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Annual Report 2009/10
Cover Story Vision / Mission Financial Highlights CEO’s Review Profile Board of Directors Kotmale, at a Glance Corporate Governance Report of the Directors Financial Information Statement of Directors’ Responsibility Auditors Report Income Statement Balance Sheet Statement of Changes In Equity Cash Flow Statement Notes to the Financial Statements Investors’ Information Five Year Financial Summary Notice of Meeting Form of Proxy 22 23 24 25 26 27 28 40 42 43 47 1 2 3 6 10 11 16 17
More than just a Brand, More than just a Taste
At Kotmale Holdings PLC, we have a rich heritage of quality and fine expertise that precedes us, in every way. Not only do we have one of the largest, progressive and diverse dairy portfolios in the country, we assure freshness and goodness, every single time. The care and attention that goes into our products is what has made us who we are today - a trusted brand in the minds of our most important stakeholders, our customers. We strive to be more than just a valued brand and recognise the importance of being more than just a taste. At Kotmale, we’re so much more.
To be the leading producer of food and beverage products for the local and international market.
Providing the nation with quality and affordable food and beverage products using state of the art technology and local expertise, continuously seeking opportunities for growth and creating an environment that develops, motivates and rewards all employees whilst providing consistent returns to all its stakeholders.
Kotmale Holdings PLC 2
Operating Results Turnover Gross Profit Net Finance Cost Profit before taxation Balance Sheet Highlights Non - Current Assets Current Assets Current Liabilities Non - Current Liabilities Share Capital & Reserves Total Assets Market/Share Holders Information Market Price per Share-at the year end Earnings per Share Net Assets per Share Interest Cover Debt/ Equity Ratio Borrowings / Total assets Price Earnings Ratio
2009/10 Rs 000’s
2008/09 Rs 000’s
1,348,176 288,905 (10,172) 87,061
1,352,959 257,754 (23,682) 75,557
345,242 394,344 153,239 52,187 534,159 739,586
356,098 407,266 183,666 48,244 531,454 763,364
(Rs) (Rs) (Rs) (times) (times) (times) (times)
24.75 2.09 17.01 9.56 0.10 0.04 11.8
9.50 2.02 16.93 4.19 0.09 0.04 4.7
Group Gross Turnover
1520 1570 1354 1389 541
180 203 258 289
Profit Before Taxation
562 685 598 763 740
Rs in million
Rs in million
Rs in million
Rs in million
Note - The figures stated for financial year 2007/08 reflect performance for a 15 month period, consequent to the Company changing its financial year from 31st December to 31st March.
Annual Report 2009/10 Annual Report 2009/10
The positive results display the value that the market places on our business and the potential future growth that can be envisaged tangibly in the current environment. Similarly. unprecedented expansion of fiscal policy in order to boost demand and stabilise financial markets and lowering of interest rates.3 Bn. Neat cattle milk. from Rs 63. Profit before tax saw an incline of 15. A consolidated revenue of Rs 1. while interest payments. Overview of the economy Despite stimulus packages introduced in most of Europe and the USA.3 Mn. despite a Withholding Tax payment on inter-company dividends amounting to Rs 16. The noteworthy growth rate is primarily attributed to the significant growth of 6. However. However.2% by March 31st 2010. quantified at a per capita consumption of 110 milliliters per day. while Group net profit after tax increased 3..5 Mn. which in tandem improved PBT ratio to 6. salaries and wages.2% seen in the last quarter of the year which saw the country maintain its equilibrium and stay afloat. the global economy was slow in getting off the ground.5 Mn.2 %. The challenges for our business stemmed specifically on our powdered milk operations.1 % to Rs 65. strengthened our initiatives to keep apace with the country’s plans for the future. Sri Lanka has managed to produce 28% of its total milk requirement this year. which is heavily reliant on imported milk powder. detailed a milk production of 184 Mn.1 Mn. resettlement.. However. a growth of 15.1 Bn. there was a concerted effort by these economies to adopt diverse policies in order to combat some of the effects of the fallout. while most sectors of the economy. a 260% increase over last year.7 Bn. which saw 7% growth.75. Kotmale Holdings shares closed at Rs 24. It gives me great pleasure therefore to present this Annual Report and Statement of Account for your Company in an environment where. while buffalo milk.6%. seeing the cascading negativities continuing to flow throughout most of the developed and emerging economies. the market capitalization of the company increased from Rs 298 Mn. This Withholding Tax payment also saw group taxation increase by Rs 9. 6 Kotmale Holdings PLC . – a significant upward momentum compared to the previous year. produced 49.1% in total milk production to 233 Mn. the IMF’s projection of a contraction in the world economy of 0. liters.6 Mn. despite the introduced panaceas. with the end to the war and investor confidence seeing a sharp reversal for the better. We at Kotmale Holdings too. The Dairy Industry The dairy industry this year showcased an increase of 12. rehabilitation and reconstruction activities did exert a heavy burden on the state. foreign financial inflows helped the country record an unprecedented surplus in its Balance of Payment to US $2. saw rapid upward movement as well. including relaxation of monetary policies.5 Mn.5% in 2009.8% held true for the year. turnover remained flat at Rs 1. we as a responsible corporate citizen will continue with our work of sustainable development in creating enabling communities among our stakeholders. Financial Review It has been a good year for the Group which performed well in a challenging economic milieu.136 Bn. began seeing the palpable signs of development and in tandem. I must also add that this noteworthy performance by the LMBP sector contributed immensely to maintaining and improving upon the growth indicators of all operations.4% from 5.CEO’s Review of Operations Sri Lanka’s focus on a resurgence of both the economy and the social fabric of the country post a nearly thirty year old war started breaking new ground towards the latter part of the year with development projects and focused infrastructure taking precedence.. However. The first quarter of the year also had to contend with an immense increase in defence expenditure due to the strong thrust to end the war. which had 38% growth. liters in 2009. despite challenging domestic and external conditions..348 Bn. liters. There was also a concerted effort towards ensuring that growth indicators remained apace with a preparation for an upward journey ahead. This was primarily due to a number of enhanced measures implemented to expand dairy farming and higher prices being obtained due to better product quality. by end 2009 with foreign exchange reserves posting a historic high of US $5. especially tourism. to Rs 777 Mn. primarily due to the meager performance of the powdered milk sector in our business which pulled down our figures with a 55% decline in turnover The Liquid Milk Based Product (LMBP) segment meanwhile showed a robust 28% growth in turnover accounting for Rs 1. at consolidated level. was recorded by the Group with profit before tax posted at Rs 87. Sri Lanka’s legendary resilience continued to remain at the fore with the growth rate displayed at a consistent 3.
1 Mn. Our focus now will be in enhancing production capacity in anticipation of the envisaged future growth we foresee in the next few years. added focus on profit making areas of the business and less emphasis on powdered milk business. have been increased. one of the shortcomings we observed was the lack of support utilities to ensure we optimise on what we have.2% during the year. focused expansion and operational improvements will be the USPs to strengthening and nurturing our business. We recognise increasing competition in the market but are confident that the strategies we have employed in maintaining standards. The directors have also made a further recommendation of Rs 2. The latter is primarily due to increased investments in marketing and HR activities which in turn increased administration expenditure.. The positive results now allow us to pursue the long planned expansion of our operations and focus more diligently on accelerating our business performance. Finance costs within the group saw a significant reduction of 57 % from Rs 23. to Rs 97. for which shareholder approval is awaited.” Profit Before Taxation 01 30 11 76 Rs in million 87 Year 2007/08 . we are strong proponents of good cost management initiatives and based on analyses conducted. One of the key focus areas this year was the expansion of our production facilities. With our machinery possessing the required capacity.Reflects 15 Month period 7 Annual Report 2009/10 07/08 08/09 2005 2006 09/10 . embarked on better usage of resources and facilities. continuous product development. the liquid milk sector was also primarily responsible for the good results we posted for the year. This will bring the total dividend for the year to Rs 4 per share. However. Given increasing energy and other relevant costs. this year.1Mn Rs777Mn Rs profit before tax 2010 The market capitalisation 2010 This also saw our consolidated gross profit record a growth of 12% to stand at Rs 289 Mn.6 Mn. The Group recorded a ROE of 18. Liquid Milk Sector One of our best performing sectors during the year. the previous year to Rs 10. Business Sector Performance As mentioned previously.CEO’s Review of Operations Continued 87.2 Mn.2 Mn.. increasing turnover by 28% and offsetting the negative impacts we experienced in the “The positive results also display the value that the market places on our business and the potential future growth that can be envisaged tangibly in the current environment. the positive facet to this is that our shareholders were availed handsome returns this year with a dividend of Rs 2 per share for the first time in the history of the Company since it became Kotmale Holdings PLC. the dairy industry did have its challenges although Kotmale continued on the strategic plans we had already embarked on during the last two years. Common resources have been enhanced and boiler and generator capacities etc. attributed to prudent cash flow management. a decline once again reflective of the large Withholding tax component. although our consolidated operating profit declined 2% from Rs 99.
With 300 within our team. Now firmly consolidating its market leadership in the flavoured milk segment. accessible. one of our biggest assets is our people. purchasing powdered milk from the market at these high prices proved to be disadvantageous. HR plans have always been worked on aligning individual aspirations to the company’s vision and this year. better working and living conditions and development of the next generation through enhanced educational avenues. one of the most salient features in our business is the extraordinary input that our human resources adds into the continued success of our business. who most often have little or limited opportunities for betterment. liters of milk annually. We therefore decided to strategically withdraw temporarily from this area of business.CEO’s Review of Operations Continued powdered milk business. having seen the positive signs had already begun laying the foundation for this growth phase in the last two years. In addition to this. duty on imported milk powder was increased from Rs. Kotmale capitalised on the opportunities by commencing UHT milk operations in Jaffna. and foreign exchange. strengthened and retained in order to achieve a win-win formula for both the team member and the company. until the market dynamics become more favourable and Kotmale can work on a business strategy that will prove to be fruitful. This consistent thrust towards our brand bore fruition this year when Kotmale was named for the first time in Brands Annual. this sector achieved a robust volume growth over the year. Having begun this company on the premise of sustainable development. due to its susceptibility to wide fluctuations in market prices. a resource that must be nurtured. For a segment of the population that has always been consuming fresh milk due to the high component of dairy farming in the Jaffna peninsula. We are one of the largest milk collectors in the country and are extremely honoured to have become a part of the development of the rural communities. People Power While Kotmale continues to add to its commendable portfolio of products. The long lasting partnership we have nurtured with these farmers and their families have imbued empowerment among the farmers which cascades to an upliftment of their lifestyles. it is pertinent to mention here that Kotmale. as our technical officers have constant dialogue and hands on training imparted to them to ensure that quality standards remain paramount in caring for cattle in order to optimise milk output. Sales and Marketing Having seen the resurgence of the economy in both the North and East of the country. while a knowledge gaining culture is encouraged within our team. we began a cohesive plan of upgrading our skills base. Additional investment remains high on the cards aligned to the buoyant mindset perceived among other sectors of the economy as well. the fact that the product has been well accepted by the consumer and has been acclaimed for its high quality and value for money features are certainly encouraging. For example. Our distribution network too was further strengthened.145 per Kg in June ’09. and remains true to its brand values and pillars. duty structures. Departments were restructured to obtain maximum operational efficiency and aligned to the operational strategies of the company.55 per Kg at the beginning of the year to Rs. Journey Ahead With the country now looking ahead and macro indicators envisaging unprecedented growth for the country. a publication of Media Services and Brand Finance and placed 61st among the country’s top 100 most valuable brands. This year we worked on a strategic distribution plan conceptualised around our liquid milk as the primary product and the rest of the product portfolio following in its wake. One 8 Kotmale Holdings PLC . Adding value to our value chain One of the biggest contributors to the success of this business area and the entirety of the Group is the impressive network of dairy farmers we have within our fold.000 dairy farmers mainly in the central hill country areas. A continuous ‘on the job’ training and learning feature adds value to the relationship we have with our farmers. we added to our distributor network and worked on visibility of our product. Kotmale has. collecting about 12 Mn. the collection of milk and in transport to our collection centers. created a sustainable income avenue for over 8. which saw noteworthy results for the year. since inception. For Kotmale Holdings. which is a relatively small player in this segment without the backing of a large multinational company. some of which hold market leadership. Our continuous investment into brand development has ensured that the Kotmale brand is visible. Powdered Milk Sector This was probably the watershed year for the powdered milk sector which saw a gradual decline in profitability compounded by the fact that world market prices saw sharp inclines making importation of milk highly unprofitable. All these were tantamount to turnover declining 55% which affected the performance of the Group.
Into this equation. This will be augmented with further training and development imparted to our team as well and emphasis on attracting the best talent available. accountability and most of all trust and care for all our stakeholders to journey towards a horizon of prosperity and growth. My thanks also extend to our expansive network of valued business partners from farmers to suppliers and distributors who have all been responsible for the success that Kotmale has achieved this year. transparency. Kotmale will focus more proactively in increasing visibility and accessibility of our product in both these geographic areas. I’m more than committed. growing on the successes of the past year and creating a sustainable on-going business venture constructed on the trusses of quality. (Sgd. malnutrition can also be assuaged due to increased milk being consumed. Our growing portfolio of consumers too deserves an accolade for the encouragement we have received to ensure that our product continues to give you the quality you so richly deserve. thank you to each and every one of you. to begin etching a successful chapter for Kotmale. while collection.CEO’s Review of Operations Continued area that will see us give added focus is a further penetration into the tourism industry. Kotmale strongly believes that a cohesive partnership between the private sector and government will yield the envisaged growth pattern and ancillary benefits. which we feel is an imperative in ensuring that we reach our growth objectives. as this then enables added investment in much required infrastructure. stable prices and enhancing income levels of low income households. capacity. ethics. This has stemmed the way for a concerted drive to uplift the rural economy through sustainable agriculture and dairy farming initiatives which augurs well for the future of dairy development. While we make a firm pledge to continue creating sustainable wealth for our shareholders. Given the new market opportunities emerging. As I observe the end of one year and the beginning of another. R&D and product look and feel. The trusses for the enhancement of production. while the government’s aid in financing and creating an enabling environment for the farmers in the difficult areas will make for a sustainable growing industry. which has seen an unprecedented fillip since the end to the war in May 2009. we aim to further empower our most valued business partners. One of the primary development drives of the government in a social context is ensuring food security for the people. our farmer network. I’m most appreciative of the guidance and direction given to me by the Board of Directors and the confidence they have placed in me to lead the company. The benefits are manifold in that while farmers receive enhanced incomes. The government also aims to drive an initiative of providing fresh milk for children of low income families from the ages of two to five through school nutrition programmes.) Jude Fernando Director/CEO 08th July 2010 9 Annual Report 2009/10 . processing. whose skills and technical knowledge too will continue to be upgraded. as is my team. especially by children. It is important that the drive for development retains both public and private sector input. Food security of people can only be ensured through a sustainable increase in food production. sales and marketing and other operational areas are already functional with new standards being introduced to ensure optimum efficiency and maximum productivity. based on the United Nations Millennium Development Goal. This will also involve significant investment in brand equity. For the hard work and dedication that my team has displayed over the year in ensuring that our growth curve retains its upward momentum. With the drive to improve dairy farming. which will enhance our presence and product portfolio throughout the country. storage and final production of our product will remain consistent with the stringent standards we maintain throughout.
at Hemas Manufacturing (Private) Limited. Mr. Prior to joining the Group. a member of the Chartered Institute of Marketing (UK) and holds a Masters Degree in Business Administration from the University of Wales. Dinesh Schaffter – Non-Executive Director ACMA. Fernando held the position of Director – Supply Chain. Mr. Mr. and holds a Bachelor of Law – Honours Degree (LLB) from the United Kingdom. Dinesh Schaffter counts over 20 years experience in the Financial Services and Manufacturing sectors. Rodrigo also serves as a Director of Dunamis Capital PLC and its listed subsidiaries namely First Capital Holding PLC and Kelsey Development PLC. He also serves as a Director of Dunamis Capital PLC. FCMA Ms. Manjula Mathews – Executive Director MBA. Ms.Profile of the Board of Directors Mrs. He was appointed as President Counsel in May 2010. Fernando brings to the Board over 17 years of experience in the fields of Supply Chain Management. LLB Mr. and holds a Masters Degree in Business Administration from the University Cambridge (UK). Mr. FCMA. Mr. Nihara Rodrigo – Independent Non-Executive Director President’s Counsel Mr. Schaffter is an Associate Member of the Chartered Institute of Management Accountants (UK). He serves as the Chairman of the Grants Board of the Information and Communication Technology Agency of Sri Lanka Capacity Building Program. She currently serves as Managing Director of Dunamis Capital PLC. Mr. Mathews is a fellow Member of the Chartered Institute of Management Accountants of (UK). Dip. M (UK). Rodrigo’s professional career span of over 30 years is enriched with diversified expertise and experience in various fields including different aspects of law and e-commerce. Mathews brings to the Board over 21 years experience in General Management and Finance. Fernando is also a Director of Dunamis Capital PLC. Jude Fernando– Executive Director/CEO MBA. Mathews was formerly the Finance Director at Janashakthi Insurance PLC one of the leading insurers in the country. both in Sri Lanka and overseas. and as a Director of other Dunamis subsidiaries. MCIM. Ms. She continues to hold a Non-Executive position at Janashakthi Insurance PLC. He is a Fellow Member of the Chartered Institute of Management Accountants (UK). Kotmale Holdings PLC 10 . a diversified conglomerate. Finance. He joined the Hemas Group following a career in Finance at Royal Ceramic PLC where he headed the finance operations as Finance Manager. Mr. and its subsidiaries. Mr. Strategic Planning and International Marketing.
Kotmale has been manufacturing cheese for over three decades. Today.Kotmale. The long term relationship that has been nurtured not only with the farmer but with his extended family has created a firm foundation of commitment and loyalty among the dairy farmers within our network due to the tangible development they have seen within their families and communities. Maintenance of rigorous 11 Annual Report 2009/10 . located in Colombo. Animal health and hygiene remains key to maintaining our stringent quality standards. but also in forging a strong bond between the farmer and the company. in the upcountry region of Patana. the three hundred strong team at Kotmale enjoy the challenges of creating tasteful masterpieces from the raw milk that is collected from our dairy farmers each day. at a Glance Built on an ethos of quality. amply augmented with an extensive product portfolio developed over an expanse of over three decades. Our entire range of ice-creams. These farmers most often eked meagre incomes from their produce which permeated to poverty ridden lifestyles. Kotmale was established in 1979. purchasing over 12 million litres of milk annually with most of it sourced directly from more than 8. with its rolling tea plantations and pure unpolluted environment. therefore has been a holistic one. Kotmale is now synonymous with dairy production in Sri Lanka. The range manufactured here includes the entire Kotmale range of cheeses and fresh cream. Transforming raw milk into delightful experiences Pooling extensive resources within three manufacturing plants and a widespread milk collection centre network across the country. The ‘Cheese Factory’ manned by an efficient team of ‘Cheese Masters’ is located in the picturesque town of Bogahawatte in close proximity to Talawakelle. Kotmale’s intervention with these farmers since 1979. Our technical teams therefore become an integral link in not only the imparting of knowledge.000 farmers across the central region of the country. which in turn has seen a considerable development of the national dairy industry. Creating a sustainable dairy industry The primary precept of Kotmale at its inception was the development of a dairy industry that would be founded on sustaining the thousands of dairy farmers around the country. constructed on a 360 degree platform that empowered and enabled the dairy farmer. pasteurised milk and UHT (Ultra Heat Treated) milk. sitting serenely surrounded by picturesque mist covered hills within the Kotmale Valley. skills and technical know how. Kotmale is the third largest fresh milk collector in the country. the ideal location for the production of cheese. wholesome products that form the foundation for a legendary reputation. with an unmatched expertise that far surpasses those in existence within the local industry. lack of knowledge and bad cash management. while giving the company the required fresh milk to develop an extensive product portfolio. yoghurts and curd are produced in the automated and semi-automated manufacturing plant.
Kotmale. Kotmale’s concentration therefore extends beyond the norm. all of which aspire to eventually exceed changing customer expectations. Kotmale is the third largest fresh milk collector in the country. remains inherent in the manufacturing process. at a Glance Continued “Today. hygienic standards. Quality and efficiency in production Producing quality dairy products is not limited to good raw materials and stringent quality standards.000 farmers across the central region of the country. our products being manufactured by people whose skills and talent come to the fore in creating the diverse range that 12 Kotmale Holdings PLC . with the necessary advice and technical know how imparted by our quality assurance team. This includes auditing and constant monitoring of distributor facilities in a network that spans the entire country as well as in supermarkets and retail outlets. which imbues our cheese with its uniqueness.” hygienic standards including a scientific food safety assurance system are of paramount importance. What is also required is a significant emphasis on maintaining an efficient cold chain. ensuring the end product exceeds food regulatory standards. focusing on managing quality across the board to ensure that the cold chain is maintained stringently and cohesively from manufacturing stage to selling point. In addition. Research and Development initiatives which are spearheaded in Colombo has extensive investment into improvement of the existing product portfolio and in new product development aligned to evolving consumer trends. astute logistical planning and apt procedures for loading and unloading of these perishable products. which monitors storage facilities at production plants. collecting our raw material from people. purchasing over 12 million litres of milk annually with most of it sourced directly from more than 8. Where People make the difference Ours is a product that has the proactive intervention of people from start to finish. although the age old traditions of cheese making. Quality and R&D Imperatives The quality control systems that encompass the A to Z of our manufacturing process. delivery vehicle temperatures. from raw milk collection to packaging are comprehensive with each stage of production being subjected to a rigorous testing and approval process.
The three hundred people within our team therefore form an integral seamless chain in ensuring that our product retains its quality and flavour. specialty enhancement and a team spirit that infuses an entrepreneurial spirit in everything we do. Motivated by commitment and spurred by dynamism. Experiencing Dairy. at a Glance Continued make up our product portfolio and finally being consumed by a discerning segment of people. inviting participation. open dialogue. successfully standing shoulder to shoulder with some of the bigger and larger local and multinational dairy product manufacturers and marketers in Sri Lanka. Kotmale has also ensured consumer loyalty and top of the mind recall due to a firm commitment to producing an expansive product portfolio built on unsurpassed quality. while also developing products that encompass pioneers in different product categories.Kotmale. the team has made Kotmale a brand and a company that steadily climbed the ladder of success. Our team is a talented one. Their commitment in ensuring that the Kotmale brand remains strong. The trust and dependability that surrounds the product and brand is now firmly embedded as growing goodwill among an expanding consumer market. visible and true to its values has built our company into the success it is today. specialised in creating some of the most unique products In the market. 13 Annual Report 2009/10 . ultimately delighting the customer. the Kotmale way It has been a little over thirty years since the Kotmale brand first hit the shelves and refrigerators in supermarkets and retail outlets and in that time. meeting and overcoming competition and gearing itself for the future with a pragmatic and forward thinking mindset. the company also creates a knowledge gaining culture within the organisation. While training and development remains a high priority in every working day.
the Kotmale cheese board includes Swiss. Plain and Spiced Balls.Products UHT Milk & Pasteurised Milk One of the largest producers of both pasteurised and UHT milk in the country. Added to this range is Feta. Cottage. Plain and Spiced Processed and Cheese Spread. Kotmale’s selection of cheeses in both Swiss and Processed cheeses. our flagship product portfolio encompasses the unique creamy flavour and natural goodness of the purity of upcountry milk in its chocolate and vanilla flavours. toppings and exotic recipes. 14 Kotmale Holdings PLC . remain incomparable to any other producer’s range available in the market today. One of our considerable advantages is that Kotmale specialises in manufacturing cheese devoid of any preservatives. as well as an expansive range of spiced cheeses. available in both 100g packs and 3 kg bulk packs. Fresh Cream The largest producer of fresh cream in Sri Lanka. Available in plain and flavoured variants. Paneer and Mozzarella. Supplying to both the retail and hospitality sectors. Kotmale now enjoys market leadership in this category. Cheese Producing some of the finest cheeses available in Sri Lanka. Kotmale Fresh Cream is the purest form of pure fresh milk and is sought after by housewives and the hospitality industry alike for use as whipped cream in desserts.
to Richy Rich and Butter Pecan. Yoghurt is available islandwide with the nonfat variety increasingly capturing the health conscious market as well. Curd Kotmale curd is abundant with rich dairy goodness. amongst the reputed chefs in Sri Lanka. The product has earned a name for its quality. Produced with pure fresh milk into which special cultures are added to give it the uniqueness that makes it a Kotmale product. the product is served as a dessert with treacle and it is also used for cooking and in the preparation of other desserts as well. Currently. Manufactured to an international recipe. the staple flavours of vanilla. We are also proud to be just one of the few dairy manufacturers in Sri Lanka to utilise fresh milk and fresh cream as primary ingredients in our ice cream. while the Fresh Fruit range infuses pieces of fresh fruit into the ice cream. It is manufactured using home-grown fresh milk. chocolate.Ice Cream Multiple flavours collated in a diverse range of 100% dairy ice cream. Yoghurt Packaged distinctively in square cups and containers in a dual range of set yoghurt and non-fat yoghurt. a truly world class range of products renowned for its unsurpassed quality and taste with a smorgasbord of flavours including Wild Berry. Kotmale’s rich and creamy ice cream encompasses the natural goodness of pure fresh milk. the goodness of natural yoghurt is expertly contained within our product. exampled amply by the natural creamy taste that is unique to our products. 15 Annual Report 2009/10 . Making ice cream a truly exotic experience is synonymous with our Signature Range. Owing to its rich dense texture and appealing flavour. strawberry and mango present the rich and creamy flavour of farm fresh milk. Kotmale curd is distributed along the hotel and catering chain.
Currently the Board comprises of one independent non-executive director.10. The Remuneration Committee currently consists of two non-executive directors Mr. The proper constitution of Remuneration and Audit committees that meet the requirements of the CSE listing rules have been hampered due to the lack of adequate independent directors within the Company. The committee therefore does not comply with the criteria of listing rule 7. Nihara Rodrigo has submitted a declaration of his independence.1 (a). The Board reviews strategic and operational issues. it is currently not in compliance with Rule 7. one non-executive director and two executive directors all of whom possess a broad range of skills and experience.10. Kotmale Holdings PLC is in the process of regularising the composition of the Board of Directors to comply with the requirements of the CSE Listing Rules. The recommendations of the Remuneration Committee on payments to executive directors were duly adopted by the Board of Directors.Corporate Governance The Directors acknowledge their responsibility for the Company’s corporate governance and the system of internal control. The remuneration policy of the Company is to base remuneration on both individual and company performance whilst recognising the importance of attracting and retaining high caliber personnel. Nihara Rodrigo and Mr. Rodrigo does not qualify as independent against the criteria set out in the listing rules because he is a director of other companies in which a majority of the other directors of the Company are employed or are directors. The Company is in the process of regularising the composition of the Board to comply with the requirements of the listing rules. The independent non-executive director on the Board. 16 Kotmale Holdings PLC . Mr. Advice and guidance is provided to the senior management team at monthly performance review meetings. approves interim and annual financial statements and annual budgets.5(a).2 (b) which requires two or onethird of the non-executive directors (whichever is higher) to be independent. However the Board is of the opinion that this does not affect his independence as he does not have a business relationship or a significant shareholding in Kotmale Holdings PLC. assesses performance and ensures compliance with all statutory and regulatory obligations. These meetings provide an opportunity to assess progress and ensure accountability of the senior management team. Mr. The Company currently does not meet the requirements of the listing rules with respect to an audit committee. The directors are responsible to the stakeholder for providing strategic direction to the company and safeguarding the assets of the business. Rodrigo functioning as the Chairman. Although the Company has two non-executive directors on its board and meets the requirements of Rule 7. The Board is satisfied with the effectiveness of the system of internal control in the Company for the period up to the date of signing the Financial Statements. Dinesh Schaffter with Mr.10.
Currently. safeguarding assets and securing as far as possible.506 83. Legal Status Kotmale Holdings PLC was incorporated in 1967 under the provisions of the Companies Ordinance No. Principal Activities The principal activities of the Group are the manufacturing and distribution of dairy products and the packaging and distribution of milk powder.Report of the Directors The Directors have pleasure in presenting the 43rd Annual Report and the Audited Statement of Account of the Company for the year ended 31st March 2010.877 The financial statements of the Company are detailed in pages 24 to 39 of the Annual Report. The Executive Director/CEO is fully accountable to the Board for the daily operations of the business. 51 of 1938 and re-registered under the Companies Act No. 7 of 2007 on 06th May 2008.877 86. The Directors are also responsible to the shareholders for providing strategic direction to the Company and safeguarding the assets of shareholders. Financial Results Group results for the current year are summarised below.061 (21. 17 Annual Report 2009/10 .per share amounting to Rs. Significant Accounting Policies The Accounting Policies adopted in preparation of the financial statements are presented on pages 28 to 31. ‘000 Revenue Profit Before Tax Income Tax Expense Profit After Tax Retained Profit B.279 75. Regular Board meetings are held to further strengthen the review process and ensure compliance with all statutory and regulatory obligations. The Board is satisfied with the effectiveness of the system of internal control for the period ending at the date of signing the financial statements. Corporate Governance The Directors acknowledge their responsibility for the Group’s corporate governance and the system of internal control.per share paid on 5th November 2009. These Statements of Account were approved by the Board of Directors on the 05th of July 2010. transparent and accountable manner. Retained Profit C.000/= on Ordinary Shares. 1.355 83. Going Concern The Directors have adopted the basis of the business being a going concern in preparing these financial statements. The Group is in the process of regularising the composition of the Board of Directors to comply with the requirements of the Listing Rules of the Colombo Stock Exchange. He provides leadership to the senior management team and is responsible for articulating the Board’s vision. Directors’ Responsibility in Financial Reporting The Directors’ responsibility in relation to the financial statements is detailed on page 22. The performance of the Company is monitored by way of monthly review meetings. These internal controls remain integral to carrying on the business of the Company in a streamlined.555) 65. The Company was listed on the Colombo Stock Exchange in 1969.62. There have been no significant change in the nature of the activities of the Group or of the Company during the financial year. all of whom possess a broad range of skills and experience. 2009/10 Rs. ‘000 1.2/. the reliability and accuracy of records. Risk and Internal Control The Board of Directors is satisfied that an effective and comprehensive system of internal controls to monitor.352. There were no changes in the Accounting Policies adopted by the Company during the year under review.557 (12.800.522 20. Dividends For the year ended 31st March 2010. 2/. control and manage the risks to which the Company is exposed exists within the Company.F. These meetings provide an opportunity to ensure that progress is aligned to agreed targets. Review of Operations A review of the operations of the Company during the financial year and results of those operations are contained in the Chief Executive Officer’s Review of Operations on pages 06 to 09 of the Annual Report.035) 63. the Directors have recommended a payment of a final dividend of Rs.583 2008/09 Rs. This report forms an integral part of the Directors’ Report. with comparative figures for the previous year. one Non-Executive Director and two Executive Directors.176 87.F.348. the Board comprises one independent Non-Executive Director. in addition to the interim dividend of Rs.
prior to recommending the final dividend for approval of the shareholders at the Annual General Meeting to be held on 05th August 2010 Directorate The Directors of the Company as at 31st March 2010 are: 1. Manjula Mathews Mr. 2. Dinesh Schaffter Mr. Mrs.500/= Rs. Capital Expenditure Details of property.988 Nil Nil 18 . Manjula Mathews Mr.3. 7 of 2007 during the accounting period under review. the Company would satisfy the solvency test immediately after the distribution. Rodrigo Interests Register An Interest Register was maintained by the Company as per the Companies Act No.000 862. plant & equipment and their movements during the year are shown in Note 09 to the financial statements. Retirement by Rotation and Re-Election Mr. Directors’ Interest in contracts in relation to transactions with related entities and other related disclosures are stated in Note 25 to the financial statements. 07 of 2007. of Shares 2009 200. All Directors have made declarations as provided for in Section 192 of the said Act. of Shares 2010 Mrs. The continuing Directors recommend his re-election.25.000 6. Jude Fernando Mr. Nihara E Rodrigo retires by rotation in terms of Article 100 and being eligible. Dinesh Schaffter Mr. Related Party Transactions Related party transactions have been declared at meetings of the Directors and are detailed on pages 38 and 39. M S Jude Fernando Director Director Director Position Transaction Details Corporate Guarantee – Rs.Report of the Directors Continued As required by sections 56 (2) and 56 (3) of the Companies Act No.548. 3. In addition. Income Tax Expenses Income tax expenses have been computed at the rates given in Note 07 to the financial statements. Name of Company Kotmale Milk Products Limited Name of Director Mrs. the Board of Directors signed a certificate. Nihara E. Manjula Mathews Mr.988 Nil Nil No. M S Jude Fernando Mr. The Company obtained this certificate from the Auditors. The profiles of the Directors are detailed on page 10 of the Annual Report. in accordance with Section 57 of the Companies Act No. Dinesh Schaffter Mr.400/= Kotmale Holdings PLC Directors’ Shareholding The direct and indirect shareholdings of the Directors at the beginning of the year and as at end of the year are as follows: No.7. Manjula Mathews Mr. The Directors have no direct or indirect interest in any other contract or proposed contract with the Company. Nihara E. which stated that in their opinion and based on the information available as at present. 07 of 2007. These interests have been declared at the meetings of Directors.000/- Swiss Cheese Co (Pvt) Limited Mrs. M S Jude Fernando Director Director Director Corporate Guarantee – Rs. Dinesh Schaffter Mr.000. offers himself for re-election. 4.299. Rodrigo 200. the Company carried out transactions in the ordinary course of business with the following entities having one or more Directors in common. Directors’ Interests in Contracts with the Company Details of the Directors’ interests in contracts or proposed contracts with the Company both direct and indirect are disclosed on pages 38 and 39.062.
race or disability.000 was paid as audit fees during the period under review.430 registered shareholders. The movements in profits and reserves are given in the statements to Changes in Equity on page 26 to the accounts. having regard for each individual’s particular aptitudes and abilities. Employee Share Option Plan and Profit Sharing Scheme The Company does not have an Employee Share Option Plan and profit sharing scheme as at year end.400. continued employment. 22nd lane. Share Information and Substantial Shareholders As at 31st March 2010. Chartered Accountants have expressed their willingness to continue as Auditors to the Company for the ensuing year.1 to the financial statements. sexual orientation. other than as disclosed in Note 28 to the accounts. Annual General Meeting The 43rd Annual General Meeting of the Company will be held on 05th August 2010 at the auditorium of the Sasakawa Memorial Sri Lanka Japan cultural center. It is the Group’s policy to give full and fair consideration to persons. religion.) Mrs. 215. 314 million. Statutory Payments and Compliance with Laws and Regulations The Directors. No 4. 7 of 2007. M/s Nihal Hettiarachchi & Company. to the best of their knowledge and belief are satisfied that all statutory payments due to the Government and in relation to the employees have been made in time and the Group has not engaged in any activities contravening laws and regulations. Corporate Donations The Group did not make any donations to charities during the year. career development and promotion. consisting of 31. market value of a share and information on share trading is stated under Shareholder and Investors’ Information on pages 40 and 41 of the Annual Report. Share information and the twenty largest shareholders as at 31st March 2010 are listed on pages 40 and 41 of the Annual Report. This Annual Report is signed for and on behalf of the Board 19 Annual Report 2009/10 (Sgd. Independent Auditors The Company’s Auditors during the period under review were M/s Nihal Hettiarachchi & Company. a resolution proposing the re-appointment of M/s Nihal Hettiarachchi & Company.000 ordinary shares. age. marital status. net assets per share. the Auditors do not have any relationship or interest in the Company or its subsidiaries. A sum of Rs. other than those disclosed in the above paragraph. there were 1. Chartered Accountants as Auditors to the Company will be submitted at the Annual General Meeting. Reserves There have been no other material transfers to or from reserves during the financial year other than those disclosed on page 26. with respect to applications for employment. Equal Opportunities The Group is committed to providing equal opportunities to all employees irrespective of gender. Stated Capital The stated capital of the Company as at 31st March 2010 was Rs. Based on the declaration from M/s Nihal Hettiarachchi & Company and as far as the Directors are aware.) Jude Fernando Director/CEO (Sgd. Chartered Accountants. Events after Balance Sheet Date No material events have taken place after the balance sheet date which requires an adjustment to or a disclosure in the financial statements. Colombo 03 The Notice convening the Meeting and the Agenda are given on page 43.Report of the Directors Continued Market Value of Freehold Properties Details of revaluations as at 31st March 2009 are listed in Note 9. Manjula Mathews Director . Information relating to earnings. Fixed Assets Details of movements in fixed assets of the Group during the year are set out in Note 9 to the financial statements. In accordance with the Companies Act No. training.
Financial Information Statement of Directors’ Responsibility Auditors Report Income Statement Balance Sheet Statement of Changes In Equity Cash Flow Statement Notes to the Financial Statements Investors’ Information Five Year Financial Summary 22 23 24 25 26 27 28 40 42 .
under Sections 150 (1). 7 of 2007. have instituted appropriate systems of internal control with a view to preventing and detecting fraud and other irregularities. 153 (1) & 153 (2) of the Companies Act No. shown on page 23 sets out their responsibilities in relation to the Financial Statements. and in that context. 7 of 2007. (Sgd. under Section 148 for ensuring that proper accounting records are kept to disclose. The Directors confirm that in preparing the Financial Statements. The Directors are also responsible. Messrs Nihal Hettiarachchi & Company. provided for. with reasonable accuracy.) K H L Corporate Services Limited Secretaries 08th July 2010 22 . As required by section 56 (2) of the Companies Act. are deemed reappointed in terms of section 158 of the Companies Act No. being satisfied based on information available to it. all statutory payments relating to employees and the Government that were due in respect of the Company and its subsidiaries as at the Balance Sheet date have been paid or where relevant. certificates of solvency from its auditors.Statement of Directors’ Responsibility The Directors are responsible. The Financial Statements provide the information required by the Companies Act and the listing rules of the Colombo Stock Exchange. The external auditors. to ensure compliance with the requirements set out therein to prepare Financial Statements for each financial year giving a true and fair view of the state of affairs of the Company and the Group as at the end of the financial year and of the profit & loss of the Company and Group for the financial year. By order of the Board. 152 (1). and sought in respect of the dividend now proposed. that the Company would satisfy the solvency test after such distributions in accordance with section 57 of the Companies Act No. the financial position and enable preparation of the Financial Statements. The report of the auditors. The Board accepts responsibility for the integrity and objectivity of the Financial Statements presented. the Board of Directors has authorised distribution of the dividends proposed. Kotmale Holdings PLC The Directors confirm that to the best of their knowledge. They also confirm that the Financial Statements have been prepared and presented in accordance with the Sri Lanka Accounting Standards. The Directors have taken reasonable measures to safeguard the assets of the Group. 7 of 2007 were provided with every opportunity to undertake the inspections they considered appropriate to enable them to form their opinion on the Financial Statements. 151. appropriate accounting policies have been selected and applied consistently while reasonable and prudent judgments have been made so that the form and substance of transactions are properly reflected. Chartered Accountants.
Opinion In our opinion. Annual Report 2009/10 . these financial statements also comply with the requirements of Section 151 (2) and 153 (2) to 153 (7) of the Companies Act No. 2010 and the financial statements give a true and fair view of the Company’s state of affairs as at 31st March. Chartered Accountants. as well as evaluating the overall financial statement presentation. so far as concerns the shareholders of the Company. 2010 and the profit and cash flows for the year then ended.. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Sri Lanka Accounting Standards. Scope of Audit and Basis of Opinion Our responsibility is to express an opinion on these financial statements based on our audit. the consolidated financial statements give a true and fair view of the state of affaires as at 31st March.Auditor’s Report INDEPENDENT AuDITOR’S REPORT TO THE SHAREHOLDERS OF KOTMALE HOLDINGS PLC. Report on the Financial Statements We have audited the accompanying financial statements of Kotmale Holdings PLC (“Company”). the consolidated financial statements of the Company and its subsidiaries which comprise the balance sheets as at 31st March 2010. in accordance with Sri Lanka Accounting Standards. 2010 NIHAL HETTIARACHCHI & CO. 23 COLOMBO July 05. An audit includes examining. and a summary of significant accounting policies and other explanatory notes. of the Company and its subsidiaries dealt with thereby. whether due to fraud or error. statements of changes in equity and cash flow statements for the year then ended. and making accounting estimates that are reasonable in the circumstances. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. the Company maintained proper accounting records for the year ended 31st March. We therefore believe that our audit provides a reasonable basis for our opinion. and the income statements. 07 of 2007. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. Report on Other Legal and Regulatory Requirements In our opinion. on a test basis. evidence supporting the amounts and disclosures in the financial statements. In our opinion. so far as appears from our examination. implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement. We conducted our audit in accordance with Sri Lanka Auditing Standards. This responsibility includes: designing. An audit also includes assessing the accounting principles used and significant estimates made by management. selecting and applying appropriate accounting policies. 2010 and its profit and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.
297 (104.521.501) (05) (06) (07) (10.556.255) (1.175.03.893) (1.959.095.870.514) 257.314.505.994 (21.835.022.270.352.575 1.089 (1.478) 288.189. 1. Notes Year ended 31.651) (5.753. 1.816.361 (721.385) (59.17) Dividends per share Interim paid Final proposed 2.135.03.449.591.034.542 Year ended 31.387) (5.382.431) (7.158 Company Year ended 31.059.736) 63.492 (3.984.880 (1.02 4.2010 Rs. Kotmale Holdings PLC 24 .702 (12.368.749.00 2.910.Income Statement Group For the.670) 133.348.00 - The accounting policies and notes from pages 28 to 39 form an integral part of these financial statements.669) (65.636.336.205.2009 Rs.904 (04) 7.905.402 1. 5.00 2.737.060.172. 136.910.6188.8.131.529 Rs.203) 132.03.812) (4.452) 65.906) Revenue Cost of sales Gross profit Amortisation of grant Other income Distribution expenses Administrative expenses Impairment of goodwill Finance expenses Profit / (Loss) before tax Taxation Net profit / (loss) (03) Earnings per share Basic earnings / (loss) per share (08) 2.630.555.00 2.23 (0.935) (5.904 10.924 (1.810) 75.03.2010 Rs.09 2.075) 87.966 Year ended 31.448) (23.320 (130.
105 333. 25 Annual Report 2009/10 .426.877 407.) Ranjith Thenuwara Head of Finance The Board of Directors is responsible for the preparation and presentation of these financial statements.161 2.928.815 383.241 65.835.744 294.400.383 (16) (17) 314.03.192 394.159.) Manjula Mathews Director The accounting policies and notes from pages 28 to 39 form an integral part of these financial statements.584.879 30.707.482.700.696 24.07 of 2007.292.244.666.2009 Rs.089.327.123 61.333 117.815 17.464 739. plant and equipment Intangible assets Investments in subsidiaries (09) (10) (11) 289.114 205.890.097.000.046.843.364.007 183.414.678.520.299 7.545.801 32.500 4.756 172.232 38.905.863.241.840 72.806 8.501 8.922 71.453.877 609.504 4.286 167.475.343 44.187.060 215.000 (4.Balance Sheet As at.10 1.436 314.378.000 217.351 314.722) 309.078.149.203 118.251 689.2009 Rs.350 141.364.909 18.278 Non-current liabilities Deferred liability Deferred tax Interest bearing borrowings Retirement benefit obligations Current liabilities Trade and other payables Amounts due to related parties Income tax payable Interest bearing borrowings Bank overdrafts Total liabilities Total equity and liabilities Net assets per share (18) (19) (20) (21) 4.585.815 51.827.775 356.432 763.984.159.000 215.000 Current assets Inventories Trade and other receivables Prepayments. (Sgd.381.597. 31. Signed for and on behalf of the Board.000.351 534.299.000.231.2010 Rs.135 100.898 215.060 2.164.258.829.838 3.266.078.905.343 763.327 153.383 333.400.984.344. Notes 31.408 5.071 739.400.191 383.241 16.815 3.239. ASSETS Non-current assets Property.866.809 314.03.910.000 220.401 36.654. deposits and advances Amounts due from related parties Short term investments Cash at banks and in hand Total assets EQuITY AND LIABILITIES Capital and reserves Stated capital Reserves (12) (13) (14) (15) 46.065 102.533. Company 31.809 531.105 24.210.524.064.453.585. Group 31.677 208.684.054.172.03.060 215.383 9.470 55.172. (Sgd.87 (22) (23) (24) I certify that these financial statements have been prepared in compliance with the requirements of the Companies Act No.03.611 3.559.258 231.274 345.01 6.917 453.961.149.251 12.436 379.138.174 138.508 52.) Jude Fernando Director / CEO July 05th 2010 (Sgd.000 65.989 19.400.537 10.687.278.002 48.198.2010 Rs.295 14.847 67.000.263 28.93 629.
011 Total Rs.184 (5.542 (62.000 130. 26 Kotmale Holdings PLC .800.545 (62. 2010 314.784.739) (7.835.018 (4.472 1.018 (4.218. 2009 Balance as at 1st April.739) 132.545 1.542 (62.407) 63.407) 130.906) (7.000 314. 2008 Loss for the year Balance as at 31st March.553 531.000. 23.522.453.054.218.800.833) (5.000 314.966 531.847.054. 2009 Profit for the year Dividends paid Balance as at 31st March.870.269.781 3. 3.278 132.000 Revaluation reserve Rs.000.781 Other reserves Rs.269.Statement of Changes In Equity Group Stated capital Rs.336.045 63.522.521.784.000 1.017 Retained earnings Rs.355.781 130.017 83.351 Company Stated capital Rs. 2009 Profit for the year Dividends paid Balance as at 31st March.000. (1.505.054.000 General reserve Rs.800.966 83.545 1.870. 20.851.017 3. 360.000. 315.232 112.000.453.630.000.809 65.149.784.582. 314.000) 379.017 3.847.221.269. 2008 Revaluation surplus Deferred tax attributable to revaluation Profit for the year Balance as at 31st March. 2009 Balance as at 1st April.521.269.545 Retained earnings Rs.881.472 Capital reserves Rs.505.472 1.158 (62. 2010 314.906) 309.436 Balance as at 1st April.905.000) 86.170 112.000) 62.011 65.158 Total Rs.809 Balance as at 1st April. 314.835.000 3184.108.40.206.336. 1.000 314.000) 534.522.800.877.784.877.054.472 1.000.419 The accounting policies and notes from pages 28 to 39 form an integral part of these financial statements. 1.000.278 309.
681.03.037 134.556.007 (785.602.058) 7.700 3.075 28.408.475.782) 42.308.143 (10.799) (11.126 225.464) 161.591.732) 15.398 (64.000) 18. Cash flows from operating activities Profit / (loss) before tax Adjustments for : Amortisation of grant Impairment of goodwill Interest expenses Depreciation Provision for gratuity Profit on sale of property.564) (29.778.696) (18.342.289) (19.238.000) (62.922) (53.277.091 (150.552) 72.408.552) Annual Report 2009/10 27 6.338 2.743.381.408.171) 100.835.870 70.728 139.295) 202.199) (62.500 12.395 124. plant & equipment transfers Proceeds from sale of property.681) (18.285 3.493 (8.364.076) 51. Year ended 31.295.269.272 2. Year ended 31.597.203 (18.955.172.270. deposits Decrease / (increase) in amounts due from related parties (Decrease) / increase in trade & other payables (Decrease) / increase in amounts due to related parties Cash generated from operations Interest paid Gratuity paid Tax paid Net cash generated from operating activities Cash flows from investing activities Purchase of property.957.838) (381.2010 Rs.070 132.289.072.Cash Flow Statement Group For the. .728 4.463.307.681.637. plant & equipment Movement in investment Net cash used in investing activities Cash flows from financing activities Movement in Finance lease Dividends paid Movement in Long term borrowings Net cash used in financing activities Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year Analysis of cash and cash equivalents Cash at banks Cash in hand Bank overdrafts Cash and cash equivalents at the end of the year 87.195) 80.890.810 27.812 2.364.581 1.224.910.702 (1.327) 70.440) 84.910.2009 Rs.286 (453.922 (16.427.893) 35.549.769.762.610.870 (62.448 23.040 75.426 (23.386) (60) (60) - (2.000) 8.065 3.2010 Rs.224. plant & equipment Effect of property.124 (30.953.910.066.800.233 (1.408.038.150) (16.172.2009 Rs.368.03.891.189.994 (1.616) 87.471.885 198.138.026.800.755.03.236.827.188 (25.664.007) 19. plant & equipment Reversal of VAT Expenses charge on the revaluation Amortisation of share issue expenses Operating profit before working capital changes Decrease in inventories Decrese / (increase) in trade & other receivables Decrease / (increase) in prepayments.256 100.001 (4.243.280.941 (18.497.493) 67.904) 5.284.675 (4.037) (2.364.868.994.812) 6.105.664.061) 150.646.969) (4.361 1.357.079 (36. Year ended 31.052) 19.436 4.992 (19.188 (22.665) (45.667 4.500.277.835.552.022.870 38.482.865 (2.201 133.123 (56. Company Year ended 31.239.075) (772.232 2.684.261.800.548 219.910.03.493) The accounting policies and notes from pages 28 to 39 form an integral part of these financial statements.276.066 (609.012.911.255) 5.545.060.675) 222.000 (5.493) (381.118 31.754.995 19.228) (48.865 71.904) 7.796 (55.501 10.810) (1.
income statement.’’ All the companies in the Group have a common financial period.. statement of changes in equity and the cash flow statement. Milife Foods Limited has temporarily ceased its commercial operations with effect from 01st February. annually or more frequently if events or changes 28 Kotmale Holdings PLC . consistent with those used in the previous year. plant and equipment which have been revalued. wherever necessary. previously known as Kshatriya Holdings PLC. have also been included in these consolidated financial statements. 1. b) Goodwill Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets.Kotmale Kiri (Pvt) Ltd. together with the accounting policies and notes (The “financial statements”) of the Group as at 31 March. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2. is a Company incorporated and operating in Sri Lanka since 6 January.26 “Consolidated financial statement” and “Accounting for investment in subsidiaries. 2010. CORPORATE INFORMATION 1. 1. . 2010 and for the year then ended comply with Sri Lanka Accounting Standards (SLAS).1 General policies 2. unless otherwise stated.2 Basis of preparation The balance sheet. Goodwill is reviewed for impairment. to conform to the current year presentation.1 Domicile and legal form Kotmale Holdings PLC. 02. The Company expects to restart its commercial operations no sooner the price of milk powder in the world market reduce to a competitive level.3 Comparative information The accounting policies applied by the company and the Group are. 2010.Kotmale Milk Products Ltd.1.3 Ultimate parent entity The ultimate parent Company of the Kotmale Holdings PLC is Dunamis Capital PLC.Notes to the Financial Statements 01.. 2. Colombo 10. Arnold Ratnayake Mawatha. 1. 1. goodwill is measured at cost less any accumulated impairment losses. . have been prepared in accordance with the Sri Lanka Accounting Standards (SLAS) as laid down by the Institute of Chartered Accountants of Sri Lanka (ICASL) and the requirements of the Companies Act No. .4 Consolidation policy a) Principles of consolidation The Group financial statement comprise a consolidation of the financial statements of the company and its subsidiaries in terms of the Sri Lanka Accounting Standards No .4 Date of authorisation for issue The financial statements of Kotmale Holdings PLC for the year ended 31 March 2010 were authorised for issue in accordance with a resolution of the Board of Directors on 05th July. are fully owned subsidiaries of Kotmale Holdings PLC. Previous years figures and phrases have been re-arranged. All assets and liabilities of the company and of its subsidiaries included in the consolidation are shown in the consolidated balance sheet. The total profits and losses for the period of the Company and of its subsidiaries included in the consolidation are shown in the consolidated income statement.5 Subsidiaries Kotmale Products Ltd and Milife Foods Ltd.Kotmale Marketing (Pvt) Ltd. formerly known as Lambretta (Ceylon) Ltd. liabilities and contingent liabilities. . Kotmale Marketing (Pvt) Limited has ceased operations on 31st March. 2. 2001 and is in the process of liquidation.Swiss Cheese Co. 1967 as a Quoted Public Company listed with the Colombo Stock Exchange.. The registered office of the Company is located at No.1. Subsidiaries are controlled from the date the parent obtains control until such time as controls cease. The financial statements of the Group represent the consolidation of the financial statements of the company and its subsidiaries after elimination of all material inter group transactions. Acquisitions of subsidiaries are accounted for using the purchase method of accounting. (Pvt) Ltd. The following companies which are fully owned subsidiaries of Kotmale Products Ltd. The principal activities of the Subsidiaries are to engage in the manufacture of dairy products and the packeting and distribution of milk powder.1. The financial statements are presented in Sri Lankan rupees have been prepared on a historical cost basis except for certain property.1 Statement of compliance The financial statements of Kotmale Holdings PLC.1.2 Principal activities and nature of operation Kotmale Holdings PLC became the holding company of the Group during the financial year ended 31st December.07 of 2007. 75. which ends on 31 March. 2003.. Kotmale Kiri (Pvt) Limited had ceased operations since February 2007 and continues as a dormant Company. Following initial recognition. 2.
plant and equipment in order to restore or maintain the future economic benefits expected from the originally assessed standard of performance.generating unit to which the goodwill relates. Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. The impairment loss is first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets pro-rata to the carrying amount of each asset in the unit. plant and equipment are stated at historical cost less depreciation. (b) Deferred taxation Deferred taxation is provided in full. are carried at revalued amounts less any subsequent depreciation thereon. is recognised as an expense when incurred. the entire class of such assets is revalued. goodwill acquired in a business combination is. deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit / (loss). on temporary differences arising between tax basis of assets and liabilities and their carrying amounts in the financial statements.2. to the extent that the decrease does not exceed the amount held in the revaluation surplus in respect of that same assets. plant and equipment a) Cost and valuation All items of property. When an asset’s carrying amount decrease as a result of a revaluation. Any balance remaining in the revaluation surplus in respect of assets. allocated to group of cash-generating units that are expected to benefit from the synergies of the combination. Subsequent to the initial recognition as an asset at cost. Additions subsequent to the last revaluation are disclosed at cost.. Deferred income tax is provided on temporary differences arising on investments in subsidiaries except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. 10 of 2006. For the purpose of impairment testing. unless it reverse a previous increment relating to that asset. However. which had previously been recognised as an expense. 10 of 2006 and amendments thereto. 04 of 1978. The profits and income of Kotmale Kiri (Pvt) Ltd is exempt from tax for a period of 5 years commencing from the year of assessment 2006/2007 under section 16 (1) (2) (a) of the Inland Revenue Act No. 2. unless it reverses a previous revaluation decrease relating to the same assets. Kotmale Milk Products Ltd. an impairment loss is recognised. plant and equipment. In these circumstances.1 Property. plant and equipment are initially recorded at cost. The provision for income tax is based on the elements of income and expenditure as reported in the financial statements and computed in accordance with the provisions of the Inland Revenue Act No. All monetary assets and liabilities in foreign currencies are converted into Sri Lankan rupees at the rate of exchange prevailing as at balance sheet date.6 Taxation (a) Current tax Provision for income tax is based on the elements of income and expenditure as reported in the financial statements and is computed in accordance with the provisions of the Inland Revenue Act No. However. any increase in the carrying amount is credited directly to a revaluation surplus. is transferred directly to retained profits on retirement or disposal of the assets b) Restoration costs Expenditure incurred on repairs or maintenance of property. Impairment is determined by assessing the recoverable amount of the cash. if revalued. The resulting gains or losses arising are dealt with in the income statement. All other property.2 Valuation of Assets and Their Basis of Measurement 2. Accordingly. plant and equipment are subsequently revalued. 29 Annual Report 2009/10 . using the liability method. income of the company is taxable from the year of assessment 2007/2008. When an asset is revalued. from the acquisition date.1. Where the recoverable amount of the cash-generating unit is less than the carrying amount. a subsidiary company is exempted from income tax for a period of 5 years commencing from the year of assessment 2002/03 under section 17 (2) of the BOI Law of Sri Lanka No. the increase is recognised as income to the extent of the previous write down.5 Foreign currency transactions Transactions arising in foreign currencies are converted into Sri Lankan rupees at the rate of exchange prevailing at the time the transactions were effected. Section 16(1) (2) (a) of this Act exempts the profits and income of the company for a period of 5 years commencing from the year of assessment 2006/2007. 2.1. Where items of property. the decrease is recognised as an expense. in which case it is charged against any related revaluation surplus. Revaluations are made with sufficient regularity to ensure that their carrying amounts do not differ materially from their fair values as at the balance sheet date.Notes to the Financial Statements Continued in circumstances indicate that the carrying value may be impaired. 10 of 2006 and subsequent amendments thereto. property. 2.
Such increase is recognised to the extent of the carrying amount had no impairment losses been recognised previously. 2003.2. on 30 November. Where the carrying amount of an asset exceeds its recoverable amount. Kotmale Porducts Ltd.4 Inventories Inventories are valued at the lower of cost and estimated net realisable value. Swiss Cheese Co.5 Trade and other receivables Trade and other receivables are stated at the amounts that they are estimated to realise.. unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. The total interest payable is accounted as interest in suspense. as wholly owned subsidiary on 2 May. Kotmale Holdings PLC. plant and equipment. impairment losses in respect of property. Total direct cost includes: I. Previously recognised impairment losses other than in respect of goodwill. Flavor cost Chemical. Net realisable value is the estimated selling price less estimated costs of completion and the estimated costs necessary to the sale. (e) Impairment of assets The Group assesses. at each reporting date whether there is an indication that an asset may be impaired. 2005. Inventories are valued according to the basis given below. such assets are recorded in the balance sheet as property. An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. plant and equipment. Kotmale Kiri (Pvt) Ltd. are wholly owned subsidiaries of Kotmale Products Ltd. If any such indication exists.. Kotmale Milk Products Ltd.. Finished goods are valued at direct cost. Swiss Cheese Co. do not own any property. and Milife Foods Ltd. in order to write off such amounts over the estimated useful economic lives of such assets.2. the Group makes an estimate of the asset’s recoverable amount. Kotmale Milk Products Ltd.. plant and equipment at their cash price.This include the purchase of cost of milk and other raw materials II.2. and Kotmale Kiri (Pvt) Ltd. 2. other raw materials and packing materials are valued at cost 2. (Pvt) Ltd. acquired Kotmale Products Ltd. 2.... An asset’s recoverable amount is the higher of an asset’s or cash generating unit’s fair value less costs to sell and its value in use and is determined for an individual asset.. fittings & equipment Motor vehicles Years 20-40 20 10 8 10 4 4 Impairment losses are recognised in the income statement.2 Intangible assets Intangible assets are recognised if it is probable that future economic benefit will flow to the enterprise. readily convertible to known amounts of cash and subject to insignificant risk of changes in value.2..Mulleriyawa Cool room and cooling plant Cooling unit on lease lorry Plant.. and Milife Foods Ltd. An amount equal to the interest charges for the year is transferred from the interest in suspense account to the income statement. demand deposits in bank and short term highly liquid investments. Packing cost III. except that. (Pvt) Ltd. and the corresponding credit is recorded as an amount payable to the lessor. the installments paid are used to reduce this liability. Basic cost . (d) Leased assets Where assets are financed by an agreement under which substantially all the risk and rewards of the ownership are transferred to the lessee. the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.. 2. or when annual impairment testing for an asset is required.Notes to the Financial Statements Continued c) Depreciation Provision for depreciation is calculated by using a straight line method on the cost or valuation of all property. and Kotmale Marketing (Pvt) Ltd.6 Cash and cash equivalents Cash and cash equivalents comprise cash in hand. plant and equipment as follows: Assets Building Premises .2. plant and equipment are recognised against the revaluation reserve to the extent that it reverses a previous revaluation surplus. Kotmale Holdings PLC. and the cost of the assets can be measured reliably.3 Investments Investments in subsidiaries have been accounted for at cost. machinery and equipment Office furniture.. the asset is considered impaired and is written down to its recoverable amount.. net of any impairment which is charged to the income statement. 2. 30 Kotmale Holdings PLC . depreciate its property. In assessing value in use. are reversed only if there has been an increase in the recoverable amount of the asset.
The Directors have decided to write off the share issue expenditure over period of 3 years commencing from the year 2006. II. the liability for gratuity payment to an employee arises only on the completion of 5 years of continued service with the Company. 12 of 1983.6 Directors Responsibility Statement The directors acknowledge the responsibility for true and fair presentation of the financial statements in accordance with the accounting records and Sri Lanka Accounting Standards and the requirements of the Companies Act No. Liabilities classified as non current liabilities are those obligations that extend beyond a period of one year of the balance sheet date.2 Provisions Provisions are recognised when the company has a legal or constructive obligation. it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. which is classified as a non current liability.3. For the purpose of the presentation of the income statement the “function of expenses” method has been adapted on the basis that it presents fairly the elements of the Company and Group’s performances. 8. Contribution to provident fund and trust fund covering the employees are recognised as expenses in the income statement in the period in which it is incurred. when the Company’s right to receive payment is established.3.Notes to the Financial Statements Continued For the purpose of the cash flow statement. and a reliable estimate of the amount of the obligation can be made. b) Dividend Dividend income is recognised on the income statement. 2005. 2. However. a) Revenue The revenue of the Group represents the invoiced value of goods.Retirement gratuity Full provision has been made in the financial statements for retiring gratuities payable under the Payment of Gratuity Act No. cash and cash equivalents consist of cash in hand and deposits in bank net of outstanding bank overdraft. This liability. 31 Annual Report 2009/10 . c) Interest income Interest income is recognised on an accrual basis. is not externally funded nor actuarially valued. Inter group sales are excluded in computing group revenue. All expenditure incurred in running the business and in maintaining the capital assets in a state of efficiency has been charged to the income statement. 2. and is recognised as an expense in the period during which their services are rendered.3 Retirement benefit cost (a) Defined benefit plan .4 Share Issue Expenditure The Company has incurred Rs. Discount rate 11% Salary increment rate 10% 2.in respect of shares issued through private placement on 21 June.5 Income Statement 2. 2. net of discounts and returns. d) Other income Other income is recognised on an accrual basis. as a result of past events. I.1 Liabilities Liabilities classified as current liabilities in the balance sheet are those obligations payable on demand or within one year from the balance sheet date.4 Capital grants Grants represent funds received in the form of plant.5. according to the Payment of Gratuity Act No. The cash flow statement is prepared based on the indirect method.1 Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefit will flow to the Group and the revenue can be reliably measured.898. 2.913/.3 Liabilities And Provisions 2. 2. Grants are amortised on a straight line basis over useful life of such assets. 7 of 2007.3.3. Urgent Issues Task Force (UITF) of the Institute of Chartered Accountants of Sri Lanka has issued a ruling to the Company stating that share issue expenditure can be shown as net of total equity without it is being charged to income statement. This liability is grouped under non current liabilities in the balance sheet date based on gratuity formula method in accordance with Sri Lanka Accounting Standard (SLAS). 2. (b) Defined contribution plan Employees Provident Fund and Employees Trust Fund. 2. All the employees who are eligible for Employees Provident Fund and Employees Trust Fund contributions are covered by relevant contribution funds in line with respective statutes and regulations.12 of 1983 for all employees including those who have completed less than five years of continued service with the Group.2 Expenditure recognition Expenses are recognised in the income statement on the basis of a direct association between the cost incurred and the earning of specific items of income.5.
all the expenses including the followings.679 5.915.910.566 199.489.578 4.859.175.467 2.170.984.448 827.03.904) 2.031.115.028 10.573.2009 Rs.492 (05) FINANCE EXPENSES Bank charges Exchange Difference Gratuity interest Import Charges Interest on lease Interest on distributors deposit Loan interest Loss arising from change in assumption of gratuity Other financial costs Overdraft interest 2.348.216.471.046 164.000 - 32 Kotmale Holdings PLC .490.077 1.636.020 1.894 64.260.782 466.650 3.933 9.438) 733.810 105.752.492 5. Year ended 31.333.130.123.089 - - (04) OTHER INCOME Dividend income Interest income Over provision of bad debts Profit from sale of property.656.483 887.696 7.224.504) 1.670 12.525.224.451.2010 Rs.075 2.675 2.815.594 150.904) 720.552 688.2009 Rs.03.681.633 1. plant & equipment Sundry income 7.901 1.920.133 5.728 890.Notes to the Financial Statements Continued Group For the.277.801 23.gratuity Staff expenses (1.636.410.166 27.515 755.342.728 227. Company Year ended 31.835.389.924 5.501 1.560) 1. (03) REVENUE Liquid Milk based products Milk powder Less-Nation Building Tax 1.960.844 28.636.03.500 2.927 767.910.649 (1.630.067 8.352.402 (1.673 7.274 136. Year ended 31.172.080.567.192 10.823.483 218.189.093.320 7.198 (102.087 1.297 133.435 639 .368.959.037 1.382.630.354.178 91.388 63.867 1.477 529.03.384 (40.2010 Rs. Year ended 31.812 (06) OPERATING PROFIT The operating profit has been arrived after charging / (crediting). Amortisation of grant Amortisation of share issue expenses Auditors’ remuneration Defined contribution plan cost EPF/ ETF Depreciation Impairment of goodwill Retirement benefit plan cost .700 5.397 17.582.
000 .059.428.214 1.407.866.505.03.428.229.500 19.462) 16.123.866.03.224.2010 Rs. 133.556.019 (1.361 92.146) 2.Notes to the Financial Statements Continued (07) TAXATION Reconciliation of accounting profit to income tax expense on ordinary activities Group For the.929.929.672) 3.533.542 63.093.499 (18.820 1.484 (1.555. 87.2009 Rs Amount used as the numerator Profit attributable to ordinary shareholders 65.298) 25.000.2010 Rs.416.970.146) 18.177 (18.225 7.407 5.113 (857.630.856 12.991 7.203 Company Year ended 31.304 (29.676 11.658 721.946 (8.338 (08) BASIC EARNINGS PER SHARE Basic earnings per share is calculated by dividing the net profit for the year attributable to ordinary shareholders of the Company by weighted average number of ordinary shares in issue during the year.912. (4.151.274 (1.138 14.957.884.03.173 81.601.492) (7.03.314.338 2.312 144.478.966 Annual Report 2009/10 33 As at Amount used as denominator Weighted average number of ordinary shares 13.946 16.545 10.242 839.728 (5. Year ended 31.859) 35.659.03.702 (48.333) 38.968 29.016.000 Group 13.03.521.03.630.306.034.720 14.500 164.408.634) 23.2010 31.591.400. Year ended 31.093.030.280.918.298) 133.634) 125.994 (84.601.060.2009 31.672) 16.614. Year ended 31.440 3.550.079 133.736 Year ended 31.759 (8.759 7.170.829.331.400.084 21.1) TAX LOSSES CARRIED FORWARD Tax losses brought forward Tax losses arising during the year Utilisation of tax losses 133. Group For the.970.2010 Rs.416.282 23.651 Accounting profit / (loss) before tax Income not subject to tax Aggregate disallowed expenses Aggregate allowed expenses Other income ( Excluding dividends income) Taxable profit (Excluding other income) Utilisation of tax losses Current income tax expenses Under provision for previous year Social responsibility levy Deferred tax 10% Withholding tax on inter company dividends Total tax liability (7.401) 23.492 (1.2009 Rs.022.03.532.019 (18. 75.255) 2.265.428.151.128 710.683.452 Year ended 31.2009 Rs.019) 5.847 11.544 310.937 14.427) 33.
03.168 267.517. Group 31. Company 31.414.915 16.800 10.598 6.189 129. LEASEHOLD PROPERTY.708.871 1. 2009 Additions Transfers Write off Adjustments Balance as at 31st March.719) 14.719.374.237. Total Rs.922 40.422 9.170.593 719. 2009 Motor vehicles Rs.258. Milife Foods Ltd.725 472.806 .806 294.317.852. Furniture & fittings Rs. Swiss Cheese Co.525.621 34 21. Mr.313) 4.313) (143.560) 132.504. COST / REVALuATION Balance as at 1st April.560) 400.008.265.847 22.256.420 185.375 (43.866.699 169.2. PLANT AND EQUIPMENT Freehold property.220.127.116.11.682 420. Motor vehicles Rs.245 919.668.248.766.2009 Rs.537. 2010 WRITTEN DOWN VALuE Balance as at 31 March.187 26. 2010 Balance as at 31st March.1. Rs.Perera in March 2009 and the values were incorporated as at 31st March 2009.725) (336.. 31.369 40.409 377.461.500) (158.250.696 11.422 4.955.560) 105.696 7.553 36.928 2.754.228 261.171 (584.123 - - Property.816 106.121 11.196. 2009 Charge for the year Transfers Write off Adjustments Balance as at 31st March.2) 267.513. (Pvt) Ltd.882. Computer equipment Rs.500.470 23.. FREEHOLD PROPERTY.074 1. 2009 Balance as at 31 March.993.Henry J. and Kotmale Milk Products Ltd.169 271.1) Leasehold property.603 3.300 1.861. 103.were revalued by an independent professional valuer.350 (203.504 22. 2009 36.317 9.472 253.755.111.341) (288. plant & equipment (Note 9.158) 274.732) (288.147 893.505 19.317 - - 21.267.000 96.472 2.525. 2010 Balance as at 31 March. (09) PROPERTY.754.517.691.553 4.105.999 (394.03.340. 2010 DEPRECIATION Balance as at 1 April.938 (143.116 709. plant and equipment of the subsidiary Companies.472 103.835 15.475.922 13.771.267.369 4.Notes to the Financial Statements Continued As at.866 (838.068 21.946 6. Total Rs.215 20.G.918.461.256. 31..454 1.096.861.2010 Rs.622 643. 2010 WRITTEN DOWN VALuE Balance as at 31st March.220.274 1.950) 4.671 2. plant & equipment (Note 9.831.326.301 289.472 84.248 2.363.000 9.976 12.387.267. PLANT AND EQUIPMENT Land and Plant & buildings equipment GROUP Rs.893 1. 2010 DEPRECIATION Balance as at 1st April.258.03.556.837.706 2.211.2010 Rs. PLANT AND EQUIPMENT Plant & equipment Rs.000 168.961.378.116 2.301 23.195 (195. GROUP Kotmale Holdings PLC COST / REVALuATION Balance as at 1 April.670 3.777 94.169 271.359.2009 Rs.124 21.645 1.169) (143.504.03. 9.938. 2009 Charge for the year Balance as at 31 March.
2009 Rs.2010 Rs. 31. Company 31. goodwill is no longer amortised but tested for impairment annually.541.189.909.03.682 15.677 22.400.548) 51.541.821 8.078.193.000 30.560 70 185.448) (36. Company 31.133 12.369 (1.372.941 46.638.707.756 - - 35 Annual Report 2009/10 .541.400.773.2010 Rs. 31.000.060 215.060 185.543.368.2010 31. However the minority share holders have transferred their share ownership to Kotmale Holdings PLC during the year.064.374.2009 Rs.03.03.333 4.352.274 (29.000 215.231. Group 31.863. (12) INVENTORIES Finished goods Raw materials Packing materials Others Less:Provision for obsolete stocks 13.457) 61. of shares 100 100 10. Group 31.501) (41.2009 Rs. 31. Holding (%) (11) INVESTMENTS IN SUBSIDIARIES Kotmale Products Ltd.775 As from 1st January 2006. Rs.782 12.893. Goodwill acquired through business combinations have been allocated to two cash generating units for impairment testing.2009 Rs.232 97.933.457) (5.009) (7.03.000 30.03.000 The Company has obtained consent from minority share holders of Milife Foods Ltd not to disclose their interest of the company separately in the financial statements. Milife Foods Ltd.232 (36.Notes to the Financial Statements Continued As at.773.958) 55.2010 Rs.400. No.03.03.441.400. (10) INTANGIBLE ASSETS Cost At the beginning of the year Accumulated amortisation / impairment At the beginning of the year Impairment At the end of the year Net carrying value 97. As at.920 10.03.000.
142 204.269.415 1.343 65.928 14.060.065 689.784.000.781 220.(Pvt) Ltd.522.631.582.269.000 314.784.2009 Rs.448.545 1.925 36.328.958 3.269.659.381 40.327.2010 Rs.634.472 62.232 2.448.176 18.503.721 102.000 314.545 1.482.826 14.686 1.000.000 ordinary shares (17) RESERVES Capital reserves General reserves Retained earnings Revaluation reserves 314.443 426.928 1.852 3.719.000 172.992 14.545 1.562 40.401 156.164.338. (13) TRADE AND OTHER RECEIVABLES Trade debtors Staff debtors (Note 13.739) (4.877.000.333 689.176 18.417 208.179.992 500.840 34. 194.438.559 21.605.1) Other receivables (Note 13.218.351 1.564 (1.822 208.333 (14) PREPAYMENTS.809 1.327.03.722) .545 1.016.500.522.419 65.694 44.472 (7.03.2) OTHER RECEIVABLES Advance to farmers Dividends receivable Other debtors 416. Company 31.065 689.381 21.214 (85.510.011.204 1.03.992 646.179.160 2.851.065 65.436 1.446) 416.928 - - 8.213.482.786.000 314.905.605.159. Swiss Cheese Co.011 130. 31.280.512.562 41.333 689.333 (13.03.926 117.274.559. DEPOSITS & ADVANCES Advances Deposits ESC prepayment NBT recoverable NSL recoverable Other prepayments Withholding tax 12.438.472 86.400.327.784.000.333 65. Milife Foods Ltd.204 63.1) STAFF DEBTORS Balance at the beginning of the year Festival advance Repayment during the year Balance at the end of the year (13. Kotmale Milk Products Ltd.784.2010 Rs.198.879 20. Group 31.211 416.453.Notes to the Financial Statements Continued As at.291. 31.417 7.757 1.278.2) Janashakthi Ltd.802 2.011.135 - - (15) AMOUNTS DUE FROM RELATED PARTIES Dunamis Capital PLC Kotmale Kiri (Pvt) Ltd.901.781 217.378 6.687 577.966.113.847 (16) STATED CAPITAL 31.827.331 5.553 130.269.843.500) 646.000 36 Kotmale Holdings PLC 1.998.074 20.086 14.472 83.2009 Rs. - 100.732 1.890.232 100.
DFCC Vardhana .75 Mn and subordination agreement of Rs. The settlement of the above loan is based on the number of packing material imported by the company from Tetra pack.910. Company Bank Facility Limit (Rs.533. 31.856 5.829.396.910. 45 Mn Corporate guarantee of Rs. HSBC .. Ltd.027 will no longer be payable by Kotmale Milk Products Ltd.027 28.210.641.210.25 Mn Milife Foods Ltd.1) SECURITIES The following assets have been pledged as securities for liabilities. (20.) Security Kotmale Holdings PLC.03. Group 31. Annual Report 2009/10 37 .2009 Rs.121.Notes to the Financial Statements Continued As at.16.495.03. under a sales agreement in the year 2004. a division of Tetra Pak South Asia Pte. Company 31.408 4.495.801 4. can reclaim the asset without any financial encumbrances on either side.263 - - (20) INTEREST BEARING BORROWINGS Lankaputhra Development Bank Lease creditors People’s Leasing Tetra pack machinery loan 8.495..501 - - Kotmale Milk Products Ltd. Ltd.2010 Rs. This agreement was amended in June 2005 citing a trial period ranging from July 2005 to June 2006.407 839. Singapore.. The amended agreement period has lapsed and Tetra Pak South East Asia Pte.687.847.299.312 6.2009 Rs.904) 8. 31. Accordingly once the asset is reclaimed by the Company the loan amount of Rs.563 16.03.537 10. (18) DEFERRED LIABILITY Grant received for the Tetra pack filling machine Amortisation for the year Balance at the beginning of the year Balance at the end of the year (19) DEFERRED TAX Balance at the beginning of the year Deferred tax attributable to revaluation Deferred tax expenses (1.292. received a Milk filling machine from Tetra Pak Singapore and Emerging Markets.2010 Rs.687.636.462) 4.408 - - 5.Colombo Overdraft 25 Mn Facility agreement for Rs.328 16.263 (857.Colombo Import loan 75 Mn Mortgage over stocks & receivables for Rs.027 32.504 (1. 21 Mn from Kotmale Holdings PLC.03.161.904) 6.146 1.947 7.
800 8. 1.Manjula Mathews Kotmale Holdings PLC. Mrs.002 - - 29. Rs. 31.415. Company 31..000 60 629. Swiss Cheese Company (Pvt) Ltd.411 9.002 640.564) 1.618.427.03. (c) 38 . (Pvt) Ltd. and Swiss Cheese Co.710 (1. Kotmale Marketing (Pvt) Ltd.03.054.2009 Rs.226.351.684. Milife Foods Ltd.414. 1.060 1.877 2.209 1.214.031 141.700.529. Kotmale Kiri (Pvt) Ltd. Jude Fernando x x x x x x x x Mr. (21) RETIREMENT BENEFIT OBLIGATIONS Balance at the beginning of the year Gain / loss arising from change in assumption Interest charge on gratuity Payments made during the year Provision for the year Balance at the end of the year (22) TRADE AND OTHER PAYABLES Accrued expenses GST & VAT payable NBT payable Sundry creditors Trade creditors 8.085.347.989 - - (25) DIRECTORS INTEREST IN CONTRACTS & RELATED PARTY TRANSACTIONS (a) Details of Directorates are as follows.226.500 (23) AMOUNTS DUE TO RELATED PARTIES Dunamis Capital PLC.806 629.982 (772. 31.591 20. Group 31.883 (1.138.076.518. The Montessori Workshop (Pvt) Ltd.Dinesh Schaffter x x x x x x x x Mr.351 respectively to Dunamis Capital PLC.138.654.2010 Rs.009.928. have paid management fees amounting to Rs.877 3. Kotmale Products Ltd.03.524.748.168.630.928.598..414. Rodrigo x x x x x x x x x x Kotmale Milk Products Ltd.054. (b) Kotmale Holdings PLC Mr. N.500 1.Notes to the Financial Statements Continued As at.379.2010 Rs. - 1.387.453.508 8.E.351 and 1. Dunamis Capital PLC.989 2.154 38.562.064 56.232 43. Kotmale Milk Products Ltd.2009 Rs.299 29.295 - - (24) INTEREST BEARING BORROWINGS Lease creditors 3.879 10.03.495 7.799) 1.202 25.224) 1.231 27. Milife Foods Ltd.189 138.432 8.884. Please refer notes 15 and 23 for outstanding balances with related parties as at 31st March 2010..
In accordance with Sri Lanka Accounting Standard 12 (Revised 2005 ) events after the Balance Sheet date.354.000 which is to be approved by shareholders at the annual genaral meeting to be held on 05th August 2010.358 Kelsey Aluminium (Pvt) Ltd. 62. Mrs.912 2. 2. . Manjula Mathews Mr. or disclosure in the financial statements.00 per share for the year ended 2009/10 amounting to Rs. the final dividend has not been recognised as a liability in the financial statements as at 31st March 2010. Dinesh Schaffter Investment 30. Jude Fernando Mr. Manjula Mathews Nature of transactions Cattle feed purchases (recovery made against farmers remittance) Insurance policies Construction Amount Rs. Manjula Mathews Mr.990 (26) CONTINGENT LIABILITIES There were no material contingent liabilities as at the balance sheet date.297. Jude Fernando Mr. Manjula Mathews Mrs. There were no other material events subsequent to the balance sheet date that require adjustments.356. Manjula Mathews Mr.668.800. Jude Fernando Mr. Mrs. Kelsey Homes (Pvt) Ltd.347 Janashakthi Insurance Company PLC.Notes to the Financial Statements Continued (d) Name of the Company Mahaweli Feed Mills ( Pvt ) Ltd. Name of Director Mrs. 39 Annual Report 2009/10 . (27) CAPITAL COMMITMENTS There were no material capital commitments as at the balance sheet date (28) POST BALANCE SHEET EVENTS The Board of Directors have recommended a final dividend of Rs. Mrs. 45. Dinesh Schaffter 4.024. Dinesh Schaffter Construction 1.000 First Capital Treasuries Ltd.
55 4.87 0.400.009 310 83 8 5 1.30 21.001500.415 1.000 10.400.00 100.001.837 177.00 Holding Number 22.00 31.636 19.75 76. PUBLIC HOLDING 2009/10 2008/09 5.362 67 1.70 Holding Number 7.18 5.00 5.044.564 31. of shares held Shareholders Number 1 1.00 31.300 1.001 10.84 18.000 500.181 1.57 0.03. STOCk EXCHANGE LISTING The issued ordinary shares of Kotmale Holdings PLC are listed on the Colombo Stock Exchange.000 % 71.415 1.26 4.46 0.87 0.49 76.001 5.400.69 99.87 1.57 4.% 6.979 1.2009) 40 .00 (31.000 5.436 24.91 5.87 1.954 31.850 24.31 4.021 31.000 1.000 % 1.422.30 21.25 (15.16 2.00 Holding Number 364.841.00 99.000 100.000.180 % 23.51 100.53 5.947 355.900 1.429 % 69.75 (31.49 0.50 (28.03.399 16 1.000 100.152 1.00 31.804. 3.000 50.375.95 Number of shares held by the publc Percentage held by the public .429 1.390.2008) 9.000 100.00 0.429 31st March 2009 Shareholders % 95.00 31st March 2009 Shareholders Number 998 261 68 78 7 9 3 5 1.007 494.00 0.967.00 31.352 63 1.000.398.47 100.400.181.001 50.06.001Over Total % 71.69 100. ANALYSIS OF SHAREHOLDERS 31st March 2010 Shareholders Number 1. Kotmale Holdings PLC SHARE PRICE MOVEMENTS FOR THE PERIOD Rs.2010) 9.415 % 95.91 0.000 1.024.077 565.45 98.255 18.55 4.13 Number 1.76 5.31 0.950. 2008/09 25.13 Holding Number 30.000 1.00 2.233 771.Investors’ Information 1.452 31.57 0.010. DISTRIBUTION OF SHAREHOLDING 31st March 2010 No.46 1.001 100.80 6.000 4.000 100.30 0.09.35 100.530 6. Highest Lowest Period-end 2009/10 Rs.2008) 8.25 (26.45 98.35 100.021.820 218.414 15 1.00 0.50 (31.2010) 13.400.63 0.00 Category of shareholders Individuals Institutions Total Resident Non-Resident Total 100.527 110.10.26 1.053 % 95.03.00 100.400.2009) 24.879.35 100.21 0.
Schaffter Seylan Bank Limited / Mr.692.400 Holding (%) 31.600 610.573 8.R.64 0. Ramesh Schaffter Merchant Bank of Sri Lanka Limited / Mr. Schaffter HSBC International Nominees Ltd-SSBT-Deustche Bank AG Singapore Waldock Mackenzie Ltd.959.M.038 2.) 9.18 0.) Market capitalisation (Rs. R. Mahinthan Mr.663.938 700.I.R Casie Chitty Mr.64 0.19 0.000 - Holding (%) 31.000 200.50 0.42 7.23 0.000 120.000 200.378.Investors’ Information Continued 6.95 0. Jayantha Dewage Mrs.038 9. R.938 700.32 0.000 2. INFORMATION ON SHARE TRADING AND MARkET CAPITALISATION 2009/10 Number of transactions Number of shares traded Values of shares traded (Rs.000 158.57 9.562.50 0.45 Annual Report 2009/10 41 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Dunamis Capital PLC First Capital Treasuries Limited Mr.45 0.400.243. of shares as at 31st March 2009 9.000 140.000 150.45 0.23 0.400 100.38 0. Schaffter Lanka Orix Finance Company Limited / Mr.600 5.Fuad Credit Suisse Singapore Mr.672.26 0.23 3.G.724 298.57 6.90 7.738 1.975 777.G.000 300.600 1.42 29.43 17.378. of shares as at 31st March 2010 9.69 2.877. Manjula Mathews National Development Bank PLC /Mouldex Limited Mrs.74 2.638 97.No2 Macksons Holdings (Pvt) Ltd Mr.809 TOP TWENTY SHAREHOLDERS No.96 2.21 0.G.943.706 32.700 67.700 57.594.500 57.000 140./Mr.000 14.738 2.500 862.18 0.S.18 No.877.M Mohamed Makeen - . D F E S Ollegasegrem Bank Of Ceylon .000 158.000 59.400 55.Kariyawasam Mrs.P.48 0.000 2008/09 2.000 80.959. Names of shareholders No.150. D.S Jayasinghe Mr.
000 217.000 35.325) 1.971) 349.408 (6.000 44.084) 330.522 1.682) 75.239) 241.666) 223.246) 16.767 349.552) 11.406 314. Plant and Equipment Intangible Assets / Biological Assets Non Current Liabilities Net Assets 314.352.707 (31.239 (23.035) 63.159 534.176 97.799 330.767 375.997 210.454 314.500 86.187) 534.406 358.105 289.251 1.476 240.802 50.930 1.982 (161.530) 78.128) 1.519.378 55.302 230.536 (11.281) 124.832 (297.000 220.767 314.908 (70.232 (48.570.348.959 99.557 (12.325 12.497 (14.092) 358.506 Financial Position Share Capital/Stated Capital Reserves Share Capital/Stated Capital & Reserves Current Assets Current Liabilities Working Capital Property.061 (4.454 407.000 16.614) 65.233 (10.529 78.159 394.278 (194.Five Year Financial Summary 2005 Rs 000’s 2006 Rs 000’s 2007/08 Rs 000’s (15 Months) 2008/09 Rs 000’s 2009/10 Rs 000’s Financial Results Revenue Profit From Operating Activities Net Finance Cost Profit Before Taxation Income Tax Expenses 10% WHT on Inter Company Dividends Profit After Taxation 541.799 234.908 (37.172) 87.283 42.471 (19.079 68.506) 73.155 (6.733) (5.454 531.406 319.863 (52.866 61.973) 30.159 42 Kotmale Holdings PLC .421 (45.344 (153.266 (183.941) (16.799 314.244) 531.600 294.225) 4.
Colombo 03.. 43 Annual Report 2009/10 .m. to transact the following business 3.) K H L Corporate Services Limited Secretaries 15th July 2010 SPECIAL BUSINESS AMENDMENTS TO THE ARTICLES OF ASSOCIATION 1. in the Auditorium of the Sasakawa Memorial Sri Lanka Japan cultural center. the company shall comply with the Rules of the Colombo Stock Exchange and the Central Depository System.Notwithstanding anything to the contrary contained in the Articles of Association of the Company. so long as the Company is listed on the Colombo Stock Exchange. such a person need not be a member of the Company. To consider and if thought fit to pass the following Special Resolution “Resolved that the proviso in paragraph 4 of Article No. “ To consider and if thought fit to pass the following Special Resolution “Resolved that the existing Article 166 be deleted and the following substituted therefor 166. RE-APPOINTMENT OF AUDITORS To re-appoint Messrs.Any member whose registered address is not within Sri Lanka may name an address within Sri Lanka which for the purpose of notice shall be considered as his registered address. RE-ELECTION OF DIRECTORS To re-elect Mr.2. 22nd lane. administrators or heirs of a deceased member)” 2. To consider and if thought fit to pass the following Special Resolution “Resolved that the existing Article 164 be deleted and the following substituted therefor A member entitled to attend and vote at the meeting is entitled to appoint a person to attend and vote on his/her behalf. such advertisement shall be published in Sinhala. No 4. DECLARATION OF DIVIDENDS To approve the declaration of a final dividend of Rs. 13 be amended to read as follows: Provided that the Company shall not register more than three persons as joint holders (including the principal holder) of any shares (except in the case of executors. which shall be in force from time to time. By order of the Board (Sgd.Where notice is given by an advertisement. 4.” 4.” 2.00 per share for the year ended 31st March 2010 as recommended by the Directors. Chartered Accountants. 5.Notice of Meeting NOTICE IS HEREBY GIVEN that the 43rd Annual General Meeting of Kotmale Holdings PLC will be held on Thursday 5th August 2010 at 3. NOTICE To receive the notice convening the meeting. Nihal Hettiarachchi & Co. To consider and if thought fit to pass the following Special Resolution “Resolved that the following clause be included immediately after existing clause 170 and be numbered as 171 (compliance with Rules) 171.00 p. 164. as the Auditors of the Company for the ensuing year and to authorise the Directors to determine their remuneration. ORDINARY BUSINESS 1. DIRECTORS’ REPORT AND AUDITED ACCOUNTS FOR THE YEAR ENDED 31ST MARCH 2010 To receive and consider the Directors’ Report and the Audited Financial Statements for the year ended 31st March 2010 together with the Report of the Auditors thereon. Nihara E Rodrigo who retires by rotation in terms of Article 100 of the Articles of Association and offers himself for re-election. Tamil and English national daily newspapers. 3.
44 Kotmale Holdings PLC Notes .
Notes Continued 45 Annual Report 2009/10 .
46 Kotmale Holdings PLC Notes Continued .
.../Co. at the Auditorium of the Sasakawa Memorial Sri Lanka Japan cultural center..... Dinesh Schaffter of Colombo Mr..................... 4.………………………………………….Form of Proxy I/We..../P... Nihara E Rodrigo of Negombo whom failing whom failing whom failing as my/our Proxy to represent me/us and vote on my/our behalf at the Annual General Meeting of the Company to be held on 5th August 2010 at 3......m... 2.......C... No …………………………) of ………………………… ……………………………………………………………………………………………whom failing 1.... 3.. 2.....No............ 166 (Notices) Inclusion of Article No.. Mrs. Nihara E Rodrigo......Reg. hereby appoint Mr/Mrs/Miss ………... .......I......... 171 (Compliance with Rules) FOR AGAINST …………………………… Signature …………………………….......................... who retires by rotation in terms of Article 100..... Re-election of Mr.......per share.13 (Joint Shareholding) Amendment to Article No...2/....... 4..... Receiving of the Report of the Directors and the Audited Financial Statements of the Company for the year ended 31st March 2010 together with the Report of the Auditors thereon.I......C..... Manjula Mathews of Colombo Mr..... 4. Re-appointment of Messrs Nihal Hettiarachchi & Co as Auditors of the Company for the ensuing year and authorising the Directors to determine their remuneration............. ORDINARY BUSINESS 1.........................of………………………………………………………………………………………………………...........………………………………………………..P. and at any adjournment thereof and at every poll which may be taken in consequence thereof.......……………………………………………………………………… …………........... Declaration of the Final Dividend of Rs...... 3...........00 p.......... being a member/s of the above named Company........ SPECIAL BUSINESS 1... 47 Annual Report 2009/10 Signed on this ………………day of ……………2010 .... 164 (Notices) Amendment to Article No. 2. 3..... 22nd lane..Kotmale Holdings PLC . M S Jude Fernando of Wattala Mr..... Colombo 03... (holder of N. No 4... Please indicate your preference by placing a “X” in the box of your choice against each Resolution..... Amendment to Article No.. Shareholder’s N....
by reason of the manner in which the Form of Proxy has been completed. 2. no vote will be recorded by the Form of Proxy. 48 hours before the time appointed for the holding of the meeting. 5. 4. if such Power of Attorney has not already been registered with the Company. by signing in the space provided and fill in the date of signature and your National Identity Card Number. after filling in legibly your full name and address. K H L Corporate Services Limited of No. Arnold Ratnayake Mawatha. the Proxy should be executed under its Common Seal in accordance with its Articles of Association or Constitution. the relative Power of Attorney should also accompany the completed Form of Proxy for registration. The completed Form of Proxy should be deposited at the Office of the Secretaries.INSTRUCTIONS FOR THE COMPLETION OF THE FORM OF PROXY 1. If an Attorney has signed the Form of Proxy. Colombo 10.75. 3. Please perfect the Form of Proxy overleaf. 48 Kotmale Holdings PLC . If the Shareholder is a company or a corporate body. If there is any doubt as to how the vote is to be exercised.
Colombo 03. Tel: 2578774 – 6 K H L Corporate Services Limited 75.Indipendent Non-Executive Director 75.7 of 2007 on 6th May 2008. Kotte Road. Arnold Ratnayake Mawatha.51 of 1938 and subsequently re-registered under the Companies Act No.Corporate Information Name of the Company Legal form Kotmale Holdings PLC Incorporated as a Public Company in 1967 under the provisions of the Companies Ordinance No. Tel: 2639807 SSP Corporate Services (Pvt) Ltd 101 Inner Flower Road. Kotte.Non-Executive Director Mr. Colombo 10. In 1969 the Company was listed on the Colombo Stock Exchange. DFCC Vardhana Bank Hatton National Bank PLC The Hongkong & Shanghai Banking Corporation Pan Asia Banking Corporation Seylan Bank PLC Board of Directors Registered Office Factory Secretaries Registrars Auditors Bankers Produced by Copyline (Pvt) Ltd Printed by Printel (Pvt) Ltd . Mr. Manjula Mathews . New Town Mulleriyawa. Tel: 2573894 M/s Nihal Hettiarahchi & Co Chartered Accountants 622B. M S Jude Fernando – Executive Director/CEO Mrs. Dinesh Schaffter . Arnold Ratnayake Mawatha. Colombo 10. Nihara E Rodrigo . Tel: 2639878 20.Executive Director Mr. Sri Sumana Mawatha.