- to servingsaferandhealthierfood,our growth, oranunwaveringcommitment it isthrough agriculture-centric regional kilogram offresh produce purchased or back tothecommunity50cents foreach 2008, the Cargills Sarubima Fund gives with theagriculture sector. Establishedin ized byourinvestmentsandengagement ment ofruralcommunitiesischaracter In thiscontext,ourfocusonthedevelop- chains. sustainable, andexport-orientedvalue ognized andelevatedtowards healthier, allowing participating farmers to be rec- represents a culmination of these efforts, (Good AgriculturalPractices)Certification recent introduction of Sri Lanka GAP promoting agriculturalproductivity. The prudent useofagriculture inputs,while of soil and waterresources through the Soil” project tosupport the protection riculture, Cargillslaunchedthe“Save Our partnership withtheDepartmentofAg- another vitalconsideration.In2014,in on theenvironment hasemerged as of agriculture practices and their impact ricultural communities, the sustainability As acompanydirectly engaged with ag- mitment toenvironmental sustainability. just a few examples of our enduring com- of plasticsatKFCoutletsin2018/19are locations and the shift away from the use lation of solar energy panels atstrategic optimal energyconsumption. The instal- resource andwastemanagement, minimized through efficient waterusage, that their impact on theenvironment is continuous review processes toensure In thiscontext,ourbusinessesengagein tribute to thesustenance of ourplanet. bility to protect theenvironment andcon- deeply mindfulofthecollectiveresponsi- and securingtheirlivelihoods,Cargillsis As we work towards nourishing people - opment. tional prioritiesaround sustainabledevel- to contributetheachievement ofna- thus, thecompanyisideally positioned the visionandmissionofCargillsand, equalities. Thegoalsstrongly alignwith tackling climatechange,andfightingin- including endingallformsofpoverty, tainable DevelopmentGoals(SDGs), see countriesworkingtomeet17Sus- next 15 years, the “Agenda 2030” would achieving abetterfuture forall.Overthe the UnitedNation’s ambitiousplanfor 192 otherMemberStatesinadopting In September2015,SriLankajoined Sustainable DevelopmentGoals tainable, andsociallyresponsible ways. ically meaningful,environmentally sus- livelihoods across SriLanka ineconom- tinues toimpactandimprove lives and Through suchinvestments, Cargills con- tice. to improve outputandagriculture prac- training, andtailored extension services special agriculture inputs, international 80 small-scalefarmers were provided Cargills Agriculture project Modernization nancial resources. Forinstance,through efficient use ofhuman, physical, and fi- to increase productivity through more agriculturetry to modernize and help small-scale farmersacross thecoun- mitted toworkingwiththousandsof Linked tosuchsupport,Cargillsiscom- projects. scholarships to regional development projects thatextendfrom educational for arangeofcommunitydevelopment the years,thisfundhasbeenutilized every litre offresh milksourced. Over

CARGILLS (CEYLON) PLC 65 Annual Report 2018 | 2019 Sustainability Report CARGILLS (CEYLON) PLC 66 Annual Report 2018 | 2019 sponsibility intooureverydayoperations. commitment statements,andcodesofconductare developedinamannerthathelpstoembedsustainabilityandcorporatere- It is in line with such commitments to our planet and people that group-wide structures, strategies, governance corporate policies, tainable businessoperationsdirectly, orindirectly, contributetoeachofthefollowingSDGs: Whether itisinengaginglocalcommunities,orsupportingskillsdevelopment,Cargillsdiverseefforts todriveresponsible andsus- societal goalsandalignoperationswithuniversalprinciplesonhumanrights,labour, environment andanti-corruption. of theUnitedNationsGlobalCompact(UNGC);aglobalmovementsustainablecompaniestakingstrategicactiontoadvance doing businessandcreate sustainablevalueforallstakeholders.Basedonthisunderstanding,Cargillsmaintaineditsmembership thesuccessfulimplementationofthesedevelopmentgoalsstandstostrengthenthe SDGs.Inturn, theenablingenvironment for Cargills recognizes thatresponsible businessandinvestment isessentialtoachievingtransformationalchangeinSriLankathrough Sustainability Report contd. individuals andgroups whohaveaninterest in,influence,orare affected by, ourworkandincludethefollowing: our keystakeholdersinorder tobetteralignbusinesspracticeswithstakeholderexpectations.Thesekeystakeholderscomprise to impact, or beimpacted by, stakeholders.We adiverse group and external recognize of internal that itisimportant to identify the company’s economic, environmental, and social performance. Every facet of our company and its operations has the potential Cargills engagementwithstakeholdershelpsustobetterdefineourbusinessstrategy, sharpendecision-making,andenhance 2. informed ofourprogress. holders, setexpectationsforareas actuponthese expectations,andensure ofmutualconcern, thatourstakeholdersremained monitoring ofperformanceindicators.Through thisprocess, weaimtounderstandtheperspectivesandneeds ofourstake- this nature, Cargillsfollowsastructured stakeholderengagementmodel,includingtheidentificationofstakeholdersand regular our stakeholders,enablingthemtobeactiveandconstructive partnersinourshared journey. Inorder tofacilitatepartnershipsof value. We recognize theimportanceofinitiatingandsustainingrelationships through timelyandappropriate communicationwith Effective collaboration and partnership with our broad base of key stakeholders remains central to our efforts in creating sustainable Stakeholder EngagementProcess STAKEHOLDER ENGAGEMENT

Community Local Authorities and Regulatory Government and Traders Farmers, SMEs, Shareholders Employees Customers tinues toexpand. network ofbusinesstouch-points,Cargillsreach andimpactacross localcommunitiescon- Whether itisthrough educational scholarshipsanddevelopmentprojects, oranincreasing tributor toregional SriLanka, Cargillsengageswithlocalcommunitiesinmanydifferent ways. While agriculture-centric ruraldevelopment iscentraltoourgoalofbecomingthelargestcon- ances through certification. government shaping andpromoting policy towards betterhealthandnutrition,providing quality assur stakeholders. Thisincludessharingcorporateinsight,supportingcommunitydevelopment, andregulatoryCargills workscloselywithgovernment authoritiestowards enhancingvaluefor for ourfarmersexceededRs.7.1billion. rectly linkedtomarketsthrough Cargillsvaluechain.In2018/19,thedirect revenue generated Over 20,000agriculture suppliersare anddairy farmers, and 587national and international di- port itscommitmenttoensuringlongtermvalueandsustainablegrowth. 1,811 shareholders continue toshare Cargillsvision,believeinitsbusinessmodel,andsup- through opportunitiesprovided continuoustraining andlearning bytheAlbertA.PageInstitute. of work.Career growth andskillsdevelopmentofeachtheseemployeesare supported The Cargills team comprises 8,932 membersspread across 25districtsand over 400places interact withCargillsacross itsdiverse ecosystemofindustrysectorsandbusinessunits. eraging ourcommitmenttofoodsafetyandquality, millionsofcustomersacross SriLanka Whether itisaccessingaffordable foodthrough anextensivenetworkofretail outlets,orlev- -

CARGILLS (CEYLON) PLC 67 Annual Report 2018 | 2019 Sustainability Report CARGILLS (CEYLON) PLC 68 Annual Report 2018 | 2019 and regular feedbackisbuiltintofacilitatemonitoringand evaluation. in atimelymanner, accountabilityisassigned toheadsofbusinessandproject teams, ensure thatcurrent developments andchangesintheoperatingcontextare captured Each step in this continuous process involves a series of actions and measures to • • • • • Stakeholder EngagementModel Sustainability Report Monitor andControl: KPI-drivenmonitoringandcontrol processes. business agenda. Plan Approach: intothe Developplantoincorporatestakeholderconcerns Analyse: High-levelstakeholderassessmentandmappingofpriorities. representatives; developstakeholderprioritizationplan. Identify andDocument:stakeholdergroups andindividualstakeholder existing plansandidentifynewareas andengagement. of concern Watch, ListenandReview:Continuousengagementwithstakeholderstoimprove and Control Approach Monitor Plan Watch, Listen and Review Strategies Develop contd. Identify and Document Analyse ing quadrantisaresult ofthisprocess. ment ofkeystakeholdersonthefollow- mechanisms ofengagement.Theplace- Cargills todeterminerelevant levelsand prioritization ofstakeholdersandhelps This identificationthenfeedsintothe the company. standing toimpact,orbeimpactedby, holders, witheachstakeholdergrouping the local community as its keystake- andregulatoryernment authorities;and holders; farmers SMEs and traders; gov- identified customers;employees;share - ny onthestakeholder. Cargillshasthus 2) theinfluence,orimpact,ofcompa- holder’s influenceonthecompany, and identification is based on 1)the stake- effective stakeholderengagement.Such group stakeholdersisacriticalfeature of The identificationofkeyindividualor Stakeholder Identification ing to concerns and,thereby,ing toconcerns creating sustainablevalue. an understandingofstakeholderprioritiesisindispensable prerequisite ofrespond- action withstakeholders,through different platformsandchannels.We recognize that To dothis,thecompanyengagesinaniterative process ofcommunication andinter stand, identify, andmapthepriorities,interests, ofthesestakeholders. andconcerns Once keystakeholdershavebeenidentifiedandprioritized, Cargillsaimstounder Stakeholder Priorities Level Impact KeepInformed Shareholders Employees Customers Engage Level ofInfluence EngageDirectly Manage Closely Government / Regulators / Government Local Community Farmers, SMEs,Traders - -

CARGILLS (CEYLON) PLC 69 Annual Report 2018 | 2019 Sustainability Report CARGILLS (CEYLON) PLC 70 Annual Report 2018 | 2019 concerns ofourstakeholdersareconcerns detailedbelow. According toourassessments,basedoniterativecommunicationanddiversemechanismsofengagement,thepriorities Sustainability Report and Traders Farmers, SMEs, Shareholders Employees Customers Stakeholder Monthly /Quarterly On-Going Annually Monthly /Quarterly On-Going Annually Monthly /Quarterly On-Going Annually Monthly /Quarterly On-Going Frequency • • • • • • • • • • • • • • • • • • • • • • • • • • • • • Mechanisms ofEngagement contd. Farmer Group Meetings Partnership Meetings Field Visits Digital EngagementPlatforms Monthly Meetings Daily Engagement Annual Reports Annual GeneralMeetings Road Shows Investor CallsandMeetings Quarterly Reports Open DoorPolicyforInvestorInquiries Media Reports Information onCSE Regional staff conventions HR engagements Periodic Briefingsbyseniormanagement Letters andPosters Staff newsletters Open DoorPolicies Daily Briefings Orientation Programs Training &Mentoring Trade Fairsand Events Consumer Research andExternal Internal Field Visits Customer ServiceHotline Social Media Promotions • • • • • • • • • • • • • • • • • • • • • • Priorities /Areas ofConcern Industry Developments Business Growth Competitive Pricing Enhanced Markets andDisclosureGovernance Financial Performance Risk Management Business ExpansionPlans Sustainability Business Development Team Buildingandinteraction Grievance Sharing Corporate information Goals forreward andrecognition Career Development Brand Recognition Service Standards Product Range Sustainability Food Safe Health andNutrition Cost ofLiving run. Therefore, allrisks,oftenemergingfrom ofkeystakeholders, are theprioritiesandconcerns mapped against GlobalReporting operational risks.Thishelpsthe companyleveragemarketopportunitieseffectively andenhancecompetitiveadvantage inthelong- practices related totheidentification,analysis,evaluation, treatment, and mitigation,and monitoringofstrategic,financial,external, Committed tominimizetheadverse impactsofriskonthebusiness,Group’s EnterpriseRisk (ERM)frameworkencompasses material totheGroup. is reported on.Thematerial aspectboundariesmaydiffer inpriorityacross the variousbusinesssectors,buttheissuesremain Restaurants. Thedegree of impactofthematerialissueongroup and/orstakeholderdeterminestheextenttowhichissue Material aspectsare usually reviewed bystakeholdersegment,withinthecontextofeachbusinesssector;i.e.Retail,FMCG,and influence theGroup commercially orsocially, andcauseanimpactonrelationships withourstakeholders. amatterwouldbeconsideredHaving identifiedstakeholderprioritiesandconcerns, materialifithasthepotentialtosubstantially Materiality stakeholders inthisregard, withafeedbackmechanisminplacetocontinuouslyimprove plansandidentifynewconcerns. feed into business strategy,cerns models, and key performance indicators. All business sectors aim to provide a balanced view to company. Stakeholders oftenremain interested intheoutcomeofengagement andare keentoseehowtheirprioritiesandcon- necessary, opinion and inputisprovided bytheBoard ofDirectors, andincorporatedintothestrategicplanningprocesses ofthe ormaterialneedsrelatingAny priorities,concerns, toourkeystakeholdersare moderatedbytheGroup’s leadership,andwhere

Impact on Stakeholder Community Local Authorities and Regulatory Government Stakeholder Materiality andReporting Not Reported Impact onGroup On-Going / Quarterly On-Going / Monthly Frequency Briefly Reported Reported inDetail • • Mechanisms ofEngagement Cargills SarubimaActivities authority stakeholders. andregulatoryMeetings withgovernment • • • Priorities /Areas ofConcern • • • Youth Empowerment Community Development Business Sustainability Practice and Business Good Governance Graduate Unemployment Market andCommunityImpact

CARGILLS (CEYLON) PLC 71 Annual Report 2018 | 2019 Sustainability Report CARGILLS (CEYLON) PLC 72 Annual Report 2018 | 2019 corresponding levelsofmateriality. The materialissuesthatimpactthestakeholdersandGroup, andalignwithGRIstandards are detailedbelow, alongwiththe market fluctuations)andnaturaldisastersemergeasaspectsthatare evaluated,butremain outsidethescopeofGRI. tory andsupplychain,ITsystemsinfrastructure, fundingandliquidityrisk,marketrisk(interest rates,FOREXandcommodity Index (GRI)standards, andincludedasmaterialtotheGroup. Riskspertainingtocompetition,reputation, businessstrategy, inven- Sustainability Report No. 22 21 20 19 18 17 16 15 14 13 12 11 10 4. 3. 2. 1. 6 5 9 8 7 Customer Privacy Regulatory Compliance Product Responsibility Product Labelling Customer HealthandSafety Community Development Diversity andEqualOpportunity Employee Training &Development Occupational HealthandSafety Labour Practices&Grievances Environmental Protection Waste Management Water Management Indirect EconomicImpact Market Presence Economic Performance Risk Management Reputation Corporate Governance Energy Consumption Anti-Competitive Behaviour Anti-Corruption Material Issue contd. External External External External External Internal Internal Internal Internal Internal Internal Internal Internal Internal Internal Internal Internal Internal Internal Internal Internal Internal GRI Standard 418 417 417 405 404 417 416 413 403 402 307 306 303 202 201 102 102 102 302 206 205 203 Moderate Moderate Moderate Moderate Moderate Moderate Moderate Moderate To Group High High High High High High High High High High High Low Low Low Materiality To Stakeholder Moderate Moderate Moderate Moderate Moderate Moderate Moderate High High High High High High High High High High High High High Low Low • • • Customers clude: ofourstakeholdersin- and concerns taken toaddress theidentified priorities Initiatives and measures that we have material issues. cesses tomanageandrespond tothese thereafter, alignourstrategiesandpro- that are materialtoour business and, holders, weassessandmapaspects stake- andexternal ment withinternal tainable value.Through regular engage- geared toenhancethecreation ofsus- aspirations ofourstakeholdersandare strategies are based ontheneedsand In order tofacilitatethis,Cargills business pact ontheirlives. aspect of our business has a positive im- we are dedicated to ensuring thatevery cess ofCargillsrests inits people,and We recognize thatthecontinuedsuc- long-term valueandsustainablegrowth. supporting ourcommitmenttocreating been ourheroes; sharingourvisionand ployees, farmers,andsuppliershave Over 175years,ourcustomers,em- Stakeholder Impact vegetables, andothercommodities. and discountsonfresh milk,fruits, nutrition through regular promotions Promoting accesstoaffordable outlets. prices across thenetworkofretail customers atthelowestpossible over 20,500supplierstobesold and othercommoditiesdirectly from Sourcing fresh milk,fruit,vegetables, districts inSriLanka. restaurants spread across all25 through 380retail outletsand40 Reaching millions of customers • • • andRegulatoryAuthorities Government • • • Farmers, SMEsandTraders • Shareholders • • • • Employees • for SriLankanconsumers. policy bysettingbenchmarksonhealthandnutrition Contributing togovernment and trainingof105newmanagementtrainees. Supporting youth employment and skills development through the recruitment Sarubima fund. development, including the provision of educational scholarships through Cargills Leveraging corporateknowledgeandinsighttosupportwidescale ruralcommunity continually enhancequalitystandards. Providing guidanceandtechnicalsupportto587SMEsupplierstraders certification foreligiblefarmersacross Cargills eco-system. through theintroduction ofSriLankaGoodAgriculture Practice(SL-GAP) Partnering withtheDepartmentofAgriculture toprovide assurancesofquality and exportmarketsforagriculture. quality produce, reduce thecostofliving,andcreate enhancedaccesstoimport Working with5,480agriculture farmersand14,666dairytosupplyfresh reports, periodicconsultations, andanopen-doorpolicyforinvestorinquiries. Engaging directly with1,811 shareholders, includingtheregular publication of Institute, tofurthersupportthecontinuoustraininganddevelopment of staff. Partnering withinternationally-renown traininginstitutions,suchastheIGA of training. training hourswere provided, withemployeesreceiving anaverageof18.9hours unique participants, across the Group of 8,932 employees. A total of 169,475 Conducting atotalof261trainingprograms, withtheparticipationof9,719non- 30, and4,230(47.4%)beingfemale. workplace with5,616(62.9%)outofthetotalemployeesbeingbelowage Reflecting acommitmenttoyouthdevelopmentandfosteringaninclusive employees to8,932attheendoffinancialyear. Recruiting 5,768newemployeesduring2018/19,bringingthetotalnumberof range andimprove servicestandards. Developing newproducts, andimproving existingproducts, toincrease product

CARGILLS (CEYLON) PLC 73 Annual Report 2018 | 2019 Sustainability Report CARGILLS (CEYLON) PLC 74 Annual Report 2018 | 2019 The direct economicvaluegeneratedanddistributedbythe Group in2018/19isRs. 25.2Bncompared toRs.29.8 Bnin2017/18. investments. erating costs,employeewagesandbenefits,paymentstoproviders donations,andcommunity ofcapitalandthe government, provides a basic indicationof the wealthcreated, retained anddistributedduring2018/19.Thestatementincludes revenue, op- The EconomicValue statementcontainsinformation on thecreation anddistributionofeconomicvalueforstakeholders 201-1 EconomicPerformance:Direct economicvaluegeneratedanddistributed ployees, customers,andlocalcommunities. and socialresponsibility, wecontinuetoprovide bothfinancialandnon-financialvaluetoourshareholders, businesspartners,em- At Cargills we are committed to value creation through sustainable economic performance. Focused on sustainable development Financial Capital generated inthelong-termasoutputsaccrueacross thecompany’s ecosystem. our tocreate sustainablevalue. Whilefocusonadvancingonecapitalmaytemporarilycompromise another, positivevaluewillbe These capitalsflowseamlesslythroughout ourbusinessmodelandare transformedintotangibleoutputasweconsistentlyendeav- natural capital,manufactured capital,and intellectualcapital. titative andqualitativeinformation,categorizedacross sixcapitals–financialcapital,humansocialandrelationship capital, Cargills utilizesanintegratedreporting modeltodescribehowitcreates valueovertime.To dothis,weuseacombinationofquan- The SixCapitals • Local Community Sustainability Report the firstrangeofproducts tobe formally sourced infulladherence toGAP-certifiedcriteria. agriculture practice(SriLankaGAP Certification);andhavehadtheirproduce soldunderCargills’newbrand–GoodHarvest; extension servicestoimprove outputand agriculture practice.Manyofthesefarmerswere eligible forcertificationongood Agriculture 80small-scalefarmerswere Modernization: provided specialagriculturetraining,andtailored inputs,international equivalent toareduction intherelease of2,703,174Kgcarbondioxideeveryyear. roof area toinstallsolarpanels.Two retail outletsalsogeneratearound 9,500units(kWh)ofsolarenergy permonth.Thisis Solar Energy: Cargills’factoriesare nowequipped with2,551KWofsolarcapacity, havingutilized18,533square metersof plastic initsoperations.Theinitiativesawasignificantreduction intheuseofplasticsequivalentto5.7MTpermonth. KFC Plastic-Free: 39restaurants locatedacross thecountrycommencedprocess ofgraduallyphasingouttheuse Sustainability Highlights,2018/19 projects, includingthrough CargillsSarubimafund. Deepening engagementwithlocalcommunitiesthrough anexpandingbusinessoutreach andcommunitydevelopment contd. were affected byfloods resulting innegativeimpact worthRs.102.1Mn.In2018/19, conditions amounting to the value of Rs.61.5Mn. In theprevious year, 6 retail outlets In 2017/18, the company reported an insurance claim arising out of adverse climatic The company aims tomitigate such risks through comprehensive insurancepolicies. Climatic changesimpactCargills businessesthrough naturaldisasters suchasfloods. climate change 201-2 EconomicPerformance:Financialimplicationsandopportunitiesdueto Gross Revenue Value Created (-) CostofGoodsandServices Value addedfrom operations Other Income Finance Income Total Value Created Operating Costs Value Distributed Remuneration totheEmployees Directors' FeesandRemuneration Community Investments Government Levies Government Corporate Taxes Interest Cost Non-Controlling Interest Dividends Total Value Distributed Total Value Retained Total Value DistributedandRetained Profit Retained Value Retained Depreciation &Amortisation Total Value Retained 104,690,462 (82,121,345) 22,569,117 25,174,121 10,027,471 21,159,592 25,174,121 2,324,947 6,614,902 1,369,122 1,704,721 4,014,529 1,493,846 2,520,683 4,014,529 Rs. '000 2018/19 280,057 467,959 408,978 486,400 26,472 53,567 100,924,320 (74,673,698) 26,250,622 29,846,842 25,721,890 29,846,842 3,326,626 5,057,074 5,706,914 9,631,193 1,914,413 1,576,757 1,344,000 4,124,952 1,856,534 2,268,418 4,124,952 Rs. '000 2017/18 269,594 352,092 130,387 9,060 2019 was87%. suppliers fortheyearended31stMarch The proportion ofexpenditure onlocal ties formallyregistered inSriLanka. tage-level industries,andanyotherenti- Local suppliersincludefarmers,cot- suppliers, excludinganydirect imports. expenditure bytheretail sectoronlocal pliers captures the scale of procurement The proportion ofspending onlocalsup- suppliers Proportion ofspendingonlocal 204-1 Procurement Practices: flooding andothernaturalperils. worth Rs.18.9Mnfrom 10incidentsof the Group reports insuranceclaims Suppliers (2018/19) Proportion ofSpendingonLocal Foreign Purchase Local Purchase 13% 87%

CARGILLS (CEYLON) PLC 75 Annual Report 2018 | 2019 Sustainability Report CARGILLS (CEYLON) PLC 76 Annual Report 2018 | 2019 discounts onpurchases ofgroceries atretail outlets. personal insurance,giftstocelebrate personalmilestones,staff loans,ex-gratiapayments,bonuses,andmostuniquely, accessto tuity for5yearsofunbroken service.Socialbenefitscoverarange ofentitlementsandincentivesincludinghealthlifebenefits, Cargills provides statutoryandsocialbenefitstoitsemployees. Thestatutorybenefitsincludeanentitlementtoapayment ofgra- 201-3 EconomicPerformance:Organization’s definedbenefitplans • • • • • • • • full-time employeesinclude: Cargills recognizes thatthe qualityofthebenefitsweoffer ouremployeesplaysalargerole inretention. Thebenefitsoffered to 401-2 Employment:Benefitstofull-timeemployees year. 62.9%of theseemployeeswere undertheageof30,representing ourcommitmenttoyouthdevelopment. Cargills recruited 5,768new employeesduring2018/19,bringingthetotalnumberofto8,932atendfinancial 401-1 Employment:Newemployeehires received atotalof169,475 traininghours,witheachreceiving anaverageof18.9hourstraining. to arangeofqualitytraininganddevelopmentopportunitiesthathelpsetthemupforcareer success.In2018/19,ouremployees emerging businesschallenges.Through theAlbertA.PageInstitute(AAPI)ofFoodBusiness,ouremployeesare provided access ees toengageininnovativethinkingandequipour workforce with the knowledgeandcompetencies required toeffectively manage environment economicclimates,weaimtofacilitateadynamiclearning thatencouragesouremploy- Cognizant ofshiftingmodern while 62.9%ofouremployeeswere belowtheageof30. ment practices,compensationandbenefits,talentmanagement.In2018/19,womenrepresented 47.4%ofourworkforce, inclusion, andfostersinnovation.To dothis,wecontinuously monitor andimprove onprograms andinitiativesrelated toemploy- form thecore ofthebusinessandhaveinvestedincreating aworkplacethatprovides equalopportunity, promotes diversityand Cargills iscommittedtoinvestinginhumancapital;attracting,developing,andretaining thebesttalent.We firmlybelieveourpeople Human Capital Sustainability Report Under 30yearsold Staff Purchase Discounts Bonuses Ex-Gratia Payments Staff Loans Gifts (incl.Birthday, Wedding) NewBorn, Death Benefits Personal Insurance Medical Benefits (62.9%) 5,616 Total NumberofEmployees(byage) 30 –50yearsold (32.3%) 2,884 contd. Over 50yearsold (4.8%) 432 Total Staff 8,932 at theendofleaveperiod. 128 employees exercised their entitlement to parental leaveduringtheyear2018/19,with97oftheseemployeesreturning towork toworkandretention401-3 Employment:Return ratesafterparental leave diseases reported duringtheyear. we reported 61workplaceinjuries,representing anincrease from the48injuriesreports in2017/18.There were nooccupational Cargills continuestostriveachieveazero-incident ratewithrespect toworkplaceinjuriesandaccidents.Inthe year2018/19, 403-9 OccupationalHealthandSafety:Work-related injuries training provided wascarriedoutaspartoftheregular trainingcurriculumoftheAlbertA.PageInstitute. In 2018/19, 7 special training programs were conducted for employees on thetopic of occupational healthand safety, while similar • • • • • • • The companypaysparticularattentiontomattersofhealthandsafety, andtheeliminationofriskin: tions thatare safe,healthy, andcomplywithallstatutoryrequirements andcodesofpractice. Cargills recognizes itsresponsibility inensuringthatallreasonable precautions are takentoprovide andmaintainworkingcondi- 403-8 OccupationalHealthandSafety:SafetyPolicy tribute tolastingemployeeloyalty. Cargills remains convinced thattheprovision offairandcompetitivewageswillhelpusattractretain thebesttalent,andcon- and women. It isCargills’policytomaintainuniformstandards across thebusiness,withnodiscrepancy betweenentry-levelwagesformen Salaries andwagesare fairly andequitablybenchmarkedagainsttheroles andresponsibilities entrustedtoindividualemployees. locations ofoperation 202-1 MarketPresence: Ratioofstandard entrylevelwage bygendercompared tolocalminimumwageatsignificant Return toworkrate Return Total numberofemployeesthatreturned toworkattheendofperiod Total numberofemployeesthattookparental leave The strictadherence tohealthandsafetyinstructionsbyallemployees. The prevention ofhealthandsafetyhazards atwork. The accessandegress ofallemployeesfrom theplaceofwork. The maintenanceofworkconditions. The provision ofrelevant information,training,andsupervision. The use,handling,storage,andtransportofarticlessubstances. The provision andmaintenance ofmachinery, equipment,andworksystems. 2018/19 76 % 128 97

CARGILLS (CEYLON) PLC 77 Annual Report 2018 | 2019 Sustainability Report CARGILLS (CEYLON) PLC 78 Annual Report 2018 | 2019 Group’s businessunits. vide industry experience and training with placements across the 500” whichaimedtorecruit 500universitygraduates, and pro- aboutgraduateunemployment,Cargillsinitiated“Projectcerns petitive privatesector. Lastyear, inresponse tonationwidecon- who lackthenecessaryskill-set togainemploymentinthecom- provides uniqueopportunitiestorural,orlessprivileged,youth Such trainingnotonlyhelpstoupgradeemployeeskills,but also • • • • • • • • • and include: training. Theprograms are largelyimplementedthrough theAAPI sectors andincludeexecutive,non-executive,management The traininganddevelopmentprograms extendacross business improvement inorder toenhanceoverallperformance. self-identification oftrainingareas by employees whoseek personal ular assessments of company-wide training needs, or through the opportunities. Suchopportunitiesare identifiedeitherthrough reg- access toawiderangeofhigh-qualitytraininganddevelopment Page Institute(AAPI)ofFoodBusiness,ouremployeesare provided nomic exigencies.Ledbyournon-profit trainingarm,theAlbertA. is equipped with the right tools to be responsive to dynamic eco- Cargills hasconsistentlyendeavoured todevelopaworkforce that employee skills 404-2 Training andEducation:Programs forupgrading in linewithISOrequirements. mented Environmental, Health,andSafetyManagementSystems As reported in 2017/18,allmanufacturing facilities have imple- Sustainability Report Number ofInjuries Customer Engagement Advanced Leadership Employee Grooming Targeted SkillsDevelopment Feedback-Oriented Refresher Courses Retention-Oriented MotivationalTraining Skills Development Language Skills Job Orientation Male 45 By Gender Female 16 contd. Minor 48 By Type Major 13 using ICTasatoolfordevelopment. opportunitiestoempoweryouthinruralareas,learning courses onlineforstudents. Cargills utilizestheseonline registered with the IGA Institute and is able to offer these skills toindependentretailers worldwide.AAPIiscurrently ing andDevelopmentdepartmentbybringingcompetitive ations. TheIGAInstitutefunctionsastheAlliance’s- Learn retaildevelopment needsofitsinternational foodassoci- courses, andclassroom trainingtosupportthecareer vide on-linetrainingmaterials,webbasedjobcertification developed byIGA(IndependentGrocers Alliance)topro- The IGAInstituteisanon-profit educationalfoundation Independent Grocers AllianceOnlineTraining enhancing thecertificationtoaDiploma. acquire theadvancedcertificate theyhavetheoptionof tive anddynamicbusinessenvironment. Oncestudents skills, allofwhichare crucial torespond toacompeti- organizational needs—technical,human,andconceptual Skills Developmenthavebeendesignedinresponse to ness. TheadvancedcertificatecoursesforManagerial and DistributionCentralWarehousing, andAgri-Busi- ing Operations, Manufacturing, Support Services, Sales designed tocaterallsectorsofFoodMarketinginclud- come effective andefficient executives.Thecoursesare certificate programs develop basicskillsrequired tobe- advancement inthefoodandmanufacturingsector. The programmes aimedatcreating opportunitiesforcareer AAPI hasdevelopedaseriesofcertificateanddiploma foreign exchangeearnings. largely from ruralSriLanka, drawsthecountry’s highest overseas issignificant—unskilledmigrantlabour, sourced derived tooureconomyfrom unskilledlabouremployed due tothelackofprofessional skills.Thatsaid,thevalue youth whowere eitherunder-employed orunemployed regional SriLanka,itunderstoodthetruepotentialofrural rural Sri Lankans. As Cargills expanded its presence in established in 2006 in response to the needs of young, The AlbertA.PageInstitute(AAPI)ofFoodBusinesswas Albert A.PageInstituteofFoodBusiness of 30,with432(4.9%)employeesbeingovertheage50. rized as Executives, while 7,297 were in the Non-Executive category. 5,616 employees (62.9%) of employees were under the age In 2018/19,womenrepresented 47.4%ofourtotalworkforce of8,932employees. Outofthetotalworkforce, 1,635were catego- our services,andcontributetothesuccessofbusiness. political view. We are alsoworkingparticularlyhard toensure thatpersonswithdisabilitiesare abletoshare ourambition,access ment, remuneration, and career developmentadvancement,regardless ofrace,religion, gender, age,nationality, civilstatus,or To promote diversityandfosterinclusion,weprovide equalopportunitiesthroughout ourbusinessoperations,includinginrecruit - reach theirfullpotential. tive potential.Attheheartofthiscommitmentisadesire toembraceourdifferences, sothateachandeveryemployeeisableto Cargills is committed to fostering an environment our transformative collec- that celebrates diversity and constructively harnesses 405-1 DiversityandEqualOpportunity:ofEmployees contemporary training. necessary. In-house trainersundergoregular trainingoftrainerprograms inorder toensure theyare abletoprovide high-quality, Training isprimarilyconductedthrough theAAPIbyin-houseresource trainersbeingengagedwhen personnel,withexternal count of8,932,Cargillsprovided anaverageof18.9hourstrainingperemployee. Cargills provided atotalof169,475hourstraining,across atotalemployee 261trainingprograms overtheyear2018/19.With 404-1 Training andEducation:Average hoursoftrainingperemployee 150 newmanagementtraineeswere recruited underProject 500lastyear;afurther105were recruited in2018/19. 32% (2018/19) Workforce -By Age Over 50yearsold 30-50 yearsold Under 30yearsold 5% 63% (2018/19) Type ofEmployment 18% Executives Non-Executives 82%

CARGILLS (CEYLON) PLC 79 Annual Report 2018 | 2019 Sustainability Report CARGILLS (CEYLON) PLC 80 Annual Report 2018 | 2019 transgressors willbedealtwithseverely. environment are strictlyprohibited and that create a hostile or offensive work advances, intimidation,andother actions harassment, includingunwelcomesexual discrimination andharassment.Sexual maintaining aworkplacethatisfree from ing diversity, itspotential,and harnessing Cargills remains committedtocelebrat- duties inasensitiveandrespectful manner. ensure that all employeescarryouttheir ferences. ItisinCargillsoperatingethosto ligion, race,orothersocialculturaldif- discrimination basedongender, age,re- discrimination onanygrounds, including Cargills doesnottolerateanyincidentsof of Discrimination 406-1 Non-Discrimination:Incidents formance irrespective ofgender. rewarded andrecognized basedonper in remuneration, andallemployees are does notdiscriminatebetweengender that ischaracterizedbyequality. Cargills and benefits of our employees is one lating to remuneration, compensation, It follows,therefore, thatourpositionre- equal employmentopportunityprovider. track records. We are proud tobean applicants, exhibitingstrong professional itize themerit-basedselectionofqualified op, andretain thebesttalent, weprior sistent withourambitiontoattract,devel- gender, political view, orcivilstatus. Con- exclusive criteria,includingrace,religion, Candidates are assessedirrespective of terion pertainingtosuitabilityforthejob. are impartiallyassessedonobjectivecri- All candidatesforemploymentatCargills Equal Remuneration 405-2 DiversityandEqualOpportunity: Sustainability Report - - contd. across thecompany’s businessunits. incidents of childlabour in any operation also confirmsthatthere isnodirect riskof procedures oftheGroup. Thecompany places. Thisisbuiltintothepoliciesand person undertheageof18atourwork- child labour or the employment of any Cargills doesnotengagein,orcondone, 408-1 ChildLabour way. restrict theirformationorfunctioninany resenting employee interests and do not portant role ofunions in collectively rep - our deliberations,werecognize theim- of ouremployeesattheforefront ofall While weconsistentlyplacetheinterests negotiations withseniormanagement. gage inconstructivediscussionsand policy, where employeesare free toen- The companyencouragesanopen-door freedom of association of its employees. Cargills doesnotcurtailthefundamental Collective Bargaining 407-1 Freedom ofAssociation and reported duringtheyear. have been no incidents of discrimination The companyispleasedtonotethere processes. detailed grievancerecords andfollow-up ular sitevisits,andthemaintenanceof the availabilityofa24hourhotline,reg - cess across businesssectors,including also hasaformalgrievancehandlingpro- man Resources department.TheGroup and grievanceswiththecompany’s Hu- employees toprivatelyairtheirconcerns lines ofcommunication,encouraging Cargills promotes andsupportsopen ly agree to: Therefore, allofCargillssuppliersformal- human rightsandlabourpractices. Environmental andSocialStandards on Finance Corporation (IFC) International sectors. These contracts are informed by erates withintheretail andmanufacturing agreements witheverysupplierwhoop- Cargills entersintoformalcontractual criteria New suppliersscreened using social 414-1 SupplierSocialAssessment: laws andindustrystandards. transport inaccordance with applicable time pay, and supportedwithmealsand are dulycompensatedbymeans ofover yond theircontractually-allottedhours are imposed.Employees who workbe- period oftime,butnobindingconstraints to retain their services for a reasonable employees are advisedabout ourdesire employee developmentare substantial, Where trainingcostsandinvestments in to refrain from theuseofforced labour. mation thatsupplierswilltakemeasures assessments include contractual confir business operations.Inaddition,supplier pulsory labourinanyformacross its Cargills doesnotdeployforced orcom- 409-1 Forced orCompulsoryLabour deployment ofchildren atwork. will takemeasures toprotect againstthe contractual confirmationthatsuppliers In addition,supplierassessmentsinclude - - vital partofourbusinessmodel. stakeholders. Theserelationships are a ter lastingrelationships withourdiverse utor toregional SriLanka,butalsofos- our goalofbecomingthelargestcontrib- In doingso,wenotonlymovecloserto of thecommunitiesinwhichweoperate. sustainability, andhealthwellbeing development, education,environmental Through these initiatives, we investinthe ment. our communitiesandnationaldevelop- sustainable businessandcontributeto ships, weleadseveralinitiativestodrive continuously enhancingtheserelation - and businesspartners. Committed to nity, suppliers, employees,government stakeholders—the agriculturalcommu- deepen our engagement with our key Cargills continuestoexplore waysto Fundamental toourbusinessvalues, Capital Social andRelationship • • • • • • Refrain from theuseofforced labour. well-being. conditions andenhanceemployee Promote safeandhealthy working client’s supplychain. parties, andotherworkersinthe workers, workersengagedbythird categories suchaschildren, migrant Protect workers, including vulnerable employment andlabourlaws. Promote compliance with national inter-personnel relationships. Establish, maintain,andimprove the of workers. discrimination, andequalopportunity Promote thefairtreatment, non- has helpedfarmersreduce post-harvest sector. Overtheyears,suchsupport ing technicalsupport,inthe agriculture knowledge andexpertise, provid- Cargills alsoplaysakeyrole insharing port, andexportmarkets. enhanced theiraccesstodomestic,im- and supply-chain,wehavesignificantly farmers intoCargillsextensivenetwork cost ofliving.Inaddition,byintegrating we are abletocontributereducing the produce at affordable prices. As aresult, duce, buttoalsooffer customersfresh offer farmersahigherpricefortheirpro- allow us to not only men. This, in turn, transaction costsandeliminatedmiddle- unique out-grower modelhas reduced In workingdirectly withfarmers, our farming communities. contributes towards the upliftment of a steadysource ofincome,this revenue nue ofRs.3.05Bnfortheirproduce. As dairy farmers received a collective reve- across the country. Over the year, our centres, connectingdairy farmersfrom million litres, sourced from 38chilling Group’s milkcollectionreached 48.9 of Rs. 4.07 Bn to the community. The agriculture farmers,returning arevenue kilograms of fruitand vegetable from its In 2018/19,Cargillssourced 44.4million communities inmanydifferent ways. contribute totheupliftmentoffarming 14,666 dairyfarmershasenabledusto ment with5,480agriculture farmersand pact. Mostnotably, ourholisticengage- leads tosignificantindirect economicim- ecosystem, werecognize thatourwork Given thescopeandextentofCargills 203-2 Indirect EconomicImpacts 26,471,633. amounted to atotaldisbursement of Rs. seas training, and other assistance. This beneficiaries withscholarships,over projects, andprovided atotalof514 fund wasutilizedtoconducttwodistinct Sarubima fund.Duringtheyear, the lected Rs. 91.4 Mnunder the Cargills At theendof2018/19,Cargillshadcol- community andCargills. made jointlybetweenmembersofthe disbursement andallocationoffundsare infrastructure. Decisionspertaining tothe ance forfarmers,andinvestmentinlocal and professional advancement, insur ships forchildren, resources forlearning utilized toprovide educational scholar ties across Sri Lanka. This fund has been gages and seeks touplift rural communi- vehicle through whichthecompany en- Since then,thefundhasbecomeakey fresh milk,purchased from ourfarmers. gram offresh produce, andeverylitre of the community 50 cents for every kilo- Sarubima”; afundwhichgivesbackto In 2008,Cargillsintroduced “Cargills Cargills SarubimaFund 413-1 LocalCommunityEngagement for theirhard-earned harvest. ensuring thatfarmersreceive afairreturn to reducing thecostofproduction and quality ofproduce. Thishascontributed enhance levelsofproductivity andthe loss from over40%tolessthan8%,and - - -

CARGILLS (CEYLON) PLC 81 Annual Report 2018 | 2019 Sustainability Report CARGILLS (CEYLON) PLC 82 Annual Report 2018 | 2019 Sustainability Report dents received scholarships,representing anotableincrease from the238scholarshipsprovided intheprevious year. Cargills continuedtoprovide scholarshipsforstudentsatdifferent levelsofeducation andareas oftraining.In2018/19,501stu- Educational Scholarships engage localcommunitiesinthefollowinglocations: of infrastructure atschools,andbuildingplaygrounds andparksforchildren atlocationsacross SriLanka.Cargillscontinuesto In previous years,communitydevelopmentprojects haveincludedtheintroduction ofdrinkingwaterfacilitiesandthedevelopment nearly 400studentswere unable toaccesswaterduringthedryseason. inThisogama,Banduragoda.ThroughSripali MahaVidyalaya theproject, Cargillsinstalledatubewelltorespondthat toconcerns zation project. Beyondthis, Cargillsalsoimplementedadrinkingwaterproject toensure uninterruptedaccesstocleanwateratthe During 2018/19,Cargillsdirected significantfocusondevelopingandrolling outitsambitious,multi-pronged agriculture- moderni Community DevelopmentProjects Norochcholai Narangoda Meesalai Masskeliya Lindula Bogawanthalawa Bogahawatta Banduragoda Bandarawela Badalgama Overseas Training Agriculture Project Modernization Community DevelopmentProjects Educational Scholarships Total Scholarships Other Training Pharmaceutical Training Vocational Training University A-Level Grade 5 Type ofScholarship Type ofDisbursement Rikillagaskanda Raththota Rambe Nuwara Eliya Norwood Hanguranketha Galewela Dayagama Dambulla Boralanda contd. Number ofBeneficiaries 14,554,333 10,657,300 910,000 350,000 Value Yatawatte Wattegama Thanamalvila Thambuthegama Ruwalwela Kilinochchi Kalugamuwa Jaffna Hettipola Hatton 501 133 222 108 14 22 2 Number 501 13 1 1 with thetechnicalsupportofJAIN IrrigationSystemsinIndia. conventional agriculture practicesandtowards moreandefficient modern farmingprocesses. Theproject isbeingimplemented only facilitatedknowledgeand experience-sharing amongthefarmingcommunity, butalsoencouraged a paradigmshiftawayfrom cessful agricultureprogram, modernization through avisittohigh-techfarmsandtechnicalparksinIndia.Thisexposure visitnot In additiontospecialinputs,8farmersand5extensionofficers were giventheopportunitytoreceive first-handexposure toasuc- a long-term,low-interest loanwas provided tothefarmersthrough CargillsBanktocoverremaining costs. mulch, insect-proof nets,and soilandwatertesting.50%ofassociatedcostswere covered undertheCargillsSarubimafund,while Through the project, the selected farmers received a range of special agriculture inputs, such as micro-irrigation systems, plastic • • • Currently initspilotphase, theproject adoptsthefollowingstrategytoaddress thesechallenges: dwindling interest ofyouthinagriculture, overuseofagro-chemicals, andlimitedexportpotential of localproduce. or standtohinder, the growth ofagriculture inSriLanka,includinghigh costsofproduction, lowyields,volatileclimaticconditions, cepted standards ofproduct qualityandsafety. Thisforward-looking objectiveseekstoaddress thediversechallengesthathinder, broad objectiveoftheproject istoenhancefarmerincomethrough improved productivity andefficiency, whilemeetingglobally-ac- During 2018/19,Cargillsdeepenedtheseefforts through the launchofCargillsSarubimaAgricultureProject. Modernization The and anumberoffarminglandshavebeentestedtodetermineoptimalinputrequirements. farming communityontheefficient andprudentuseofagriculture inputs.Today, over1,550farmershavereceived suchtraining, abouttheuseoffertilizer and agro-chemicalsconcerns inagriculture. Themainobjectiveoftheproject wastoeducateandtrainthe In 2014,Cargills—inpartnershipwiththeDepartmentofAgriculture—launched the‘SaveourSoil’project, inresponse toconsumer Agriculture Project Modernization information onGoodAgriculture Practices (GAP). Expose farmersandCargillsagriculture extensionofficers toglobally-acceptedcrop production methodsandprovide first-hand Introduce improved, climate-smartagriculturalpracticesfor20different crop varieties. Create atotalof80model farmsinThambuthegama,Thanamanvila,andNorochcholai.

CARGILLS (CEYLON) PLC 83 Annual Report 2018 | 2019 Sustainability Report CARGILLS (CEYLON) PLC 84 Annual Report 2018 | 2019 the introduction ofclearstandards andguidelinesforgoodagriculturalpractice,thisinitiativehasfinallycometofruition. partment ofAgriculture embarked onatransformativeinitiativetointroduce GAPcertificationinSriLanka(SL-GAP).In2018/19,with Until recently, however, thepursuitandadoptionofsuch practicewasafforded insufficient formalrecognition. Two yearsago,theDe- vegetables. land. As a result ofsuch measures, our produce consistently falls within globally-acceptedcriteria pertaining toresidue onfruitand record booksare maintainedtomonitorlevelsofinput,andfarmersavoidthe overuseofagro-chemicals andfertilizersontheir agriculture practice.Forinstance, wehavetakenmeasures toensure thatproduce canbetracedbacktothefarmersource, crop thesupportofkeystakeholders,includingDepartmentAgriculture, wehavestrivedtoensureWith thatfarmerspursuegood Agriculture Project Modernization launchedin2018/19. demonstrated through theseriesofprojects wehaveundertaken; includingthe‘SaveourSoil’project commencingin2014,orthe concerted effort tointroduce GAPisaresponse Ourefforts tosuchconcerns. toimprove agriculturalpracticeinSriLankaare best our operations,weremain extremely onthesafetyofproduce mindfulofourcustomers’ concerns theyconsume,andour Cargills haslong-promoted theadoptionofgoodagriculturalpractices(GAP)inproduction offruitandvegetables.Throughout GAP Certification Sustainability Report honest andprofessional conduct. integrity andethicalconductacross allourbusinessactivities, andeveryemployeeisexpectedtomaintainthisreputation through Cargills iswidelyrecognized andrespected asaresponsible corporatecitizen.Thecompanyadheres tothehigheststandards of 205-2 Anti-Corruption:CommunicationandTraining onAnti-Corruption pointintheadvancementofagricultureduction ofGAPcertificationmarksyetanotherturning sectorinSriLanka. As wecontinuetoempowerourcustomersconsumelocal fruitandvegetableswithconfidence,weare confidentthattheintro- packaging containinginformationonthefarmer, alongwithauniqueQRcode. range ofproducts tobeformallysourced infulladherence toGAP-certifiedcriteria,eachproduct alsofacilitatestraceabilitywithits produce issourced from farmersparticipatinginCargillsSarubimaAgriculture Project. Modernization Apartfrom beingthefirst its extensivenetworkofretail outletstooffer customerscertifiedGAPproduce, underitsnewbrand–GoodHarvest.Muchofthis As thisimportantinitiativetakesflight,Cargillsisproud toleadthewayintranslatingSL-GAP certificationintopractice;leveraging contd. follows: reduction ofsugar, theseproducts were subjecttominorreductions insugarcontent.Thepercentage ofsugarwasreduced as During theyear, ourpopulardrinkingyoghurtwasamongthemainproducts evaluated.Adoptingan incremental approach tothe and theintroduction ofanumber ofhealthyproduct options,represent someofthenotableachievementsinthisarea. of products andservices. Among thesemeasures, furtherprogress inreducing thepercentage ofsugarandsaltinourproducts, In 2018/19,anumberofsystematicefforts andmeasures were takentopromote betterhealthandsafetyacross ourdiverserange to ensure thattheproducts weoffer are safeandofthehighestquality. The healthandnutritionofourcustomersconsumersremains akeypriorityofCargills.We thusconsideritourresponsibility 416-1 CustomerHealthandSafety:AssessmentofSafetyImpacts ance ofthesupplierswiththeseindicatorsismonitored through periodicaudits. These contractsincludesocialperformanceindicatorswhichaimtoassesstheimpactsuppliermakesonsociety. Thecompli- Cargills entersintoformalcontractualagreements witheverysupplierwhooperateswithintheretail andmanufacturingsectors. 414-1 SupplierSocialAssessment There were noincidentsorreports ofanti-competitivebehaviourduringthefinancialyear 2018/19. 206 Anti-CompetitiveBehaviour There were noincidentsorreports ofanti-corruptionorbriberyduringthefinancialyear 2018/19. 205-3 Anti-Corruption:Incidentsofanti-corruption and willresult indisciplinary sanctionsorcriminalcharges. The tradingofcompanyshares orothersecuritiesbyindividualswhohaveaccesstonon-publicinformationisstrictlyprohibited Insider Trading during festiveseasonswhere theproclivity forsuchdealingsarise. or emolumentthatmaybeconstruedasabribe.Executivesare alsoissuedofficial memorandumstoremind themofthisobligation corruption. Allexecutivesare boundbyasignedcodeofconductwhichprohibits themfrom acceptingoroffering anyformofgift Stemming from theexpectationofprofessional andhonest businessdealings,Cargillshaszero tolerancetowards briberyand Wood AppleDrinkingYoghurt Mango Drinkingyoghurt Vanilla DrinkingYoghurt Strawberry drinkingyoghurt Product Reduction %(pertotaloriginaladdedsugar) 7.69% 6.78% 4.55% 11.1%

CARGILLS (CEYLON) PLC 85 Annual Report 2018 | 2019 Sustainability Report CARGILLS (CEYLON) PLC 86 Annual Report 2018 | 2019 from theprevious yearacross allthree indicators,Cargillswillcontinuetostrivetowards 100%compliance. 67% ofproducts metrequirements pertainingtotheinclusionofadisposallogo.While thisrepresents anincremental improvement In 2018/19,94%ofourproducts metrequirements ontheinclusionofinstructions forstorageandcompletelistsofingredients. about thepositiveandnegativeenvironmental andsocialimpactsoftheproducts andservicestheyuse. Consumers shouldbeabletomakeinformedchoicesabouttheirhealthandnutrition,haveaccessadequateinformation 417 MarketingandLabelling:Product andServiceLabelling Our foodprocessing plantsalso continue tobeequippedwithISOandSLSqualitycertification. • • • • Other specificinitiativesinclude: Sustainability Report ing ofdynamicconsumersentiments anddevelopavalue-addedproduct portfoliothatmeetsdemand. capacity topositionourselves at theforefront ofproduct innovation.Thisfeedbackhelpsthecompanyobtain agoodunderstand- ically, through the administration of customersatisfaction surveys, we are abletoleverageouradvanced research anddevelopment Cargills regularly seekstoengageitscustomersgainvaluable insightintothereception ofCargillsproducts and services.Specif- Customer SatisfactionSurveys non-compliance reported in2018/19. This proactive, comprehensive approach toproduct and serviceinformationandlabellinghasmeantthere were noincidentsof instructions ,anddisposalmethods. on ingredients andnutritionalcontent,flavours,additives,colouring,anti-oxidants,preservatives, stabilizers,net content, storage feature oftheseefforts, andwetakeproactive stepstoreport overandabovetheregulatory requirements, includinginformation that ourproducts are ofthehigheststandard offoodsafetyandquality. Thedisseminationofadequateproduct informationisa quality-controlsCargills implementsinternal andrelated measures ateverypointofthefoodsupplyjourney, in order toensure 417 MarketingandLabelling:Product andServiceLabellingNon-Compliance and regulations. all, theproducts andservices labellingcurrently meets84%oftheGRIstandard, andremains fullycompliantwithSriLankanlaws Cargills ensures thatourproduct information,labelling,andclaimsare reliable, factual,andsupportedbyscientificevidence.Over Instructions forStorage Reduction ofmono-sodiumglutamatecontentinSupreme chickensausages. Introduction ofano-addedsugarfruitspread. Introduction ofahealthyfishproduct range,free ofpreservatives, mono-sodiumglutamate,andfoodcolouring. Introduction ofahealthy‘Lite’product range: GRI IndexCoverage 4 LightNectars:whichcontain43%lesssugarwhencompared totheoriginalnectar. 4 LightYoghurts: whichcontain50%lesssugarwhencompared totheoriginalyoghurt,low-fat,andhigh-protein, and; Yes (%met) 94 contd. Disposal Logo Yes (%met) 67 Complete ListofIngredients indescending order 85% Yes (%met) 94 - the USEnvironmental Protection Agency. solar panels.Thisisequivalent toareduction intherelease of2,703,174Kgcarbon dioxideeveryyear, basedoncalculationsof addition, ourfactoriesare nowequippedwith2,551KWof solarcapacity, havingutilized18,533square metersofroof area toinstall the year, tworetail outlets—inNawalaandPethiyagoda—were generatingaround 9,500units(KWH)ofsolarenergypermonth. In In 2018/19,Cargillshastaken significant stepstowards the introduction ofrenewable solarenergyinitsoperations. Attheendof identification andimmediaterectification. ported. Cargillsfollowsformalprocesses andappliesstandard practicesinaddressing anysuchinstances,includingroot-cause In thepastyear, nomajorincidentsofnon-compliancewithlawsandregulations inthesocialandeconomicarea havebeenre- 419-1 Socio-EconomicCompliance:Non-CompliancewithLawsandRegulations at eachbusinessunit,billsreceived from utilityproviders, andledgerentries. consumer of such energy. Energy consumption is measured, consolidated, and reported through a combination of logs maintained install energy-efficient lighting. Thecompany’s primarysource ofenergyisthenationalgrid,andretail sectorremains thehighest Cargills initiativestoconserveenergyacross theecosystemincludeefforts tomonitorenergyusage,utilizerenewable energy, and 302-1 Energy: EnergyConsumptionwithintheorganization aim istominimizelong-termadverseimpactsontheenvironment. endeavour tominimizefoodwasteandpost-harvestloss.Through detailedmonitoringofourecologicalfootprint,underlying inating waste has become a central feature of our operations and ethos. This emerges as a particular priority in our long-standing ment, wehaveinvestedinefforts toreduce ourenergyandwaterconsumptionacross allbusinessunits,whileminimizingorelim- Cargills iscommittedtoprotecting ournaturalresources andreducing ourfootprintontheenvironment. To deliveronthiscommit- being afundamentalprerequisite ofanyeffort tocreate sustainablevalueforstakeholders. ness strategy. Theseresources provide theenvironment forothercapitalstoflourish,withtheavailabilityofcleanwater, soil,andair Natural capitalcomprisesthenaturalresources, assetsandprocesses thatcan beleveragedtosupporttheachievementofbusi- Natural Capital increase incustomerengagementcompared totheprevious year, where 1,055customerswere interviewedthrough 24surveys. A totalof46surveyswere carriedoutonneworexistingproducts, coveringatotalof44fooditems.Thisrepresents asignificant In theyear2018/19,Cargillsinterviewed2,176customersforpurposesofproduct development,evaluation,andimprovement. Electricity Consumption • • • Fuel Consumption Existing Products Furnace Oil Furnace Gas Diesel Energy Consumption(2018/19) 29 Customer SatisfactionSurveys(2018/19) New Product Development 17 116,792,022 2,867,410 357,995 843,835 Value Total Survey 46 Sample Size Kw/h Unit Kg L L 2,176

CARGILLS (CEYLON) PLC 87 Annual Report 2018 | 2019 Sustainability Report CARGILLS (CEYLON) PLC 88 Annual Report 2018 | 2019 bags andnowprovides arangeofre-usable bagstocomplementexistingoptions. Food Cityalsocontinuestoengagewith its customerstoreduce theuseofplastic ther eliminatetheuseofplasticsatKFCare scheduledintheforthcomingyear. Cargills with informationcards beingplacedoncountersattherestaurants. Initiativestofur been educatingandencouragingcustomerstoreduce theusageofplasticstraws, bags. Thisisequivalenttoareduction of5.7MTplasticpermonth.KFChasalso rice-based products and replaced plastic take-away bags with cloth and paper-based ed across thecountrygraduallyphasedoutuseofplasticinpackagingits KFC restaurants toplastic-free operations.Duringtheyear, the39restaurants locat- In thecontextofwaste,oneourhallmarkprojects in2018/19wasthetransitionof environmental footprintinterms ofemissions,effluent, andwaste. with comprehensive Environment ManagementSystemsthatalsohelptoanalyseour processes by the Central Environmental Authority. Our production plants are aligned ter discharge,asperGRI303-4,isinlinewiththestandards approved foragriculture reduced inlinewithagreater focusonefficient watermanagement.Thequality ofwa- 2018/19, Cargills recycled 55,318,000 litres of water, and the discharge of water has ing, restoring, andreplacing thenaturalresources thatweuseinouroperations.In Throughout theGroup, weworktowards zero-environmental footprintbyconserv- business unitsinaccordance withrequirements. suppliers andbowsers,nationalboard supplies,withquantitiesvaryingacross The waterweconsumeissourced through acombinationofground water, approved water bottlingbusiness. including themaintenanceofhealthandhygiene.Itisalsoafundamentalinputinour critical to allour business operations. It isessential to our manufacturingprocesses, to playinmeetingthischallenge.Accessto,andtheavailabilityof,cleanwateris is a commitment that is globalin scale, we believe thatevery stakeholder has apart ciencies inourwaterconsumption.Althoughtheresponsible useofwaterresources Cargills iscommittedtoprotecting andpreserving water resources byachievingeffi- 303-3 Water andEffluents: Water Withdrawal Sustainability Report Total Water Withdrawal Approved Supplier Water Board Groundwater Water Withdrawal 842,697,253 208,299,855 548,987,718 85,409,680 Value contd. Unit L L L L - ecological footprint. precautions necessarytoensure minimal sitivity initsoperationsthearea, taking ues to act responsibly and exercise sen- vironment. Despitethis,Cargillscontin- on thelong-termsustainabilityofen- water from thisarea hasnegligibleimpact hydro-geological set-up, the sourcing of the mountainrange.Giventhisplentiful several streams originatingatthetopof 3,000 mm/year, andissupplementedby by rainfall,whichfallsatanaverageof versity. The water isreplenished entirely with naturalforest andrich withbiodi- from thetopofasmallmountain covered The bottlingfacilitysources spring water industrialization orurbanization. reserve reduces thepossibilityoffuture ed, andtheproximity toa naturalforest sea level.Thearea isnothighly populat- facility is situated 1,000 meters above of high bio-diversity value. The 40-acre facility at Katool Oya Estate, is an area near ourKistKnuckleswaterbottling The KnucklesMountainRange,located vant lawsandregulations. business decisions, or adhering to rele - it isincorporatingsuchconsiderationsin tion ofbiodiversityinSriLanka;whether committed tocontributingtheprotec - and sustain local livelihoods. Cargills is man health,andevenhelpstosecure clean waterandair, foodsecurity, hu- natural ecosystems.Thiscontributesto and animalspecies,endangered tant forensuringthesurvivalofplant The protection ofbiodiversityisimpor 304-1 Biodiversity - case basis. the companyandhandledon case-by- are channelledtorelevant entitieswithin spondence, orpost.Thesegrievances hotlines, feedbackforms,e-mailcorre- ent communicationchannels,including their grievancesviaachoiceofdiffer Stakeholders are empowered toshare ed in2018/19. impact ontheenvironment were report- No majorgrievancespertainingtoour Environmental GrievanceMechanism monitored through periodicaudits. suppliers withsuchindicatorsshallbe the environment. Thecompliance ofthe similar indicatorsforsupplierimpacton are currently beingevaluatedtoinclude plier makesonsociety. Thecontracts which aimtoassesstheimpactsup- include social performance indicators As notedabove,thesecontractsalready Environmental andSocialStandards. Finance Corporation (IFC) International sectors. These contracts are informed by erates withintheretail and manufacturing agreements witheverysupplier whoop- Cargills entersintoformalcontractual Assessment 308 SupplierEnvironmental posed ontheGroup fornon-compliance. 2018/19, nofinesorpenaltieswere im- regular review ofrelevant legislation.In vironmental risksininvestmentsand pre-emptive measures toassess en- theenvironment.cerning Thisincludes pliance withlawsandregulations con- to address anymattersofnon-com- Cargills has established a formal process 307-1 Environmental Compliance - more robust preventive measures. tion ofshortcomingsallowsustoreinforce ourefforts tomonitorrisks,andincorporate and deepenourcontributiontotheenvironment. We alsorecognize thattheidentifica- an opportunity for us to reflect on our processes, identify the root-causes of issues, Cargills takesitscommitmenttotheenvironment seriously, andsuchgrievancesare Manufactured Capital • • • undertaken towards thisend: improve efficiency andreduce production costs. Anumberofinitiativeshavebeen Cargills iscognizantoftheimportancecontinuousinvestment ininfrastructure to Investments inManufactured Capital 39 restaurants across thecountry, with8newrestaurants beingopenedin2018/19. brand. Intherestaurant sector, alongside one TGIFridaysoperation,KFCoperated retail experience,while retaining the trusted image and ambience of our FoodCity 60 outletsoperatedasnew-look,conceptstores; eachcreating spacious amodern, ence through the introduction of new store formats. At theendof 2018/19, atotalof company embarkedonanexcitinginitiativetofurtherenhancethecustomerexperi- Lanka. Thisrepresents anadditionof28newoutletsinthepastyear. In2015/16,the In theretail sector, 380retail outletsservecustomersinall25districts across Sri permanent distributioncentres withacombined storagecapacityof400,000sq.ft. linked to38milkchillingcentres. Thedrygoodsoperationisundertakenthrough 3 10 collectioncentres; and 113,150 litres ofmilkare procured at330collectionpoints, dairy farmerswhere, every day, around 130MToffruitandvegetables are procured at ties; anda24x7delivery operation. TheGroup also works with20,146agriculture and central processing facilities forfruit,vegetablesandseafood;8foodproduction facili- Across Cargillsdiverseecosystem andsupplychain,manufactured capitalincludes3 in buildingandstrengthening such capacity. high-quality physicalassetscansecure long-termgrowth prospects andthusinvests to create valueforourdiverse stakeholders. Cargills recognizes thatsustainableand Manufactured capitalconsistsof thephysicalassetsthatenableourbusinessunits meeting highervolumesofdemand. fluctuations indemand,recognizing thatanygrowth insalesiscontingentupon Capacity Utilization : minimize thequantityofproduct lossandreduce energyconsumption. to facilitatehigherproductivity andthroughput perhour. Thisalsocontributesto Factory Machines:Maintainandensure ahighleveloffactorymachineavailability quality ofsystems,processes, andourmanufacturingassets. Capital Investments : Regular and diverse investment to ensure and enhance the Manage or enhance manufacturing capacity to meet

CARGILLS (CEYLON) PLC 89 Annual Report 2018 | 2019 Sustainability Report CARGILLS (CEYLON) PLC 90 Annual Report 2018 | 2019 • • • • Commercial • • Distribution andWarehousing • • • • Production • • • Supply ChainPlanningandProcurement and weforesee future valuecreation inthefollowingareas: Investments inmanufactured capital haveledtoacorresponding increase inthesustainable valuecreated forourstakeholders, products ateverystageof production. and SLS certified manufacturing plants. Quality Assurance and Control Technicians also undertake comprehensive testing of our Similarly, allour products are manufactured incompliancewiththehigheststandards inquality, hygiene,andfoodsafety, atISO potential risksthatmayarisefrom any investments orinfrastructure projects priortoimplementation. ronment andsocietybecause ofourmanufactured capital.Therefore, theGroup endeavourstoidentify, evaluate,andcontrol all interests. Asasustainablecorporatecitizen,werecognize thatitisourresponsibility tominimizeadverseimpactsontheenvi- The company is committed to ensuring that the development of manufactured capital also contributes beyond strategic business 203-1 Indirect EconomicImpacts:Infrastructure InvestmentsandServices • Sustainability Report Focus onallsegmentsofthemarket,bothformalandinformal. Identified untappedmarkets. Retention ofexistingcustomers. customerbase. Enhanced localandinternational Automated keymanualprocesses involvedinwarehousing. Optimised distributionnetworkthrough efficient planningandmonitoring. Increased capacityutilisation. Increased efficiencies inenergy, water, andwastemanagement. Industry development,exportopportunities,andjobcreation. Improved assetutilisation. Procurement offruitandvegetables;create exportinitiativestoenhancemarketopportunities. Improved coldchainfacilities toreduce post-harvestloss. Improved pricingstrategies withfarmers,suppliersandtraders. per manhourinorder toevaluatehowsuccessfulwehavebeeninreducing operatingcosts. This inherent trade-off isfactored intoanyassessmentofimprovements inproductivity, where wemeasure production oroutput Material Trade-Offs :Facilitateskillsdevelopmentofemployeesalongsidetheadoptionadvancedtechnologyandautomation. contd. tures, processes, are andpractice.Specificaspectsofourcommitmenttocorporategovernance covered elsewhere inthisreport. continue togrow andevolvetomeet therequirements ofadynamicbusinessenvironment, andaimtostrengthen associatedstruc- Cargills remainsandembracesglobalbestpracticeinthisregard. committed totheprinciplesofsoundcorporategovernance We thus Corporate Governance Approximately 7%ofourtotal employeebasehasover15yearsofworkexperienceacross theCargillsGroup. andbuildupontheseideasthroughaims toharness focusedtrainingprograms andcross-functional exposure. Cargills placeshighvalueonitstalentedemployeebase,andtheknowledgeideastheybringtocompany. Thecompany Ideas the monitoringofinfringementsandstreamlined registration processes. The Group takesstepstolegally protect intellectualproperty around thesebrandsandmaintainuniquebrandidentificationthrough across theRetail,FMCG,Restaurant, andFinancialServicesindustries. My Choice.AsCargillsentersits175thyear, wereflectthathasseentheCargillsbrandemergeasanationalicon onajourney promotions, weaimtokeep ourbrandsfresh andsalient,beitMagic,Kotmale,Kist,KistBiscuits,Knuckles,Goldi,Sams,or spected householdnamesinthecountry’s consumermarket.Through frequent traditionalanddigitalmarketingcampaigns Central tothedevelopmentofintellectualcapitalisprotection andpromotion ofourbrands;eachwhichhavebecomere - Brands confidentiality agreements, inlinewithnationallawsandregulations on intellectualproperty. ment ofideas.Itisforthisreason thattheGroup invests inprotecting itsintellectualproperty through employmentcontractsand and sustain intellectual capital must operate in an environment that fostersandprotects constructive dialogue and thedevelop- that developmentofintellectualcapitalisvitaltosustainedbusinessgrowth. TheGroup recognizes, however, thatefforts tobuild Whether it is sharing knowledge, building relationships, seeding innovative ideas, or protecting intellectual property, Cargills believes Intellectual Capital

CARGILLS (CEYLON) PLC 91 Annual Report 2018 | 2019 Sustainability Report CARGILLS (CEYLON) PLC 92 Annual Report 2018 | 2019 3. Sustainability Report GRI Standard Disclosures GRI 102:General General Disclosures GRI 101:Foundation GRI CONTENTINDEXTOOL Disclosure 102-56 External assurance 102-56 External 102-55 GRIcontextindex 102-54 Claimsofreporting inaccordance withGRIStandards 102-52 Reportingcycle 102-51 Dateofmostrecent report 102-50 Reportingperiod 102-49 Changesinreporting 102-48 Restatementofinformation 102-47 Materialtopics 102-46 Definingreport contentandtopicboundary 102-45 Entitiesincludedintheconsolidatedfinancialstatements raised 102-44 Keytopicsandconcerns 102-43 Approach tostakeholderengagement 102-42 Identifyingandselectingstakeholders 102-41 Collectivebargainingagreements 102-40 Listofstakeholdergroups Structure102-18 Governance 102-16 Values, principles,normsandstandards ofbehaviour 102-14 Statementfrom seniordecision-maker 102-13 Membershipofassociations initiatives 102-12 External 102-11 Precautionary Principle orapproach 102-10 Significantchangestotheorganisationandsupplychain 102-9 Supplychain 102-8 Informationonemployeesandotherworkers 102-7 Scaleoftheorganisation 102-6 Marketsserved 102-5 Ownershipandlegalform 102-4 Locationofoperations 102-3 Locationofheadquarters 102-2 Activities,brands,products andservices 102-1 NameofOrganisation contd. Page Number 99-101 71-72 16-18 11-13 14-15 120 IBC IBC IBC IBC 8-9 93 03 03 03 03 03 03 73 73 70 70 81 70 28 65 81 81 38 80 22 02 Omission SDG GRI Standard Performance GRI 201:Economic Approach Management GRI 103: Economic Performance Material topics Presence GRI 202:Market Approach Management GRI 103: Market Presence Economic Impacts GRI 203:Indirect Approach Management GRI 103: Indirect EconomicImpacts corruption GRI 205:Anti- Approach Management GRI 103: Anti-Corruption Behaviour Practices Procurement GRI 204: Approach Management GRI 103: Procurement Practices Disclosure 201-3 Definedbenefitplanobligationsandotherretirement plans to climatechange 201-2 Financialimplicationsandotherrisksopportunitiesdue 201-1 Direct economicvalue generatedanddistributed 103-3 EvaluationoftheManagementApproach 103-2 TheManagementApproach anditscomponents 103-1 Explanationofmaterialtopicsanditsboundaries local minimumwage 202-1 Ratiosofstandard entry levelwagebygendercompared to 103-3 Evaluationofthemanagementapproach 103-2 Themanagementapproach anditscomponents 103-1 ExplanationofthematerialtopicanditsBoundary 203-2 Significantindirect economic impacts 103-3 Evaluationofthemanagementapproach 103-2 Themanagementapproach anditscomponents 103-1 ExplanationofthematerialtopicanditsBoundary 205-3 Confirmedincidentsofcorruption andactionstaken and procedures 205-2 Communicationandtraining aboutanti-corruptionpolices 103-3 Evaluationofthemanagementapproach 103-2 Themanagementapproach anditscomponents 103-1 ExplanationofthematerialtopicanditsBoundary 204-1Proportion ofspendingonlocalsuppliers 103-2 Themanagementapproach anditscomponents 103-3 Evaluationofthemanagementapproach 103-1 ExplanationofthematerialtopicanditsBoundary Page Number 77 76 75 75 75 72 78 78 78 72 82 82 82 72 86 86 86 86 72 76 76 76 72 Omission SDG 8 & 10 5 ,8 &12 4,6

CARGILLS (CEYLON) PLC 93 Annual Report 2018 | 2019 Sustainability Report CARGILLS (CEYLON) PLC 94 Annual Report 2018 | 2019 Sustainability Report GRI Standard GRI 302:Energy Approach Management GRI 103: Energy Environmental Behaviour competitive GRI 206:Anti- Approach Management GRI 103: Anti-Competitive Behaviour GRI 303:Water Approach Management GRI 103: Water Approach Management GRI 103: Biodiversity GRI 304:Biodiversity and Waste GRI 306:Effluents Approach Management GRI 103: Effluents andWaste Disclosure 302-1 Energyconsumptionwithintheorganization 103-3 EvaluationoftheManagementApproach 103-2 TheManagementApproach anditscomponents 103-1 Explanationofmaterialtopicsanditsboundaries monopoly practices 206-1 Legalactionsforanti-competitivebehaviour, anti-trust,and 103-3 Evaluationofthemanagementapproach 103-2 Themanagementapproach anditscomponents 103-1 ExplanationofthematerialtopicanditsBoundary 303-4 Water discharge 303-3 Water withdrawal 103-3 Evaluationofthemanagementapproach 103-2 Themanagementapproach anditscomponents 103-1 ExplanationofthematerialtopicanditsBoundary 103-1 ExplanationofthematerialtopicanditsBoundary biodiversity 304-2 Significantimpactsofactivities,products, andserviceson protected areas. to, protected areas andareas ofhighbiodiversityvalueoutside 304-1 Operationalsitesowned,leased,managedin,oradjacent 103-3 Evaluationofthemanagementapproach 103-2 Themanagementapproach anditscomponents 306-1 Water discharge by qualityanddestination 103-3 EvaluationoftheManagement Approach 103-2 Themanagementapproach anditscomponents 103-1 ExplanationofthematerialtopicanditsBoundary contd. Page Number 88 88 88 72 86 86 86 72 89 89 89 89 72 72 89 89 89 89 89 89 89 72 Omission 6 &14 SDG & 13 7,12 12 &15 12 &15 12 GRI Standard Approach Management GRI 103: Supplier Environmental Assessment Compliance Environmental GRI 307: Approach Management GRI 103: Environmental Compliance Employment GRI 401: Approach Management GRI 103: Employment Social Assessment Environmental GRI 308-Supplier Approach Management GRI 103: Occupational HealthandSafety and education GRI 404:Training Approach Management GRI 103: Training andeducation and Safety Occupational Health GRI 403: Disclosure 103-3 Evaluationofthemanagementapproach 103-2 Themanagementapproach anditscomponents 103-1 ExplanationofthematerialtopicanditsBoundary 307-1 Non-CompliancewithEnvironmental lawsandregulations 103-3 Evaluationofthemanagementapproach 103-2 TheManagementApproach anditscomponents 103-1 Explanationofmaterialtopicsanditsboundaries provided totemporaryorpart-time employees 401-2 Benefitsprovided to full-timeemployeesthatare not 103-3 Evaluationofthemanagementapproach 103-2 TheManagementApproach anditscomponents 103-1 Explanationofmaterialtopicsanditsboundaries criteria 308-1 Newsuppliersthat were screened usingenvironmental 401-3 Parental leave 103-1 Explanationofmaterialtopicsanditsboundaries programmes 404-2 Programs forupgradingskillsandtransitionassistance 404-1 Average hoursoftrainingperyearemployee 103-2 EvaluationoftheManagement Approach 103-2 Themanagementapproach anditscomponents 103-1 ExplanationofthematerialtopicanditsBoundary 403-9 Work -Relatedinjuries 103-3 Evaluationofthemanagementapproach 103-2 TheManagementApproach anditscomponents Page Number 90 90 72 89 89 89 72 78 78 78 72 90 78 72 79 80 79 79 72 78 78 78 Omission SDG 12 8 8 8

CARGILLS (CEYLON) PLC 95 Annual Report 2018 | 2019 Sustainability Report CARGILLS (CEYLON) PLC 96 Annual Report 2018 | 2019 Sustainability Report GRI Standard opportunity and equal GRI 405:Diversity Approach Management GRI 103: Diversity andequalopportunity discrimination GRI 406:Non- Approach Management GRI 103: Non-discrimination Compulsory Labour GRI 409:Forced or Approach Management Forced orCompulsoryLabour Labour GRI 408:Child Approach Management GRI 103: Child Labour Collective Bargaining Association and GRI 407:Freedom of Approach Management GRI 103: Freedom ofAssociationand CollectiveBargaining Disclosure 405-2 Ratioofbasicsalaryandremuneration ofwomentomen bodiesandemployees 405-1 Diversityofgovernance 103-3 Evaluationofthemanagementapproach 103-2 Themanagementapproach anditscomponents 103-1 ExplanationofthematerialtopicanditsBoundary 406-1 Incidentsofdiscriminationandcorrective actionstaken 103-3 Evaluationofthemanagementapproach 103-2 Themanagementapproach anditscomponents 103-1 ExplanationofthematerialtopicanditsBoundary forced orcompulsorylabour 409-1 Operationsandsuppliersatsignificantriskforincidents of 103-3 Evaluationofthemanagementapproach 103-2 TheManagementApproach anditscomponents 103-1 Explanationofmaterialtopicsanditsboundaries child labour 408-1 Operationsandsuppliersatsignificantriskforincidents of 103-3 Evaluationofthemanagementapproach 103-2 TheManagementApproach anditscomponents 103-1 ExplanationofthematerialtopicanditsBoundary association andcollectivebargainingmaybeatrisk 407-1 Operationsandsuppliersinwhichtherighttofreedom of 103-3 Evaluationofthemanagementapproach 103-2 Themanagementapproach anditscomponents 103-1 Explanationofmaterialtopicsanditsboundaries contd. Page Number 81 80 80 80 72 81 81 81 72 81 81 81 72 81 81 81 72 81 81 81 72 Omission SDG 8 8 GRI Standard communities GRI 413:Local Approach Management GRI 103: Local Communities Health andSafety GRI 416:Customer Approach Management GRI 103: Customer HealthandSafety Social Assessment GRI 414:Supplier Approach Management GRI 103: Supplier SocialAssessment Compliance Socioeconomic GRI 419: Approach Management GRI 103: Socioeconomic Compliance and labelling GRI 417:Marketing Approach Management GRI 103: Marketing andlabelling Disclosure assessments anddevelopmentprogrammes 413-1 Operationswithlocalcommunityengagement,impact 103-2 EvaluationoftheManagementApproach 103-2 TheManagementApproach anditscomponents 103-1 Explanationofmaterialtopicsanditsboundaries and servicecategories 416-1 Assessmentofthehealthandsafetyimpactsproduct 103-2 EvaluationoftheManagementApproach 103-2 TheManagementApproach anditscomponents 103-1 Explanationofmaterialtopicsanditsboundaries taken 414-2 Negativesocialimpactsinthesupplychainandactions 414-1 Newsuppliersthatwere screened usingsocialcriteria 103-3 Evaluationofthemanagementapproach 103-2 Themanagementapproach anditscomponents 103-1 ExplanationofthematerialtopicanditsBoundary economic area 419-1 Non-compliancewithlawsandregulations inthesocialand 103-3 Evaluationofthemanagementapproach 103-2 Themanagementapproach anditscomponents 103-1 ExplanationofthematerialtopicanditsBoundary service informationandlabelling product417-2 Incidentsofnon-complianceconcerning and 417-1 Requirements forproduct andservicelabelling 103-2 EvaluationoftheManagementApproach 103-2 TheManagementApproach anditscomponents 103-1 Explanationofmaterialtopicsanditsboundaries Page Number 82 82 82 72 86 86 86 72 81 81 81 81 72 87 87 87 72 87 86 86 86 72 Omission SDG & 12 4, 6 3

CARGILLS (CEYLON) PLC 97 Annual Report 2018 | 2019 Sustainability Report CARGILLS (CEYLON) PLC 98 Annual Report 2018 | 2019 gagement are: The LimitedAssuranceSustainabilityIndicatorscovered byourlimitedassuranceen- year ended31March 2019(the "Report"). Indicators are includedinthe Cargills(Ceylon)PLC’s IntegratedAnnualReportforthe Indicators as identified below for the year ended 31 March 2019. The Sustainability provide reasonable assuranceandlimitedinrespect oftheSustainability We havebeenengagedby thedirectors ofCargills(Ceylon)PLC(“theCompany”)to INDEPENDENT ASSURANCEREPORT TOCARGILLS(CEYLON)PLC Report Independent Assurance appropriate toprovide abasisforourconclusions. lined in this report. We believe that the evidence we have obtained is sufficient and Our conclusion has been formed on the basis of, and is subject to, the matters out- Our conclusions Manufactured Capital Natural Capital Intellectual Capital Social and Relationship Capital Human Capital Capital Financial Information provided on following capitals Non-Financial Highlights Indicators Sustainability Assurance Limited Financial Highlights Indicators Sustainability Assured Integrated Annual Report Page Report Annual Integrated Integrated Annual Report Page Report Annual Integrated 89-90 76-81 87-89 81-87 74-75 11-12 91 13 Guidelines. tive SustainabilityReportingStandards solidated SetofGlobalReportingInitia- presented inaccordance withtheCon- all materialrespects, beenprepared and year ended31March 2019, havenotin ity Indicators, as defined above, for the that theLimitedAssuranceSustainabil- to ourattentionthatcausesusbelieve as describedbelow, nothinghascome dures performedandevidence obtained, Based onthelimitedassuranceproce - Indicators Limited AssuranceSustainability ards Guidelines. Initiative SustainabilityReportingStand- the ConsolidatedSetofGlobalReporting pared andpresented inaccordance with 2019 are, inallmaterial respects, pre- above, fortheyearended31March ance SustainabilityIndicators,asdefined In ouropinion,theReasonableAssur Indicators Reasonable AssuranceSustainability - defined above. bility Indicatorsincludedinthe Report, as tion oftheLimitedAssurance Sustaina- clusion onthepreparation andpresenta- Indicators andalimitedassurancecon- the Reasonable Assurance Sustainability pany’s preparation andpresentation of able assuranceconclusionontheCom- Our responsibility istoexpress areason- Our responsibility pass allsignificantbusinessunits. that anychangesinreporting encom- tion systemsare properly updatedand and Reportare properly trained,informa- ration andpresentation ofthedescription suring thatstaff involvedwiththe prepa- Management isalsoresponsible foren- to itsactivities. plies with laws and regulations applicable ing andensuringthattheCompanycom- ing anddetectingfraudforidentify- Management isresponsible forprevent- statement whetherduetofraudorerror. dicators thatare free from materialmis- the LimitedAssuranceSustainabilityIn- Assurance Sustainability Indicators and able thepreparation ofthe Reasonable ment determinesare necessary toen- controlsing suchinternal asmanage- These responsibilities includes establish- Guidelines. tiative Sustainability Reporting Standards Consolidated Set of Global Reporting Ini- ability Indicatorsinaccordance withthe tors andtheLimitedAssuranceSustain- sonable AssuranceSustainabilityIndica- preparation andpresentation oftheRea- Management isresponsible forthe Management's Responsibility entation oftheReport. control overthepreparation andpres- effectiveness oftheCompany'sinternal es ofexpressing aconclusionastothe circumstances, but not for the purpos - procedures thatare appropriate inthe Indicators inorder todesignassurance the Reasonable Assurance Sustainability to thepreparation andpresentation of have considered control internal relevant In making those risk assessments, we Indicators whetherduetofraudorerror. the Reasonable Assurance Sustainability of therisksmaterialmisstatement our judgment,includingtheassessment able assuranceengagementdependon The procedures selectedinourreason- Indicators Reasonable AssuranceSustainability Reasonable assuranceover misstatement. ability Indicatorsare free from material whether theLimitedAssuranceSustain- statement andlimitedassuranceabout Indicators are free from materialmis- Reasonable AssuranceSustainability sonable assuranceaboutwhetherthe perform theengagementtoobtainrea - SLSAE 3000requires thatweplanand of Chartered AccountantsofSri Lanka. the CodeofEthicsissuedbyInstitute ence andotherethicalrequirements of We havecompliedwith the independ- countants ofSriLanka. issued bytheInstituteofChartered Ac- ical FinancialInformation(SLSAE3000) other thanAuditsorReviewsofHistor SLSAE 3000: Assurance Engagements Standard on Assurance Engagements ment inaccordance withSriLanka We conductedourassuranceengage- - • • • propriate. Theseprocedures included: analytical andotherprocedures, asap- Sustainability Indicators,andapplying preparation oftheLimited Assurance primarily ofpersonsresponsible forthe dicators consistedofmakingenquiries, the LimitedAssuranceSustainabilityIn- Our limitedassuranceengagementon Sustainability Indicators Limited assuranceontheAssured surance SustainabilityIndicators. the calculationsofReasonableAs- by the Company, and re-computation of the reasonableness ofestimates made from which it was obtained, evaluating non-financial informationtothesources ing ofthecompilationfinancialand in theReport,obtaininganunderstand- Assurance SustainabilityIndicatorswith- paring andpresenting the Reasonable Guidelines, usedbytheCompanyinpre- tiative Sustainability Reporting Standards Consolidated Set of Global Reporting Ini- the suitabilityofcriteria,being able AssuranceSustainabilityIndicators, ing theappropriateness oftheReason- Our engagementalsoincludedassess- Assurance Sustainability Indicators; for thepreparation oftheLimited and selectedsitelevelresponsible enquiries ofrelevant staff atcorporate stakeholder groups; issues fortheCompany's key processes for determining material an understandingoftheCompany's enquiries ofmanagementtogain business; implementation oftheseacross the for materialissues,andthe sustainability strategyandpolicies and selectedsitelevelconcerning and relevant staff atcorporate interviews withseniormanagement

CARGILLS (CEYLON) PLC 99 Annual Report 2018 | 2019 Sustainability Report CARGILLS (CEYLON) PLC 100 Annual Report 2018 | 2019 Assurance SustainabilityIndicators. ble assuranceconclusionontheLimited cordingly, we do notexpress areasona- ance engagementbeenperformed. Ac- been obtainedhadareasonable assur er thantheassurancethatwouldhave ance engagementissubstantiallylow- of assurance obtained in alimitedassur gagement, andconsequentlythelevel than for, areasonable assuranceen- and timing from, and are less in extent assurance engagementvaryinnature The procedures performedinalimited • • • • Report Independent Assurance of ourassuranceengagement. our understandingobtainedaspart material inconsistenciesbasedon material misstatementsoffactor to determine whether there are any reading theremainder oftheReport Company; the sustainabilityperformanceof knowledge of,andexperiencewith, they are inlinewithour overall in theReporttodeterminewhether Sustainability Indicatorspresented reading theLimited Assurance included intheReport; information hasbeenappropriately to determinewhetheralltherelevant underlying sources onasample basis Sustainability Indicatorstorelevant comparing theLimitedAssurance of thereported information; Indicators, includingtheaggregation the LimitedAssurance Sustainability methods used to collect and report implementation ofthesystemsand enquiries aboutthedesignand - - 1 July2019 Colombo ACCOUNTANTSCHARTERED (Signed) conclusions wehavereached. dependent assurancereport, orforthe the Company for our work, for this in- deny anyliabilitytopartyotherthan accept orassumenoresponsibility and the fullestextentpermittedbylaw, we part thereof) willdosoatits ownrisk.To and choosestorely onour report (orany access toourreport oracopy thereof other thantheCompanywhoobtains pose orinanyothercontext.Anyparty us other than the Company, for any pur party wishingtoacquire rights against suitable tobeusedorrelied onbyany Our report shouldnotbe regarded as Restriction ofuseourreport any othercontext. Guidelines andfornootherpurposeorin tive SustainabilityReportingStandards solidated SetofGlobalReportingInitia- presented inaccordance withtheCon- tainability Indicatorsare prepared and Reasonable andLimitedAssuranceSus- in determiningwhethertheCompany's the purposeofassistingDirectors been prepared for the Company for gagement, thisassurancereport has In accordance with the terms of our en- Purpose ofourreport contd. - Financial Statements

Annual Report of the Directors’ on the Affairs of the Company 103 Statement of Directors’ Responsibility 107 Independent Auditor’s Report 108 Financial Performance 112 Statement of Profit or Loss and Other Comprehensive Income 113 Statement of Financial Position 114 Statement of Changes in Equity – Group 115 Statement of Changes in Equity – Company 116 Statement of Cash Flows 117 Notes to the Financial Statements 119

Results andDividends The accountingpoliciesadoptedinthepreparation ofthefinancialstatementsare givenonthepages119to190. ACCOUNTING POLICIES The independentauditors’report issetoutonpages108–111. AUDITORS’ REPORT Report oftheBoard. pany andtheGroup forthe financialyearended31March 2019givenonpages113to119formanintegralpartoftheAnnual Financial Position,Statements of ChangesinEquity, StatementsofCashFlowsandNotestothefinancialCom- The auditedfinancialstatementscomprisingtheStatementsofProfit orLossandOtherComprehensive Income,Statementsof FINANCIAL STATEMENTS f) e) d) c) b) a) The Group: the yearthere were nosignificantchangesintheprincipalactivitiesofGroup. Manufacturing ofandTrading inFoodandBeverageDistributionare theprincipalactivitiesofGroup ofcompanies.During ACTIVITIES The Chairman'sstatementdescribesinbrieftheGroup's affairs andimportant eventsoftheyear. REVIEW OFTHEYEAR Directors on1July2019. consolidated auditedfinancialstatementsoftheGroup fortheyearended31March 2019whichwere approved bytheBoard of The Directors are pleasedtosubmittheAnnualReport togetherwiththeauditedfinancialstatementsofCargills(Ceylon)PLCand on the Affairs oftheCompany Annual ReportoftheDirectors' The profit attributabletoshareholders was Less: Amountattributabletonon controlling interest Profit fortheyearaftertaxationamountedto For theyearended31stMarch Produces, importanddistribute agriculturalseeds. Operates aHotelinthehill-country. Operates the'KentuckyFriedChicken'and'TGIF'franchiserestaurants inSriLanka jams, cordials, sauces,and biscuits. Manufactures/produces/processes andmarketsprocessed meat,dairyicecream, yoghurt,cheese,milk,nectars&fruitjuices, Distributes worldrenowned FMCGbrands. Operates achainofsupermarketsandconveniencestores 1,980,246 2,033,813 Rs. ‘000 (53,567) 2019 Group 3,200,534 3,330,921 (130,387) Rs. ‘000 2018 1,540,019 1,540,019 Rs. ‘000 2019 Company -

3,174,834 3,174,834 Rs. ‘000 2018 - 103 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 104 Annual Report 2018 | 2019 The movementofproperty, plantandequipmentduringtheyearisgivenin Note 12tothefinancialstatementsonpage141. Statement ofCashFlowsonpage118. outlay oftheCompanyonproperty, plantandequipmentamountedtoRs.76Mn(2018-92Mn). Detailsare giveninthe The Group’s capitaloutlayonproperty, plantandequipmentamountedtoRs.5,233Mn(2018-4,637 Mn)whilethecapital CAPITAL EXPENDITURE given inNote21tothefinancialstatementsonpage160. Stated Capital of the company as at31st March 2019 was Rs. 6,531 Mn (2018 - Rs. 6,531 Mn).Thedetail of the stated capital is STATED CAPITAL the totalreserves oftheCompanystandsatRs.6,111Mn(2018-Rs.4,980Mn). After theabovementionedappropriations, thetotalreserves oftheGroup standsat Rs 10,890Mn(2018-Rs.9,798Mn),while RESERVES subsequent year'sfinancialstatements.(refer Note33tothefinancialstatementsonpages179and180) on the Affairs oftheCompany Annual ReportoftheDirectors' A finaldividend of Rs.4.10pershare (Rs.1,054.6Mn)is proposed for theyearended31 An interimdividendofRs1.90pershare (Rs.486.4Mn)waspaidon28November2018fortheyearended31stMarch 2019. To whichprofit brought forward from previous year is added of Leaving anunappropriated balancetobecarriedforward Interim Rs.1.90pershare forFinancial Year 2018/19 Dividend paidfortheyearended31stMarch 2019 Interim Rs.4.10pershare forFinancial Year 2017/18 Interim Rs.1.90pershare forFinancial Year 2017/18 Dividend paidfortheyearended31stMarch 2018 follows: From whichyourdirectors havemadeappropriation as Leaving anamountavailabletotheappropriation of Capitalisation ofreserves Transfer from revaluation reserve upondisposal Other comprehensive income For theyearended31stMarch contd. 7,743,933 9,210,192 9,696,592 Rs. ‘000 486,400 (27,587) 2019 Group - - - - (2,709,757) 8,214,904 7,843,183 9,187,183 Rs. ‘000 918,400 425,600 522,601 (41,099) st 2018 March 2019.Thiswill be reflected inthe - 4,814,260 5,854,635 6,341,035 Rs. ‘000 486,400 (13,244) 2019 Company - - - -

(2,709,757) 5,714,490 4,814,260 6,158,260 Rs. ‘000 918,400 425,600 (21,307) 2018 - - and appointmenthavebeenindicated. names datesofcessation,resignation, other thantheDirectors againstwhose pany throughout theyearunderreview, cover havebeendirectors ofthecom- The Directors listedontheinnerback DIRECTORATE page 195and196. the 20largestshareholders isgivenon to thesizeofholdingandnames An analysisofshareholdings according 2019 (31stMarch 2018-1,903). istered shareholders as at 31st March Holdings PLCandthere were 1,811reg- The CompanyisasubsidiaryofCT SHAREHOLDINGS in thefinancialstatements. buildings are given on page 193 and 194 The portfoliooftherevalued landand market valuesofsuchproperties. amounts are notinexcess ofthecurrent tors are oftheopinionthat therevalued ments onpage143and144.TheDirec - are giveninNote12tothe financial state- revalued asat31stMarch 2018.Details The landandbuildingsoftheGroup were MARKET VALUE OFPROPERTIES 147. 13 totheFinancialStatementsonpage and the Company are disclosed in Note investment property heldbytheGroup and Rs.3,515Mnrespectively. Detailsof March 2019amountedtoRs.1,819Mn Group andtheCompanyasat31st classified asinvestmentproperty ofthe The fairvalueoflandandbuildings INVESTMENT PROPERTY Companies ActNo.07of2007. The company maintains an Interests Register conforming to the Provisions of the INTERESTS REGISTER entered intobythecompanyduringyear. ing Rules of the Colombo Stock Exchange in respect of the related party transactions Directors’ hereby confirmthattheCompanyisincompliancewithsection9ofList- RULES STATEMENT OFCOMPLIANCEWITHRELATED PARTY TRANSACTIONS relation tothebusinessofcompany. directors. Thedirectors havehadnodirect orindirect interest inanyothercontracts financial statementsonpage181to182andhavebeendeclared atmeetingsofthe Directors’ interests intransactionsofthe company are disclosed in Note34.3tothe DIRECTORS’ INTERESTSINCONTRACTS ed financialstatements. The remuneration ofthedirectors isgiveninNote34.1onpage180totheconsolidat- DIRECTORS’ REMUNERATION rectors. The re-election oftheretiring Directors hastheunanimoussupportofother Di- 211 (1)and(2)oftheCompaniesActNo.072007. passed seventyyearsofage,andoffer themselvesforre-election intermsofSection retire intermsofSection210(2)(b)theCompaniesActNo.072007havingsur Messrs. A.T. P. Edirisinghe, SunilMendis,E.A.D.Perera andP. D.Rodrigoare dueto being eligibleoffers himselfforre-election. Mr. J. C. Page retires by rotation in terms of the Company’s Articles of Association and the Board ofDirectors. eligible offer themselves for re-appointment, on the unanimous recommendation of 25 February2019)retire intermsoftheCompany’s ArticlesofAssociationandbeing Messrs. Yudy KanagasabaiandAsokaPieriswhowere appointedduringtheyear(on attaining theageof70years,whichhehadattainedon21March 2018. (a) attheconclusionoflastAnnualGeneralMeetingheldon27August2018after Mr. Anthony A. Page retired from the directorate in terms of Section 210 (1) and (2) - 105 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 106 Annual Report 2018 | 2019 The Directors' shareholdings intheCompanywere asfollows: DIRECTORS’ SHAREHOLDINGS on the Affairs oftheCompany Annual ReportoftheDirectors' The Chairman’s message describesthefuture developments oftheGroup. FUTURE DEVELOPMENTS ees havebeenmadeoraccrued forthereporting date. ofSriLankaand on behalfofemploy- All statutorypaymentsdueto the Government STATUTORY PAYMENTS statements onpage179and180. Events aftertheReportingperiodofCompanyare giveninNote33tothefinancial EVENTS AFTERTHEREPORTING PERIOD disclosed intheabovenote. than thatofanauditor)withthecompanyoranyitssubsidiaries otherthanthose 133. Asfarasthedirectors are aware, theauditorsdonothaveanyrelationship (other fee paidtotheAuditorsare disclosedinnote08tothefinancialstatementsonpage directors havebeenauthorizedtodeterminetheremuneration oftheAuditorsand of thecompanyintermsSection158CompaniesActNo.072007.The Messrs. KPMGare deemed re- appointedasAuditorsattheAnnualGeneralMeeting AUDITORS nity projects duringthefinancial year. addition theGroup madeinvestments amountingtoRs.26.5Mnforvariouscommu- During theyeardonationsamountingtoRs.185,000were madebytheCompany. In DONATIONS Mr. Yudhishtran Kanagasabai Mr. AsokaPieris Mr. DevaRodrigo Mr. Errol Perera Mr. JosephPage Mr. SunilMendis Mr. SanjeevGardiner Mr. PriyaEdirisinghe Mr. ImtiazAbdul Wahid Mr. RanjitPage Mr. LouisPage As at31stMarch 17,335,169 520,000 11,429 22,857 22,857 57,143 42,011 4,571 2019 - - - contd. 17,142,964 520,000 11,429 22,857 22,857 57,143 42,011 4,571 2018 - - - 1 July2019 Company Secretary Sarath Dissanayake (Signed.) Managing Director/DeputyCEO Imtiaz AbdulWahid (Signed.) Deputy Chairman/CEO Ranjit Page (Signed.) For andonbehalfoftheBoard foreseeable future. sources tocontinueitsoperations inthe satisfied thattheGroup has adequatere- from themanagement, directors are cial statements.Aftermakingenquiries Basis in preparingConcern these finan- The Directors haveadopted theGoing GOING CONCERN Group operates. and the communities within which the have abeneficialeffect on the customers and provide products andservicesthat the detrimentaleffect ontheenvironment aries operateinamannerthatminimizes isfied thatthecompanyanditssubsidi- the management,directors are sat- After makingadequateenquiries from ENVIRONMENTAL PROTECTION the ColomboStockExchange. Companies ActandtheListing Rulesof provide theinformationrequired bythe the SriLankaAccountingStandards and pared andpresented in accordance with ing thatthefinancialstatementsare pre- Company andtheGroup andforensur accuracy, the financial position of the to beabledisclosewithreasonable maintain adequateaccountingrecords ing thattheCompanyandGroup The Directors are responsible forensur estimates. reasonable andprudentjudgments LKASs) whichhavebeensupportedby Lanka Accounting Standards (SLFRSs/ presented inaccordance withtheSri statements have been prepared and The Directors confirmthat thefinancial financial statements. basisforthepreparationcern ofthese Directors haveadoptedthe goingcon- and theforecasts forthe next year, the tion oftheCompanyandGroup Considering thepresent financial posi- 111. in theAuditors’Reportonpages108to differ from thatoftheDirectors, issetout gard tothesefinancialstatements, which The responsibility oftheAuditors withre- counting policiesandexplanatorynotes. Equity fortheyeartogetherwithac- Statement and Statement of Changes in Comprehensive income,CashFlows Statements ofProfit orLossandOther Financial Positionasatyearenddateand for each year comprising a Statementof prepare andpresent financialstatements es the responsibility on the Directors to The CompaniesActNo.07of2007plac- Statement ofDirectors’Responsibility - - 1 July2019 Company Secretary Sarath Dissanayake (Signed.) By order oftheBoard financial statements. date orhavebeenprovided forinthese utory payments have been made up to edge and belief, are satisfied that all stat- The Directors, tothebestoftheir knowl- the IndependentAuditors’Report. to thefinancialstatementsissetoutin ity oftheIndependentAuditorsinrelation out theirresponsibilities. The responsibil- sider appropriate andnecessary tocarry out anyreviews andtests that theycon- Auditors witheveryopportunitytocarry The Directors are required to provide the tively duringtheyear. the control procedures operatedeffec - ularities. TheDirectors are satisfiedthat from unduerisks,fraudsand otherirreg- Company andtheGroup are protected ble butnotabsoluteassurancethatthe and implementedtoobtainreasona- controlternal systemhasbeendesigned the CompanyandofGroup. Thein- proper managementoftheresources of The Directors are responsible for the 107 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 108 Annual Report 2018 | 2019 thereon, andwedonotprovide aseparateopiniononthesematters. of ouraudittheCompanyfinancialstatementsandconsolidated financialstatementsasawhole,andinformingouropinion financial statementsandtheconsolidated ofthecurrent period.These matterswere addressed inthecontext Key auditmattersare thosemattersthat,inourprofessional judgment,were ofmostsignificanceinouraudittheCompany KEY AUDITMATTERS statements. Ouropinionisnotmodifiedinrespect ofthismatter. Group’s positionisnotheldbytheAuthorities,impactonCompany andtheGroup is disclosedinNote17tothefinancial assets orinvestmentduetotheuncertaintiesthatexist withrespect oftheinterpretation oftheapplication. Intheevent icant judgmentinvolvedindeterminingwhetherthelandsheld bytheentityandusedinbusinessare tobeconsidered ascapital investment assets.BasedonourunderstandingoftheInland RevenueActandlegaladviceprovided bytheexpert,there issignif- We drawattentiontoNote17ofthefinancialstatementswherein theGroup hasconsidered alllandheldandusedinbusinessas EMPHASIS OFMATTER appropriate toprovide abasisforouropinion. ethical responsibilities inaccordance withtheCodeofEthics.We believethatthe auditevidencewehaveobtainedissufficient and ent oftheGroup inaccordance withtheCodeofEthicsissuedbyCASriLanka(CodeEthics),andwehavefulfilledourother further describedintheAuditor’s ResponsibilitiesfortheAuditofFinancialStatementssectionourreport. We are independ- We conductedourauditin accordance withSriLankaAuditingStandards (SLAuSs). Ourresponsibilities underthosestandards are BASIS FOROPINION ended inaccordance withSriLanka AccountingStandards. position oftheCompanyandGroup asatMarch 31,2019,andoftheirfinancialperformancecashflowsfortheyearthen In ouropinion,theaccompanyingfinancialstatementsofCompanyandGroup giveatrueandfairviewofthefinancial tory informationsetoutonpages113to190oftheAnnualReport. year thenended,andnotestothefinancialstatements,includingasummaryofsignificantaccountingpoliciesother explana- statement ofprofit orloss and othercomprehensive income,statementofchangesinequityandcashflowsforthe the Companyanditssubsidiaries(“theGroup”), whichcomprisethestatementoffinancialpositionasatMarch 31,2019,andthe We have audited the financial statements of Cargills (Ceylon) PLC (“the Company”) and the consolidated financial statements of OPINION Report Independent Auditor’s involved thisisconsidered tobe akeyauditmatter. level ofjudgments,estimates,numberitemsandlocations based onlowerofcostandnetrealizable value.Giventhe of slowmovingandobsoleteinventoriestoarriveatvaluation then involvedinarrivingatprovisions againstcostinrespect moving tobeconsidered for provision/write offs; estimatesare with regard tocategorization of stock as obsolete and/or slow Due tothechangeinconsumerdemandsjudgmentisexercised assets oftheGroup consistedof inventory. and diversifiedproduct range. At31March 201917%oftotal The Group holds a significant level of inventory across a broad Carrying amountofinventories-Group valuations are sensitivetothekey assumptionsapplied. the perch price,valuepersquare footandlocationbecausethe significant judgmentandestimation,particularlydetermining matter becausethedeterminationoffairvaluesinvolves We identifiedvaluationof investment properties asakeyaudit industry standards. independent property valuerinaccordance withrecognized properties isbasedonvaluationsperformedbyaqualified Management’s assessmentoffairvalueinvestment Valuation ofInvestmentProperty –Group The KeyAuditMatter • • • • Our auditprocedures included: • • • Our auditprocedures included: Our Response that are alsoadjustedperiodically. throughout theperiodtoassesslevelofcountvariances counts performedbythemanagementandthird parties manner. Alsoweevaluatedtheresults oftheothercycle stocks andstockshortagesthatare writtenoff inatimely each countlocationstoidentifydamagedstocks,expired effectiveness ofthephysicalcountcontrols inoperationat to performing sample test counts, we assessed the the Subsidiary’s supermarkets and warehouses. Inaddition Attending stockcountsasattheyearendasampleof obsolete orslowmoving. Further wechallengedtheCompany’s categorizationas and obsoleteinventorieshadbeenappropriately identified. levels, tosalesdatacorroborate whetherslowmoving write offs and also carried out a comparison of inventory We considered theprinciplesofaccountingforinventory estimates madeinrespect ofinventory provisioning. consistently appliedinrespect ofthejudgmentand Assessing whethertheCompany’s policieshadbeen effectiveness ofthekeycontrols overinventories. Testing thedesignandimplementationoperating statements. and buildingsinvestmentproperties inthefinancial financial statementsinrelation tofairvalueoffreehold land Assessing theadequacyofdisclosures madeinthe standards. methodologies withreference torecognized industry current marketvalues.In addition assessingthevaluation comparing thefairvalueofproperties withevidenceof made inderivingthefairvalueofproperties and Assessing thekeyassumptionsappliedandconclusions valuer.qualifications oftheexternal Assessing theobjectivity, independence,competenceand 109 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements on the Affairs oftheCompany Annual ReportoftheDirectors'

CARGILLS (CEYLON) PLC 110 Annual Report 2018 | 2019 ing the going concern basisofaccount- ing thegoingconcern matters related andus- togoingconcern disclosing,asapplicable, going concern, ing theGroup’s abilitytocontinueas a management isresponsible forassess- In preparing thefinancialstatements, whether duetofraudorerror. that are free from material misstatement, the preparation offinancialstatements ment determinesisnecessarytoenable controland forsuchinternal asmanage- with SriLankaAccountingStandards, give atrueandfairviewinaccordance preparation offinancialstatementsthat Management isresponsible forthe THE FINANCIALSTATEMENTS CHARGED WITHGOVERNANCEFOR MANAGEMENT ANDTHOSE RESPONSIBILITIES OF nothing toreport inthisregard. are required toreport thatfact.We have statement ofthisotherinformation,we we conclude that there is a material mis- based ontheworkwehaveperformed, appears tobemateriallymisstated.If, edge obtainedintheauditorotherwise the financialstatementsorourknowl- formation ismateriallyinconsistentwith doing so,considerwhethertheotherin- is toread theotherinformation and,in nancial statements,ourresponsibility In connectionwithourauditofthefi- conclusion thereon. we donotexpress anyform ofassurance does notcovertheotherinformationand Our opinion on the financial statements port thereon. financial statementsandourauditor’s re- annual report, butdoesnotincludethe prises theinformationincludedin information. Theotherinformationcom- Management isresponsible fortheother OTHER INFORMATION Report Independent Auditor’s • cism throughout theaudit.We also: ment andmaintainprofessional skepti- SLAuSs, weexercise professional judg- As partofanauditinaccordance with cial statements. users takenonthebasisofthesefinan- to influencetheeconomicdecisionsof gate, theycouldreasonably beexpected material if,individuallyorintheaggre - from fraudorerror andare considered when itexists.Misstatementscanarise always detectamaterialmisstatement ducted inaccordance with SLAuSswill but isnotaguaranteethatanauditcon- assurance isahighlevelofassurance, that includesouropinion.Reasonable or error, andtoissueanauditor’s report terial misstatement,whetherduetofraud statements asawholeare free from ma- assurance aboutwhetherthefinancial Our objectives are to obtain reasonable STATEMENTS FOR THEAUDITOFFINANCIAL AUDITOR’S RESPONSIBILITIES cess. and theGroup’s financialreporting pro - sponsible foroverseeingtheCompany’s areThose chargedwithgovernance re- to doso. tions, orhas no realistic but alternative liquidate theGroup ortoceaseopera- ing unlessmanagementeitherintendsto detecting a material misstatement detecting amaterial misstatement basis forouropinion.Therisk ofnot sufficient andappropriate to provide a and obtainauditevidencethat is procedures responsive tothoserisks, or error, designandperformaudit statements, whetherduetofraud material misstatementofthefinancial Identify andassesstherisksof contd. • • • • represent the underlying transactions and whetherthefinancialstatements statements, includingthedisclosures, structure andcontentofthefinancial Evaluate theoverallpresentation, going concern. the Group toceasecontinueasa future eventsorconditionsmaycause date ofourauditor’s report. However, audit evidenceobtaineduptothe Our conclusionsare basedonthe inadequate, tomodifyouropinion. statements or, ifsuchdisclosures are the related disclosures in the financial attention in our auditor’s report to exists, weare required todraw conclude thatamaterialuncertainty Ifwe continue asagoingconcern. doubt ontheGroup’s abilityto conditions thatmaycastsignificant uncertainty existsrelated to eventsor obtained, whether a material based ontheauditevidence basisofaccountingand, concern of management’s use of the going Conclude on the appropriateness made bymanagement. estimates and related disclosures reasonableness ofaccounting accounting policiesusedandthe Evaluate theappropriateness of control. Company andtheGroup’s internal opinion on the effectiveness of the not forthepurposeofexpressing an appropriate inthecircumstances, but to designauditprocedures thatare control relevant totheauditinorder Obtain anunderstandingofinternal control.override ofinternal omissions, misrepresentations, orthe involve collusion,forgery, intentional one resulting from error, asfraudmay resulting from fraudishigherthanfor report unless law or regulation precludes describe thesemattersinourauditor’s are therefore thekey auditmatters.We statements ofthecurrent periodand significance in theaudit of thefinancial termine thosemattersthatwere ofmost we de- those chargedwithgovernance, From thematterscommunicatedwith applicable, related safeguards. to bear on ourindependence, and where matters that may reasonably be thought cate withthemallrelationships andother garding independence,and tocommuni- accordance withtheCode ofEthicsre- complied withethicalrequirements in withastatementthatwehave ernance We alsoprovide thosechargedwithgov- our audit. controlinternal thatweidentifyduring including anysignificantdeficienciesin of theauditandsignificantfindings, matters, the planned scope and timing regarding,with governance amongother We communicatewiththose charged • responsible forourauditopinion. the group audit.We remain solely supervision andperformanceof We are responsible forthedirection, consolidated financialstatements. to express an opinion on the business activitieswithintheGroup information oftheentitiesor evidence regarding thefinancial Obtain sufficient appropriate audit fair presentation. and eventsinamannerthatachieves 1 July2019 Colombo, SriLanka CHARTERED ACCOUNTANTS (Signed) is 1224. signing thisindependentauditor’s report the engagementpartnerresponsible for CA SriLankamembershipnumberof kept bytheCompany. proper accountingrecords havebeen as far as appearsfrom ourexamination, tions thatwere required fortheauditand, obtained alltheinformationandexplana- Companies ActNo.07of2007,wehave As required bysection163(2)ofthe REGULATORY REQUIREMENTS REPORT ONOTHERLEGAL AND communication. weigh thepublicinterest benefitsofsuch would reasonably beexpectedtoout- the adverse consequences of doing so be communicated in our report because we determinethatamattershouldnot when, inextremely rare circumstances, public disclosure aboutthematteror 111 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 112 Annual Report 2018 | 2019 Financial Performance 88,000 90,000 92,000 94,000 96,000 10 15 5 - Revenue (Rs. Mn) Per Share (Rs.) Basic Earnings

2019 2019

2018 2018 2,000 4,000 6,000 8,000 2 4 6 8 - - Operating Profit (Rs. Mn) Share (Rs.) Dividend Per Ordinary

2019 2019

2018 2018 8,000 8,500 6,500 7,500 7,000 9000 - EBITDA (Rs. Mn)

2019

2018 For theyearended31March Other ComprehensiveIncome Statement ofProfitorLossand Note Revenue 4 Cost ofsales Gross profit Other income Distribution expenses Administrative expenses Other expenses Results from operatingactivities Net financecost Changes infairvalueofinvestmentproperty Share ofprofit ofequityaccountedinvestees,nettax Profit before tax 8 Income taxexpense Profit fortheyear Revaluation ofproperty plantand equipment Items thatwillnotbereclassified toprofit orloss Other comprehensive income(OCI) Actuarial gain/(loss)onemployeebenefits equity accountedinvestee,netoftax Share ofothercomprehensive incomein Net changeinfairvalueofavailable-for- salefinancialassets Items thatare ormaybereclassified subsequentlytoprofit Impairment ofavailableforsalefinancialassets reclassified to Tax onothercomprehensive income Other comprehensive incomefortheyear, netoftax Total comprehensive incomefortheyear Equity holdersoftheparent Profit attributableto: Non-controlling interest Profit fortheyear Equity holdersoftheparent Total comprehensive incomeattributableto: Non-controlling interest Total comprehensive incomefortheyear Basic (Rs.) pershareEarnings Diluted (Rs.) The accounting policiesandnotesfrom pages119to 190formanintegralpartofthese financialstatements. Figures inbrackets indicatedeductions or loss profit orloss 10.1 10.2 13 15.4 12 27.4 15.4 15.3.1 5 6 7 9

(84,214,185) 94,662,991 10,448,806 (2,951,702) (4,466,944) (1,424,664) (1,369,122) 2,179,674 4,682,326 3,402,935 2,033,813 2,001,479 1,980,246 2,033,813 1,947,528 2,001,479 (527,508) Rs. ‘000 (32,334) (11,961) (18,591) 91,212 54,061 53,567 53,951 (5,131) 3,349 2019 7.74 7.73 - - Group Company (80,718,803) 91,293,127 10,574,324 (2,824,690) (4,020,220) (1,307,163) (1,914,413) 3,037,066 6,262,937 5,245,334 3,330,921 4,034,323 3,200,534 3,330,921 3,892,756 4,034,323 (503,543) Rs. ‘000 212,273 775,272 703,402 130,387 141,567 (57,134) (55,737) 77,287 11,259 29,742 12.50 12.49 2018 - 2,754,486 1,930,826 1,617,803 1,540,019 1,521,661 1,540,019 1,540,019 1,521,661 1,521,661 (706,943) (345,359) Rs. ‘000 (17,933) (18,358) (21,174) (96,353) (77,784) (18,395) 18,743 32,336 (5,114) 5,151 2019 6.02 6.01 810 ------4,616,918 3,860,096 3,300,452 3,174,834 3,197,703 3,174,834 3,174,834 3,197,703 3,197,703 (640,974) (104,406) (760,071) (125,618) Rs. ‘000 200,427 (29,246) (12,406) (29,593) 30,210 14,580 29,737 22,869 12.40 12.39 8,145 2018 964 - - - - - 113 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 114 Annual Report 2018 | 2019 As at31March Statement ofFinancialPosition Note Property, plantandequipment Non-current assets ASSETS Investment property Intangible assets Investments insubsidiaries Investment inequityaccountedinvestees Other financialassets Prepayment onleaseholdlandandbuilding Deferred taxassets Total non-current assets Inventories 18 Current assets Trade andotherreceivables Amounts duefrom related companies Other financialassets Cash andcashequivalents Total current assets Total assets Stated capital EQUITY Other equity Reserves 23 Retained earnings Total equityattributabletoholdersoftheparent Non-controlling interest Total equity Interest bearingloansandborrowings Non -current liabilities LIABILITIES Deferred taxliabilities Capital grants Employee benefitliabilities Put liability Total non-current liabilities Trade andotherpayables Current liabilities Current taxliabilities Amounts duetorelated companies Dividend payable Interest bearingloansand borrowings Total current liabilities Total liabilities Total equityandliabilities Colombo 1July 2019 Deputy Chairman/CEO Ranjit Page (Signed) (Signed) Signed forandonbehalfoftheBoard. The Board ofDirectors isresponsible forthepreparation andpresentation ofthesefinancial statements. Group ChiefFinancialOfficer Dilantha Jayawardhana (Signed) I certifythatthefinancialstatementshavebeenprepared inaccordance withthe requirements oftheCompaniesActNo.72007. The accountingpoliciesandnotesfrom pages119to190formanintegralpartofthesefinancialstatements. Figures inbracketsindicate deductions. Managing Director/Deputy CEO Imtiaz AbdulWahid 12 13 14 15.1 15.2 15.3 16 17 19 20 15.3 24 21 22 25 17 26 27 22 28 20 29 25

27,877,020 36,642,556 21,486,371 58,128,927 17,421,070 17,942,901 14,810,176 16,837,315 34,219,401 40,186,026 58,128,927 (3,456,493) 1,818,798 1,412,714 5,296,632 9,762,036 6,842,456 3,058,884 6,530,709 5,136,662 9,210,192 1,386,624 1,072,680 3,456,493 5,966,625 2,501,500 Rs. ‘000 212,108 913,394 909,601 521,831 14,537 10,747 50,419 64,588 5,822 2019 409 - Group Company 25,076,817 33,676,707 19,115,574 52,792,281 16,328,392 16,820,311 13,220,686 14,637,588 30,523,915 35,971,970 52,792,281 (3,089,325) 1,726,552 1,311,686 5,366,761 9,662,860 5,635,118 2,000,288 6,530,709 5,043,825 7,843,183 1,352,650 3,089,325 5,448,055 2,594,237 Rs. ‘000 166,810 843,869 973,439 491,919 942,633 19,668 61,901 68,229 8,413 1,546 3,175 2018 - 14,569,995 17,532,278 12,642,189 12,642,189 17,532,278 2,801,303 3,514,555 2,963,591 5,113,672 1,682,799 1,037,244 2,962,283 6,530,709 5,854,635 3,470,648 4,250,711 4,890,089 Rs. ‘000 140,208 230,297 256,845 193,443 445,935 639,378 620,367 22,203 14,463 11,943 90,869 64,589 4,238 2019 ------14,226,706 15,804,686 11,510,378 11,510,378 15,804,686 2,772,004 3,207,009 2,907,772 5,121,439 1,577,980 6,530,709 4,814,260 3,042,787 3,716,838 4,294,308 Rs. ‘000 144,060 635,515 924,502 165,409 180,324 397,146 577,470 420,186 168,787 54,845 19,577 12,594 21,242 63,836 5,369 2018 ------Group The accountingpoliciesandnotes from pages119to190formanintegral partofthesefinancialstatements. The figures inbracketsindicatedeductions. Put optionovernon-controlling Adjusted Balanceasat1April2018 Equity Put optionovernon-controlling Transactions withownersoftheCompany, Total Other comprehensive income Statement ofChangesinEquity-Group Equity-settled Capitalisation Transfer Balance asat1April2017 Subsidiary Dividends Profit Total comprehensive income Balance asat31March 2018 Subsidiary dividendto Dividends Total Other Balance asat31March 2019 Profit Total comprehensive income Transactions withownersoftheCompany, Adjustment oninitialapplicationof interest recognised directly inequity investees, SLFRS 09from equityaccounted non-controlling interest recognised directly inequity (Note 22) comprehensive comprehensive for for comprehensive - Settled of the the (Note to to dividend revaluation year year net shareholders shareholders of share-based share 22) reserves of - - interests tax to income income - income reserve

non-controlling based * payment on payment

disposal

interests 6,530,709 6,530,709 6,399,986 - 6,530,709 Rs. ‘000 130,723 capital reserve reserve reserve Stated

------Attributable toequityholdersofparent Rs. ‘000 Capital 7,928 7,928 7,928 7,928 4,884,927 Revaluation (3,204,729) 4,884,927 7,908,678 4,884,927 (522,601) - 703,579 - Rs. ‘000 703,579 - (485,500) - Rs. ‘000 485,500 General - - - Available reserve / Rs. ‘000 forsale (29,742) 29,742 - reserve 29,742 - (5,131) - (3,713) (5,131) - FVOCI 1,418 - 1,418 -

Employee Rs. ‘000 150,970 150,970 - 150,970 247,520 reserve 96,550 - option share - (3,089,325) (3,456,493) 9,210,192 (3,089,325) (2,761,159) (328,166) - (367,168) - Rs. ‘000 equity Other (1,344,000) (2,709,757) - 3,159,435 1,980,246 7,743,933 3,200,534 8,214,904 1,952,659 7,843,183 (486,400) Retained (41,099) earnings Rs. ‘000 522,601 - (99,250) (27,587) 16,230,560 13,956,832 16,328,392 17,421,070 (1,344,000) - (328,166) - 3,892,756 1,980,246 3,200,534 1,947,528 (367,168) - (486,400) - 692,222 Rs. ‘000 150,970 - (97,832) - (32,718) 96,550 - Total controlling Rs. ‘000 141,567 491,919 415,091 130,387 491,919 521,831 (64,739) (24,039) 11,180 interest 53,567 53,951 Non 384

16,722,479 14,371,923 16,820,311 17,942,901 (1,344,000) (328,166) 4,034,323 2,033,813 3,330,921 2,001,479 (367,168) (486,400) 703,402 Rs. ‘000 150,970 (97,832) (64,739) (32,334) (24,039) 96,550 Equity Total

115 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 116 Annual Report 2018 | 2019 Balance asat31March 2019 Equity-settled Dividends recognised directly inequity Transactions withownersoftheCompany, Total Other Profit Total comprehensive income Balance asat1April2018 Balance asat31March 2018 Equity-settled Capitalisation ofreserves * Dividends recognised directly inequity Transactions withownersoftheCompany, Total Other comprehensive income Profit Total comprehensive income Balance asat1April2017 Company

The accountingpoliciesandnotesfrom pages119to190formanintegralpartofthesefinancialstatements. The figures inbracketsindicatedeductions. ing 255,999,927ordinary (voting)shares (2018–255,999,927). The statedcapitaloftheCompanyatbalancesheetdate amounted toRs6,530,708,400(2018-Rs.6,530,708,400)compris 20th March 2018were allottedthecapitalisedshares asmentionedabove. Central Depository Systems (Pvt) Ltd (CDS) and the Shareholders Register maintained by the Company as at end of trading on Company, includingtherighttoparticipateinanydividenddeclared afterthedateofallotment.AllShareholders appearingin the sideration ofRs200.00pershare. Thenewshares, rankPariPassuinallrespects withtheexistingissuedordinary shares ofthe reserves oftheCompanyin theproportion ofOne(01)share foreverySeven(07) shares heldasattheentitlementdate,acon- 31,999,927 ordinary voting shares intheCompany, credited asfullypaidbycapitalizingasumofRs6,399,985,400lyinginthe *The shareholders ofthe Company, atanExtraOrdinary General Meetingheldon20thMarch 2018,approved the issue of Statement ofChangesinEquity-Company comprehensive comprehensive for for comprehensive the the year year share-based share-based - income - income - income - - payment - payment

- -

6,530,709 6,530,709 6,530,709 6,399,986 Rs. ‘000 130,723 capital reserve reserve reserve reserve Stated - 14,439 Revaluation (3,204,729) 3,204,729 Rs. ‘000 14,439 14,439 14,439 14,439 - (485,500) Rs. ‘000 485,500 General - - - - 29,737 Available Rs. ‘000 (29,737) for 29,737 - (5,114) (5,114) - (5,114) - sale - - - share Employee Rs. ‘000 247,520 150,970 150,970 150,970 - 96,550 - option - - - (2,709,757) (1,344,000) 5,854,635 1,526,775 1,540,019 4,814,260 4,814,260 3,153,527 3,174,834 5,714,490 (486,400) Retained earnings Rs. ‘000 (13,244) (21,307) 22,869 12,642,189 11,510,378 11,510,378 (1,344,000) 1,521,661 1,540,019 3,197,703 3,174,834 9,505,705 (486,400) Rs. ‘000 150,970 (18,358) 96,550 Equity Total - For theyearended31March Statement ofCashFlows

Profit before taxation Cash flowsfrom operatingactivities Depreciation onproperty,plant andequipment Adjustments for: Employee benefits Amortisation ofintangibleassets Amortisation ofprepayment onleasehold landandbuilding Amortisation ofdeferred income Gain ondisposalofproperty, plantandequipment Gain ondisposalofinvestmentproperty Change infairvalueofinvestmentproperty Revaluation (gain)/lossofproperty, plantandequipment Impairment of/(reversal ofimpairment) forinventories Impairment of/(reversal ofimpairment) fortradereceivables Net financecosts Dividend income Impairment ofinvestmentinequityaccountedinvestee Share of(profit) /lossonequityaccountedinvestees,netoftax Equity settledshare basedpayment transactions Impairment ofavailableforsaleinvestment Profit on repurchase ofshares bysubsidiary Operating profit before workingcapitalchanges - (Increase) /decrease ininventories Changes inworkingcapital - (Increase) /decrease intradeandotherreceivables - (Increase) /decrease inrelated companyreceivables - Increase /(decrease) intradeandotherpayables - Increase /(decrease) inrelated companypayables Cash generatedfrom operations Income taxespaid Interest paid Retiring gratuitypaid Net cashgeneratedfrom /(usedin)operatingactivities

(1,229,959) (1,426,869) (1,704,721) 3,402,935 2,431,028 1,424,664 7,468,724 1,589,490 7,652,822 4,465,728 Rs. ‘000 193,311 (11,482) (43,531) (91,212) (54,061) (92,758) (85,322) (55,504) 96,410 22,621 92,629 (6,418) 4,727 7,767 2,647 2019 (664) - - - - Group Company (1,010,440) (1,360,694) (1,147,336) (1,576,757) 5,245,334 2,168,649 1,307,163 7,939,564 6,492,387 3,694,478 (212,273) (958,116) Rs. ‘000 179,548 106,526 144,838 958,544 (11,481) (77,287) (89,890) (73,816) 24,950 34,443 11,243 31,056 (6,735) 4,724 2,979 2018 (694) - - (1,758,360) 1,617,803 (118,490) (130,305) (137,436) (447,788) Rs. ‘000 345,359 378,212 200,182 487,887 (32,336) (17,004) (21,153) 46,518 73,034 34,456 36,809 63,376 (1,250) (6,574) 3,852 4,560 7,767 2019 ------(2,451,605) (1,296,025) 3,300,452 (200,427) (744,220) (151,664) (857,845) Rs. ‘000 760,071 378,822 228,867 (21,626) (72,828) (42,414) 42,534 71,272 61,962 57,557 31,023 16,892 (1,492) 3,849 7,072 2018 (350) (629) ------117 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 118 Annual Report 2018 | 2019 For theyearended31March Statement ofCashFlows

Acquisition andconstructionofproperty, plantandequipment Cash flowsfrom investingactivities Acquisition andconstructionofinvestmentproperty Acquisition ofintangibleassets Interest incomereceived Dividend received Proceeds from disposalofproperty, plantandequipment Addition/disposal tootherfinancialassets Addition toprepaid leases Proceeds from repurchase ofshares /acquisitionofsubsidiary Proceed from disposalofinvestmentproperty Investment innewshare issueofsubsidiary Net cash(usedin)/generatedfrom investing activities Net proceeds from /(repayment of)shorttermborrowings Cash flowsfrom financingactivities Net proceeds from /(repayment of)longtermborrowings Dividend paidtoshareholders Dividend paidtonon-controlling interest Net cashgeneratedfrom/ (usedin)financing activities Increase incashand equivalents At thebeginningofyear Movement incashandequivalents Movement duringtheyear At theendofyear Notes totheFinancialStatementscontd. The accountingpoliciesandnotesfrom pages119to190formanintegralpartofthesefinancialstatements. The figures inbracketsindicatedeductions. contd.

(5,091,642) (5,233,383) 2,149,422 1,634,205 1,008,291 1,008,291 (197,437) (490,041) (769,240) Rs. ‘000 280,057 239,051 (50,025) (24,039) 45,683 63,833 (1,034) (1,137) 2019 664 - - - Group Company (2,123,113) (4,637,517) (1,345,180) (1,659,450) 4,155,020 (681,155) (769,240) (384,631) (712,170) Rs. ‘000 269,594 890,210 890,210 (16,653) (92,705) (64,739) 25,043 (1,024) 2018 694 - - - (275,210) (485,647) Rs. ‘000 102,429 643,141 393,979 445,000 234,842 234,842 199,649 (40,647) (75,817) (35,193) (1,814) 1,250 2019 ------(4,849,753) (3,503,200) (1,346,553) 2,451,605 3,584,525 6,314,262 (755,482) Rs. ‘000 275,100 720,289 720,289 (92,396) (35,193) 97,774 (6,879) 4,691 2018 (508) 350 - - - - (a) 2) 1) The principalactivitiesoftheGroup are, of Operations 1.5 March 2018). March 2019 is 8,932 (9,158 as at 31st The staff strength oftheGroup asat31st 31st March 2018). 31st March 2019is1,902(1,794asat The staff strength oftheCompanyasat 1.4 Exchange. Sri LankaandlistedinColomboStock Limited LiabilityCompanydomiciledin Holdings PLC which is aQuoted Public The Company’s ultimateparent isCT Entity 1.3 ed investees. the Group’s interest initsequityaccount - (together referred toas the ‘Group’) and PLC (Parent Company),its subsidiaries March 2019compriseCargills Ceylon of theGroup fortheyear ended31st The ConsolidatedFinancialStatements Statements 1.2 lombo 1. office islocatedat40,York Street, Co- Exchange. TheCompany’s registered Sri LankaandlistedinColomboStock Limited LiabilityCompanydomiciledin Cargills (Ceylon)PLCisaQuotedPublic 1.1 1. Notes totheFinancialStatements Magic’, ‘Heavenly’ and‘Kotmale’ under the brand names of ‘Cargills Ice cream and other dairy products Manufacturing anddistributing and ‘FoodCityExpress’ under the brand names of ‘Food City’ Operating achainofretail outlets CORPORATE INFORMATION Principal ActivitiesandNature Number ofEmployees Parent Entity&Ultimate Parent Consolidated Financial Reporting entity Position: the historicalcostbasisexceptforfollowingitemsinStatementofFinancial The FinancialStatementsoftheCompanyandGroup havebeenprepared on 2.1 2. pany andtheGroup duringthefinancial yearunderreview. There were nosignificantchangesinthenature oftheprincipal activities oftheCom- 5) 4) 3) (d) (c) (b) • • These financialstatementsinclude thefollowingcomponents: the ListingRulesofColombo StockExchange. and incompliancewiththerequirements oftheCompaniesActNo.072007,and (SLFRS andLKAS),laiddownbytheInstituteofChartered AccountantsofSriLanka been prepared andpresented inaccordance withSriLanka AccountingStandards ments oftheCompany, asat31stMarch 2019andfortheyearthenended,have The ConsolidatedFinancialStatementsoftheGroup andSeparateFinancialState- 2.2 Employee Benefits Employee Share OptionReserve Put Liability Investment Properties Available-for-sale Financial Investments Property PlantandEquipment Item Production, importanddistribution ofagriculturalseeds. ‘Nabisco’, ‘Tang’ ‘Oreo’, ‘Lotte’,‘Loacker’and‘Toblerone’ etc. brandssuchas‘Kodak’,‘Kraft’,‘Cadbury’,‘Bonlac’, Distribution ofinternational Operating achainof‘KFC’and‘TGIF’restaurants underfranchiseagreements Biscuits underthebrandnameof‘Kist’ ‘Goldi’ and‘Sams’. Processed andfresh meatproducts underthebrandnamesof‘Supremo’,‘ Finest’, Fruit basedproducts under‘Kist’brand of theCompany andtheGroup asattheyear-end. Statement ofFinancial Positionproviding the informationonfinancial position year underreview. information onthefinancialperformance oftheCompanyandGroup forthe Statement ofProfit orLossandOtherComprehensive Incomeproviding the BASIS OFPREPARATION Basis ofMeasurement Statement ofCompliance benefit obligation. present valueofthedefined Liability is recognised as the Fair value Present valueofexercise price Fair Value Fair Value Cost/Revaluation Basis ofmeasurement NoteNo. 23.1 15.3 27 22 13 12 119 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 120 Annual Report 2018 | 2019 on 1July2019. were approved andauthorised forissue March 2019(includingcomparatives) ny and theGroup for the year ended 31st The FinancialStatementsofthe Compa- Statements bytheBoard ofDirectors 2.4 sition. cation on the Statement of Financial Po- Directors’ Responsibility, andthecertifi- of theBoard ofDirector’s, Statementof ments assetoutintheAnnualReport their responsibility forFinancialState- The Board ofDirectors acknowledges FRS andLKAS. Companies Act No. 07 of 2007 and SL- and theGroup aspertheprovision ofthe Financial StatementsoftheCompany preparation andpresentation ofthese The Board ofDirectors isresponsible for Statements 2.3 accounting. prepared followingtheaccrualbasisof information oncashflowshavebeen These financialstatements,exceptfor • • • Notes totheFinancialStatements other explanatoryinformation. comprising Accounting Policies and Notes totheFinancialStatements year underreview and to utilizethosecashflowsduringthe equivalents andtheneedsofentity Group togeneratecash and cash the abilityofCompanyand the informationtousers,on Statement ofCashFlowsproviding during theyearunderreview . equity oftheCompanyandGroup depicting allchangesinshareholder’s Statement ofChangesinEquity Approval ofFinancial Responsibility forFinancial have beenrounded-off tothenearest The amountsin theFinancialStatements 2.8 Rounding immaterial. are presented separately, unlesstheyare Items ofdissimilarnature orfunctionstoo ed separatelyintheFinancialStatements. material classofsimilaritemsispresent- entation ofFinancialStatements’,each counting Standard -LKAS01on‘Pres- In compliancewiththeSriLankaAc- 2.7 rency. Group’s functionalandpresentation cur Sri LankanRupees(Rs.),whichisthe and theCompanyare presented in The FinancialStatementsoftheGroup Currency 2.6 of theGroup. ically disclosedintheaccountingpolicies standard orinterpretation, andasspecif- required orpermittedbyanyaccounting and othercomprehensive income unless consolidated statementofprofit orloss come andexpensesare not offset inthe and settletheliabilitysimultaneously. In- tle onanetbasis,ortorealize theassets amounts andthere isanintention toset- forceable right to offset the recognised position onlywhenthere is alegallyen- in theconsolidatedstatementoffinancial are offset, andthenetamountreported Financial assetsandfinancialliabilities Statements. flationary factorsaffecting theFinancial No adjustmentshavebeenmadeforin- nancial Positionare grouped bynature. and theGroup intheStatementofFi- The assetsandliabilitiesoftheCompany Statements 2.5 Materiality andAggregation Functional andPresentation Presentation ofFinancial contd. - in anyfuture periods affected. od inwhichtheestimatesare revised and ing estimatesare recognised intheperi- an ongoingbasis.Revisionsto account- underlying assumptionsare reviewed on Accounting judgements, estimates and from theseestimates. financial year. Actualresults maydiffer of assetsandliabilitieswithinthenext terial adjustmenttothecarryingamounts that havesignificantriskofcausingama- timation uncertainty at the reporting date the future andotherkeysources ofes- consider keyassumptionsconcerning Further, managementisalsorequired to liabilities, incomeandexpenses. cies andthereported amounts ofassets, affect the application of accounting poli- ments, estimatesandassumptionsthat requires managementtomakejudge- in conformitywithSLFRSandLKAS ments oftheCompanyandGroup The preparation oftheFinancial State- Assumptions Judgments, Estimatesand 2.10 current presentation. wherever necessarytocomply withthe Comparative informationisreclassified ‘Presentation of Financial Statements’. ka AccountingStandard - LKAS01on cial yearinaccordance with theSriLan- Group withthoseoftheprevious finan- sistently applied bythe Company andthe The accountingpolicieshavebeencon- 2.9 ments’. 01 on‘Presentation ofFinancialState- Sri LankaAccountingStandard- LKAS erwise indicatedaspermittedbythe Rupees thousands,exceptwhere oth- Significant Accounting Comparative Information SLFRS 15establishes acomprehen- A. and SLFRS09from 01April2018. The Group hasinitiallyappliedSLFRS15 cies Change insignificantaccountingpoli- financial statements. policies toallperiodspresented inthese has consistentlyappliedtheaccounting Except forthechangesbelow, theGroup POLICIES 3. pared basis. onthegoingconcern Financial Statements continue to be pre - Therefore,tinue as a goingconcern. the doubt upontheGroup’s abilitytocon- uncertainties thatmaycastsignificant agement isnotaware of anymaterial a foreseeable future. Furthermore, man- the resources tocontinueinbusinessfor andissatisfiedthatithas going concern assessment ofitsabilitytocontinueasa The Group’s managementhasmadean 2.11 Reserve Note 32 Note 27 liabilities Note 23.1-EmployeeShare Option Note 22 Note 17 Note 14 Note 13 Note 12 as giveninrelated Notes. amounts ofsuchassetsandliabilitiesare volving uncertaintyofrespective carrying ments, estimatesandassumptionsin- The keysignificantaccounting judge- with Customers SLFRS 15-Revenuefrom Contracts SIGNIFICANT ACCOUNTING Going Concern - - Employeebenefitobligation - Putliability - Deferred taxassetsand - IntangibleAssets - InvestmentProperty - Provisions and contingencies Property PlantandEquipment and Company’s historicalexperience of of tradedebtors basedupontheGroup ard rateofprovision on initialrecognition ted bythestandard, byapplyingastand- result ofrevenue recognition, aspermit- has beenusedforbalancesarising asa simplified “lifetimeexpectedloss model” periods, aspermittedbythestandard. A ed SLFRS09withnorevision forprior The Group and Company have adopt- plied tocomparativeinformation. 2018 but have not been generally ap- that are appliedtodisclosures about 07 FinancialInstruments:Disclosures consequential amendmentstoSLFRS the Group andCompanyhaveadopted As aresult oftheadoptionSLFRS09, ment. Instruments: Recognition and Measure- standard replaces LKAS39Financial to buyorsellnon-financialitems.This financial liabilitiesandsomecontracts ognising andmeasuringfinancialassets, SLFRS 09setsoutrequirements forrec- B. accumulated profits asat01April 2018. had noimpactinthereported amountin Further, thechange inaccountingpolicy equity andthestatementofcashflows. nancial position, statement of changes in figures presented inthestatementoffi- There wasnoimpactonthe comparative quires judgement. trol –atapointintimeorover time–re- mining thetimingoftransfercon- control of the goods or services. Deter is recognised whenacustomerobtains terpretations. UnderSLFRS15,revenue Construction Contractsandrelated in- It replaced LKAS18Revenue,11 much andwhenrevenue isrecognised. sive frameworkfordetermininghow SLFRS 09-FinancialInstruments - policies. porting yearusingconsistentaccounting sociates are prepared forthesamere- of theCompany’s subsidiariesandas - 31st March 2019,Financialstatements accounted investeesfortheyearended Company, itssubsidiariesandequity comprise offinancialstatementsthe The ConsolidatedFinancialStatements 3.1 financial liabilities. Group’s accountingpolicies related to has nothadasignificanteffect onthe bilities andtheadoptionofstandard fication and measurement of financial lia- requirements inLKAS39fortheclassi- SLFRS 09largelyretains theexisting cost underSLFRS09. LKAS 39, are classified as amortised classified asloansandreceivable under and cashequivalentswhichwere earlier Trade andother receivable andcash able andavailableforsale. ries ofheldtomaturity, loansandreceiv- eliminates the previous LKAS 39 catego- al cashflowcharacteristics.SLFRS09 cial assetismanagedanditscontractu- on thebusinessmodelinwhichafinan- sets underSLFRS09isgenerallybased FVTPL. Theclassificationoffinancialas- measured atamortisedcost, FVOCIand sification categoriesforfinancialassets: SLFRS 09containsthree principalclas- nancial assetsandfinancialliabilities. Classification andmeasurement offi- take accountofoverdue receivables. future, andincreasing thisprovision to credit lossmodifiedbyexpectationofthe Basis ofConsolidation 121 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 122 Annual Report 2018 | 2019 acquiree are assignedtothoseunits. whether otherassetsorliabilities ofthe gies of the combination, irrespective of are expectedtobenefitfrom thesyner units (CGUs)orgroup ofCGUs,which to eachofthegroup’s cash–generating is, from theacquisitiondate,allocated will acquired inabusinesscombination the purposeofimpairmenttesting,good- the carryingvaluemaybeimpaired. For changes incircumstances indicatethat nually, ormore frequently, ifeventsor Goodwill isreviewed forimpairmentan- impairment losses. measured atcostlessanyaccumulated Following initialrecognition, goodwill is acquired. sets, liabilitiesandcontingent in thenetamountofidentifiableas- combination overtheGroup’s interest the excessofcostbusiness nation isinitiallymeasured atcost, being Goodwill acquired in a business combi- in profit orloss. purchase gainisrecognised immediately When theexcessisnegative,abargain all measured asoftheacquisition date. assets acquired andliabilities assumed, recognized amountofthe identifiable interest intheacquiree, lessthenet nized amountofanynon-controlling eration transferred includingthe recog- goodwill asthefairvalueofconsid- The Group and the Company measure Combinations). ing Standard -SLFRS03(Business the requirements ofSriLankaAccount- for usingtheAcquisitionmethodasper Business combinations are accounted goodwill 3.1.1 Notes totheFinancialStatements Business combinationand - therefore nogoodwill isrecognised as a owners intheircapacityas and are accountedforastransactionswith Acquisition of non-controlling interests trolling interest. arate disclosure is made of non-con- and liabilitiesoftheacquired entity, Sep- sition fairvaluesoftheidentifiableassets the minorities’share ofthepost-acqui- Non-controlling interest ismeasured at are generallyatfairvalue. acquiree’s identifiablenetassets,which fair value;oratproportionate share ofthe trolling interests intheacquire either:at Group electstomeasure anynon-con- For eachbusinesscombination,the 3.1.3 power overtheinvestee. ability toaffect thosereturns through its volvement withtheinvesteeandhas has right,tovariablereturnsfrom itsin- trol an investee when it is exposed, or Company or Group ispresumed to con- the date when such control ceases. The and continuetobeconsolidateduntil control istransferred totheCompany fully consolidatedfrom the dateonwhich trolled bytheGroup. Subsidiariesare Subsidiaries are entities that are con- 3.1.2 Subsidiaries of andtheportionCGUretained. relative values of the operation disposed circumstance ismeasured basedonthe operation. Goodwilldisposedofinthis ing thegainorlossondisposalof amount oftheoperationwhendetermin- disposed ofisincludedinthecarrying goodwill associatedwiththe operation tion within that unit is disposed of, the group ofCGUs)andparttheopera- Where goodwill forms part of a CGU (or Non-Controlling Interests contd. er entity. 50 percent of the voting power of anoth- when theGroup holdsbetween20and Significant influenceispresumed toexist over thefinancialandoperating policies. has significantinfluence,but no control Associate isanentityinwhichtheGroup 3.1.6 impairment. to the extent that there is no evidence of same wayasunrealised gains,butonly Unrealised losses are eliminated in the of theGroup’s interest intheinvestee. ed against the investment to theextent uity accountedinvesteesare eliminat- gains arisingfrom transactionswitheq- idated FinancialStatements.Unrealised are eliminatedinpreparing theConsol- es arisingfrom intra-group transactions and anyunrealised income andexpens- Intra-group balancesandtransactions Consolidation 3.1.5 the levelofinfluenceretained. able forsale financial asset depending on equity-accounted investeeorasanavail- Subsequently itisaccountedforasan fair valueatthedatethatcontrol islost. sidiary, then such interest ismeasured at retains anyinterest intheprevious sub- recognised inprofit orloss.IftheGroup or deficitarisingonthelossofcontrol is ty related tothesubsidiary. Anysurplus est andtheothercomponentsofequi- the subsidiary, anynon-controlling inter derecognises theassetsand liabilitiesof Upon thelossofcontrol, theGroup 3.1.4 net assetsofthesubsidiary. based onaproportionate amountofthe ments tonon-controlling interests are result ofsuchtransactions.Theadjust- Equity AccountedInvestees Transactions Eliminatedon Loss ofControl - rying valueand recognises theamountin equity accounted investees and its car between therecoverable amountofthe amount of impairment as the difference is thecase,Group calculatesthe accounted investee is impaired. If this dence thattheinvestmentinequity date whetherthere isanyobjectiveevi- The Group determinesateachreporting not recognised. of theprofits equalstheshare oflosses share ofthoseprofits onlyafteritsshare its, theGroup resumes recognising its the Associatesubsequentlyreports prof- payments on behalfofthe Associate. If that theGroup hasanobligationormade es isdiscontinuedexcepttotheextent to nilandtherecognition offurther loss- rying amountofthatinterest isreduced ceed itsinterest intheAssociate, thecar When theGroup’s share oflossesex- fluence effectively ceases. mences untilthedatethatsignificantin- that significantinfluenceeffectively com- with thoseoftheGroup from thedate made toaligntheaccountingpolicies the Associate,afteradjustmentsbeing and expensesequitymovementsof include theGroup’s share oftheincome The ConsolidatedFinancialStatements cumulated impairmentlosses. recognised on acquisition, net ofanyac- Group’s investments include goodwill but issubjectedtoimpairmenttest.The of theinvestmentandisnotamortised ciate isincludedinthecarryingamount Ventures’. Goodwillrelating toanasso- on ‘InvestmentsinAssociatesandJoint Lanka AccountingStandard -LKAS28 ognised initially at cost in terms of the Sri for usingtheEquitymethodandisrec- Investments inAssociatesare accounted - - the date when the fair value was deter lated using the spot exchange rates at fair valueinaforeign currency are trans- nition. Non-monetary items measured at exchange ratesasatthedate ofrecog- currency are translated usingthespot in termsofhistoricalcostaforeign Non–monetary itemsthatare measured ing date. lated attheexchangeratereport- amortised cost in foreign currency trans- and paymentsduringtheyear the yearadjustedforeffective interest functional currency atthebeginningof ference betweenamortisedcostinthe gain orlossonmonetaryitemsisthedif- the reporting date. The foreign currency currency atthespotrateof exchangeat ing dateare retranslated tothefunctional nated inforeign currencies atthereport- Monetary assetsandliabilitiesdenomi- transactions were affected. spot exchangerateatthedateof which isSriLankanRupees(Rs.)atthe translated intothefunctionalcurrency All foreign currency transactionsare and Balances 3.2 ments: Recognitionandmeasurement’. Standard- LKAS 39 on ‘Financial Instru- cordance with the Sri Lanka Accounting accounts fortheinvestmentcostinac- nificant influenceoveranAssociateand from thedatethatitceases tohavesig- continues theuseofEquitymethod interest intheAssociate.TheGroup dis- ciate are eliminatedtotheextentof tions betweentheGroup andtheAsso- Profit and losses resulting from transac- investee’ inprofit orloss. ‘share of losses of an equityaccounted Foreign Currency Transactions - the businessmodel. porting periodfollowingthe change in classified on the first day of the first re- case all affected financial assets are re- for managingfinancialassets,inwhich the Group changesitsbusinessmodel sequent totheirinitialrecognition unless Financial assetsare notreclassified sub- equity investment;orFVTPL. cost; FVOCI–debtinvestment; is classifiedasmeasured at:amortised On initialrecognition, afinancialasset from 1April2018 Financial assets-Policyapplicable measurement 3.3.2 measured atthetransaction price. nificant financingcomponentsisinitially issue. Trade receivable without a sig- directly attributabletoits acquisition or not atFVTPL,transactioncoststhatare measured atfairvalueplus, foranitem component) orfinancialliabilityisinitially ceivable withoutasignificantfinancing Financial asset (unless it is a trade re - ment. the contractualprovisions oftheinstru- nised whentheGroup become apartyto and financialliabilitiesare initially recog- are originated. All other financial assets sued are initially recognized when they Trade receivable anddebtsecuritiesis- measurement offinancialinstruments 3.3.1 3.3 generally recognised inprofit orloss. mined. Foreign currency differences are Financial Instruments Classification andsubsequent Classification andinitial 123 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 124 Annual Report 2018 | 2019 PL. Thisincludes allderivativefinancial described aboveare measured atFVT measured atamortisedcostorFVOCIas All financialassetsnotclassified as vestment basis. election ismadeonaninvestment-by-in - the investment’s fairvalueinOCI.This elect topresent subsequentchangesin Group andCompanymayirrevocably ment that is not held for trading, the On initialrecognition ofanequityinvest- • • tions anditnotdesignatedasatFVTPL. if itmeetsbothofthefollowingcondi- A debtinvestmentismeasured at FVOCI equivalents. and other receivable andcash and cash under amortisedcostincludestrade The Group’s financialassetsclassified • • FVTPL. conditions andisnotdesignatedasat tised costifitmeetsbothofthefollowing A financialassetismeasured atamor Notes totheFinancialStatements outstanding. interest ontheprincipalamount are solelypaymentsofprincipaland specified datestocashflowsthat Its contractualtermsgiveriseon selling financialassets;and collecting contractualcashflowsand whose objectiveisachievedbyboth It isheldwithinabusinessmodel outstanding. interest ontheprincipal amount are solelypaymentsofprincipal and specified datestocashflowsthat Its contractualtermsgiveriseon collect contractualcashflows;and whose objectiveistoholdassets to It isheldwithinabusinessmodel - - • • • the assets; realizing cashflowsthrough thesaleof liabilities orexpectedcashoutflows cial assetstothedurationofanyrelated file, matchingthedurationoffinan- maintaining aparticularinterest rate pro- contractualintereston earning income, whether management’s strategyfocuses those policiesinpractice.Theseinclude for theportfolioandoperationof -The statedpoliciesandobjectives tion considered includes: provided tomanagement. Theinforma- business is managed, and information is el becausethisbestreflects theway a financialassetisheldatportfoliolev- objective of the business model inwhich The Group makesanassessment ofthe April 2018 assessment: Policyapplicable from 1 Financial assets –Businessmodel otherwise arise. es anaccountingmismatchthatwould doing soeliminatesorsignificantlyreduc- ortised cost or at FVOCI as at FVTPL if the requirements tobemeasured atam- a financial asset that otherwise meets and Companymayirrevocably designate assets. Oninitialrecognition, theGroup contractual cash flowscollected;and value oftheassetsmanaged or the compensation isbasedonthe fair are compensated–e.g.whether How managersofthebusiness are managed; business model)andhowthoserisks financial assetsheldwithinthat of thebusinessmodel(and The risksthataffect theperformance Group’s management; is evaluatedandreported tothe How theperformanceofportfolio contd. considers: assessment, theGroup andCompany not meetthiscondition.Inmarking this contractual cash flowssuch that itwould whether thefinancialassetcontains a the instrument.Thisincludes assessing pany considersthecontractualtermsof cipal and interest, the Group and Com- cash flows are solelypayments of prin- In assessingwhetherthecontractual margin, administrative costs),aswellaprofit ing risksandcosts.(e.g.liquidityrisk period of time and for other basic lend- amount outstandingduringaparticular credit riskassociatedwiththeprincipal the timevalueformoneyand ‘Interest’ is defined as consideration for the financialassetoninitialrecognition. ‘principal’ isdefinedasthefairvalueof For the purpose of this assessment, applicable from 1April2018 ments of principal and interest: Policy contractual cashflowsare solelypay- Financial Assets–Assessmentwhether measured atFVTPL. is evaluatedonafairvaluebasisare or are managedandwhose performance Financial assets that are heldfor trading assets. the Group’s continuing recognition of the sales forthispurpose,consistentwith for derecognition are notconsidered ties intransactionsthatdonotqualify Transfers offinancialassetstothird par • activity. and expectationaboutfuture sales periods, thereasons forsuchsales of salesfinancialassetsinprior The frequency, volumeandtiming - • • • • The Group classifieditsfinancialassetsintooneofthefollowingcategories: Financial assets–Policyapplicableprior1April2018 Financial assets–subsequentmeasurement andgainslosses:policyapplicablefrom 1April2018 termination) is treated as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition. par amountplusaccrued(butunpaid)contractualinterest (whichmayalsoincludereasonable additionalcompensationforearly contractual paramount,afeature thatpermitsorrequires prepayment atanamountthatsubstantiallyrepresents thecontractual tional compensation for early termination of the contract. Additionally, for a financial asset acquired at a discount or premium to its tially represents unpaidamountsofprincipalandinterest ontheprincipalamountoutstanding, whichmayincludereasonable addi- A prepayment feature isconsistentwiththesolelypayments ofprincipalandinterest criterioniftheprepayment amountsubstan- • • • • FVOCI Equity investmentsat Debt investmentsatFVOCI amortised cost Financial assets at Financial assetsatFVTPL t FVTPL, at available forsale;and held tomaturity; loans andreceivables ; Terms thatlimittheGroup’s claimtocashflowsfrom specifiedassets(e.g.non-recourse features). Prepayment andextensionfeatures; and Terms thatmayadjustthecontractualcouponrate,includingvariable-ratefeatures; Contingent eventsthatwouldchangetheamountortimingofcashflows; net gainsandlossesare recognized inOCIandare neverreclassified toprofit orloss. or loss unless the dividend clearlyrepresents a recovery of part of the cost of theinvestment. Other These assetsare subsequently measured atfairvalue.Dividendsare recognized asincomeinprofit in OCIare reclassified toprofit orloss. Other netgainsandlossesare recognized inOCI.Onderecognition, gainsand lossesaccumulated interest method,foreign exchangegainsandlossesimpairmentare recognized inprofit orloss. These assetsare subsequently measured atfairvalue.Interest incomecalculated usingtheeffective recognized inprofit orloss. and losses and impairment are recognized in profit or loss. Any gain or loss on derecognition is The amortisedcostisreduced byimpairmentlosses.Interest income,foreign exchangegains These assets are subsequently measured at amortised cost using the effective interest method. or dividendincome,are recognised inprofit orloss. These assetsare subsequently measured atfairvalue.Netgainsandlosses,includinganyinterest 125 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 126 Annual Report 2018 | 2019 or determinablepaymentsand fixedma- non-derivative financialassets withfixed Held tomaturityinvestments were d. of theendreporting period. tended to dispose of it within 12 months investment matured ormanagementin- included innon-current assetsunlessthe any oftheothercategories.Theywere nated inthiscategoryornotclassified non-derivatives that were eitherdesig- Available-for-sale financialassetswere c. statement offinancialposition. and ‘cashcashequivalents’inthe comprised ‘tradeandotherreceivables’ and Company’s loansandreceivables fied asnon-current assets.The Group the reporting period.These were classi- greater than12monthsafter theendof in current assets,except for maturities in an active market. They were included minable paymentsthatwere notquoted tive financialassetswithfixedordeter Loans andreceivables were non-deriva- b. were classifiedasnon-current. settled within 12 months, otherwise they sified ascurrent assetsifexpected tobe term. Assetsinthiscategorywere clas- ly forthepurposeofsellinginshort fied in this category if acquired principal- for trading. A financial asset wasclassi- profit orlosswere financialassetsheld Financial assetsatfairvaluethrough a. cable prior1April2018 ment andgainslosses:policyappli- Financial assets–subsequentmeasure- Notes totheFinancialStatements Held tomaturity Available-for-sale financialassets Loans andreceivables profit orloss Financial assets at fair value through - asset. it doesnotretain control ofthefinancial the risksandrewards ofownershipand transfers norretains substantiallyallof which the Group and Company neither of thefinancialassetare transferred in of therisksandrewards ofownership a transactioninwhichsubstantiallyall to receive thecontractualcashflowsin cial assetexpire, orittransferstherights rights tothecashflowsfrom thefinan- a financialassetwhenthecontractual The Group andCompanyderecognizes Financial asset 3.3.3 Derecognition cost includetradeandotherpayable. Financial liabilitiesmeasured atamortised nized inprofit orloss. or lossonderecognition is alsorecog- are recognized inprofit orloss.Anygain and foreign exchangegains andlosses fective interest method.Interest expense measured atamortisedcost usingtheef- Other financialliabilitiesare subsequently expense, are recognized inprofit orloss. gains andlosses,includinganyinterest FVTPL are measured atfairvalueandnet on initialrecognition. Financial liabilitiesat a derivativeoritisdesignatedassuch if itisclassifiedasheld-for-trading, itis nancial liabilityisclassifiedasatFVTPL ured atamortisedcostor FVTPL.Afi- Financial liabilitiesare classified asmeas- losses sequent measurement andgains Financial liabilities–Classification,sub- tion andabilitytoholdmaturity. turity thatanentityhadthepositiveinten- contd. for alltradeand otherreceivable. uses alifetimeexpectedloss allowance measuring expectedcredit losseswhich The Group usessimplifiedapproach to Policy applicableafter01April 2018 Financial assets 3.3.10 Impairment liability simultaneously. sis ortorealize theassetandsettle intends eithertosettlethemonanetba- able righttosetoff theamountsandit Company currently hasalegallyenforce- when, and only when,the Group and ed inthestatementoffinancialposition are offset andthenetamountpresent- Financial assetsandfinancialliabilities 3.3.4 Offsetting ognized inprofit orloss. transferred orliabilitiesassumed) isrec- tion paid(includinganynon-cashassets amount extinguishedandtheconsidera- ty, thedifference betweenthecarrying On derecognition ofafinancial liabili- recognized atfairvalue. liability based on themodified terms is different, inwhichcaseanewfinancial of themodifiedliabilityare substantially terms are modifiedandthe cashflows derecognizes afinancialliability whenits or expire. TheGroup andCompany obligation are discharged orcancelled, a financial liability when its contractual The Group andCompanyderecognizes Financial liabilities transferred assetsare notderecognized. transferred assets.Inthesecases,the tially alloftherisksandrewards ofthe position, butretains eitherallorsubstan- recognized in its statement of financial transactions whereby ittransfersassets The Group andcompanyentersinto objective evidenceindicatesthat aloss impaired. Afinancialassetisimpaired if er there isobjectiveevidencethatit each reporting datetodeterminewheth- ue through profit or loss is assessed at A financialassetnotcarried at fairval- Policy applicablebefore 01April2018 • • • • able data: it-impaired includesthefollowing observ- Evidence that a financial asset iscred- nancial assethaveoccurred. the estimatedfuture cash flows ofthefi- events thathaveadetrimentalimpacton set is‘credit impaired’ whenoneormore FVOCI are credit-impaired. Afinancialas- at amortisedcostanddebtsecurities sesses whetherfinancialassetscarried At each reporting date, the Group as- Credit-impaired financialassets forward-looking information. formed credit assessmentandincluding Company’s historicalexperienceandin- and analysis,basedontheGroup and quantitative andqualitativeinformation undue costoreffort. Thisincludesboth that is relevant and available without reasonable andsupportableinformation estimating ECLs,theGroup considers icantly sinceinitialrecognition andwhen of afinancialassethasincreased signif- When determiningwhetherthecredit risk reorganisation. enter bankruptcyorotherfinancial it isprobable thattheborrower will would notconsiderotherwise; by theGroup ontermsthattheGroup The restructuring ofaloanoradvance or beingmore than90dayspastdue; a breach ofcontractsuchasadefault borrower orissuer; Significant financialdifficulty ofthe carrying amount and the present value calculated as the difference between its cial assetmeasured atamortisedcostis An impairmentlossinrespect ofafinan- historical trends. to begreater orlessthansuggestedby are suchthattheactuallossesare likely current economicandcredit conditions management’s judgementastowhether the amountoflossincurred, adjustedfor ability ofdefault,timingrecoveries and Group useshistoricaltrends oftheprob- In assessingcollectiveimpairment,the similar riskcharacteristics. by grouping togetherreceivables with are collectivelyassessedfor impairment bles thatare notindividuallysignificant incurred butnotyetidentified.Receiva - sessed foranyimpairmentthathasbeen cifically impaired are thencollectivelyas- nificant receivables found not tobespe- specific impairment.Allindividuallysig- significant receivables are assessedfor asset andcollectivelevel.Allindividually ment forreceivables atboth aspecific The Group considers evidence of impair for asecurity. the disappearance of an active market debtor or issuerwill enter bankruptcy, or not considerotherwise,indicationsthata the Group ontermsthatthe Group would debtor, restructuring ofanamountdueto can includedefaultordelinquencybya (including equitysecurities)are impaired Objective evidencethatfinancialassets that canbeestimatedreliably. mated future cashflowsofthatasset event had a negative effect on the esti- ognition oftheasset,andthatloss event hasoccurred aftertheinitialrec- - hensive income. security isrecognised inothercompre- of animpaired available-for-sale equity any subsequent recovery in the fair value sal recognised inprofit orloss.However, is reversed, with the amount of the rever in profit orloss,thentheimpairmentloss after theimpairmentlosswasrecognised related objectivelytoaneventoccurring curity increases andtheincrease canbe of animpaired available-for-sale debtse- If, inasubsequentperiod,thefairvalue a componentofinterest income. attributable totimevalueare reflected as loss. Changesinimpairmentprovisions loss previously recognised inprofit or current fair value, less any impairment repayment andamortisation, andthe the acquisitioncost,netofanyprincipal in profit orlossisthedifference between comprehensive incomeand recognised mulative lossthatisremoved from other reserve inequity, toprofit orloss.Thecu- income, and presented in thefair value been recognised inothercomprehensive transferring thecumulativelossthathas investment securitiesare recognised by Impairment lossesonavailable-for-sale loss isreversed through profit orloss. to decrease, thedecrease inimpairment causes the amount of impairment loss the discount.Whenasubsequentevent be recognised through theunwindingof est ontheimpaired assetcontinuesto ance accountagainstreceivables. Inter profit orlossandreflected inanallow- interest rate.Lossesare recognised in counted attheasset’s originaleffective of theestimatedfuture cashflowsdis- - - 127 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 128 Annual Report 2018 | 2019 nor exceedsthecarryingamount that does notexceeditsrecoverable amount, so thatthecarryingamountof theasset was recognized, thereversal islimited amount sincethelastimpairment loss to determinetheasset’s recoverable been achangeintheassumptionsused ment loss is reversed only if there has amount. Apreviously recognized impair or cash-generatingunit’s recoverable exists, theGroup estimatestheasset’s may have decreased. If such indication previously recognized impairmentlosses as towhetherthere isanyindicationthat sessment ismadeateachreporting date For assets excluding goodwill, an as- ate valuationmodelisused. fair value less costs to sell, an appropri - risks specifictotheasset.Indetermining ments ofthetimevaluemoneyand rate thatreflects current marketassess- present valueusingapre-tax discount future cashflowsare discountedtotheir In assessingvalueinuse,theestimated ten downtoitsrecoverable amount. asset isconsidered impaired andiswrit- unit exceedsitsrecoverable amount,the amount ofanassetorcash–generating and itsvalueinuse.Where thecarrying erating unit’s fair value less costs to sell is thehigherofanasset’s orcashgen- amount. Anasset’s recoverable amount Group estimatestheasset’s recoverable ment testing of an asset is required, the indication exists,orwhenannualimpair that an asset may be impaired. If any ing datewhetherthere isanindication tax assetsare reviewed ateachreport- non-financial assets,otherthandeferred The carrying amounts of the Group’s assets 3.4 Notes totheFinancialStatements Impairment ofNon-financial - - that theamountultimatelyrecognised conditions are expectedtobemet,such ed serviceandnon-marketperformance the numberofawards forwhichtherelat- nised asanexpenseisadjusted toreflect period oftheawards. Theamountrecog- ing increase inequity, overthevesting nised as an expense,with a correspond- granted toemployeesisgenerallyrecog- tled share-based payment arrangements The grant-datefairvalueofequity-set- arrangements 3.6.2 Loss, asincurred. are recognised as an expense in Profit or ees Trust Fund covering all employees Employees Provident Fund andEmploy- amounts. Obligationsforcontributionsto constructive obligationtopayanyfurther separate entityandwillhavenolegalor an entity pays fixed contributions into a employment benefitplanunderwhich Defined ContributionPlanisapost- and Employees’Trust Fund Cargills Employees’Provident Fund 3.6.1 3.6 cial position. amortised cost inthe statement of finan- Cash andcashequivalentsare carriedat changes intheirfairvalue. that are subject to an insignificant risk of in hand,andwithbanksatshortnotice Cash andcashequivalentsinclude 3.5 nized inprofit orloss. in prior years. Such reversal is recog- ment lossbeenrecognized fortheasset preciation/ amortisation,hadnoimpair would havebeendetermined,netofde- Employee Benefits Cash andEquivalents Share-based payment Defined contributionplans– contd. - ment losses. depreciation andaccumulatedimpair ments attheinceptionlessaccumulated present valueofminimumleasepay- to theloweroftheirfairvalueand lease are measured at anamount equal Assets acquired bythewayoffinance asset. rewards incidental to the ownership of an Group substantiallyassumestheriskand nance leaseswhenbyanagreement, the Assets are classifiedasacquired byfi- 3.9.1 3.9 Leases after thereporting date. ment oftheliabilityforatleast12months has anunconditionalrighttodefersettle- bilities unlesstheCompanyandGroup Borrowings are classifiedascurrent lia- 3.8 Borrowings the discretion oftheGroup. when theyare declared andnolongerat im dividendsare deducted from equity and approved bytheshareholders. Inter and declared bytheBoard ofDirectors equity when they are recommended by ognised asaliabilityanddeductedfrom Dividends onordinary shares are rec - 3.7 outcomes. ferences betweenexpected andactual conditions andthere isno true-up fordif- payment ismeasured toreflect such grant-date fairvalueoftheshare-based awards withnon-vestingconditions,the ing date.Forshare-based payment ket performanceconditionsatthevest- meet therelated serviceandnon-mar is basedonthenumberofawards that Dividends Payable Finance Leases - - - the periodinwhich theyoccur. costs are recognised inprofit or loss in its intended use or sale. Otherborrowing substantial period of time to get ready for qualifying assetisanwhich takesa asset aspartofthecost asset.A construction orproduction ofqualifying are directly attributabletotheacquisition, Group capitalizesborrowing coststhat ard-LKAS 23on‘Borrowing Costs’,the As perSriLankaAccountingStand- 3.11 Recognition er Comprehensive Income Expenditure Statement ofProfit orLossandOth- obligation atthatdate. risks anduncertaintiessurrounding the reporting date,takinginto accountthe to settlethepresent obligation atthe estimate oftheconsiderationrequired sets’. The amount recognised is the best tingent LiabilitiesandContingentAs- Standard -LKAS37on‘Provision, Con- ance withtheSriLankaAccounting the amountofobligationinaccord - and areliable estimatecan bemadeof will berequired tosettle the obligation sources embodying economic benefits and itisprobable thatanoutflow ofre- constructive) asaresult of apastevent, Group hasapresent obligation(legalor ment of Financial Position when the Provisions are recognised intheState- 3.10 Provisions straight-line basis. it orLossovertheperiodofleaseona are recognised asanexpenseinProf- es. Paymentsunderoperatingleases leases are classifiedasoperatingleas- asset under the lease agreement, such stantially alltherisksandrewards ofan When thelessoreffectively retains sub- 3.9.2 Borrowing Costs Operating Leases asset intheFinancial Statements. periods, theexcess isrecognised asan riods exceedstheamountdue forthose paid inrespect ofcurrent andpriorpe- When the amount of taxation already as aliabilityintheFinancialStatements. riods totheextentunpaidisrecognised Taxation forthecurrent andprevious pe- previous years. adjustment to taxpayable in respect of enacted atthereporting date,andany using taxratesenactedorsubstantially able onthetaxableincomeforyear, The current taxistheexpectedpay- 3.13.1 in therespective statements. ty, inwhichcase itisrecognised directly income orstatementofchangesinequi- the statementofothercomprehensive lates totheitemsrecognised directly in statement excepttotheextentthatitre - expense isrecognised in theincome rent and deferred tax. The income tax Income taxexpensecomprisesofcur 3.13 maining balanceoftheliability. stant periodicrateofinterest on there- the leasetermsoastoproduce acon- pense isallocatedtoeachperiodduring the outstandingliability. Thefinanceex- the financeexpenseandreduction of finance leasesare apportioned between Minimum leasepaymentsmadeunder 3.12.2 lease expense,overtheterm. recognised asanintegralpartofthetotal lease. Lease incentives received may be straight-line basisoverthetermof es are recognised inprofit orlossona Payments madeunderoperatingleas- 3.12.1 3.12 Leases Income Tax Expense Finance Leases Current Tax Operating Leases - 3.13.2 ments thereto. enue ActNo.10of2006anditsamend- puted in accordance withthe Inland Rev- incorporated inSriLankahasbeencom- Provision forcurrent taxforcompanies Group are disclosed separately as- nised byindividualcompanies withinthe Deferred taxassetsandliabilitiesrecog- ised. that therelated taxbenefitwillbereal- to the extent that it is no longer probable at eachreporting dateandare reduced utilised. Deferred taxassetsare reviewed be availableagainstwhichtheycan is probable thatfuture taxableprofits will porary differences, totheextentthatit unused taxlossesanddeductibletem- A deferred taxassetisrecognised for reporting date. acted orsubstantivelyenactedbythe based on the laws that have been en- porary differences whentheyreverse, that are expected to be applied to tem- Deferred taxismeasured atthetaxrates reverse intheforeseeable future. to theextentthattheyprobably willnot subsidiaries andjointlycontrolled entities the differences relating toinvestmentsin neither accounting nor taxable profit, and business combinationandthataffects or liabilitiesinatransactionthatisnot goodwill, the initial recognition of assets differences arisingoninitialrecognition of ferred taxisnotrecognised fortemporary amounts usedfortaxationpurposes.De- for financialreporting purposes andthe rying amountsofassetsandliabilities temporary differences betweenthecar Deferred tax isrecognised in respect of Deferred Taxation - 129 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 130 Annual Report 2018 | 2019 representing itsobligationtomakelease the underlying asset andaleaseliability use asset representing its right to use lessees. A lessee recognises a right-of- ance leaseassetaccounting model for SLFRS 16 introduces a single, on-bal- uary 2019. riods beginningonorafter1stofJan- FRS 16Leaseseffective forannualpe- Sri LankaAccountingStandard -SL effective 3.15 of thoseitemsasexplainedinnote24. Statement ofCashFloware comprised Cash Equivalentsasreferred tointhe cant risk of changes in value. Cash and of cashandare subjectto aninsignifi- are readily convertibletoknownamounts short-term, highlyliquidinvestmentsthat Cash andEquivalentscompriseof arately recognised. activities andfinancingare sep- whereby operatingactivities, investing – LKAS7on‘StatementofCashFlows’, with theSriLankaAccountingStandard of preparing cashflowsin accordance prepared byusingthe‘Indirect Method’ The StatementofCashFlowshasbeen 3.14 the Group companies. ny hascontrol overthedividend policyof tion willbemade,astheholdingcompa- to theextentthatitisprobable distribu- uted profits oftheGroup companiesonly Deferred tax isprovided on theundistrib- in theConsolidatedIncomeStatement. dends are recognised asataxexpense taxontheIntra-Group divi- Withholding against eachother. of financial position andare notoffset sets andliabilitiesintheGroup statement Notes totheFinancialStatements Standards issuedbutnotyet Statement ofCashFlows not restate thecomparativeinformation expedients. As a result, thecompanywill spective approach withoptionalpractical ing 31March 2020,usingmodifiedretro- its financial statements for theyear end- The group planstoadoptSLFRS16in on leaseliabilities. right-of-use assetsandinterest expense expense withadepreciation chargefor places thestraight-lineoperatinglease leases willnowchangeasSLFRS16re- the nature ofexpensesrelated tothose retail andrestaurant outlets.Inaddition, and liabilitiesforitsoperatingleases that theGroup willrecognise newassets the mostsignificantimpactidentifiedis impact onitsfinancialstatements.Sofar, The Group hasassessed thepotential • • ply thestandard usinga: As alessee,thecompanycaneitherap- Transition 2019. riods beginningonorafter1January The Standard iseffective forannualpe- ing theLegalFormofaLease. ing theSubstanceofTransactions Involv- Leases –IncentivesandSIC-27Evaluat- contains aLease,SIC-15Operating 4 Determining whether anArrangement ance includingLKAS17Leases,IFRIC SLFRS 16replaces existing leasesguid- finance oroperatingleases. i.e lessorscontinuetoclassifyleasesas remains similartothecurrent standard – of lowvalueitems.Lessoraccounting tions forshort-termleasesand payments. There are optional exemp- optional practicalexpedients. Modified retrospective approach with Retrospective approach; or contd. and Company’s FinancialStatements. ed tohaveamaterialeffect ontheGroup None oftheseamendmentsare expect- 28) SLFRS 11,LKAS12,23and -2017 Cycle(AmendmentstoSLFRS3, Annual improvements to SLFRSs 2015 Settlement (AmendmentstoLKAS19), clude PlanAmendments,Curtailmentor fied forvariousspecificissues.Thesein- A numberofstandards havebeenmodi- Standards 3.16 of initialapplication. balance ofretainedatthedate earnings and there isnoimpacttotheopening Amendments toAccounting For theyearended31March goods havebeentransferred tothebuyers,usuallyondeliveryofgoods. Revenue isrecognised uponsatisfactionofperformanceobligation.Revenuefrom saleofgoodsisrecognised whenthecontrol of Revenue Recognition-SaleofGoods Accounting Policy 4. REVENUE

Gross revenue Revenue related taxes Net revenue tal informationare disclosedinNote 30. The Group primarilyhasthree businesssegmentsnamely, Retail,FastMoving ConsumerGoods(FMCG)andRestaurant,segmen- 20 40 60 80 - Group Segment NetRevenue (Rs. Bn) Restaurant Fast movingconsumerorgoods Retail 2019 2018

104,690,462 10 15 20 30 35 (10,027,471) 25 94,662,991 5 - Company NetRevenue (Rs. Mn) Rs. ‘000 2019 2019 Group Company 100,924,320 91,293,127 (9,631,193) 2018 Rs. ‘000 2018 Rs. ‘000 21,772 18,743 (3,029) 2019 Rs. ‘000 35,092 30,210 (4,882) 2018 131 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 132 Annual Report 2018 | 2019 For theyearended31March Rental incomeisrecognised on an accrualbasis. goods. Income from scrapsalesis recognised whenthecontrol ofgoodshavebeen transferred tothebuyer, usuallyondelivery ofthe Foreign currency gainsandlossesare reported onanetbasis. on disposal. ing investments, are accounted for in profit or loss, after deducting the carrying amount of such assets from the net sales proceeds Gains orlossesofrevenue nature arisingfrom thedisposalofproperty, plantandequipmentothernon-current assets,includ- Dividend isrecognised whenthe Group’s right toreceive thepaymentisestablished. Accounting Policy 6. Cost ofsalestheCompanyandGroup includesdirect operating costs. 5. Notes totheFinancialStatements

Rental income Dividend income Gain ondisposalofproperty, plantandequipment Gain ondisposalofinvestmentproperty Gain onrepurchase ofshares by subsidiary Income from services Merchandising income Foreign exchangegain Amortisation ofdeferred income Sundry income

- Capitalgrant - Other - Relatedcompanies OTHER INCOME COST OFSALES

contd. 1,808,454 2,179,674 Rs. ‘000 186,843 123,182 43,531 11,481 1,379 4,140 2019 664 - - - Group Company 1,010,440 1,796,825 3,037,066 Rs. ‘000 112,761 94,918 11,481 6,735 3,212 2018 694 - - - 1,757,697 2,754,486 Rs. ‘000 316,092 676,262 1,250 2,521 2019 664 - - - - - 2,450,911 1,296,025 4,616,918 Rs. ‘000 249,741 617,103 2,094 2018 694 350 - - - - For theyearended31March 7.

7.1

7.2

Net financecost For theyearended31March Profit before taxoncontinuingoperationsisstatedaftercharging/(crediting) allexpenses/(income) includingthefollowing: 8. year 2017/18. No borrowing costhasbeen incurred bytheGroup andtheCompanyonqualifying assetsduringthecurrent financialyearand

Staff costs(Note8.1) Auditors’ remuneration

Depreciation onproperty, plantandequipment(Note12) Amortisation ofintangibleassets(Note14) Revaluation loss/(reversal ofrevaluation loss) Amortisation ofprepayment onleaseholdlandandbuildings(Note16) Provision for/(reversal) impairmentoftradereceivable Impairment ofavailableforsale investment Foreign exchangegain/(loss) Provision for/(reversal) impairment ofinventories Directors’ emoluments(Note34.1) - Interest income - Shorttermloans - Bankoverdrafts - Otherloansandbankcharges - Staff securitydeposits - Auditandauditrelated services - Nonauditservices of property plantandequipment NET FINANCECOST PROFIT BEFORETAX Finance income Finance Cost

1,474,193 1,704,721 1,424,664 6,614,902 2,431,028 Rs. ‘000 Rs. ‘000 280,057 280,057 188,780 408,978 40,842 10,326 96,410 22,621 (6,418) 4,727 4,7243,8523,849 4,140 2019 2019 906 751 - - Group Company Group Company 1,154,133 1,576,757 1,307,163 5,851,752 2,168,649 Rs. ‘000 Rs. ‘000 269,594 269,594 220,250 201,513 106,526 352,092 10,155 24,950 11,243 31,056 34,443 5,471 3,212 2018 2018 861 Rs. ‘000 Rs. ‘000 102,429 102,429 427,312 447,788 345,359 372,258 17,406 46,518 34,456 49,478 3,070 1,905 4,560 7,613 2019 2019 244 - - - - Rs. ‘000 Rs. ‘000 635,708 167,238 857,845 760,071 351,524 97,774 97,774 54,899 42,534 61,962 31,023 43,371 (1,492) 1,585 2,000 2018 2018 - - - - 133 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 134 Annual Report 2018 | 2019 For theyearended31March 8.1 Notes totheFinancialStatements

Salaries, wagesandothercosts Employee benefits(Note27.3) Defined contributionplancost-EPFandETF Equity Settledshare basedpayment transaction

Number ofemployeesasat31March • • • • • rying amountsforfinancialreporting purposes. Deferred taxliabilitiesare recognised foralltaxabletemporarydifferences, except: Deferred taxisprovided ontemporarydifferences atthereporting datebetweenthetaxbasesofassetsandliabilitiestheircar Deferred Tax in accordance withtheprovisions oftheInlandRevenueActNo.242017. enacted bythereporting date. Accordingly, provision fortaxationisbasedontheprofit fortheyearadjustedtaxationpurposes to thetaxationauthorities.Thetaxratesandlawsusedcomputeamountare thosethatare enactedorsubstantively Current taxassetsandliabilities forthecurrent andprioryearsare measured attheamountexpectedtoberecovered from orpaid Current Tax Accounting Policy 9. available againstwhichthetemporary differences canbeutilised. only totheextentthat it isprobable thatthe temporary differences will reverse intheforeseeable future and taxableprofit willbe In respect of deductible temporary differences associated with investments in subsidiaries, deferred tax assetsare recognised profit nortaxableprofit orloss;and liability inatransactionthatisnotbusinesscombinationand, atthetimeoftransaction,affects neithertheaccounting Where thedeferred taxassetrelating tothedeductibletemporarydifference arisesfrom theinitial recognition ofanasset or and thecarryforward ofunusedtaxcredits andunusedtaxlossescanbeutilisedexcept: losses, to the extent that it is probable that taxable profit will be available againstwhich the deductible temporary differences, Deferred taxassetsare recognised foralldeductibletemporarydifferences, carryforward ofunused taxcredits andunused tax future temporary differences canbecontrolled anditisprobable thatthetemporarydifferences willnotreverse intheforeseeable In respect oftaxabletemporarydifferences associatedwithinvestmentsinsubsidiaries,where thetimingofreversal ofthe a businesscombinationand,atthetimeoftransaction,affects neithertheaccountingprofit nortaxableprofit orloss;and Where thedeferred taxliabilityarisesfrom theinitialrecognition ofgoodwilloranassetliabilityinatransactionthatisnot INCOME TAX EXPENSE Staff costs

contd. 5,808,955 6,614,902 Rs. ‘000 193,311 520,007 92,629 8,932 2019 Group Company 5,059,127 5,851,752 Rs. ‘000 179,548 468,239 144,838 9,158 2018 Rs. ‘000 238,560 372,258 73,034 23,855 36,809 1,902 2019 Rs. ‘000 200,958 351,524 71,272 21,737 57,557 1,794 2018 - For theyearended31March rent taxliabilitiesandthedeferred taxesrelate tothesametaxableentityandtaxationauthority. Deferred taxassetsanddeferred taxliabilitiesare offset ifalegallyenforceable rightexiststosetoff current taxassetsagainstcur of Profit orLoss. Current taxanddeferred taxrelating toitemsrecognised directly inequityare alsorecognised inequityandnottheStatement or theliabilityissettled,basedontaxrates(andlaws)thathavebeenenactedsubstantivelyatreporting date. Deferred taxassetsandliabilities are measured atthetaxratesthatare expectedtoapplyintheyearwhenassetisrealised profit willallowthedeferred taxassettoberecovered. tax assetsare reassessed ateachreporting dateandare recognised totheextentthatithasbecomeprobable thatfuture taxable able thatsufficient taxableprofit willbeavailabletoallow allorpartofthedeferred taxassettobeutilised.Unrecognised deferred The carryingamountofdeferred taxassetsisreviewed at each reporting dateandreduced totheextentthatitisnolongerprob- 9.

Current taxexpense(Note 9.1) Current incometax Withholding taxonrelated companydividend Withholding (Over) /underprovision ofcurrent taxofprevious years Deferred taxexpense(Note 9.2)

(b) (a) Mn) andRs.5.5Mn(2018-4.8respectively. During theyearGroup andtheCompanypaidEconomicServiceCharge(ESC)amounting toRs.523Mn(2018-561 with theprovisions oftheInlandRevenueActNo.102006andsubsequentamendmentsthereto. Cargills QualityConfectioneries(Private)Limitedisexemptfrom incometaxtilltheyearof assessment2019/2020inaccordance full orpartialexemptionsandconcessions. The taxliabilityofcompaniesare computedatthestandard rateof28%or40%exceptforthefollowingcompanywhichenjoy INCOME TAX EXPENSECONTD.

1,151,226 1,369,122 (104,377) Rs. ‘000 287,283 34,990 2019 Group Company 1,429,414 1,914,413 Rs. ‘000 250,540 305,218 (70,759) 2018 Rs. ‘000 59,514 18,270 77,784 2019 - - Rs. ‘000 125,618 73,880 51,738 2018 - - - 135 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 136 Annual Report 2018 | 2019 For theyearended31March 9.1 Notes totheFinancialStatements

Profit before taxation Aggregate disallowedexpenses Aggregate allowableexpenses Aggregate otherincome Exempt profit Adjusted businessprofit Tax lossesincurred Taxable incomefrom othersources Adjusted profit (a) Tax lossesbrought forward Tax lossesadded(Note9.1.1) Tax lossesutilised(b) Adjustment onfinalisationofliability Tax lossescarriedforward Taxable income(a+b) Income tax@28% Income tax@12% Income tax@10% Income tax@40% Current taxcharge Tax lossesincurred bycontinuingoperations 9.1.1

Reconciliation BetweenCurrent Tax ChargeandProfit Before Taxation isGivenBelow: Tax LossesAdded

contd. (3,037,802) 3,402,935 3,874,297 3,884,214 4,070,133 1,439,507 1,544,170 4,029,738 1,074,903 1,151,226 (292,182) Rs. ‘000 160,571 119,710 (63,034) (40,395) 25,348 25,348 76,323 25,348 25,348 2019 - - Group Company (3,015,733) (1,652,754) 5,245,334 4,323,701 4,821,438 5,200,783 1,801,029 1,439,507 5,111,377 1,427,715 1,429,414 (305,378) Rs. ‘000 346,083 (79,110) (89,406) 33,262 33,262 33,262 33,262 1,069 2018 255 375 (1,894,375) 1,617,803 (164,615) Rs. ‘000 551,310 110,123 102,429 212,552 212,552 59,514 59,514 2019 ------(4,047,117) 3,300,452 1,073,392 (161,983) Rs. ‘000 164,744 263,455 263,455 98,711 73,505 73,880 2018 375 ------For theyearended31March 9.2

Operating leaseliability Deferred taxexpensearisingfrom; Accelerated depreciation fortax purposes Provisions (Includinginventory andreceivables impairment) Employee benefits Benefit arisingfrom taxlosses Deferred income Deferred taxcharge /(release) As at31March have notbeenrecognized, are asfollows. Confectioneries (Pvt)Limited,KotmaleMilkProducts Limited,andKotmaleMilkFoodsforwhichdeferred taxassets 9.3 ent cancontrol thetimingof reversal ofthesetemporarydifferences. standard rate companies. The deferred tax effect on undistributed reserves of subsidiaries has not been recognised since the Par Deferred taxhasbeencomputed takingintoconsiderationthetaxrateseffective from 1April2018whichis28%or40%forall

potential ordinary shares. attributable toordinary shareholders andtheweightedaveragenumberofordinary shares outstandingfortheeffects ofalldilutive ed averagenumberofordinary shares outstandingduringtheperiod.DilutedEPS isdeterminedbyadjustingtheprofit orloss Basic EPSiscalculatedbydividing theprofit orlossattributable toordinary shareholders oftheGroup /Companybytheweight- Accounting Policy 10. future taxableprofits willbeavailableagainstwhichtheGroup canusethebenefittherefrom. Deferred taxassetshavenotbeenrecognised inrespect oftaxlossestheabovecompaniesasitisnotprobable thatsufficient Tax losses Deductible temporarydifferences EARNINGS PERSHARE(EPS) Deferred IncomeTax Temporary differences associatedwith subsidiary companies,CargillsFoodServices(Pvt)Limited,Quality

Temporary temporaryTemporary 1,506,688 421,8731,367,347 1,506,688 421,8731,365,433 difference difference difference Rs. ‘000 Rs. ‘000 119,035 (62,413) (32,943) 34,990 1,012 7,084 3,215 2019 - Group Company 2019 2018

Tax effect on (194,172) Rs. ‘000 Rs. ‘000 137,576 295,361 305,218 (30,649) 93,887 3,215 2018 - 1,914 Rs. ‘000 Rs. ‘000 35,955 18,270 (9,175) (8,510) 2019 - - -

Tax effect on temporary difference Rs. ‘000 Rs. ‘000 382,857 382,321 (17,248) 77,066 51,738 (8,080) 2018 536 - - - - 137 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 138 Annual Report 2018 | 2019 10.1 Notes totheFinancialStatements Profit attributabletoequityshareholders oftheparent (Rs.‘000) Weighted averagenumberofordinary shares (ReferNote10.1.1) Basic earnings pershareBasic earnings (Rs.) 10.1.1 Issued ordinary shares asat1April Capitalisation ofreserves Weighted averagenumber ofordinary shares asat31March erage numberofordinary shares outstandingafteradjustmentfortheeffects ofalldilutivepotential ordinary shares. pershareThe calculationofdilutedearnings hasbeenbasedontheprofit attributabletoordinary shareholders andweighted-av- 10.2 Profit attributabletoequity shareholders oftheparent (Rs.‘000) ordinary shares (Diluted)(ReferNote10.2.1) Weighted averagenumber of Diluted earnings pershareDiluted earnings (Rs.) 10.2.1 Weighted-average numberofordinary shares (basic) Effect ofshare optionsonissue shares (diluted)asat31stMarch Weighted-average numberofordinary Basic Earnings PerShareBasic Earnings Diluted EPS Weighted Average NumberOfOrdinary Shares Weighted Average NumberOfOrdinary Shares (Diluted)

contd. 255,999,927 255,999,927 255,999,927 256,288,311 256,288,311 256,288,311 1,980,246 1,980,246 2019 2019 2019 2019 7.74 7.73 - - Group Company Group Company Group Company Group Company 255,999,927 224,000,000 255,999,927 256,288,311 255,999,927 256,288,311 31,999,927 3,200,534 3,200,534 288,384 12.50 12.49 2018 2018 2018 2018 255,999,927 255,999,927 255,999,927 256,288,311 256,288,311 256,288,311 1,540,019 1,540,019 2019 2019 2019 2019 6.02 6.01 - - 255,999,927 224,000,000 255,999,927 256,288,311 255,999,927 256,288,311 31,999,927 3,174,834 3,174,834 288,384 12.40 12.39 2018 2018 2018 2018 qualified independentvaluersevery three years.TheGroup revalued allitsfreehold landandbuildings asat31March 2018. decreases are charged tothestatement of profit orloss.Revaluationoffree holdlandandbuildingsare carriedoutbyprofessionally es ofthesameassetare chargedagainsttherevaluation reserves inthestatementofchangesequity, anyexcessandallother in othercomprehensive incomeandaccumulatedinequitytheassetrevaluation reserve. Decreases thatoffset previous increas- the dateofrevaluation. Where landandbuildingsare subsequentlyrevalued, anyincrease inthecarryingamountisrecognised Land andbuildingsare measured atfairvaluelessaccumulateddepreciation onbuildingsandimpairmentchargedsubsequentto Revaluation Model Plant andequipmentare statedatcostlessaccumulateddepreciation andanyaccumulatedimpairmentloss. Cost model items ofProperty, Plant&Equipment. When majorcomponents of anitemProperty, Plant&Equipmenthavedifferent usefullives,theyare accountedforasseparate related equipmentiscapitalised asapartofcomputerequipment. at thesiteonwhichtheyare locatedandcapitalisedborrowing costs.Purchased software thatisintegraltothefunctionalityof bringing theassettoaworkingconditionforitsintendeduseandcostsofdismantlingremoving theitemsandrestoring of it. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to expenditure thatisdirectly attributabletotheacquisition of theassetandcostincurred subsequentlytoaddorreplace apart An itemofProperty, PlantandEquipmentthatqualifiesforrecognition asanassetisinitiallymeasured atitscost.Costincludes Basis ofMeasurement Group andcostoftheasset canbemeasured reliably. Property, PlantandEquipmentisrecognised ifitisprobable thatfuture economicbenefitsassociatedwiththeassetwill flowtothe Basis ofRecognition Accounting Policy 12. 2019, hasnotbeenrecognised as atthereporting dateincompliancewithLKAS10-"EventsAftertheReportingPeriod". 2nd Interim-paid 1st Interim-paid Dividends fortheyear 11. A finaldividendofRs.4.10pershare isproposed fortheyearended31 An interimdividendofRs1.90pershare (Rs.486.4Mn)waspaidon28November2018fortheyearended31stMarch 2019. PROPERTY PLANTAND EQUIPMENT DIVIDEND PERSHARE

1.90 1.90 Rs. - Rs. ‘000 486,400 486,400 2019 - st March 2019.Thefinaldividend proposed on25thJune Group Company 4.10 918,400 6.00 1,344,000 1.90 425,600 Rs. Rs. ‘000 2018 1.90 1.90 Rs. - Rs. ‘000 486,400 486,400 2018 2019 - 4.10 918,400 6.00 1,344,000 1.90 425,600 Rs. Rs. ‘000 139 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 140 Annual Report 2018 | 2019 The estimatedusefullivesare asfollows; future economicbenefitsembodied intheasset.Landisnotdepreciated. of anitemproperty, plantandequipmentsincethismethodmostcloselyreflects ofconsumptionthe theexpectedpattern Depreciation isrecognised inStatementofProfit orLossonastraight–linebasis overtheestimatedusefullivesofeachcomponent Depreciation amount oftheasset)isrecognised in‘Other income’intheStatementofProfit orLossintheyearassetisde-recognised. gain orlossarisingonderecognition oftheasset(calculatedasdifference between thenetdisposalproceeds andthecarrying Property, plantandequipmentare de-recognised ondisposalorwhennofuture economicbenefitsare expectedfrom itsuse.Any De-recognition been completedduringtheyearandputtousehavetransferred toProperty, plantand equipment. development, awaitingcapitalisation.Theseare statedintheStatementofFinancialPositionatcost.Capitalassetswhichhave These are expenses of a capital nature directly incurred in the construction of buildings, major plant and machinery and system Capital Work-in-Progress asset. renovation replaces anidentifiablepartoftheasset.Majorrenovations are depreciated duringtheremaining usefullifeoftherelated excess ofthemostrecently assessedstandard ofperformancetheexistingassetswillflowtoCompany&Group andthe The costofmajorrenovations isincludedinthecarryingamountofassetswhenitprobable thatfuture economicbenefitsin Repairs and maintenance are charged to the Statement of Profit or Loss during the financial period in which they are incurred. Repairs &Maintenance reliably. ThecostofdaytoservicingProperty, PlantandEquipmentare chargedtotheProfit orLossasincurred. is probable thatthefuture economicbenefitsembodiedwithin thecomponentwillflowtoGroup anditscostcanbemeasured The cost of replacing a component of an item of Property, Plant and Equipment is recognised in the carrying amount of the item if it Subsequent Costs Notes totheFinancialStatements icant partofanitemproperty, plantandequipmentcommence todepreciate whenitis availableforuse,i.e.whenitisin The aboveratesare consistentlyusedbyalltheGroup entities.Thedepreciation ratesare determinedseparatelyforeachsignif- Furniture andfittings Plant &machinery Air conditionandrefrigeration Office andotherequipment IT equipmentandsoftware Motor vehicles Improvement ofleaseholdproperties Buildings Class ofasset contd. % perannum 20 –33.3 10 –20 10 –20 10 –25 20 20 25 2 5 -10years 5 -10years 4 -10years 3 -5years 50 years 5 years 5 years 4 years Period Carrying valueas at31March Capital workinprogress Carrying value As at31March Disposals Charge fortheyear As at1April Depreciation /Impairment As at31March Disposals Group Revaluation Additions As at1April Cost /revaluation Company Carrying valueasat31March Capital workinprogress Carrying value As at1April Depreciation /Impairment As at31March Disposals As at1April Cost /revaluation Depreciation methods,usefullivesandresidual valuesare reassessed ateachreporting dateandadjustedifappropriate. of anassetceasesattheearlierdatethatisclassifiedasheldforsaleorde-recognised. the locationandconditionnecessaryforittobecapableofoperatinginmannerintendedbymanagement.Depreciation Additions Charge fortheyear Revaluation Disposals As at31March - -

- - land Freehold

10,052,474 10,052,474 2,266,075 2,266,075 2,266,075 9,553,385 Rs. ‘000 499,089 ------

2,153,293 5,066,592 2,968,834 9,501,457 2,835,750 Freehold leasehold Rs. ‘000 347,212 3,728 408,470 7,264 398,259 3,536 building 715,871 133,084 815,541 61,258 3,536 53,259 3,014 10,211 3,728 99,670 7,999 522 ------

incurred on incurred Expenditure 8,080,364 3,885,107 1,421,093 4,434,865 Rs. ‘000 building 549,758 – -

19,408,451 1,324,851 and others machinery Motor 17,376,776 11,472,353 7,936,098 317,728 9,833,621 2,047,815 1,652,725 Rs. ‘000 199,506 143,830408,130 365,362 175,159 133,930365,362327,628 297,981 161,163 246,248 164,913 (16,140) (31,608)(47,748)(45,783) (13,993) 98,475 17,333 24,347 13,65046,51842,534 51,733 - Plant, - - (3,750)(4,800) - (3,750) (4,800) - - -

1,206,434 1,007,123 Rs. ‘000 vehicles 909,851 150,025 128,875 (31,603) - 27,877,020 43,256,067 39,052,709 39,052,709 15,344,450 17,729,882 2,801,303 2,772,00 4 2,732,823 2,713,669 3,140,953 3,079,031 3,079,031 3,012,284 2,350,835 1,368,558 4,251,106 2,431,028 Rs. ‘000 (45,596) 68,480 58,335 65,672 56,967 2019 2018 Total Total - - 14,580 25,076,817 32,994,772 13,203,276 15,344,450 5,353,398 2,168,649 Rs. ‘000 750,322 (27,475) 141 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 142 Annual Report 2018 | 2019 the inputstovaluationtechniquesused.Detailsofgroup landsmeasured atfairvalueas31March 2018isasfollows: ment foralllandsandbuildingsclassifiedasproperty plantandequipmenthasbeencategorized asalevel3fairvaluebasedon In estimatingthefairvalueofproperties, thehighestandbestuseofproperties istheircurrent use.Thefairvaluemeasure- in therelevant locations.Mr. Weeratne isnotrelated Tissa totheCompany. member oftheInstituteValuers ofSriLanka,withappropriate qualificationsandrecent experienceinthevaluationofproperties Fair value ofLandand Buildings asat31 March 2018have been basedonvaluationscarried outbyMr. Weeratne (FIV), a Tissa 12.1 The detailsofassetsmortgagedforbankingfacilitiesobtained havebeengivenintheNote25.3tofinancialstatements. Expenditure incurred onleaseholdbuildingrepresent thecostincurred insettingupnewoutlets. Notes totheFinancialStatements 10,000 15,000 5,000 Revaluation ofFreehold Land&Buildings - Group -PPE(Rs. Mn) Capital workinprogress Motor vehicle andothers Plant, machinery Expenditure incurredonleaseholdbuilding Freehold building Freehold land

2019

2018 1000 2000 3000 - Company -PPE(Rs. Mn) contd. Capital workinprogress Motor vehicle andothers Plant, machinery Expenditure incurredonleaseholdbuilding Freehold building Freehold land

2019

2018 Ja-Ela A,C,D,B1) Ingiriya (Lot Moratuwa Gampaha Mattakkuliya (141) Kohuwala Mattakkuliya (111) Nuwara Eliya Maharagama Kandy Dematagoda Colombo -02 Staple Street - - 01 Canal Row, Colombo Colombo -01 Location value market Open value market Open value market Open value market Open value market Open value market Open Approach Income value market Open value market Open Approach Income value market Open value market Open Approach Income value market Open valuation of Method 2018 March 31st 2018 March 31st 2018 March 31st 2018 March 31st 2018 March 31st 2018 March 31st 2018 March 31st 2018 March 31st 2018 March 31st 2018 March 31st 2018 March 31st 2018 March 31st 2018 March 31st 2018 March 31st valuation date of Effective Weeratne Mr.Tissa Weeratne Mr.Tissa Weeratne Mr.Tissa Weeratne Mr.Tissa Weeratne Mr.Tissa Weeratne Mr.Tissa Weeratne Mr.Tissa Weeratne Mr.Tissa Weeratne Mr.Tissa Weeratne Mr.Tissa Weeratne Mr.Tissa Weeratne Mr.Tissa Weeratne Mr.Tissa Weeratne Mr.Tissa valuer Property 4 Acres 26 Acres Perches 78.6 Perches 82.6 Perches 288 Perches 29 Perches 330 Perches 57 Perches 145 Perches 88 Perches 84 Perches 81.5 Perches 15 Perches 141 extent Land 28,976 - - 39,565 44,469 6,225 80,967 9,617 15,827 25,174 - 20,970 12,300 124,215 (Sq.ft) area Building 2 - - 1 4 1 2 1 1 1 - 2 1 1 buildings No.of. perch Market valueper perch Market valueper perch Market valueper perch Market valueper perch Market valueper perch Market valueper foot Rental persquare perch Market valueper perch Market valueper foot Rental persquare perch Market valueper perch Market valueper foot Rental persquare perch Market valueper inputs unobservable Significant 1,311,204 2,266,075 Valuation Rs. ‘000 242,999 250,104 123,900 446,000 104,600 719,033 212,500 508,550 288,792 774,630 284,897 93,050 2018 143 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 144 Annual Report 2018 | 2019 Notes totheFinancialStatements Katubedda Bandarawela Hatton Bogahawatta Mulleriyawa Baduragoda Mirigama, Thawalatenne Katoolaya Estate, Kelaniya Katana Ja -Ela Mattakuliya Location value market Open value market Open value market Open value market Open value market Open value market Open value market Open value market Open value market Open value market Open value market Open valuation of Method 2018 March 31st 2018 March 31st 2018 March 31st 2018 March 31st 2018 March 31st 2018 March 31st 2018 March 31st 2018 March 31st 2018 March 31st 2018 March 31st 2018 March 31st valuation date of Effective Weeratne Mr.Tissa Weeratne Mr.Tissa Weeratne Mr.Tissa Weeratne Mr.Tissa Weeratne Mr.Tissa Weeratne Mr.Tissa Weeratne Mr.Tissa Weeratne Mr.Tissa Weeratne Mr.Tissa Weeratne Mr.Tissa Weeratne Mr.Tissa valuer Property Acres 1.15 Perches 85 Acres 17.4 1 Acres Acres 1.7 Perches 49.8 4 Acres Acres 1.5 Acres 11.3 Acres 5.1 Acres 1.3 extent Land contd. 3,500 6,345 12,479 16,304 28,862 - 16,706 55,770 68,624 38,381 16,517 (Sq.ft) area Building - 1 4 6 3 - 1 2 4 1 3 buildings No.of. perch Market valueper perch Market valueper perch Market valueper perch Market valueper perch Market valueper perch Market valueper perch Market valueper perch Market valueper perch Market valueper perch Market valueper perch Market valueper inputs unobservable Significant Valuation Rs. ‘000 445,750 341,865 124,430 214,500 314,280 319,575 363,400 56,000 21,600 14,350 7,000 2018 12.2

Cost Group Accumulated depreciation Net bookvalue Cost Company Accumulated depreciation Net bookvalue of aninvestmentproperty are recognised intheProfit orLossintheyearofretirement ordisposal. withdrawn from use and nofuture economicbenefit is expected from itsdisposal.Anygainsorlosseson the retirement ordisposal Investment properties are de-recognised wheneither theyhavebeendisposedoforwhentheinvestmentproperty ispermanently De-recognition - Property, PlantandEquipment. erties are treated asproperty, plant andequipmentintheConsolidatedFinancialStatements,accountedforasperLKAS16 Where Group companiesoccupyasignificantportionoftheinvestmentproperty ofasubsidiary, suchportionofinvestmentprop- Profit orLossintheyearwhichtheyarise. values, whichreflect marketconditionsatthereporting date.Gainsorlossesarisingfrom changesinfairvalueare includedinthe Investment properties are initiallyrecognised atcost.Subsequenttoinitialrecognition theinvestmentproperties are statedatfair ordinary courseofbusiness,useintheproduction orsupplyofgoodsservicesforadministrativepurposes. Investment property is a property rental held either to earn income or for capital appreciation or for both, but not for sale in the Accounting Policy 13. Rs.270.35 Mn(2018-Rs.225.77Mn). Fully depreciated assets oftheGroup asattheyearendisRs.4,025.67Mn(2018-3,061.89Mn)andthatofCompany tions asatthereporting date. Capital workinprogress consistsofexpenditure incurred onprojects whichare notcompletedandcommencedbusinessopera- ciation costamountingtoRs.46.52Mn(2018-42.53Mn)isincludedintheotherexpensesofCompany. charged respectively tothe costofgoodssoldanddistribution,administrationotherexpensestheGroup. Thetotaldepre - Depreciation amounting to Rs. 2,092.84 Mn (2018 - Rs. 1,934.71 Mn) and Rs.338.19 Mn(2018 - Rs.233.93Mn)has been INVESTMENT PROPERTY If landandbuildingswere statedatthehistoricalcostbasis,amountswouldhavebeenasfollows:

3,153,438 3,153,438 Rs. ‘000 1,812 1,812 2019 - - Land Building 2,654,349 2,654,349 Rs. ‘000 1,812 1,812 2018 - - 1,827,541 1,354,436 (473,105) Rs. ‘000 (12,011) 61,637 49,626 2019 1,694,457 1,257,913 (436,544) Rs. ‘000 (10,795) 39,961 29,166 2018 145 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 146 Annual Report 2018 | 2019 ments are madeforconsolidation purposes. Any property leasedoutto parent orsubsidiaryisconsidered asowner-occupied from theperspectiveofGroup andadjust- Investment Property Leasedwithin theGroup and categoryofproperty beingvalued, valuetheinvestmentproperty portfolioannually. andindependentvaluers,havingappropriateExternal recognised professional qualificationsandrecent experienceinthelocation Determining FairValue the fairvalueofproperty atthat dateanditsprevious carryingamountisrecognised intheProfit orLoss. When theCompanycompletesconstructionordevelopmentofaself-constructedinvestmentproperty, anydifference between any existingrevaluation surplus thatwasrecognised underrevaluation modeltothe property willbetransferred toretained earnings. revaluation ofproperty, plantandequipmentisnottransferred toprofit orlossatthedateoftransferandsubsequent disposal, Any difference atthedateofchangeinusebetweencarryingamountproperty anditsfairvalueisrecognised asa plant andequipmentuptothedateofchangeinuse. becomes aninvestmentproperty, theCompany, accounts forsuchproperty inaccordance withthepolicy statedunderproperty, accounting is its fair value at the date of change in use. If the property occupied by the Company as an owner occupied property For atransferfrom investment property toowneroccupiedproperty orinventories,the deemedcostofproperty forsubsequent owner occupationorcommencementofdevelopmentwithaviewtosale. Transfers are madefrom investmentproperty when,andonlythere isachangeinuse,evidencedbycommencementof pation, commencementofanoperatingleasetoanotherpartyorcompletionconstructiondevelopment. Transfers are madetoinvestmentproperty when,andonlythere isachangeinuse,evidenced bytheendofowneroccu- Subsequent Transfers to/from InvestmentProperty Notes totheFinancialStatements

As at1stApril Additions Disposals Changes infairvalueduringtheyear

Capital workinprogress addition

the Group and theCompanyamounting to Rs.17.94Mn(2018-26.53 Mn)andRs.38.08Mn (2018 -Rs.54.60Mn).The 36.27 Mn)and Rs.128.92 Mn(2018-Rs.126.85 Mn)respectively. Direct operating expensesincurred oninvestment property by fromRental incomeearned theinvestment properties bytheGroup andtheCompany amounting toRs.36.66Mn(2018- atne (FIV),anindependentprofessional valuer. In accordance withLKAS40,fairvalueoftheaboveInvestment Properties were ascertainedasat31March 2019byMr. TWeer

contd. 1,726,552 1,818,798 1,818,798 Rs. ‘000 91,212 1,034 2019 - - Group Company (3,144,580) 4,777,192 1,726,552 1,726,552 Rs. ‘000 16,653 77,287 2018 - 3,207,009 3,241,057 3,514,555 Rs. ‘000 273,498 32,336 1,712 2019 - 3,274,803 3,200,130 3,207,009 (275,100) Rs. ‘000 200,427 6,879 2018 - - specific assettowhichitrelates. Allotherexpenditure isexpensedasincurred. Subsequent expenditure onintangibleassetsiscapitalised onlywhenitincreases thefuture economicbenefits embodiedinthe Subsequent Expenditure Statement ofFinancialPosition atcostlessanyaccumulatedamortisationand impairmentlossesifany. ness combination is their fair value as at the date of acquisition. Following initial recognition, intangibleassetsare statedin the Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a busi- tangible Assets’. benefits thatare attributabletoitwillflowtheGroup inaccordance withtheSriLankaAccountingStandard- LKAS38on‘In- An intangible asset is recognised only when its cost can be measured reliably and it is probable thatthe expected future economic Basis ofRecognition The Group’s intangibleassetsincludethevalueofcomputersoftware, brandname,franchisefeeandgoodwill. Intangible Assets Accounting Policy 14. * Mr. Weeratne, (Chartered Tissa Valuation Surveyor,UK, FIVSL) are asfollows: valuation techniquesused.DetailsofGroup’s investmentproperty andinformationrelating totheirfairvaluesasat31March 2019 fair value measurment for all the investments properties has been catagorisedas a level3fairvalue based onthe inputs to the Location Boralsgamuwa Staple Street - Square-Jaffna Dematagoda Colombo 02 Colombo 01 Nittambuwa Canal Row, Braybrook Cargills place INTANGIBLE ASSETS valuation Method of Open market Open market Open market Open market Open market Open market approach Income value value value value value value 31/03/2019 31/03/2019 31/03/2019 31/03/2019 31/03/2019 31/03/2019 31/03/2019 valuation Effective date of valuer Property Weeratne* Weeratne* Weeratne* Weeratne* Weeratne* Weeratne* Weeratne* Mr.Tissa Mr.Tissa Mr.Tissa Mr.Tissa Mr.Tissa Mr.Tissa Mr.Tissa Land extent 84 Perches 78 Perches 15 Perches Leasehold 2.5 Acres Perches Perches 81.5 112 Building 23,168 37,967 20,970 99,164 12,300 5,146 (Sq.ft) - area buildings No. of. 4 1 2 1 1 1 - inputs unobservable Significant Market value Market value Market value Market value Market value Market value square feet Rental per per perch per perch per perch per perch per perch per perch 2019 Fair Value Rs. 363,250 134,775 630,557 690,216 - - - ‘000 Group 2018 Fair Value Rs. 324,810 128,450 606,437 666,855 - - - ‘000 1,045,700 2019 Fair Value Rs. 513,644 869,466 690,216 388,050 - - Company ‘000 1,005,700 2018 Fair Value Rs. 308,000 828,600 666,855 377,747 - - ‘000 147 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 148 Annual Report 2018 | 2019 Carrying valueasat31stMarch As at31March Amortisation fortheyear As at1April Amortisation/Impairment As at31March Additions As at1April Gross value Group their estimatedusefuleconomiclivesattheratesasspecifiedbelow; Amortisation iscalculatedusingthestraight–linemethodtowritedowncostofintangibleassetstheirresidual valuesover intangible asset. on intangible assets with finite lives is recognised in the Profit or Loss in the expense category consistent with the function of the ortisation periodormethod,asappropriate, andtheyare treated aschangesinaccountingestimates.Theamortisationexpense ofconsumptionfuturethe expectedpattern economicbenefitsembodiedintheassetare accountedforbychangingtheam- for anintangibleassetwithafiniteusefullifeare reviewed atleasteachreporting date.Changesintheexpectedusefullifeor Intangible assetswithfinitelivesare amortisedovertheusefuleconomiclife.Theamortisationperiodandmethod The usefuleconomiclivesofintangibleassetsare assessedtobeeitherfiniteorindefinite. Useful EconomicLives,AmortisationandImpairment Notes totheFinancialStatements

the asset)isrecognised intheprofit orlossintheyearassetisde-recognised. arising onde-recognition oftheasset (calculatedasthedifference betweenthenetdisposal proceeds andthecarryingamountof Intangible assets are de-recognised on disposal or when no future economic benefits are expected from its use. Any gain or loss De-recognition expected future benefits. dication forimpairmentandrecognised inprofit orlosstotheextentthattheyare no longer probable ofbeingrecovered from the The unamortisedbalancesofintangibleassetswithfinitelivesare reviewed forimpairmentannuallyandwheneverthere isanin- Computer software Class ofasset Franchise fee

Rs. ‘000 390,789 142,627111,474217,433147,558661,865 661,865 138,978 145,072126,170270,439192,931 138,978 126,170109,558192,931103,017 529,767 287,699237,644487,872340,489661,865 661,865 529,767 237,644195,868340,489289,560661,865 661,865 2019 2018 Goodwill - - Rs. ‘000 Rs. ‘000 18,902 16,61277,50889,914 50,055 41,776 Franchisee fee Rs. ‘000 contd. Rs. ‘000 147,383 50,929 Software Rs. ‘000 % perannum Rs. ‘000 Brand name - - - - Rs. ‘000 25 10 1,412,714 1,311,686 1,967,203 1,769,765 1,769,765 1,677,060 Rs. ‘000 554,489 458,079 458,079 351,553 197,438 92,705 96,410 106,526 10 years Total 4 years Period Rs. ‘000 38 -‘Intangible Assets’, anyintangibleassetwhich hasindefiniteusefullifeis subjecttoannualimpairment testwhichistobecar that thebrandname hasanindefiniteusefullife andaccordingly noamortisation ischarged.However, inaccordance withLKAS Brand hasbeentestedforimpairment andnoimpairmenthasbeenrecognised asatreporting date.Managementisoftheview The Rs.661.9Mnrepresents thebrandvaluerecognised on theacquisitionofKotmaleHoldingPLC. the year. Goodwill asatthereporting datehasbeentestedforimpairment andnoimpairmentincarryingvaluehasbeenrecognised during Company

As at1April Gross value Additions As at31March As at1April Amortisation/Impairment Amortisation fortheyear As at31March Carrying valueasat31stMarch 100 200 300 400 500 600 700 - (Rs. Mn) Group -Intangible Assets Brand name Software Franchises fee Goodwill

2019

2018 10 20 30 40 50 60 - (Rs. Mn) Company -Intangible Assets

Software 2019

2018

Rs. ‘000 150,853 152,667 130,464 96,008 34,456 22,203 1,814 2019 Software Total Rs. ‘000 150,345 150,853 34,046 61,962 96,008 54,845 2018 508 Rs. ‘000 150,853 152,667 130,464 96,008 34,456 22,203 1,814 2019 Rs. ‘000 150,345 150,853 34,046 61,962 96,008 54,845 2018 508 - 149 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 150 Annual Report 2018 | 2019 Employee share optioninvestment (Note15.1.1) 15.1.1 Cargills FoodsCompany(Private)Limited 15.1 15. INVESTMENTS been included in cost of goods sold and Rs. 34.46 Mn (2018 - Rs.61.96 Mn) in administrative and other expenses of the company. (2018 -89.91Mn)inadministrativeandotherexpensesoftheGroup. AmortisationofintangibleassetsRs.nil(2018-nil)have Amortisation ofintangibleassetsRs.18.90Mn(2018-16.61Mn)havebeenincludedincostgoodssoldandRs.77.51 for thisasset. is reviewed eachperiodtodeterminewhethereventsandcircumstances continuetosupportanindefiniteusefullifeassessment ried outinaccordance withLKAS36-‘ImpairmentofAssets’andtheusefullifeintangibleassetthatisnotbeingamortised Notes totheFinancialStatements Frederick NorthHotelCompany Limited Kotmale HoldingPLC Cargills FoodProcessors (Private) Limited The Empire Investments Dawson Office Complex(Private) Limited Cargills QualityFoodsLimited

Cargills FoodsCompany(Private)Limited Kotmale DairyProducts (Private)Limited Cargills FoodProcessors (Private)Limited Cargills FoodServices(Private)Limited Cargills QualityConfectionaries(Private)Limited Cargills QualityDairies(Private) Limited Cargills QualityFoodsLimited Cargills Distributors(Private)Limited Millers Limited Cargills AgrifoodsLimited

Company (Private)Limited Investments insubsidiaries Employee share optioninvestment 47,500,002 31,100,000 77,600,000 5,700,002 4,860,291 Shares % 54,315 1,000 No of Holding

contd. 0.17 100 100 100 100 100 92

Rs. ‘000 2019

Company ------311,000 -3,437 -61,500 -776,000 -100 -1,193,453 -475,000 Group Company Rs. ‘000 2018

- - 143,10187,282 - 2,820,490 2,963,591 2,907,772 Rs. ‘000 102,364 143,101 Rs. ‘000 14,771 2,451 4,169 8,344 5,581 4,028 2019 2019 2018 908 212 273 Rs. ‘000 Rs. ‘000 62,435 87,282 1,495 2,543 5,089 3,404 9,009 2,457 2018 554 129 167 to investmentin equityaccountedinvesteeof CTProperties LimitedintheCompanyand Group respectively. 15.2.a Cargills BankLimited C TProperties Ltd Unquoted : 15.2 • • • In March 2018, Holdings PLCas100%subsidiaries. Foods Limited,KotmaleMilkProducts LimitedandKotmaleProducts (Private)LimitedhavebeenconsolidatedwiththatofKotmale consolidated asasubsidiaryofCQFandCCP.The financialstatementsofKotmaleDairyProducts (Private)Limited,KotmaleMilk 99.51% oftheissuedshare capitalofKotmaleHoldingsPLC.ThefinancialstatementsPLChavebeen As at31March 2019,the Companydirectly andthrough itssubsidiariesCQDand CQFholds31,246,778shares representing said subsidiaryofCargillsAgrifoodsLimitedhavebeenconsolidatedasaCQFandCCP. Ceylon Agro Development Company (Private) Limited is a subsidiary of CargillsAgrifoodsLimited.The financial statementsofthe consolidated asasubsidiaryofCQFandCCP. Cargills Frozen Products (Private)LimitedisasubsidiaryofCQD.ThefinancialstatementsthesaidCQDhavebeen in viewoftheminorityshareholders (subscriber shares) confirmingthattheyholdtheshares intrust forCQF. Quality FoodsLimited(CQF).ThefinancialstatementsofthesaidsubsidiariesCQFhavebeenconsolidatedas100%subsidiar ies Millers Limited, Cargills Quality Confectioneries (Private) Limited , Cargills Food Services (Private) Limited are subsidiaries of Cargills Cargills AgrifoodsLimited,CPCLankaQualityDairies(Private)Limited(CQD),Distributors(Private) Statement ofthesaidsubsidiaryhasbeenconsolidatedwithCargills(Ceylon)PLC. gills FoodsCompany(Private)LimitedisasubsidiaryofCargills(Ceylon)PLCandinwhichCCPhas92%staketheFinancial The financialstatementsofsaidsubsidiarieshavebeenconsolidatedwiththatCargills(Ceylon)PLCas100%subsidiaries.Car Hotel CompanyLimitedandTheEmpire InvestmentsCompany(Private)Limitedare subsidiariesofCargills(Ceylon)PLC(CCP). Cargills QualityFoodsLimited,CargillsFoodProcessors (Private)Limited,DawsonOffice Complex(Private)Limited,Frederick North Quality FoodsLimited.Accordingly asat31stMarch 2018CQFdirectly holds100%oftheissuedshare capitalofCFS. Cargills FoodProcessors (Private)Limitedtransferred itsshareholding inCargillsFoodServices(Private)Limitedto capital ofCFP. PLC. Accordingly asat31st March 2018thecompanydirectly holds5,700,002shares representing 100%oftheissuedshare Cargills QualityFoodsLimitedtransferred 5,700,002shares ofCargillsFoodProcessors (Private)LimitedtoCargills(Ceylon) Rs. 3,646,025,155. Dawson Office Complex(Private) Limitedrepurchased 23,500,001oftheshares thatwere inissueforacashconsiderationof Investment inequityaccountedinvestees An impairmentamountingtoRs.7.7 Mn(2018-Rs.Nil)andRs.7.7has beenrecognised inrelation

350,696,90539.714,881,942 4,949,5964,717,843 54,100,000 21.76414,690 417,165395,829403,596 Shares % No of

Holding 20192018 5,296,6325,366,7615,113,672 5,121,439 Rs. ‘000 Group Company Rs. ‘000 Rs. ‘000 Rs. ‘000 - 151 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 152 Annual Report 2018 | 2019 As at31March 15.3.1 15.3 Notes totheFinancialStatements Quoted equityinvestments Lanka IOCPLC Sierra CablesPLC Aitken SpencePLC

Increase /(decrease) infairvalueofinvestments

Call deposits/Fixeddeposit 15.3.2 Re-purchase agreements

15.4 amounted toRs.14.53Mn(2018-Rs.19.66Mn) The marketvalueofquotedshortterminvestmentsGroup asat31March 2019,asquotedbytheColomboStockExchange

As at1April Share ofprofit Share ofothercomprehensive income Impact onadoptingSLFRS9-CargillsBank(15.4.1) Impairment As at31March The followingtableshowsthe impact ontransitiontoSLFRS9-“Financialinstruments‘’as at1January2018. information . the impactofadoptingSLFRS9isconsidered asanadjustmenttoequityon1January 2018,withoutrestating thecomparative The CargillsBankLimitedinitiallyadoptedSLFRS9From 1January2018.Aspermitted bythetransitionalprovisions ofSLFRS9, 15.4.1 Other financialassets Investment inequityaccountedinvestees Available forsalefinancialinstruments-Noncurrent Other nonequityinvestments-Current Impact onadoptionofSLFRS9-CargillsBankLimited

contd. Rs. ‘000 786,373 123,228 909,601 924,138 13,536 19,668 14,537 (5,131) 5,792 2019 340 Group Company

Group Rs. ‘000 804,258 169,181 973,439 993,107 15,033 20,982 19,668 (1,314) 5,800 2018 149

5,366,761 5,296,632 Rs. ‘000 Rs. ‘000 (18,591) (97,832) 13,535 19,577 14,463 14,463 54,061 (5,114) (7,767) 5,792 2019 2019 250 - - - 5,143,229 5,366,761 Rs. ‘000 Rs. ‘000 212,273 15,033 20,863 19,577 19,577 11,259 (1,286) 5,800 2018 2018 30 - - - - - 15.5 Total impactfortheGroup Ownership Interest Total impactonadoptingSLFRS9“FinancialInstruments” Balance asperLKAS39at31Dec2017 Balance asperSLFRS9at1Jan2018

Revenue /operatingincome Operating expenses Finance expenses Income taxexpense Profit/(Loss) fortheyear Other comprehensive income Total comprehensive income Group’s share ofprofit /(loss) Group’s share ofothercomprehensive income Group’s share oftotalcomprehensive income Summarised financialinformationofassociates

Rs. ‘000 103,376 (65,820) 24,329 24,314 C TProperties Ltd (6,234) (6,993) 5,295 5,292 2019 (15) (3) Group Rs. ‘000 116,468 (10,438) (66,444) 39,588 39,697 8,616 8,640 2018 - Retained Earn 109 24 2 (249,937) (236,882) (486,819) Rs. ‘000 (99,250) 39.71% (1,882,600) 2,044,044 Rs. ‘000 122,805 Cargills BankLimited ings (38,639) (46,809) (18,588) 75,996 48,766 30,178 2019 comprehensive income reserve - through other (1,443,514) 2,064,651 Fair value (108,278) Rs. ‘000 512,859 541,152 203,657 Rs. ‘000 214,892 39.71% 28,293 11,235 10,546 14,118 1,418 3,572 2018 - 153 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 154 Annual Report 2018 | 2019 As at31March Notes totheFinancialStatements

Total assets Total liabilities Non controlling interest Net assets Ownership interest Group’s share ofnetassets Goodwill Impairment

16.

As at31March Gross value As at1April Amortisation Amortisation fortheyear As at31March Balance asat31March Current portionoftheprepayment (Note19) Non- current portionoftheprepayment

Property

Kolonnawa land Cargills FoodsCompany (Pvt)Limited Banduragoda landandbuilding Cargills Quality Diaries(Private)Limited Wellawatte land Cargills (Ceylon) PLC PREPAYMENT ONLEASEHOLDLANDANDBUILDING From 12Feb.2002to22May2045 Lease period 99 Years From 5Sep.2016to22Aug.2056

contd. 2,909,741 2,038,399 (871,342) Rs. ‘000 Rs. ‘000 443,647 414,690 238,374 216,818 212,108 216,818 21.76% (60,332) 31,375 16,829 21,556 C TProperties Ltd 4,727 4,710 2019 2019 - Group Company

Group 2,813,744 2,014,074 (799,670) Rs. ‘000 Rs. ‘000 438,355 417,165 188,349 171,520 166,810 171,520 21.76% (52,565) 31,375 12,105 16,829 4,724 4,710 2018 2018 -

(22,779,158) 33,803,120 11,023,962 4,377,626 4,881,942 Rs. ‘000 Rs. ‘000 504,316 153,349 144,043 140,208 144,043 Cargills BankLimited 39.71% 5,454 3,852 9,306 3,835 2019 2019 - -

(21,318,380) 32,512,711 11,194,331 4,445,280 4,949,596 Amount Rs. ‘000 Rs. ‘000 Rs. ‘000 504,316 153,349 147,895 144,060 147,895 153,349 39.71% 35,000 50,025 1,605 3,849 5,454 3,835 2018 2018 - - make anadditional deferred taxprovision inthestatement ofprofit orlossfor theyearended31stMarch 2019amountingtoRs. it isdeemedthat freehold landbeconsidered as“CapitalAssetsusedin the business”,Companyand Group wouldhaveto the categoryof“InvestmentAssets” andaccordingly deferred taxhasbeenprovided ontherelated gainonrevaluation. Intheevent Having soughtindependent professional legaladvice,thegroup isoftheviewthatfreehold landusedinthebusinessfallsunder was exercised todeterminetheprovision required fordeferred taxesoncapitalgainsapplicabletofreehold land. Due touncertaintiesthatexist on theinterpretation ofthe newlawrelating tofreehold landfortaxpurposes,significant judgement 2018. 2018/19. Theprovision fordeferred taxat31March 2019 has beencalculatedatrates and on capitalgainsapplicablepost1April ingly theincometaxchargeforyearended31March 2019hasbeencomputedonrates applicableintheyearofassessment The InlandRevenueActNo24of2017andnewtaxratesincluding capitalgainstaxesare effective from 1April2018.Accord- Total expensereleased/(charged) toprofit orloss Reversal/(origination) ofdeferred tax - Temporary difference ofoperatingleaseliability - Temporary difference ofproperty, plantandequipment Deferred taxassetsarisingfrom Deferred taxassetsasatthe year endismadeupasfollows: As at31March Release /(charge)fortheyear Assets 17. - Temporary difference ofrevaluation Surplus onrevaluation - Temporary difference ofcarriedforward taxlosses - Temporary difference ofemployeebenefits Total expenseReleased/(charged)toOCI - Temporary difference oncapitalgrants - Temporary difference onprovisions - Temporary difference onequity - Temporary difference ofrevaluation

As at1April Transfer betweendeferred taxassets&liabilities settled share basedpayment surplus offreehold land surplus offreehold building DEFERRED TAX

10,747 Rs. ‘000 10,747 2,334 2,372 5,473 4,340 8,413 2,334 2019 896 (38) 38 ------Rs. ‘000 (48,095) 56,680 8,413 8,413 6,117 1,463 (172) 2018 (172) (211) 768 65 39 ------Group 1,386,624 1,386,624 1,724,339 1,352,650 (20,792) (298,813) (225,886) 264,672 34,701 Rs. ‘000 (33,974) (37,361) (64,979) (14,116) 22,199 3,387 2019 (727)

- - Liabilities 1,352,650 1,352,650 1,649,881 1,039,964 286,332 (19,781) (360,781) (305,005) (262,646) (189,929) 239,452 (55,776) Rs. ‘000 (40,555) (17,332) (48,095) 74,449 (6,440) 2018 - Rs.‘000 2019 - - -

------

Assets Rs.‘000 2018 Company ------193,443 193,443 (124,862) 123,349 210,926 180,324 13,885 Rs. ‘000 (13,119) (18,270) (26,423) 10,453 5,151 2019 (766)

Liabilities - - - - -

180,324 180,324 (111,201) Rs.‘000 211,660 136,731 43,452 (43,593) (51,738) (16,116) 97,113 (1,132) 8,145 2018 141 - - - - - 155 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 156 Annual Report 2018 | 2019 Other inventories Merchandising goods Finished goodsandwork-in-progress Raw &PackingMaterials The costofeachcategoryinventorytheGroup isdeterminedonthefollowingbasis. course ofbusinesslessestimatedcostrealisation and/orcostofconversionfrom theirexistingstatetosalablecondition. Inventories are valued at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the normal Accounting Policy 18. INVENTORIES tial increase inthedeferred taxliabilityonthestatementof financial position. amounting to Rs. 551 Mn( 2018 -Rs.551Mn ) and Rs. 669Mn(2018 - Rs.669 Mn) with a consequen- income/ Retained earnings 273 Mn(2018-Rs.261Mn)and449416anadditionaldeferred taxprovision inothercomprehensive Notes totheFinancialStatements

Raw andpackingmaterials Work inprogress Finished goods Merchandising stockforsale Food andbeverages-restaurant operations Consumables

Provision forobsoleteinventories

Goods intransit

-Actualcost -ActualcostonaFirstInOut(FIFO)basis -Directly attributablemanufacturing cost -ActualcostonaFirstInOut(FIFO)basis

contd. 7,393,316 9,585,059 9,500,215 9,762,036 908,554 918,576 104,043 199,621 261,821 Rs. ‘000 (84,844) 60,949 2019 Group 1,087,446 7,271,784 9,673,692 9,582,430 9,662,860 Rs.‘000 991,420 202,139 (91,262) 50,426 70,477 80,430 2018 Rs. ‘000 11,943 11,943 11,943 11,943 2019 Company ------Rs. ‘000 5,369 5,369 5,369 5,369 2018 ------19. The detailsofinventoriesmortgagedforbankingfacilitiesobtainedhavebeengivenintheNote25.3tofinancialstateme nts As at31March

Trade receivables Impairment oftradereceivables

Prepayment ofleaseholdlandandbuildings Other Prepayments anddeposits Other receivables Loans andadvances(Note19.1) Tax recoverable (Note19.2)

2.00 4.00 6.00 8.00 - TRADE ANDOTHERRECEIVABLES (Rs. Bn) Group -Inventories Consumables Food andbeverages-restaurantoperations Merchandising stockforsale Finished goods Work inprogress Raw andpackingmaterials

2019

2018 10 12 14 2 4 6 8 - (Rs. Mn) Company -Inventories

Merchandising stockforsale 2019 3,726,340 1,706,782 3,603,159 6,842,456 (123,181) 578,216 884,717 Rs. ‘000 64,872 4,710 2019 Group 2,924,873 2,824,313 1,344,296 5,635,118 (100,560) Rs.‘000 615,932 804,563 41,304 4,710 2018 2018 1,130,421 1,682,799 110,019 101,417 402,791 Rs. ‘000 10,092 34,243 (8,602) 3,835 2019 Company 434,915 635,515 Rs. ‘000 93,558 89,516 81,576 10,779 14,894 3,835 (4,042) 2018 157 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 158 Annual Report 2018 | 2019 19.1 Other Prepayments anddepositsofRs.1,706,782includesmainlyrent advancesbytheGroup. pany. Other receivable balanceofRs.1,130,421includesdividendreceivable amountingtoRs.1,115,220(2018-Nil)bytheCom ments. The details of trade receivable mortgaged for banking facilities obtained have been given in the Note 25.3 to the financial state- Notes totheFinancialStatements

As at1April Loans granted

Repayments As at31March Amounts duefrom subsidiaries 20. This includesEconomicServiceCharge,VAT recoverable, WHTrecoverable andincometaxoverpayments. 19.2 As at31March

Cargills FoodsCompany(Private)Limited Cargills QualityFoodsLimited Dawson Office Complex(Private)Limited Cargills FoodProcessers (Private)Limited Cargills FoodServices(Private)Limited Cargills AgrifoodsLimited Cargills QualityDairies(Private)Limited CPC (Lanka)Limited Cargills QualityConfectioneries(Private)Limited Millers Limited Kotmale HoldingPLC Ceylon Agro DevelopmentCompany(Private)Limited The Empire InvestmentsCompany(Private)Limited

AMOUNTS DUEFROM/DUETORELATED COMPANIES Loans andadvancesrepresents loanstoemployeesandthemovementduringyearisasfollows: Tax recoverable

contd. Rs. ‘000 Rs. ‘000 101,526 (36,654) 41,304 60,222 64,872 2019 2019 ------Group - Group Rs.‘000 Rs.‘000 (38,657) 26,860 53,101 79,961 41,304 2018 2018 ------146,310 Rs. ‘000 Rs. ‘000 10,779 18,887 10,092 66,021 13,840 22,135 11,262 21,989 (8,795) 8,108 2,271 4,555 3,344 2019 2019 543 293 57 Company Company - - Rs.‘000 Rs.‘000 117,826 17,068 22,455 10,779 29,827 28,834 11,906 11,335 10,430 16,677 (11,676) 5,387 1,299 6,830 2018 2018 486 188 14 - - Amounts duefrom subsidiaries As at31March

C THoldingsPLC Amounts duefrom holdingcompany

Cargills BankLimited Amounts duefrom equityaccounted investees C TProperties Limited

Ceylon HotelsCorporationPLC Amounts duefrom otherrelated companies Ceylon Theatres (Private)Limited C TLandDevelopmentPLC Galle FaceHotelCompanyLimited Kandy HotelsCompany(1938)PLC United HotelsCo.ltd

Total amountduefrom related companies Cargills QualityFoodsLimited Amounts duetosubsidiaries Cargills Foodcompany(Private)Limited Cargills FoodProcessors (Private) Limited Kotmale DairyProducts (Private) Limited Cargills FoodsServices(Private)Limited

Ceylon PrintersPLC Amounts duetootherrelated companies CT RealEstate(Pvt)Ltd

Total amountduetorelated companies

857,771 913,394 Rs. ‘000 884,365 26,594 18,942 23,725 5,304 2,026 1,037 1,103 5,822 5,822 5,304 5,822 2019 518 99 ------Group - Rs.‘000 791,967 820,120 843,869 28,153 16,878 20,409 3,340 3,340 1,094 2,925 3,175 3,175 2018 450 646 890 451 250 ------1,037,244 857,771 872,609 Rs. ‘000 14,838 13,038 13,038 5,287 5,287 3,288 4,042 4,238 2019 754 196 196 Company ------Rs.‘000 791,967 792,880 924,502 10,019 10,571 21,242 21,242 3,225 3,225 5,350 7,842 8,050 2018 913 552 ------159 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 160 Annual Report 2018 | 2019 Incremental costsdirectly attributabletotheissueof new shares are showninequityasadeduction,netoftax,from theproceeds. share atmeetingsoftheCompany. The holdersofordinary shares are entitledtoreceive dividendsasdeclared from timetoandare entitledtoonevoteper Accounting Policy 21. Notes totheFinancialStatements Balance asat1stApril Capitalisation ofreserves Balance asat31stMarch and cashflows. ations, theweightedaveragecost ofcapital,etc.Achangeinanythesefactorsmayhave asignificantimpactonfuture results thereof, adherence totheconditions oftheshareholder agreement bybothparties, projected cashflows oftheunderlyingoper involved managementjudgements andestimatesofvitalfactorssuchasthelikelihood exercise oftheoptionand thetiming The determinationofpresent valueoftheexercise price(i.e.fairvalue)forputoptions related tonon-controlling interests has mined suchasitsaccountingpolicytobeappliedconsistently. The Group has accounted for its written put option over non-controlling shareholders using the present access method and deter Accordingly Group hasrecognised aputliabilityasatreporting date. by theentity, theentityisrequired torecognise aliabilityforthepresent valueoftheexercise priceoftheoptionasperLKAS32. subsidiary, andtheputoptiongrantedtonon-controlling shareholders provides forsettlementincashoranotherfinancialasset When an entity writes a put option with the non-controlling shareholders in an existing subsidiary on their equityinterests in that Recognition andmeasurement Written putoptionsoverNCI Accounting Policy 22. - Rs.6,530,708,400)comprising255,999,927ordinary (voting)shares (2018–255,999,927). Consequent tothisshare issue thestatedcapitalofCompanyatbalancesheetdateamountedtoRs6,530,708,400(2018 20th March 2018were allottedthecapitalisedshares asmentionedabove. the CentralDepositorySystems(Pvt)Ltd(CDS)andShareholders RegistermaintainedbytheCompanyasatendoftradingon the Company, including therighttoparticipateinanydividenddeclared afterthedateofallotment.AllShareholders appearingin a considerationofRs200.00pershare. Thenewshares, rankPariPassuinallrespects withtheexistingissuedordinary shares of in thereserves oftheCompany intheproportion ofOne(01)share foreverySeven(07) shares heldasattheEntitlementDate, issue of 31,999,927 ordinary voting shares in the Company credited as fully paid by capitalizing a sum of Rs 6,399,985,400 lying The shareholders oftheCompany, atanExtraOrdinary GeneralMeeting oftheCompanyheldon20thMarch 2018,approved the Capitalisation ofReserves STATED CAPITAL OTHER EQUITY/PUTLIABILITY

255,999,927 255,999,927 contd. of Shares Number 2019 - 6,530,709 6,530,709 Rs.‘000 - 224,000,000 255,999,927 31,999,927 ofShares 6,399,986 6,530,709 130,723 Rs. ‘000 2018 - - As at31March Subsequent changesinthecarryingamountofputliabilitywillberecognised withinequity. Subsequent measurement

Put optionoverNonControlling Interest (NCI) February 2021(whichisassumedastheexercise date). computed afteradjustingforanIRRof9%andaputperiod from 25thFebruary2015 (which istheshare certificate date)to10th The present valueoftheexercise pricehasbeenderivedbasedonanexercise priceofRs.4,263,498,814/-whichhasbeen • • • • • The assumptionsonwhichtheabovepresent valueoftheexercise pricehasbeendeterminedare asfollows shall notbeanydiscountforliquidityorminoritystake. provided that the put price, shall be suitably adjusted to account for any dividends received by IFC on the Put shares and there the dateofsettlementpurchase oftherelevant Putshares bythegrantor)thatprovides IFCanIRRof9%inlocalcurrency terms; As perthePutoptionagreement thePutPricemeansinrelation toanygivenexercise oftheputoption,price(calculatedas Put Price. CCP hasgrantedIFC an option (The Put Option) to sell their shares toCCPduringtheputperiod on up to three occasions at the CCP actsasthegrantor/sponsortocontract. Rs. 2,550Mnon25thFebruary2015.Therefore IFCisconsidered theinvestorofCFCand non-controlling interest toCCPand IFC has subscribed for 4,130,424shares of CFC(representing 8% shares of theCompany)foranaggregate subscriptionpriceof Finance Corporation(IFC),andCargillsCeylonPLC(CCP) The putoptionoverNCIrelates toPutOptionagreement betweenCargillsFoodsCompany(Private)Limited(CFC),International An yearisassumedtohave365days Pricing dateas31March 2019 Weighted averagecostofcapitalCCPis11.9% In theeventofnon-listingcompanybyCCP, IFCwillwaituntiltheendofPutPeriodtoexercise thePutOption Conditions oftheShareholder Agreement willnotbebreached byeitherpartyuntilthePutPeriod arrives

Group

3,456,493 Rs. ‘000 2019 3,089,325 Rs. ‘000 2018 161 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 162 Annual Report 2018 | 2019 As at31March • • • • • The reserves recorded inequity(Othercomprehensive income)ontheGroup’s StatementofFinancialPositioninclude; Equity Reserves Accounting Policy 23. RESERVES Notes totheFinancialStatements

Revaluation reserve Capital reserve Capital reserve Employee share optionreserve (Note23.1)

General reserve Revenue reserve Available forsalereserve /FVOCIreserve

(c) (b) (a) of theissuedcapitalCCP. Theshare optionswouldbegrantedinthree trancheswhichwouldconstitute– of sixmillionsevenhundred andtwentythousand(6,720,000)ordinary votingshares couldbeissuedwhichisequivalentto3.0% Under thetermsofESOS,whichare incompliancewiththeListingRulesofColomboStock Exchange,amaximumnumber of its subsidiaries (‘’CCP Group’’) was approved by the shareholders at anExtraOrdinary GeneralMeeting held on 29th June 2017. An EmployeeShare OptionScheme(ESOS)proposed bytheDirectors oftheCompanyforbenefitit’s employeesandthose 23.1.1 23.1 holder therighttobuyacertainamountofCompanyshares atapredetermined price. ‘Employee share optionreserve’ consistsofstockoptionsgrantedtospecifiedemployeesacompany. ESOSoffer theoption ‘Capital reserve’ comprises share ofcapitalreserve resulting from consolidation. General reserve istomeet thepotentialfuture unknownliabilities. ‘General reserve’ represents theamountssetasidebyDirectors forgeneralapplication.Thepurposeofsettingupthe ‘Available forSale’reserve, whichcompriseschangesinfair valueofavailableforsaleinvestments. ‘Revaluation reserve’ consistsofnetsurplusresulting from therevaluation ofproperty plantandequipment. a third trancheof1,680,000optionsconstituting0.75% of theissuedshares ofthe Company; a secondtrancheof1,680,000 optionsconstituting0.75%oftheissuedshares oftheCompany; a firsttrancheof3,360,000options constituting1.50%oftheissuedshares oftheCompany; Employee share optionreserve Employee share optionscheme

contd. 4,884,927 5,140,375 5,136,662 Rs. ‘000 247,520 (3,713) (3,713) 7,928 2019 - - Group Company 4,884,927 5,043,825 5,043,825 Rs. ‘000 150,970 7,928 2018 - - - - Rs. ‘000 247,520 261,959 256,845 14,439 (5,114) (5,114) 2019 - - - Rs. ‘000 150,970 165,409 165,409 14,439 2018 - - - - - of shares. terms andconditionsrelated tothegrantsunderthesetranchesare asfollows;alloptionsare tobesettledbythephysicaldelivery Each oftheaforesaid tranches wouldbesubdividedintosubtrancheswithdifferent vestingperiodsandexercise periods.Thekey Rs. 145Mn) The costofShare BasedPayments accountedintheGroup’s FinancialStatementsfortheyearamountedtoRs.96.5Mn.(2018- (d) (c) (b) (a) Consequent tothisshare issue,thenumber ofoptionsgrantedandtheexercise pricehaschangedasfollows– consideration ofRs200.00pershare. in thereserves oftheCompany intheproportion ofOne(01)share foreverySeven (07)shares heldasattheentitlementdate,a shares) intheCompany, totheshareholders oftheCompanycredited asfullypaidbycapitalizingasumofRs6,399,985,400lying Subsequent to theadoption of theESOS, the shareholders of CCPapproved theissueof31,999,927shares (netoffractional value ofRs.196.95pershare. of Rs.211.40pershare. Thesecondtranchewouldbeissuedinthree equalsubtranchescommencingfrom 31stJuly2019ata each tranche.Thefirst tranche wouldbeissuedinthree equal sub tranchescommencingfrom 30thSeptember2017at avalue the volumeweightedaveragepriceduringperiodofthirty(30)marketdaysimmediatelypriortorespective grantdatesfor options wouldbeissuedtoemployeeswhoare eligiblefortheaward oftheshare optionsforaconsiderationthatisequivalentto Each of the aforesaid tranches would be subdivided in to sub tranches with different vesting periods and exercise periods. Share Tranche Type of Sub Tranche 1 Tranche 2 Sub Tranche 3 Sub Tranche 2 Sub Tranche 1 Tranche 1 Sub Tranche 2 Sub Tranche 3

Third tranche–1,919,999 optionsconstituting0.75%oftheissuedshares oftheCompany; 172.33; Second tranche – 1,919,999 options constituting 0.75% of the issued shares of the Company at an exercise price of Rs Firsttranche–3,839,999optionsconstituting1.50%oftheissuedshares oftheCompanyatanexercise priceofRs184.98 Total numberofoptionstobeissued–7,679,997constituting3%theshares oftheCompany; options Number of 1,279,999 1,280,000 1,280,000 640,000 640,000 639,999 Vesting Condition until thevestingdate. Remaining inemploymentup FY 2018/19. related conditions relating to meeting theperformance until thevestingdate.And Remaining inemploymentup Months 1 Year &9 9 Months 3 Months Period Vesting Months 1 Year &4 2 Years 3 Years Vesting Date July 31,2019 September 31,2019 31,2018 30,2017 31,2020 31,2021 March March March March March 31,2021 April 1,2019to March 31,2020 April 1,2018to March 31,2019 October 1,2017 to Exercise Period March 31,2020 August 1,2019to March 31,2021 April 1,2020to March 31,2022 April 1,2021to 2 Years 2 Years Months 1 Year &6 Duration Exercise 8 Months 1 Year 1 Year 163 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 164 Annual Report 2018 | 2019 Notes totheFinancialStatements Description ofthevaluationinput The inputsusedinmeasurement offair valueatthegrantdateofESOSwere asfollows: Valuation Modeltakingintoconsiderationvarioustermsandconditionsuponwhichtheshare optionsare granted. As required bySLFRS2on“Share-based Payment”,thefairvalueofESOS wasestimatedatthegrantdateusingBinomial 23.1.2 Average Price(VWAP) oftheCCPshare duringthirty(30)marketdaysimmediatelypriorto theGrantdate. Based onaGrantdateof29thJune2017theexercise priceofTranche 1oftheESOSisRs.184.98,beingVolume Weighted Exercise Price is recognised astheGrant dateforall3tranchesoftheESOSschemewhichis29thJune2017. through theESOSscheme basedontheGrantDateofshare options.Thedateofobtainingtheshareholder approval forESOS As per“SLFRS2-Share-based Payments”theentityshouldrecognise thevalue/costofshare optionsgrantedtoemployees Grant Date of CCPduringthelastfiveyear period. The probability of pricemovements ofthe CCP share pricehasbeenarrivedatbytaking intoconsiderationshare pricemovements Exercise price(Rs.) Size ofannualreduction inshare price(%) Size ofannualincrease ofshare price(%) Probability ofshare pricedecrease (%) Probability ofshare priceincrease (%) Risk free rate(%) Expected dividendyieldrate(%) Tranche Type of Sub Tranche 1 Tranche 3 Options Total Share Sub Tranche 3 Sub Tranche 2 Measurement offairvalues options Number of 7,679,997 640,000 639,999 640,000 Vesting Condition FY 2019/20. related conditionsrelating to meeting theperformance until thevestingdate.And Remaining inemploymentup Period Vesting Months 1 Year &4 3 Years 2 Years

contd. July 31,2020 Vesting Date 31,2022 31,2021 March March

Tranches Tranche 1 184.98 172.33 10.73 Exercise Period 1.5 August 1,2020to 10 18 20 80 March 31,2023 March 31,2022 March 31,2021 April 1,2022to April 1,2021to Tranche 2 Duration Exercise 1 Year 1 Year 8 Months Tranche 3 10.73 211.4 1.5 10 18 20 80 In thousandsofoptions The numberandweighted-averageexercise pricesofshare optionsunder theESOSschemewasasfollows: 23.1.3

24. and optionsallocatednotyetexercised asatthereporting dateamountedto2,543,189options. issued on 29April2019.Further, 75,694 options were cancelled at the expiryof period allowed for exercise ofsuch options tions were exercised byemployeesduring the period 1st to31stMarch 2019andshares inrespect ofsuchexercised optionswere Pursuant totheEmployeeShare OptionSchemeoftheCompanyapproved bytheShareholders on29June2017,1,221,116op- *WAEP -Weighted Average Exercise Price Exercisable asat31March Outstanding asat31March Granted duringtheyear Exercised duringtheyear Forfeited duringtheyear Outstanding asat1April

Cash atbankandinhand Cash andbankbalances cash andequivalentscomprisethefollowing: For thepurposeofstatementcashflows,year-end Bank overdraft (Note25)

CASH ANDEQUIVALENTS Reconciliation ofoutstandingshare options

options 2019 Number of (2,819,833) 3,058,884 3,058,884 Rs. ‘000 239,051 2,560 2,543 1,221 3,840 2019 76 - Group Company (2,769,528) 2019 (Rs.) 2,000,288 2,000,288 (769,240) Rs. ‘000 *WAEP 184.98 1,280 184.98 3,840 184.98 - 184.98 - 184.98 - 2018 - 3,840 options 2018 Number of Rs. ‘000 230,297 230,297 199,649 (30,648) 2019 2018 (Rs.) Rs. ‘000 (35,193) (47,787) *WAEP 184.98 184.98 184.98 12,594 12,594 2018 - - - 165 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 166 Annual Report 2018 | 2019 As at31March 25. Notes totheFinancialStatements

Current portionoffinance leaseliabilities(Note25.2) Current Short termloans(Note25.3) Bank overdraft (Note25.3)

Bank borrowings (Note25.1) Non-current Finace leaseliabilities(Note25.2)

Total borrowings 25.1

As at1April Loans received /(transferred) Repayments As at31March Falling duewithinoneyear

Repayment during1-2years Repayment during2-5years

INTEREST BEARINGLOANSANDBORROWINGS Bank borrowings

contd. 14,016,345 16,837,315 16,837,724 2,819,833 Rs. ‘000 Rs. ‘000 1,137 2019 2019 409 409 ------Group Company Group Company 11,867,036 14,637,588 14,639,134 2,769,528 (198,300) Rs. ‘000 Rs. ‘000 198,300 1,024 1,546 1,546 2018 2018 ------3,440,000 3,470,648 3,470,648 Rs. ‘000 Rs. ‘000 30,648 2019 2019 ------2,995,000 3,042,787 3,042,787 Rs. ‘000 Rs. ‘000 47,787 2018 2018 ------25.2

On Acquitionofsubsidiary As at1April Repayments

Lease interest insuspence As at31March Lease payablewithinoneyear Payable within1-2years 25.3 Hatton National BankPLC Seylan BankPLC Commercial BankofCeylonPLC Short termloans Sampath BankPLC MCB BankLimited Deutsche Bank Nations Trust BankPLC Seylan BankPLC Commercial BankofCeylon PLC Bank overdraft Cargills (Ceylon)PLC Institution andfacility Finance leaseliabilities Details ofallloansoutstandingtogetherwiththerelated securitiesoffered asatthereporting dateare setoutbelow: 1,000,000 1,600,000 Principal Rs. ‘000 250,000 100,000 500,000 200,000 100,000 100,000 amount 45,000 Outstanding 1,165,000 Rs. ‘000 250,000 Amount 30,648 19,077 11,571 - - - - -

1-4 months,based onweeklyAWPLR Repayment terms&interest rate 1-12 months,basedontheprevailing On demand,basedontheprevailing On demand,basedontheprevailing 1-3 months,basedontheprevailing On demand,basedonmonthly On demand,basedonmonthly On demand,basedonweekly On demand,basedonweekly

AWPLR+1.25% p.a. AWPLR+1.0% p.a. AWPLR+1.0% p.a. AWPLR+1.0% p.a. Rs. ‘000 market rates market rates market rates market rates (1,247) (1,138) 2,912 1,665 1,547 2019 (118) 409 Group Company Rs. ‘000 (1,246) (1,024) 4,158 2,912 2,570 1,546 2018 (342) Security offered Rs. ‘000 from CTHoldingsPLC for Rs.50Mn.from CT Corporate guarantee Corporate guarantee 2019 Holdings PLC Clean basis Clean basis Clean basis Clean basis Clean basis Clean basis Clean basis ------Rs. ‘000 2018 ------167 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 168 Annual Report 2018 | 2019 Notes totheFinancialStatements ICICI BankLimited Commercial BankofCeylonPLC Hatton NationalBankPLC Bank ofCeylon Standard Chartered Bank Short termloans Bank ofCeylon Commercial BankofCeylon PLC Deutsche Bank Cargills BankLimited Bank overdraft Cargills FoodsCompany(Private)Limited Bank ofCeylon Nations Trust BankPLC Sampath BankPLC Institution andfacility 1,950,000 2,500,000 2,600,000 1,500,000 2,800,000 1,800,000 Principal Rs. ‘000 800,000 500,000 115,000 500,000 amount 50,000 - Outstanding 8,635,393 7,308,300 1,950,000 2,500,000 2,058,300 1,327,093 3,470,648 3,440,000 2,025,000 Rs. ‘000 800,000 100,750 195,717 566,127 464,499 Amount - - -

1-4 months,basedonweeklyAWPLR Repayment terms&interest rate 1-12 months,basedontheprevailing 1-12 months,basedontheprevailing 1-12 months,basedontheprevailing On demand,basedontheprevailing On demand,basedontheprevailing 1-4 months,basedontheprevailing 1-3 months,basedontheprevailing 1-6 months,basedontheprevailing On demand,basedonmonthly On demand,basedonmonthly 1-3 months,basedonmonthly contd. SLIBOR+0.95% p.a. AWPLR+1.0% p.a. AWPLR+0.5% p.a. market rates market rates market rates market rates market rates market rates market rates market rates Security offered of Rs.250.0Mn.from from Cargills(Ceylon) Cargills (Ceylon)PLC Fully secured against Corporate guarantee Corporate guarantee Clean basis Clean basis Clean basis Clean basis Clean basis Clean basis Clean basis Clean basis Clean basis cash PLC Cargills BankLimited Bank overdraft CPC LankaLimited Commercial BankofCeylonPLC Hatton NationalBankPLC Deutsche Bank Bank overdraft Cargills FoodServices(Private)Limited Commercial BankofCeylon PLC Short termloans Commercial BankofCeylon PLC Deutsche Bank Cargills BankLimited Bank overdraft Cargills FoodProcessors (Private) Limited Cargills BankLimited Commercial BankofCeylonPLC Bank overdraft Cargills AgrifoodsLimited Institution andfacility Principal Rs. ‘000 250,000 100,000 100,000 150,000 amount 5,000 - - - - - Outstanding Rs. ‘000 284,915 100,000 100,000 184,915 Amount 47,830 37,021 14,629 97,757 72,529 64,421 25,991 38,430 3,556 3,556 6,828 3,981

Repayment terms&interest rate 1-12 months,basedontheprevailing On demand,basedontheprevailing On demand,basedontheprevailing On demand,basedontheprevailing On demand,basedontheprevailing On demand,basedontheprevailing On demand,basedontheprevailing 1 week,basedonweeklyAWPLR+ On demand,basedonmonthly On demand,basedonmonthly AWPLR +1.0%p.a. AWPLR+1.0% p.a. market rates market rates market rates market rates market rates market rates market rates 0.75% Security offered from Cargills(Ceylon) Fully secured against Cargills (Ceylon)PLC Fully secured against Fully secured against Cargills (Ceylon)PLC Corporate guarantee Corporate guarantee Corporate guarantee for Rs.155Mn.from for Rs.50Mn.from Clean basis Clean basis Clean basis Clean basis cash cash cash PLC 169 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 170 Annual Report 2018 | 2019 Notes totheFinancialStatements Commercial BankofCeylonPLC Hatton NationalBankPLC Standard Chartered Bank Short termloans Deutsche Bank Cargills BankLimited Seylan BankPLC Commercial BankofCeylon PLC Bank overdraft Cargills QualityDairies(Private)Limited Commercial BankofCeylon PLC Hatton NationalBankPLC Short termloans Commercial BankofCeylonPLC Bank Overdraft Cargills QualityConfectionaries(Private)Limited Institution andfacility 1,500,000 1,200,000 Principal Rs. ‘000 750,000 100,000 200,000 250,000 200,000 amount 10,000 90,000 - Outstanding 2,402,686 2,060,000 Rs. ‘000 750,000 430,000 880,000 342,686 244,340 106,601 Amount 98,346 65,000 65,000 41,601 41,601 - - -

1-4 months,basedonweeklyAWPLR Repayment terms&interest rate 1-12 months,basedontheprevailing 1-12 months,basedontheprevailing 1-12 months,basedontheprevailing On demand,basedontheprevailing On demand,basedontheprevailing On demand,basedonmonthly On demand,basedonmonthly On demand,basedonmonthly 1-4 months,basedonweekly contd. AWPLR +1.0%p.a. AWPLR +2.5%p.a. AWPLR +1.0%p.a. AWPLR+0.75% market rates market rates market rates market rates market rates Security offered Fully secured against Cargills (Ceylon)PLC Cargills (Ceylon)PLC Cargills (Ceylon)PLC Corporate guarantee Corporate guarantee Corporate guarantee for Rs.200Mn.from for Rs.150Mn.from for Rs.70Mn.from Clean basis Clean basis Clean basis Clean basis Clean basis Clean basis cash Commercial BankofCeylonPLC Standard Chartered Bank Short termloans Hatton NationalBankPLC Deutsche Bank Cargills BankLimited Bank overdraft Millers Limited Hatton NationalBankPLC Standard Chartered Bank Short termloans Deutsche Bank Commercial BankofCeylonPLC Bank overdraft Cargills QualityFoodsLimited Institution andfacility Principal Rs. ‘000 200,000 250,000 200,000 200,000 750,000 600,000 350,000 150,000 amount - Outstanding 1,439,990 Rs. ‘000 247,004 247,004 193,136 959,045 459,045 500,000 480,945 349,207 131,738 Amount 36,062 17,806 - - -

Repayment terms&interest rate 1-12 months,basedontheprevailing On demand,basedontheprevailing On demand,basedontheprevailing On demand,basedontheprevailing 1-4 months,basedontheprevailing 1-6 months,basedontheprevailing On demand,basedonmonthly 1-4 months,basedonweekly 1-4 months,basedonweekly AWPLR +1.0%p.a. AWPLR+0.75% AWPLR+0.75% market rates market rates market rates market rates market rates market rates Security offered Corporate Guarantee Corporate Guarantee Corporate Guarantee Cargills (Ceylon)PLC Cargills (Ceylon)PLC Cargills (Ceylon)PLC Fully secured against Cargills (Ceylon)PLC for Rs.215Mn.from Corporate guarantee for Rs.250Mn.from for Rs.335Mn.from for Rs.125Mn.from Clean basis Clean basis Clean basis Clean basis cash 171 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 172 Annual Report 2018 | 2019 Notes totheFinancialStatements Limited Pan AsiaBankCorporation Import Loanfacility Limited Pan AsiaBankCorporation Bank overdraft Kotmale MilkProducts Limited Bank ofCeylon Import Loanfacility/Seriesofon Seylan BankPLC Bank ofCeylon Bank overdraft Kotmale DairyProducts (Private) Limited Hatton NationalBankPLC Short termloans Bank ofCeylon Seylan BankPLC Bank overdraft Ceylon Agro DevelopmentCompany(Private)Limited Institution andfacility Principal Rs. ‘000 amount 20,000 40,000 10,000 5,000 - - - - Outstanding Rs. ‘000 Amount 49,122 49,122 49,122 84,012 84,000 84,000 12 10 2 - - - -

Repayment terms&interest rate Based ontheprevailing marketrates Based ontheprevailing marketrates On demand,basedontheprevailing On demand,basedontheprevailing On demand,basedontheprevailing On demand,basedontheprevailing On demand,basedontheprevailing 1-4 months,basedonweekly contd. AWPLR+0.75% market rates market rates market rates market rates market rates Security offered from Kotmale Holdings from KotmaleHoldings from KotmaleHoldings from KotmaleHoldings Corporate guarantee Corporate guarantee Corporate guarantee Corporate guarantee PLC. Mortgageover PLC. Mortgageover stocks andbook stocks andbook Clean basis Clean basis Clean basis Clean basis debtors debtors PLC PLC in theprofit orloss,undertheheading ‘otherincome’againsttheincurrence ofrelated expenditure. profit orlossonasystematicandrationalbasisovertheusefullifeofasset.Grantsrelated toincomeare presented asacredit non-monetary grantsatfairvalue,are presented inthe StatementofFinancialPositionasdeferred incomeandrecognised inthe conditions attachedtothemwillbecompliedbytheCompanyandgrantsreceived. Grantsrelated toassets,including grants,includingnon-monetarygrantsatfairvalue,areGovernment recognised whenthere isreasonable assurancethatthe grants Government Accounting Policy 26.

As at1April Amortisation As at31March Comprehensive Incomeduringtheperiodinwhichitoccurs. The Company and Group recognises the total actuarial gains and losses thatariseincalculatingthe Company’s obligationinOther Recognition ofActuarialGainsandLosses statements. The assumptions based onwhichtheresults oftheactuarial valuation wasdetermined,are includedin this notetothefinancial The itemisstatedunderEmployeeBenefitsintheStatement ofFinancialPosition. Benefits’. tuary usingthe‘Projected UnitCredit method’(PUC)asrequired bytheSriLankaAccountingStandard- LKAS19on‘Employee The Group measures thepresent valueoftheretirement benefitsforgratuity, withtheadviceofanindependentprofessional ac- Defined BenefitPlanRetiringGratuity ACCOUNTING POLICY 27. assistance. The grantsreceivedanddisclosure havebeen accountedaspertheLKAS20-“Accountingforgovernment ofgovernment Kilinochchi formUSAID. The unamortisedgrantbalancerefers tograntsreceived byCargillsAgrifoodsLimitedinrespect ofprojects inDehiattakandiyaand CAPITAL GRANTS EMPLOYEE BENEFITLIABILITIES

Group

Rs. ‘000 (11,482) 61,901 50,419 2019 Rs. ‘000 (11,481) 73,382 61,901 2018 173 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 174 Annual Report 2018 | 2019 funded. The gratuityliabilityisnotexternally Funding Arrangements Notes totheFinancialStatements

As at1April 27.1 Transferred tosubsidiary/equityaccountedinvestees Interest cost Current servicecost Actuarial (gain)/loss Benefits paid As at31March As at31March 27.2

Present valueofdefinedbenefit obligation Net liabilityofdefinedbenefitobligation Current servicecost Continuing operations 27.3 Interest cost

Actuarial (gain)/loss 27.4

actuarial valuationwere asfollows: ment Consultants (Private) Limited, a firm of professional actuaries, as at 31 March 2019. The principal assumptions, used in the The gratuity liability is based ontheactuarial valuation carried out byMr. M. Poopalanathan, AIA,MessersActuarialandManage- funded. This obligationisnotexternally Movement inpresent valueof defined benefitobligations Liability recognised inthe StatementofFinancialPosition Amount recognised inthe Profit /loss Amount recognised inOtherComprehensive Income

contd. 1,072,680 1,072,680 1,072,680 Rs. ‘000 Rs. ‘000 942,633 153,439 153,439 193,311 (19,721) (55,504) 39,872 11,961 39,872 11,961 11,961 2019 2019 Group Company Group Company Rs. ‘000 Rs. ‘000 779,767 942,633 942,633 942,633 179,548 (73,816) 89,047 90,501 57,134 90,501 89,047 57,134 57,134 2018 2018 - Rs. ‘000 Rs. ‘000 397,146 445,935 445,935 445,935 (21,487) (21,153) 39,444 33,590 18,395 33,590 39,444 73,034 18,395 18,395 2019 2019 Rs. ‘000 Rs. ‘000 338,695 397,146 397,146 397,146 (42,414) 38,950 32,322 29,593 32,322 38,950 71,272 29,593 29,593 2018 2018 -

Discount rate Future salaryincrease

Group variables heldconstantinthedefinedbenefitobligationmeasurement. The followingtabledemonstratesthesensitivitytoareasonably possiblechangeinthekeyassumptionsemployedwithallother 27.5 employee benefitliabilityofthecompanyandsubsidiaries. ered fortheactuarialvaluation. “A67/70mortalitytable”issuedbytheinstituteofActuaries,Londonwasusedtoestimate In additiontotheabove,demographicassumptionssuchasmortality, withdrawalanddisability, andretirement agewere consid- Company Salary increment rate(1% movement) Discount rate(1%movement) Salary increment rate(1%movement) Discount rate(1%movement) As at31March 28.

Trade payables Other payables(Note28.1) Accrued expenses

payable andSRL payable. 28.1 - Executive - Staff TRADE ANDOTHERPAYABLES Sensitivity analysis Other payablesoftheGroup andCompanyincludeNation BuildingLevy(NBT)payable,EconomicServiceCharge(ESC)

14,810,176 9,770,143 2,950,613 2,089,420 Increase Increase Rs. ‘000 Rs. ‘000 Rs. ‘000 (51,385) (14,944) 61,516 17,986 2019 Group Company 2019 2018 2019 2018

13,220,686 9,013,585 2,574,676 1,632,425 Decrease Increase Decrease Increase Rs. ‘000 Rs. ‘000 Rs. ‘000 (55,858) 56,334 (16,620) 57,533 (46,302) 16,456 (13,839) 2018

Rs. ‘000 Rs. ‘000 Rs. ‘000 427,686 620,367 17,545 96,826 95,855 2019 2019 11 10 10 % Decrease Decrease Rs. ‘000 Rs. ‘000 Rs. ‘000 234,682 420,186 (51,017) (16,171) 52,104 15,353 98,589 86,915 2018 2018 10.5 10 10 % 175 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 176 Annual Report 2018 | 2019 As at31March 29. Notes totheFinancialStatements

Unclaimed dividends

Inter-segment pricingisdeterminedatpricesmutuallyagreed bythecompanies. the Group. The accountingpoliciesadoptedforsegmentreporting are thoseaccountingpoliciesadoptedforpreparing theFinancialStatementsof able basis. Segment results, assetsand liabilitiesincludeitemsdirectly attributabletoasegmentaswellthosethatcanbeallocatedonreason - is subjecttorisksandrewards thatare different from thoseofothersegments). A segmentisadistinguishablecomponentoftheGroup thatisengagedinproviding products andservices.(Businesssegment,which to beidentifiedasgeographicalsegmentsfortheGroup. The Group’s primarysegmentsare retail, fastmovingconsumergoods(FMCG)andrestaurant. There are nodistinguishablecomponents Segment Reporting Accounting Policy 30. 17% 18% DIVIDENDS PAYABLE SEGMENTAL INFORMATION 2019 4% 4% 2018 Revenue Retail Fast movingconsumergoods 79% 78% 26% 17% 34% Profit Before tax 9% 7% 2019 2018 1% Restaurant 64% 42% Other 23% 24% 27% 28% Segmental Assets

2018 3% 2019 2% contd. Rs. ‘000 64,588 64,588 2019 46% 47% Group Company Rs. ‘000 68,229 68,229 2018 Rs. ‘000 64,589 64,589 2019 Rs. ‘000 63,836 63,836 2018 Total segmental assets

Cash andcashequivalents Short terminvestments Amount duefrom related companies Trade andotherreceivables Inventories Current assets Deferred taxassets Investment inequityaccountedinvestees Prepayments ofleaseholdbuildings Available forsaleinvestments Intangible assets Investment property Property plantandequipment Non current assets Segment assets

Non controlling interest Equity shareholders oftheparent Attributable to: Profit fortheyear Deferred incometax Current incometax Income taxexpense Change infairvalueofinvestmentproperty Profit before taxation Share ofequityaccountedinvestees results Net financecost Segment operatingprofit

Inter segmentrevenue Intra segmentrevenue Revenue

27,336,834 23,968,79913,578,45512,725,022 13,251,788 11,757,105 14,085,046 12,211,694 13,890,704 12,161,676 74,003,943 72,019,52016,785,71915,659,125 74,413,736 72,663,91623,758,18222,100,907 1,771,214 1,045,280 3,280,519 2,605,1622,617,5362,252,937 7,465,812 7,365,8192,175,8972,217,437 1,486,587 2,502,0182,632,3372,183,327 (289,619) (551,675)(905,770)(703,066) (622,104) (283,134)(448,045)(398,208) (409,793) (644,396) Rs. ‘000 718,660 707,102182,107263,385 144,317 50,018 621,354 1,601,0361,234,943897,880221,517 568,549 1,472,0491,234,181896,480221,517 621,354 1,601,0361,234,943897,880221,517242,014 864,483 2,218,8842,190,6171,794,694 15,583 33,742 50,025 - 52,805 128,987 46,490 (66,173)(49,904)(193,748) 2019 2018 ------Retail Rs. ‘000 Fast movingconsumergoods (6,791,510) (6,244,509) 5,925,740 5,464,031 7,652,715 7,260,9911,317,399 6,785,215 6,407,4121,161,684 (180,953) (197,273) Rs. ‘000 943,323 726,821113,655 705,534 700,034150,210116,340412,653445,294 134,775 128,450 21,875 22,750 6,877 3,451 5,274 2,2965,473 6,325 9,575 762 1,400 42 4932 Rs. ‘000 1,790,067 3,873,329 3,614,482 3,873,329 3,614,482 Rs. ‘000 472,668 250,629 140,221693,772636,798 108,384 74,23511,9435,369 304,498 372,388 318,581 382,276244,8211,195,3164,682,3266,262,937 (76,676) (136,815) (14,083) (9,888) (6,305) 6,441 Restaurant ------1,291,049 Rs. ‘000 311,614 979,435 856,936 242,014 242,014 97,158 6,117 - 15,423,571 14,807,41158,128,92752,792,28 13,587,396 13,224,58736,642,55633,676,707 1,836,175 1,582,824 5,296,632 5,366,761 1,684,023 1,598,1021,818,7981,726,552 6,039,417 5,650,793 (340,432) (615,933) Rs. ‘000 230,692 131,029 890,934 806,676913,394843,869 140,208 144,060212,108166,810 (44,001) 589,991 (44,001) 589,991 (44,001) 589,991 (25,271) (51,738)(34,990)(305,218) (62,067) (217,639) (18,743) (30,210) 14,463 19,57714,53719,668 43,337 859,368 54,061 212,273 84,887 67,71291,21277,287 18,743 30,210 8,834 2,952 - - - Other Rs. ‘000 102,063,990 98,409,515 21,486,371 19,115,574 27,877,020 25,076,817 94,662,991 91,293,127 (1,334,132) (1,609,195) (1,424,664) (1,307,163) (7,220,046) (6,919,115) 3,058,884 2,000,288 6,842,456 5,635,118 9,762,036 9,662,860 1,412,714 1,311,686 2,033,813 3,330,921 1,980,246 3,200,534 2,033,813 3,330,921 3,402,935 5,245,334 (180,953) (197,273) Rs. ‘000 909,601 973,439 10,747 8,413 53,567 130,387 54,061 212,273 Group Rs. ‘000 1 177 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 178 Annual Report 2018 | 2019 Depreciation Capital expenditure Other information Total segmentalliabilities

Borrowings Dividends payable Amount duetorelated companies Current taxliabilities Trade andotherpayables Current liabilities Put liability Employee benefits Deferred income Deferred taxliability Borrowings Non current liabilities Segment liabilities

Notes totheFinancialStatements As at31March 31. COMMITMENTS The Group intosignificantgeographicsegments. doesnotdistinguish itsturnover Segmental information-thesecondarysegments(geographicalsegments)

Approved andcontracted Capital commitment (a) Future paymentsofoperatingleaserentals Financial commitments

(b) Settlementoflettercredits andimportbills - within1year. - between1-5years - more than5years

21,286,746 18,346,958 20,369,529 17,452,757 11,362,483 10,418,658 1,398,430 1,214,944 2,975,748 4,021,997 8,635,393 6,345,5924,398,5294,971,556 Rs. ‘000 365,831 685,582 917,217 894,201790,927737,111 548,363 480,722 368,854 413,479661,717608,899 5,822 2,925 2019 2018 – - - 4,393 - - Retail Rs. ‘000 Fast movingconsumergoods 9,002,207 8,960,1411,483,3621,202,3838,413,7117,462,488 8,211,280 8,223,0301,385,3191,110,0014,253,2733,738,127 1,669,858 1,391,469 2,142,893 1,855,362 Rs. ‘000 790,982 720,161183,649179,561 748,565 1,187,406 78,382 64,765 50,419 61,901 409 1,546 - 250 Rs. ‘000

contd. 14,656,878 26,026,663 1,473,460 2,095,122 9,274,663 Rs. ‘000 207,093 Rs. ‘000 461,121 87,02865,67256,967 332,745 277,653 368,736 305,990 683,838 526,358620,962420,308 98,043 92,382 98,043 92,382 2019 Restaurant - - - - - Group Company Rs. ‘000 12,142,942 20,108,578 2,026,543 1,115,657 6,849,979 Rs. ‘000 112,157 3,470,648 3,042,787 4,160,438 3,724,3615,966,6255,448,055 3,456,493 3,089,325 2018 Rs. ‘000 445,935 397,146 258,010 237,890 57,967 53,983 64,588 63,83668,229 97,075 211,196 – - Other Rs. ‘000 Rs. ‘000 587,794 143,465 157,640 12,040 2,135 2019 40,186,026 35,971,970 34,219,401 30,523,915 16,837,315 14,637,588 14,810,176 13,220,686 2,431,028 2,168,649 4,251,106 5,353,398 2,501,500 2,594,237 1,072,680 942,633 1,386,624 1,352,650 - Rs. ‘000 50,419 61,901 5,822 3,175 409 1,546 Group Rs. ‘000 511,862 146,405 159,600 11,235 1,960 Rs. ‘000 2018 - auditors. satisfies the solvency test in accordance with section 57 oftheCompaniesAct No.07 of2007,andhasobtainedacertificate from As required bytheSection56 (2)oftheCompaniesActNo.072007,Board ofDirectors hasconfirmedthattheCompany now inissue)fortheyearended31March 2019whichistobeapproved bytheshareholders attheAnnualGeneralMeeting. The Board ofDirectors haveproposed afinaldividendof4.10Rupeepershare on25thJune2019(the257,221,043shares The Companyhasissued1,221,116shares on29April2019.(Pleaserefer Note23) 33. There are noothermaterialcontingentliabilitiesasatthereporting date. Directors donotexpectanyclaimonthisguarantees.Accordingly, noprovision hasbeenmadeinthefinancialstatements. of Rs.150MntocovercontingenttaxliabilitiesinconnectionwiththedisposalinvestmentMillersBrewery Limited.The The Companyhasprovided BankGuaranteestoLionBrewery (Ceylon)PLCanditssubsidiaryPearlSprings(Pvt)Ltdtothevalue Corporate guarantee The Directors donotexpect anyclaimontheseguarantees.Accordingly, noprovision hasbeenmadeinthefinancialstatements. companies KotmaleDairyproducts (Pvt)Ltd(Rs.50Mn)andKotmaleMilkProducts LtdRs.25Mn)amountingto75Mn. Kotmale HoldingPLCasubsidiaryofthecompanyhasgivenlettersguaranteetoCommercial Banksonbehalfofitssubsidiary The CompanyhasgivenletterofguaranteetoCommercial BanksonbehalfofthesubsidiarycompaniesamountingtoRs.1.8Bn. Letter ofguaranteetoCommercial Banks obtained onanyrecovery actions. would arise. Accordingly, no provision has been made in the financial statements. Where necessary, interim stay orders have been Having soughtprofessional advice,theManagementisconfidentthattaxexemptionsare applicableandassuchnoliabilities Rs.139.5 MnandKotmaleDairyProducts (Private)LimitedRs.43.81Mn. Cargills Agrifoods Limited - Rs. 16.6 Mn, Cargills Quality Dairies (Private) Limited - Rs. 40.3 Mn, Cargills Quality Foods Limited - Revenue. Contingentliabilitiesonpotentialincometaxpaymentsare asfollows: The incometaxexemptionclaimedundertheInlandRevenueActNo10of2006isbeingcontestedbyDepartment of Inland Income tax Statement ofFinancialPositionbutare disclosedunlessitsoccurrence isremote. Standard- LKAS37on‘Provisions, ContingentLiabilities and ContingentAssets’.liabilitiesare notrecognised inthe tions where thetransfer of economic benefit is notprobable or cannot be readily measured asdefinedinthe Sri Lanka Accounting Contingent Liabilitiesare possibleobligationswhoseexistencewillbeconfirmedonlybyuncertainfuture eventsorpresent obliga- Contingencies Accounting Policy 32. EVENTS AFTERTHEREPORTING DATE CONTINGENT LIABILITIES 179 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 180 Annual Report 2018 | 2019 ments. Amounts duefrom andduetorelated companiesasattheyearendhavebeendisclosedunderNote20tothese financialstate- 34.2 agement personnelapartfrom thedisclosedamount. to thedirectors asemoluments andnopostemploymentbenefitsduringtheyear. There are nootherpaymentsmadetokeyman- The Group andtheCompany haspaidRs.408.98Mn(2018-352.09Mn)and49.4843.37respectively directors) havebeenclassified asKMPofthegroup. trolling the activities of the entity. Accordingly, the directors of the company and its parent (including executive and non - executive According toLKAS24-“Related PartyDisclosures”, KMPare thosehavingauthority andresponsibility forplanning,directing, con- 34.1 company balances.Thebalanceshavebeendisclosedundernote20totheFinancialStatements. Companies within the Group engage in trading and business transactions under normal commercial terms which give rise to related the detailsofwhichhasbeendisclosedunderNote25.3toFinancialstatements. The companyhasprovided corporateguaranteesforthetermloansandbankingfacilitiesobtainedbyitssubsidiarycompanies, The relevant detailsare disclosedintherespective notestotheFinancialStatements. over thefinancialandoperatingpolicies/decisionsofother, irrespective ofwhetherapriceisbeingchargedornot. Disclosure hasbeenmadeinrespect ofthetransactionsinwhichonepartyhasabilitytocontrol orexercise significantinfluence Related PartyTransaction Accounting Policy 34. the financialstatements. No eventsotherthantheabove,haveoccured sincethereporting datewhichwouldrequire anyadjustmentto,ordisclosure in, financial statementsasat31March 2019. In accordance withLKAS10-"Eventsafterthereporting period",thefinaldividendhasnotbeenrecognised asaliabilityinthe Notes totheFinancialStatements TRANSACTIONS WITHGROUPCOMPANIES Amount duefrom/due torelated companies Transactions withkeymanagementpersonnel(KMP) contd. 34.3 For theyearended31March

Sale /(Purchase) Subsidiaries Transaction withrelated parties Other Income/(Expense) Fund Transfer /(Settlement) Sale /(Purchase) Holding company Other Income/(Expense) Fund Transfer /(Settlement) Sale /(Purchase) Other related companies Other Income/(Expense) Fund Transfer /(Settlement) Net dividendsreceived from subsidiarycompanies - 41.04Mn)fortheyearended31stMarch 2019. The otherexpenserelating toCompanyincludesemployeebenefitcosttransfersubsidiariesamountingRs.40.39Mn(2018

Cargills QualityFoodsLimited Cargills FoodsCompany(Private)Limited Cargills FoodsProcessers (Private)Limited Kotmale HoldingPLC Dawson Office Complex(Private)Limited (c) (b) (a) with theentity. Theymayinclude; CFM ofaKMPare thosefamilymemberswhomaybeexpectedtoinfluence,orinfluenced by, thatindividualintheirdealings Transactions, ArrangementsandAgreements involvingKeyManagementPersonnel(KMP)andtheir CloseFamilyMembers(CFM) dependentsoftheindividualor theindividual’s domesticpartner children oftheindividual’s domestic partner;and the individual’s domesticpartnerandchildren; Transactions withrelated companies

Rs. ‘000 (21,122) 17,905 73,882 4,080 5,289 2019 - - - -

Group Rs. ‘000 134,227 (38,241) 3,225 3,310 2018 - - - - -

1,412,401 (914,218) Rs. ‘000 Rs. ‘000 941,158 237,747 107,550 18,743 91,824 (9,825) 2,063 2019 2019 - - - - - Company 1,538,039 (715,732) Rs. ‘000 Rs. ‘000 760,616 644,670 267,347 (24,290) 35,092 91,811 3,225 2018 2018 855 - - - - 181 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 182 Annual Report 2018 | 2019 As at31stMarch Financial AssetsbyCategories(Group) imation offairvalue. value informationforfinancialassesandliabilitiesnotmeasured atfairvalueifthecarryingamountisareasonable approx - The following table shows the carrying amounts and fair values of financial assets and financial liabilities. It does not include fair 36.1 36. better presentation. Comparative Informationisre-classified wherever necessarytoconfirmwiththecurrent year’s presentation inorder toprovide a 35. There are nomaterialrelated partytransactionsotherthanthosedisclosedabove Directors havenodirect orindirect interest inanyothercontactswiththecompany (2018 -Rs.0.98Mn). Purchases forre-sale intheordinary courseofbusinessRs.114.20Mn(2018 -Rs.79.98Mn)Rentalincomeof0.84Mn - Rs.8.36Mn). Limited had the following transaction during the year and the amount outstanding as at 31 March 2019 was Rs. 10.73 Mn (2018 Mrs. R Page, wife of the Deputy Chairman is a Director of the above company with which the Cargills Food Company (Private) Double Yummm (Private)Limited CFM are related partiestotheentity. There were notransactionsotherthandisclosedbelowwiththeCFMduringyear. Notes totheFinancialStatements

Other financialinstruments Financial assetsmeasured atfairvalue Trade andotherreceivables Financial assetsnotmeasured atfairvalue Amounts duefrom related companies Other financialassets Cash atbankandinhand Total Financial Liabilitiesbycategories financialliabilitiesmeasured atAmortised cost. FINANCIAL INSTRUMENTS COMPARATIVE INFORMATION Financial AssetsandLiabilitiesbyCategories

contd. 11,724,335 6,842,456 3,058,884 and Receivables(L&R) Rs. ‘000 913,394 909,601 2019 - Loans 5,635,118 2,000,288 9,452,714 Rs. ‘000 843,869 973,439 2018 - Financial Assets(AFS) Rs. ‘000 14,537 14,537 Available- forsale 2019 - - - - Rs. ‘000 19,668 19,668 2018 - - - - As at31stMarch (Group) Interest bearingloansandborrowings Financial liabilitiesnotre-measured atfairvalue Trade andother payables Amounts duetorelated companies Total As at31stMarch Financial AssetsbyCategories(Company)

Other financialinstruments Financial assetsmeasured atfairvalue Trade andother receivables Financial assetsnotmeasured atfair value Amounts duefrom related companies Other financialassets Cash atbankandinhand Total As at31stMarch (Company) Financial LiabilitiesbyCategoriesmeasured atamortisedcost Interest bearingloansandborrowings Financial liabilitiesnotre-measured atfairvalue Trade andotherpayables Amounts duetorelated companies Total

1,682,799 1,037,244 2,950,340 and Receivables(L&R) Rs. ‘000 230,297 2019 - - Loans

1,572,611 Rs. ‘000 635,515 924,502 12,594 2018 - -

16,837,724 14,810,176 31,653,722 3,470,648 4,095,253 Financial Assets(AFS) iblte (36.1.(a) Liabilities Financial Other Rs. ‘000 Rs. ‘000 Rs. ‘000 620,367 14,463 14,463 Available-for-sale 5,822 4,238 20192018 (36.1.(a)) Liabilities financial Other 2019 2019 2018 - - - - 14,639,134 13,220,686 27,862,995 3,042,787 3,484,215 Rs. ‘000 Rs. ‘000 Rs. ‘000 420,186 19,577 19,577 21,242 3,175 2018

- - - - 183 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 184 Annual Report 2018 | 2019 As at31stMarch Level 3:Inputsfortheassetsorliabilitythatare notbasedonobservablemarketdata(unobservableinputs) Level 2:Inputotherthanquotedpricesincludedwithin1thatare observablefortheassetorliability, eitherdirectly (i.e.as Level 1:Quotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities The different levelshavebeendefinedasfollows: The tablebelowanalysesfinancialinstrumentscarriedatfairvalue,byvaluationmethod. 36.2 such asshorttermtradereceivables andpayables,becausetheircarryingamountsare areasonable approximation offairvalue. carrying amountisareasonable approximation offairvalue.The Group hasnotdisclosedthefairvaluesforfinancialinstruments 36.1.a Notes totheFinancialStatements significant unobservableinputsused. The followingtableshowsthevaluationtechniquesusedbyboth Group andtheCompany inmeasuringlevel3fairvaluesandthe 36.2.1 Available forsale-FinancialAssets Investment property Freehold landandbuildings Company Available forsale-FinancialAssets Investment property Freehold landandbuildings Group

Fair Value Hierarchy The abovetabledoesnotincludefairvalueinformationforfinancialassetsandliabilitiesmeasured atfairvalueifthe Assets andliabilitiesmeasured atfairvalue-Recurring prices) orindirectly (i.e.derivedfrom prices) Rs. ‘000 14,463 19,577- 14,537 19,668- 2019 2018 - 3,514,5553,207,009 - 2,613,2872,611,075 - 1,818,7981,726,552 - Level 1 Rs. ‘000 Rs. ‘000 contd. Level 2 Rs. ‘000 12,205,767 11,673,264 Rs. ‘000 Level 3 Rs. ‘000 Rs. ‘000 14,463 19,577 14,537 19,668 Total Rs. ‘000 land andbuilding Investment property -Freehold Freehold landandbuilding Property, plant and equipment - Asset andliabilities calculate itsfairvalue. with certainfactorsisusedto property isusedinconjunction income generatedbythe Income method:-Thenet the property size, nature andlocationof adjustments for difference in assets, makingappropriate active marketpricesofsimilar involves evaluation of recent property being revalued. This determining thefairvalueof recent periodoftime in property withinareasonably the sellingpriceofasimilar - Thismethodconsiders Market comparablemethod calculate itsfairvalue. with certainfactorsisusedto property isusedinconjunction income generatedbythe Income method:-Thenet the property size, nature andlocationof adjustments for difference in assets, makingappropriate active marketpricesofsimilar involves evaluation of recent property being revalued. This determining thefairvalueof recent periodoftime in property withinareasonably the sellingpriceofasimilar - This method considers Market comparablemethod Valuation technique rate discounted atanappropriate Cash flowsfrom property per square foot Price perperch ofland/Price rate discounted atanappropriate Cash flowsfrom property per square foot Price perperch ofland/Price inputs Significant unobservable (decreases) market interest rateincreases increase (decrease) if; Estimated fairvaluewill (decreases) per perch/ sqftincreases increase (decrease) if;Price Estimated fairvaluewill (decreases) market interest rateincreases increase (decrease) if; Estimated fairvaluewill (decreases) per perch/ sqftincreases increase (decrease) if;Price Estimated fairvaluewill the fairvalue “Sensitivity oftheinputto 185 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 186 Annual Report 2018 | 2019 The maximumexposure tocredit riskatthereporting datewasasfollows; Carrying amountoffinancialassetsrepresents themaximumcredit exposure. obligation, andariseprincipallyfrom the Group’s receivables from customers. Credit riskistheoffinanciallosstoGroup if acustomerorcounterpartytofinancialinstrumentfailsmeetitscontractual 37.1 management controls andprocedures, theresults ofwhichare reported totheAuditCommittee sisted initsoversightroleAudit,whoundertakesbothregular by RiskManagementteamandInternal adhocreviews ofrisk and procedures andreviews theadequacyofriskmanagementframeworkinrelation totherisks.TheAuditCommitteeisas- The AuditCommitteeoverseehowmanagementmonitorscompliancewiththeGroup’s riskmanagementprocesses/ guidelines changes inmarketconditionsandtheGroup’s activities. risk limitsandcontrols and tomonitorrisksandadherence tolimits.Riskmanagementsystemsare reviewed regularly toreﬂect The Group’s riskmanagementprocesses are establishedtoidentifyandanalysetherisksfacedbyGroup, tosetappropriate The Board ofDirectors hasoverallresponsibility fortheestablishmentandoversightof Group’s riskmanagementframework. Risk ManagementFramework throughout theseconsolidated financialstatements. cesses formeasuringandmanagingrisk,theGroup’s managementofcapital.Furtherquantitativedisclosures are included This notepresents information abouttheGroup’s exposure toeachoftheaboverisks,Group’s objectives,policiesandpro - • • • The Group hasexposure tothefollowingrisksfrom itsuseoffinancialinstruments: Overview 37. Notes totheFinancialStatements

Trade receivables Loans andadvances Amount duefrom related companies Cash andcashequivalents Total credit riskexposure Available forsaleinvestments Total equityriskexposure Market risk Liquidity risk Credit risk FINANCIAL RISKMANAGEMENT Credit risk

contd. 3,603,159 3,058,884 7,640,309 Rs. ‘000 913,394 64,872 14,537 14,537 2019 Group Company 2,824,313 2,000,288 5,709,774 Rs. ‘000 843,869 41,304 19,668 19,668 2018 1,037,244 1,379,050 Rs. ‘000 101,417 230,297 10,092 14,463 14,463 2019 1,037,391 Rs. ‘000 924,502 89,516 10,779 12,594 19,577 19,577 2018 As at31March 37.1.1

Past due1-30days Past due31-60days Past due61-90days > 91days

tractual cashinflows thatcanbegeneratedthrough thesale ofassets,repurchase agreement orsecured borrowings. the liquidassetsapproach. Thebusinessunitsattemptto matchcashoutflowsineachtimebucketagainstacombination ofcon- In liquidityriskmanagement,the Group usesamixedapproach where itcombineselementsofcashflowmatching approach and funding includingbankloansand overdrafts overawiderspread ofmaturityperiods. The Group’s objectiveistomaintain balance betweencontinuityoffundingandflexibilitythrough theuseofmultiplesources of assets andotherprojected cashflowfrom operations. The Group monitorsitsrisktoshortageoffundsbyconsideringmaturityboththe Group’s financialinvestmentand enable theGroup tomanageitsliquidityrisk. ring unacceptablelossesorriskingdamagetotheGroup’s reputation. TheGroup holdscashandundrawncommitted facilities to that itwillalwayshavesufficient liquiditytomeetitsliabilitieswhendue,underbothnormaland stressed conditions,without incur are settledbydelivering cash oranother financial asset. The Group’s approach tomanagingliquidity is toensure, asfarpossible, Liquidity riskisthethatGroup willencounterdifficulty inmeetingtheobligationsassociatedwithitsfinancial liabilitiesthat 37.2 The Group’s policyistoprovide financial guaranteesonlytowhollyownedsubsidiaries. 37.1.5 Guarantees are heldwithbanks,which are ratedAAA(lka)toA(lka),basedonFitchRatings. 2,000.28 MnandRs.12.59Mn),whichrepresents itsmaximumcredit exposure ontheseassets.Thecashandequivalents The Group andtheCompany heldcashandequivalentsofRs.3058.88Mn230.29at31March 2019(2018-Rs. 37.1.4 ny. TheCompany’s amountduefrom related companiesconsistofreceivables from affiliate companies. The Group’s amountsduefrom related companiesmainlyconsistofreceivables from otherrelated companiesandparent compa- 37.1.3 The loansandadvancesrepresents loansgiventopermanentemployees. 37.1.2 The Companyhasobtainedbankguaranteesfrom majorcustomersbyreviewing theirpastperformanceandcredit worthiness. Liquidity risk Trade receivables Cash andcashequivalents Amount duefrom related companies Loans andadvances

2,427,121 3,603,159 Rs. ‘000 566,484 337,667 271,887 2019 Group Company 1,891,442 2,824,313 Rs. ‘000 548,135 201,130 183,606 2018 Rs. ‘000 101,417 97,050 3,178 2019 746 443 Rs. ‘000 86,231 89,516 1,662 1,261 2018 362 - 187 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 188 Annual Report 2018 | 2019 The followingare thecontractualmaturitiesoffinancialliabilitiesasat31March 2019 Notes totheFinancialStatements Bank Short Amounts Trade overdraft Financial instrumentsincurrent liabilities term due Borrowings & Financial instrumentsinnon-current liabilities loan to Company other related payables The followingare thecontractualmaturitiesoffinancialliabilitiesasat31March 2019 companies The followingare the contractualmaturitiesoffinancialliabilitiesasat31March 2018 Group Group Trade &otherpayables Financial instrumentsincurrent liabilities Borrowings Financial instrumentsinnon-current liabilities Current portionoffinanceleaseliabilities Amounts Trade Financial instrumentsincurrent liabilities Borrowings Financial instrumentsinnon-current liabilities Amounts duetorelated companies Bank Short Current portionoffinanceleaseliabilities Short termloan Bank overdraft

overdraft term & other due loan to payables related companies Within - - Within Within

31,653,313 4,095,253 - - 3,440,000 - - 14,810,176 13,220,686 - 27,861,449 11,867,036 - 14,016,345 2,769,528 - - 2,819,833 Rs. ‘000 620,367 - - Rs. ‘000 Rs. ‘000 30,648 - - 1 year 4,238 - - 1 year 1 year 1,024 3,175 - 5,822 1,137 1-2 years Between Rs. ‘000 1-2 years 1-2 years Between Between Rs. ‘000 Rs. ‘000 contd. ------2-3 years Rs. ‘000 2-3 years 2-3 years Rs. ‘000 Rs. ‘000 - - 3-4 years Between Rs. ‘000 3-4 years 3-4 years Between Between Rs. ‘000 Rs. ‘000 ------4-5 years Between Rs. ‘000 4-5 years 4-5 years Between Between Rs. ‘000 Rs. ‘000 - More than More than More than Rs. ‘000 5 years Rs. ‘000 Rs. ‘000 5 years 5 years - 4,095,253 3,440,000 13,220,686 14,810,176 11,867,036 27,861,449 14,016,345 31,653,313 2,769,528 2,819,833 Rs. ‘000 620,367 Rs. ‘000 Rs. ‘000 30,648 4,238 3,175 1,024 5,822 1,137 Total Total Total banks whichhasenabledthecompanytonegotiatecompetitive rates. minimizing thenegativeeffect ofmarketfluctuations.Further, thecompanyhasconsiderablebankingfacilities withseveralreputed tiated leveragingonthestrength oftheCargillsgroup andthereby ensuringtheavailabilityofcost-effective fundsatalltime,while The Group adoptpolicyofensuringborrowings are maintained at manageablelevel whileoptimizingreturn. Interest ratesare nego- liabilities. and volatilityoftheGroup’s interest expense bymaintainingadiversifiedportfoliooffixedrate,floatingrateandinflation-linked The Group is exposed to interest rate risk on borrowings and deposits. The Group’s interest ratepolicyseekstominimisethecost 37.3.2 (LKR).The Group alsohas limited exposure inrespect ofrecognised foreign currency assetsandliabilities. The Group isexposedtocurrency riskonsalesandpurchases thatare denominatedinacurrency otherthantheSriLankan rupees 37.3.1 control marketriskexposures withinacceptableparameters,whileoptimisingthereturn. Group’s incomeorthevalueofitsholdingsfinancialinstruments.Theobjectivemarketriskmanagementistomanageand Market riskisthethatchangesinmarketprices,suchasforeign exchangerates,interest ratesandequitypriceswillaffect the 37.3 Bank Short Amounts Trade overdraft Financial instrumentsincurrent liabilities term due Borrowings & Financial instrumentsinnon-current liabilities loan to Company other related payables The followingare thecontractualmaturitiesoffinancialliabilitiesasat31March 2018 companies Market risk Interest raterisk Currency risk - Within 3,484,215 - 2,995,000 - Rs. ‘000 420,186 - 47,787 - 21,242 - 1 year 1-2 years Between Rs. ‘000 2-3 years Rs. ‘000 3-4 years Between Rs. ‘000 4-5 years Between Rs. ‘000 More than Rs. ‘000 5 years 3,484,215 2,995,000 Rs. ‘000 420,186 47,787 21,242 Total 189 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Financial Statements CARGILLS (CEYLON) PLC 190 Annual Report 2018 | 2019 As at31March shareholders. tain future developmentofthebusiness.TheBoard ofDirectors monitorsthereturn oncapitalandlevelofdividendstoordinary The Board’s policyistomaintainastrong capitalbasesoastomaintainshare holder, creditor andmarketconfidencetosus- 37.4 Notes totheFinancialStatements

Total Liabilities Less: CashandEquivalents Net Debt Total Equity Net DebttoEquityRatio There were nochangesintheGroup’s approach tocapitalmanagementduringtheyear. Capital management

contd. 40,186,026 37,127,142 17,942,901 3,058,884 Rs. ‘000 2019 2.07 Group Company 35,971,970 33,971,682 16,820,311 2,000,288 Rs. ‘000 2018 2.02 12,642,189 4,890,089 4,659,792 Rs. ‘000 230,297 2019 0.37 11,510,378 4,294,308 4,281,714 Rs. ‘000 12,594 2018 0.37 Profit from operation Revenue Continuing Operations Group Five Year FinancialSummary Profit before taxation Profit aftertaxation Profit/loss from discontinuedoperation,netoftax Discontinued Operations Profit fortheyear Owners ofthecompany Attributable to Non controlling interest

Stated Financial position capital Reserves Working capital Current liabilities Current assets Capital Non and reserves controlling interest Non current liabilities Non current assets Non controlling interest Net assets 61,631,285

599,978 130,723 12,411,81613,990,55613,826,109 12,609,56214,931,26915,932,37719,115,574 12,879,14714,504,81814,371,92316,820,311 336,608383,539415,091491,919 24,553,98927,279,86633,371,05933,676,707

12,542,53914,121,27913,956,83216,328,392 (20,392,074) (23,755,857)(30,274,672)(30,523,915) (7,782,512) (3,892,330) 1,571,788 (336,608) 804,653 247,217 352,761 599,978 576,179 Rs'000 23,799 2015 71,441,850 84,190,87091,293,127 (8,824,588) (3,950,460) 3,463,013 5,091,120 2,886,008 4,154,134 1,690,581 2,284,196 1,690,581 1,623,986 2,140,184 1,690,581 2,284,196 (383,539) Rs'000 66,595 144,012 2016 - (14,342,295) 2,284,196 (4,656,841) (415,091) Rs'000 2017 2018 (11,408,341) (5,448,055) 6,262,937 5,245,334 3,330,921 3,330,921 3,200,534 3,330,921 6,530,709 9,797,683 (491,919) (521,831) 130,387 Rs'000 - (34,219,401) (12,733,030) 94,662,991 10,890,361 21,486,371 17,942,901 36,642,556 17,421,070 (5,966,625) 4,682,326 3,402,935 2,033,813 2,033,813 1,980,246 2,033,813 6,530,709 521,831 53,567 2019 191 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Supplementary Information CARGILLS (CEYLON) PLC 192 Annual Report 2018 | 2019 Growth (%) inturnover Key Indicators Continuing Operations Group Five Year FinancialSummary Earnings pershareEarnings (Rs.) Growth (%) inearnings Dividends pershare (Rs.) Operating profit (%) toturnover Net assetspershare (Rs.) Earnings to turnover (%) toturnover Earnings Dividends paidpershare (Rs.) Return ontotalassets(%) Return Dividend payout(%) Growth intotalassets(%) Debt equityratio(times) Dividends paid Growth incapitalandreserves (%) Return oncapitalandreservesReturn (%) Interest cover (times) Quick assetsratio(times) Current ratio (times) Return oninvestment(%) Return Market capitalisation Capital additions b) Debtequityratioiscomputedbydividingthetotalliabilitiesshareholders’ funds. oninvestmentiscomputedbydividingtheprofita) Return fortheyearbytotalaverageassetsemployed.

30,688,000 33,600,00042,044,80049,894,40051,200,000 1,788,079 2,264,9113,327,0985,353,3984,251,106 contd. 448,000

55.99 77.75 2.57 2.00 2.00 1.89 1.89 5.734.534.793.29 0.31 0.62 0.630.53 Rs'000 2015 (7.63) (5.54) 5.67 2.55 0.97 1.61 4.63 4.66 4.76 571,370 1,758,4001,344,000 63.04 48.28 7.25 3.50 2.55 1.91 0.33 Rs'000 181.77 15.92 13.58 12.62 11.66 12.35 2016 4.85 2.37 4.01 62.31 58.64 9.55 5.60 7.85 2.43 0.25 Rs'000 18.55 35.11 16.36 15.89 15.82 2017 2018 (0.92) 6.05 2.71 4.63 12.50 63.78 42.06 Rs'000 6.00 6.00 2.14 0.31 45.82 17.04 19.80 21.36 8.44 6.86 3.65 6.31 7.08 486,400 68.05 24.56 (38.94) 10.11 11.33 11.70 7.74 1.90 1.90 2.24 0.34 2019 3.69 4.95 2.15 3.50 6.67 Location Group RealEstatePortfolio Colombo 01 Cargills (Ceylon)PLC Staple Street -Colombo2 Braybrooke Place Canal Raw-Colombo01 Cargills Square -Jaffna Dematagoda Kandy Cargills FoodsCompany(Private)Limited Maharagama Nuwara Eliya Mattakkuliya (111) Park Road Kohuwala Mattakkuliya (141) Gampaha Moratuwa Ingiriya (LotA,C,D,B1) Negombo Ja -Ela Cargills QualityFoodsLimited Mattakkuliya Ja ela Katana Cargills AgrifoodsLimited 81.5 Perches 82.6 Perches 78.6 Perches 141 Perches 145 Perches 330 Perches 288 Perches

78 Perches 15 Perches 84 Perches 88 Perches 57 Perches 29 Perches 28.8 Acres 11.3 Acres Leasehold 5.1 Acres 1.3 Acres 26 Acres 4 Acres Extent Land - Building (Sq. Ft) 124,215 20,970 12,300 99,164 37,967 25,174 15,827 80,967 44,469 39,565 38,381 16,517 28,976 68,624 Area 5,146 9,617 4,610 6,225 - - - Valuation/ 2,611,075 1,045,700 1,350,085 869,466 690,216 388,050 513,644 595,050 223,500 826,000 115,055 515,800 341,500 275,100 243,000 495,685 410,640 423,360 120,850 544,046 Rs’000 54,000 Cost Valuation Year of 2018 2019 2019 2019 2019 2019 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2019 2019 2018 193 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Supplementary Information CARGILLS (CEYLON) PLC 194 Annual Report 2018 | 2019 Location Group RealEstatePortfolio Kelaniya Millers Limited Nittambuwa Katoolaya estate,Thawalantenne CPC LankaLimited Mirigama, Baduragoda Cargills QualityDairies(Private)Limited Mirigama, Baduragoda Mulleriyawa Kotmale DairyProducts (Private) Limited Bogahawatta Hatton Boralesgamuwa Fredrick NorthHotelCompany Limited Bandarawela The Empire InvestmentsCompany (Private)Limited Katubedda contd. 49.8 Perches 38.5 Perches 112 Perches

85 Perches 17.4 Acres 1.15.Acres 1.5 Acres 1.7 Acres 2.5 Acres 4 Acres 1 Acres Extent Land Building (Sq.Ft) Rs’000 55,770 16,706 28,862 16,304 12,479 23,168 Area 6,345 3,500 488,958 - - - Valuation/ 365,000 134,775 186,690 363,250 372,177 59,350 28,500 91,845 7,000 3,404 Cost Valuation Year of 2018 2019 2018 2018 2018 2018 2018 2019 2019 2019 Institutions Group of 4. 1-1,000 Size 3. of The issuedordinary shares ofCargills(Ceylon)PLCare listedintheColomboStockExchange. 2. Voting rights Class ofshares Issued shares Stated capital 1. GENERAL Investor RelationsSupplement 31 March The marketpricepershare recorded duringtheyearended 5. Individuals 1,001-10,000

Total 10,001-100,000 Residents 100,001-1,000,000 Highest 1,000,001and Non Lowest

Total Last tradedprice residents ANALYSIS OFSHAREHOLDERS DISTRIBUTION OFSHAREHOLDERS STOCK EXCHANGELISTING SHARE VALUATION over One voteperordinary share Ordinary shares 255,999,927 Rs. 6,530,708,400

Number % Number %

1,088 1,705 1,811 1,723 1,811 1,811 Shareholders 106 477 182 31Mach2019 31Mach2019 Shareholders 47 17 88 100.00 100.00 100.00 60.08 26.34 94.15 10.05 95.14

5.85 2.60 0.94 4.86 223,009,882 255,999,927 237,570,379 236,930,002 255,999,927 255,999,927 32,990,045 12,048,239 18,429,548 Number Number 1,603,458 5,235,507 182,721 Holding Holding

100.00 100.00 100.00 87.11 12.89 1,77993.48 92.80 1,80995.06 92.55 0.07 1,09957.75 0.63 2.05 4.70 7.20 % Number % Number

1,903 100.00 1,903 100.00 1,903 100.00 Holding Shareholders Holding Shareholders 124 537 195 31Mach2018 31Mach2018 55 2.89 17 94 4.94

28.22 1,788,451 10.25 5,945,757 209.90 190.00 200.00 6.52 221,426,359 0.89 234,164,837 % Number % Number 2019 Rs 255,999,927 100.00 240,439,556 93.92 255,999,927 100.00 255,999,927 100.00 34,573,568 13.51 13,912,036 5.43 15,560,371 6.08 188,846 220.50 180.00 194.90 2018 86.49 91.47 Rs 0.07 0.70 2.32 % % 195 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Supplementary Information CARGILLS (CEYLON) PLC 196 Annual Report 2018 | 2019 BNYMSANV RE-LFRuffer Investment Funds: CITI BankNewYork S/ANorgesA/CNo.2 Ceylon Guardian InvestmentTrust PLC-A/CNo.1 Ms. MPage Odeon Holdings(Ceylon)(Private)Limited Employees' Provident Fund Mr. VRPage Minimum PublicHoldingrequirement oftheMainBoard asperOption1ofSection7.13.1(a)theCSEListingRules. 52,371,806 shares. ThefloatadjustedmarketcapitalisationamountstoRs10.5Bn.Accordingly, theCompanycomplieswith the and 1,794(2018-1,883)respectively. Thetotalnumberofshares inissueis255,999,927,ofwhichPublicHoldingrepresents The percentage of shares held by the public and number of public shareholders as at 31 March 2019 is 20.46%. (2018 - 20.38%) 7. Total Mr. P.E. Muttukumaru Mr. JCPage Ceylon Guardian InvestmentTrust PLC-A/CNo.2 Sir ChittampalamAGardiner Trust Ceylon InvestmentPLCA/CNo.2 The AssociatedNewspapersofCeylonLimited GF CapitalGlobalLimited Deutsche BankAGasTrustee for Bank ofCeylon-A/CNo.1 Mellon BankN.A.-FloridaRetirement System BNYMSANV RE-Butterfield Trust (Bermuda)Limited Seb Ab-Tundra Frontier OpportunitiesFund The holdingsofthetop20shareholders 6. Investor RelationsSupplement

C THoldingsPLC JB Vantage Value EquityFund LF Ruffer PacificAndEmergingMarkets Fund PUBLIC HOLDING TOP 20SHAREHOLDERS

contd.

Number of 179,713,417 70.20 242,296,412 94.65237,583,470 17,335,169 6.7717,142,964 4,653,487 1.82- 4,772,229 1.86 4,951,458 1.935,133,946 5,511,909 2.15 8,407,333 3.28 1,016,000 0.40 1,484,124 0.581,484,129 1,487,771 0.58 1,551,429 0.61 2,609,579 1.02 1,031,737 0.40 3,970,920 1.55 Shares %Shares 480,000 0.19 520,000 0.20 521,771 0.20 643,474 0.25 720,502 0.28670,759 914,103 0.36 31 Mach2019

Number of 31 Mach2018 70.20 92.81 6.70 1.86 2.01 2.15 3.28 0.40 0.58 0.58 0.61 1.02 0.19 0.20 0.20 0.25 0.26 0.36 0.40 1.55 % - nies ActNo.07of2007shallnot applytotheappointmentofsaidDirector” declared thattheagelimitofseventyyearsreferred to in Section210oftheCompa- three years be and is hereby reappointed a Director of the Company and it is hereby “Resolved that Errol Perera, a retiring Director, who has attained the age of seventy Ordinary Resolution(iii) Act No.07of2007shallnotapplytotheappointment saidDirector” clared thattheagelimitofseventyyearsreferred toinSection210oftheCompanies four yearsbeandishereby reappointed aDirector oftheCompanyanditishereby de- “Resolved thatSunilMendis,aretiring Director, whohasattainedtheageofseventy Ordinary Resolution(ii) nies ActNo.07of2007shallnotapplytotheappointment thesaidDirector”, and declared thattheagelimitofseventyyearsreferred toinSection210oftheCompa- ty three yearsbeandishereby reappointed aDirector oftheCompanyanditishereby “Resolved thatPriyaEdirisinghe,aretiring Director, whohasattained theageofseven- Ordinary Resolution(i) 3. To re-elect Directors 2. 1 07, andthebusinesstobebrought before themeetingwillbe: LANKA FOUNDATION, 100,PadanamMawatha,IndependenceSquare, Colombo will beheldonThursday, 25July2019,at09.30a.m.theAuditoriumofSRI Notice ishereby giventhattheseventythird AnnualGeneralMeeting oftheCompany Notice of Annual GeneralMeeting g) f) e) d) c) b) a) To declare adividendasrecommended bytheDirectors thereon Accounts fortheyearended31March 2019,withtheReportofAuditors To consider and adopt the Annual Report of the Board and the Statements of

of 2007withtheunanimoussupportotherDirectors: for re-election intermsofSection 211(1)and(2)oftheCompaniesActNo.07 No. 07of2007havingsurpassedseventyyearsageandoffer themselves DevaRodrigo,whoretire intermsofSection210(2)(b)theCompaniesAct E.A.D.Perera, and SunilMendis, A.T. P. Edirisinghe, Association andbeingeligibleoffer themselvesforre-appointment, and the Company’s Articlesof Asoka Pieris who were appointed on 25 February 2019 also retire in termsof Y. Kanagasabai,and offers himselfforre-election, and and beingeligible J.C.Page,retires byrotation intermsoftheCompany’s ArticlesofAssociation iii. ii. i. Note : 01 July2019 Company Secretary S LWDissanayake (Signed) Cargills (Ceylon)PLC By Order oftheBoard 5. To authorisetheDirectors to 4. To authorisetheDirectors todetermine of thesaidDirector” 2007 shallnotapplytotheappointment tion 210oftheCompaniesActNo.07 limit of seventy years referred to in Sec- and itishereby declared thattheage reappointed aDirector oftheCompany seventy three yearsbeandishereby Director, whohasattainedtheageof “Resolved thatDevaRodrigo,aretiring Ordinary Resolution(iv) time fixedforthemeeting. not less than 48 hours before the the registered office oftheCompany must becompletedanddeposited at The instrumentappointinga proxy purpose. A formofproxy isenclosedforthis Company. proxy neednotbeamemberofthe meeting in his or her stead and the a proxy toattendandvoteatthe A memberisentitledtoappoint the CompaniesActNo.07of2007 Company intermsofSection158 the AnnualGeneralMeetingof deemed reappointed asAuditors at Auditors, Messrs.KPMG,whoare determine theremuneration ofthe financial year2019/20 contributions tocharitiesforthe 197 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Supplementary Information CARGILLS (CEYLON) PLC 198 Annual Report 2018 | 2019 ...... (d) (c) (b) (a) NOTES: Date ……………………….. may betakeninconsequencethereof in themannerindicatedbelow: General MeetingoftheCompanytobeheldonThursday, thereof 25July2019andatanyadjournment andateveryPollwhich the ChairmanofMeetingas*my/ourProxy torepresent *me/usandtovote foron*my/ourbehalfattheseventythird Annual …………………. of…………………………………………………………………………………………orfailinghim/her, …………….whom failing…………………………………………………………………………………………………………………… ……………………………………………………………….of……………………………………………………………………………… ...... ………………………………………………being a*member/membersofCargills(Ceylon)PLChereby appoint of………………………………………………………………………………………………………………………………...... ………………………...... *I/We ………………………………………………………………………………………………………………………………………….. For useattheseventythird AnnualGeneralMeeting Proxy Form Against For Resolution number fit completed) astothewayinwhichProxy holdershouldvote,theProxy holderinhis/herdiscretion mayvoteashe/shethinks the viewofProxy holder, anydoubt(byreason ofthemannerinwhichinstructionscontainedProxy havebeen Please indicatewithan“X”inthecageprovided howyourProxy holdershouldvote.Ifnoindicationisgiven,orif there is,in A Proxy holderneednotbeaMemberoftheCompany Instructions astocompletionoftheFormProxy are setoutinthereverse hereof *Strike outwhicheverisnotdesired 1 2 . 3 (a) 3 (b) 3 (c) Signature ofmember(s) ...... 3 (d) 3 (e) 3 (f) 3 (g) 4 5 199 CARGILLS (CEYLON) PLC Annual Report 2018 | 2019 Supplementary Information CARGILLS (CEYLON) PLC 200 Annual Report 2018 | 2019 6. 5. 4. 3. 2. 1. INSTRUCTIONS FORCOMPLETIONOFTHEPROXYFORM Sri Lanka. In the case of non-resident Shareholders, the stamping will be attended to upon return of the completed form of proxy to In thecaseofjointholders,onlyoneneedsign.Thevotes the seniorholderwhotendersavotewillalonebecounted. accompany thecompletedFormofProxy, ifithasnotalready beenregistered with theCompany. If theProxy Formissigned byanAttorney, therelevantoranotariallycertifiedcopythereof, PowerofAttorney shouldalso Association orotherconstitutionaldocuments. the caseofaCorporationmustbeexecutedunderitsCommonSealorinsuchothermannerprescribed byitsArticlesof The instrumentappointingaProxyandin shall,inthecaseofanindividual,besignedbyappointerorhisAttorney provided andfillinthedate ofsignature. as yourproxy, pleasefillinyourfullnameandaddress, thenameandaddress oftheproxy holderandsigninthespace In perfectingtheform,pleaseensure thatalldetailsare legible.IfyouwishtoappointapersonotherthantheChairman Street, Colombo1,notless than48hoursbefore thetimeappointedforholdingofMeeting. To bevalid,thecompletedFormofProxy shouldbedepositedattheRegistered Office oftheCompanyatNo:40,York Corporate Information

Name of Company Postal Address Cargills (Ceylon) PLC P.O. Box 23, Colombo 1

Company Registration No. Auditors PQ 130 KPMG Chartered Accountants Legal Form Quoted public company with limited liability, incorporated in Sri Lanka Bankers on 1 March 1946. Bank of Ceylon Cargills Bank Board of Directors Commercial Bank of Ceylon Deutsche Bank Louis Page (Chairman) DFCC Bank Ranjit Page (Deputy Chairman/CEO) Habib Bank Imtiaz Abdul Wahid (Managing Director/Deputy CEO) HNB Bank Sidath Kodikara** HSBC Bank Prabhu Mathavan** ICICI Bank Priya Edirisinghe MCB Bank Sanjeev Gardiner NDB Bank Sunil Mendis Nations Trust Bank Anthony A Page* Pan Asia Bank People’s Joseph Page Bank Sampath Bank Errol Perera Seylan Bank Deva Rodrigo Standard Chartered Bank Yudhishtran Kanagasabai (w. e. f. 25 Feb 2019) State Bank of India Asoka Pieris (w. e. f. 25 Feb 2019) Subsidiary Companies Company Secretary Cargills Agrifoods Limited Sarath Dissanayake Cargills Agro Development Company (Private) Limited Cargills Distributors (Private) Limited Remuneration Committee Cargills Enterprise Solutions (Private) Limited Sunil Mendis (Chairman) Cargills Food Processors (Private) Limited Priya Edirisinghe Cargills Food Services (Private) Limited Deva Rodrigo Cargills Foods Company (Private) Limited Cargills Frozen Products (Private) Limited Audit Committee Cargills Quality Confectioneries (Private) Limited Priya Edirisinghe (Chairman) Cargills Quality Dairies (Private) Limited Sunil Mendis Cargills Quality Foods Limited Errol Perera C P C Lanka Limited Deva Rodrigo Dawson Office Complex (Private) Limited Yudhishtran Kanagasabai ( w. e. f. 25 Feb 2019) Frederick North Hotel Company Limited Kotmale Dairy Products (Private) Limited Related Party Transactions Review Committee Kotmale Holdings PLC Priya Edirisinghe (Chairman) Kotmale Milk Foods Limited Sunil Mendis Kotmale Milk Products Limited Errol Perera Kotmale Products Deva Rodrigo Limited Millers Limited Yudhishtran Kanagasabai ( w. e. f. 25 Feb 2019) The Empire Investments Company (Private) Limited

Stock Exchange Listing Associate Companies Colombo Stock Exchange C T Properties Limited Cargills Bank Limited Registered Office 40, York Street, Colombo 1, Sri Lanka Telephone : +94 (0) 11 242 7777 Facsimile : +94 (0) 11 233 8704 E-mail : [email protected]

* Mr. Anthony A Page - ceased to be a Director at the conclusion of the AGM held on 27 Aug 2018 on having attained 70 years of age on 21 March 2018 and not seeking re-election. **Messrs. Sidath Kodikara and Prabhu Mathavan resigned from their position as Director on 31 January 2019. www.cargillsceylon.com

Cargills (Ceylon) PLC No. 40, York Street, Colombo 1