Professional Documents
Culture Documents
http://www.keellsfoods.com
Corporate Information
Name of Company
Audit Committee
Mr. M P Jayawardena
Mr. R Pieris
Mr. S H Amarasekera PC
Mr. A D E I Perera
342
1218
1146
Designed & produced by
Digital Plates & Printing by Printel (Pvt) Ltd.
Good food is a must in every celebration and wherever theres good food, youre
sure to find Keells. Famed for our convenience, quality and taste, Keells Foods
offer a range of classic and unforgettable flavours that are known and trusted
by thousands of Sri Lankans islandwide because in true Sri Lankan style, we like
to keep our products simple, tasty and good.
Today were an integral part of many peoples lives and we are proud to know
that we shall continue to celebrate memorable moments with them for many
years to come.
Keells Foods, Celebrate any day, any time.
Contents
Financial Highlights
Our Products
Chairmans Review
Management Discussion & Analysis
Directors Profiles
Sustainability Report
Corporate Governance
Audit Committee Report
Enterprise Risk Management
Financial Calendar
Financial Information
Annual Report of the Board of Directors
On The Affairs of the Company
Statement of Directors Responsibility
Independent Auditors Report
4
5
6
9
16
19
27
67
70
77
77
78
84
85
Income Statement
Statement of Comprehensive Income
Statement of Financial Position
Statement of Cash Flows
Statement of Changes in Equity
Notes to the Financial Statements
Your Share in Detail
Ten Year Information at a Glance
Key Ratios and Information
Real Estate Portfolio
Glossary of Financial Terminology
Notice of Meeting
Notes
Form of Proxy (enclosed)
86
87
88
89
91
92
138
140
141
141
142
143
144
Financial Highlights
Group
Year ended 31st March
2014 2013 Change
%
Revenue
Rs. 000
2,280,142
2,197,482
Operating Profit/(Loss)
Rs. 000
(33,593)
64,959
Profit/(Loss) Before Tax
Rs. 000
(11,954)
115,214
Profit After Tax (PAT)
Rs. 000
467
90,883
Shareholders Funds
Rs. 000
1,549,530
1,597,616
Total Assets
Rs. 000
2,091,343
2,492,008
Total Debt
Rs. 000
246,997
264,734
Earnings per Share- ( Re-stated )
Rs.
0.02
4.82
Return on Capital Employed
%
(1.84)
5.41
Return on Equity
%
0.03
8.87
Market Price per Share as at 31st March
Rs.
55.00
70.00
Market Capitalisation
Rs. 000
1,402,500
1,785,000
Price Earning Ratio-(Re-stated)
No. of times
2,750
16
Quick Assets Ratio
No. of times
1.60
1.89
4
(152)
(110)
(99)
(3)
(16)
(7)
(100)
(134)
(100)
(21)
(21)
18,836
(16)
Rs. Mn
Rs. Mn
2,500
200
150
2,000
100
1,500
Rs. Mn
6
5
4
0
2010 2011 2012 2013 2014
Net Revenue
Operating Profit/(Loss)
-150
2,000
15
440
430
-100
Rs.
10
1,500
450
0
-50
Rs. Mn
480
460
500
No
470
50
1,000
0
1,000
-5
420
410
-10
500
-15
400
390
2010 2011 2012 2013 2014
-20
2010 2011 2012 2013 2014
Shareholders Funds
EPS
Our Products
The Keells Sausage Range
The Keells Sausage Range is renowned as a superior brand. A pioneer in the processed meats industry, Keells
Sausages endorses our premium quality and adherence to strict hygienic manufacturing guidelines.
Chicken Sausages
Cheesy Blast
Chicken Garlic
Sausages
Spicy Bites
Cheesy Blast is
full of wholesome
chicken and
generous dollops
of creamy and
nutritious cheese.
No wonder that
this sausage is a hit
among kids.
A mouth watering
favourite, this sausage
is packed with juicy
chicken and fresh
garlic, offering many
creative possibilities
in kitchens across the
country.
The yummy Krest Range offers you a wide variety of snacks & bites. We offer delicious & ready to fry Formed
Meats, Chinese Rolls and Crispy Potato Chips.
Formed Meat
The superior
golden crispy
crumb delivers the
ultimate snacking
experience where
with each bite you
are guaranteed
the delicious Krest
experience.
Chinese Rolls
The Elephant House Sausage Range is a distinctively Sri Lankan brand launched in 1966. We offer a wide range
of handmade products created from our traditional recipes using the finest, freshest ingredients made to
international quality standards.
Chicken
Sausage
The most
popular
variant which
everybody
likes to
indulge in.
Pork Lingus
The favourite
legendary
Elephant House
Sausage taste
is most famous
for Lingus!
Bacon
Whopper
Sausage
The popular
chunky pork
sausage with
superior
bacon taste!
Beef
Sausage
Chairmans Review
The rebound in consumer sentiment and
spending patterns, would allow the Company
to penetrate into new markets and market
segments with KFPs versatile product
offerings that cater to a variety of snack and
meal choices. Moreover, with consumers
increasingly opting for convenient choices,
our offerings would look to secure a larger
cross section of the island-wide consumer
populace.
Susantha Ratnayake
Chairman
30th May 2014
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Management
Discussion and
Analysis
10
Operational Review
New Investments
An automated production line to manufacture formed
meats and crumbed products was installed in the last quarter
of 2013/14. The Pannala plant, manufactures the entire
production of chicken sausages, meat balls and slices, with
all pork products exclusively manufactured in Ja-ela. While
further enhancing capacity, the Pannala factory is expected
to relay substantial cost efficiencies for the Company, both in
terms of manning and material yield.
Supply Chain and Procurement Practices
Amid an outbreak of foot-and-mouth disease spreading in
five districts, Anuradhapura, Puttalam, Trincomalee, Ampara
and Vavuniya, health authorities directed a ban on all forms
of meat other than poultry, in an effort to contain the spread
of the disease even further . Consequently, with the supply
of beef and pork curtailed, for a two month period from
February 2014 proved to be a grave challenge for KFP, with
supplies being restored only after the end of the Financial
Year 2013/14. However, it is hoped that such eventualities
could be prevented in the future with adequate precautionary
measures to improve the supplier quality standards through
awareness, vaccinations etc.
On a more positive note, in this year too, KFP continued
with the supply chain management and seamless backward
integration initiatives practiced in the past few years. Driven
by an unwavering commitment to excellence, the Company
has always pursued relationships with local producers and
suppliers to help secure the consistent quality of the produce
used in the Companys products. Technical guidance and
knowledge transfer efforts initiated by KFP have assisted
suppliers to enhance their service standards and outputs in
conformity with internationally accepted benchmarks. While
promoting cost effective procurement practices.
11
Financial Review
Rs. Mn
2500
500
2,000
Tons
Rs. Mn
2,500
400
350
2,000
300
400
1,500
250
1,500
300
1,000
200
500
100
0
2010 2011 2012 2013 2014
Net Revenue
12
Gross Profit
200
1,000
150
100
500
50
0
0
2010 2011 2012 2013 2014
Sausage Volume Trend
Distribution Cost
13
The tax reversal for the Company was Rs. 12.4 million as
Asset Base
The Groups total assets base as at 31st March 2014 was Rs.
requirements.
growth.
The basic Earnings per Share (EPS) for the Group was at
Rs. 0.02 (Rs. 4.82 - 2012/13).
14
15
Directors Profiles
Susantha Ratnayake
Non-Independent Non-Executive, Director, Chairman
Mr. Ratnayake was appointed to the Board of Keells Food
Products PLC from the 1st of April 1993.
Mr. Ratnayake was appointed as the Chairman and CEO of
John Keells Holdings PLC (JKH) in January 2006 and has
served on the JKH Board since 1992/93 and has 36 years
of management experience, all of which is within the John
Keells Group.
He is the Chairman of Ceylon Tobacco Company PLC, Vice
Chairman of the Employers' Federation of Ceylon and serves
as a member of several clusters of the National Council of
Economic Development. A past Chairman of the Sri Lanka
Tea Board, immediate past Chairman of the Ceylon Chamber
of Commerce, he serves on the Board of the national carrier
Sri Lankan Airlines.
Ajit Gunewardene
Non-Independent Non-Executive, Director
Mr. Gunewardene was appointed to the Board of Keells Food
Products PLC from 1st October 2002.
Mr. Gunewardene is the Deputy Chairman of John Keells
Holdings PLC and has been a member of the Board for
over 20 years. He is a Director of many Companies in the
John Keells Group and is the Chairman of Union Assurance
PLC. He is a member of the Board of SLINTEC, a Company
established for the development of nanotechnology in Sri
Lanka under the auspices of the Ministry of Science and
Technology. He is also an Advisory Committee Member of
COSTI, the coordinating Secretariat for Science Technology
and Innovation under the purview of the Minister (Senior) of
Scientific Affairs. He has also served as the Chairman of the
Colombo Stock Exchange. Ajit has a Degree in Economics
and brings over 31 years of management experience.
Ronnie Peiris
Non-Independent Non-Executive, Director
Mr. Peiris was appointed to the Board of Keells Food Products
PLC from 1st June 2003.
Appointed to the John Keells Holdings PLC Board during
2002/03 as Group Finance Director, he has overall
responsibility for the Groups Finance and Accounting,
16
Eardley Perera
Independent Non-Executive, Director
Preethiraj Jayawardena
Independent Non-Executive Director
Ranil Pieris
Independent Non-Executive, Director
Mr. Pieris was appointed to the Board of Keells Food
Products PLC from 1st July 2005 and is a member of the
Audit Committee of the Board of Directors.
He previously was Director and Chief Operating Officer
at Richard Pieris and Company PLC (RPC), at the time he
was on the Board of 13 Subsidiary Companies of RPC and
was Chairman of some of these. He conceptualised and
spearheaded the Arpico Super Centres and introduced the
hyper market concept to the local market. For a period he
was CEO at EDNA. More recently he was CEO/Managing
Director of GTECH Lanka (Pvt) Ltd., a fully owned Subsidiary
of GTECH Corporation (USA).
Today he is involved with developing a project in Real Estate.
In addition he is on the Board of Rajawella Holdings, Arel
Holdings and a Trustee of the Lionel Wendt. Mr. Pieris holds
a Bachelors degree from Florida International University in
the USA.
17
y. Tue
s
Great times,
great fun,
great food.....
Keells Foods,
is always there when
youre celebrating
life!
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Sustainability
Report
Sustainability Report
Development
of the talent
pool
Social
Corporate
Social
Responsibility
Product
Responsibility
KFPs Triple
Bottom Line
Approach to
Sustainability
Environmental
Resource
Efficency
20
Economic
Ethical
Sourcing
Product Responsibility
As a frontrunner in Sri Lankas processed food industry, our
brands are found in millions of households across the country
and consumers are therefore at the heart of our business.
Understanding their needs and aspirations as well as their
opinion of our brands will always remain the key to our success.
We are thus governed by a set of fundamental guidelines to
help us fulfil the promise of wholesome, convenient products
with a guarantee of high quality at all times.
Recognising that consistent quality plays a pivotal role
in retaining consumer loyalty towards our products, we
remain committed to deliver this promise vis--vis strategic
investments in technology. By augmenting capabilities at
both our manufacturing plants in Ja-ela and Pannala, we
aspire to become the pinnacle of manufacturing excellence.
Our state-of-the-art manufacturing technology has been
instrumental in revolutionising the industry and transforming
accepted norms and practices. As we strive to uphold the
tenets of our customer promise, we remain fully compliant
with all applicable regulatory standards for quality. Our
overriding emphasis on quality and food safety has
encouraged us to secure SLS quality systems certification
along with ISO 9001 certification for quality management
standards and ISO 22000 for Food Safety Standards.
Moreover, we also subscribe to a voluntary code of principles
for quality that dictates our actions, over and above that of
the mandatory stipulations.
With customer health and safety being of paramount
importance to us, we have structured all our systems and
processes to optimise process efficiency at every level
of the operation and ensure customer health and safety
is not compromised at any stage of the product life cycle.
The process is further supported by regular system audits
that ensure all processes maintain optimum performance
standards, with prompt remedial actions being initiated to
rectify irregularities and system malfunctions.
21
Sustainability Report
Sustainable Sourcing Projects of Keells Food Products PLC 2013/14
Product
Location
Primary Suppliers/
Project Partners
Pork
Kaluaggala, Divulapitiya
Bujjampola, Giriulla,
Weliweriya, Katana,
Kosgama, Pamunugama
Dambulla, Kandy.
Chicken
Wennappuwa
Kosgama,
Hanwella, Meethirigala.
Spices
Meegammana West,
Wattegama, Kandy.
Vegetables
Meegammana West,
Wattegama, Kandy.
No. of
Farmers
Total Payment
(Rs.)
25
643,095
667,931,277
2200
1,634,205
2500
35,622
37,352,242
2500
138,923
13,247,324
Case Study
Entitled the Farmer Out-Grower Programme, in 2010, KFP launched a pioneering initiative to procure selected
vegetables and the entire range of spices through a sustainable integrated farmer community, formed under the Kandy
Vanilla Growers Association (KVGA).
Comprising of a registered farmer base of 2,306 farmers from seven districts, the KVGA also provides direct employment
to twenty villagers from the Raththota area under a value addition initiative that encourages them to cultivate onions and
sweet potatoes to earn an average income of anything between Rs. 15,000/- to Rs. 20,000/- per month, per villager.
With this initiative, the number of females who were engaged in the value addition process also increased from twenty to
thirty, during the same year.
KFPs commitment to this initiative saw over 90% of the Companys vegetable produce and spice requirements being
serviced by the KVGA at a guaranteed price. Thus the Company was able to secure a guaranteed supply of high quality
produce at very competitive prices. Furthermore, having effectively eliminated the middleman, the entire benefit was
passed down to the grower. Encouraged by the success of the initiative, the KVGA too has invested a sum of Rs. 1.5 million
towards a new spice mill, which would further enhance their production capacity.
The spices procured by KFP increased in volume as well as value from last year to this year and the total payout for the
spices procured for the year was Rs. 38 million. The Company procured vegetable for a total value of Rs. 13 million during
the year.
22
23
Sustainability Report
Analysis on Executive
Service years
41%
44%
15%
10 years & above
Below 5 years
05 to 10 years
Employee Relations
As key stakeholders of our business, maintaining close
relationships with our employees forms a key part of our
endeavour to empower our human capital. In this regard,
KFPs association with the Ceylon Mercantile, Industrial and
General Workers Union (CMU), has been a long and fruitful
one, characterised by excellent relations throughout.
KFP Voluntary Retirement Scheme 2013
With the newly commissioned Pannala Manufacturing facility
with enhanced capacity and a high degree of automation
taking over a number of our key operations, certain aspects
of the Ja-ela manufacturing plant fell redundant with effect
from 2013. The Company offered the workers at the
Ja-ela factory a Voluntary Retirement Scheme (VRS) and 129
workers voluntarily accepted the scheme.
Employee Recognition
KFPs open-door culture facilitates regular forums which
provide an ideal platform not only for discussion and
conflict resolution, but also sets the stage for employees
to express their ideas for the betterment of the Company.
In this regard, V sparc awards are presented, in recognition
of the contribution made by employees towards improving
the versatility of operations and upholding KFPs promise of
excellence at all times.
24
Employee Grade
AVP & Above
Manager
160
Assistant Manager
297
Executive Staff
411
Clerical Staff
378
Factory Staff
Total
266
1,520
25
y. Tue
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Corporate
Governance
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Corporate Governance
1. Introduction
Keells Food Products PLC (KFP) and its Subsidiary John
Keells Foods India (Pvt) Limited (JKFIL) referred to
as the Group and its Holding Company John Keells
Holdings PLC (JKH) has a Corporate Governance
philosophy founded on a culture of performance
within a framework of conformance and compliance
to succeed in todays competitive business environs
in a manner that is sustainable and equitable to all our
stakeholders.
28
2.
Audit
Committee
CEO
Assurance
Mechanisms
Integrated
Governance Systems
and Procedures
Strategy
Formulation and
Decision Making
Process
Human Resource
Governance
Integrated Risk
Management
IT Governance
Key components
Independent
Director
Employee
Participation
Internal Control
JKH Code of
Conduct
Ombudsman
Employees Empowerment
Audit
Committee
Regulatory benchmarks
External
Control
29
Corporate Governance
The Corporate Governance framework of the Group
entails three key components as summarised below and the
discussion within this report is sequenced to highlight the
different elements that combine to ensure a robust and a
sound governance framework.
1.
2.
3.
30
3.
b.
Involvement/
Interest in
Shareholding
Involvement/
Interest in
Management
Involvement/
Interest
in Supply
Contracts
Continuously
served for 9
years
Name of Director
Mr. S C Ratnayake
Chairman
Non Executive
Non
Independent
Yes
No
No
N/A
Mr. A D Gunawardena
Non Executive
Non
Independent
No
No
No
N/A
Mr. J R F Peiris
Non Executive
Non
Independent
No
No
No
N/A
Mr. J R Gunaratne
Non Executive
Non
Independent
No
Yes
No
N/A
Mr. S H Amarasekara PC
Non Executive
Independent
No
No
No
No
Mr. R Pieris
Non Executive
Independent
No
No
No
No
Mr. A D E I Perera
Non Executive
Independent
No
No
No
No
Mr. M P Jayawardena
Non Executive
Independent
No
No
No
No
31
Corporate Governance
3.1.3 Non-Executive/Independent Directors and the Board
balance
32
Prior to Appointment
Once Appointed
33
Corporate Governance
34
29th
July
2013
28th
22nd
October January
2013
2014
24th
April
2014
Mr. S C Ratnayake
Mr. A D Gunewardena
Mr. J F R Peiris
Mr. J R Gunaratne
Mr. R Peiris
Mr. S H Amarasekera PC
Mr. A D E I Perera
Mr. P S Jayawardena
3.1.11.1 Composition
As at 31 March 2014, the 9 member GEC consisted
of the Chairman, the Deputy Chairman, the Group
Finance Director of JKH and the Presidents of each
business/function of JKH.
3.1.11.2 Key Responsibilities
Approving the Industry Groups short, medium and long
term strategies and annual plans and monitoring the
actual business performance against pre-set objectives
and key performance indicators on a quarterly basis.
Regularly reviewing the portfolio of businesses, and the
supporting functions, in terms of current performance,
future prospects and synergy.
Recommending to the Board new business
opportunities.
Assisting the Chairman in succession planning and
appointment of Presidents, Sector Heads, Functional
Heads and other Senior Managers.
Career management of Senior Executives (Assistant
Vice President and above).
Regularly reviewing the HR practices, including the
compensation philosophy of the Group through
surveys and other internally generated indicators.
3.1.12.2 Scope
The Audit Committee comprises solely of NonExecutive, Independent Directors and conforms to
the requirements of the Listing Rules of the Colombo
35
Corporate Governance
Stock Exchange. It is governed by a Charter, which inter
alia, covers the reviewing of policies and procedures
of Internal Control, business risk management,
compliance with laws and Company policies and the
independent audit function.
36
Composition
Mandate
Define and establish nomination process for NEDs, lead the process of board appointments and make
recommendations to the Board on the appointment of Non-Executive Directors.
Scope
i. Assess skills required on the Board given the need of the businesses.
ii. From time to time assess the extent to which required skills are represented on the Board.
iii. Prepare a clear description of the role and capabilities required for a particular appointment.
iv. Identify and recommend suitable candidates for appointments to the Board.
v. Ensure, on appointment to board, NEDs receive a formal letter of appointment specifying clearly.
Participation in committees.
The Related Party Transaction Review Committee of the Parent Company, John Keells Holding PLC,
functions as the Related Party Transaction Review Committee of the Company and its Subsidiary. It
comprises of three Non-Executive Independent Directors and two Non-Executive Non-Independent
Directors. The Chairperson is a Non-Executive Director.
Mandate
To ensure on behalf of the Board, that all Related Party Transactions of the Company and its Subsidiary
are consistent with the Code of Best Practices on Related Party Transactions issued by the SEC.
Scope
Develop, and recommend for adoption by the Board of Directors of the Company and its Subsidiary,
a Related Party Transaction Policy which is consistent with the Operating Model and the Delegated
Decision Rights of the Group.
ii. Update the Board of Directors the Related Party Transaction of each of the Companies of the Group
on a quarterly basis.
37
Corporate Governance
38
5. Performance
evaluation of the
second half/full
year
4. Reforecasting
the targets for
the second half
of the year
3. Business
performance
evaluation of
first six months
against target
Continuous
performance
monitoring at
BU level
Step 3
Upon the completion of the first half of the financial
year the Board and the Group Executive Committee
evaluates the performance of the businesses against
the plan with deviations being noted along with the
identification of corrective action.
Step 4
Reforecast Annual Plan for the second half of the
financial year is presented to the Board and the Group
Executive Committee for approval having taken into
consideration changes taking place at both a macro
and micro levels.
Step 5
Business performance during the second half of
the financial year as well as the full financial year is
evaluated against the reforecast plans and targets at
the end of the financial year.
2. Board and
GEC approval
Step 1
Business Units and Functional Units of the Group carry
out detailed analysis on the following aspects when
formulating strategies for the forthcoming financial
year;
Step 2
The Board and the Group Executive Committee ensures
that the key enablers of performance, together with
organisational structures and processes are defined
and are in place to ensure the delivery of its goals and
objectives and approves annual plans.
1. Formulating
business strategy,
objectives and
risk management
for each BU for
the financial year
39
Corporate Governance
Career
development
Identification of :
High performers.
Group talents.
Succession
planning
Talent
management
40
Identification of :
Promotions.
Inter Company transfers.
Inter department transfers.
Performance
Management
System
Rewards &
recognition
Identification of :
Long term development plans.
Competency based training
needs.
Business focused training needs.
Identification of :
Jobs at risk.
Suitable successors.
Readiness level of successors.
Development plans.
External recuitment.
Satisfaction
Performance Management
Pay for performance
Compensation Policy
Compensation comprises of fixed (base) payments, short term incentives and long term incentives.
Higher the authority level within the Group, higher the incentive component.
Greater the decision influencing capability of a role, higher the weight given on organisational
performance as opposed to the individual performance.
External Equity
Internal Equity
Equity sharing
The employee share option schemes (ESOPs)
implemented by the Parent Company JKH, has been
offered to employees of the Group at defined career
levels based on pre-determined criteria which are
uniformly applied across the eligible levels. Such
options are offered at market prices prevailing on the
date of the offer.
41
Corporate Governance
3.2.3 People and Talent Management
The
Group believes that shareholders long term
interests are well served by involving employees actively
in safeguarding the Group Corporate Governance
framework, where the employees are encouraged and
empowered to positively contribute towards upholding
the principles of Corporate Governance.
42
43
Corporate Governance
Based on the above the Group IT Strategy Map is drawn as
detailed in table below,
Business/IT
alignment
Accountability
Sustainability of
business value
Value
management
Sustainability of
business value
IT and Business
Requirements
Contextual
Business
Model - Why?
IT Strategy
Services Catalogue
IT blue print
Business
Requirements
Organizational
Considerations
Conceptual
Process
Model - What?
Change
Management
TCO and Business
Case
System
Requirements
Standards and
Constraints
Component
Model - With
What?
Governance
Best Practises
Operational
Lifecycle Mgmt.
Trade-offs and
Alternatives
Priority
Refinement
Solution
Enablement
Advocacy
Congruent
Methodologies
Continuous Improvement
Value
Objective
Drivers
Products and
Results
Logical System
Benefit/ Risk
Identification
Model - How?
Partnerships
and Collaboration
44
Architectural
Views
Drivers and
Objectives
Assurance
Performance
management goals
Risk
management goals
Performance metrics
Risk metrics
Enterprise Governance
IT Governance
Best Practices
Risk IT
ISO 31000
ITIL
ISO 20000
ISO
27001
PMI
ISO 9001/
CMMI
Policies/Procedures
IT risk
management
IT Service
management
Security/Risk
principles
Project
management
principles
Process
management
Cobit/COSO
Chairman
Board of Directors
Group IT Governance Committee
Chairman
GEC
Group CIO
Group IT MC
Company
Heads of SGIT
CEO
HoBSs
Functional Heads
Independent Directors
Assurance Mechanisms
Audit Committee
Employee Participation
Internal Control
JKH Code of Conduct
Ombudsman
External Audit
45
Corporate Governance
4.1
Independent Directors
46
Internal Compliance
A quarterly self-certification programme requires the
CEO, Chief Financial Officer the Head of Finance
to confirm compliance with financial standards and
regulations. Further the CEO and the Heads of business
unit are required to confirm operational compliance
with statutory and other regulations and key control
procedures, and also identify any significant deviations
from the expected norms.
Code of Conduct
Group Values
The objectives of the Code of Conduct are further
affirmed by a strong set of corporate values which
are well institutionalised at all levels within the Group
through structured communication. The degree of
employee conformance with corporate values and
their degree of adherence to the JKH Code of Conduct
are key elements of reward and recognition schemes.
4.6 Ombudsperson
47
Corporate Governance
i.
ii.
iii.
4.7 External Audit
48
5.
4.3 Levels of Compliance with the Colombo Stock Exchanges New Listing Rules - Section 7.10, Rules on Corporate
Governance
Rule No.
Subject
Applicable Requirement
Compliance Action
Status
7.10 (a/b/c)
Compliance
Compliant
7.10.1(a/b/c)
Compliant
7.10.2(a)
Independent
Directors
Compliant
7.10.2(b)
Independent
Directors
Compliant
7.10.3(a/b)
Disclosure
relating to
Directors
Compliant
Corporate Governance
Report
All Independent NonExecutive Directors have
submitted declarations as to
their independence.
49
Corporate Governance
50
Rule No.
Subject
Applicable Requirement
Compliance Action
Status
7.10.3(c)
Disclosure
relating to
Directors
Compliant
7.10.3(d)
Disclosure
relating to
Directors
Compliant
7.10.4
(a-h)
Determination
of
Independence
Compliant
7.10.5.(a1)
Remuneration
Committee
Compliant
7.10.5(a2)
Composition
of
Remuneration
Committee
Compliant
7.10.5.(b)
Functions of
Remuneration
Committee
Compliant
Rule No.
Subject
Applicable Requirement
Compliance Action
Status
7.10.5.(c1)
Disclosure in
the Annual
Report
relating to
Remuneration
Committee
Compliant
Compliant
Compliant
Compliant
Compliant
Compliant
7.10.5.(c2)
7.10.5.(c3)
7.10.6(a1)
7.10.6(a2)
Composition
of the Audit
Committee
7.10.6(a3)
7.10.6(a4)
Composition
of the Audit
Committee
51
Corporate Governance
Rule No.
Applicable Requirement
Compliance Action
Status
7.10.6(b1)
Compliant
7.10.6(b2)
Compliant
Compliant
7.10.6(b4)
Compliant
7.10.6(b5)
Compliant
The Committee is
responsible for appointment,
re-appointment, removal
of external auditors and
also the approval of the
remuneration and terms of
engagement
7.10.6(c1)
Compliant
Compliant
Compliant
7.10.6(b3)
7.10.6(c2)
7.10.6(c3)
52
Subject
Functions
of the Audit
Committee
Disclosure
in Annual
Report relating
to Audit
Committee
Code of Best practice of Corporate Governance jointly issued by the Securities and Exchange Commission of Sri Lanka
(SEC) and the Institute of Chartered Accountants of Sri Lanka (CASL) - (Issued on 1st July 2008)
Voluntary Provisions Fully Complied
A. Directors
CSE Rule
Compliance Action
Status
A. 1 The Board
A. 1 Company to be headed by an
effective Board to direct and control
the Company
Yes
The Board of Directors, along with the Chairman, is the apex body
responsible and accountable for the stewardship function of the
Group. The Directors are collectively responsible for upholding
and ensuring the highest standards of corporate governance and
inculcating ethics and integrity across the Group.
Yes
Yes
53
Corporate Governance
CSE Rule
Compliance Action
Status
54
Yes
Yes
CSE Rule
Compliance Action
Status
Yes
Yes
Yes
Yes
The Chairman is responsible for leading the Board and for its
effectiveness. In practice, this means taking responsibility for the
Boards composition, appraisal and development, ensuring that the
Board focuses on its key tasks and supports the President CEO.
The Chairman is also the ultimate point of contact for shareholders,
particularly on corporate governance issues.
A. 3 Chairmans Role
A. 3 Preserving order and facilitating
the effective discharge of Board
functions
55
Corporate Governance
CSE Rule
Compliance Action
Status
A. 4 Financial Acumen
Yes
Yes
N/A
N/A
A. 5. 3 Definition of Independent
Directors
Yes
A. 5. 4 Declaration of Independent
Directors
Yes
A. 5. 5 Board determinations on
Independence or Non-Independence
of Non-Executive Directors.
Yes
N/A
56
CSE Rule
Compliance Action
Status
N/A
N/A
Yes
Yes
Yes
Yes
Yes
A. 6 Supply of information
Information as is necessary to carry out their duties and
responsibilities effectively and efficiently.
Information updates from management on topical matters, new
regulations and best practices as relevant to the business.
External and internal auditors.
Experts and other external professional services.
Periodic performance report.
Senior management under a structured arrangement.
57
Corporate Governance
CSE Rule
Compliance Action
Status
A. 7. 1 Nomination Committee to
make recommendations on new
Board appointments
Yes
Yes
Yes
A. 8 Re Election
A. 8 / A. 8. 1 / A. 8. 2 Re-election
at regular intervals and should be
subject to election and re-election by
shareholders
Yes
58
CSE Rule
Compliance Action
Status
Yes
Yes
A. 9. 2 The Board should also
undertake an annual self-evaluation
of its own performance and that of its
Committees
A. 9. 3 The Board should state how
such performance evaluations have
been conducted
Yes
Yes
Yes
59
Corporate Governance
B. Directors' Remuneration
CSE Rule
Compliance
Status
Action
Yes
B. 1 Remuneration Procedure
B. 1. 1 The Board of Directors should
set up a Remuneration Committee
Yes
Yes
B. 1. 4 Determination of the
remuneration of Non-Executive
Directors
Yes
NEDs receive a fee for devoting time and expertise for the benefit
of the Group in their capacity as Director and additional fees for
either chairing or being a member of a committee. NEDs do not
receive any performance/incentive payments and are not eligible
to participate in any of the Groups pension plans or share option
plans. Non-Executive fees are not time bound or defined by a
maximum/minimum of hours committed to the Group per annum,
and hence are not subject to additional/lower fees for additional/
lesser time devoted.
Yes
60
B. 2. 1 to B. 2. 4 Performance related
elements in pay structure and
alignment to industry practices
Yes
Yes
CSE Rule
Compliance
Status
Action
B. 2. 6 Designing schemes of
performance-related remuneration
Yes
B. 2. 7 / B. 2. 8 Compensation
commitments in the event of early
termination of the Directors
Yes
Yes
Yes
B. 3 Disclosure of Remuneration
B. 3 / B. 3. 1 Disclosure of
remuneration policy and aggregate
remuneration
Compliance
Status
Action
Yes
Complied
C. 1. 2 Separate resolution to be
proposed for each item
Yes
Complied
Yes
61
Corporate Governance
CSE Rule
Compliance
Status
Action
Yes
Yes
Yes
Yes
C. 1. 5 Summary of procedures
governing voting at General
meetings to be informed
C. 2 Communication with shareholders
Yes
Compliance
Status
Action
Yes
62
CSE Rule
Compliance
Status
Action
Yes
D. 1. 3 Statement of Directors
responsibility
Yes
Yes
Yes
Yes
In the unlikely event that the net assets of the Company fall below
a half of shareholders funds, shareholders would be notified and
an extraordinary resolution passed on the proposed way forward.
Yes
Yes
The Board has taken necessary steps to ensure the integrity of the
Groups accounting and financial reporting systems and internal
control systems remain effective via the review and monitoring
of such systems on a periodic basis. What follows is a brief
description of some of the key systems.
Yes
The role of the internal auditor of the Company and its Subsidiary,
has transformed into a value adding function instead of merely a
policing function, where audit findings form an integral input in
modifying and improving our internal processes.
63
Corporate Governance
CSE Rule
Compliance
Status
Action
D. 2. 3 / D. 2. 4 Maintaining a sound
system of internal control
Yes
Risk Review Reports arising out of internal audits are, in the first
instance, considered and discussed at the functional unit levels
and after review by the respective CEO of the Company and its
Subsidiary are forwarded to the Audit Committee on a regular
basis. Further, the Audit Committee also assess the effectiveness
of the risk review process and systems of internal control on
a regular basis. Follow-ups on internal audits are done on a
structured basis.
Yes
Yes
D. 3 Audit Committee
Yes
Yes
64
Yes
CSE Rule
Compliance
Status
Action
Yes
The Chairman of the Board affirms that there has not been
any material violations of any of the provisions of the Code of
Conduct. In the instances where violations did take place, or were
alleged to have taken place, they were investigated and handled
through the Companys and its Subsidiarys well established
procedures which, among others, include direct and confidential
access to an independent, external Ombudsperson as discussed
above.
Yes
Compliance
Status
Action
The corporate governance report in the annual report sets out the
Companys governance arrangements.
65
Corporate Governance
F. Other Investors
CSE Rule
Compliance
Status
Action
G. Sustainability Reporting
CSE Rule
Compliance
Status
Action
G Sustainability Reporting
G.1 G.1.7 Disclosure on adherence to Yes
sustainability principles.
The Group is committed to conducting its affairs, under a stakeholder model, with integrity, efficiency and fairness.
We believe that Corporate Governance in the future will reflect an increasing emphasis on customer satisfaction, both external
and internal customers, as a way of measuring the adaptability of the organisation over time. Additionally we also believe that
there will emerge a new type of corporate information and control architecture in the form of more specialised Board Groups
and Advisory Stakeholder Councils comprising employees, lead customers, suppliers and others. Our growing emphasis on
sustainability is the first step in this journey.
Our key areas of focus will be:
66
Creating operating structures which are agile and flexible in aligning to the constantly changing needs of the dynamic
environment that we operate in.
Maintaining appropriate internal controls and a robust framework of risk management and mitigation.
Reviewing, regularly, the internal processes and benchmarking them against international best practices.
Entrenching stakeholder relationships through more transparent information flows and proactive dialogue.
67
Mr. M P
Jayawardena
Mr. S H
Amarasekera PC
Mr. A D E I
Perera
Mr. R Peiris
Name
68
Conclusion
The Audit Committee is satisfied that the effectiveness
of the organisational structure of the Group in the
implementation of the accounting policies and operational
controls, provide reasonable assurance that the affairs of the
Group are managed in accordance with accepted policies
and that assets are properly accounted for and adequately
safeguarded. The Committee is also satisfied that the
Groups Internal and External Auditors have been effective
and independent throughout the period under review.
M P Jayawardena
Chairman, Audit Committee
30 May 2014
69
Business
Strategies &
Policies
Business
Process
Risk
Normalisation
Risk
Validation
Organisation
& People
Analysis &
Reporting
Technology &
Data
JK Group
Review Risk
Report &
Action
BU Review &
Sector Risk
Report &
Action
Management Committee
BU Risk
Report &
Action
Operational Units
Report Content
Risk
Presentation
Risk
Identification
70
External
Environment
Impact /Severity
Catastrophic/
extreme Impact
Moderate/
High Impact
Minor Impact
Low/ Insignificant
Impact
10
15
20
25
12
16
20
09
12
15
10
Rare/Remote to
occur
Unlikely to
occur
Possible to
occur
Likely to
occur
Almost certain
to occur
5
Occurrence/Likelihood
1 2 3 4 5
Ultra High
High
Medium
Low
Insignificant
71
Related Risks
Headline
Risk
External
Environment
Business Strategies
and Policies
Business Process
Organisation and
People
Analysing and
Reporting
Technology and
Data
Political
Reputation and
Brand Image
Internal Business
Process
Leadership
Performance
Measurement
and reporting
Technology
Infrastructure/
Architecture
Competitor
Capital and
Finance
Operations
Planning,
Production,
Process
Skills/
Competency/
Motivation
Budgeting/
Financial
Planning
Data
Relevance and
Integrity
Catastrophic
Loss
Strategy and
Innovation
Operations
Technology,
Design,
Execution,
Continuity
Change
Readiness
Customer
Expectations
Business/Product
Portfolio
Resource
Capacity and
Allocation
Communication
External
Reporting and
Disclosures
Technology
Reliability and
Recovery
Macro
Economic
Organisation
Structure
Vendor/Partner
Reliance
Performance
Incentives
Pricing /
Margins
IT Security
Foreign
Exchange and
Interest Rates
Stakeholders
Channel
Effectiveness
Accountability
Market
Intelligence
IT processes
Weather and
Climate
Investment,
Mergers and
Acquisitions
Interdependency
Environment,
Health and Safety
Customer
Satisfaction
Knowledge/
Intellectual
Capital
Legal, Regulatory
Compliance and
Privacy
Change
Integration
Innovation
Labor Relations
Property and
Equipment
Damage
Attrition
Liability
72
Insurable risks
73
74
apply to those who are not. In addition, staff must act so they
are not perceived to be involved in such activities. Through
transparent and accountable decision-making, together
with open discussion by staff and managers about the risks
of fraud and corruption, the Company seeks to foster an
organisational culture which does not tolerate fraud or
corruption.
This risk of fraud and corruption has been categorised as
low for the Company given the impact and likelihood of
occurrence.
The Company under the head line risk Business Process
has identified the following risks;
Product Liability (Risk of Food Contamination and
Poisoning)
The Company has identified Product liability which can arise
due to fault in the product as a core risk. Over the years the
Company has taken several steps to mitigate this risk which
includes certifying the manufacturing processes through
ISO 9001(2008) and ISO 22000 (2005), adherence to GMP
and Food Safety standards, compliance with all Consumer
Affairs Authority rules and regulations and other statutory
regulations. Further the Company has established a Hot line
to convey any message regarding the products to Company
officials and an internal mechanism has been established to
address these suggestions or complains promptly.
Products manufactured and sold by the Company have
a leading house hold brand name with high brand equity.
Therefore it must be managed and protected to survive and
prosper in the years to come. The irreparable damage done to
the brand following a crisis or catastrophe may substantially
outweigh the immediate and visible costs.
This risk has been categorized by the Company as low
considering the impact to the Company and the likelihood
of occurrence.
75
y. Tue
s
inner.
g. D
nin
ve ner.
. Eng. Din
Financial Calendar
ea time. Lunch
Morning. T
time.
rday.
Even
Satu
Sunday.
Fri ay. Tu
da esda
y.
ne y.
sd S
day
.W
ed
ay
.T
Mo
nd
ay
.
Tu
Su
Sun
day
.M
on
d
ing.
.
Din
iday
ea
. Fr
day
rning. T time. L ner.
urs
. Th
Mo turday. Morning. Tea time. Luunc
ay
h
sd
n
c
ne
ht
ay. ay. Sa
t
ed
i
i
rid
d
m
W
e. m
ur ay. F
E e
v
en
at hursd
i
e
W
.
ay
d
es
day. Thursday
s
e
n
d
.
nday. Monda
Financial Information
Financial Information
Financial
Statements
78
84
85
86
87
88
89
91
92
78
Group
For the year ended 31 March
2014
2013
in Rs. 000s
Profit/(Loss) from Operating Activities
(33,593)
64,959
Finance Cost
(35,663)
(26,355)
Finance Income
57,302
76,610
Profit/(Loss) Before Tax
(11,954)
115,214
Taxation (Charge)/Reversal including Deferred Tax
12,421
(24,331)
Profit After Tax
467
90,883
Balance brought forward from the previous year
154,356
65,340
Transfer of General Reserve
-
20,305
Transfer of Dividend Reserve
-
134
Other Comprehensive Income/(Loss)
(2,732)
742
Direct cost on Rights Issue
-
(6,048)
Profit available for Appropriation
152,092
171,356
Appropriations
Dividend paid for previous year
(51,000)
(17,000)
Unappropriated Profit carried forward
101,092
154,356
First and Final dividend declared of Rs. 2/- per share (2012/13 -Rs. 2/-)
to be paid out of profits *
(51,000)
(51,000)
Balance to be carried forward to the next year
50,092
103,356
* The First and Final dividend recommended for this financial year has not been recognised at the date of the Statement of Financial
position in compliance with LKAS 10 Event after the reporting period.
Corporate Donations
Segment Reporting
A segmental analysis of the activities of the Company and
the Group is given in Note 2.1 to the Financial Statements.
Related Party Transactions
Related Party Transactions, exceeding the lower of 10% of
Equity or 5% of the total assets of the Company is detailed
below;
Jaykay Marketing Services (Pvt) Limited - Rs. 486 million (Rs.
473 million in 2012/13 ).
Directors have disclosed the transactions with related parties
in terms of Sri Lanka Accounting Standard LKAS 24 Related
Party Disclosures, in Note 31 to the Financial Statements.
Dividends
The Directors have declared a first and final dividend of
Rs. 2/- per share for the year ended 31st March 2014, from
the profits available for appropriation. The total dividend
payout amounts to Rs. 51 million in accordance with Sri
Lanka Accounting and Reporting Standards 10, events after
the reporting period, the declared dividend has not been
recognised as a liability as at 31st March 2014.
As required by sections 56 (2) of the Companies Act No.
7 of 2007, the Board of Directors have confirmed that
the Company satisfies the solvency test in accordance
with section 57 of Companies Act No. 7 of 2007 and have
79
80
Mr. E F G Amerasinghe
Dr. I Coomaraswamy
Mr. A R Gunesekara
Mrs. S Tiruchelvam
Mr. M A Omar
Mr. N A Fonseka
Risk Management
Share Information
- Chairman
81
Directorate
The Board of Directors of Keells Food Products PLC consisted of
eight Directors who served during the year and as at the end of
the Financial Year are given below.
Brief Profiles of the Director's appear on pages 16 to 17 of the
Annual Report.
No other Director held office during the period under review.
Mr. S C Ratnayake
(Chairman)
(Non Executive,Non
Independent)
Mr. A D Gunewardane
Mr. J R F Peiris
Mr. J R Gunaratne
Mr. M P Jayawardena
Mr. R Pieris
Mr. S C Ratnayake
(Chairman)
Mr. R S Fernando
Mr. J R Gunaratne
Retirement of Directors by Rotation or otherwise and their
Re-election
Mr. J R F Peiris and Mr. M P Jayawardana retire by rotation
in terms of Article 83 of the Articles of Association of the
Company, and being eligible offer themselves re-election.
82
Name of Directors
Mr.S C Ratnayake
(Chariman)
As at 31
March 2014
12,750
As at 31
March 2013
12,750
Mr.A D Gunewardane
Mr.J R F Peiris
Mr.J R Gunaratne
Mr.M P Jayawardane
Mr.S H Amarasekara PC
Mr.A D E I Perera
Mr.R Pieris
Remuneration to Directors
Executive Directors remuneration is established within a
framework approved by the Human Resources and Compensation
Committee. The Directors are of the opinion that the framework
assures appropriateness of remuneration and fairness for the
Company. The remuneration of the Non-Executive Directors
is determined according to scales of payment decided upon by
the Board previously. Details of Directors fees and emoluments
paid during the year are disclosed in the Note 7 to Financial
Statements.
Directors Meetings
Details of Directors meetings are presented on page 34 of this
report.
Interests Register
The Company has maintained an Interests Register as
contemplated by the Companies Act No 7 of 2007. In
compliance with the requirements of the Companies Act No 7
of 2007 this Annual Report contains particulars of entries made
in the Interests Register.
Particulars of Entries in the Interests Register for the Financial
Year 2013/14
a) Interests in Contracts - The Directors have all made a
General Disclosure to the Board of Directors as permitted
by Section 192 (2) of the Companies Act No. 7 of 2007 and
no additional interests have been disclosed by any Director.
b) Share Dealings: There have been no disclosures of share
dealings as at 31st March 2014.
Auditors
The Company and its Subsidiary has complied with all applicable
laws and regulations. A compliance checklist is signed on a
quarterly basis by responsible officers and any violations are
reported to the Audit Committee and Board of Directors.
Supplier Policy
The Group endeavours to transact business with reputed
organisations capable of offering quality goods and services at
competitive prices with a view to building mutually beneficial
business relationships.
Statutory Payments
The Directors confirm to the best of their knowledge that all
taxes, duties and levies payable by the Group and all contributions,
levies and taxes payable on behalf of and in respect of the
employees of the Group and all other known statutory dues as
were due and payable by Group as at the date of the Statement
of Financial Position have been paid or where relevant provided.
Environment Protection
The Group is conscious of the impact, direct and indirect, on
the environment due to its business activities. Every endeavour
is made to minimise the adverse effects on the environment to
ensure sustainable continuity of our resources.
Voluntary Retirement Scheme (VRS)
During the year in review the Company offered a Voluntary
Retirement Scheme (VRS) to the staff at the Ja-Ela production
facility. The VRS was offered due to the automated production
capability at the new facility at Pannala. A total sum of Rs.139
million was paid out as compensation to the 129 members of
staff who opted for the scheme.
Sustainability
The Group pursues its business goals from a stakeholder approach
of business governance. Based on the findings of the continuous
stakeholder engagements, the Group has taken specific steps, in
focusing on material issues such as the conservation of natural
J. R. Gunaratne
Director
J. R. F. Peiris
Director
30th May 2014
Keells Consultants
(Private) Limited
Secretaries
83
84
30 May 2014
Colombo
85
Income Statement
Group Company
86
Group Company
(347,363)
148,237,603
1,194,293
148,409,861
Attributable to:
Equity holders of the parent
(347,363)
148,237,603
(347,363)
148,237,603
The accounting policies and notes as set out in pages 92 to 136 form an integral part of these financial statements.
Figures in brackets indicate deductions.
87
Group
Company
As at 31st March
Note
2014
2013
2014
2013
Rs
Rs
Rs
Rs
ASSETS
Non-current assets
Property, plant and equipment
13 1,158,501,374
878,975,105 1,158,501,374
878,975,105
Intangible assets
14
246,325,000
246,208,963
246,325,000 246,208,963
Investment in subsidiary
15
-
-
4,947,083
6,132,376
Other non-current financial assets
16
22,891,204
26,264,238
22,891,204
26,264,238
Other non-current assets
17
4,846,414
6,385,227
4,846,414
6,385,227
1,432,563,992
1,157,833,533
1,437,511,075 1,163,965,909
Current assets
Inventories
18
198,198,987
253,657,054
198,198,987
253,657,054
Trade and other receivables
19
231,131,169
203,541,307
231,131,169
201,406,164
Amounts due from related parties
31
78,493,314
71,937,890
78,493,314
71,937,890
Other current assets
20
31,173,509
19,890,763
30,400,991
18,725,221
Short term investments
21
100,568,439
766,591,841
95,101,260 760,582,048
Cash in hand and at bank
22
19,213,931
18,555,430
18,690,971
17,936,650
658,779,349 1,334,174,285
652,016,692 1,324,245,027
Total assets 2,091,343,341 2,492,007,818 2,089,527,767 2,488,210,936
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Stated capital
23 1,294,815,000 1,294,815,000 1,294,815,000 1,294,815,000
Revenue reserves
24
101,091,517
154,355,686
99,139,429
148,945,136
Other components of equity
25
153,623,305
148,445,295
154,302,276
151,041,072
Total equity 1,549,529,822
1,597,615,981 1,548,256,705 1,594,801,208
Non-current liabilities
Borrowings
26
Deferred tax liabilities
27
Employee benefit liabilities
28
183,333,333
18,019,794
53,100,545
254,453,672
233,333,333
30,494,360
60,280,195
324,107,888
183,333,333
18,019,794
53,100,545
254,453,672
233,333,333
30,494,360
60,280,195
324,107,888
Current liabilities
Trade and other payables
29
Amounts due to related parties
31
Current portion of borrowings
26
Other current liabilities
30
Bank overdrafts
22
Total equity and liabilities
214,303,955
7,607,680
51,102,738
1,784,821
12,560,653
287,359,847
2,091,343,341
519,646,824
9,462,817
18,330,571
9,774,085
13,069,652
570,283,949
2,492,007,818
213,761,498
518,664,715
7,607,680
9,462,817
51,102,738
18,330,571
1,784,821
9,774,085
12,560,653
13,069,652
286,817,390
569,301,840
2,089,527,767 2,488,210,936
I certify that the financial statements comply with the requirements of the Companies Act No. 7 of 2007.
S R Jayaweera
Chief Financial Officer
he Board of Directors is responsible for the preparation and presentation of these financial statements.
T
Signed for and on behalf of the board by,
J R F Peiris
J R Gunaratne
Director
Director
The accounting policies and notes as set out in pages 92 to 136 form an integral part of these financial statements.
30th May 2014
88
Group
Company
89
Group
Company
90
As at 1 April 2012
Profit for the year
Other comprehensive income
Total comprehensive income
Transfers
Issue of ordinary shares
Direct cost of share issue
First & Final dividend paid - 2011/12
As at 31 March 2013
274,815,000
-
-
-
-
1,020,000,000
-
-
94,653,862
-
56,387,210
56,387,210
-
-
-
-
(2,821,624)
-
225,847
225,847
-
-
-
-
20,305,176
-
-
-
(20,305,176)
-
-
-
1,294,815,000
151,041,072
(2,595,777)
133,875
65,340,451 452,426,740
- 90,882,567
90,882,567
-
741,979
57,355,036
- 91,624,546 148,237,603
(133,875)
20,439,051
-
- 1,020,000,000
- (6,048,362)
(6,048,362)
- (17,000,000) (17,000,000)
- 154,355,686
1,597,615,981
As at 31 March 2014
1,294,815,000
151,041,072
(678,971)
3,261,204
101,091,517 1,549,529,822
Stated Revaluation Employee
General Dividend Revenue Total
capital
reserve share option
reserve
reserve
reserves
equity
reserve
Company
Rs
Rs
Rs
Rs
Rs
Rs
Rs
As at 1 April 2012
Profit for the year
Other comprehensive income
Total comprehensive income
Transfers
Issue of ordinary shares
Direct cost of share issue
First & Final dividend paid - 2011/12
274,815,000
-
-
-
-
1,020,000,000
-
-
94,653,862
-
56,387,210
56,387,210
-
-
-
-
20,305,176
-
-
-
(20,305,176)
-
-
-
133,875
59,531,796 449,439,709
-
91,280,672
91,280,672
-
741,979
57,129,189
- 92,022,651 148,409,861
(133,875)
20,439,051
-
- 1,020,000,000
- (6,048,362)
(6,048,362)
- (17,000,000) (17,000,000)
As at 31 March 2013
1,294,815,000
151,041,072
-
-
- 148,945,136 1,594,801,208
Profit for the year
3,925,854
3,925,854
Other comprehensive income
-
-
-
-
-
(2,731,561)
(2,731,561)
Total comprehensive income
-
-
-
-
-
1,194,293
1,194,293
Share based payments
-
-
3,261,204
-
-
-
3,261,204
First & Final dividend paid - 2012/13
-
-
-
-
- (51,000,000) (51,000,000)
As at 31 March 2014
1,294,815,000
151,041,072
3,261,204
99,139,429 1,548,256,705
The accounting policies and notes as set out in pages 92 to 136 form an integral part of these financial statements.
Figures in brackets indicate deductions.
91
Corporate Information
Reporting entity
Company
During the year, the principal activities of the Company
were manufacture and sale of processed meats,
crumbed products and sale of raw meats.
Statement of compliance
The Financial Statements which comprise the
Statement of Financial Position, The Statement
of Income, Statement of Comprehensive income,
Statement of Changes in Equity and the Statement of
Cash Flows, together with the accounting policies and
notes (the financial statements) have been prepared
in accordance with Sri Lanka Accounting Standards
(SLFRS/LKAS) as issued by the Institute of Chartered
Accountants of Sri Lanka (CA Sri Lanka) and the
requirement of the Companies Act No. 7 of 2007.
Basis of consolidation
The consolidated financial statements comprise the
financial statements of the Company and its Subsidiary
as at 31st March 2014. The financial statements of the
Subsidiary is prepared in compliance with the Groups
accounting policies unless otherwise stated.
Subsidiary
The principal activity of John Keells Foods India Private
Limited is the marketing of processed and formed
meat products.
92
1.2
Basis of Preparation
Bases of Measurement
The consolidated financial statements have been
prepared on an accrual basis and under the historical
cost convention unless stated otherwise.
Subsidiaries
Subsidiaries are those enterprises controlled by the
parent. Control exists when the parent holds more than
50% of the voting rights or otherwise has a controlling
interest.
The total profit and losses for the year and all assets
and liabilities of the Company and of its Subsidiary are
included in consolidation are shown in the consolidated
income statement and statement of financial position
respectively.
was
Losses within a subsidiary are attributed to the noncontrolling interest even if that results in a deficit
balance.
93
94
Taxes
The Group is subject to income tax and other taxes
including VAT. Significant judgment was required to
determine the total provision for current, deferred
and other taxes due to uncertainties that exist, with
respect to the interpretation of the applicability of tax
laws, at the time of the preparation of these financial
statements.
1.4
95
Foreign operations
The statement of financial position and income
statement of the overseas Subsidiary which is deemed
to be foreign operation is translated to Sri Lanka rupees
at the rate of exchange prevailing as at the reporting
date and at the average annual rate of exchange for
the period respectively.
96
Statement of
Financial Position
Closing
2013/14 2012/13
Rs.
Rs.
Indian rupee
2.18
2.33
Income
Statement
Average rate
2013/14 2012/13
Rs.
Rs.
2.15
2.39
1.4.3 Tax
Current tax
Current tax assets and liabilities for the current and
prior periods are measured at the amount expected to
be recovered from or paid to the taxation authorities.
The tax rates and tax laws used to compute the amount
are those that are enacted or substantively enacted, at
the reporting date.
Sales tax
Revenues, expenses and assets are recognised net of
the amount of sales tax except:
Where the sales tax incurred on a purchase of a
assets or services is not recoverable from the taxation
authority, in which case the sales tax is recognised as
part of the cost of acquisition of the asset or as part of
the expense item as applicable and
Receivables and payables that are stated with the
amount of sales tax included.
The net amount of sales tax recoverable from, or
payable to, the taxation authority is included as part of
receivables or payables in the Statement of Financial
Position.
Basis of measurement
Plant and equipment are stated at cost less accumulated
depreciation and any accumulated impairment loss.
Such cost includes the cost of replacing component
parts of the plant and equipment and borrowing costs
for long-term construction projects if the recognition
criteria are met. When significant parts of plant and
equipment are required to be replaced at intervals, the
Group derecognises the replaced part, and recognises
the new part with its own associated useful life and
depreciation. Likewise, when a major inspection is
performed, its cost is recognised in the carrying
amount of the plant and equipment as a replacement
if the recognition criteria are satisfied. All other repair
and maintenance costs are recognised in the income
statement as incurred. The present value of the
expected cost for the decommissioning of the asset
after its use is included in the cost of the respective
asset if the recognition criteria for a provision are met.
Land and buildings are measured at fair value less
accumulated depreciation on buildings and impairment
charged subsequent to the date of the revaluation.
97
Derecognition
An item of property, plant and equipment is
derecognised upon replacement, disposal or when no
future economic benefits are expected from its use.
Any gain or loss arising on derecognition of the asset is
included in the income statement in the year the asset
is derecognised.
Depreciation
Depreciation is calculated by using a straight-line
method on the cost or valuation of all property, plant
and equipment, other than freehold land, in order
to write off such amounts over the estimated useful
economic life of such assets.
Assets
Buildings on Freehold Land
Buildings on Leasehold Land
Plant and machinery
Computer Equipment
Furniture and fittings
Motor vehicles
Freezers
Office Equipment
Other equipment
Years
33
10 - 35
10 - 15
4-5
8
5
8
6
2
1.4.5 Leases
The determination of whether an arrangement is,
or contains, a lease is based on the substance of the
arrangement at the inception date, whether fulfilment
98
Operating leases
Leases, where the lessor effectively retains substantially
all the risks and benefits of ownership over the terms
of the lease, are classified as operating leases.
Basis of measurement
Intangible assets acquired separately are measured on
initial recognition at cost. The cost of intangible assets
acquired in a business combination is the fair value as at
the date of acquisition.
Useful life
Acquired/
Internally
generated
Impairment testing
Purchased
Software
5-4 years
Acquired
S of t wa re 5-4 years
License
Acquired
When indicators of
impairment arise.
The amortization
method is reviewed
at each financial
year end.
The Groups financial assets include cash and shortterm deposits, trade and other receivables, loans and
other receivables.
Subsequent measurement
The subsequent measurement of financial assets
depends on their classification as follows:
99
100
Derecognition
A financial liability is derecognised when the obligation
under the liability is discharged or cancelled or expires.
Subsequent measurement
The measurement of financial liabilities depends on
their classification as follows:
101
102
Goodwill
Goodwill is tested for impairment annually and when
circumstances indicate that the carrying value may be
impaired.
Manufactured
Finished Goods
Work in
Progress
Finished Goods
Purchased
Spares
Other
Inventories
At actual cost.
Employees receive remuneration in the form of sharebased payment transactions, whereby employees
render services as consideration for equity instruments
(equity-settled transactions). The cost of the employee
services received in respect of the shares or share
options granted is recognised in the income statement
over the period that employees provide services, from
the time when the award is granted up to the vesting
date of the options. The overall cost of the award is
calculated using the number of share options expected
to vest and the fair value of the options at the date of
grant.
The employee remuneration expense resulting from
the John Keells Groups Employees share option
(ESOP) scheme to the employees of Keells Food
Products PLC is recognized in the income statements
of the Company. This transaction does not result in a
cash outflow and the expense recognised is met with a
corresponding equity reserve increase, thus having no
impact on the statement of financial position (SOFP).
The fair value of the options granted is determined by
using an option pricing model.
Equity-settled transactions
The cost of equity-settled transactions is recognised,
together with a corresponding increase in other
capital reserves in equity, over the period in which
the performance and service conditions are fulfilled.
The cumulative expense recognised for equity-settled
transactions at each reporting date until the vesting
date reflects the extent to which the vesting period has
expired and the Groups best estimate of the number of
equity instruments that will ultimately vest. The income
statement expense or credit for a period represents
the movement in cumulative expense recognised as at
the beginning and end of that period and is recognised
in the share based payment plan note 26.3.
where vesting is conditional upon a market or nonvesting condition, which are treated as vesting
irrespective of whether or not the market or nonvesting condition is satisfied, provided that all other
performance and service conditions are satisfied.
103
Sale of goods
Revenue from the sale of goods is recognised when
the significant risk and rewards of ownership of the
goods have passed to the buyer with the Group
retaining neither a continuing managerial involvement
to the degree usually associated with ownership, nor an
effective control over the goods sold.
Turnover based taxes
Turnover based taxes include value added tax and
nation building tax. Companies in the Group pay such
taxes in accordance with the respective statutes.
Interest income
For all financial instruments measured at amortised
cost and interest bearing financial assets classified
as available for sale, interest income or expense is
recorded using the effective interest rate (EIR), which
is the rate that exactly discounts the estimated future
cash payments or receipts through the expected life
of the financial instrument or a shorter period, where
appropriate, to the net carrying amount of the financial
asset or liability. Interest income is included in finance
income in the income statement.
Other income
Other income is recognised on an accrual basis.
104
105
106
1.9
Segment Information
Operating segments
The Groups internal organisation and management is
structured based on individual products and services
which are similar in nature and process and where the
risk and return are similar.
Segment information
Segment information has been prepared in conformity
with the Accounting Policies adopted for preparing
and presenting the Financial Statements of the Group.
2 Revenue
Group
Company
Value Added Tax of Rs. 272,504,454/- (2012/13 Rs. 239,419,958/-) has been deducted in arriving at the revenue of the
Group and the Company.
2.1
Finance costs
Finance income
Net finance (cost)/ income
Segment Assets
Segment Liabilities
Goodwill
Deferred tax liabilities
Purchase and construction of PPE
Purchase and construction of PPE
-business combination
Addition to IA
Depreciation of PPE
Amortisation of IA
Gratuity provision and related costs
20 14
2013
Manufacturing
Trading
Total Manufacturing
Trading
Total
Rs
Rs Rs Rs Rs Rs
2,174,123,143 106,019,296 2,280,142,439
479,990,767
25,637,017
505,627,784
4,926,330
-
4,926,330
(223,068,736)
- (223,068,736)
(121,533,908)
-
(121,533,908)
(139,017,140)
-
(139,017,140)
(60,527,291)
-
(60,527,291)
(59,229,978) 25,637,017
(33,592,961)
(35,663,559)
57,302,435
21,638,876
(37,591,102)
1,825,654,946
523,765,225
242,268,046
18,019,794
345,399,006
-
991,500
65,872,737
875,463
10,330,357
-
-
-
25,637,017
23,420,349
28,500
-
-
-
-
2,056,649,252
447,215,892
4,493,739
(232,755,403)
(110,362,262)
-
(55,061,193)
53,530,773
140,833,106
11,141,616
286,492
-
-
-
-
11,428,108
2,197,482,358
458,357,508
4,780,231
(232,755,403)
(110,362,262)
(55,061,193)
64,958,881
(35,663,559)
57,302,435
21,638,876
(26,354,556)
76,609,675
50,255,119
-
-
-
(26,354,556)
76,609,675
50,255,119
(11,954,085)
103,785,892
11,428,108
1,849,075,295
523,793,725
242,268,046
18,019,794
345,399,006
2,231,715,296
858,559,329
242,268,046
30,494,360
202,818,091
18,024,476
5,338,148
-
-
-
-
991,500
65,872,737
875,463
10,330,357
457,731,954
4,120,560
29,200,494
179,643
9,655,952
115,214,000
2,249,739,772
863,897,477
242,268,046
30,494,360
202,818,091
457,731,954
4,120,560
29,200,494
179,643
9,655,952
107
2.1.1 All Inter Company revenues, other income and expenses have been eliminated on consolidation
2.1.2 Segment assets, does not include goodwill arising from the business combination.
2.1.3 Non- current assets have not been allocated to the trading segment.
For the year ended 31st March
Group
Company
2014
2013
2014
2013
Rs Rs Rs Rs
2,269,576,155
10,566,284
2,280,142,439
For the year ended 31st March
2,189,196,547
8,285,811
2,197,482,358
2,269,576,155
10,566,284
2,280,142,439
2,189,196,547
8,285,811
2,197,482,358
Group Company
2014
Rs
2013
Rs
2014
Rs
2013
Rs
3
Other Operating Income
Exchange gain
Profit on sale of property, plant and equipment
Royalty income
Sundry income
-
26,786
-
4,899,544
4,926,330
14,813
1,141,119
286,492
3,337,807
4,780,231
-
26,786
-
4,899,544
4,926,330
14,813
1,141,119
3,337,807
4,493,739
4
Other Operating Expenses
Other operating expenses includes Nation Building Tax of Rs. 37,895,064/- for the year ended 31st March 2014 (2012/13
Rs. 35,168,146/-) for the Group and the Company.
Group Company
For the year ended 31st March
2014
Rs
2013
Rs
2014
Rs
2013
Rs
35,467,567
195,992
35,663,559
19,624,795
6,729,761
26,354,556
5
Finance Cost
Interest expense on borrowings
Long term
Short term
108
35,467,567
195,992
35,663,559
19,624,795
6,729,761
26,354,556
For the year ended 31st March
Group Company
2014
Rs
2013
Rs
2014
Rs
2013
Rs
6
Finance Income
Interest income
Finance income from other financial instruments
53,506,481
3,795,954
57,302,435
72,050,831
4,558,844
76,609,675
53,182,198
3,795,954
56,978,152
71,722,674
4,558,844
76,281,518
Finance Income from other financial instruments includes notional interest pertaining to executive staff loans granted.
For the year ended 31st March
Group Company
2014
Rs
2013
Rs
2014
Rs
2013
Rs
7
Profit Before Tax
Profit before Income Tax is stated after charging all
expenses including the following;
Remuneration to Non Executive Directors
6,300,000
6,300,000
6,300,000
6,300,000
Auditors Fees and Expenses -Audit Service
879,980
879,074
758,760
745,000
- Non Audit Service
931,110
706,727
74,200
89,400
Costs of defined employee benefits
Defined benefit plan cost - Gratuity
10,330,357
9,655,950
10,330,357
9,655,950
Defined contribution plan cost - EPF and ETF
26,449,268
28,371,546
26,449,268
28,371,546
Staff expenses
263,556,877
288,274,828
263,556,877
288,274,828
Voluntary retirement scheme expense
139,017,140
-
139,017,140
Depreciation of property, plant and equipment
65,872,737
29,200,494
65,872,737
29,200,494
Amortisation of intangible assets
875,463
179,643
875,463
179,643
Operating lease payments
615,368
217,368
615,368
217,368
Research and Development
1,700,000
500,000
1,700,000
500,000
Donations
1,940,000
720,000
1,940,000
720,000
Bad debts
786,726
-
-
Exchange Loss
-
-
107,479
Impairment of Investment in subsidiary
-
-
1,185,292
-
109
Group Company
2014
Rs
-
53,089
- 53,089
(12,474,566)
(12,421,477)
2013
Rs
-
-
-
24,331,433
24,331,433
2014
Rs
2013
Rs
-
53,089
53,089
(12,474,566)
(12,421,477)
24,331,433
24,331,433
110
2014
Rs
2013
Rs
2014
Rs
2013
Rs
(11,954,085)
115,214,000
(280)
(144)
3,458,462
398,105
(8,495,903)
115,611,961
-
(8,495,903)
115,611,961
(8,495,623)
(280)
-
(8,495,903)
(8,495,903)
115,612,105
(144)
115,611,961
(2,378,853)
32,371,349
53,089
1,321,617
3,020,755
(9,943,482)
(11,329,996)
(1,473,848)
269,335
(12,421,477)
24,331,443
(2,378,853)
53,089
1,321,617
(9,943,482)
(1,473,848)
(12,421,477)
32,371,349
3,020,755
(11,329,996)
269,335
24,331,443
-
-
53,089
53,089
(12,474,566)
(12,421,477)
-
-
53,089
53,089
(12,474,566)
(12,421,477)
24,331,433
24,331,433
-
-
-
-
24,331,433
24,331,433
115,611,961
8.2
Group Company
3,261,693
27,593,126
The Subsidiary has carried forward tax losses amounting to Rs 206,237,623 /- (2012/13-Rs.219,433,013/-). Deferred Income
Tax asset arising from the carried forward losses has not been recognised in the Subsidiary Companys Financial Statements
as it is not probable that the taxable profits will be available in the foreseeable future against which the deductible temporary
difference can be utilised.
For the year ended 31st March
8.3
Tax losses
Tax losses brought forward
Adjustments on finalisation of liability
Tax losses arising during the year
Utilisation of tax losses
Tax losses carried forward
Group Company
2014
Rs
12,119,863
1,197,845
291,845,804
(19,185,295)
285,978,217
2013
Rs
-
-
37,917,118
(25,797,255)
12,119,863
2014
Rs
12,119,863
1,197,845
291,845,804
(19,185,295)
285,978,217
2013
Rs
37,917,118
(25,797,255)
12,119,863
457,731,954
71,368,659
The Company is eligible for qualifying payment relief granted under Section 34(2)(s) of the Inland Revenue Act No. 10 of 2006
duly amended by the Inland Revenue (Amendment) Act No. 8 of 2012 and the Inland Revenue (Amendment) Act No. 18 of
2013. The Company has carried forward, the unclaimed investment relief to set of in future years.
111
Note Group
2014
2013
9.1
467,392
90,882,567
Weighted average number of ordinary shares
9.2
Basic earnings per share
25,500,000
0.02
18,862,256
4.82
25,500,000
-
25,500,000
8,500,000
17,000,000
25,500,000
25,500,000
18,862,256
For the year ended 31st March
2014 2013
Rs Rs Rs Rs
10
Dividend Per Share
112
11
Financial Instruments
11.1 Financial Assets and Liabilities By Categories
Financial assets and liabilities in the tables below are split into categories in accordance with LKAS 39.
Financial assets by categories Loans and receivables
Group
As at 31st March
Financial instruments in non-current assets
Other non-current financial assets
Financial instruments in current assets
Trade and other receivables
Amounts due from related parties
Short term investments
Cash in hand and at bank
Total
Company
2014
2013
2014
2013
Rs Rs Rs Rs
22,891,204
26,264,238
22,891,204
26,264,238
231,131,169
78,493,314
100,568,439
19,213,931
452,298,057
203,541,307
71,937,890
766,591,841
18,555,430
1,086,890,706
231,131,169
78,493,314
95,101,260
18,690,971
446,307,918
201,406,164
71,937,890
760,582,048
17,936,650
1,078,126,990
The fair value of financial assets does not significantly vary from the value based on amortised cost.
Financial liabilities by categories Financial liabilities measured at amortised cost
Group Company
As at 31st March
2014
2013
2014
2013
Rs Rs Rs Rs
12
113
The Company and its subsidiary trades only with recognised, creditworthy third parties. It is the Company and its
subsidiarys policy that all clients who wish to trade on credit terms are subject to credit verification procedures. In
addition, receivable balances are monitored on an ongoing basis with the result that the Company and its subsidiarys
exposure to bad debts is not significant.
With respect to credit risk arising from the other financial assets of the Company and its subsidiary, such as cash and cash
equivalents the Company and its subsidiarys exposure to credit risk arises from default of the counterparty. The Group
manages its operations to avoid any excessive concentration of counterparty risk and the Company and its subsidiary
takes all reasonable steps to ensure the counterparties, fulfil their obligations.
Cash in
hand and
at bank
Trade and
Short
Amounts
Total
other
term
due from
receivables investments related parties
% of
allocation
Government securities 12.1.2 - - -
95,101,260 -
95,101,260
21
Deposits with bank
12.1.3 - - -
5,467,179 -
5,467,179 1
Loans to executives
12.1.4
22,891,204 -
7,166,308 - -
30,057,512 7
Trade and other receivables 12.1.5 - -
223,964,861 - -
223,964,861
49
Amounts due from related parties
12.1.6 - - - -
78,493,314
78,493,314
18
Cash in hand and at bank
12.1.7
-
19,213,931
-
-
-
19,213,931
4
Total credit risk exposure 22,891,204
19,213,931 231,131,169 100,568,439 78,493,314 452,298,057
100
2013
Group
Notes
Other
non current
financial assets
Cash in
hand and
at bank
Trade and
Short
Amounts
Total
other
term
due from
receivables investments related parties
% of
allocation
Government securities 12.1.2 - - -
8,600,000 -
8,600,000 1
Deposits with bank
12.1.3 - - -
757,991,841 -
757,991,841
70
Loans to executives
12.1.4
26,264,238 -
10,277,100 - -
36,541,338 3
Trade and other receivables 12.1.5 - -
193,264,207 - -
193,264,207
18
Amounts due from related parties
12.1.6 - - - -
71,937,890
71,937,890 7
Cash in hand and at bank
12.1.7
- 18,555,430
-
-
- 18,555,430
1
Total credit risk exposure 26,264,238 18,555,430 203,541,307 766,591,841 71,937,890 1,086,890,706
100
114
2014
Company
Notes
Other
non current
financial assets
Cash in
hand and
at bank
Trade and
Short
Amounts
Total
other
term
due from
receivables investments related parties
% of
allocation
Government securities 12.1.2 - - -
95,101,260 -
95,101,260
21
Deposits with bank
12.1.3 - - - - - -
Loans to executives
12.1.4
22,891,204 -
7,166,308 - -
30,057,512 7
Trade and other receivables 12.1.5 - -
223,964,861 - -
223,964,861
50
Amounts due from related parties
12.1.6 - - - -
78,493,314
78,493,314
18
Cash in hand and at bank
12.1.7
- 18,690,971
-
-
- 18,690,971
4
Total credit risk exposure 22,891,204 18,690,971 231,131,169 95,101,260 78,493,314 446,307,918
100
2013
Company
Notes
Other
non current
financial assets
Cash in
hand and
at bank
Trade and
Short
Amounts
Total
other
term
due from
receivables investments related parties
% of
allocation
Government securities 12.1.2 - - -
8,600,000 -
8,600,000 1
Deposits with bank
12.1.3 - - -
751,982,048 -
751,982,048
70
Loans to executives
12.1.4
26,264,238 -
10,277,100 - -
36,541,338 3
Trade and other receivables 12.1.5 - -
191,129,064 - -
191,129,064
18
Amounts due from related parties
12.1.6 - - - -
71,937,890
71,937,890 7
Cash in hand and at bank
12.1.7
- 17,936,650
-
-
- 17,936,650
1
Total credit risk exposure 26,264,238 17,936,650 201,406,164 760,582,048 71,937,890 1,078,126,990
100
As at 31st March
2014
Rs.
AAA*
AA *
AA+ *
Total
5,467,179
-
-
5,467,179
Rating %
of total
2013
Rs.
100 6,009,793
- 480,446,000
- 271,536,048
100 757,991,841
2014
Rating %
of total
Rs.
1
63
36
100
-
-
-
-
Rating %
of total
2013
Rs.
-
-
- 480,446,000
- 271,536,048
- 751,982,048
Rating %
of total
64
36
100
115
Neither past due nor impaired
0160 days
Past due but not impaired
6190 days
91120 days
121180 days
> 181 days
impaired
Gross carrying value
Less: impairment provision Individually
assessed impairment provision
Total
Group Company
2014 2013 2014 2013
Rs. Rs. Rs. Rs.
224,871,537
224,871,537
224,871,537
4,035,069
1,223,559
1,001,004
3,815,247
234,946,416
1,782,843
229,404
282,915
2,269,997
3,842,931
207,384,238
4,035,069
1,223,559
1,001,004
3,815,247
234,946,416
1,782,843
229,404
282,915
134,854
3,842,931
205,249,095
(3,815,247)
231,131,169
(3,842,931)
203,541,307
(3,815,247)
231,131,169
198,976,148
(3,842,931)
201,406,164
The Company has obtained bank guarantees from all distributors by reviewing their past performance and credit
worthiness, as collateral. The requirement for an impairment is analysed at each reporting date on an individual basis for
major clients. Additionally, a large number of minor receivables are grouped into homogenous groups and assessed for
impairment collectively. The calculation is based on actual incurred historical data.
12.1.6 Amounts due from related parties
The balance consists of amounts due from the Parent, Companies under common control, Joint Ventures and Associates
of the Parent.
12.1.7 Credit risk relating to cash and cash equivalents
In order to mitigate concentration, settlement and operational risks related to cash and cash equivalents, the Company
and its subsidiary limits the maximum cash amount that can be deposited with a single counterparty. In addition, the
Company and its subsidiary maintains an authorised list of acceptable cash counterparties based on current ratings
and economic outlook, taking into account analysis of fundamentals and market indicators. The Group held cash and
cash equivalents of Rs. 107,221,717/-as at 31st March 2014 (2013 Rs. 772,077,619/-). The Company held cash and cash
equivalents of Rs. 101,231,578/- as at 31 March 2014 (2013 Rs. 765,449,046/-).
12.2 Liquidity Risk
The Groups policy is to hold cash and undrawn committed facilities at a level sufficient to ensure that the Group
has available funds to meet its medium term capital and funding obligations, including organic growth and acquisition
activities, and to meet any unforeseen obligations and opportunities. The Group holds cash and undrawn committed
facilities to enable the Group to manage its liquidity risk.
116
The Company and its subsidiary monitors its risk to a shortage of funds using a daily cash management process. This
process considers the maturity of the Company and its subsidiarys financial investments and financial assets (e.g.
accounts receivable, other financial assets) and projected cash flows from operations.
The Company and its subsidiarys objective is to maintain a balance between continuity of funding and flexibility through
the use of multiple sources of funding including bank loans and overdrafts.
12.2.1 Net debt/(cash)
As at 31st March
Short term investments
Cash in hand and at bank
Total liquid Assets
Borrowings
Current portion of borrowings
Bank overdrafts
Total liabilities
Net debt/ (cash)
Group
Company
766,591,841
18,555,430
785,147,271
233,333,333
18,330,571
13,069,652
264,733,556
(520,413,715)
95,101,260
18,690,971
113,792,231
183,333,333
51,102,738
12,560,653
246,996,724
133,204,493
760,582,048
17,936,650
778,518,698
233,333,333
18,330,571
13,069,652
264,733,556
(513,785,142)
Group
31st March 2014
Within 1 Between Between Between Between
More than
Total
year
1-2 years
2-3 years
3-4 years
4-5 years
5 years
Rs Rs Rs Rs Rs Rs Rs
Borrowings- Financial instruments
in non-current liabilities
- 50,000,000 50,000,000 50,000,000 33,333,333
- 183,333,333
Borrowings-Financial instruments
in current liabilities
51,102,738 - - - - -
51,102,738
Trade and other payables 214,303,955 - - - - -
214,303,955
Amounts due to related parties 7,607,680 - - - - -
7,607,680
Bank overdrafts
12,560,653 - - - - -
12,560,653
285,575,026 50,000,000 50,000,000 50,000,000 33,333,333
- 468,908,359
117
in current liabilities
18,330,571 - - - - -
18,330,571
Trade and other payables 519,646,824 - - - - -
519,646,824
Amounts due to related parties 9,462,817 - - - - -
9,462,817
Bank overdrafts
13,069,652 - - - - -
13,069,652
560,509,864 50,000,000 50,000,000 50,000,000 50,000,000 33,333,333 793,843,197
Company
31st March 2014
Within 1
Between
Between
Between
Between
More than
Total
year
1-2 years
2-3 years
3-4 years
4-5 years
5 years
Rs Rs Rs Rs Rs Rs Rs
in current liabilities
51,102,738 - - - - -
51,102,738
Trade and other payables 213,761,498 - - - - -
213,761,498
Amounts due to related parties 7,607,680 - - - - -
7,607,680
Bank overdrafts
12,560,653 - - - - -
12,560,653
285,032,569 50,000,000 50,000,000 50,000,000 33,333,333
- 468,365,902
Company
31st March 2013
Within 1
Between
Between
Between
Between
More than
Total
year
1-2 years
2-3 years
3-4 years
4-5 years
5 years
Rs Rs Rs Rs Rs Rs Rs
in current liabilities
18,330,571 - - - - -
18,330,571
Trade and other payables 518,664,715 - - - - -
518,664,715
Amounts due to related parties 9,462,817 - - - - -
9,462,817
Bank overdrafts
13,069,652 - - - - -
13,069,652
559,527,755 50,000,000 50,000,000 50,000,000 50,000,000 33,333,333 792,861,088
118
The objective of market risk management is to manage and control market risk exposures within acceptable parameters,
while optimising the return.
The sensitivity analysis in the following sections relate to the position as at 31 March in 2014 and 2013 The analysis
excludes the impact of movements in market variables on; the carrying values of other post-retirement obligations;
provisions: and the non-financial assets and liabilities of foreign operations.
The following assumptions have been made in calculating the sensitivity analysis;
The statement of financial position sensitivity relates to derivatives and available-for-sale debt instruments The sensitivity
of the relevant income statement item is the effect of the assumed changes in respective market risks. This is based on
the financial assets and financial liabilities held at 31 March 2014 and 2013.
12.3.1 Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. The Groups exposure to the risk of changes in market interest rates relates primarily to
the Groups and Companys long-term debt obligations with floating interest rates.
Most lenders grant loans under floating interest rates. To manage this, based on the market condition & outlook of the
interest rate, the Group takes mitigating action such as interest rate swaps ,caps, etc.
The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables
held constant, of profit/ (loss) before tax (through the impact on floating rate borrowings).
Increase/ (decrease)
Group
Company
in basis points
Rs.
Rs.
Rupee borrowings
2014
+200
(4,688,721 )
(4,688,721)
-200
4,688,721
4,688,721
2013
+150
(3,774,959) (3,774,959)
-150
3,774,959
3,774,959
The assumed spread of basis points for the interest rate sensitivity analysis is based on the currently observable market
environment changes to base floating interest rates.
119
Group
Currency
Increase/(decrease)
Effect on profit
Effect on
in exchange rate
before tax LKR
equity LKR
Rs.
Rs.
2014
INR
6%
9,153
(338,642)
-6%
(9,153)
338,642
2013
INR
5%
324,276
(439,961)
-5%
(324,276)
439,961
Assumptions
The assumed movement, in the spread of the exchange rate sensitivity analysis, is based on the current observable market
environment.
12.4 Capital management
The primary objective of the Groups capital management is to ensure that it maintains a strong financial position and
healthy capital ratios in order to support its business and maximise shareholder value.
The Group manages its capital structure, and makes adjustments to it, in the light of changes in economic conditions. To
maintain or adjust the capital structure, the Group may issue new shares, have a rights issue or buy back of shares.
Group Company
2014 2013 2014 2013
Debt / Equity
15.94%
16.57%
15.95%
16.60%
120
121
Buildings
Plant and
Furniture
Motor
Freezers
Vehicles
Other
Assets
WIP
Capital
Total
2014
Total
2013
Rs Rs Rs Rs Rs Rs Rs Rs Rs Rs
Disposals
Revaluations
-
-
2,677,165 305,306,190
33,861,124
1,222,286
-
674,166
-
41,667,512
- (3,003,553)
- 12,816,235
674,166 31,854,830
11,616,563
1,601,585
10,014,978
- 1,092,725,022 421,535,421
- 457,731,954
- 50,215,110
- (3,003,553) (39,575,554)
Revaluations
-
-
(6,719,794) (49,381,368)
(3,570,051)
(2,186,171)
(674,166)
(2,421,475)
(19,827,915) (9,489,874)
- 3,003,553
- 9,433,792
- (276,619,101) (213,749,917)
38,316,673
- (14,189,000)
- 3,003,553
- (65,872,737) (15,011,494)
- (213,749,917) (232,299,888)
As at 31 March 2013
12,841,133
- 11,209,533
2,946,579
- 878,975,105
Carrying value
As at 31 March 2014
172,597,972 186,805,742 742,862,461 10,493,368
- 21,839,597
2,126,689 21,775,545 1,158,501,374
Disposals
(1,593,878)
business combination
Accumulated depreciation
Additions
13.1
Group
Cost or valuation
As at 31 st March
Land
Equipment
Leasehold
122
Carrying value
As at 31 March 2014
172,597,972 186,805,742 742,862,461 10,493,368
- 21,839,597 2,126,689 21,775,545 1,158,501,374
As at 31 March 2013
174,191,850 190,848,371 486,937,639 12,841,133
- 11,209,533 2,946,579
- 878,975,105
Accumulated depreciation
and impairment
At the beginning of the year
- (3,558,011) (162,006,339) (19,797,705) (674,166) (20,645,297) (7,068,399)
- (213,749,917) (232,299,888)
Charge for the year
(1,593,878) (6,719,794) (49,381,368) (3,570,051)
-
(2,186,171) (2,421,475)
- (65,872,737) (15,011,494)
Charge for the year business combination
-
-
-
-
-
-
-
-
- (14,189,000)
Disposals
-
-
-
-
- 3,003,553
-
-
3,003,553 38,316,673
Revaluations
-
-
-
-
-
-
-
-
- 9,433,792
At the end of the year
(1,593,878) (10,277,805) (211,387,707) (23,367,756) (674,166) (19,827,915) (9,489,874)
- (276,619,101) (213,749,917)
Cost or valuation
At the beginning of the year 174,191,850 194,406,382 648,943,978 32,638,838 674,166 31,854,830 10,014,978
- 1,092,725,022 421,535,421
Additions
- 2,677,165 305,306,190 1,222,286
- 12,816,235 1,601,585 21,775,545 345,399,006 202,818,091
Additions - business combination
-
-
-
-
-
-
-
-
- 457,731,954
Disposals
-
-
-
-
- (3,003,553)
-
- (3,003,553) (39,575,554)
Revaluations
-
-
-
-
-
-
-
-
- 50,215,110
At the end of the year
174,191,850 197,083,547 954,250,168 33,861,124 674,166
41,667,512 11,616,563 21,775,545 1,435,120,475 1,092,725,022
13.2 Company
Group
As at 31st March
At cost
At fair value
Company
2014
Rs
2013
Rs
2014
Rs
2013
Rs
801,774,780
356,726,594
1,158,501,374
513,934,884
365,040,221
878,975,105
801,774,780
356,726,594
1,158,501,374
513,934,884
365,040,221
878,975,105
356,726,594
356,726,594
365,040,221
365,042,221
356,726,594
356,726,594
365,040,221
365,040,221
Method of
valuation
Effective date
of valuation
Independent
Valuer
123
As at 31st March
2013
2014
2013
Cost
215,961,000
215,961,000
215,961,000
215,961,000
Accumulated Depreciation
(35,410,970)
(29,985,944)
(35,410,970)
(29,985,944)
180,550,030
185,975,056
180,550,030
185,975,056
13.6 Property, Plant and Equipment with a cost of Rs. 156,698,775/- (2013 -Rs. 158,605,256/-) have been fully depreciated
and continue to be in use by the Company.
13.7 During the financial year, the Company acquired Property, Plant & Equipment to the aggregate value of Rs.
345,399,006/- (2013 -Rs. 660,550,045/-) cash payments amounting to Rs. 345,399,006/- (2013- Rs. 552,818,091/- )
were made during the year for purchase of Property, Plant and Equipment.
As at 31st March
Goodwill
Purchased
14
Intangible Assets
2014
2013
Software
Goodwill
Purchased
2014
2013
Rs Rs Rs Rs Rs Rs Rs Rs
Cost/carrying value
At the beginning of the year
Additions / transfers
Acquisitions
At the end of the year
991,500
-
4,120,560
- 242,268,046
991,500
4,120,560
- 242,268,046
(179,643)
(179,643)
(179,643)
(179,643)
Amortisation
(875,463)
(875,463)
(179,643)
(875,463)
(875,463)
(179,643)
(1,055,106)
(1,055,106)
(179,643)
(1,055,106)
(1,055,106)
(179,643)
Carrying value
As at 31 March 2014
As at 31 March 2013
124
Group Company
Software
3,940,917 242,268,046
- 246,208,963
- 246,208,963
14.1 Goodwill
Goodwill acquired through business combination is due to the purchase of the manufacturing facility (CGU) of D&W
Food Products (Pvt) Ltd and goodwill is tested for impairment as follows;
The recoverable amount of the CGU has been determined based on the value in use (VIU) calculation.
Gross margins
The basis used to determine the value assigned to the budgeted gross margins, is the gross margins achieved in the year
preceding the budgeted year adjusted for projected market conditions.
Discount rates
Inflation
Volume growth
The discount rate used is the risk free rate, adjusted by the addition of an appropriate risk premium.
The basis used to determine the value assigned to the budgeted cost inflation, is the inflation rate, based on projected
economic conditions.
Volume growth has been budgeted on a reasonable and realistic basis by taking into account the growth rates of one to
four years immediately subsequent to the budgeted year based on Industry growth rates. Cash flows beyond the five year
period are extrapolated using a 5% growth rate.
125
15 Investment in Subsidiary
15.1 Carrying value
Investments in subsidiary
Unquoted- John Keells Foods India Pvt Ltd (JKFI)
220,291,730
220,291,730
(215,344,647)
4,947,083
(214,159,354)
6,132,376
15.2 The Subsidiary Company John Keells Foods India Private Limited was restructured in June 2010, due to the significant losses
incurred. Despite efforts made by John Keells Foods India Private Limited to appoint a master distributor who could carry out
sales on their behalf, the Company was unable to agree terms which were beneficial to both parties. In the above context it
was considered prudent and appropriate to impair the investment in John Keells Foods India Private Limited. The amount of
Rs. 215,344,647/- was impaired of which Rs. 1,185,293/- was made in 2013/14, Rs. 119,727,152/- was made in 2010/11 and Rs.
94,432,202/- was made in 2009/10.
As at 31st March
16
Note
2014
Rs
Group Company
2013
2014
2013
Rs
Rs
Rs
Loans to executives
16.1
22,891,204
26,264,238
22,891,204
26,264,238
22,891,204
26,264,238
22,891,204
26,264,238
2014 2013 2014 2013
Rs
Rs
Rs
Rs
16.1 Loans to executives
At the beginning of the year
36,541,338
39,195,516
36,541,338
39,195,516
Loans granted / transfers
5,964,480
12,595,484
5,964,480
12,595,484
Recoveries
(12,448,306)
(15,249,662)
(12,448,306)
(15,249,662)
At the end of the year
30,057,512
36,541,338
30,057,512
36,541,338
Receivable within one year
19
7,166,308
10,277,100
7,166,308
10,277,100
Receivable between one and five years
22,891,204
26,264,238
22,891,204
26,264,238
Total Receivable
30,057,512
36,541,338
30,057,512
36,541,338
126
Group Company
As at 31st March
17
2014
Rs
2013
Rs
2014
Rs
2013
Rs
4,846,414
4,846,414
6,385,227
6,385,227
4,846,414
4,846,414
6,385,227
6,385,227
Pre paid staff cost represents the pre paid portion of executive staff loans granted.
Group Company
As at 31st March
2014
Rs
2013
Rs
2014
Rs
2013
Rs
Raw materials
Work-in-progress
Finished goods
Spare Parts
Other stocks
88,056,427
5,827,869
84,444,662
19,538,589
331,440
198,198,987
127,441,965
5,072,707
103,183,116
17,663,697
295,569
253,657,054
88,056,427
5,827,869
84,444,662
19,538,589
331,440
198,198,987
127,441,965
5,072,707
103,183,116
17,663,697
295,569
253,657,054
18 Inventories
As at 31st March
19
Group Company
Note
2014
Rs
2013
Rs
2014
Rs
2013
Rs
227,780,108
(3,815,247)
7,166,308
231,131,169
194,971,995
(3,842,931)
10,277,100
201,406,164
Group Company
As at 31st March
Note
2014
2013
Rs
Rs
2014
Rs
2013
Rs
9,124,371
21,276,620
30,400,991
8,784,453
9,940,768
18,725,221
20
Other Current Assets
Other receivables
Tax refunds
20.1
9,896,889
21,276,620
31,173,509
9,949,995
9,940,768
19,890,763
127
Group Company
As at 31st March
20.1 Tax Refunds
At the beginning of the year
Charge for the year
Income Tax -Under provision
Payments during the year
Refund transferred from income tax payable account
At the end of the year
2014
Rs
2013
Rs
9,940,768
-
(53,089)
11,388,941
-
21,276,620
-
-
-
-
9,940,768
9,940,768
2014
Rs
9,940,768
-
(53,089)
11,388,941
-
21,276,620
2013
Rs
9,940,768
9,940,768
Group Company
21
Rs
Rs
Rs
Rs
5,467,179
95,101,260
100,568,439
757,991,841
8,600,000
766,591,841
-
95,101,260
95,101,260
751,982,048
8,600,000
760,582,048
Group Company
As at 31st March
22
Cash in hand
Cash at bank
Favourable cash & cash equivalent balance
Bank overdraft
Unfavourable cash & cash equivalent balance
703,250
18,510,681
19,213,931
(12,560,653)
(12,560,653)
729,250
17,826,180
18,555,430
(13,069,652)
(13,069,652)
703,250
17,987,721
18,690,971
729,250
17,207,400
17,936,650
(12,560,653)
(12,560,653)
(13,069,652)
(13,069,652)
Facility
Security
Amount Rs.
Repayment
Terms
Lending
Institution
Nature of
Facility
Short term
HSBC
Bank overdraft
50,000,000
A letter of negative
pledge over Companys
unencumbered assets
assets in Ja Ela
Short term
Deutsche Bank
Bank overdraft
40,000,000
Clean basis
Short term
BOC
Bank overdraft
1,000,000
Clean basis
Short term
DFCC
Bank overdraft
50,000,000
Clean basis
128
On demand
On demand
On demand
On demand
2014 2013
As at 31st March
23
Stated Capital
Number of
shares
25,500,000
-
25,500,000
Value of
shares
1,294,815,000
-
1,294,815,000
8,500,000
17,000,000
25,500,000
274,815,000
1,020,000,000
1,294,815,000
Group
As at 31st March
Revenue Reserves
Company
2014
Rs
2013
Rs
2014
Rs
2013
Rs
101,091,517
101,091,517
154,355,686
154,355,686
99,139,429
99,139,429
148,945,136
148,945,136
Accumulated profit
Note
As at 31st March
25
Number of
shares
Rs.
24
Value of
shares
Rs.
25.1
25.2
25.3
Group
2014
Rs
Company
2013
Rs
2014
Rs
2013
Rs
151,041,072
-
3,261,204
154,302,276
151,041,072
151,041,072
151,041,072
(678,971)
3,261,204
153,623,305
151,041,072
(2,595,777)
-
148,445,295
25.1 Revaluation reserve consists of the surplus on the revaluation of Property, Plant and Equipment net of deferred tax effect.
25.2 Foreign currency translation reserve consists of currency translation difference from the Foreign Subsidiary.
25.3 Employee share option reserve
Under the John Keells Groups Employees share option scheme (ESOP), share options of the parent are granted to
senior executive of the Company and the subsidiary. With more than 12 months of service. The exercise price of the share
options is equal to the 30 day volume weighted average market price of the underlying shares on the date of grant. The
share options vest over a period of four years and is dependent on a performance criteria and a service criteria. The
performance criteria being a minimum performance achievement of Met Expectations and service criteria being that
the employee has to be in employment at the time the share options vest. The fair value of the share options is estimated
at the grant date using a binomial option pricing model, taking into account the terms and conditions upon which the
share options were granted.
The contractual term for each option granted is five years. There are no cash settlement alternatives. The Group does not
have a past practice of cash settlement for these share options.
129
Group Company
2014
2013
2014
2013
Rs. Rs. Rs. Rs.
Expense arising from equity-settled share-based
payment transactions
3,261,204
-
3,261,204
Total expense arising from share-based
payment transactions
3,261,204
-
3,261,204
Movements in the year
The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of, and movements in, share
options during the year:
Group Company
2014 2014 2014 2014
ESOP PLAN 8
No.
WAEP Rs.
No.
WAEP Rs.
Outstanding at 1 April 2013
-
-
-
Granted during the year
97,200
253.16
97,200
253.16
Lapses/Forfeited during the year
(16,384)
253.16
(16,384)
253.16
Adjustments
39,179
253.16
39,179
253.16
Outstanding at 31 March 2014
119,995
253.16
119,995
253.16
Fair value of the share options and assumptions
The fair value of the share options is estimated at the grant date using a binomial option pricing model, taking into account
the terms and conditions upon which the share options were granted. The valuation takes into account factors such as stock
price, expected time to maturity, exercise price, expected volatility of share price, expected dividend yield and risk free
interest rate.
As at 31st March
Group Company
2014
Rs
2013
Rs
2014
Rs
2013
Rs
251,663,904
-
(17,227,833)
234,436,071
-
251,663,904
-
251,663,904
251,663,904
-
(17,227,833)
234,436,071
251,663,904
251,663,904
51,102,738
18,330,571
51,102,738
18,330,571
183,333,333
-
183,333,333
234,436,071
200,000,000
33,333,333
233,333,333
251,663,904
183,333,333
-
183,333,333
234,436,071
200,000,000
33,333,333
233,333,333
251,663,904
26 Borrowings
Movement
At the beginning of the year
Additions
Repayments
At the end of the year
130
Nature of
Security
facility
FCC
D
Project Loan
A corporate guarantee
from John Keells
Holdings PLC.
Notes
As at 31st March
27
Installment
remaining
60 equal installments
after a grace period
of 12 months
56
Group
Company
2014
2013
2014
2013
Rs Rs Rs Rs
30,494,360
(12,474,566)
18,019,794
2,901,234
27,593,126
30,494,360
30,494,360
(12,474,566)
18,019,794
2,901,234
27,593,126
30,494,360
112,961,855
(14,868,160)
50,766,382
(16,878,454)
112,961,855
(14,868,160)
50,766,382
(80,073,901)
(3,393,568)
(80,073,901)
18,019,794
30,494,360
18,019,794
Group
As at 31st March
28
Repayment
terms
30,494,360
Company
2014
2013
2014
2013
Rs. Rs. Rs. Rs.
60,280,195
3,699,536
6,577,557
6,630,821
(26,819,125)
54,939,342
4,162,018
206,717
5,493,932
(3,779,835)
60,280,195
3,699,536
6,577,557
6,630,821
(26,819,125)
54,939,342
4,162,018
206,717
5,493,932
2,731,561
(741,979)
2,731,561
53,100,545
60,280,195
53,100,545
60,280,195
5,345,766
1,766,010
3,218,581
10,330,357
6,658,884
994,999
2,002,067
9,655,950
5,345,766
1,766,010
3,218,581
10,330,357
6,658,884
994,999
2,002,067
9,655,950
131
2014 2013
11% p.a.
5%-10% p.a.
11% p.a.
6% - 10% p.a.
55 years
55 years
55 years
55 years
55 years
55 years
Discount rate
Salary increment
(2,568,075)
2,829,518
(3,426,236)
3,802,233
3,040,945
(2,797,402)
132
10,945,890
10,234,048
10,306,039
13,050,925
8,563,643
53,100,545
Group Company
As at 31st March
29
Trade payables
152,402,181
98,985,653
152,216,993
98,003,544
Sundry creditors including accrued expenses
61,901,774
420,661,171
61,544,505
420,661,171
214,303,955
519,646,824
213,761,498
518,664,715
Sundry creditors including accrued expenses as at 31st March 2013 included the amount of Rs. 350,000,000/- payable to D&W Food
Products (Pvt) Limited being the balance consideration payable for the acquisition of the manufacturing facility, which was settled in
full in July 2013.
Group Company
As at 31st March
30
31
Related Party Transactions
The Group and Company carried out transactions in the ordinary course of business with the following related entities.
Group Company
As at 31st March
31.1
31.2
Note
2014
Rs
2013
Rs
2014
Rs
2013
Rs
-
-
78,493,314
78,493,314
71,937,890
71,937,890
-
-
78,493,314
78,493,314
71,937,890
71,937,890
2,165,861
-
5,441,819
7,607,680
3,005,642
6,457,175
9,462,817
2,165,861
-
5,441,819
7,607,680
3,005,642
6,457,175
9,462,817
133
Ultimate Parent
John Keells Holdings PLC
Subsidiary
John Keells Foods India (Pvt) Ltd.
Companies under common control
Asian Hotels and Properties PLC.
Ceylon Cold Stores PLC.
DHL Keells (Pvt) Ltd.
Habarana Lodge Ltd.
Habarana Walk Inn Ltd.
InfoMate (Pvt) Ltd.
JayKay Marketing Services (Pvt) Ltd.
NDO Lanka (Pvt) Ltd.
John Keells Office Automation (Pvt) Ltd.
John Keells PLC.
Kandy Walk Inn Ltd.
Keells Consultants (Pvt) Ltd.
Trans Asia Hotels PLC.
Trinco Holiday Resorts (Pvt) Ltd.
Union Assurance PLC.
Ultimate Parent
John Keells Holdings PLC
Subsidiary
John Keells Foods India (Pvt) Ltd.
Companies under common control
Asian Hotels and Properties PLC.
Ceylon Cold Stores PLC.
DHL Keells (Pvt) Ltd.
Habarana Lodge Ltd.
Habarana Walk Inn Ltd.
InfoMate (Pvt) Ltd.
JayKay Marketing Services (Pvt) Ltd.
NDO Lanka (Pvt) Ltd.
John Keells Office Automation (Pvt) Ltd.
John Keells PLC.
Kandy Walk Inn Ltd.
Keells Consultants (Pvt) Ltd.
Trans Asia Hotels PLC.
Trinco Holiday Resorts (Pvt) Ltd.
Union Assurance PLC.
134
Group
Amounts due from
2014
Rs
Amounts due to
2013
Rs
2014
Rs
2012
Rs
2,165,861
3,005,642
1,941,377
-
-
346,652
243,981
-
68,281,942
-
-
-
201,690
-
489,220
433,028
-
71,937,890
-
2,590,074
16,994
-
17,250
185,904
452,884
1,956,259
137,500
40,575
-
36,174
-
-
8,205
7,607,680
3,803,876
100,138
238,898
1,929,626
149,030
142,000
20,288
73,319
9,462,817
-
-
-
590,919
403,463
-
76,852,684
-
-
-
402,545
-
-
243,703
-
78,493,314
Company
Amounts due to
2013
Rs
2014
Rs
2013
Rs
2,165,861
3,005,642
1,941,377
-
-
346,652
243,981
-
68,281,942
-
-
-
201,690
-
489,220
433,028
-
71,937,890
-
2,590,074
16,994
-
17,250
185,904
452,884
1,956,259
137,500
40,575
-
36,174
-
-
8,205
7,607,680
3,803,876
100,138
238,898
1,929,626
149,030
142,000
20,288
73,319
9,462,817
-
-
-
590,919
403,463
-
76,852,684
-
-
-
402,545
-
-
243,703
-
78,493,314
Group
Company
Group Company
2014
Rs
2013
Rs
2014
Rs
2013
Rs
135
Note
Group
Company
As reported
Current
As reported
Current
previously Presentation previously Presentation
Income Statement
Cost of sales
(1,738,607,810)
(1,739,124,850)
(1,738,607,810)
Selling and distribution expenses
(232,612,437)
(232,755,403)
(232,612,437)
Administrative expenses
(110,280,288)
(110,362,261)
(109,284,707)
(1,739,124,850)
(232,755,403)
(109,366,680)
33
34
Capital commitments approved as at the reporting date, but not provided for in the financial statements amounted to Rs.
17,982,379/- (2013 Rs. 181,325,416/-) for both the Group and the Company.
The Company has constructed a building on leasehold land obtained on lease, the details are stated below;
Property
Period of Lease
Rentals
2014
As at 31st March
Rs
New Post Estate, Temple Road,
Renewed for 10 years from
Within one year
Ekala, Ja Ela
1st September 2010
Between one and five years
After five years
Property
Period of Lease
Rentals
As at 31st March
35
136
217,368
1,086,840
86,947
1,391,155
2014
Rs
Industrial Estate
35 years from August 2012
Within one year
398,000
Makandura Pannala
Between one and five years
1,990,000
After five years
13,532,000
15,920,000
Events After the Reporting Period
There have been no material events occurring after the Statement of Financial Position date that require adjustments to or
disclosure in the Financial Statements other than the following:
As required by section 56(2) or the Companies Act No. 7 of 2007, the Board of Directors have confirmed that the Company
satisfies the solvency test in accordance with section 57 of the Companies Act No. 7 of 2007, and has obtained a certificate
from the Auditors, prior to approving a first and final dividend of Rs. 2/- per share to be paid on 17th June 2014.
Shareholding Range
No. of
No. of
%
No. of
Shareholders
Shares Held Shareholders
Less
than or equal to
1,000
870
164,128
0.64
874
1,001
to
10,000
130
438,320
1.72
136
10,001
to
100,000
30
950,011
3.73
33
100,001
to
1,000,000
5
1,024,299
4.02
5
Over 1,000,001
3
22,923,242
89.90
3
1,038 25,500,000
100.00
1,051
No. of
Shares Held
176,601
462,196
945,874
992,087
22,923,242
25,500,000
0.69
1.81
3.71
3.89
89.90
100.00
Shareholding Range
No. of
Shareholders
No.Of
Shares Held
No. of
No.Of
%
Shareholders
Shares Held
8
1
1,029
1,038
23,350,658
12,750
2,136,592
25,500,000
91.57
0.05
8.38
100.00
8
1
1,042
1,051
23,350,658
12,750
2,136,592
25,500,000
91.57
0.05
8.38
100.00
1,023
15
1,038
25,366,672
133,328
25,500,000
99.48
0.52
100.00
1,034
17
1,051
25,374,550
125,450
25,500,000
99.51
0.49
100.00
137
No. of Shares
% of Issued
No. of Shares
% of Issued
Held Capital Held Capital
19,110,399
74.94
19,110,399
74.94
2,573,196
10.09
2,573,196
10.09
1,239,647
4.86
1,239,647
4.86
328,791
1.29
328,791
1.29
260,400
1.02
231,600
0.91
170,969
0.67
184,557
0.72
159,419
0.63
142,419
0.56
Mr.J B Hirdaramani
104,720
0.41
104,720
0.41
Mr.D J M Blackler
90,000
0.35
90,000
0.35
84,221
0.33
64,854
0.25
60,000
0.24
60,000
0.24
57,000
0.22
36,935
0.14
50,700
0.20
50,700
0.20
47,445
0.19
49,960
0.20
Mr. M A H Esufally
46,660
0.18
45,200
0.18
Mr.H N Esufally
46,576
0.18
35,650
0.14
Sandwave Limited
31,280
0.12
21,300
0.08
30,000
0.12
30,000
0.12
30,000
0.12
30,000
0.12
29,625
0.12
28,625
0.11
Share Prices
2014 2013
Rs Rs
70.00
100.00
82.40
(22-05-2013)
104.50
(21-06-2012)
50.10
(26-02-2014)
60.10
(30-08-2012)
As at 31st March
55.00
70.00
138
Shareholders Funds
Market Capitalisation
Rs. Mn
Rs. Mn
2,000
2,000
1,500
1,500
1,000
1,000
500
500
Market Price
Rs.
Rs.
80
150
70
120
60
50
90
40
60
30
20
30
10
0
2010 2011 2012 2013 2014
0
2010 2011 2012 2013 2014
139
140
1,294,815
154,356
148,445
1,597,616
324,108
18,331
13,070
538,883
-
2,492,008
223,696
-
2,091,343
275,479
38,447
2,492,008
309,624
50,388
2,091,343
1,294,815
101,092
153,623
1,549,530
254,454
51,102
12,561
878,975
278,858
766,592
253,657
1,158,501
274,063
100,568
198,199
64,959
50,255
115,214
(24,331)
90,883
2,197,482
2,280,142
(33,593)
21,639
(11,954)
12,421
467
2013
Group
2014
Group
5,504
818,812
216,221
274,815
85,780
91,832
452,427
57,841
-
86,820
287,210
9,622
818,812
189,236
33,959
7,237
291,549
184,177
(3,534)
180,644
(51,005)
129,639
2,328,752
2012
Group
25,330
778,460
178,384
274,815
(43,859)
92,007
322,963
53,428
-
198,355
276,844
1,839
778,460
173,635
18,636
8,957
298,548
110,209
(14,657)
95,552
(65,189)
30,363
2,196,156
2011
Group
-
672,576
222,829
274,815
(78,051)
92,803
289,567
51,897
-
108,283
236,716
26,175
672,576
176,005
12,816
29,484
191,381
(123,470)
(13,798)
(137,268)
(9,062)
(146,330)
1,833,113
2010
Group
-
690,343
158,663
274,815
86,395
92,803
454,013
50,746
-
26,921
263,698
18,974
690,343
180,163
15,382
22,369
189,757
41,364
(24,995)
16,369
(28,583)
(12,215)
1,792,635
2009
Group
17,955
568,141
150,189
99,815
123,072
92,803
315,690
49,294
-
35,013
215,968
4,258
568,141
170,853
14,466
5,800
156,796
132,458
(10,948)
121,510
(45,428)
76,082
1,552,000
2008
Company
21,449
513,084
124,859
99,815
59,490
32,417
191,723
46,326
128,727
193,846
48,736
513,084
114,920
-
-
155,582
91,215
(15,162)
76,054
(29,359)
46,695
1,401,620
2007
Company
-
422,118
521,614
103,015
136,390
90,479
110,382
99,815
49,041
35,223
184,079
98,131
181,529
98,128
521,614
151,575
-
-
90,381
54,312
(12,161)
42,151
(13,740)
28,411
1,153,900
2005
Company
99,815
12,795
35,223
147,833
73,424
151,055
15,936
422,118
131,086
-
-
124,041
(11,654)
(13,674)
(25,328)
(918)
(26,245)
1,201,182
2006
Company
The above indicates the simplified income Statement and the Statement of Financial Position of the Company for the year 2005 to 2008 and the Group for the year 2009 to 2014.
The Statement of Financial Position is categorised in to its key Assets and Liabilities.
What We Owned
Stated Capital
Revenue Reserves
Other components of equity
Total Equity
Non-current liabilities
Current portion of borrowings
Interest Bearing Borrowings
Trade and Other Payables including
dues to Related Parties
Provision for Taxation &\
Government - Levies
What We Owned
Property, Plant & Equipment
Non Current Assets / Goodwill
Short term investments
Inventories
Trade & Other receivable including
dues from Related Parties
Other Current Assets
Revenue
141
70.00
483
4,550
1,656
100.00
453
5,141
2,028
6.87
-
14.56
17.74
5.57
14.56
33.44
34.73
-
19.19
55.25
1.93
0.99
24.36
2012
Group
150.00
440
4,991
1,683
44.00
-
2.27
12.67
1.38
3.41
9.91
23.98
-
61.42
41.49
1.46
0.72
7.52
2011
Group
50.50
455
3,940
1,376
69.00
456
4,020
1,108
(36.82)
2.44
(2.72)
17.80
2.67
1.64
1.65
1.46
0.88
(8.95)
(4.20)
(0.55)
(23.81)
11.36
(0.68)
(1.37)
(3.17)
9.95
3.50
5.93
65.77
434
3,576
1,566
56.00
6.55
2.10
15.26
12.38
1.88
1.11
12.10
4.90
8.54
29.99
39.47
2.50
11.09
55.57
435
3,222
1,231
49.75
9.49
-
10.54
7.52
1.45
0.88
6.02
3.33
5.24
27.50
32.65
-
69.07
37.37
2009
2008
2007
Group Company Company
(7.98)
(16.43)
(39.36)
(28.10)
2.50
37.39
43.05
2010
Group
439
2,736
1,014
34.00
(11.54)
1.60
(8.67)
5.80
1.45
0.83
(0.85)
(2.18)
(2.95)
(15.81)
(4.17)
2.00
79.53
35.02
2006
Company
452
2,553
987
38.00
11.91
8.40
7.22
1.55
1.17
4.47
2.46
3.19
16.72
17.02
101.52
35.29
2005
Company
Number of
Buildings
Buildings
in (Sq. Ft)
1.00
4.08
Land in acres
Freehold
Leasehold
Location
The above ratios are based on the Income Statement and the Statement of Financial Position of the Company from the year 2005 to 2008 and the Group for the year 2009
to 2014 I FRS has been applied for the years of 2012 ,2013 & 2014
55.00
361
6,316
2,081
14.53
7.28
6.88
62.65
4.14
4.82
8.87
5.41
2.00
16.57
64.11
2.34
1.89
2.46
0.02
0.02
0.03
(1.84)
2.00
15.94
74.09
2.29
1.60
(0.94)
2,750
2.41
0.04
60.77
2013
Group
2014
Group
Key Indicators
(A) Profitability & Return to Shareholders
142
Net Assets
Total Assets minus Current Liabilities minus Long Term
Liabilities minus Minority Interest.
Net Asset per Share
Net Assets divided by number of Ordinary Shares in issue at
the end of the period.
Net Turnover per Employee
Net Turnover over Average Number of Employees.
Price Earnings Ratio
Market Price per Share over Earnings per Share.
Quick Ratio
Cash plus Short term Investments plus Receivables over
Current Liabilities.
Return on Assets
Profit After Tax over Average Total Assets.
Return on Capital Employed
Earning Before interest and Tax as a percentage of Average
Shareholders Funds plus Total Debt.
Return on Equity
Consolidated Profit after Tax as a Percentage of Average
Shareholders Funds.
Shareholders Funds
Stated Capital, Capital Reserves and Revenue Reserves.
Total Debt
Long Term Loans plus Short Term Loans and Overdrafts
Total Value Added
The difference between Revenue (including Other Income)
and Expenses, Cost of Materials and Services Purchased
from External Sources.
Interest Cover
Profit Before Interest and Tax over Finance Expenses.
Total Assets
Fixed Assets plus Investments plus Non- Current Assets plus
Current Assets.
Market Capitalisation
Number of Shares in issue at the end of period multiplied by
the Market price at end of period.
Notice of Meeting
Notice is hereby given that the 32nd Annual General Meeting
of Keells Food Products PLC will be held at the John Keells
Holdings PLC Auditorium, No. 186, Vauxhall Street,Colombo 2,
on Monday 30th June 2014 at 11.00 a.m.
Note:
143
Notes
144
Form of Proxy
I/We ......................................................................................................................................................................................................................................of
..................................................................................................................................................................................................................................... being a
member/s of Keells Food Products PLC, hereby appoint:
................................................................................................................................................................................................................................................ of
................................................................................................................................................................................................................ or failing him/her
Mr. Susantha Chaminda Ratnayake of Colombo
Mr. Ajit Damon Gunewardene of Colombo
Mr. James Ronnie Felitus Peiris of Colombo
Mr. Jitendra Romesh Gunaratne of Colombo
Mr. Shiran Harsha Amarasekera PC of Colombo
Mr. Athulugamage Damian Eardley Ignatius Perera of Colombo
Mr. Ranil Pieris of Colombo
Mr. Mahinda Preethiraj Jayawardena of Colombo
or failing him
or failing him
or failing him
or failing him
or failing him
or failing him
or failing him
as my/our proxy to vote for me/us on my/our behalf at the 32nd Annual General Meeting of the Company to be held at 11 a.m
on the 30th of June 2014 and at any adjournment thereof and at every poll which may be taken in consequence thereof.
I/We, the undersigned, hereby direct my/our proxy to vote for me/us and on my/our behalf on the specified Resolution as
indicated by the letter X in the appropriate cage:
FOR
AGAINST
To re-elect as Director, Mr. James Ronnie Felitus Peiris, who retires
in terms of Article 83 of the Articles of Association of the Company.
To re-elect as Director, Mr. Mahinda Preethiraj Jayawardena who
retires in terms of Article 83 of the Articles of Association of the
Company.
To re-appoint Auditors and to authorise the Directors to determine
their remuneration.
Signed this .............................................. day of .............................................. Two Thousand and Fourteen (2014).
........................................................
Signature/s of shareholder/s
INSTRUCTIONS AS TO COMPLETION OF FORM OF PROXY ARE SET OUT ON THE REVERSE HEREOF.
Form of Proxy
INSTRUCTIONS AS TO COMPLETION OF PROXY
1.
Kindly complete the Form of Proxy by filling in legibly your full name and address and that of the Proxy holder. Please sign
in the space provided and fill in the date of signature.
2.
The instrument appointing a Proxy shall, in the case of an individual, be signed by the appointer or by his Attorney and in
the case of a Corporation must be executed under the Common Seal or in such other manner prescribed by its Articles
of Association or other Constitutional documents.
3.
If the Proxy Form is signed by an Attorney the relevant Power of Attorney or a notarially certified copy thereof, should
also accompany the completed Form of Proxy if it has not already been registered with the Company.
4.
To be valid, the completed Form of Proxy should be deposited at the Registered Office of the Company at No. 117, Sir
Chittampalam A. Gardiner Mawatha, Colombo 02, not less than 48 hours before the time appointed for the holding of
the meeting.
http://www.keellsfoods.com
Corporate Information
Name of Company
Audit Committee
Mr. M P Jayawardena
Mr. R Pieris
Mr. S H Amarasekera PC
Mr. A D E I Perera
342
1218
1146
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