Cargills Annual Report 2011.Pdf
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Cargills (Ceylon) PLC The year 2010/11 was a year of unprecedented investment for Cargills (Ceylon) PLC. We accelerated the expansion of our flagship supermarket chain while continuing to build on our strength in the food manufacturing sector. We entered new product categories and invested in people and in technology to harness this expansion. We redefined our place in the dairy sector acquiring a brand with a distinct identity that is synonymous with the industry. Through these investments we will connect our brands with millions of consumers to improve quality of life. Our investments will continue to help farmers and communities succeed, and our stakeholders enjoy sustainable returns. In the year 2011/12 and beyond our commitment towards Investing for Growth remains steadfast. Contents Our businesses 2 - 3 Financial highlights 4 - 5 Profile of Directors 6 Chairman’s statement 7 - 11 Corporate governance 12 - 16 Audit & Remuneration Committee reports 17 Risk management 18-19 Sustainability report 20 - 26 Financial information 27 - 66 Statement of value added 67 Five year financial summary 68 Group real estate portfolio 69 Investor relations supplement 70 - 71 Notice of Annual General Meeting 72 The proxy form is on page 73 2 Annual Report 2011 Our businesses Cargills (Ceylon) PLC Cargills is Sri Lanka’s largest modern retailer with more than 50% of the modern trade market share. Its pioneer venture into modern trade was an innovation of the Company’s trading legacy. Thereafter Cargills Food City continued to challenge the norm by taking to the masses what was traditionally an affluent focused business and offering ‘higher value for the lowest price’. Today the Cargills retail operation has grown to 163 outlets spread across the 25 districts, as ‘Cargills Food City’ supermarkets, ‘Cargills Express’ convenience stores and Cargills ‘Big City’ hypermarket. In its short span of operation of 28 years, Cargills Food City has been consistently rated among the most valuable brands in Sri Lanka as per the Brand Finance Index rating. The Company is also in the business of food manufacturing, restaurant and distribution through its subsidiaries given below. Cargills Quality Dairies (Private) Limited Magic is the number one dairy ice cream in Sri Lanka and is a strong number two player in the overall ice cream market. Cargills Quality Dairies which produces Cargills Magic ice cream, Milk and Milk Shakes is the first and only dairy product manufacturing Company in Sri Lanka to be accredited with all three ISO certifications; ISO 9001: 2000 Quality Management System certification, ISO 22000: 2005 Food Safety Management System certification and ISO 14001: 2004 Environment Management System certification. Cargills Magic was the first to introduce fresh fruits and local flavours to its portfolio of ice creams creating a new trend in the overall ice cream industry. Through its innovation driven focus Cargills Magic has expanded its market share exponentially and is now the fastest growing ice cream brand in Sri Lanka. Cargills Agrifoods Limited Kist is one of the most trusted brand names in Sri Lanka known by generations for its true Sri Lankan flavours and high standards of quality. Cargills Kist which is traditionally renowned for its delectable selection of jams, sauces and cordials has expanded its 100% fruit based product range introducing fruit based nectars to the market. Today the nutritious and delicious Kist nectar range has revolutionized the industry and is popular for its genuine fruity taste. Cargills Quality Foods Limited The processed meats range consists of Cargills Supremo catering to mass market demand, Cargillls Finest a premium deli range and traditional favorites ‘Goldi’ and ‘Sams’. Cargills is rapidly gaining market share in this category through its product innovation, quality and unique taste. Cargills Quality Foods is the only meat processing plant in Sri Lanka that has secured the ISO 9001: 2000 Quality Annual Report 2011 3 Our businesses contd... Management System certification, ISO 22000: 2005 Food Safety Management System certification and ISO 14001: 2004 Environment Management System certification. The Company has also engaged international expertise to develop new and innovative products which offer a novel variety of taste whilst catering to the nutritional needs of the consumer. Cargills Food Processors (Private) Limited The Company holds the franchise for the internationally acclaimed KFC chain which is the largest and most popular international restaurant chain in the country. The success of KFC was in the fusion of an international brand with well - loved Sri Lankan recipes. The locally inspired additions to the KFC menu have now been included into the regional product portfolio. Kotmale Holdings PLC Kotmale is a leading brand in the dairy sector known for highest quality products at a reasonable price having entered the market three decades ago. The Brand is synonymous with locally produced cheese and has won mass appeal for its delicious range of dairy ice cream as well as pasteurized milk, yoghurt, fresh cream, ghee, curd and fruit drinks. Established in 1967 as Lambretta (Ceylon) Ltd, its beginnings are traced back to the cool surroundings of Bogahawatte, Patana (Upper Kotmale). Kotmale Holdings PLC was acquired by the Cargills Group in 2010. Diana Biscuits Manufactures (Private) Limited Diana Biscuits Manufactures (Private) Limited is engaged in the manufacturing, distribution and marketing of biscuits and confectionaries under the Brand name ‘Helan’. The Company was a family owned business established in 2006 and acquired by Cargills in 2010 and manufactures soft & hard dough biscuits & wafers. The factory is located at the Nalanda Industrial Estate in Matale. The Company has now been renamed as Cargills Quality Confectionaries (Private) Limited. The biscuits would be relaunched shortly under a new Brand name and would be an altogether new and improved range. Millers Brewery Limited Millers Brewery Limited is the brewer of the finest beers in the THREE COINS country such as ‘Three Coins’ ‘Irish Dark’, ‘Sando Stout’ and T H E A L L M A L T B E E R ‘Grand blonde’ that have also won international appeal. The Company which came into the Cargills fold in 2011 is presently expanding its capacity and upgrading its infrastructure. MILLERS BREWERY LIMITED, SRI LANKA Millers Limited The Group’s marketing and distribution arm Millers, is one of the largest distribution and logistic operations in the country geared with a network spread across the 25 districts of Sri Lanka. Millers is the island wide distributor for international brands such as Kodak, Kraft, Cadbury, Bonlac, Nabisco, Tang, Toblerone etc and is also the mass market distributor for own brands. 4 Annual Report 2011 Financial highlights Rs. Bn Group 2011 2010 change Rs. ‘ 000 Rs. ‘ 000 % Operations Turnover 37,128,661 30,874,797 20.26 Profit from operation 1,825,442 1,429,545 27.69 Rs. Mn Profit before taxation 1,406,703 1,000,726 40.57 Profit after taxation 1,094,173 712,392 53.59 Balance sheet Non current assets 13,568,878 9,251,241 46.67 Current assets 5,736,722 4,697,601 22.12 Current liabilities 11,348,392 7,085,476 60.16 Non current liabilities 907,775 722,211 25.69 Capital and reserves 7,049,433 6,141,155 14.79 Per share data (Rs.) Earnings per share 4.86 3.18 52.83 Rs. Mn Dividend per share 1.50 1.10 36.36 Net assets per share 31.07 27.42 13.31 Market value per share 228.30 70.50 223.83 Cash Flow Net cash generated from / (used in) - Operating activities 2,088,275 1,374,544 - Investing activities (4,844,610) (1,040,320) - Financing activities 1,488,868 (156,951) Rs. Bn Annual Report 2011 5 Financial highlights Rs. Bn Company 2011 2010 change Rs. ‘ 000 Rs. ‘ 000 % Operations Turnover 29,669,660 17,328,142 71.22 Profit from operation 1,050,355 642,721 63.42 Profit before taxation 756,107 345,487 118.85 Rs. Mn Profit after taxation 555,285 315,443 76.03 Balance sheet Non current assets 9,355,826 8,400,290 11.38 Current assets 6,501,560 2,730,386 138.12 Current liabilities 10,599,605 6,134,818 72.78 Non current liabilities 452,215 474,465 (4.69) Capital and reserves 4,805,566 4,521,393 6.29 Per share data (Rs.) Earnings per share 2.48 1.41 75.89 Rs. Mn Dividend per share 1.50 1.10 36.36 Net assets per share 21.45 20.18 6.29 Market value per share 228.30 70.50 223.83 Cash Flow Net cash generated from / (used in) - Operating activities (253,515) 805,110 - Investing activities (2,566,322) (751,156) - Financing activities 1,702,310 (87,697) Rs. Bn 6 Annual Report 2011 Profile of Directors Mr. L R Page Mr. A T P Edirisinghe **Chairman *Director Mr. Louis R Page is a Fellow Member of the Institute of Mr. Priya Edirisinghe is a Fellow Member of the Institute of Chartered Accountants of Sri Lanka and a Fellow Member of Chartered Accountants of Sri Lanka and a Fellow Member of the Chartered Institute of Management Accountants (UK). He the Chartered Institute of Management Accountants (UK) and has been involved in the operations of the C T Holdings group holds a Diploma in Commercial Arbitration. He was the Senior in a non - executive capacity and in the setting and review of Partner of HLB Edirsinghe & Co., Chartered Accountants and policy framework, and in key investment decision-making. currently serves as Consultant / Advisor. He counts over 41 He has also held a number of senior management and board years of experience in both public practice and in the private positions in overseas companies.