Cargills Ceylon : Annual Report for Financial Year 2021/2022

O U R V A L U E C R E A T I O N S T O R Y

H O L D I N G T R U E T O O U R P U R P O S E

Our Purpose is to serve the rural community, our customers and all other stakeholders, through our core business - food with love - and other related businesses, based on the three main principles of;

• Reducing the cost of living
• Enhancing youth skills
• Bridging regional disparity

by enhancing local and global markets.

We are inspired by the unity and perseverance shown by our fellow Sri Lankans during these challenging times, and it gives us confidence to continue to make investments towards nation building and improving food security. Cargills stands with the people of Sri Lanka at all times and remains committed to finding solutions to the current economic crisis.

Louis Page

• Chairman

The Management is looking at all available avenues to reduce the costs being passed onto consumers.

Improving productivity in operations and reducing wastage are important short-term measures to achieve this objective. The Group is also exploring import substitutes and alternative food items to secure the meals of the customers, as imported food continues to rise in cost and become scarce.

Developing local raw material suppliers and agricultural producers are a key element in ensuring the long-term food security of the country.

Imtiaz Abdul Wahid

• Group Managing Director

001

Cargills (Ceylon)

PLC

Annual Report 2021/22

04

12

14

PREAMBLE

CHAIRMAN'S

MANAGING

MESSAGE

DIRECTOR'S

OUR JOURNEY

MESSAGE

04

NATIONAL

HIGHLIGHTS

06

002

ENDEAVOUR TO

WE ARE

06

2021/22

Financial Highlights

IMPROVE FOOD

RELENTLESS

(Ceylon)

08

Business Impact Highlights

Cargills

IN LIVING OUR

PLC

2021/22

PRODUCTION

Annual

OUR BUSINESS

PURPOSE

2021/22 10

Report

20

TAKING

STOCK

1. DISCUSSION ON HOW WE ARE FARING IN LIVING OUR PURPOSE

20 A REVIEW OF OUR OPERATIONS

21 Operating Segments

38 Shared Services

40 COMMUNITY FRIENDLY NATIONAL DEVELOPMENT

41 Our Approach to Sustainability

43 Reducing the Cost of Living

48 Bridging Regional Disparity

73 Healthy, Safe and Affordable Nutrition

84 Enhancing Youth Skills

93 Building Equality, Diversity and Inclusivity

109 Playing our Part for the Planet

120

STEWARDSHIP

120 BOARD OF DIRECTORS

125 CORPORATE GOVERNANCE

145 ENTERPRISE RISK MANAGEMENT

150 ANNUAL REPORT OF THE DIRECTORS' ON THE AFFAIRS OF THE COMPANY

1. STATEMENT OF DIRECTORS' RESPONSIBILITY
2. INDEPENDENT ASSURANCE REPORT

157

FINANCIAL

STATEMENTS

158 INDEPENDENT AUDITOR'S REPORT

1. STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
2. STATEMENT OF FINANCIAL POSITION
3. STATEMENT OF CHANGES IN EQUITY - GROUP
4. STATEMENT OF CHANGES IN EQUITY - COMPANY
5. STATEMENT OF CASH FLOWS
6. NOTES TO THE FINANCIAL STATEMENTS

213

ANNEXURES

215 ABOUT THIS REPORT

216 Stakeholder engagement

218 Materiality

218 GRI Content Index

1. FIVE YEAR SUMMARY
2. INVESTOR RELATIONS SUPPLEMENT

1. GROUP REAL ESTATE PORTFOLIO
2. NOTICE OF ANNUAL GENERAL MEETING

225 PROXY FORM

227 CORPORATE INFORMATION

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Cargills
	(Ceylon)
	PLC
	Annual
	Report
	2021/22

004

Cargills (Ceylon)

PLC

PREAMBLE

	Established the first
	fresh produce
	collection centre in
	Hanguranketha thereby
	developing a direct
Controlling interest	sourcing model with
was acquired by	smallholder farmers in
Ceylon Theatres	the vicinity

Entered the dairy industry with the acquisition of an ice cream plant which led to the commencement of sourcing fresh dairy from local farmers

Further expanded the outgrower base with the acquisition of a fruit and vegetable processing facility

Received a
Commercial
Banking license as
part of the vision
to offer inclusive		Launched the
finance to
	Kotmale Dairy
smallholder
	plant, Sri Lanka's
farmers, SMEs and	Cargills Bank
first fully integrated
low to middle
commenced	dairy processing
income groups
operations	facility

Bringing Sri Lanka's first gourmet supermarket experience by establishing Cargills Food Hall at the Colombo City Centre Shopping Mall

Cargills incorporated the Cargills Foundation, to undertake the social development initiatives of the Group

Opened the 400th Cargills Food City supermarket in Wattala

Launched the Kotmale Cheese processing plant in Hatton

005

Cargills (Ceylon)

PLC

Annual Report 2021/22

1844

Commenced a general warehouse, import and wholesale business in the heart of Fort

OUR19811999JOURNEY20022011 2014 2017 2019

2022

Launch of Cargills AAPI eLearning platform

Annual Report 2021/22

1946	1983	1993	1996	2000	2005	2008	2010
Incorporated as a	Established the	Tapped into Food	Secured the	Advanced the	Established the	Launched Cargills	Rapidly expanded the
public limited	first Cargills Food	Manufacturing	franchise rights to	supermarket model	Albert A. Page	Sarubima, modelled	modern trade business
liability Company	City at Staple	market following	the globally	to bring quality of	Institute of Food	after the fairtrade	outside the Western
	Street; thus,	the acquisition of	recognised QSR	life and affordable	Business to	concept of investing	Province, driving regional
	introducing the	Goldi meat	chain KFC, and	nutrition to the	develop regional	back into the	recruitment and sourcing
	concept of modern	processing	thereafter, setting	general consumer	youth and	communities
	trade to Sri Lanka	business	up the first KFC		empower them as	sourced from	Made further investments
			restaurant within		entrepreneurs		in the Food Manufacturing
			the Majestic City				business following the
			premises				acquisition of the 'Kotmale'
							brand and entered the
							confectionery industry

2016	2018	2020
Launched the Cargills	Opened the	Launched the
Sarubima and Farmer	350th Cargills	e-grocery store
Citizens Award	Food City	"Cargills Online"
	supermarket in
Leveraging the Cargills	Pilimathalawa
ecosystem, the banking
services were
integrated to Cargills
touch points in a bid to
drive digitised banking
in Sri Lanka

PREAMBLE

006

Cargills (Ceylon)

PLC

Annual Report 2021/22

FINANCIAL HIGHLIGHTS

221/22

Revenue
- Group
150
120
90
60
30
0
Rs. Bn.	2018	2019	2020	2021	2022

Profit before taxation

- Group

6,000
4,800
3,600
2,400
1,200
0
Rs. Mn.	2018	2019	2020	2021	2022

Revenue
- Company
100
80
60
40
20
0
Rs. Mn.	2018	2019	2020	2021	2022

Profit before taxation

- Company

3,750
3,000
2,250
1,500
750
0
Rs. Mn.	2018	2019	2020	2021	2022

	Group			Company
2022	2021	Change	2022	2021	Change
Rs. '000	Rs. '000	%	Rs. '000	Rs. '000	%

Operations								007
Continuing operations
136,691,993	112,607,061	21.39	31,013	78,935	(60.71)		Cargills
Revenue
	(Ceylon)
Profit from operations	9,058,383	7,287,074	24.31	1,890,285	1,534,005	23.23		PLC
	Annual
Profit before taxation	5,818,434	4,527,659	28.51	1,637,028	1,271,976	28.70		Report
	2021/22
Profit after taxation	4,538,720	3,483,639	30.29	1,504,329	1,250,006	20.35
Financial position
Non-current assets	71,265,687	59,468,926	19.84	20,158,404	16,727,901	20.51
Current assets	27,178,089	23,123,652	17.53	2,923,751	2,076,341	40.81
Current liabilities	41,001,806	38,945,230	5.28	4,199,696	4,997,815	(15.97)
Non-current liabilities	28,320,455	20,686,625	36.90	6,280,719	1,372,941	357.46
Capital and reserves, minority interest and
other equity	29,121,515	22,960,723	26.83	12,601,740	12,433,486	1.35

PREAMBLE

Profit after taxation

- Group

5,000
4,000
3,000
2,000
1,000
0
Rs. Mn.	2018	2019	2020	2021	2022

Total Assets

- Group

100
80
60
40
20
0
Rs. Bn.	2018	2019	2020	2021	2022

Profit after taxation - Company

3,750
3,000
2,250
1,500
750
0
Rs. Mn.	2018	2019	2020	2021	2022

Total assets
- Company
25
20
15
10
5
0
Rs. Bn.	2018 2019	2020	2021	2022

Per share data (Rs.)
Basic earnings per share	17.63	13.51	30.50	5.84	4.85	20.41
Dividends per share	6.10	5.10	19.61	6.10	5.10	19.61
Net assets per share	98.94	89.08	11.07	48.91	48.25	1.37
Market value per share	182.50	235.00	(22.34)	182.50	235.00	(22.34)
Cash flow
Net cash generated from/(used in)
- Operating activities	14,166,421	11,630,537		(846,072)	251,537
- Investing activities	(11,437,225)	(10,010,054)		(635,597)	132,440
- Financing activities	(1,212,727)	752,879		1,854,563	(185,211)			PREAMBLE