UNTAPPED POTENTIAL AND GREATER PROMISE

UNTAPPED POTENTIAL AND GREATER PROMISE

AgStar Fertilizers PLC

Annual Report 2013/14



AgStar Fertilizers PLCNo.9, Bawa Place, Colombo 8.

AgS

tar Fertilizers PLC

|

Annual R

eport

2013/14

We live in a time where successful corporate entities embrace

diversification as a means to mitigate risk and stretch their wings

into areas of untapped potential and greater promise.

AgStar as an established and trusted fertilizer brand has now

branched into rice milling, crop care, seeds and export of

spices.

AgStar’s evolution from fertilizer company to an agri inputs

and food products conglomerate is gathering pace, and with it

brings the potential for enhanced stakeholder value ever closers.


The Company


Legal Form

A Public Quoted incorporated in Sri Lanka

Company Registration No.

PV1618 PB/PQ

Date of Incorporation

25th June 2002

Registered Office

AgStar Fertilizers PLCNo.9, Bawa Place, Colombo 8Tel: +94 11 4812424, +94 11 7708040-3 Fax: +94 11 4810706E-mail: [email protected]: www.agstaragri.com

Directors

Mr N G R KarunaratneChairman/ Chief Executive Officer

Mr D N N LokugeDeputy Chairman/ Non-Executive Director

Mr A P WeerasekaraManaging Director

Mr P R SaldinExecutive Director

Mr D S K AmarasekeraNon-Executive Director

Mr I C NanayakkaraNon-Executive Director

Mr W A P PereraNon-Executive Director

Mr A G WeerasingheIndependent Non-Executive Director

Mr H P J de SilvaIndependent Non-Executive Director

Ms S WickramasingheIndependent Non-Executive Director

Audit Committee

Mr H P J de SilvaMr A G Weerasinghe

Remuneration Committee


Subsidiaries

AgStar Seeds (Private) LimitedAgStar Cropcare (Private) LimitedAgStar Grains (Private) LimitedAgStar Properties (Private) LimitedMahaweli Rice Processing Industries (Private) LimitedAgStar Exports (Private) Limited

Secretaries

P R Secretarial Services (Pvt) LimitedNo.59, Gregory’s Road, Colombo 7

Registrars

SSP Corporate Services (Private) LimitedNo.101, Inner Flower Road, Colombo 3

Auditors

PricewaterhouseCoopersP O Box 918No.100, Braybrooke Place, Colombo 2

Bankers

Commercial Bank of Ceylon PLCHatton National Bank PLCSampath Bank PLCPeoples’ BankNational Development Bank PLCBank of CeylonSeylan Bank PLCDFCC Vardhana Bank PLCMCB Bank Ltd

Legal Consultants

Nithya PartnersNo.97A, Galle Road, Colombo 3

Paul Ratnayake AssociatesNo.59, Gregory’s Road, Colombo 7

Sudath Perera AssociatesNo.5, 9th Lane, Nawala Road, Nawala

CORPORATE INFORMATION

Produced by Copyline (Pvt) Ltd Printed by Gunaratne Offset Ltd

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History

After a decade long successful journey AgStar is now set for a new phase as a

diversified conglomerate in the agricultural business arena. Our progressive vision has

made it possible for us to position ourselves to meet the diverse needs of the agricultural

community ranging from rural farmers to large commercial projects.

We believe that diversification in to viable new areas of agriculture related business

provide new avenues for business growth and expansion adding greater value to our

shareholders. The natural extension of diversifying into value added agri-related areas of

business has given our company a fresh new strategic outlook.

We strongly believe that AgStar’s visionary leadership combined with her proven

capabilities in the field of agriculture will guide the group to even greater heights in the

future.

VisionTo be the preferred choice for agri inputs, agri

products and related services

MissionTo be the preferred choice for agri inputs, agri

products and related services

Contents

VISION • MISSION • HISTORY

Financial Highlights 02 Chairman / Chief Executive’s message 04

Managing Director’s Review 06 Board of Directors 8

Corporate Management 12 Management Discussion & Analysis 16

Corporate Governance 22 Risk Analysis 30

Statement of Directors’ Responsibility 32 Remuneration Committee Report 33

Directors’ Report on the State of Affairs of the Company 36

Audit Committee Report 40 Independent Auditors’ Report 41 Income Statement 42

Statement of Comprehensive Income 43 Statement of Financial Position 44

Statement of Changes in Equity - Group 45

Statement of Changes in Equity - Company 46 Statement of Cash Flows 47

Notes to the Financial Statements 48 Shareholder and Investor Information 69

Decade at a Glance 72 Notice of Annual General Meeting 73

Form of Proxy 75 Corporate Information IBC

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02

2,101MnShareholders Funds

289MnOperating Profit

Year ended 31st March 2014 2013 Change

%

Operating Results

Group Revenue (Rs.’000) 1,725,717 1,757,847 (2)%

Gross Profit (Rs.’000) 685,062 684,126 0%

Net Finanace Cost (Rs.’000) 230,675 100,275 130%

Profit before Tax (Rs.’000) 58,399 287,031 (80)%

Profit for the year (Rs.’000) 29,398 217,549 (86)%

Financial Position

Stated Capital (Rs.’000) 1,204,094 1,204,094 0%

Non Controlling Interest (Rs.’000) 21,117 34,597 (39)%

Property,Plant & Equipment (Rs.’000) 1,212,319 948,891 28%

Current Assets (Rs.’000) 3,351,805 3,445,393 (3)%

Total Assets (Rs.’000) 4,569,974 4,399,980 4%

Non Current Liabilities (Rs.’000) 288,566 276,105 5%

Current Liabilities (Rs.’000) 2,180,516 2,016,950 8%

Total Equity (Rs.’000) 2,100,891 2,106,925 0%

Financial Indicators

Earning Per Share (Rs.) 0.13 0.67 (81)%

Dividend Per Share (Rs.) 0.10 0.10 0%

Net Assets Per Share (Rs.) 6.40 6.38 0%

Return on Equity (%) 1.40 10.33 (86)%

Return on Total Assets (%) 0.64 4.94 (87)%

Gross Profit Ratio (%) 39.70 38.92 2%

Net Profit Ratio (%) 1.70 12.38 (86)%

Current Ratio (Times) 1.54 1.71 (10)%

Liquidity Ratio (Times) 1.31 1.63 (20)%

Gearing (%) 64.57 34.08 (89)%

FINANCIAL HIGHLIGHTS

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10 11 12 13 14

Group

Company

Revenue (Rs. Mn)

2,33

72,

189

2,91

92,

529

1,80

51,

358

1,75

81,

407 1,

726

1,37

6

10 11 12 13 14*

Group

Company

Profit Before Tax (Rs. Mn)

216

204

288

231

289

234

287

352

181 20

210 11 12 13 14*

Group

Company

Total Comprehensive Income (Rs. Mn)

129

118

233

178

211

158

284

284

141

117

10 11 12 13 14

Group

Company

Total Assets (Rs. Mn)

1,37

11,

334

2,02

51,

887

4,15

13,

943 4,

400

4,06

1 4,57

03,

900

10 11 12 13 14

Group

Company

Net Assets (Rs. Mn)

353

336

613

543

1,82

31,

700

2,10

71,

969

2,10

11,

989

10 11 12 13 14

Group

Company

Return on Equity (Rs. ‘000)

0.36

60.

350 0.38

00.

328

0.11

60.

093 0.

135

0.14

4

0.01

40.

026

10 11 12 13 14

Group

Company

Net Assets Per Share (Rs. ‘000)

1.77

1.68

3.07

2.72

6.44

6.00 6.

486.

06 6.46

6.12

* Exclude claim on arbitration award on dispute in 2008

FINANCIAL HIGHLIGHTS

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Dear Shareholder,

I welcome you to the Twelfth Annual General

Meeting of AgStar Fertilzers PLC and have

pleasure in presenting to you the Annual

Report and Audited Financial Statements for

the year ended 31st March 2014.

Group Performance

The year under review was turbulent for

the fertilizer industry, with the Government

introducing regulatory changes to the

quota system to control the import of

chemical fertilizer. Consequently, AgStar’s

import allocation was 25% lower than the

previous year’s, which had a direct impact

on our ability to satisfy customer demand.

Furthermore, this change was implemented

in May 2013 with no prior warning to the

fertilizer industry, hence undermining our

ability to transition to the new regime in a

planned manner.

Rs.117 Million, as compared with last year’s

profit figures of Rs. 287 Million and Rs. 217

Million respectively.

AgStar’s ability to remain resilient and

profitable in a turbulent landscape gives me

optimism that the foundations we have laid

are strong and augur well for the future of

your Company. It also reinforces the Board’s

strategy of diversifying from a fertilizer

company to an agri inputs and food products

conglomerate and I am pleased to note that

we continue at pace along this path.

The Board of Directors, taking into

consideration the working capital challenges

posed by the fertilizer subsidy scheme and

the strategic diversification into rice milling,

recommend a first and final dividend of

Rs.0.10 per share for 2013/2014 maintaining

the previous year’s dividend declaration.

The long outstanding dispute with Toepfer

International Asia Pte Ltd on an alleged

breach of contract consequent to the

global financial crisis six years ago in

2008 has now been ruled against the

company. The International Chamber of

Commerce, Singapore arbitration award of

USD.821,200/- was received in April 2014,

after the end of the current financial year.

The financial statement has now been

adjusted to provide for this liability and

presented in accordance with the Sri Lanka

“AgStar’s ability to remain resilient and profitable in a turbulent landscape gives me optimism that the foundations we have laid are strong and augur well for the future of your Company.”

Mr. Rohan KarunaratneChairman

In my 2012/2013 message I commented

that the Company had to incur Rs.125

Million in annual interest charges due to

delayed settlement of subsidy claims. I am

disappointed to note that the current year

witnessed a further deterioration in subsidy

settlements by the Government with AgStar’s

average overdue claims increasing to over

Rs.1.5 Billion and the interest cost of delayed

settlements reaching Rs.190 Million. In this

regard, we continue to urge the Government

to provide a fair and transparent subsidy

scheme and settle claims within the agreed

credit period of 6 months.

Against the above backdrop of restricted

import volumes and delayed settlement of

claims, I am pleased to report that the Group

remained profitable, posting a pre-tax profit

of Rs.181 Million and a post-tax profit of

CHAIRMAN / CHIEF EXECUTIVE’S MESSAGE

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Financial Reporting Standards posting an

amended group pretax profit of Rs.58 Million

and a post-tax profit of Rs.29 Million for the

year under review.

Strategic Diversification

Agriculture remains a cornerstone of the

Sri Lanka economy and the use of high

quality fertilizer is an essential ingredient in

improving productivity, economic growth

and living standards of rural farmers and the

wider population. Having established itself

as a leading fertilizer brand in Sri Lanka over

the past decade, AgStar is well placed to

contribute to this goal and benefit from its

achievement. However, the Board recognizes

the need to expand from our core fertilizer

business into wider agro inputs and food

products sectors to bring new strategic

dimensions to our business. In this regard,

AgStar has already made a number of

strategic investments in rice milling, crop

care, seeds and export of spices.

With regard to rice milling, despite

construction delays, the commissioning

of our state of the art rice milling plant in

Anuradhapura is currently underway and

it is envisaged that the plant will be fully

operational in June 2014. We also continue

to integrate the investment made in Mahaweli

Rice Processing Industries (Pvt) Ltd, the well

known rice milling plant at Mahaweli System

“C” Dehiattakandiya, under the AgStar

umbrella. These two strategic investments

are expected to provide a major impetus to

our diversification program in 2014/2015.

As noted in my message last year, the seed

business continued to be adversely affected

by the free issue of large quantities of seed

and planting material under the Government

initiated “Divi Neguma” program. However, I

am pleased to note that we have streamlined

this business, which remains profitable, and

turned around the crop care business which

returned to profitable in the current year.

Consistent with our diversification strategy,

we established a fully owned subsidiary,

AgStar Exports (Pvt) Ltd, in October 2013

to export value added “true Cinnamon”

products to established markets. Product

development is well advanced and I am

pleased to report that our first order has been

secured from the USA.

Future Outlook

I believe that our continued diversification

into viable new areas of agricultural business

provides new avenues for business growth

and expansion, insulates AgStar from future

turbulence in the regulatory landscape

for fertilizer, and will generate enhanced

economic value to our shareholders.

I am conscious that the current year has

witnessed both a period of adjustment in

the fertilizer business due the challenges

described above, and a focus on completing

the Rs.500 Million investments in rice milling

ventures. As we enter the new financial year,

I am confident that this period of investment

will enable AgStar start to generate greater

shareholder return and move closer to our

strategic goal of becoming a fully diversified

agri inputs and food products conglomerate.

In keeping with this vision, I am pleased to

announce that we will be seeking shareholder

approval at the forthcoming Annual General

Meeting to change the parent company

name from AgStar Fertlizers PLC to AgStar

PLC, thus reflecting the greater breadth of

the AgStar brand.

Acknowledgement

In conclusion, I wish to thank my colleagues

in the AgStar executive management team

and all employees for their unstinted support,

commitment and hard work which has

enabled the Group to withstand a challenging

year and yet deliver value to shareholders.

I also wish to thank our business partners,

customers and financial institutions for their

continued support.

Finally, I take this opportunity to thank

the Board of Directors for their valuable

contribution and guidance over the past year.

I look forward to a promising year and in

particular, to untapping potential from the

AgStar brand and reaping the rewards of our

investments as we continue diversify and

create value for our stakeholders and play

our role in contributing to the prosperity of Sri

Lanka.

Mr. Rohan Karunaratne

Chairman / Chief Executive

CHAIRMAN / CHIEF EXECUTIVE’S MESSAGE

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The period under review proved to be another challenging year for AgStar as a result of new regulatory controls introduced to the fertilizer industry restricting the free import of fertilizer. However, we were successful in facing the challenges by taking timely and farsighted decisions to address the issues at hand.

The Board of Directors having seen the risk of over dependency on the fertilizer sector took a strategic decision to diversify into new areas of agri business in order to mitigate the risk of exposure to one industry. After considering our strengths in the agricultural industry and the significant role of processed rice in the Sri Lankan market a well-considered decision was taken to engage ourselves in the rice industry. We foresee a significant portion of the consolidated revenue in the future will be generated from rice and other agri related business in the coming years.

profit also includes a provision of Rs. 122.7 million as a result of an arbitration award made against the Company on a dispute related to a fertilizer shipment consequent to the drastic drop in world fertilizer prices during the global financial crisis in 2008.

Fertilizer Business

Despite the operational issues experienced by the fertilizer industry following the imposition of a fertilizer import quota and high interest charges resulting from the delays in settlement of subsidy claims, our performance was satisfactory.

We were able to achieve the envisaged productivity and efficiency by streamlining operations as planned with the relocation of our new factory premises to the Ekala industrial zone. As a direct result of this change we were able to enhance our operational synergies.

These improvements were reinforced by taking measures to improve credit management and reduce the debt outstanding to a desirable level congruent with the task at hand. The sales team was restructured to reflect the new marketing challenges facing the Company and the product range was optimized to generate the best possible margins for the business.

As a cumulative result of the actions that were taken we were able to successfully deal with the issues faced and maintain the envisaged profitability and also improve the overall customer service.

“We were able to achieve the envisaged productivity and efficiency by streamlining operations as planned with the relocation of our new factory premises to the Ekala industrial zone. As a direct result of this change we were able to enhance our operational synergies.”

MANAGING DIRECTOR’S REVIEW

The group’s current businesses are fertilizer, crop care products, seeds, rice and other grains and export of spices. AgStar Grains, Mahaweli Rice Industries and AgStar Exports are yet to commence commercial operations. The consolidated revenue for the year was Rs. 1,726 million, marginally lower when compared to the previous year’s revenue of Rs.1,758 million despite the imposition of a reduced fertilizer quota on our imports by nearly 25% during the period under review.

The group reported a net profit after tax of Rs. 29 million which is below the profit of Rs. 217.5 million achieved for the period of 2012/2013. The key reason for the reduction in performance was due to the higher finance charges which was adverse by Rs. 131 million when compared to the previous year net interest figure of Rs. 100 million resulting from the delays in settlement of fertilizer subsidy claims by the Government. The lower

Mr. Pasad WeerasekaraManaging Director

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MANAGING DIRECTOR’S REVIEW

Cropcare Business

The crop care business also faced a turbulent year. In this business too we were successful in achieving an outstanding year in terms of performance. The division grew in both volume and value registering an increase of 50% growth in both areas. Furthermore the business registered the highest ever sales volume in the granular and foliar fertilizer category. This is an area we have been particularly focusing on and it is heartening to note that we are getting traction in the areas of strategic development we are focusing on.

Seed Business

The external environment for the seed business continued to be unfavorable as reported last year. Adverse weather conditions and the Government sponsored “ Divi Naguma” program which distributed free seeds affected the local seeds market. Furthermore the non-settlement of outstanding dues for seed paddy supplied to the government to the value of Rs. 108 million resulted in affecting the profitability of the business.

Grains Business

We have commenced testing of our newly commissioned the state of the art Rajarata rice processing plant in Anuradapura which faced some unexpected delays during the construction stage. The installation and commissioning of the high tech German branded Buhler machinery and equipment has been successfully completed. The commissioning of the parboiling plant is currently in progress. The plant is expected to be fully operational by the end of the 2nd quarter. In the mean time we have purchased the requisite paddy to begin commercial operations.

We are pleased to inform that we have acquired full ownership of Mahaweli Rice Processing Industries Private Limited which we invested in last year and have upgraded and streamlined the process in order to improve the envisaged efficiency and capacity levels. The plant has now been commissioned and is fully operational since April 2014.

Exports Business

The export division was started with a vision of extending our involvement in the agriculture sector to the export market. We have identified value added Cinnamon exports as an area with tremendous marketing potential and as an entry point for this business area. We plan to generate a substantial revenue portion from our export business in the future and we strongly believe that our passion for achievement coupled with sound business planning and execution would drive the success of our new venture.

Conclusion

I am taking this opportunity to express my heartfelt gratitude towards the Chairman and the Board of Directors for their immense support and guidance accorded throughout the financial year. I also thank our shareholders for the trust and support extended during the year. Our employees have always been our greatest asset and I extend my appreciation to our staff members of the AgStar group for their tireless efforts and contributions made towards improving the fortunes of the group. I also want to mention our gratitude to the contributions made by our stakeholders as well as our valued customers for their support throughout the year without which we would not have achieved our successes.

I recognize that the business environment is ever changing. As a dynamic organization we have taken great pains to position ourselves so as to ensure that the AgStar team is prepared to meet any challenges the future may hold for us. I envisage an exciting future for our group and her shareholders.

Mr. Pasad WeerasekaraManaging Director

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Mr. N. G. R. Karunaratne

Chairman /CEO

Mr. D. N. N. Lokuge

Deputy Chairman

Mr Rohan Karunaratne is a Fellow of the

Institute of Chartered Accountants of Sri

Lanka and is the founder Chairman/CEO of

AgStar Fertilizers PLC. He has previously

served on the Boards of Ceylon Tobacco

Company, CIC Holdings PLC and CIC Agri

Business. Mr Karunaratne has a wealth

of experience counting over 35 years of

managing agri business ventures.

As the founder CEO of CIC Agri Business,

Mr Karunaratne successfully spearheaded

the setting up and development of new

agricultural ventures in fertilizer, seed,

planting material, biotechnology, agro

consultancy and agri technology. He was

also instrumental in developing public/private

partnerships in the agricultural sector of Sri

Lanka by transforming the management of

large Government farms and converting ADB

funded perennial crop development projects

to viable business ventures. Mr Karunaratne

has provided the vision and leadership to

introduce pioneering new technologies and

products into the agricultural sector, and has

contributed significantly to its development in

Sri Lanka.

During his tenure at Ceylon Tobacco

Company, Mr Karunaratne functioned as the

Head of Tobacco Business. He thereafter

functioned as the Managing Director of

CTC Services, with responsibility for the

management of diversified businesses.

Mr. A. P. Weerasekera

Managing Director

Mr Pasad Weerasekera is a Fellow of

the Chartered Institute of Management

Accountants, United Kingdom and has

over 20 years of industry experience having

started his carrier in 1988. He has been a

founder Director of AgStar Fertilizers PLC,

initially functioning as Head of Finance and

thereafter as the Chief Operating Officer. He

has contributed significantly to the Company

becoming a viable business entity.

Mr Weerasekera previously was at CIC

Agri business having joined the company

in 1993. He was Finance Manager of CIC

and gathered a wide experience in the

management of agro business related

activities. Mr Weerasekera is also a Director

of Ajax Engineering (Pvt) Ltd, a leading

aluminium fabrication company in Sri Lanka.

Mr. Nimal Lokuge is a founder Director of

AgStar Fertilizers PLC and functioning as the

Deputy Chairman of the Company. He was

also a founder Director of Sierra Construction

PVt Ltd with 30 years of experience in the

construction industry. He is a Director of a

number of Sierra Group Companies.

BOARD OF DIRECTORS

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Mr. Ishara Nanayakkara

Non Executive Director

Mr. D. S. K. Amarasekera


W. A. P. Perera


Mr. W. A. P. Perera is a founder Director

if AgStar Fertilizers PLC and serves as

the Chairman of Sierra Cables PLC and a

founder Director of Sierra Holdings (Pvt)

Limited and Sierra Construction (Pvt) Limited.

He has over 33 years –experience in the

Engineering and Construction industry.

Mr. Ishara Nanayakkara Joined to the Board of Lanka ORIX Leasing Company PLC in 2002, presently Mr. Nanayakkara is the Deputy Chairman of LOLC PLC and a Director in Lanka ORIX Finance Company PLC. He chairs the Board of Commercial Leasing & Finance PLC and LOLC Micro Credit Limited, backed by the professional expertise in the industry for over a decade. He also serves the Board of PRASAC; Micro Finance Institute; Cambodia’s largest Micro Finance Institute. His interest and expertise in microfinance lead to the inauguration of LOLC Myanmar Micro Finance Company Ltd in which he is the founding Chairman. He was instrumental in the recent joint venture between BRAC and LOLC.

Mr.Nanayakkara is the Deputy Chairman of Seylan Bank, and also hands on in the fields of Insurance, factoring, working capital, Islamic financing, stock broking manifesting his vision of catering to entire value chain of the finance sector.

Mr.Nanayakkara also serves the Board of Sierra Constructions Ltd, Lanka Century Investment PLC and Associated Battery Manufacturers (Cey) Ltd in line with Group’s movement into areas such as Agriculture & Plantation, Leisure and Construction. His need to contribute to growth areas of the economy is highlighted through the vital role played by him in Browns & Company PLC & Browns Investments PLC as the Executive Chairman. Browns Group is a renowned conglomerate with leading market position in trade, leisure, manufacturing, consumer appliances and agriculture equipment.

He holds a diploma in Business Accounting from Australia.

Mr. Kamantha Amarasekera is an eminent

tax consultant and the Senior Tax and Legal

Partner of Amarasekera & Company – a

leading tax consultancy firm in the country.

He is a member of the Institute of Chartered

Accountants of Sri Lanka and is an Attorney-

at-Law of the Supreme Court of Sri Lanka.

He graduated in Business Administration

from the University of Sri Jayawardenapura.

Mr. Kamantha Amarasekera holds the

directorships of various companies in Sri

Lanka.

BOARD OF DIRECTORS

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Mr. H. P. Janaka de Silva

Independent Non Executive Director

Mr. A. G. Weerasinghe


Mr.Janaka de Silva is a holder of B.Sc.

(Ceylon) and a MBA (Sri Jayawardenapura)

Degree.He is a Fellow of the Institute of

Chartered Accountants and Institute of

Bankers of Sri Lanka and counts for over 40

years’ experience in Banking and Finance.

Mr.de Silva served as a Consultant to

National Development Bank during the

period of August 2003 to December 2007

and advised the bank on the integration of

financial and accounting systems on the

merger of NDB Bank with NDB.He joined

Union Bank of Colombo Ltd at the pre

operational stage of the bank as General

Manager/Chief Operations Officer and was

appointed as the Managing Director/CEO

in May 2002.During the period April 1992

to April 1995 Mr de Silva Served as the

Director-Operations of American Express

Bank, Colombo and was responsible for all

operational activities and functioned as the

Quality Coordinator of the Colombo Office.

In September 1976 Mr de Silva joined Bank

of Ceylon as Assistant General Manager/

Controller and was elevated to the position of

Corporate Adviser in 1979.In February 1987

Mr de Silva joined Sampath Bank as the

founder General Manager/CEO.

Mr. P. R. Saldin

Executive Director

Mr. Rimoe Saldin is a Fellow of the Institute

of Chartered Accountants of Sri Lanka. He

is also a Fellow of the Chartered Institute

of Management Accountants in the United

Kingdom and a Certified Management

Accountant, Australia. He is an Alumnus of

the Asian Institute of Management, Manila.

He has over 20 years of experience at top

management level in the areas of Finance,

Human Resource Development, General

Management and Operations.

Presently Mr. Saldin serves as the Group

Chief Operating Officer of the Browns Group

of Companies and Managing Director/Chief

Executive Officer of Browns Investments

PLC. He also serves on the Board of

Directors of a number of listed and unlisted

companies.

He was previously Country Controller for

Royal Dutch Shell in Sri Lanka and Finance

Director of Shell Gas Lanka Ltd and Shell

Terminal Lanka Ltd. Mr. Saldin also served

as Group Finance Director and Commercial

Director of CIC Holdings PLC. He also served

on the Board of Directors of number of listed

and unlisted companies in the CIC Group.

Mr. Weerasinghe is an experienced senior banker who joined Taprobane Group of Companies in June 2012. Presently he serves as the Chairman of Taprobane Securities (Pvt) Ltd, Taprobane Investments (Pvt) Ltd, Lexinton Holdings (Pvt) Ltd, Taprobane Wealth Plus (Pvt) Ltd, Heron Agro Products (Pvt) Ltd, Colombo City Holdings PLC, Lanka Century Investments PLC (Former Environmental Resources Investment PLC) and Ascot Holdings PLC. He is an Associate and a Fellow member of the Institute of Bankers, Sri Lanka and also holds a B.A. in Economics from the University of Ceylon, Peradeniya. Mr. Weerasinghe served as an Assistant Lecturer in Economics, University of Ceylon, Peradeniya. He was also a former President of Sri Lanka FOREX Association and a member of the Sri Lanka Cricket Board. Mr. Weerasinghe was the former Deputy General Manager, Corporate Banking at Bank of Ceylon. He has served as Country Manager, Bank of Ceylon, London and Deputy General Manager, International at Seylan Bank. He was a Director and was subsequently appointed as the Chairman of Pan Asia Banking Corporation PLC in March 2008, and continued his service till March, 2012.

At present he serves the Boards of many renowned companies in Sri Lanka, namely, Browns Investments PLC, Ceylon Leather Products PLC, Dankotuwa porcelain PLC and South Asia Textile Industries Lanka (Pvt) Ltd.

BOARD OF DIRECTORS

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Ms. S. N. Wickramasinghe


Ms. Siromi Wickramasinghe an Attorney at

Law of the Supreme Court of Sri Lanka and a

Fellow of the Chartered Management Institute

U.K. was appointed as the Chairman of

HDFC Bank in May 2010.

She is a Senior Banker with 35 years of

experience and has held many positions

in financial institutions including the post

of DGM- Hatton National Bank PLC, GM /

CEO-Lankaputhra Development Bank,

Director-Commercial Bank of Ceylon PLC,

and Director-Sri Lanka Banks’ Association

(Guarantee) Ltd.

She was also a Commission Member of the

Securities and Exchange Commission of Sri

Lanka (SEC) and the Chairman of Ceybank

Asset Management (Pvt.) Ltd an Associate

Company of Bank of Ceylon.

Ms. Wickramasinghe is presently a Director

of HNB Assurance PLC, and Head of the

Credit Counselling Centre.

BOARD OF DIRECTORS

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CORPORATE MANAGEMENT

Mr. Daya Jayasekara

Director - Technical

Mr. Shantha Emithiyagoda

Director/Consultant - Agri Business

Development

Mr. Asela Angammana

General Manager - Marketing

Mr. Aruna Kumarasinghe

Strategic Business Unit Head - Agri

Business

Mr. Rajith Perera

General Manager - Finance

Mrs. Uma Shanmuganathan

General Manager - Accounts & Admin

Mr. Ruwan Marambage

General Manager - Cropcare

Mr. Alex de Vas

General Manager - Commercial

Mr. W. K. Fernando

General Manager - Projects

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CORPORATE MANAGEMENT

Mr. Lakmal Dasanayake

General Manager- Procurement

Mr. Athula Gunarathne

Deputy General Manager - Marketing

Mr. Danushka de Zoysa

Operations Manager - Exports

Mr. Saman Premasiri

Sales Manager

Mr. Chandana Udawela

Sales Manager

Mr. Asela Indika

Sales Manager

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Management Reports

Management Discussion & Analysis 16Corporate Governance 22Risk Analysis 30Statement of Directors’ Responsibility 32Remuneration Committee Report 33

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Economic Environment

It is certain that Sri Lanka is better off without

the war and is carving its development path

by achieving above six percent economic

growth rate for last consecutive four year

period in all sectors of the economy.

The Central Bank’s Annual Report, in 2013

elaborates a growth in the economy of

7.3% against the 6.3% in 2012. The gross

domestic production (“GDP”) reported for

the period was Rs. 8,674 billion. The highest

contribution to the GDP has been by the

service sector, 58.1% during the period

whereas the agricultural sector has made

10.8% compared to the 11.1% made in

2012. Within the agricultural sector, the

contribution from tea, rubber, coconut and

paddy have been approximately 3.5% which

shows no variation in comparison with the

previous year.

The wholesale and retail trade has been the

highest achiever within the service sector

while the transport and communication sector

was the second largest during 2013 reporting

22.7% and 14.6% respectively.

Figure 01: Sectorial Composition of GDP-

2013

Agriculture 18.0%

Industry 31.1%

Services 58.1%

Gross Domestic Production

Figure 02: Economic Growth Rate

09

3.5

108.

011

8.2

12

6.3

13

7.3

Economic Growth Rate (%)

Agriculture

A marginal drop (by 0.5%) in the growth rate

pertaining to the agricultural sector could be

observed during 2013 which accounted for

10.8% of the GDP. Despite moderate growth

in the first half of the year in the paddy sector

it was neutralized due to the crop damage

in the Maha season due to adverse weather

conditions.

According to the Central Bank Annual Report

2013, total national paddy production has

been 4.62 million metric tons which was in

increase of 20% against 2012. In 2013, the

highest growth in paddy production was

recorded in the North Western Province,

which was 108 per cent.

While tea production has recorded an all

times highest to 340.2 million kilograms

showing a 3.6 percent growth against 2012,

the rubber sector has declined by 14.2

per cent to 130,421 metric tons in 2013

compared to 2012.

Agricultural Policies

The annual report reveals that the

Government’s agricultural policies are aimed

at;

• increasing domestic food production to

enhance food security

• reducing import expenditure

• promoting agricultural exports

In achieving above targets,

Government has

deployed several

infrastructure

MANAGEMENT DISCUSSION & ANALYSIS

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development projects to increase the national

production in the country. Meanwhile massive

irrigation projects are being progressed,

the Government continued in providing

paddy subsidy throughout the period which

amounted to Rs. 19.7 billion for 403,000

metric tons.

Price Levels

The overall price levels have been managed

during 2013 also by maintaining the inflation

at 6.9% which was a 0.7% reduction

compared to 2012. 2013 was the fifth

consecutive year the inflation has been

maintained at a single digit. “Year-on-year

headline inflation too has moved on a

decelerating path since March 2013 with

the improvements in supply conditions of

domestic agricultural commodities, easing of

some commodity prices in the international

market and prudent demand management

policies of the Central Bank.” (Annual Report,

Sec. 4)

Figure 03: Movement of Inflation

093.

5010

6.20

11

6.70

12

7.60

13

6.90

Movement of Inflation (%)

Operational Review

The fertilizer business has been under severe

restrictions in its operation in the present

context. The curtailment of quota on imports

for the private sector and overdue delays in

releasing subsidy due to the private sector

has created turmoil in the fertilizer industry

as a whole. The effects of such environment

affected AgStar’s fertilizer business during the

period. Accordingly, the AgStar’s quota for

importing fertilizer has been reduced by 15

percent and it will be further restricted in the

coming year of operations.

Simultaneously, the significant delays in

releasing subsidy due has created immense

financial difficulties in the group. The short

term finance cost has increased by 31%

during 2013/14 due to sourcing through the

banking sector.

Despite of the limitations on fertilizer, AgStar

had achieved 57,636 metric ton volume of

sale during 2013/14 which is 9% less than

2012/13. There is a strong demand for the

Brand name of AgStar as a reliable fertilizer

supplier in the tea sector. The composition of

sales on sector wise is shown in the figure 05.


Interest Rates

In comparison with 2012, the overall interest

rates of the economy were maintained at low.

The six month Treasury bill rates had been

dropped to 7.85% by the end of December

2013 that was comparatively high at 11.32%

in 2012. Simultaneously, the overnight repo

rates also came down from 7.5% to 6.5%

over the same time period and the inter Bank

offer rate (SLIBOR) was reduced by 26.4%

during 2013.

Figure 04: Behaviour of SLIBOR (6 month)

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

13.7

1

13.6

6

13.2

8

13.0

7

12.4

5

12.3

1

12.1

8

11.3

8

11.6

1

10.9

10.6

4

10.2

SLIBOR (%)

Paddy Stocks for Proce

ssin

g

Cropcare Newest L

aunc

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Figure 05: Fertilizer Sectoral Performance

Fertilizer Sectoral Performance

Tea 53%

Rubber 4%

Coconut 2%

Other 40%

AgStar plays a key role in the Sri Lankan

fertilizer market and keenly work with the

plantation sector in Sri Lanka. The fertilizer

blending plant and the main distribution

center is at Ekala.

AgStar caters both straight fertilizers as well

as own blended fertilizers to our customers.

However, in the present context our blended

fertilizers are more demanded in the market

due to the right mix of blended fertilizers

which are specifically tailored on customer

necessity. The experienced and subject

matter experts’ contribution has been the key

for the success of the fertilizer business.

The fertilizer business still dominates the

AgStar group business by contributing

78% of the group turnover.

Seed Business

AgStar Seeds Private Limited is the

prime arm of AgStar group dealing

with the seed business.

The Seed business was formally

established in 2006 for primarily to promote

seed paddy and other field crop seeds

and vegetable seeds and key processing

and distribution locations are at Dambulla,

Nuwaraeliya and Embilipitiya.

During the year under review, a drawback

was seen in the seed operations due to being

unsuccessful in winning government bidding

process and the natural restrictions on the

business expansion along with the “Divi

Naguma” programme of the Government.

The revenue has been dropped by 63%

during the year resulting a net loss for the

period. The periodic movement of seeds

business is shown in the figure 06.

Figure 06: Movement of Seeds Revenue

09/10

108

10/11

319

11/12

310

12/13

260

13/14

95

Movement of Seeds Revenue (Rs. Mn)

Agro Cropcare Business

The regulatory enforcement has adversely

affected the agrochemical industry during the

year. Along with the claims of chemicals being

main reason for chronic illnesses and the

adverse public perception has resulted in the

minimum usage of agrochemicals. Year gone

by has been a very challenging one for AgStar

Cropcare private limited due to the said

reasons as well as on the consequent import

restrictions. Cropcare business was set up

in 2006 along with the establishment of the

Seed business as a measure of diversification.

It deals primarily with crop protection items

such as weedicide, insecticide, fungicide and

growth stimulants.

Despite of the hostile situation that prevailed;

the Cropcare business has reported a

commendable growth in business uplifting the

topline by 52% and the net operating profit by

133%. The strategic reach towards the pre

identified sectors in the agrochemical sector

has given results during the year.

Aligning to the environmental forces,

Cropcare business has understood the

importance of discouraging harmful use of

agrochemicals and steps have been taken

to move towards the introduction of safer


Cropcare Foliar F

ertil

izer

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chemicals to the market. More towards

organic based products and range of safer

chemical products would be introduced in

time to come which we strongly believe is the

future of the agro chemical industry.

Figure 07: Revenue - Cropcare Business

09/10

40

10/11

71

11/12

137

12/13

91

13/14

137

Revenue - Cropcare Business (Rs. Mn)

Figure 08: Net Profit - Cropcare

Business

09/10

1

10/11

3

11/12

9

12/13

0

13/14

7

Net profit – Cropcare business (Rs. Mn)

Agro based Commodities

The agro product business is predominantly

lead by AgStar Grains Private Limited and

the Mahaweli Rice Processing Industries

Private Limited. The acquisition of 51%

stake in Mahaweli Rice Processing Industries

Private Limited and the establishment of

the state of art rice mill at Anuradhapura

have given AgStar a new dimension for the

The Export Business

The exports operations of the group

have been struggling to initiate

anticipated growth momentums set

at the beginning of the operations.

Being new to cinnamon export,

we believe more to learn and

more to go in regulating and

standardizing the operation for

better prospects.

The export business is focused

on export of cinnamon in bulk

form at present. However, steps

have been initiated to export value

added cinnamon under the brand name

of AgStar. The best cinnamon is found in the


AgStar group. The total investment is

estimated approximately at Rs. 400

million.

AgStar Rice Products focuses

primarily on rice and other grain

products. Rice milling and sale

which are at present sold under

the brand names of “Mahaweli”

and “Ran Sahal” has given the

initiation for the business. The rice

milling and processing functions are

carried out Dihiaththakandiya (“Mahaweli”)

and Anuradhapura (“Rajarata”) rice mills

out of which

Anuradhapura mill is considered to be one of

the best state of art mills in Sri Lanka with

a capacity of processing 200MT per 2

days by 5 batches.

In addition to the direct sale of

rice, animal feed is expected

to be produced out of the by

products such as broken rice,

paddy husk and empty paddy.

AgStar Rice Products are

expected to generate a decent

net profit margin over a time

horizon of 5 years.

Mahaweli Rice

Fertilizer Blending Plan

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Sri Lankan geographical landscapes. It is

AgStar’s attempt to be a professional icon in

cinnamon business in the global context.

According to the spice council of Sri Lanka,

cinnamon seems to have originated in

the central hills where several species of

cinnamon grows scattered places such as

Kandy, Matale, Belihull Oya, Haputale and the

Sinharaja forest range.

Although cinnamon cultivation is presently

concentrated along the coastal belt

stretching along from Kaluthara to Mathara,

it has also made inroads to the inland

of Kalutara, Ambalangoda, Matara and

Ratnapura. The extent under cinnamon

cultivation in Sri Lanka is 25,500ha. Although,

the bulk of cinnamon plantations are about

70 - 80 years old, the size of holdings has

been diminishing and only about 5-10% of

the plantations are of sizeable extent ranging

from 8 - 10ha.

Although at present, AgStar is new to the

cinnamon industry, the knowledge we

have gained within a short period of time,

we strongly believe that we are in a better

position to capture the future prospects in

cinnamon business.

Financial Review

The group turnover posted in

2013/14 was Rs. 1.736 billion which

is marginal reduction of 1% against

the previous year. The fertilizer

sectors gave the highest contribution

towards the group performances. The

consolidated revenue has been ended

up with an operating profit of Rs. 378 Mn

showing a 3% whereas the profit after tax

of Rs. 86.8 million showing a decrease of

61% against 2012/13.

The earnings per share for the period

amounts Rs.0.13 per share whereas in

2012/13 it was Rs. Rs.0.67 per share.

There was no new share issue made during

the period under review. The return to

shareholders’ fund has been reduced by

6.3% compared to the previous year due to

the decrease in groups overall profitability.

The debt equity ratio in fact has become

lesser than 2012/13 period due to non-

entering into long term debt agreement with

financiers.

The total asset base of the AgStar group

has been increased by 3% during 2013/14

financial year and the return on assets has

been reported at 8.36%.


Rajarata Rice Mill Complex

Fertilizer Offi ce Complex -

Ekala

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The Interest Cover

The interest cover has been reported at 1

times in 2013 whereas in 2012 reported at 2

times. The resulted reduction was due to the

high interest cost incurred due to delay in the

receipt of Government subsidy.

Figure 09: Interest Cover

10

6

11

9

12

2

13

1

14

1

Interest Cover (Times)

Shareholder information

AgStar Fertilizers PLC was listed in the

Colombo burse on 16 /02/2012. As per

the Listing Rules, Company has submitted

unaudited interim financial statements

to the Colombo Stock Exchange

(CSE) within 45 day period

following the quarter

concern.

The share price has not been significantly

moved during the period and as at 31st

March 2014, it was traded at Rs.4.40 per

share. The figure 10 shows the monthly

variation of AgStar share price during

2013/14 period.

Figure 10: AgStar Share Price A

pr’

2013

May

’201

3

Jun’

2013

Jul’2

013

Aug

’201

3

Sep

’201

3

Oct

’201

3

No

v’20

13

Dec

’201

3

Jan’

2014

Feb

’201

4

Mar

’201

4

7.5 7.7

6.7

5.6

5.5 5

.9

5.5

4.8

4.8

1

4.8

4

4.4

2

4.4

AgStar Share Price (Rs.)

During the financial year 2013/14, the

following regulatory changes were introduced

by the securities exchange commission

making compulsory to comply with by all

listed entities in the CSE.

• Disclosures of director’s dealings in

shares

• Code of best practices on related party

transactions

• Certifications on rules on minimum

public holding as a continuous listing

requirement for listed public companies

Dividends

It has been proposed to declare a dividend

of Rs. 0.10 per share for the period under

review at group level.

The figure 11 depicts the dividend payment

history of AgStar group for last 5 year period.

Figure 11: Dividend Declaration

10

0.5

7

11

0.1

12

0.0

5

13

0.1

14

0.1

Dividend Declaration (Rs.)


Cropca

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Fertilizer Offi ce Complex -

Ekala

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CORPORATE GOVERNANCE

General Governance Policy

The concept of corporate governance covers the entire accountability framework of an organization. It encompasses aspects of both corporate

and business governance and is based on the premise that good governance policy alone cannot make an organization successful. It is only

by having in place good corporate governance practices, which are strategically linked to performance management that an organization is

able to focus on the key drivers of the business. This concept emphasizes the dual role of the Board of Directors in ensuring conformity to good

governance and strategic management for value creation.

It is the firm belief of the Board of Directors that an effective self-regulatory framework is vital to pursue stakeholder confidence in the context

of increasing trends in deregulation and lack of regulations in certain areas. AgStar Fertilizers PLC(“AgStar“) has continued its commitment to

maintain high standards of corporate governance in order to ensure the integrity, accountability and transparency of all transactions and as well

as to ensure equal importance to business performance in order to ensure value creation.

AgStar’s Adoption of Corporate Governance

Being a listed company committed to maintain ethics and professionalism in every sphere of activity, AgStar adheres to high standards of

corporate governance. It defines governance as the set of processes, customs, policies, laws and institutions affecting the way in which the

corporation is directed, administered and controlled. Key aspects of the corporate governance framework established by the Company are

described below.

In keeping with its vision and mission and with the continued goodwill and confidence of customers very much in mind, the Company is careful

not to undertake any business activity that might affect adversely the welfare of the community and the environment.

The governance principles and measures of the Company are described below:

CorporateGovernancePrinciple

PrincipleNo.

Level of Compliance

Directors

The Board A.1 Composition

The Board currently comprises of Ten Directors which include Seven Non-Executive Directors and

Three Executive Directors. Three out of Seven Non-Executive Directors are Independent. The Board

has an appropriate balance of skills, experience, independence and knowledge to enable it to

discharge its duties and responsibilities effectively.

Frequency of Board Meetings

Six Board Meetings are scheduled to evaluate the performance and to discuss strategy and of Board

Meetings other matters of the company. Ad-hoc meetings are scheduled to deal with specific matters

which require the attention of the Board between scheduled meetings.

The table below depicts the attendance of Directors at the Board and Committee meetings held

during the year.

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PrincipleNo.

Level of Compliance

The Board A.1Name of Director Board Meetings Audit Committee

MeetingsRemuneration

Committee Meetings

Mr.N.G.R.Karunaratne 6/6

Mr.D.N.N.Lokuge 5/6

Mr.A.P.Weerasaekara 6/6

Mr.A.P.W.Perera 4/6

Mr.D.S.K.Amarasekara 3/6

Mr.I.C.Nanayakkara 2/6

Mr.P.R.Saldin 6/6

Mr.A.G.Weerasinghe 6/6 4/4 1/1

Mr.H.P.J. De Silva 5/6 4/4 1/1

Ms.S.Wickramasinghe 5/6

The Responsibilities of the Board

The Board is ultimately accountable for ensuring that, as a collective body, it has the appropriate

skills, knowledge and experience to perform its role effectively.

The Board is responsible for the following:-

• formulation, implementation and monitoring of strategy

• effective systems to secure integrity of information, internal controls and risk management

• compliance with laws, regulations and ethical standards

• ensuring all stakeholder interests are considered in corporate decisions.


PrincipleNo.

Level of Compliance

Directors The Board has delegated several functions to Board Committees, while retaining final decision rights

pertaining to matters under the purview of the Committees. The composition and the functions of

these sub-committees are discussed in detailed under the relevant sections of this Report.

Obtaining Independent Professional advice

In discharging their duties the Directors are permitted to seek independent professional advice from

external parties when necessary at the expense of the Company.

Company Secretary

The Directors have access to the advice and services of the Company Secretary. The Company

Secretary advices on the need to comply with Board Procedures, relevant statutory obligations and

other applicable rules and regulations.

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PrincipleNo.

Level of Compliance

Directors Independent Judgment

All Directors employ independent judgment in all decisions pertaining to strategy, performance,

resource allocation and standards of business conduct and acts free from any undue influence and

bias from other parties.

Dedication of adequate time and effort to matters of the Board and the Company

The Board members dedicate adequate time and effort to fulfill their duties as Directors of the

Company and ensure that they are satisfactorily discharged.

Newly appointed Directors who do not have previous public company experience at Board level

are provided with appropriate training on their role and responsibilities. New Directors participate

in a comprehensive and tailored induction program including meetings with members of the senior

management. The induction program includes a fuIl review of corporate responsibility. Subsequent

training is available on an ongoing basis to meet any particular needs.

Chairman &

Managing

Director

A.2 A clear division of responsibility is maintained between the Chairman and the Managing

Director ensuring that the balance of power and authority is preserved.

Chairman’s role A.3 The Chairman being responsible for the running of the Board facilitates the effective discharge

of Board proceedings and ensures that:

• effective participation of both Executive and Non-Executive Directors is secured

• all Directors are encouraged to make effective contributions to proceedings

• the views of Directors on issues under consideration are ascertained

• Board is in control of the affairs of the Company and alert to its obligations to all stakeholders

Financial Acumen A.4 The members of the Board possess the necessary knowledge and competence to offer guidance on

matters of finance

Board balance A.5 The Board considers the independent Directors as free of any business relationship or other

circumstance and independent of management that could materially interfere with or could be

reasonably perceived to materially interfere with the exercise of their, unfettered or independent

judgment.

To determine their independence, the Board reviews all Directors’ interests that may give rise

To a potential or perceived conflict, and any circumstances relevant to their current or ongoing

independence as set out in the Rules and Regulations of the Colombo Stock Exchange.

Mr. H P J de Silva and Mr. A G Weerasinghe meet the criteria for independence specified by Rule

7.10.4 of the Listing Rules of the Colombo Stock Exchange. These Directors have

submitted written declarations of their independence as required by section 7.10.2(b) of the Listing

Rules.


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PrincipleNo.

Level of Compliance

Directors

Supply of

Information

A.6 The Board is provided with timely information in an appropriate manner enabling it to

Discharge its duties effectively.

In the event the information volunteered by management is not adequate the Directors make

Further inquiries. The Chairman ensures all Directors are appropriately briefed on issues

Arising at Board meetings.

The minutes, agenda and connected papers required for a Board Meeting are dispatched to the

Directors in advance enabling them with sufficient time to review the papers and request for

any additional information or clarifications on matters when necessary.

Appointments to

the Board

A.7 The Board has not established a Nominations Committee for making recommendations on

Board appointments. Hence appointments to the Board are made collectively and with the

Consent of all the Directors.

Upon the appointment of a new Director to the Board, the Company informs the Colombo

Stock Exchange a brief resume of the Director which includes;

• the nature of his expertise in relevant functional area,

• other Directorships or memberships in Board sub committees,

• whether the Director is considered an Independent Director.

Re-election A.8 In compliance with the Articles of Association of the Company, one third of the Directors

Retire by rotation at every Annual General Meeting. A Director appointed during the year

retires at the next Annual General Meeting of the Company and seeks re-appointment in terms of the

Articles of the Company.

Disclosure of

Information

in respect of

Directors

A.9 Current Directors' biographical details are set out on pages 08-11 of this Annual Report. These

Include their main external commitments.

Appraisal of the

Managing Director

A.10 The Annual appraisal of the Managing Director is carried out by the Board at pre agreed

Performance targets.

Directors’ Remuneration

Remuneration

Procedure

B.1 The Board has established a formal and transparent procedure for developing policy on

Executive remuneration and for fixing the remuneration. In order to avoid potential conflicts of interest,

the Board has delegated powers to the Remuneration Committee to make

recommendations to the Board on remuneration policy and practice that is consistent with the

Objectives of the Company.

The Remuneration Committee consists of two Non-Executive independent Directors. The

names of the members of the Committee are indicated in the Directors’ Report on the state of

Affairs of the Company.


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PrincipleNo.

Level of Compliance

Level and makeup

of remuneration

B.2 The level of remuneration for both Executive and Non-Executive Directors is sufficient to attract and

retain the Directors to run the Company successfully. The Remuneration Committee compares the

levels of remuneration of the Company in relation to other companies in the industry.

The Remuneration Committee report appears on page 33 of this Report.

Directors B.3 The total remuneration of the Directors’ disclosed in note 27.3 to the Financial Statements.

Corporate

Governance

Principle

Principle No Level of Compliance

Relations with Shareholders

Constructive

use of

The Annual

General Meeting

C.1 The Shareholders of the Company have the opportunity to meet and question the Board at the

Annual General Meeting. Each item of business to be considered at the Annual General

Meeting is included with the Notice of Meeting which is sent to shareholders at least 15

Working days prior to the meeting.

The Chairpersons of the Audit and Remuneration Committees are present at the Annual

General Meeting to answer any questions raised by the shareholders.

Major transactions C.2 There were no major transactions during the year as defined by Section 185 of the Companies

Act No. 01 of 2007 which materially affect the net asset base of AgStar Fertilizers PLC or

Consolidated Group net asset base.

Accountability and audit

Financial reporting D.1 The Board ensures that the quarterly and annual Financial Statements of the Company are

prepared and published in compliance with the requirements of the Companies Act No 07 of

2OO7, Sri Lanka Accounting Standards and the Colombo Stock Exchange.

The Statement of Directors’ Responsibility in preparation of the Financial Statements is given

on page 32 of this Report.

The declaration by the Board that the Company is a going concern is given in the Directors'

Report on the state of affairs of the Company.

Internal control D.3 The Audit Committee consists of two Independent Directors. The members of the Committee

are indicated in the Directors' Report on the state of affairs of the Company.

The Committee is empowered to examine and report on the following :-

• Review the financial reporting system

• Review internal control framework and identify business risks

• Review the quality of external and internal audit performance

• Review compliance with laws, regulations and professional standards

• Recommend the appointment and fees of external auditors

The Committee met four times during the year The Chairman/Chief Executive, Managing

Director and the Executive Director of the Company attended all meeting by invitation.


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PrincipleNo.

Level of Compliance

Code of business

Conduct and

ethics

D.4 The Directors have adopted and adhered to the Code of Business Conduct and Ethics for

Directors.

A set of Guidelines for ethical behavior has also been compiled to help employees to act with

Responsibility and to, make the right decisions in their daily work. This Code of Conduct

explains the principles for dealings with business associates, general partners, colleagues and

In the community in which we operate. Thus it supports all employees in acting ethically not only in

their dealings with one another but also outside the Company.

Institutional and Other investors

Shareholder

voting

E.1 The company is committed to maintaining good communications with investors. The

Chairman conducts a structured dialogue with the shareholders based on the mutual understanding

of objectives and ensures that the views of the shareholders are communicated to the Board as

whole.

All shareholders are encouraged to participate at meetings of the Company, and a form of

Proxy accompanies each notice providing shareholders who are unable to attend such meeting the

opportunity to cast their vote.

Corporate Governance

Disclosures pertaining to Corporate Governance Practices

CSE Rule No Applicable Rule Requirement Status of Compliance

Reference to Annual Report

7.10.1 Non-Executive Directors

(NEDs)

Two or at least one third of the total number of

Directors should be NEDs Corporate Governance

Report

7.10.2(a) Independent Directors Two or one third of NEDs (whichever is higher)

should be independent Corporate Governance

Report

7.10.2(b) Independent Directors Each Non-Executive Director should submit a

declaration of independence/non-independence in

the prescribed format


Report

7.10.3(a) and

(b)

Disclosure relating to

Directors

Names of Independent Directors should be

disclosed in the Annual Report Corporate Governance

Report

Disclosure relating to

Directors

The basis for determination of independence of

NEDs, if criteria for independence is met Corporate Governance

Report

7.10.3( c ) Brief Resume of each

Director in the Annual

Report

A brief resume of each Director should be included

in the Annual Report, including his/her area of

expertise

Profiles of the Board of

Directors

7.10.4 Criteria for defining

"independence"

Requirements for fulfilling criteria Corporate Governance

Report


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Rules relating to Remuneration Committee

7.10.5(a) Composition of


The Committee shall comprise of Non-Executive

Directors, a majority of whom shall be independent

The Chairman of the Committee shall be a Non-

Executive Director


Report ,Directors' Report

on the state of affairs of

the company

7.10.5(b) Disclosure of the functions

of the Remuneration

Committee

The Committee shall recommend the remuneration

payable to the Executive Directors and Chief

Executive Officer or equivalent role


Report ,Remuneration

Committee Report

7.10.5( c)

Disclosure in the Annual

Report

The Report should include the names of the

Remuneration Committee members, a statement

of Remuneration Policy and the aggregate

remuneration paid to Executive and Non-Executive

Directors


Report, the Directors'

Report on the state of

affairs of the company

and the Remuneration

Committee Report

Rules relating to Audit Committee

7.10.6(a) Composition of Audit

Committee

The Committee shall comprise of

NEDs, a majority of who shall be

Independent. The Chairman of the

Committee shall be a Non-Executive

Director. The Chairman or a member

should be a member of a recognized

professional accounting body


Report, the Directors'

Report on the state of

affairs of the Company

and the Audit Committee

Report

7.10.6(b) Functions of the Audit

Committee

Overseeing the preparation,

presentation and adequacy of the

disclosures in the Financial

Statements in accordance with the

Sri Lanka Accounting Standards

Overseeing compliance with

financial reporting related

regulations and requirements

Overseeing the processes to ensure

that internal controls and risk

management are adequate

Assessing the independence and

performance of the external auditors

Recommending to the Board the

appointment, re-appointment and

removal of the external auditors and

approving their remuneration and

terms of engagement


Report, Audit

Committee Report


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7.10.6(c) Disclosure in the Annual

Report

The names of the members of the

Audit Committee

The basis of determination of their

independence

A report of the Audit Committee as

setting out the manner of compliance

with their functions

Directors' Report

on the state of affairs

of the Company,

Audit Committee Report


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RISK ANALYSIS

The mitigating initiations of loss exposure can be identified as management of risk in broader sense and in the present context the risk

management has become part and partial of any business operation due to the complexity prevailing in the business environment. The growingly

frequent uncertainty necessarily leads company management to look for higher levels of safety through continuous supervision and risk

management procedures.

Especially in AgStar which is in the agricultural sector, faces common vulnerabilities operationally as the business itself is a social element which is

affected by the nature. Further, the risk is not restricted merely to the operational risk but risk other than operational as well. Accordingly, following

are some of the risks AgStar encounters in its business and mitigating actions in place.

Description of Risk Risk Mitigation

Business/ Investment Risks

Risk of losses and uncertainties attached to new business

investments as the Group continuously looks diversifying its existing

business portfolio.

• Stringent evaluation of risks associated with each new investment

is carried out by in-house expertise and external resources as

when required

• Formation of strategic alliances with reputed partners to create

synergies and share the investment risk

• Address potential adverse ethical, social and environmental

factors before venturing into such new projects

Default Risk

Default of subsidy component settlements by the Government of Sri

Lanka (GoSL)

Delays in subsidy component settlements

• Currently the likelihood of the default risk is low. However,

continuous representative efforts are being carried out in this

regard

• Constant follow-up with Government authorities to recover the

subsidy component within the stipulated time period

• Carry out necessary and appropriate representative efforts in this

regard

Economic Risk

Risk of an economic downturn negatively impacting the Group’s

investment and business operations.

• Closely monitors domestic and global economic activities that

could have an impact on Group‘s business to take precautions

• Maintain sound relationships with relevant stakeholders

Interest Rate Risk

Adverse impacts on profitability owing to changes in market interest

rates as the Group borrowing are mostly to floating interest rates.

• Ensures maximizing returns on financial investments and

minimizing cost borrowing

• Use of appropriate financial and hedging strategies to minimize

interest rate risk

• Negotiate for concessionary interest rates using AgStar’ s

strength as a listed Company

Exchange Rate Risk

Adverse impact of exchange rate fluctuations on Group’s cash flows,

assets and liabilities, and business activities such as purchase of raw

materials and capital goods.

• Exchange rate fluctuations are considered in the subsidy formula;

hence a natural hedged persist to a reasonable extent

• Monitors the effects of foreign currency movements on the

Group’s business

• Adopt timely and appropriate hedging activities to mitigate foreign

exchange risk

Regulatory and Complains Risk

Introduction of new regulation affecting the business adversely and

complexity in complying with regulatory requirements

• Monitors complain with regulatory requirements

• Participate in representative effort against regulations that could

have a negative impact on business / industry

Credit Risk

The probability of the loss of income owing to default by the

company’s debtors

• Conduct in-depth analysis of debtors on their performance

• Regular follow-up on overdue debtors to minimize potential

losses

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RISK ANALYSIS

Description of Risk Risk Mitigation

Employee Risk

Risk arising from the inability to attract, motivate and retain skilled and

experienced staff, thus impacting the business competitiveness.

• Build strong employer brand

• Implement an effective human resource policy and a plan which is

reviewed by the remuneration committee

• Adopt an open door policy where any employee can speak to the

senior management regarding their concerns

Operational Risk

Losses resulting from fraud, human errors, inefficient processes,

natural perils and loss of sensitive information.

• Conduct periodic internal audit reviews to ensure complains and

the effectiveness of internal control system

• Maintain a business continuity plan to ensure disaster

preparedness

Funding / Liquidity Risk

Difficulty in obtaining required funding for projects.

• Maintain a business continuity plan to ensure disaster

preparedness

• Use of AgStar’s group strength as a listed Company to raise

economical funding as and when required

Lack of Government support

Lack of Government support to promote and encourage the private

participation in the industry

• Appropriate representative efforts

Competitive Risk

Risk of losses from a decline in company’s competitiveness.

• Carry out regular analysis on competitor activities and

performance

• Formulate strategies to enhance AgStar ‘s market share

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STATEMENT OF DIRECTORS’ RESPONSIBILITY

The Directors are responsible, under the

companies Act No 7 of 2007, 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 and loss of the Company and the

Group for the financial year.

In preparing financial statements the

Directors are required to ensure that:

• Appropriate Accounting policies have

been selected and applied consistently.

• Financial Statements have been prepared

and presented in accordance with Sri

Lanka Financial Reporting Standards

(SLFRS) and Sri Lanka Accounting

Standards(LKAS);

• The Financial Statements provide the

information required by the Companies

Act and Listing Rules of the Colombo

Stock Exchange; and

• Reasonable and prudent judgments and

estimates have been made.

The Directors have taken reasonable

measures to safeguard the assets of the

Company and of the Group and in this

regard to give proper consideration to the

establishment of appropriate internal control

systems with a view of preventing and

detecting fraud and other irregularities.

The Directors have a reasonable expectation,

that the Company and the Group have

adequate resources to continue in

operational existence for the foreseeable

future and therefore have continued to adopt

the going concern basis in preparing the

Financial Statements.

Further, the Directors have recommended a

final dividend of Rs.0.1 per share, after being

satisfied that the Company would satisfy

the solvency test immediately after such

distribution in accordance with section 56

(2) of the Companies Act No 7 of 2007, and

shall obtain a certificate of solvency from the

Independent Auditors in accordance with

Section 57 of the Companies Act No 7 of

2007.

Messrs PricewaterhouseCoopers, Chartered

Accountants, the Auditors of the Company,

have examined the Financial Statements

made available by the Board of Directors

together with all relevant financial records,

related data, and minutes of Shareholders’

and Directors’ meetings and expressed their

opinion in their Report on page 41 of the

Annual Report.

The Directors confirm that to the best of

their knowledge, all statutory payments

relating to employees and the government

that were due on behalf of the Company and

the Group as at the date of the statement of

financial position have been paid, or where

relevant provided for, except as disclosed in

note 31 to the Financial Statements covering

contingent liabilities.

The Directors are of the view that they have

discharged their responsibilities as set out in

this statement.

By Order of the Board

P.R. Secretarial Services (Private) Limited

Secretaries

Colombo

29th May 2014

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REMUNERATION COMMITTEE REPORT

Composition of Committee

The remuneration committee appointed

by the Board of Directors consists of two

independent non-executive Directors. The

members of the committee during the year

under review were Mr. Janaka de Silva

(Chairman) and Mr. A G Weerasinghe.

Committee Meetings

The committee met once a year under review

as per the table on page 23 of this report and

the minutes of the meeting are presented to

the Board.

Attendance

The Chairman/CEO, Managing Director and

the Executive Director attend the meeting of

the Remuneration Committee by invitation

to discuss the performance if the senior

executives and to make proposals as

deemed necessary except where their own

remunerations are discussed.

Role of the Committee

The role of the Remuneration Committee The

role of the committee is to;

• formulate remuneration policy of the

company to attract and retain high caliber

personnel and motivate them

• make recommendations to the Board

and monitor the level and structure of

remuneration for senior management

• make recommendations to the Board on

the Company’s framework of executive

remuneration and its cost, and to

determine on behalf of the Board specific

remuneration packages and conditions

of employment (including compensation

entitlement) for Executive Directors

• make recommendations to the Board

regarding the content of the Board’s

Annual Report to the shareholders on

Directors’ remuneration (including the

Company’s policy on Executive Director’s

remuneration, details of individual

remuneration and other terms and

conditions)

Remuneration to Directors

The remuneration paid to Directors during the

year under review is indicted in note 27.3 to

the Financial Statements.

Janaka De Silva

Chairman - Remuneration Committee

29th May 2014

Financial Information

Directors’ Report on the State of Affairs of the Company 36Audit Committee Report 40Independent Auditors’ Report 41Income Statement 42Statement of Comprehensive Income 43Statement of Financial Position 44Statement of Changes in Equity - Group 45Statement of Changes in Equity - Company 46Statement of Cash Flows 47Notes to the Financial Statements 48

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DIRECTORS’ REPORT ON THE STATE OF AFFAIRS OF THE COMPANY

The details set out in the following report

provide information required by the

Companies Act No 07 of 2007 and the listing

rules of the Colombo Stock Exchange of

Sri Lanka and are guided by recommended

best practices on Corporate Governance.

This Report was approved by the Board of

Directors by Resolution passed as of 23rd

May 2014.

General

The Directors of AgStar Fertilizers PLC (the

Company) have pleasure in submitting their

report together with the audited Financial

Statements of the Company, and the audited

consolidated Financial Statements of the

Group for the year ended 31st March, 2014

and the Auditors’ Report thereon.

Review of Performance for the year ended 31st March, 2014

The operations of the Company and its

subsidiaries for the year ended 31st March,

2014 are reviewed in the Chairman’s Report

and the Managing Director’s review.

Company Activities and Structure

AgStar Fertilizers (Private) Limited (Reg: No.

N[PVS] 30875) was incorporated in Sri Lanka

on 25th June 2002 under the Companies

Act No. 17 of 1982 and was re-registered

as per the Companies Act No. 07 of 2007

(Reg :No PV 1618) on 26th December, 2007.

The name of the Company was changed to

AgStar Fertilizers Limited (Reg. No. PV 1618

PB) pursuant to the change of its status to a

limited liability company. On 16th February,

2012 the shares of AgStar Fertilizers Limited

were listed on the Diri Savi Board of the

Colombo Stock Exchange and the name

of the Company thus changed to AgStar

Fertilizers PLC with effect from 8th May,

2012.

During the year the principal activity of the

Company was to carry out the business of

importing, blending and marketing of fertilizer

products.

The Company has six subsidiary companies

and their activities are given in note 1.2 to the

Financial Statements on page no. 48 of this

Annual Report.

Directors’ Responsibility for Financial Reporting

The Directors are responsible for the

preparation and presentation of the Financial

Statements of the Company and the Group

as to give a true and fair view of the State of

Affairs of the Company and the Group.

The Statement of Directors’ Responsibility

for Financial Reporting is given on page 32 of

this Report.

The Financial Statements of the Company

and the Group are given on pages 42 to 68

of this Report.

Accounting Policies

The Accounting Policies adopted in

preparation of Financial Statements are given

on pages 48 to 54 There were no material

changes in the Accounting Policies of the

Group during the year under review.

Auditors

The Financial Statements for the year ended

31st March, 2014 have been audited by

Messrs. PricewaterhouseCoopers (Chartered

Accountants).

A resolution relating to the appointment of

KPMG as Auditors and authorizing by the

Directors to determine their remuneration will

be proposed at the Annual General Meeting.

The fees paid to the Auditors are disclosed in

note no 7 to the Financial Statements.

The Auditors of the Company, Messrs.

PricewaterhouseCoopers do not have any

relationship with the Company other than that

of Auditors.

Independent Auditors’ Report

The Auditors’ Report on the Financial

Statements is given on page 41of this

Report.

Results and Appropriations

The profit after tax of the parent Company,

AgStar Fertilizers PLC was Rs 53 million

(2013-Rs 285 million), whilst the Group profit

attributable to the equity holders of the parent

for the year was Rs 43 million (2013- Rs 218

million). Results of the Company and of the

Group are given in the Income Statement.

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Detailed description of the Group results and appropriation is given below.

Financial Results 31st March 2014

Rs’ 000

31st March, 2013

Rs’ 000

Operating profit 289,074,343 387,306,057

Finance cost (244,999,344) (312,682,613)

Finance income 14,324,122 212,407,154

Profit before Tax 58,399,121 287,030,598

Tax expense (29,000,901) (69,481,932)

Profit for the year 29,398,220 217,548,666

Loss attributable to minority shareholders (13,479,906) (2,887)

Profit available to group’s shareholders 42,878,126 217,551,553

Other adjustments (107,573) (455,791)

Balance brought forward from previous year 789,215,918 572,120,156

Amount available for appropriation 797,086,467 789,215,918

Final dividend of Rs. 0.10 per share (2013-Rs.

0.10 per share)

(32,500,000) (32,500,000)

Balance to be carried forward next year 764,586,467 756,715,918

Statutory Payments

The Directors confirm that to the best of

their knowledge and belief, all statutory

payments in relation to all relevant regulatory

and statutory authorities have been paid

or adequately provided for in the Financial

Statements. A statement of compliance by

the Board of Directors in relation to statutory

payments is included in the Statement of

Directors’ Responsibilities on page 32 of this

Report.

Contingent Liabilities

Contingent liabilities outstanding as at 31st

March, 2014 are given in note 30 to the


Events after the Reporting Period

The award was issued by the International

Court of Arbitration of International Chamber

of Commerce against AgStar Fertilizers

PLC in relation to the case with Toepfer

International-Asia Pte. Ltd. (Singapore).

Accordingly, the impact has been adjusted

in the current year financial statements

and disclosed in note 28 to the Financial

Statements.

Corporate Governance and Internal Controls

The Board of Directors has acknowledged

the responsibility to ensure good governance

in conducting the Business activities of the

Company and confirms that the Company

is compliant with section 7.10 of the Listing

Rules of the Colombo Stock Exchange and

has also adopted the relevant Corporate

Governance practices recommended by

the Securities and Exchange Commission

of Sri Lanka and the Institute of Chartered

Accountants of Sri Lanka.

An Audit Committee and a Remuneration

Committee function as Board sub

committees with Directors who possess the

requisite qualifications and experience. The

composition of the said committees is as

follows;

Dividends

The final dividend recommended for this

financial year has not been recognized as at

the date of Statement of Financial Position in

compliance with LKAS 10- Events after the

Reporting Period.

Property, Plant and Equipment

An analysis of the property, plant and

equipment of the Company and the Group

is disclosed in note no 15 to the Financial

Statements on pages 58 and 59 of this

Report. The book value of property, plant and

equipment as at the reporting date amounted

to Rs. 1,212 million (2013-Rs. 949 million)

and Rs. 174 million (2013-Rs. 172 million) for

the Group and Company respectively.

Stated Capital

The stated capital of the Company as at

31st March, 2014 was Rs. 1,204,093,678

comprising 307,526,310 ordinary voting

shares and 17,473,690 non-voting shares

(2013- Rs. 1,204,093,678 comprising

307,526,310 ordinary voting shares and

17,473,690 non-voting shares) as given in

note 20 to the Financial Statements.

Donations

The Company and its subsidiaries have not

made any donations during the year. (2013-

Nil)

Capital Commitments

The Capital Expenditure Commitments as at

31st March, 2014 is given in note 29 to the


Revenue Reserves

The reserves consist of Retained Earnings.

The revenue reserves as at 31st March 2014

for the Group and Company amounted Rs.

797 million (2013-Rs.789 million) and Rs. 754

million (2013- Rs. 734 million) respectively.

The movement and the composition of

reserves are disclosed in the Statement of

Changes in Equity on pages no 45 and 46 of

this Report.

Provision for Taxation

The provision for taxation is computed at

the rates as disclosed in note 2.20 to the


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Audit CommitteeMr. H.P.J. De Silva

(Independent Non-Executive Director)

Mr. A.G. Weerasinghe


Remuneration CommitteeMr. H.P.J. De Silva


Mr. A.G. Weerasinghe


Company’s compliance with rules on

corporate governance are given in

corporate governance report on pages 22

to 29. The Audit Committee Report and

the Remuneration Committee Report are

disclosed on page 40 and 33 respectively of

this Report.

The Board of Directors is satisfied with the

effectiveness of the systems of internal

controls for the year under review and up to

the date of the Annual Report.

Compliance with Rules and Regulations

The Company has complied with tax and

other regulations applicable to the Company

and has submitted all the returns and the

details to the relevant parties by the due

dates.

Going Concern

After considering the financial position as

at 31st March 2014 and considering the

future prospects of the Company and its

subsidiaries, the Directors have a reasonable

expectation that the Group has adequate

resources to continue in operations in

foreseeable future. Therefore the Directors

have adopted the assumption of going

concern in preparing these Financial

Statements.

Employment Policy

The Group policy is to respect the merits

of the individuals and provide career

opportunities, irrespective of sex, race or

religion. The Group’s strength of manpower

as at 31st March, 2014 was 139. (2013-141)

Equitable treatment to Stake Holders and their interest

The Group has taken all steps to ensure the

equitable treatment to all stakeholders. The

Directors assure that the Group has taken

necessary precautions to safe guard the

interest of its stakeholders.

Environmental Protection

The Directors have ensured that every

possible step has been taken to comply

with the relevant environmental laws and

regulations in the country. The Group has

not engaged in any activity that is harmful or

hazardous to the environment.

Directors during the Year

The Directors of the Company during the

year were as follows:

Mr. N. G. R. Karunaratne (Chairman/ Chief

Executive Officer)

Mr. D. N. N. Lokuge (Deputy Chairman)

Mr. A. P. Weerasekera (Managing Director)

Mr. W. A. P. Perera

Mr. D. S. K. Amarasekara

Mr. I. C. Nanayakkara

Mr. P. R. Saldin


Mr. H. P. J. de Silva

Ms. S. Wickramasinghe

The detailed profiles of the Board of Directors

of the Company are given on pages 08 to 11

of this Report.

Rotation/ Re-Election of Directors

I. Messrs. D. N. N. Lokuge, A. P.

Weerasekara and P. R. Saldin retire

by rotation in accordance with Article

23 (6) of the Articles of Association of

the Company and being eligible, offer

themselves for re-election.

II. Mr. N.G.R. Karunaratne who is

presently 77 years of age will cease

to hold office at the conclusion of

the Annual General Meeting and it is

proposed to move a resolution for his

re-appointment for a further period of

one year or up to the date of the next

Annual General Meeting (whichever

occurs first) and for the non-application

of the age limit referred to in Section

210 of the Companies Act No. 7 of

2007.

III. Mr. A.G. Weerasinghe who is presently

72 years of age will cease to hold office

at the conclusion of the Annual General

Meeting and it is proposed to move a

resolution for his re-appointment for

a further period of one year or up to

the date of the next Annual General

Meeting (whichever occurs first) and

for the non-application of the age

limit referred to in Section 210 of the

Companies Act No. 7 of 2007.

Independent Directors

During the year the following Directors were

acting as the Independent Directors of the

Company;


Mr. H. P. J. de Silva

Ms. S. Wickramasinghe

Directors’ Interest Register

In terms of the Companies Act No 07 of

2007 an Interest Register was maintained

during the accounting period under review.

Directors’ Interest in Contracts

The Directors in terms of Section 192 of the

Companies Act No 7 of 2007, have declared

their interests in contracts with the Company.

The Directors did not have any material

interest in any contract of significance in

Group’s business except those disclosed in


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Directors’ Interest in SharesName of The Director As At

31st March 2014

As At

31st March 2013

Ordinary

voting

shares

Non-voting

shares

Ordinary

voting

shares

Non-voting

shares

Mr. N. G. R. Karunaratne 8,188,310 11,648,140 8,188,310 11,648,140

Mr. D. N. N. Lokuge 3,125,000 - 3,125,000 -

Mr. A. P. Weerasekera 8,053,310 5,824,550 8,053,310 5,824,550

Mr. W. A. P. Perera 3,120,000 - 3,120,000 -

Mr. D. S. K. Amarasekara - - - -

Mr. I. C. Nanayakkara - - - -

Mr. P. R. Saldin - - - -

Mr. A. G. Weerasinghe - - - -

Mr. H. P. J. de Silva - - - -

Mrs. S. Wickramasinghe - - - -

Directors Fees and Remuneration

The amount of the Directors fees and

remuneration paid during the year is given in

note 27.3 to the Financial Statements.

Related Party Transactions

The Directors have disclosed the transactions

with Related Parties in terms of the Sri Lanka

Accounting Standards which are set out in


Shareholders

The number of registered shareholders of the

Company, top twenty shaholders and the

distribution and analysis of shareholdings as

at 31st March 2014 are given on pages 69 to

71 of this Report.

Annual Report

The Board of Directors approved the

Company Financial Statements together with

the reviews which forms part of the Annual

Report on 23rd May 2014. The appropriate

number of copies will be submitted to

the Colombo Stock Exchange, Sri Lanka

Accounting and Auditing Standard Monitoring

Board and the Registrar of Companies within

the time frame.

Annual General Meeting

The Annual General Meeting will be held on

30th June 2014 at 10.00 a.m. at The Park

Premier Banquet Hall, Excel World, No. 338,

T.B. Jaya Mawatha, Colombo 10. The notice

of Annual General Meeting is given on page

73 of this Report.

On behalf of the Board of Directors.

Director

Director

P.R. Secretarial Services (Private) Ltd

Company Secretary

Colombo

29th May 2014

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Purpose of the Committee

The committee is vested with the

responsibility to assist the Board of Directors

in the oversight of the effectiveness of the

internal control over financial reporting,

including the integrity of the financial

statements of the company and the group.

The committee ensures the qualifications

and the independence of the External

auditors and monitors the performances of

the internal auditors. The establishment of

the compliance with the legal and regulatory

requirements is also form part of the key

purpose of the committee.

Composition

The committee appointed by the Board

of Directors consists of two independent

non -executive Directors. The committee

is headed by Mr. Janaka De Silva who is

a member of the Institute of Chartered

Accountants of Sri Lanka. Mr. A G

Weerasinghe who represents the committee

is an experienced senior banker.

The Chairman/CEO, Managing Director and

Executive Director attend to the Committee

meeting by invitation.

Meetings

There were 6 meetings of the committee

during the year under review; each

attendance is stated in the table on page 23

of this report.

Financial Reporting

The committee assists the Board of Directors

in fulfilling its oversight responsibility to the

shareholders and other stakeholders relating

to the Company’s financial statements and

the financial reporting process. Further,

the committee holds the responsibility for

reviewing the internal audit function of the

company and the annual independent audit

of the financial statements of the company

and the group.

AUDIT COMMITTEE REPORT

The recommendation of the quarterly annual

financial statements to the board as well as

ensuring company’s compliance with the law

and regulatory affairs of the company are

also part and partial responsibilities of the

committee. Further, the ensuring the reliability

and consistency of the accounting policies

and methods adopted in preparing the

financial statements and their compliance with

the Sri Lanka Financial Reporting Standards

and the adequacy of disclosures required by

other applicable laws, rules and guidelines.

External Audit

The committee has recommended to the

Board of Directors that Messer’s KPMG to be

appointed as the auditors of the company for

the year ending 31st March 2015 subject to

the approval of the shareholders at the Annual

General Meeting.

The Audit committee is satisfied that the

independence of the external auditors has

not been adversely influenced by any event

or service that could result in a conflict of

interest. Due consideration has been given to

the level of audit and non-audit fees received

by the external auditors from the company.

The Audit committee has recommended to

the Board of Directors on the fees payable to

the auditors for the payable to the auditors for

approval by the Board.

Janaka De Silva

Chairman – Audit Committee

Colombo.

29th May 2014

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INDEPENDENT AUDITORS’ REPORT

To the shareholders of AgStar Fertilizers PLC

Report on the Financial Statements

1. We have audited the accompanying

financial statements of AgStar Fertilizers

PLC (the Company), the consolidated

financial statements of AgStar Fertilizers

PLC and its subsidiaries (the Group)

which comprise the statements of

financial position as at 31 March 2014,

the income statements, statements of

comprehensive income, statements of

changes in equity and statements of

cash flows for the year then ended, and

a summary of significant accounting

policies and other explanatory notes, as

set out on pages 42 to 68.

Management’s Responsibility for the Financial Statements

2. Management is responsible for the

preparation and fair presentation of

these financial statements in accordance

with Sri Lanka Accounting Standards.

This responsibility includes: designing,

implementing and maintaining internal

control relevant to the preparation and

fair presentation of financial statements

that are free from material misstatement,

whether due to fraud or error; selecting

and applying appropriate accounting

policies; and making accounting

estimates that are reasonable in the

circumstances.

Scope of Audit and Basis of Opinion

3. Our responsibility is to express an opinion

on these financial statements based

on our audit. We conducted our audit

in accordance with Sri Lanka Auditing

Standards. Those standards require

that we plan and perform the audit to

obtain reasonable assurance whether

the financial statements are free from

material misstatement.

4. An audit includes examining, on a

test basis, evidence supporting the

amounts and disclosures in the financial

statements. An audit also includes

assessing the accounting principles

used and significant estimates made by

management, as well as evaluating the

overall financial statement presentation.

5. 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. We

therefore believe that our audit provides a

reasonable basis for our opinion.

Opinion

6. In our opinion, so far as appears from our

examination, the Company maintained

proper accounting records for the year

ended 31 March 2014 and the financial

statements give a true and fair view

of the Company’s state of affairs as at

31 March 2014 and of its profit and

cash flows for the year then ended in

accordance with Sri Lanka Accounting

Standards.

7. In our opinion, the consolidated

financial statements give a true and

fair view of the Group’s state of affairs

as at 31 March 2014 and of the profit

and cash flows for the year then

ended in accordance with Sri Lanka

Accounting Standards, of the Group

dealt with thereby, so far as concerns the

shareholders of the Company.

Report on Other Legal and Regulatory Requirements

8. These financial statements also comply

with the requirements of Sections 151 (2)

and 153 (2) to 153 (7) of the Companies

Act, No. 07 of 2007.

COLOMBO

CHARTERED ACCOUNTANTS

29th May 2014

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INCOME STATEMENT

(All amounts in Sri Lankan Rupees)

Group Company

For the Year Ended 31st March 31st March

Note 2014 2013 2014 2013

Revenue 6 1,725,716,540 1,757,846,542 1,376,487,205 1,407,110,053

Cost of sales 7 (1,040,654,609) (1,073,720,226) (764,232,437) (779,347,490)

Gross profit 685,061,931 684,126,316 612,254,768 627,762,563

Distribution expenses 7 (81,687,417) (126,411,650) (67,790,562) (112,773,375)

Administrative expenses 7 (202,011,426) (176,306,434) (176,372,445) (162,526,031)

Claim on arbitration 8 (122,710,596) - (122,710,596) -

Other operating income 9 10,421,851 5,897,825 31,540,917 89,298,280

Operating profit 289,074,343 387,306,057 276,922,082 441,761,437

Finance income 129,732,080 212,407,154 127,908,860 209,833,494

Finance costs (360,407,302) (312,682,613) (325,574,179) (299,600,968)

Net finance costs 11 (230,675,222) (100,275,459) (197,665,319) (89,767,474)

Profit before tax 58,399,121 287,030,598 79,256,763 351,993,963

Income tax expense 12 (29,000,901) (69,481,932) (26,051,897) (66,688,501)

Profit for the year 29,398,220 217,548,666 53,204,866 285,305,462

Profit attributable to :

Oweners of the parent 42,878,126 217,551,553 53,204,866 285,305,462

Non controlling interests (13,479,906) (2,887) - -

29,398,220 217,548,666 53,204,866 285,305,462

Earnings per share - basic 13 0.13 0.67

Dividend per share 14 0.10 0.10

The notes on pages 48 to 68 form an integral part of these financial statements.

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STATEMENT OF COMPREHENSIVE INCOME


Group Company


Note 2014 2013 2014 2013

Profit for the year 29,398,220 217,548,666 53,204,866 285,305,462

Other comprehensive income:

Actuarial loss on post employment benefit

obligations 23 (531,775) (879,993) (531,775) (879,993)

Revaluation of land - 67,491,000 - -

Other comprehensive income for the

year, net of tax (531,775) 66,611,007 (531,775) (879,993)

Total comprehensive income for the year net of tax 28,866,445 284,159,673 52,673,091 284,425,469

Attributable to :

- Owners of the parent 42,346,351 284,162,560 52,673,091 284,425,469

- Non -controlling interest (13,479,906) (2,887) - -

28,866,445 284,159,673 52,673,091 284,425,469


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STATEMENT OF FINANCIAL POSITION


Group Company 31st March 31st MarchAs at Note 2014 2013 2014 2013

ASSETSNon current assetsProperty, plant and equipment 15 1,212,318,753 948,890,942 174,396,882 172,262,147Goodwill 5,629,638 5,629,638 - -Investment in subsidiaries 16 - - 635,199,990 630,199,990Deferred tax assets 24 219,842 66,151 - -Total non current assets 1,218,168,233 954,586,731 809,596,872 802,462,137

Current assetsInventories 17 488,209,258 163,969,629 91,690,117 70,108,228Trade and other receivables 18 2,746,116,011 3,121,321,434 2,943,142,999 3,076,294,398Cash and cash equivalents 19 117,480,206 160,102,115 55,596,152 112,306,418Total current assets 3,351,805,475 3,445,393,178 3,090,429,268 3,258,709,044Total assets 4,569,973,708 4,399,979,909 3,900,026,140 4,061,171,181

EQUITY AND LIABILITIESCapital and reservesStated capital 20 1,204,093,678 1,204,093,678 1,204,093,678 1,204,093,678Revaluation reserve 78,594,246 79,018,448 30,000,726 30,424,928Retained earnings 797,086,467 789,215,918 754,791,170 734,193,877Equity attributable to: Owners of the parent 2,079,774,391 2,072,328,044 1,988,885,574 1,968,712,483Non controlling interest 21,117,005 34,596,911Total equity 2,100,891,396 2,106,924,955

Non current liabilitiesLoans and borrowings 22 35,020,012 46,952,757 1,014,802 5,311,810Retirement benefit obligations 23 12,628,200 9,578,902 12,628,200 9,578,902Deferred tax liabilities 24 240,918,173 219,572,930 222,020,693 200,675,450Total non current liabilities 288,566,385 276,104,589 235,663,695 215,566,162

Current liabilitiesLoans and borrowings 22 1,300,535,454 671,015,566 848,829,432 557,216,319Trade and other payables 25 871,616,886 1,293,067,066 823,222,808 1,267,501,704Current tax payable 8,363,587 52,867,733 3,424,631 52,174,513Total current liabilities 2,180,515,927 2,016,950,365 1,675,476,871 1,876,892,536Total equity and liabilities 4,569,973,708 4,399,979,909 3,900,026,140 4,061,171,181

I certify that these financial statements have been prepared in compliance with the requirements of the Companies Act No. 07 of 2007.

A.S. Rajith PereraGeneral Manager-Finance

The Board of Directors is responsible for the preparation and presentation of these financial statements.

Signed for and on behalf of the board

N.G.R. Karunaratne P.R. SaldinChairman/CEO Director

29th May 2014


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STATEMENT OF CHANGES IN EQUITY - GROUP


Equity Attributable to owners of the parent Non

Stated Revaluation Retained Total capital controlling Total

capital reserve earnings & reserves interest Equity

Balance as at 1st April 2012 1,204,093,678 30,849,130 588,370,156 1,823,312,964 - 1,823,312,964

Non controlling interest on

Acquisition of subsidiary - - - - 34,599,798 34,599,798

Profit for the year - - 217,551,553 217,551,553 (2,887) 217,548,666

Other comprehensive

income for the year - 67,491,000 (879,993) 66,611,007 - 66,611,007

Total comprehensive

income for the year - 67,491,000 216,671,560 284,162,560 (2,887) 284,159,673

Deferred tax on

revaluation surplus - (18,897,480) - (18,897,480) - (18,897,480)

Depreciation impact on revaluation

transferred to retained earnings - (424,202) 424,202 - - -

Dividends declared and paid

2011/2012 - - (16,250,000) (16,250,000) - (16,250,000)

Balance as at 31st March 2013 1,204,093,678 79,018,448 789,215,918 2,072,328,044 34,596,911 2,106,924,955

Balance as at 1st April 2013 1,204,093,678 79,018,448 789,215,918 2,072,328,044 34,596,911 2,106,924,955

Profit for the year - - 42,878,126 42,878,126 (13,479,906) 29,398,220

Other comprehensive

income for the year - - (531,775) (531,775) - (531,775)

Total comprehensive

income for the year - - 42,346,351 42,346,351 (13,479,906) 28,866,445

Depreciation impact on revaluation

transferred to retained earnings - (424,202) 424,202 - - -

Dividends declared and paid

2012/2013 - - (34,900,004) (34,900,004) - (34,900,004)

Balance as at 31st March 2014 1,204,093,678 78,594,246 797,086,467 2,079,774,391 21,117,005 2,100,891,396


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STATEMENT OF CHANGES IN EQUITY - COMPANY


Stated Revaluation Retained Total capital

capital reserve earnings & reserves

Balance as at 1st April 2012 1,204,093,678 30,849,130 465,594,206 1,700,537,014

Profit for the year - - 285,305,462 285,305,462

Other comprehensive income for the year - - (879,993) (879,993)

Total comprehensive income for the year - - 284,425,469 284,425,469

Depreciation impact on revaluation transferred to

retained earnings - (424,202) 424,202 -

Dividend declared and paid 2011/2012 - - (16,250,000) (16,250,000)

Balance as at 31st March 2013 1,204,093,678 30,424,928 734,193,877 1,968,712,483

Balance as at 1st April 2013 1,204,093,678 30,424,928 734,193,877 1,968,712,483

Profit for the year - - 53,204,866 53,204,866

Other comprehensive income for the year - - (531,775) (531,775)

Total comprehensive income for the year - - 52,673,091 52,673,091

Depreciation impact on revaluation transferred - (424,202) 424,202 -

to retained earnings

Dividend declared and paid 2012/2013 - - (32,500,000) (32,500,000)

Balance as at 31st March 2014 1,204,093,678 30,000,726 754,791,170 1,988,885,574


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STATEMENT OF CASH FLOWS


Group Company


Note 2014 2013 2014 2013

Cash flows from operating activities

Cash generated from / (used in) operations 26 (85,438,093) 567,988,084 (62,334,433) 500,880,985

Gratuity paid 23 (326,250) (389,765) (326,250) (389,765)

Interest paid 11 (360,407,302) (312,682,613) (325,574,179) (299,600,968)

Interest received 11 129,732,080 212,407,154 127,908,860 209,833,494

Income tax paid (405,580) (34,396,358) - (30,567,822)

Net cash generated from/(used in) operating activities (316,845,145) 432,926,502 (260,326,002) 380,155,924

Cash flows from investing activities

Acquisition of subsidiaries net of cash and bank overdraft - (24,006,941) - -

Investment in Subsidiaries - - (5,000,000) (629,199,990)

Payments on property, plant and equipment 15 (313,839,020) (586,211,080) (39,639,269) (32,961,001)

Proceeds from disposal of property, plant and equipment 2,975,113 320,335 2,975,113 113,584,916

Dividend income (received) 9 - - 21,599,996 16,250,000

Net cash used in investing activities (310,863,907) (609,897,686) (20,064,160) (532,326,075)

Cash flows from financing activities

Short term borrowing net movement 698,704,196 (386,509,991) 306,542,685 (410,971,273)

Dividend payment 14 (32,500,000) (16,250,000) (32,500,000) (16,250,000)

Repayment of finance lease principal (7,028,618) (6,225,544) (6,252,410) (5,777,553)

Net cash (used in)/generated from financing activities 659,175,578 (408,985,535) 267,790,275 (432,998,826)

Net decrease/increase in cash and cash equivalents for the year 31,466,526 (585,956,719) (12,599,887) (585,168,977)

Moment in cash and cash equivalent

Beginning of the year 19 75,519,133 661,475,852 67,476,184 652,645,161

Increase in cash and cash equivalents 31,466,526 (585,956,719) (12,599,887) (585,168,977)

End of the year 19 106,985,659 75,519,133 54,876,297 67,476,184

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1. General Information

1.1 AgStar Fertilizers PLC is a limited

liability company incorporated in Sri

Lanka and listed on the Colombo Stock

Exchange. The address of its registered

office is No. 9, Bawa Place, Colombo

8.

1.2 The principal activities of Group are as follows:

AgStar Fertilizers PLC - Carry on

business of importing, blending and

marketing of fertilizer products.

AgStar Cropcare (Private) Limited

- Carry on business of importing,

formulating and marketing of

chemicals, fertilizers and specialty

products.

AgStar Seeds (Private) Limited - Carry

on business of producing, trading

and marketing of seeds and planting

materials.

AgStar Grains (Private) Ltd - Carrying

on the business of procurement,

processing and marketing of rice and

other grains.

Mahaweli Rice Processing

Industries (Private) Limited - Carrying

on the business of procurement,

processing and marketing of rice.

AgStar Properties (Private) Limited

- Set up for property development

and construction of warehousing and

storage facilities.

AgStar Exports (Private) Limited -

Carrying on business of exporting

cinnamon

2. Summary of Significant accounting policies

The principal accounting policies

adopted in the preparation of these

financial statements are set out below.

These policies have been consistently

applied to all the years presented,

unless otherwise stated.

liabilities and contingent liabilities

assumed in a business combination

are measured initially at their fair values

at the acquisition date, irrespective of

the extent of any minority interest. The

excess of the cost acquisition over

the fair value of the Group’s share of

the identifiable net assets acquired

is recorded as goodwill. If the cost of

acquisition is less than the fair value

of the net assets of the subsidiary

acquired, the difference is recognised

directly in the income statement.

Goodwill is initially measured as

the excess of the aggregate of the

consideration transferred and the fair

value of non-controlling interest over

the net identifiable assets acquired and

liabilities assumed. If this consideration

is lower than the fair value of the net

assets of the subsidiary acquired, the

difference is recognised in profit or loss.

2.3 Foreign currency transactions The Company’s/Group’s functional

currency is Sri Lankan Rupees.

Foreign currency transactions are

accounted for using the exchange

rates prevailing at the date of the

transactions or valuations where items

are re-measured. Gains and losses

resulting from the settlement of such

transactions and from the translation

of monetary assets and liabilities

denominated in foreign currencies, are

recognized in the income statement.

Such balances are translated at year

end exchange rates.

2.4 Property, plant and equipment(a) Cost and valuation

Land and buildings comprise mainly

factories, retail outlets and offices.

Land and buildings are shown at

fair value, based on valuations by

external independent valuers, less

subsequent depreciation for buildings.

Valuations are performed with sufficient

NOTES TO THE FINANCIAL STATEMENTS

2.1 Basis of preparation The consolidated financial statements

are prepared in accordance with and

comply with Sri Lanka Accounting

Standards (SLFRSs/LKASs). The

financial statements are prepared under

the historical cost basis as modified

by the revaluation of land and financial

assets and liabilities.

The preparation of financial statements

in conformity with SLFRSs/LKASs

and requires the use of certain critical

accounting estimates. It requires

management to exercise their

judgment in the process of applying

the Company’s accounting policies.

The areas where assumptions and

estimates are significant to the

consolidated financial statements are

disclosed in note 4.

2.2 Consolidation Subsidiary undertakings, which are

those companies in which the Group,

directly or indirectly, has an interest of

more than one half of the voting rights

or otherwise has power to exercise

control over the operations, have

been consolidated. Subsidiaries are

consolidated from the date on which

effective control is transferred to the

Group and are no longer consolidated

from the date of disposal. All inter

company transactions, balances,

unrealised surplus and deficits

on transactions between Group

companies have been eliminated.

The purchase method of accounting

is used to account for the acquisition

of subsidiaries by the Group. The

cost of an acquisition is measured

as the fair value of the assets given,

equity instruments issued and

liabilities incurred or assumed at

the date of exchange, plus costs

directly attributable to the acquisition.

Identifiable assets acquired and

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regularity to ensure that the fair value

of a revalued asset does not differ

materially from its carrying amount. Any

accumulated depreciation at the date

of revaluation is eliminated against the

gross carrying amount of the asset,

and the net amount is restated to the

revalued amount of the asset. All other

property, plant and equipment is stated

at historical cost less depreciation.

Historical cost includes expenditure that

is directly attributable to the acquisition

of the items.

Subsequent costs are included in the

asset’s carrying amount or recognised

as a separate asset, as appropriate,

only when it is probable that future

economic benefits associated with the

item will flow to the group and the cost

of the item can be measured reliably.

The carrying amount of the replaced

part is derecognised. All other repairs

and maintenance are charged to the

income statement during the financial

period in which they are incurred.

Increases in the carrying amount arising

on revaluation of land and buildings

are credited to other comprehensive

income and shown as other reserves

in shareholders’ equity. Decreases

that offset previous increases of the

same asset are charged in other

comprehensive income and debited

against other reserves directly in

equity; all other decreases are charged

to the income statement. Each year

the difference between depreciation

based on the revalued carrying amount

of the asset charged to the income

statement, and depreciation based on

the asset’s original cost is transferred

from ‘revaluation reserve’ to ‘retained

earnings’.

Land is not depreciated. Depreciation

on other assets is calculated using

the straight-line method to allocate

their cost or revalued amounts to their

residual values over their estimated

useful lives, as follows:

Plant & Machinery 10 Years

Motor Vehicle 5 Years

Furniture & Fittings 10 Years

Computer Hardware 3 Years

Office Equipment 5-10 Years

Leasehold Motor Vehicles 4 Years

Pallets 5 Years

Building Fittings 4 Years

Buildings 20 Years

An asset’s carrying amount is written

down immediately to its recoverable

amount if the asset carrying amount is

greater than its estimated recoverable

amount.

Gains and losses on disposal of

property, plant and equipment are

determined by comparing the proceeds

with the carrying amount and are

recognised within other operating

income/ (expenses) in the income

statement.

When revalued assets are sold, the

amounts included in other reserves are

transferred to retained earnings.

(b) Borrowing costs

General and specific borrowing

costs directly attributable to the

acquisition, construction or production

of qualifying assets, which are assets

that necessarily take substantial period

of time to get ready for their intended

use are added to the cost of those

assets, until such time as the assets

are substantially ready for their intended

use.

Investment income earned on the

temporary investment of the specific

borrowing pending their expenditure on

qualifying assets is deducted from the

borrowing cost eligible for capitalization.

(c) Impairment of property, plant

and equipment

The carrying value of property,

plant and equipment is reviewed for

impairment when events or changes

in circumstances indicate the carrying

value may not be recoverable. If any

such indication exists and where the

carrying values exceed the estimated

recoverable amount the assets are

written down to their recoverable

amount. Impairment losses are

recognized in the income statement

unless it reverses a previous revaluation

surplus for the same asset.

2.5 Intangible Assets Goodwill

Goodwill arises on the acquisition of

subsidiaries and represents the excess

of the consideration transferred over

the group’s interest in net fair value of

the net identifiable assets, liabilities and

contingent liabilities of the acquiree

and the fair value of the non-controlling

interest in the acquiree. For the purpose

of impairment testing, goodwill acquired

in a business combination is allocated

to each of the CGUs, or groups of

CGUs, that is expected to benefit

from the synergies of the combination.

Each unit or group of units to which

the goodwill is allocated represents the

lowest level within the entity at which

the goodwill is monitored for internal

management purposes. Goodwill is

monitored at the operating segment

level. Goodwill impairment reviews are

undertaken annually or more frequently

if events or changes in circumstances

indicate a potential impairment. The

carrying value of goodwill is compared

to the recoverable amount, which is the

higher of value in use and the fair value

less costs to sell. Any impairment is

recognised immediately as an expense

and is not subsequently reversed.


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2.6 Impairment of non-financial assets

Assets that are subject to amortisation

are reviewed for impairment whenever

events or changes in circumstances

indicate that the carrying amount may

not be recoverable. An impairment loss

is recognised for the amount by which

the asset’s carrying amount exceeds its

recoverable amount. The recoverable

amount is the higher of an asset’s fair

value less costs to sell and value in

use. For the purposes of assessing

impairment, assets are grouped at

the lowest levels for which there are

separately identifiable cash flows (cash-

generating units). Non-financial assets

other than goodwill that suffered an

impairment are reviewed for possible

reversal of the impairment at each

reporting date.

2.7 Trade and other receivables Trade receivables are amounts due

from customers for merchandise sold

in the ordinary course of business. If

collection is expected in one year or

less (or in the normal operating cycle

of the business if longer),they are

classified as current assets. If not, they

are presented as non-current assets.

Trade receivables are recognised

initially at fair value and subsequently

measured at amortised cost using the

effective interest method, less provision

for impairment.

2.8 Financial assets2.8.1 Classification

The Company classifies its financial

assets in the following categories: at fair

value through profit or loss, loans and

receivables, available for sale and held

to maturity. The classification depends

on the purpose for which the financial

assets were acquired. Management

determines the classification of its

financial assets at initial recognition and

re-evaluates this designation at every

reporting date.

(a) Financial assets at fair value

through profit or loss

A financial asset is classified into this

category if acquired principally for the

purpose of selling in the short term

designated by management. Assets in

this category are classified as current

assets if expected to settle within 12

months; Otherwise, they are classified

as non current assets. Derivatives are

also categories as financial assets at

fair value through profit or loss unless

they are designated as hedges.

(b) Loans and receivables

Loans and receivables are non-

derivative financial assets with fixed or

determinable payments that are not

quoted in an active market. They are

included in current assets, except for

maturities greater than 12 months after

the end of the reporting period. Loans

and receivables of which maturity

greater than 12 months classified as

non current asset. The company’s

loans and receivables comprise “ Trade

& other receivable and Cash & Cash

equivalents in the statement of financial

position.

2.8.2 Recognition and measurement of

financial asset

Regular purchases and sales of

financial assets are recognised on the

trade-date – the date on which the

company commits to purchase or

sell the asset. Investments are initially

recognised at fair value plus transaction

costs for all financial assets. Financial

assets are derecognized when the

rights to receive cash flows from the

investments have expired or have

been transferred and the company has

transferred substantially all risks and

rewards of the ownership. Loans and

receivables are carried at amortised

cost using the effective interest method.

Gains or losses arising from changes

in the fair value of the ‘financial assets

at fair value through profit or loss’

category are presented in the income

statement within other gains/(losses) –

net, in the year in which they arise.

2.9 Offsetting financial instruments Financial assets and liabilities are offset

and the net amount reported in the

statement of financial position when

there is a legally enforceable right to

offset the recognised amounts and

there is an intention to settle on a net

basis or realise the asset and settle the

liability simultaneously.

2.10 Impairment of financial assets(a) Assets carried at amortised cost

The Company assesses at the end of

each reporting period whether there is

objective evidence that a financial asset

or group of financial assets is impaired.

A financial asset or a group of financial

assets is impaired and impairment

losses are incurred only if there is

objective evidence of impairment as

a result of one or more events that

occurred after the initial recognition

of the asset (a ‘loss event’) and that

loss event (or events) has an impact

on the estimated future cash flows of

the financial asset or group of financial

assets that can be reliably estimated.

Evidence of impairment may include

indications that the debtors or a

group of debtors is experiencing

significant financial difficulties, default

or delinquency in interest or principle

payment, the probability that they will

enter bankruptcy or other financial

reorganization, and where observable

data indicate that there is a measurable

decrease in the estimated future cash

flows, such as changes in arrears or

economic conditions that correlate with

defaults.


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For loans and receivables category, the

amount of the loss is measured as the

difference between the asset’s carrying

amount and the present value of

estimated future cash flows (excluding

future credit losses that have not been

incurred) discounted at the financial

asset’s original effective interest rate.

The carrying amount of the asset is

reduced and the amount of the loss is

recognised in the income statement.

If, in a subsequent period, the amount

of the impairment loss decreases

and the decrease can be related

objectively to an event occurring after

the impairment was recognised (such

as an improvement in the debtor’s

credit rating), the reversal of the

previously recognised impairment loss

is recognised in the income statement.

2.11 Financial liabilities The Company’s financial liabilities

include trade and other payables, bank

loans and other borrowings. All financial

liabilities are recognised initially at their

fair values and subsequently measured

at amortised cost, using the effective

interest method, unless the effect of

discounting would be insignificant, in

which case they are stated at cost.

2.12 Inventories Inventories are stated at the lower

of the cost or net realisable value.

Cost is determined by the weighted

average method. The cost of finished

goods and work in progress comprises

raw materials, direct labour, other

direct costs and related production

overheads, but excludes borrowing

costs. Net realisable value is the

estimate of the selling price in the

ordinary course of business, less

the costs of completion and selling

expenses.

2.13 Cash and cash equivalents Cash and cash equivalents includes

cash in hand, deposits held at call with

banks, other short term highly liquid

investments with original maturities

of three months or less, and bank

overdrafts. Bank overdrafts are shown

within borrowings in current liabilities on

the statement of financial position.

2.14 Provisions Provisions are recognised when the

Company has a present legal or

constructive obligation as a result

of past events; it is probable that an

outflow of resources will be required to

settle the obligation; and the amount

has been reliably estimated. Provisions

are not recognised for future operating

losses.

Where there are number of similar

obligations, the likelihood that an

outflow will be required in settlement

is determined by considering the class

of obligations as a whole. A provision

is recognised even if the likelihood of

an outflow with respect to any one

item included in the same class of

obligations may be small.

Provisions are measured at the present

value of the expenditures expected to

be required to settle the obligations

using the pre-tax rate that reflects

current market assessment of the time

value of money and risks specific to

the obligations. The increase in the

provision due to passage of time is

recognised as interest expense.

2.15 Employee benefits(a) Defined benefit obligation

Defined benefit plans define an amount

of benefit that an employee will receive

on retirement, usually dependent on

one or more factors such as age, years

of service and compensation.

The liability recognised in the statement

of financial position in respect of

defined benefit plans are the present

value of the defined benefit obligation

at the statement of financial position

date. The defined benefit obligation

is calculated by the Company using

the projected unit credit method. The

present value of the defined benefit

obligation is determined by discounting

the estimated future cash flows using

the interest rates of government bonds

in the absence of a deep market for

corporate bonds in Sri Lanka. The

government bonds are denominated

in the currency in which the benefits

will be paid, and that have terms to

maturity approximating to the terms of

the related pension liability.

(b) Defined contribution plans

All employees of the Company

in Sri Lanka are members of the

Employees’ Provident Fund and

Employees’ Trust Fund, to which the

Company contributes 12% and 3%

respectively, of such employees’ basic

or consolidated wage or salary.

(c) Short term employee benefits

Wages, salaries, paid annual leave

and sick leave, bonuses and non-

monetary benefits are accrued in the

year in which the associated services

are rendered by employees of the

Company.

2.16 Trade and other payables Liabilities classified as trade and other

payables in the statement of financial

position are those which fall due for

payment on demand or within one year

from the statement of financial position

date. Items classified as non-current

liabilities are those which fall due for

payment beyond a period of one year

from the statement of financial position

date.


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2.17 Borrowings Borrowings are recognised initially

at fair value, net of transaction costs

incurred. Borrowings are subsequently

stated at amortised cost; any difference

between the proceeds (net of

transaction costs) and the redemption

value is recognised in the income

statement over the period of the

borrowings using the effective interest

method.

All other borrowing costs are

recognised in profit or loss in the year in

which they are incurred.

2.18 Leases Leases of property, plant and

equipment where the Company

assumes substantially all the risks and

rewards of ownership are classified

as finance leases. Finance leases

are capitalized at the estimated

present value of the underlying lease

payments. Each lease payment is

allocated between the liability and

finance charges so as to achieve a

constant rate on the finance balance

outstanding. The corresponding rental

obligations, net of finance charges, are

included in other long-term payables.

The interest element of the finance cost

is charged to the income statement

over the lease period. The property,

plant and equipment acquired under

finance leasing contracts is depreciated

over the useful life of the asset.

Leases in which a significant portion

of the risks and rewards of ownership

are retained by the lessor are classified

as operating leases. Payments made

under operating leases are charged

to the income statement on a straight

line basis over the period of the lease.

When an operating lease is terminated

before the lease period has expired,

any payment required to be made

to the lessor by way of penalty is

recognised as an expense in the period

in which termination takes place.

2.19 Revenue recognition Revenue is measured at the fair

value of the consideration received or

receivable, and represents amounts,

for goods supplied, stated net of

discounts, Returns, Value added

taxes. The Company recognises

revenue when the amount of revenue

can be reliably measured; when it is

probable that future economic benefit

will flow to the entity; and when

specific criteria have been met for

each of the company’s activities, as

described below. The company bases

its estimates of returns on historical

results, taking into consideration

the type of customer, the type of

transaction and the specify of the each

arrangement.

(a) Sale of goods

Sales of goods are recognised when a

company has delivered products to the

customer, the customer has accepted

the products and collectability of

the related receivables is reasonably

assured.

(b) Interest income

Interest income is recognised on

a time-proportion basis using the

effective interest method unless

collectability is in doubt.

2.20 Taxation(a) Current taxes

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.

(b) Deferred income taxes

Deferred tax is provided using the

liability method, for all temporary

differences arising between the tax

bases of assets and liabilities and their

carrying values for financial reporting

purposes. Currently enacted tax rates

are used to determine deferred income

tax.

Deferred income tax asset are

recognised only to the extent that it

is probable that future taxable profits

will be available against which the

temporary differences can be utilised.

Deferred income tax asset & liabilities

are offset when there is a legally

enforceable right to offset current tax

asset against current tax liabilities.

When the deferred income tax assets

and liabilities relate to income taxes

levied by the same taxation authority.

2.21 Contingent liabilities and contingent assets

A contingent liability is a possible

obligation that arises from past events

whose existence will be confirmed by

uncertain future events beyond the

control of the Company or a present

obligation that is not recognised

because it is not probable that an

outflow of resources will be required

to settle the obligation. All contingent

liabilities are disclosed as a note to the

financial statements unless the outflow

of resources are remote.

A contingent asset is a possible asset

that arises from past events whose

existence will be confirmed by uncertain

future events beyond the control of

the Company . Contingent assets are

disclosed where inflow of economic

benefits is probable.

2.22 Segment reporting Operating segments are reported

in a manner consistent with the

internal reporting provided to the chief

operating decision-maker. The chief

operating decision-maker, who is

responsible for allocating resources and

assessing performance of the operating

segments, has been identified as

the steering committee that makes

strategic decisions.


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3. Financial risk management

3.1 Financial risk factors The Group is exposed to a variety of financial risks. These include foreign exchange risks, interest rate risks, credit risks and liquidity risks.

Based on our economic outlook and the Group’s exposure to these risks, the Board of Directors approves various risk management

strategies from time to time.

(a) Market risk

(i) Foreign exchange risk

The Company/group pays for Fertilizer imports in foreign currency. The foreign exchange risk is considerably low under present

government subsidy scheme where the Company has to pay on letters of credit within six months since the due date and the

government subsidy is receivable in US Dollars within six months since due. No significant foreign currency exposure arise form the

other transactions.

(ii) Interest rate risk

The Group is exposed to the risk of changes in market interest rates as the Group borrowings are mostly at floating interest rates.

(b) Credit risk

The credit risk arises from trade and other receivables. Refer Note 18 for further disclosures on credit risk.

(c) Liquidity risk

Cash flow forecasting is performed by the finance division. The finance division monitors rolling forecasts of the Group’s liquidity

requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed

borrowing facilities at all times so that the Group does not breach borrowing limits or covenants (where applicable) on any of its borrowing

facilities. Such forecasting takes into consideration the Group’s debt financing plans, covenant compliance, compliance with internal

statement of financial position ratio targets and, if applicable external regulatory or legal requirements – for example, currency restrictions.

The table below analyses the Group’s non-derivative financial liabilities into relevant maturity groupings based on the remaining period

at the statement of financial position date to the contractual maturity date. Derivative financial liabilities are included in the analysis if

their contractual maturities are essential for an understanding of the timing of the cash flows. The amounts disclosed in the table are the

contractual undiscounted cash flows (group).

At 31st March 2014 Less than 1 year Between 1 and 5 years Over 5 years Total

Borrowings (excluding finance lease liabilities) 1,295,505,635 33,524,654 - 1,329,030,289

Trade and other payables (excluding statutory liabilities) 871,616,886 - - 871,616,886

2,167,122,521 33,524,654 - 2,200,647,175

At 31st March 2013 Less than 1 year Between 1 and 5 years Over 5 years Total

Borrowings (excluding finance lease liabilities) 663,760,969 40,653,559 - 704,414,528

Trade and other payables (excluding statutory liabilities) 1,293,083,175 - - 1,293,067,066

1,958,305,108 40,653,559 - 1,997,481,594

3.2 Capital risk management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide

returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In

order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to

shareholders, issue new shares or sell assets to reduce debt. The Group assesses solvency prior to declaration of dividend to maintain the

dividend ratio. Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated

as total debt divided by total capital. Debt is calculated as total borrowings including ‘current and non-current borrowings’ as shown in the

statement of financial position. Total capital is calculated as ‘equity’ as shown in the statement of financial position.


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The gearing ratio were as follows

Company

2014 2013

Total borrowings (Note 22) 849,844,234 562,528,129

Total equity 1,988,885,574 1,968,712,483

Gearing ratio 43% 29%

Group

2014 2013

Total borrowings (Note 22) 1,335,555,466 717,968,323

Total equity 2,100,891,396 2,106,924,955

Gearing ratio 64% 34%

4. Critical accounting estimates and judgments

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of

future events that are believed to be reasonable under the circumstances.

4.1 Critical accounting estimates and assumptions The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal

the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying

amounts of assets and liabilities within the next financial year are outlined below:

(a) Estimated impairment of non-current assets

The Group tests annually the indicators to ascertain whether non-current assets (including intangibles) have suffered any impairment,

in accordance with the accounting policy stated in policy 2.4 (c) and 2.6 The recoverable amounts of cash generating units have been

determined based on value-in-use calculations. These calculations require the use of estimates.

(b) Defined benefit plan - Gratuity

The present value of the defined benefit plan depends on a number of factors that are determined on an actuarial basis using a number of

assumptions. The assumptions used in determining the net cost (income) for defined benefit plan include the discount rate. Any changes in

these assumptions will impact the carrying amount of defined benefit plan. The Company determines the appropriate discount rate at the

end of each year as explained in the accounting policies note 2.15. This is the interest rate that should be used to determine the present

value of estimated future cash outflows expected to be required to settle the defined benefit obligations. Other key assumptions for defined

benefit plan are based in part on current market conditions. Additional information is disclosed in note 23.


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5. Segment information

Management has determined the operating segments based on the reports reviewed by the Executive Board that are used to make strategic

decisions.

Trading - Items which are directly imported and sold without further processing are categorised under this.

Non Trading - This segment includes the items which are further processed at the Company before sold.

2014 2013 Trading Non Trading Total Trading Non Trading Total

Total external segment revenue 459,368,367 1,266,348,173 1,725,716,540 559,728,621 1,198,117,921 1,757,846,542Cost of sales (292,516,424) (748,138,185) (1,040,654,609) (336,374,629) (737,345,597) (1,073,720,226)Gross profit 166,851,943 518,209,988 685,061,931 223,353,992 460,772,324 684,126,316Unallocated expensesDistribution expenses (81,687,417) (132,767,410)Administrative expenses (324,722,022) (169,950,674)Other operating income/(expenses) 10,421,851 5,897,825Operating profit 289,074,343 387,306,057Net finance cost (230,675,222) (100,275,459)Profit before tax 58,399,121 287,030,598Income tax expense (29,000,901) (69,481,932)Profit for the year 29,398,220 217,548,666

Since the information on total assets and liabilities for each reportable segment are not provided to the Executive Board on regular basis, the

segmented assets and liabilities are not provided.

6. Revenue

Group Company 2014 2013 2014 2013

Revenue 1,725,716,540 1,757,846,542 1,376,487,205 1,407,110,053

Revenue of the group consist of local sales of fertilizers, agro-chemicals, seeds, cinnamon and rice which have been disclosed net of taxes.

7. Expenses by nature

Operating profit stated after charging following expenses Group Company 2014 2013 2014 2013

Directors’ emoluments 16,859,699 13,876,453 16,859,699 13,876,453Auditors’ remuneration - Audit fees 831,250 520,000 316,250 275,000Non audit fees 80,000 - 80,000 -Depreciation (Note 15) 50,314,339 43,883,615 37,407,664 42,373,684Staff cost (Note 10) 84,357,340 70,308,753 76,569,144 68,892,278Raw material consumption 993,297,343 1,023,369,206 709,886,074 738,935,342Transport cost 27,425,900 23,637,479 24,073,180 20,918,947Rent expenses 20,696,624 20,681,335 51,050,349 19,841,335Impairment of debtors 8,025,892 29,215,819 4,766,678 22,022,767Stock write-off 4,504,245 - - -Others 117,960,820 150,945,650 87,386,406 127,511,090 1,324,353,452 1,376,438,310 1,008,395,444 1,054,646,896


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Group Company 2014 2013 2014 2013

Cost of sales 1,040,654,609 1,073,720,226 764,232,437 779,347,490Distribution expenses 81,687,417 126,411,650 67,790,562 112,773,375Administrative expense 202,011,426 176,306,434 176,372,445 162,526,031 1,324,353,452 1,376,438,310 1,008,395,444 1,054,646,896

8. Claim on arbitration

The claim on arbitration represent the total amount payable to Toepfer International Asia Pte Ltd as claimant in the arbitration proceedings institute against the Company, discussed in Note 28, Events after the reporting period.

9. Other income

Group Company 2014 2013 2014 2013

Sundry income 7,543,608 5,840,590 7,062,678 5,500,045Dividend income - - 21,599,996 16,250,000Profit on disposal of property, plant and equipment 2,878,243 57,235 2,878,243 57,235Profit on transfer of land - - - 67,491,000 10,421,851 5,897,825 31,540,917 89,298,280

10. Staff costs

Group Company 2014 2013 2014 2013

Salaries and wages 72,001,073 60,321,906 64,716,590 58,934,420Defined contribution plan 9,512,494 8,293,086 9,008,781 8,129,327Defined benefit obligations (Notes 23) 2,843,773 1,693,761 2,843,773 1,828,531 84,357,340 70,308,753 76,569,144 68,892,278

11. Net finance costs

Group Company 2014 2013 2014 2013

Finance costsInterest expenses - bank loans and overdrafts 358,932,557 311,830,035 324,613,462 297,931,176Interest on finance leases 1,245,421 839,691 960,717 1,656,905Net foreign exchange loss 229,324 12,887 - 12,887 360,407,302 312,682,613 325,574,179 299,600,968Finance incomeInterest income on investments (124,556,872) (211,924,676) (122,733,652) (209,833,494)Net foreign exchange gain (5,175,208) (482,478) (5,175,208) - (129,732,080) (212,407,154) (127,908,860) (209,833,494) 230,675,222 100,275,459 197,665,319 89,767,474


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12. Income tax expense

Group Company

2014 2013 2014 2013

Current income tax 6,610,500 66,974,678 3,424,631 66,389,147

Group dividend tax - 1,637,577 - -

Under/ (over) provisions in previous years 1,198,849 (13,204,721) 1,282,023 (13,204,721)

Deferred income tax expense/ (income) 21,191,552 13,534,221 21,345,243 13,504,075

Deemed dividend tax - 540,177 - -

Income tax expense 29,000,901 69,481,932 26,051,897 66,688,501

The tax on the Company’s profit before tax differs from the theoretical amount that would arise using the basic tax rate of the Company and the

Group as follows:

Group Company

2014 2013 2014 2013


Tax calculated at a tax rate 28% ( 2013 - 28%) 16,351,754 80,368,567 22,191,894 98,558,310

Expenses not deductible for tax 1,848,199 140,332 1,817,129 22,348

Exempted income (5,517,408) - - -

Effect of tax loss companies 8,310,657 - - -

Income not subject to tax (123,679) - (6,171,678) (18,687,436)

Group dividend tax - 1,637,577 - -

Deemed dividend tax - 540,177 - -

Over / (under) provision previous years 1,198,849 (13,204,721) 1,282,023 (13,204,721)

Deferred tax under provision in previous years 6,932,530 - 6,932,530 -

29,000,901 69,481,932 26,051,897 66,688,501

13. Earnings per share

Basic earnings per share is calculated, based on the net profit attributable to owners of the parent and weighted average number of ordinary

shares in issue during the year. Basic earnings for an ordinary share is as follows:

Group

2014 2013

Net profit attributable to ordinary shareholders 42,878,126 217,551,553

Weighted average number of ordinary shares 325,000,000 325,000,000

Earnings per share 0.13 0.67

14. Dividend per share

Group

2014 2013

Final ordinary dividend recommended 32,500,000 32,500,000

Dividend per share 0.10 0.10

The Directors have recommended a final dividend payment of Rs.0.10 per share for the year ended 31st March 2014 to be approved at the

Annual General Meeting on 30th June 2014. In compliance with Sri Lanka Accounting Standard LKAS-10 Events after the reporting period, the

final dividend recommended is not recognized as a liability in the financial statements as at 31st March 2014.


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15.

Prop

erty

, pla

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men

t - G

roup

La

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Build

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t and

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ters

Fu

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re

Offi

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Lab

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M

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Pl

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Equi

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uipm

ent

Unit

W

ork

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nery

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Pr

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At 3

1st M

arch

201

2

Cost

69

,410

,700

25

,579

,048

51

,978

,818

15

,567

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79

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,751

26

,890

,000

12

,074

,764

11

,128

,007

5,

529,

746

4,43

0,48

1 68

3,85

0 1,

928,

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4,72

3,01

2 30

9,29

6,15

0

Accu

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) (1

1,19

2,44

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(7,6

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(1

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0)

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(80,

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Net b

ook

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69,4

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20,3

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Year

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Addi

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7,00

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- -

- 1,

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1,64

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5 59

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8,33

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567,

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040

Reva

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land

67

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-

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- -

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- -

- 67

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Stam

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- -

- -

- -

- -

- -

- (4

,479

,000

)

Acqu

isitio

n of

sub

sidiar

y -

54,8

61,2

26

52,7

45,0

00

- -

3,23

0,75

1 -

170,

562

- -

- -

15,0

43,3

52

126,

050,

891

Tran

sfer

red

from

cap

ital W

IP

- 17

,278

,899

-

- -

- -

- -

- -

- (1

7,27

8,89

9)

-

Recla

ssific

atio

n -

- 15

,567

,500

(1

5,56

7,50

0)

- -

- -

- -

- -

- -

Disp

osals

-

- -

- (4

48,4

00)

- (2

97,7

50)

- (2

0,25

0)

- -

- -

(766

,400

)

Depr

eciat

ion

on D

ispos

al &

writ

e-of

f -

- -

7,60

5,37

5 18

5,30

0 -

297,

720

- 20

,250

-

- -

- 8,

108,

645

Depr

eciat

ion

char

ge (N

ote

7)

- (2

,852

,651

) (1

4,41

6,65

2)

- (1

4,16

8,15

1)

(6,0

28,7

50)

(2,0

22,0

94)

(3,0

08,8

34)

(564

,888

) (5

05,2

80)

(136

,770

) (1

79,5

45)

- (4

3,88

3,61

5)

Clos

ing

net b

ook

amou

nt

137,

049,

700

89,6

00,4

74

95,2

94,6

14

- 39

,072

,357

11

,233

,251

2,

543,

991

6,95

8,66

6 3,

032,

201

2,40

5,87

0 20

5,15

5 66

6,27

4 56

0,82

8,38

9 94

8,89

0,94

2

At 3

1st M

arch

201

3

Cost

/ valu

atio

n 13

7,04

9,70

0 97

,719

,173

12

0,90

3,71

5 -

78,9

23,3

51

30,1

20,7

51

13,4

89,9

64

12,9

41,5

64

6,10

0,04

9 4,

538,

816

683,

850

2,23

8,35

9 56

0,82

8,38

9 1,

065,

537,

681

Accu

mula

ted

depr

eciat

ion

- (8

,118

,699

) (2

5,60

9,10

1)

- (3

9,85

0,99

4)

(18,

887,

500)

(1

0,94

5,97

3)

(5,9

82,8

98)

(3,0

67,8

48)

(2,1

32,9

46)

(478

,695

) (1

,572

,085

) -

(116

,646

,739

)

Net b

ook

amou

nt

137,

049,

700

89,6

00,4

74

95,2

94,6

14

- 39

,072

,357

11

,233

,251

2,

543,

991

6,95

8,66

6 3,

032,

201

2,40

5,87

0 20

5,15

5 66

6,27

4 56

0,82

8,38

9 94

8,89

0,94

2

Year

end

ed 3

1st M

arch

201

4

Ope

ning

net b

ook

amou

nt

137,

049,

700

89,6

00,4

74

95,2

94,6

14

- 39

,072

,357

11

,233

,251

2,

543,

991

6,95

8,66

6 3,

032,

201

2,40

5,87

0 20

5,15

5 66

6,27

4 56

0,82

8,38

9 94

8,89

0,94

2

Addi

tions

dur

ing th

e ye

ar

14,6

32,2

76

2,65

0,25

8 1,

326,

733

- -

- 62

0,10

0 83

7,08

4 2,

073,

705

211,

164

- 12

7,60

0 29

1,36

0,10

0 31

3,83

9,02

0

Tran

sfer

red

from

cap

ital W

IP

299,

573,

280

203,

581,

596

36,9

36,8

40

- -

- -

346,

442

31,4

42

- -

- (5

40,4

69,6

00)

-

Recla

ssific

atio

n -

- -

- -

- -

- -

- -

- -

-

Disp

osals

- Co

st

- -

- -

(276

,049

) (5

,550

,000

) -

- -

- -

- -

(5,8

26,0

49)

Depr

eciat

ion

on d

ispos

als &

writ

e-of

f -

- -

- 17

9,17

9 5,

550,

000

- -

- -

- -

- 5,

729,

179

Depr

eciat

ion

char

ge (N

ote

7)

- (1

1,68

2,54

2)

(12,

323,

001)

-

(14,

694,

258)

(5

,335

,000

) (1

,665

,953

) (3

,131

,958

) (6

58,0

50)

(426

,128

) (1

36,7

70)

(260

,679

) -

(50,

314,

339)

Clos

ing

net b

ook

amou

nt

451,

255,

256

284,

149,

786

121,

235,

186

- 24

,281

,229

5,

898,

251

1,49

8,13

8 5,

010,

234

4,47

9,29

8 2,

190,

906

68,3

85

533,

195

311,

718,

889

1,21

2,31

8,75

3

At 3

1st M

arch

201

4

Cost

/ valu

atio

n 45

1,25

5,25

6 30

3,95

1,02

7 15

9,16

7,28

8 -

78,6

47,3

02

24,5

70,7

51

14,1

10,0

64

14,1

25,0

90

8,20

5,19

6 4,

749,

980

683,

850

2,36

5,95

9 31

1,71

8,88

9 1,

373,

550,

652

Accu

mula

ted

depr

eciat

ion

- (1

9,80

1,24

1)

(37,

932,

102)

-

(54,

366,

073)

(1

8,67

2,50

0)

(12,

611,

926)

(9

,114

,856

) (3

,725

,898

) (2

,559

,074

) (6

15,4

65)

(1,8

32,7

64)

- (1

61,2

31,8

99)

Net b

ook

amou

nt

451,

255,

256

284,

149,

786

121,

235,

186

- 24

,281

,229

5,

898,

251

1,49

8,13

8 5,

010,

234

4,47

9,29

8 2,

190,

906

68,3

85

533,

195

311,

718,

889

1,21

2,31

8,75

3


AgS

tar

Fert

ilize

rs P

LC

Ann

ual R

epor

t 20

13/1

4

59

15.

Prop

erty

, pla

nt a

nd e

quip

men

t - C

ompa

ny

La

nd

Build

ing

Plan

t and

Le

aseh

old

Mot

or

Leas

ehol

d Co

mpu

ters

Fu

rnitu

re

Offi

ce

Lab

Cabi

n Pa

llets

Ca

pita

l To

tal

M

achi

nery

Pl

ant

Vehi

cles

M

otor

& F

ittin

gs

Equi

pmen

t Eq

uipm

ent

Unit

W

ork

in

& M

achi

nery

Vehi

cles

Pr

ogre

ss

At 3

1st M

arch

201

2

Cost

69

,410

,700

25

,002

,598

51

,579

,343

15

,567

,500

79

,371

,751

26

,890

,000

11

,924

,934

11

,128

,007

4,

994,

097

4,19

6,62

1 68

3,85

0 1,

914,

973

4,72

3,01

2 30

7,38

7,38

6

Accu

mula

ted

depr

eciat

ion

- (4

,689

,598

) (1

1,06

4,28

6)

(7,6

05,3

75)

(25,

868,

143)

(1

2,85

8,75

0)

(9,0

89,6

05)

(2,9

74,0

64)

(2,2

87,3

80)

(1,5

10,9

60)

(341

,925

) (1

,385

,789

) -

(79,

675,

875)

Net b

ook

amou

nt

69,4

10,7

00

20,3

13,0

00

40,5

15,0

57

7,96

2,12

5 53

,503

,608

14

,031

,250

2,

835,

329

8,15

3,94

3 2,

706,

717

2,68

5,66

1 34

1,92

5 52

9,18

4 4,

723,

012

227,

711,

511

Year

end

ed 3

1st M

arch

201

3

Ope

ning

net b

ook

amou

nt

69,4

10,7

00

20,3

13,0

00

40,5

15,0

57

7,96

2,12

5 53

,503

,608

14

,031

,250

2,

835,

329

8,15

3,94

3 2,

706,

717

2,68

5,66

1 34

1,92

5 52

9,18

4 4,

723,

012

227,

711,

511

Addi

tions

dur

ing th

e ye

ar

36,0

00

- 55

3,39

7 -

- -

1,71

2,95

0 1,

429,

443

584,

254

- -

309,

886

20,7

29,6

96

25,3

55,6

26

Tran

sfer

red

from

cap

ital W

IP

- 17

,278

,899

-

- -

- -

- -

- -

- (1

7,27

8,89

9)

-

Disp

osals

- Co

st

(44,

509,

000)

-

- -

(448

,400

) -

(297

,750

) -

(20,

250)

-

- -

- (4

5,27

5,40

0)

Recla

ssific

atio

n -

- 15

,567

,500

(1

5,56

7,50

0)

- -

- -

- -

- -

- -

Depr

eciat

ion

on d

ispos

als &

writ

e-of

f -

- -

7,60

5,37

5 18

5,30

0 -

297,

720

- (5

11,0

24)

(419

,662

) (1

36,7

70)

(176

,845

) -

6,84

4,09

4

Depr

eciat

ion

char

ge (N

ote

7)

- (2

,852

,651

) (1

4,32

9,89

4)

- (1

4,16

8,15

1)

(6,0

28,7

50)

(2,0

14,9

61)

(2,9

99,5

27)

20,2

50

- -

- -

(42,

373,

684)

Clos

ing

net b

ook

amou

nt

24,9

37,7

00

34,7

39,2

48

42,3

06,0

60

- 39

,072

,357

8,

002,

500

2,53

3,28

8 6,

583,

859

2,77

9,94

7 2,

265,

999

205,

155

662,

225

8,17

3,80

9 17

2,26

2,14

7

At 3

1st M

arch

201

3

Cost

24

,937

,700

42

,281

,497

67

,700

,240

-

78,9

23,3

51

26,8

90,0

00

13,3

40,1

34

12,5

57,4

50

5,55

8,10

1 4,

196,

621

683,

850

2,22

4,85

9 8,

173,

809

287,

467,

612

Accu

mula

ted

depr

eciat

ion

- (7

,542

,249

) (2

5,39

4,18

0)

- (3

9,85

0,99

4)

(18,

887,

500)

(1

0,80

6,84

6)

(5,9

73,5

91)

(2,7

78,1

54)

(1,9

30,6

22)

(478

,695

) (1

,562

,634

) -

(115

,205

,465

)

Net b

ook

amou

nt

24,9

37,7

00

34,7

39,2

48

42,3

06,0

60

- 39

,072

,357

8,

002,

500

2,53

3,28

8 6,

583,

859

2,77

9,94

7 2,

265,

999

205,

155

662,

225

8,17

3,80

9 17

2,26

2,14

7

Year

end

ed 3

1st M

arch

201

4

Ope

ning

net b

ook

amou

nt

24,9

37,7

00

34,7

39,2

48

42,3

06,0

60

- 39

,072

,357

8,

002,

500

2,53

3,28

8 6,

583,

859

2,77

9,94

7 2,

265,

999

205,

155

662,

225

8,17

3,80

9 17

2,26

2,14

7

Addi

tions

dur

ing th

e ye

ar

14,6

32,2

76

2,62

5,25

8 32

0,74

3 -

- -

539,

100

578,

379

805,

401

211,

164

- 12

7,60

0 19

,799

,348

39

,639

,269

Tran

sfer

red

from

cap

ital W

IP

- -

27,9

73,1

57

- -

- -

- -

- -

- (2

7,97

3,15

7)

-

Disp

osals

- Co

st

- -

- -

(276

,049

) (5

,550

,000

) -

- -

- -

- -

(5,8

26,0

49)

Depr

eciat

ion

on

disp

osals

& w

rite-

off

- -

- -

179,

179

5,55

0,00

0 -

- -

- -

- -

5,72

9,17

9

Depr

eciat

ion

char

ge (N

ote

7)

- (3

,490

,501

) (8

,573

,573

) -

(14,

033,

258)

(5

,335

,000

) (1

,599

,076

) (3

,071

,188

) (5

59,3

78)

(350

,941

) (1

36,7

70)

(257

,979

) -

(37,

407,

664)

Clos

ing

net b

ook

amou

nt

39,5

69,9

76

33,8

74,0

05

62,0

26,3

87

- 24

,942

,229

2,

667,

500

1,47

3,31

2 4,

091,

050

3,02

5,97

0 2,

126,

222

68,3

85

531,

846

- 17

4,39

6,88

2

At 3

1st M

arch

201

4

Cost

39

,569

,976

44

,906

,755

95

,994

,140

-

78,6

47,3

02

21,3

40,0

00

13,8

79,2

34

13,1

35,8

29

6,36

3,50

2 4,

407,

785

683,

850

2,35

2,45

9 -

321,

280,

832

Accu

mula

ted

depr

eciat

ion

- (1

1,03

2,75

0)

(33,

967,

753)

-

(53,

705,

073)

(1

8,67

2,50

0)

(12,

405,

922)

(9

,044

,779

) (3

,337

,532

) (2

,281

,563

) (6

15,4

65)

(1,8

20,6

13)

- (1

46,8

83,9

50)

Net b

ook

amou

nt

39,5

69,9

76

33,8

74,0

05

62,0

26,3

87

- 24

,942

,229

2,

667,

500

1,47

3,31

2 4,

091,

050

3,02

5,97

0 2,

126,

222

68,3

85

531,

846

- 17

4,39

6,88

2


AgS

tar

Fert

ilize

rs P

LC

Ann

ual R

epor

t 20

13/1

4

60

15. Property, plant and equipment (Contd.)

(a) Property, plant and equipment of the Group and the Company include fully depreciated assets, the original cost of which amounted to

Rs.26,637,989 and Rs.25,933,109 respectively (2013 - Rs.25,239,339 and Rs. 24,534,459 respectively).

(b) The Company’s Property, plant and equipments were revalued in November 2010 by Mr Dinasiri Subasinghe and Land and building was by

Mr Sarath G Fernando an Independent valuer. Valuation was made on the basis of open market.

(c) The Group’s land were revalued by Mr W M Punchibanda Who is an independent valuer. Valuation was made on the basis of open market.

(d) Carrying values of the revalued assets as at 31st March 2014 that would have been recognised had they were carried at cost are, land- Rs

49,968,000, buildings- Rs 4,641,243 ( 2013 - Rs 4,922,531) , plant and machinery- Nil ( 2013 -Rs 700,000 ) and motor vehicles- Nil.

16. Investments in subsidiaries

Company

As at 31st March 2014 2013

AgStar Cropcare (Private) Limited 37,999,990 37,999,990

AgStar Seeds (Private) Limited 500,000 500,000

AgStar Grains (Private) Limited 200,000,000 200,000,000

AgStar Properties (Private) Limited 350,000,000 350,000,000

AgStar Exports (Private) Limited 5,000,000 -

Mahaweli Rice Processing Industries (Private) Limited 41,700,000 41,700,000

635,199,990 630,199,990

17. Inventories

Group Company

As at 31st March 2014 2013 2014 2013

Raw material stock 375,366,330 67,143,038 91,690,117 63,879,827

Finished goods 112,842,928 98,422,409 - 6,273,837

488,209,258 165,565,447 91,690,117 70,153,664

Less: Provision for slow moving items - (1,595,818) - (45,436)

488,209,258 163,969,629 91,690,117 70,108,228

18. Trade and other receivables

Group Company

As at 31st March 2014 2013 2014 2013

Trade receivables 441,433,504 807,951,155 219,566,358 610,952,207

Less: Provision for impairment (119,728,247) (111,702,354) (100,924,038) (96,157,360)

321,705,257 696,248,801 118,642,320 514,794,847

Subsidy receivable 2,302,627,355 2,239,175,408 2,302,627,355 2,239,175,408

Receivables from related parties (Note 27) - - 257,859,743 205,348,457

Tax recoverable 34,884,529 84,888,082 25,680,020 78,491,061

Prepayments and other receivables 86,898,870 101,009,143 238,333,561 38,484,625

2,746,116,011 3,121,321,434 2,943,142,999 3,076,294,398

The fair value of subsidy receivables are based on amortised cost method using the 6 month Treasury Bill rate 8.83% (2013 - 11.88%).


AgS

tar

Fert

ilize

rs P

LC

Ann

ual R

epor

t 20

13/1

4

61

Trade receivables comprise of the following balances as past due but not impaired. These relates to a few of independent customers for whom there is no recent history of default. The aging of such balances are as follows:

Group CompanyAs at 31st March 2014 2013 2014 2013

Less than 1 year 32,692,107 162,437,600 27,224,351 155,684,718Over 1 year 114,466,346 32,911,455 9,274,648 29,878,457 147,158,453 195,349,055 36,498,999 185,563,175

The aging of the impairment provision is as follows Group CompanyAs at 31st March 2014 2013 2014 2013

Less than 1 year 2,085,241 6,612,183 821,974 3,290,408Over 1 year 117,643,006 105,090,171 100,102,064 92,866,952 119,728,247 111,702,354 100,924,038 96,157,360

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivables mentioned above. The Company does not hold any collateral as security.

19. Cash and cash equivalents


Cash at bank and in hand 117,480,206 160,102,115 55,596,152 112,306,418Bank overdrafts (Note 22) (10,494,547) (84,582,982) (719,855) (44,830,234)Total cash and cash equivalents for the purpose of the statement of cash flows 106,985,659 75,519,133 54,876,297 67,476,184

20. Stated capital

Company/Group Number of Amount shares Rs.

At 31st March 2013 325,000,000 1,204,093,678At 31st March 2014 325,000,000 1,204,093,678

All issued shares are fully paid.

21. Financial instruments by category

(a) Loans and receivables Group Company 2014 2013 2014 2013

As at 31st March 2014Assets as per statement of financial positionTrade and other receivables(excluding pre-payments,tax and other receivables) 2,624,332,612 2,935,424,209 2,679,129,418 2,959,318,712Cash and cash equivalents (Note 19) 117,480,206 160,102,115 55,596,152 112,306,418 2,741,812,818 3,095,526,324 2,734,725,570 3,071,625,130


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(b) Other financial liabilities at amortised cost Group Company 2014 2013 2014 2013

As at 31st March 2014Liabilities as per statement of financial positionBorrowings (excluding finance lease) 1,329,030,289 704,414,528 844,532,429 550,963,914Trade and other payables (excluding non financial liabilities) 871,616,886 1,293,067,066 823,222,808 1,267,501,704 2,200,647,175 1,997,481,594 1,667,755,237 1,818,465,618

Group Company 2014 2013 2014 2013

Cash at bank and short-term bank deposits (Excluding cash in hand) RatingCash at bankCommercial Bank of Ceylon PLC AA 16,495,420 (55,567,973) 12,629,510 (18,941,987)National Development Bank PLC AA- 1,873,754 2,072,754 (719,855) 4,907,617Hongkong and Shanghai Banking Corporation Limited AAA - 71,712 - 71,712Hatton National Bank PLC AA- 13,359,275 (23,936,006) 9,096,224 (24,322,453)Sampath Bank PLC AA- 642,573 (86,202) 642,573 (86,202)People’s Bank AA+ 16,052,281 11,461,835 14,757,904 10,669,138Hatton National Bank PLC AA- 57,221 85,221 57,221 85,221Seylan Bank PLC A- 1,402,963 (1,170,503) 1,378,396 (1,097,570)Bank of Ceylon AA+ 40,598,786 2,500,866 953,815 193,809DFCC Vardhana Bank AA- 152,876 -Muslim Commercial Bank Limited 25,000 - 25,000 90,660,150 (64,568,295) 38,820,789 (28,520,714)

Short-term bank deposits (Excluding cash in hand)Lanka Orix Leasing Company BBB+ - 81,517,220 - 81,517,220Hatton National Bank PLC AA- 15,754,853 14,219,181 15,754,853 14,219,181Bank of Ceylon AA+ - 12,892,671 - -Hongkong and Shanghai Banking Corporation Limited AAA 3,497 3,497 3,497 3,497Commercial Bank of Ceylon PLC AA 31,067,859 - - 15,758,350 139,700,428 15,758,350 95,739,898

Cash in hand 567,160 387,000 297,160 257,000Total cash and cash equivalents 106,985,659 75,519,133 54,876,298 67,476,184

22. Loans and Borrowings


Non- current liabilitiesSecured bank loans 33,524,654 40,653,559 - -Lease Liabilities 1,495,358 6,299,198 1,014,802 5,311,810 35,020,012 46,952,757 1,014,802 5,311,810

Current liabilitiesImport loans (short term loan ) 1,274,714,386 568,302,016 843,812,575 506,133,680Secured bank loans 10,296,702 10,875,971 - NilLease Liabilities 5,029,819 7,254,597 4,297,003 6,252,405Bank overdraft (Note 19) 10,494,547 84,582,982 719,854 44,830,234 1,300,535,454 671,015,566 848,829,432 557,216,319Total borrowings 1,335,555,466 717,968,323 849,844,234 562,528,129


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Maturity analysis of the borrowings Group CompanyAs at 31st March 2014 2013 2014 2013

6 months or less 1,287,357,434 662,043,776 846,680,930 553,999,0376 - 12 months 13,178,020 8,971,790 2,148,502 3,217,2821- 5 years 35,020,012 46,952,757 1,014,802 5,311,810 1,335,555,466 717,968,323 849,844,234 562,528,129

Weighted average effective interest rates Group Company 2014 2013 2014 2013

Bank overdrafts 15% 16% 15% 16%Secured bank loans (Lease liability) 14% 14% 14% 14%Short term bank facilities 14% 16% 14% 16%

23. Retirement Benefit Obligation

The movement in the defined benefit obligation over the year is as follows; Group CompanyAs at 31st March 2014 2013 2014 2013

At beginning of year 9,578,902 7,394,913 9,578,902 7,260,143Under provision for previous year - (520,758) - (385,988)Current service cost 1,837,988 1,458,362 1,837,988 1,458,362Interest cost 1,005,785 756,157 1,005,785 756,157Actuarial losses 531,775 879,993 531,775 879,993Contributions paid (326,250) (389,765) (326,250) (389,765)

At end of year 12,628,200 9,578,902 12,628,200 9,578,902

The amounts recognised in the income statement are as follows

Group Company

2014 2013 2014 2013

Under provision for previous year - (520,758) - (385,988)

Current service cost 1,837,988 1,458,362 1,837,988 1,458,362

Interest cost 1,005,785 756,157 1,005,785 756,157

Recognised in income statement (Note 10) 2,843,773 1,693,761 2,843,773 1,828,531

This obligation which is not externally funded is based on an actuarial valuation of the defined benefit plan based on the projected unit credit

method, specified in Sri Lanka Accounting Standards No.19 “Employee Benefits”, carried out by a professional actuaries as of 31st March 2014.

The principal assumptions used for this purpose are as follows:

Group Company

2014 2013 2014 2013

Discount rate per annum 10% 10.5% 10% 10.5%

Annual salary increment rate 10% 10% 10% 10%

Retirement age 55 55 55 55


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24. Deferred income tax

Deferred income tax - Group

2014 2013

Deferred Deferred Net deferred Deferred Deferred Net deferred

tax assets tax liability tax liability tax assets tax liability tax liability

Property plant and equipment - (1,867,756) (1,867,756) - (3,016,191) (3,016,191)

General provision for bad debts - - - - -

Subsidy receivable - (648,138,050) (648,138,050) - (626,969,114) (626,969,114)

Revaluation reserve - (27,297,683) (27,297,683) - (27,416,460) (27,416,460)

Leasehold assets 64,488 - 64,488 - (617,925) (617,925)

Retirement benefit obligations 3,535,896 - 3,535,896 2,682,093 - 2,682,093

Tax losses carried forward 432,784,933 - 432,784,933 435,764,668 - 435,764,668

Assets / (liabilities) as at 31st March 436,385,317 (677,303,490) (240,918,173) 438,446,760 (658,019,690) (219,572,930)

Deferred income tax - Company

2014 2013

Deferred Deferred Net deferred Deferred Deferred Net deferred

tax assets tax liability tax liability tax assets tax liability tax liability

Property plant and equipment - (1,867,756) (1,867,756) - (3,016,191) (3,016,191)

Subsidy receivable - (648,138,050) (648,138,050) - (626,969,114) (626,969,114)

Revaluation reserve - (8,400,203) (8,400,203) - (8,518,980) (8,518,980)

Leasehold assets 64,488 - 64,488 - (617,925) (617,925)

Retirement benefit obligations 3,535,896 - 3,535,896 2,682,092 - 2,682,092

Tax losses carried forward 432,784,933 - 432,784,933 435,764,668 - 435,764,668

Assets / (liabilities) as at 31st March 436,385,317 (658,406,010) (222,020,693) 438,446,760 (639,122,210) (200,675,450)

The movement in deferred income tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the

same tax jurisdiction, is as follows:

Deferred tax liabilities

Group Company

As at 1st April 2012 187,171,375 187,171,375

Charge/(credited) to the income statement 13,504,075 13,504,075

Transferred from revaluation reserve 18,897,480 -

As at 31st March 2013 219,572,930 200,675,450

As at 1st April 2013 219,572,930 200,675,450

Charge/(credited) to the income statement 21,345,243 21,345,243

At 31st March 2014 240,918,173 222,020,693


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Deferred tax assets

Group Company

As at 1st April 2012 96,297 -

Charge/(credited) to the income statement (30,146) -

As at 31st March 2013 66,151 -

As at 1st April 2013 66,151 -

Charge/(credited) to the income statement 153,691 -

As at 31st March 2014 219,842 -

25. Trade and other payables

Group Company

As at 31st March 2014 2013 2014 2013

Trade payables 828,038,658 1,275,116,300 814,655,600 1,256,547,115

Accrued expenses and other payables 43,578,228 17,950,766 8,567,208 10,954,589

871,616,886 1,293,067,066 823,222,808 1,267,501,704

Letter of credits are fair valued based on amortised cost method using the AWPLR 14.23% ( 2013 - 15.32%).

26. Cash generated from operations

Reconciliation of profit before tax to cash (used in)/ generated from operations:

Group Company

For the Year ended 31st March 2014 2013 2014 2013


Adjustments for:

Dividend income - - (21,599,996) (16,250,000)

Depreciation (Note 15) 50,314,339 43,883,615 37,407,664 42,373,684

Profit on disposal of fixed assets (2,878,243) (57,235) (2,878,243) (57,235)

Profit on transfer of land - - - (67,491,000)

Provision for defined benefit obligations (Note 23) 2,843,773 1,693,761 2,843,773 1,828,531

Net finance costs (Note 11) 230,675,222 100,275,459 197,665,319 89,767,474

Provision/(reversal) for slow moving stocks - (6,160,718) - (1,884,400)

Provision for Impairment of trade receivables 8,025,893 29,215,819 4,766,678 22,022,767

Changes in working capital

- (increase)/ decrease in inventories (324,239,629) 124,290,192 (21,581,889) 106,706,793

- (increase)/ decrease in trade and other receivables 312,871,611 (185,026,277) 106,064,394 (212,853,693)

- (decrease)/ increase in trade and other payables (421,450,180) 172,842,870 (444,278,896) 184,724,101

Cash generated (used in)/ from operations (85,438,093) 567,988,084 (62,334,433) 500,880,985


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27. Directors’ interests in contracts and related party transactions

The Company had the following transactions in the ordinary course of business during the year:

27.1 The Company owns 100% of AgStar Cropcare (Private) Limited, AgStar Seeds (Private) Limited, AgStar Grains (Private) Limited, AgStar

Properties (Private) Limited, AgStar Exports (Private) Limited and 51.04% of Mahaweli Rice Processing Industries (Private) Limited.

27.2 Sierra Holdings (Private) Limited holds 31.71% of the total issued share capital of AgStar Fertilizers PLC.

27.3 Key management compensationKey management personnel are members of the Board of Directors of the company and its subsidiaries. The compensation paid/payable to the

Key Management personnel are as follows.

Group Company

2014 2013 2014 2013

Salaries and other short term employee benefits 16,859,699 13,876,453 16,859,699 13,876,453

Termination benefit 417,775 326,362 417,775 326,362

27.4 The related party transactions carried out by the Company within AgStar Group are as follows:

The related party transactions carried out by the Company are as follows: Company 2014 2013

Fund transferred to AgStar Cropcare (Private) Limited - 24,600,000 AgStar Seeds (Private) Limited 37,800,000 28,500,000 AgStar Grains (Private) Limited 92,580,140 122,980,000 AgStar Properties (Private) Limited - 404,720,000 AgStar Exports (Private) Limited 420,000 - Mahaweli Rice Processing Industries (Private) Limited 6,000,000 7,193,542

Fund received from AgStar Cropcare (Private) Limited 24,000,000 - AgStar Seeds (Private) Limited 20,000,000 49,000,000 AgStar Properties (Private) Limited - 4,500,000 AgStar Grains (Private) Limited 26,194,581 - AgStar Exports (Private) Limited 9,000,000 - Mahaweli Rice Processing Industries (Private) Limited 28,918,552 -

Sale of goods to AgStar Cropcare (Private) Limited 12,073,312 -

Other ancillary expenses incurred on behalf of AgStar Cropcare (Private) Limited 7,185,497 5,409,289 AgStar Seeds (Private) Limited 1,253,840 764,501 AgStar Grains (Private) Limited 91,145,677 50,348,052 AgStar Properties (Private) Limited 30,418,427 61,817,622 AgStar Exports (Private) Limited 86,120,739 - Mahaweli Rice Processing Industries (Private) Limited 35,626,787 1,674,946


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Company 2014 2013

Share issue AgStar Cropcare (Private) Limited - 37,499,990 AgStar Grains (Private) Limited - 200,000,000 AgStar Properties (Private) Limited - 350,000,000 AgStar Exports (Private) Limited 5,000,000 -

Land transfer AgStar Properties (Private) Limited - 116,479,000

Rent paid in advance AgStar Properties (Private) Limited 240,000,000 -

Rent expense AgStar Properties (Private) Limited 32,000,000 -

AgStar Fertilizers PLC holds shares in subsidiary companies as follows: AgStar Cropcare (Private) Limited 4,999,999 4,999,999 AgStar Seeds (Private) Limited 4,999,999 4,999,999 AgStar Grains (Private) Limited 20,000,000 20,000,000 AgStar Properties (Private) Limited 35,000,000 35,000,000 AgStar Exports (Private) Limited 5,000,000 - Mahaweli Rice Processing Industries (Private) Limited 4,170,000 4,170,000

27.5 Outstanding balances arising from the related party transactions are as follows: Company 2014 2013

Receivables from related parties:

As at 31st MarchAgStar Cropcare (Private) Limited 9,553,949 14,295,140AgStar Grains (Private) Limited 130,859,289 -AgStar Properties (Private) Limited 18,935,049 228,516,622AgStar Exports (Private) Limited 77,540,739 -Mahaweli Rice Processing Industries (Private) Limited 21,576,723 8,868,489 258,465,749 251,680,251

Payables to related parties:

Company

As at 31st March 2014 2013

AgStar Seeds (Private) Limited 606,006 19,659,846

AgStar Grains (Private) Limited - 26,671,948

606,006 46,331,794

Related party receivables - Net 257,859,743 205,348,457


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27.6 Transactions with other related companies outside AgStar Group are as follows:

Name of the company Relationship Description of transaction Amount involved Outstanding balance

receivable/(payable)

Browns & Company PLC Common Directors Purchase of batteries 15,358 -

Taprobane Plantations (Private) Limited Common Directors Purchase of refreshments 85,544 -

Sierra Property Development (Private)

Limited

Common Directors Construction contract 22,108,971 -

Sierra Cables PLC Common Directors Purchase of cables, coils and

electric items

1,639,185 -

Seylan Bank PLC Common Directors Short term loan repayment and

interest paid

367,968,803 1,729,396

Balangoda Plantation PLC Common Directors Sale of goods 16,178,200 7,924,757

Gal Oya Plantations PLC Common Directors Sale of goods 11,503,575 19,791,675

Madulsima Plantations PLC Common Directors Sale of goods 28,556,950 2,530,184

28. Events after the reporting period

(a) The final award on arbitration by the International Chamber of Commerce ( the “ICC” ) - Singapore on the action instituted against the Company by Toepfer International Asia Pte Ltd, disclosed as a contingent liability in previous years financial statements, was made on 23rd April 2014. Accordingly, the Company is liable to pay Toepfer International Asia Pte Ltd, USD 821,237.75 (LKR 108,542,993) as compensation together with other reimbursable legal costs totaling to an amount of USD 928,430 ( LKR 122,710,596). This liability as an adjusting event had been recognized in the financial statements in accordance with Sri Lanka Accounting Standards, LKAS -10,Events After the Reporting Period.

(b) The Board of Directors of the Company resolved on 23rd May 2014 to recommend a first and final ordinary dividend of Rs.0.10 per share for the year 2013/14 to be approved at the Annual General Meeting. Details of the dividend is disclosed in Note 14 to the financial statements.

(c) The Board of Directors of the Company recommend by resolution dated 23rd May 2014 to change the name from AgStar Fertilizers PLC to AgStar PLC to be approved at the Annual General Meeting.

(d) The Company has purchased the balance 48.96% of the shareholding of Mahaweli Rice Processing Industries (Private) Limited on 26th May 2014 and as a result it became a fully owned subsidiary of AgStar Fertilizers PLC.

There were no other material events other than above which occurred after the reporting date that require adjustments to, or disclosure in the financial statements.

29. Commitments

Capital commitmentsThere were no material capital commitments outstanding as at the date of statement of financial position.

Financial commitmentsDocumentary credits effected for foreign purchases amounted to Rs. 466,375,221 (2013 - Rs 651,867,469) .

30. Contingencies(a) The guarantees given to banks on behalf of AgStar Seeds (Private) Limited, AgStar Cropcare (Private) Limited and AgStar Grains (Private)

Limited amounting to Rs.212 Mn, Rs.129 Mn and Rs. 344.4 Mn respectively.

Apart from the above, the Company has no material contingent liabilities as of the year ended 31st March 2014 that would affect current and future profits.


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SHAREHOLDER AND INVESTOR INFORMATION

Shareholder and Investor Information1. Stock Exchange Listing

AgStar Fertilizers PLC is a Public Quoted Company. The issued share capital of the Company consists of 307,526,310 Ordinary Shares and 17,473,690 Non-Voting Shares listed in the Colombo Stock Exchange.

2. Shareholders

There were 756 Ordinary shareholders and 3 Non-Voting shareholders as at 31st March 2014, distributed into different categories as follows;

2.1 Analysis of Ordinary Voting Shareholders according to the number of shares held

Shares held As at 31st March 2014 As at 31st March 2013

No of

Shareholders

No of Shares % No of

Shareholders

No of Shares %

1 -1,000 413 117,862 0.04% 350 102,003 0.03%

1,001 - 10,000 223 898,124 0.29% 169 592,194 0.19%

10,001 - 100,000 84 2,831,226 0.92% 66 2,545,105 0.83%

100,001 - 1,000,000 22 9,432,027 3.07% 10 5,459,756 1.78%

Over1,000,000 14 294,247,071 95.68% 15 298,827,252 97.17%

Total 756 307,526,310 100.00% 610 307,526,310 100.00%

2.2 Analysis of Ordinary Voting Shareholders according to the category


No of Shareholders

No of Shares % No of Shareholders

No of Shares %

Resident 751 306,770,689 99.75% 608 307,525,110 100.00%

Non Resident 5 755,621 0.25% 2 1,200 0.00%

Total 756 307,526,310 100.00% 610 307,526,310 100.00%


No of

Shareholders


Shareholders

No of Shares %

Individual 723 45,729,889 14.87% 584 40,702,654 13.24%

Institutional 33 261,796,421 85.13% 26 266,823,656 86.76%

Total 756 307,526,310 100.00% 610 307,526,310 100.00%

2.3 Analysis of Ordinary Non-Voting Shareholders according to the number of shares held


No of

Shareholders


Shareholders

No of Shares %

1 -1,000 1 1,000 0.01% 1 1,000 0.01%

1,001 - 10,000 - - - - - -

10,001 - 100,000 - - - - - -

100,001 - 1,000,000 - - - - - -

Over1,000,000 2 17,472,690 99.99% 2 17,472,690 99.99%

Total 3 17,473,690 100.00% 3 17,473,690 100.00%

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2.4 Analysis of Ordinary Non-Voting Shareholders according to the category


No of

Shareholders


Shareholders

No of Shares %

Resident 3 17,473,690 100.00% 3 17,473,690 100.00%

Non Resident - - - - - -

Total 3 17,473,690 100.00% 3 17,473,690 100.00%


No of

Shareholders


Shareholders

No of Shares %

Individual 3 17,473,690 100.00% 3 17,473,690 100.00%

Institutional - - -

Total 3 17,473,690 100.00% 3 17,473,690 100.00%

The percentage of public shareholding in voting and non-voting shares as at 31st March 2014 were 16.59% (2013-16.59%) and 0.1% (2013-0.01%) respectively.

3. Twenty Major Shareholders Ordinary Voting shares - as at 31st March

Name of shareholder 2014 2013

Shareholding % Shareholding

Sierra Holdings (Pvt) Ltd 97,514,400 31.71% 97,514,400

Lanka Orix Leasing Company PLC 60,213,500 19.58% 60,213,500

Browns Investments PLC 39,270,061 12.77% 39,270,061

Sierra Construction (Pvt) Ltd 37,025,290 12.04% 37,025,290

P & K Investments (Pvt) Ltd 20,500,000 6.67% 20,500,000

Mrs.W.D.L.D.Perera 10,087,200 3.28% 10,087,200

Mr.N.G.R.Karunaratne 8,188,310 2.66% 8,188,310

Mr.A.P.Weerasekera 8,053,310 2.62% 8,053,310

FLMC Plantations (Pvt) Ltd 3,150,000 1.02% 3,150,000

Mr.D.N.N.Lokuge 3,125,000 1.02% 3,125,000

Mr.W.A.P.Perera 3,120,000 1.01% 3,120,000

Mrs.A.C.P.Irugalbandara -Joint 1,500,000 0.49% 1,500,000

Mr.S.Karunaratne 1,250,000 0.41% 1,250,000

Ajax Engineers (Pvt) Ltd 1,250,000 0.41% 1,250,000

Mrs.A.C.P.Irugalbandara 1,000,000 0.33% 1,000,000

Miss.G.S.M.Irugalbandara 1,000,000 0.33% 1,000,000

ARRC Capital (Pvt) Limited 1,000,000 0.33% 1,000,000

Mr.B.M.D.T.Basnayaka 857,453 0.28%

Mr.S.A.O.A.Abo Qamaz 738,721 0.24%

Mr.P.A.S.Attygala 647,806 0.21%

Total 299,491,051 97.39%


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Ordinary Non-Voting shares - as at 31st March

Name of shareholder 2014 2013

Shareholding % Shareholding

Mr.N.G.R.Karunaratne 11,648,140 66.66% 11,648,140

Mr.A.P.Weerasekera 5,824,550 33.33% 5,824,550

Mr.A.B.Weerasekera 1,000 0.01% 1,000

Total 17,473,690 100.00% 17,473,690

4. Directors’ direct Shareholding - as at 31st March

Name of Director 2014 2013

Ordinary voting

shares

Non-voting

shares

Ordinary voting

shares

Non-voting

shares

Mr.N.G.R.Karunaratne 8,188,310 11,648,140 8,188,310 11,648,140

Mr.D.N.N.Lokuge 3,125,000 - 3,125,000 -

Mr.A.P.Weerasekera 8,053,310 5,824,550 8,053,310 5,824,550

Mr.W.A.P.Perera 3,120,000 - 3,120,000 -

Mr.D.S.K.Amarasekara - - - -

Mr.I.C.Nanayakkara - - - -

Mr.P.R.Saldin - - - -

Mr.H.P.J.de Silva - - - -

Mr.A.G.Weerasinghe - - - -

Ms.S.Wickramasinghe - - - -

There were no indirect shareholdings of Directors.

5. Market Information on Ordinary shares of the Company

Share information 2014 2013

Highest during the year (Rs.) 8.40 11.30

Lowest during the year (Rs.) 4.20 5.40

As at 31st March (Rs.) 4.40 5.70

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Rs.’000

31st March 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005

OPERATING RESULTS

Group Revenue 1,725,717 1,757,847 1,805,149 2,918,609 2,337,500 1,582,805 1,585,743 1,318,346 806,335 650,153

Net Finance Expense (230,675) (100,275) (54,396) (37,836) (33,858) (52,225) (35,473) (23,156) (11,719) (9,689)

Profit Before Tax 58,399 287,031 289,452 287,607 215,625 92,340 80,239 24,203 33,980 16,945

Tax Expense (29,001) (69,482) (79,211) (54,636) (86,431) (32,931) (29,959) (8,224) (25,927) (266)

Profit After Tax 29,398 217,549 210,241 232,971 129,194 59,409 50,280 15,979 8,053 16,679

Attributable To:

Equity Holders of the parent 42,878 217,552 210,241 232,971 129,194 59,409 50,280 15,979 8,053 16,679

Non Controlling Interest (13,480) (2.9) - - - - - - - -

29,398 217,549 210,241 232,971 129,194 59,409 50,280 15,979 8,053 16,679

FINANCIAL POSITION

Stated Capital 1,204,094 1,204,094 1,204,094 204,094 204,094 114,766 113,266 110,266 58,645 40,000

Reserves 875,680 868,234 619,219 409,364 148,953 120,563 72,486 790 20,522 26,691

2,079,774 2,072,328 1,823,313 613,458 353,047 235,329 185,752 111,056 79,167 66,691

Non Controlling Interest 21,117 34,597 - - - - - - - -

Net Assets 2,100,891 2,106,925 1,823,313 613,458 353,047 235,329 185,752 111,056 79,167 66,691

Non Current Liabilities 288,566 276,105 206,130 142,757 94,321 11,475 8,767 9,852 7,621 11,405

2,389,457 2,383,030 2,029,443 756,215 447,368 246,804 194,519 120,908 86,788 78,096

Represented By;

Property Plant &

Equipment (PPE) 1,212,319 948,891 228,424 131,956 77,078 56,410 62,128 47,968 23,622 24,161

Non Current Assets

(Excluding PPE) 5,849 5,696 96 145 703 842 - - - -

Current Assets 3,351,805 3,445,393 3,922,160 1,892,915 1,293,160 767,322 810,016 851,144 854,642 761,493

Current Liabilities (2,180,516) (2,016,950) (2,121,237) (1,268,801) (923,572) (577,770) (677,625) (778,205) (791,476) (707,558)

Net Current Assets 1,171,289 1,428,443 1,800,923 624,114 369,588 189,552 132,391 72,939 63,166 53,935

2,389,457 2,383,030 2,029,443 756,215 447,369 246,804 194,519 120,907 86,788 78,096

KEY INDICATORS

Annual Revenue growth (%) (1.83) (2.62) (38.15) 24.86 47.68 (0.19) 20.28 63.50 24.02 10.71

Basic earning per share (Rs.) 0.13 0.67 0.74 1.16 6.46 2.97 4.50 1.45 1.69 4.17

Net Profit to net revenue (%) 1.70 12.38 11.65 7.98 5.53 3.75 3.17 1.21 1.00 2.57

Dividend per share (Rs.) 0.10 0.10 0.05 0.10 0.57 0.99 - - 0.87 1.00

Return on Equity (%) 1.40 10.33 11.53 37.98 36.59 25.25 27.07 14.39 10.17 25.01

Net Assets per share (Rs.) 6.40 6.38 5.61 3.07 17.65 20.51 16.40 10.07 13.50 16.67

Gearing ratio (Times) 0.64 0.34 0.54 0.50 0.15 2.18 3.25 6.46 8.74 10.21

Current ratio(Times) 1.54 1.71 1.85 1.49 1.40 1.33 1.20 1.09 1.08 1.08

DECADE AT A GLANCE

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NOTICE OF ANNUAL GENERAL MEETING

AGSTAR FERTILIZERS PLC (Company Registration No. PV 1618)

No. 9, Bawa Place, Colombo 8

NOTICE IS HEREBY GIVEN that the 12th Annual General Meeting of AGSTAR FERTILIZERS PLC will be held on 30th June 2014 at 10:00.a.m. at The Park Premier Banquet hall, Excel World, 338, T .B. Jaya Mawatha, Colombo 10.

AGENDA1) To receive and consider the report of the Directors and the audited financial statements for the year ended 31st March 2014 and the Report

of the Auditors thereon.2) To declare a Dividend as recommended by the Directors.3) To consider and if thought fit to pass the following as an ordinary resolution – To re-elect Mr. N. G. R. Karunaratne as a Director of the

Company “IT IS HEREBY RESOLVED THAT the age limit referred to in Section 210 of the Companies Act No.7 of 2007 shall not apply to Mr. N.G.R

Karunaratne, who is presently 77 (seventy seven) years of age and that he be re-appointed as a Director of the Company for a further period of one year or until the conclusion of the next Annual General Meeting whichever occurs first”

4) To re-elect Mr. A. G. Weerasinghe as a Director of the Company “IT IS HEREBY RESOLVED THAT the age limit referred to in Section 210 of the Companies Act No.7 of 2007 shall not apply to Mr A.G

Weerasinghe, who is presently 72 (seventy two) years of age and that he be re-appointed as a Director of the Company for a further period of one year or until the conclusion of the next Annual General Meeting whichever occurs first”.

5) To re-elect Mr. A. P. Weerasekara who retires in terms of Article 23(6) of the Articles of Association of the Company, as a Director of the Company.

6) To re-elect Mr. P. R. Saldin who retires in terms of Article 23(6) of the Articles of Association of the Company, as a Director of the Company.7) To re-elect Mr. D. N. N. Lokuge who retires in terms of Article 23(6) of the Articles of Association of the Company, as a Director of the

Company.8) WHEREAS Messrs PricewaterhouseCoopers, Charted Accountants have tendered their resignation as Auditors of the Company and have

stated that they have no circumstances that they wish to disclose to the shareholders with respect to their resignation AND WHEREAS Messrs KPMG have given their agreement to be appointed as Auditors of the Company IT IS HEREBY RESOLVED THAT Messrs KPMG be appointed as Auditors the Company for the ensuing year and to authorise the Directors to

determine their remuneration.9) Change of name WHEREAS the Registrar of Companies have approved in writing the name change of the Company. IT IS HEREBY RESOLVED as a Special Resolution that the name of the Company be changed from ‘AGSTAR FERTILIZERS PLC’ to

‘AGSTAR PLC’. 10) To transact any other business of which due notice has been given.

By order of the Board of Directors of AGSTAR FERTILIZERS PLC

P.R. SECRETARIAL SERVICES (PRIVATE) LIMITEDSecretariesAt Colombo, this 23rd day of May 2014

Note:• A Member entitled to attend and vote at the meeting, is entitled to appoint a Proxy to attend and vote instead of him/her.• A Proxy need not be a Member of the Company.• A Member wishing to vote by Proxy at the meeting may use the Form of Proxy form enclosed.• Any member or Proxy holder attending the meeting is kindly requested to bring this report.• The completed Form of Proxy should also be deposited at the Registered Office of the Company, No. 9, Bawa Place, Borella, Colombo 8 not

less than forty eight (48) hours before the time appointed for holding of the meeting.• For security reasons, members. Proxy holders are kindly advised to bring along with them their National Identity Card or similar for of

acceptance identity when attending the meeting.

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NOTES

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I/We……………………………………………………………………………………………………………………………….of…………..............being a

Member/Member* of the above named Company, hereby appoint (1)……………………………………………………….of…………………......……

…………………………………………………………….......................................................................................................………..failing him/her.

(2) Mr. N. G. R. Karunaratne or failing him (7) Mr. I.C.Nanayakkara or failing him(3) Mr. D.N.N.Lokuge or failing him (8) Mr. H. P. J. de Silva or failing him(4) Mr. A. P. Weerasekera or failing him (9) Mr. A. G. Weerasinghe or failing him(5) Mr. D. S. K. Amarasekera or failing him (10) Mr. P. R. Saldin or failing him(6) Mr. W.A.P.Perera or failing him (11) Ms. S. Wickramasinghe

as my/our* Proxy to represent me/us* and vote and speak for me/us* on my/our* behalf at the Annual General Meeting of the Company to be held on 30th June 2014 at 10.00 a.m. at The Park Premier Banquet hall, Excel World, 338, T .B. Jaya Mawatha, Colombo 10 and at any adjournment thereof and at every poll which may be taken in consequence thereof.

I/WE INDICATE MY/OUR VOTE ON THE RESOLUTIONS BELOW AS FOLLOWS;

For Against

1. To receive and consider the report of the Directors and the audited financial statements for the year ended 31st March 2014 and the Report of the Auditors thereon.

2. To declare a Dividend as recommended by the Directors.

3. To re-elect Mr. N.G.R. Karunaratne as a Director of the Company“IT IS HEREBY RESOLVED THAT the age limit referred to in Section 210 of the Companies Act No.7 of 2007 shall not apply to Mr. N.G.R Karunaratne, who is presently 77 (seventy seven) years of age and that he be re-appointed as a Director of the Company for a further period of one year or until the conclusion of the next Annual General Meeting whichever occurs first”

4. To re-elect Mr. A.G. Weerasinghe as a Director of the Company“IT IS HEREBY RESOLVED THAT the age limit referred to in Section 210 of the Companies Act No.7 of 2007 shall not apply to Mr A.G Weerasinghe, who is presently 72 (seventy two) years of age and that he be re-appointed as a Director of the Company for a further period of one year or until the conclusion of the next Annual General Meeting whichever occurs first”.

5. To re-elect Mr.A.P Weerasekara who retires in terms of Article 23(6) of the Articles of Association of the Company, as a Director of the Company.

6. To re-elect Mr.P.R. Saldin who retires in terms of Article 23(6) of the Articles of Association of the Company, as a Director of the Company.

7. To re-elect Mr. D.N.N. Lokuge who retires in terms of Article 23(6) of the Articles of Association of the Company, as a Director of the Company.

8. WHEREAS Messrs PricewaterhouseCoopers, Charted Accountants have tendered their resignation as Auditors of the Company and have stated that they have no circumstances that they wish to disclose to the shareholders with respect to their resignation.AND WHEREAS Messrs KPMG have given their agreement to be appointed as Auditors of the Company.

9. Change of nameWHEREAS the Registrar of Companies have approved in writing the name change of the Company.IT IS HEREBY RESOLVED as a Special Resolution that the name of the Company be changed from ‘AGSTAR FERTILIZERS PLC’ to ‘AGSTAR PLC’.

Signed this ……………day of…………………………..2014.

……………………………………Signature of shareholder

FORM OF PROXY

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Instructions as to completion

1. Kindly perfect the Form of Proxy by filing in legibly your full name, National

Identity Card/ Passport/ Company Registration Number, your address and your

instructions as to voting and by signing in the space provided and filing in the

date of signature. Please ensure that all details are legible.

2. Please mark “X” in appropriate cages, to indicate your instructions as to voting

on each resolution. If no indication is given, the Proxy holder in his/her discretion

will vote as he/her thinks fit.

3. To be valid, the completed Form of Proxy must be deposited at the Registered

Office at No. 9, Bawa Place, Borella, Colombo 8, not less than 48 hours before

the time appointed for the holding of the meeting.

4. If you wish to appoint a person other than the Chairman (or failing him, one of

the Directors) as your Proxy, please insert the relevant details (1) overleaf and

initial against this entry.

5. In the case of a Company/Corporation, the Proxy must be under its Common

Seal, which should be affixed and attested in the manner prescribed by Articles

of Association/ Act of Incorporation.

6. In the case of a Proxy signed by an Attorney, a certified copy of the Power of

Attorney should accompany the completed Form of Proxy for registration, if such

Power of Attorney has not already been registered with the Company.

FORM OF PROXY

We live in a time where successful corporate entities embrace

diversification as a means to mitigate risk and stretch their wings

into areas of untapped potential and greater promise.

AgStar as an established and trusted fertilizer brand has now

branched into rice milling, crop care, seeds and export of

spices.

AgStar’s evolution from fertilizer company to an agri inputs

and food products conglomerate is gathering pace, and with it

brings the potential for enhanced stakeholder value ever closers.


The Company


Legal Form

A Public Quoted incorporated in Sri Lanka

Company Registration No.

PV1618 PB/PQ

Date of Incorporation

25th June 2002

Registered Office

AgStar Fertilizers PLCNo.9, Bawa Place, Colombo 8Tel: +94 11 4812424, +94 11 7708040-3 Fax: +94 11 4810706E-mail: [email protected]: www.agstaragri.com

Directors

Mr N G R KarunaratneChairman/ Chief Executive Officer

Mr D N N LokugeDeputy Chairman/ Non-Executive Director

Mr A P WeerasekaraManaging Director

Mr P R SaldinExecutive Director

Mr D S K AmarasekeraNon-Executive Director

Mr I C NanayakkaraNon-Executive Director

Mr W A P PereraNon-Executive Director

Mr A G WeerasingheIndependent Non-Executive Director

Mr H P J de SilvaIndependent Non-Executive Director

Ms S WickramasingheIndependent Non-Executive Director

Audit Committee




Subsidiaries

AgStar Seeds (Private) LimitedAgStar Cropcare (Private) LimitedAgStar Grains (Private) LimitedAgStar Properties (Private) LimitedMahaweli Rice Processing Industries (Private) LimitedAgStar Exports (Private) Limited

Secretaries

P R Secretarial Services (Pvt) LimitedNo.59, Gregory’s Road, Colombo 7

Registrars

SSP Corporate Services (Private) LimitedNo.101, Inner Flower Road, Colombo 3

Auditors

PricewaterhouseCoopersP O Box 918No.100, Braybrooke Place, Colombo 2

Bankers

Commercial Bank of Ceylon PLCHatton National Bank PLCSampath Bank PLCPeoples’ BankNational Development Bank PLCBank of CeylonSeylan Bank PLCDFCC Vardhana Bank PLCMCB Bank Ltd

Legal Consultants

Nithya PartnersNo.97A, Galle Road, Colombo 3

Paul Ratnayake AssociatesNo.59, Gregory’s Road, Colombo 7

Sudath Perera AssociatesNo.5, 9th Lane, Nawala Road, Nawala

CORPORATE INFORMATION

Produced by Copyline (Pvt) Ltd Printed by Gunaratne Offset Ltd






AgStar Fertilizers PLCNo.9, Bawa Place, Colombo 8.

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UNTAPPED POTENTIAL AND GREATER PROMISE