KOTAGALA PLANTATIONS PLC. Annual Report 2016/17

Transcription

1 KOTAGALA PLANTATIONS PLC Annual Report 2016/17

2 CONTENT Financial Highlights 01 Chairman s Review 02 CEO s Review 04 Board of Directors 07 Risk Management 09 Enterprise Governance 11 Audit Committee Report 15 Remuneration Committee Report 16 Related Party Transactions Review Committee Report 17 Our Plantations 18 Our People 19 Crop and Yield 20 Management Discussion & Analysis 21 Ten Year Summary 25 Shareholder & Investor Information 26 Financial Reporting Annual Report of The Board of Directors 28 Statement of Directors Responsibilities 31 Independent Auditors Report 32 Statement of Profit or Loss and Other Comprehensive Income 33 Statement of Financial Position 34 Statement of Changes In Equity 35 Cash Flow Statement 37 Notes To The Financial Statements 38 Glossary of Financial And Non Financial Terms 94 Notice of Meeting 95 Form of Proxy 99 Corporate Information Inner Back Cover Vision To be the foremost producer of High Quality Tea & Rubber Mission To maximise land and labour productivity and achieve excellence in the protable management of the Company in an acceptable and socially responsible manner. Core Values Integrity Courage Commitment Objectives To lead the way in the technical and innovative development of the Tea & Rubber agri-industries. To provide a satisfying work experience to our employees and ensure a rewarding investment to our shareholders. To be a trail-blazer in the shift away from producing visually graded rubber as an agricultural commodity to the production of a fully technically specied industrial polymer

3 FINANCIAL HIGHLIGHTS Year ended 31st March Group Company (Restated) (Restated) Change % Statement of Comprehensive Income Revenue Rs.000 7,319,107 6,684,033 3,086,410 3,038, Loss before tax Rs.000 (369,413) (888,894) (350,830) (943,984) 0.63 Loss after tax Rs.000 (319,405) (753,401) (311,274) (838,389) 0.55 Total Comprehensive Loss for the year Rs.000 (371,871) (523,950) (374,110) (618,737) 0.40 Loss per share Rs. (7.99) (18.83) (7.78) (20.96) 0.63 Statement of Financial Position Total Assets Rs ,358,395 10,645,228 8,564,317 9,192,168 (0.07) Total Liabilities Rs.000 8,760,051 8,675,013 6,888,695 7,142, Total Shareholders Funds Rs.000 1,598,344 1,970,215 1,675,622 2,049,732 (0.18) Net Assets per Share Rs (0.18) Market/shareholder information Debt/ Equity Ratio (0.18) Quick Asset Ratio (0.17) Interest Cover 0.35 (0.40) 0.31 (0.69) (1.45) Market Price (Year end) Rs (0.33) Market Capitalisation Rs , ,000 ( 0.33) Revenue Rs.Mn. 4,000 3,500 3,000 2,500 2,000 1,500 1, Shareholders' Funds Rs.Mn. 3,500 3,000 2,500 2,000 1,500 1, /13 13/14 14/15 15/16 16/ /13 13/14 14/15 15/16 16/17 Net Asset Per Share Rs./Share 120 Total Assets Rs.Mn. 10, ,000 6,000 4,000 2, /13 13/14 14/15 15/16 16/ /13 13/14 14/15 15/16 16/17 1

4 CHAIRMAN S REVIEW I take great pleasure in welcoming you to the Annual General Meeting of Kotagala Plantations PLC for the year During the year the Sri Lankan economy grew at a rate of 4.4% which is slower than the 4.8% growth recorded for the previous year. A gamut of reasons contributed to the downturn in the rate of growth, among them the unfavourable weather conditions, micro economic challenges, inflationary pressures and the upward movement in interest rates. Our own tea is mainly VP; 87% under VP in the high growns and 100% in the low growns. These VPs require adequate nutrition and adequate well distributed rain to maintain high yields and are more susceptible to erratic weather than the hardier seedling tea. Additionally the unseasonal rains reduced the window of opportunity for the regular and timely application of nutrients. We were able to harvest only 72% of the high grown budgeted crop and only 77% of the low grown budget. The year saw several changes which impacted adversely on the standard practices employed by the Plantation Managers. For many years Managers relied on the use of Glyphosate in weed management on the plantations. Glyphosate was banned by the Government citing serious health concerns and thereby severely affecting the weed control programmes. The fertilizer subsidy hitherto granted by the Government was withdrawn creating a twofold adverse reaction in the plantations-that of increased cost of fertilizing the tea compounded by the lower efficacy of the fertilizer programmes due to part of the fertilizer being taken up by the controlled weed flora. The Plantation woes of poor revenue continued with the hitherto scientifically acceptable forestry development plan established by the Plantations Ministry for the harvesting of timber and fuel timber clearings being subjected to unplanned changes. The serious shortage of workers is a major threat confronting the plantation industry. This problem will continue with no solution in sight. Many of the young people born in the plantations to the current workers opt to move in to areas of employment away from the plantations. The lack of workers is already felt by the plantations and will prove to be a major drawback to good Plantation Management in the future. This is vividly felt during the cropping months when the estates are unable to carry out their planned agricultural programmes resulting in poor agricultural maintenance, poor yields with low quality and drop in all aspects of tea culture, quality and manufacture resulting in poor prices at the auctions. The only solution available to the plantation management is automation of every possible process both in the field and specially in the manufacture. Another pathway that needs serious investigation is the means of increasing the yield-applicable to both tea and rubber, using advanced agronomic practices that increases production by enabling the plantations to derive the current revenue with much higher profits from smaller extents of cultivation. These techniques in agronomy enumerated above are being seriously pursed by our Plantation Managers to transform an industry forecasted with a bleak future to profitability. The balance of payment problems and uncertain trading conditions in our main tea importing countries which seriously affected prices in 2015 had eased by the start of the new financial year and by June 2016 had reached very satisfactory levels seldom seen in recent years. We ended the year with a high grown net sale average of Rs per kilogram and the low grown teas averaged Rs per kilogram. With the increase in tea auction prices, the manufacture of bought leaf became attractive. In the low country, where the bulk of our production is already bought leaf and competition for bought leaf is severe and we could not significantly improve our intakes. However we were able to improve our intakes in the high growns and ended up manufacturing 526,852 kilos of bought leaf against 200,000 kilos last year; a substantial increase. RUBBER The same weather which adversely affected Tea production assisted rubber production and under the prevalent drier conditions we achieved 184 days of tapping against 150 days in the previous season. Total production was 2.58 Mn kilos of rubber against 2.46 Mn kilos the previous year. The crop harvested was 95% of budget. The budget would have been easily achieved if not for an eighteen day work stoppage by the labour in support of a new collective agreement. Prices continued to be poor and below cost of production. It is unlikely that we will see an improvement in Rubber prices in the new season. Nevertheless we did not cut back on essential agricultural maintenance activities and additionally replanted 105 hectares. OIL PALM Kotagala Plantations is a truly multi-crop company and we have already planted 526 hectares of oil palm of which 223 hectares are now in bearing. It will be a few more years before these extents come up to peak bearing. In the season under review we harvested 950,000 Fresh Fruit bunches (FFBs) against 426,000 FFBs last season. Our target is to plant in excess of 1,000 hectares in Oil Palm but are currently constrained by difficulties in importing the required seed. TEA In the year under review weather was not conducive for growth and the total rainfall was one of the lowest recorded in recent years. The island s crop was also one of the lowest in recent years and 11% behind the crop harvested in the previous year. 2 Kotagala Plantations PLC Annual Report 2016/17

5 FINANCIAL PERFORMANCE The total gross profit from tea operations was Rs. 173 million against a gross loss of Rs.62 million the previous year. The gross loss from Rubber operations was Rs million against a gross loss of Rs.61.8 million the previous year. The gross profit from all plantation operations for the year under review was Rs.10 million against a gross loss of Rs. 131 million the previous year. After Rs. 54 million Fair Value Gain on Biological assets and other income of Rs.338 million and unallocated expenses of Rs million the final loss for the year was Rs.374 million. The net financing cost included in the unallocated expenses is Rs. 509 million. A significant portion of the financing charges are in servicing the borrowings for investments and the Company has taken necessary steps to reduce these financing charges in the coming year. GENERAL In October 2016 a new collective agreement was implemented and the increase in wages for the year under review was Rs130 million. On a full year basis the impact of this wage increase is expected to be in the region of a 20% increase. Inspite of difficult trading conditions and cash flows, we have not neglected essential agricultural maintenance and labour and staff welfare activities. During the year under review Capital expenditure on replanting and the maintenance of immature areas was Rs. 302 million. A further Rs.29 million was incurred on buildings, worker housing and staff quarters. The new year has started well and tea crops are coming in satisfactorily. The South West monsoon is delayed but expected very shortly. All available labour is employed on harvesting and although conditions are suitable, the application of fertilizer is a little behind. Indications are that the new season will be satisfactory for tea crops, although with increase harvests the current very high price levels will level down. Immediate prospects for Rubber are not good but towards the latter part of the year, when international economies stabilize we may begin to see an improvement. My thanks and appreciation are due to all our stake holders for their continued support and confidence in the Company. To my fellow members on the Board, all executives, staff and the workforce my thanks and gratitude for their co-operation and unstinted support at all times. S D R Arudpragasam Chairman 26th May

6 CEO S REVIEW We review the performance of the company in a season of mixed fortunes. A season that witnessed a resurgence in Tea prices to unprecedented levels in the latter part while Rubber prices struggled in the doldrums. Had weather conditions been kinder, enabling crop harvests upto expectations, the company s Tea sector would have experienced a boom year. As it stood, however, the erratic weather that prevailed over Sri Lanka resulted in a 2016 National Tea crop that was the lower than in the previous 06 years. Unfortunately, our Tea plantations followed the trend and we ended the season at 28% below budget. This impacted heavily on our cost of production and, together with the burden of a desperately poorly performing Rubber sector, despite record Tea price averages, the Company recorded a total comprehensive loss of Rs. 374Mn.for the season. WAGE HIKES An increased wage was paid to all workers of the company with effect from 15th October, The impact of this was 17% on the company s wage bill. Furthermore, a 25% increase was afforded to all estate Staff, from 01st March, 2017 as per new Collective Agreement effective for three years. TEA Weather conditions that prevailed over the Island were not conducive to the production of Tea crop. As a result, our High Grown region was able to harvest only 72% of the estimated crop target. Similarly, our Low Grown region harvested 77%. These figures, no doubt contributed to the National trend which reflected a decline of 11.07% from the previous year. In the last six months of the season, when sale prices began to improve sharply, the manufacture of Bought Leaf became very attractive. Renewed interest was taken to increase the intake of Bought Leaf to our factories. Competition being intense in the Low Grown areas due to low crop production, this exercise has been more fruitful in the Up-country. However, in the Low country too some headway was made and we are pleased to report that all our three Low Country factories are now operational. Tea prices showed an increasing trend from February, 2016 and swung sharply upward from June. Our High Growns ended the season on an Auction Average of Rs while the Low Growns achieved Rs These figures make satisfactory reading compared to the Rs and Rs , respectively, of The high prices being fetched at present give hope that the industry is buoyant. However, it must not be forgotten that it was crop shortfalls, worldwide, that triggered the price increases. While prices have held firm in the face of improved crop intakes, the quality of Tea that is manufactured will play a major role in maintaining price structures. Our company is focused on this aspect. RUBBER Weather Weather conditions were more conducive for harvesting Rubber crop this season over the previous. We were able to undertake normal tapping on 184 days as against 150 days. Crop During the period under review, the company produced 2.58 Mn kgs as against 2.46 Mn kgs the previous season. This is an increase of 5%. 90% of the season s budgeted crop was harvested. Unfortunately, a 18 day strike by the workers on the wage issue during the high cropping season prevented us from making further ground. Prices Rubber prices increased 6% from the beginning to the end of the season but with some drastic fluctuations in-between. The increase referred to, from Rs. 278/- to Rs. 295/-, for Latex Crepe No.1, however, hardly provides satisfaction as the increased price is still well below the cost of production. Manufacture Although prices were not lucrative, the Company s Estates continued to manufacture to high standards. The Padukka factory manufactures prime quality Sole Crepe while the 06 other factories manufacture good quality Crepe Rubber. Capital Field Development Despite the parlous state of the Industry, the company completed 105 hectares of replanting while also maintaining 575 hectares of immature rubber planted over the last 05 years totalling to 680 hectares. OIL PALM Crop 105 hectares were included in the Revenue extent during the season, thus increasing this category to 223 hectares. 950 MT of Fresh Fruit Bunches (FFB) were harvested, compared to 426 MT in the previous season. Manufacture The Fresh Fruit Bunches continue to be supplied to an outside processing factory. Prices Rs. 33/- to Rs. 39/- per kg were received averaging to Rs. 37/- during the year, which are improvements from the Rs.29/- to Rs.30/- per kg fetched in the previous season. Capital Field Development 303 hectares of immature Oil Palm were maintained during the season. 4 Kotagala Plantations PLC Annual Report 2016/17

7 FAIR TRADE CERTIFIED MARKS Our three Fair Trade certified Tea factories, Kelliewatte, Bogahawatte and Chrystler s Farm, experienced less sales through this system over the season. With these trading volumes being reduced, we may have to review the benefits against certification costs. ISO 22000:2005 & 9001:2008 The requisite Audits take place from time to time and compliance is maintained by the factories of the company in order to retain these important certifications. RAINFOREST ALLIANCE The programme of compliance continues successfully in our certified properties while we look forward to bringing our other estates into the system as early as possible CORPORATE SOCIAL RESPONSIBILITY The Regions - Up Country and Low Country of Kotagala Plantations PLC have invested substantial resources in Social Responsibility Initiatives in year 2016, spending over Rs.68 Mn for 59 Units of New Housing (Green Gold Housing ) 58 Units of rehabilitation of worker quarters, 2 Child Development Centers, Concrete Roads and a Water Scheme. This project was fully funded by the Ministry of Hill Country, New Villages Infrastructure and Community Development in collaboration with the PHDT. Green Gold Housing Scheme Chrystler s Farm Estate 20 Units Programme, Provision of Spectacles, Cataract removal surgeries, AIDS awareness Programmes, Promoting home gardening and educating parents to use fresh fruits and vegetables, House Hold Cash Management, Regularized feeding for children at Child Development Centers by educating Child Development Officers, promotion of breast feeding corners at Child Development Centers enabling lactating mothers to feed their babies, Refresher Training programmes for Midwives in Estates etc., were carried out on both Low Country & Up Country Regions in collaboration with the Health Ministry/RDSH & PHDT. The improvement of health conditions has benefited many in the Estate Community, from infants to retirees. Maternal Care The provision of maternal care on KPPLC Estates commences at the level and time of antenatal registration, with clinics, attendance, place of delivery and postnatal care by qualified Midwives in our Estates. Nutritional levels are monitored and maintained with the support of the Estate health teams under the guidance of the Medical Officer of the Health (MOH) of the respective area. In addition, the Estate Midwives visit mothers at home to ensure early registration and to follow up during pregnancy, ensure safe delivery at hospitals and provide the best possible care. Many educational programmes were conducted for mothers, and young females in families by the Midwives. Our Estate health teams have contributed significantly towards early registration of pregnancies, thereby enabling better health and safety of the mothers and babies. Estate Worker Housing Co-operative Society (EWHCS) The EWHCS was first established in 1993 by the Plantation Human Development Trust (PHDT) in collaboration with the Department of Cooperative Development, mainly with the intention of distributing funds to construct houses for the Estate community. These societies are models which have been successfully developed on our plantations. This initiative has made a significant impact in uplifting the living conditions of the Plantation workers and their families. Under our Living Environment of the Estate Community, 20 Housing Units were planned and constructed in A Land extent of 7 perches + 10% for infrastructure was granted per beneficiary. This project was supported by the Ministry of Hill Country & New Villages, Infrastructure and Community Development. Health & Nutrition Health & nutrition of our workers is a major priority of our management. KPPLC is committed to maintain the Health and nutritional status of its Estate Community. Social Mobilization, Dengue Awareness Programmes, Dental Clinics, Eye Clinics, TB awareness programmes, Oral Cancer The Resident Plantation Community has been empowered by the EWHCS which are now established on all Estates managed by RPCs by providing them loans, creating job opportunities, access to many goods and services, etc. Congratulations! The Infant Mortality Rate (IMR) and Maternal Mortality Rate (MMR) on our Plantations are registered at level zero. This is a great achievement. Giving birth at home has been actively discouraged. In other words, no birth should take place outside a maternity ward or Government medical institution. We are pleased to have achieved these goals. 5

8 CEO S REVIEW We congratulate our Estate Management and the Health Staff and PHDT Officials on this achievement and thank everyone involved World Vision We gratefully acknowledge the tremendous contribution made by M/s. World Vision (NGO) to uplift the living conditions of the Estate Community in our Upcountry Region. Inter Plantation Rugby 7s and Cricket 6s The above tournaments were conducted at the Darrawela and Radella Club grounds, respectively. Teams from our Company participated in both tournaments. Appreciation We wish to place on record our grateful thanks to our Buyers, Brokers, Lenders and Suppliers for their continued support. Our appreciation is extended to the shareholders for the confidence they hold in us. We would fail in our responsibilities if we did not thank, most sincerely, our Plantation Executives, staff and workforce, without whose hard work this Industry cannot be sustained. Our gratitude is also extended to the Executives and staff of our Head Office and Regional Offices for their consistent and dedicated input. In conclusion, we thank the Chairman and the Board of Directors for providing direction and advice in steering the Company through the difficult times we have had to face. Mahen Madugalle Director / Chief Executive Officer 26th May 2017 Rugby Team Cricket Team 6 Kotagala Plantations PLC Annual Report 2016/17

9 BOARD OF DIRECTORS S. D. R. Arudpragasam Chairman Non- Executive Mr. S. D. R. Arudpragasam joined the Board in 1996 and was appointed Chairman in May, He serves as Chairman of several subsidiaries of The Colombo Fort Land and Building PLC (CFLB) and holds the position of Deputy Chairman on the Boards of The Colombo Fort Land and Building PLC and Lankem Ceylon PLC. He also functions as Managing Director of E.B. Creasy & Company PLC in addition to holding other Directorships within the CFLB Group. Mr. S.D.R. Arudpragasam is a Fellow of the Chartered Institute of Management Accountants (U.K.) C. P. R. Perera - Deputy Chairman Independent Non- Executive Mr. C.P.R. Perera joined the Board in 1996 and was appointed Deputy Chairman in May, He serves as a Director in several Companies in the Colombo Fort Land & Building Group and also holds directorships in other private and public companies. He is a past Chairman of the Sri Lanka Tea Board, Sri Lanka Insurance Corporation, PERC and Bank of Ceylon. He retired as Chairman of Forbes & Walker Ltd and its subsidiary companies in June 2005 after almost 44 years of service. He presently functions as Chairman of Ceylon Tea Brokers PLC. Mr. Perera has served as a Committee Member of the Ceylon Chamber of Commerce, The Planters Association of Ceylon and on the Committee of Management of the Ceylon Planters Provident Society. He is presently an Appointed Member of the Monetary Board of the Central Bank of Sri Lanka. A. Rajaratnam Non Executive Director Mr. Rajaratnam joined the Board of Kotagala Plantations PLC in 1996 and served as Chairman from the year 2003 to May, He currently serves as Chairman of The Colombo Fort Land & Building PLC (CFLB) and several listed and unlisted companies within the CFLB Group in addition to holding other Directorships within the Group. Mr. A. Rajaratnam is a Fellow of the Institute of Chartered Accountants of Sri Lanka. D. S. AbeyRatna Non Executive Director Mr. D.S. AbeyRatna was appointed to the Board on 11th November, He is a Fellow of the Institute of Chartered Accountants of Sri Lanka, Chartered Institute of Management Accountants (U.K.) Certified Management Accountants of Sri Lanka. He is also a Member of the Certified Management Accountants of Australia. Mr. AbeyRatna holds a Ph. D. from the University of Honolulu (U.S.A.) He is the Head of AbeyRatna & Co. Chartered Accountants which is an affiliate of AGN International Ltd. (U.K.) and is a Director of the said Company. He possesses well over 40 years of experience in Finance at a very Senior Level. Mr. AbeyRatna is a Director of several listed and unlisted Companies. He functions as Managing Director of Lankem Tea & Rubber Plantations (Pvt) Ltd. Managing Agents. M. S. Madugalle Chief Executive Officer Executive Director Mr. Mahen Madugalle commenced his planting career with Janatha Estates Development Board (JEDB). He has worked for other private sector Plantation Companies. He joined Kotagala Plantations PLC which was then managed by George Steuart Management Services as Manager Mount Vernon Estate and was promoted as Cluster General Manager of Mount Vernon under the management of Lankem Tea & Rubber Plantations (Private) Limited (LT&RP) and subsequently as Regional General Manager of the Kotagala Region. He has also held the position of General Manager of the Agras and Uva Regions of Agarapatana Plantations Ltd. He was appointed to the Boards of LT&RP in 2012 and Kotagala Plantations PLC in January 2013 and functioned as Deputy Chief Executive Officer of KPPLC from 1st April, Mr. Madugalle was appointed as Chief Executive Officer of KPPLC with effect from 1st April, He has provided consultancy services to the FAO in Iran on tea projects. He holds a Diploma from the National Institute of Plantation Management. R. C. Peries Non- Executive Director Having started his career with Carsons Cumberbatch & Co., he then moved to George Steuarts, one of the premier Agency Houses. He has served as Manager of some of the most prestigious rubber properties in the Low Country and also held senior appointments in the industry and served on the Rubber Research Board Advisory Panel. In 1983, he was the Regional Director of the JEDB Hatton Board and in 1988 he was made Director General of the Kegalle Avissawella Zone of the JEDB. In 1992 after the Privatisation of the management of plantations, he joined George Steuart Management Services as the General Manager of Low Country rubber and tea estates of Kotagala Plantations. He continued to serve in this position even after the takeover of the Management of Lankem Tea & Rubber Plantations (Pvt) Ltd (LT&RP), Managing Agents in He was appointed to the Directorate of LT&RP in 2002 and to the Board of KPPLC in He also serves as a Director in other Companies of The Colombo Fort Land & Building Group. He is a member of the Rubber Research Board and of the Rubber Wages Board. Mr. R.C. Peries is a Member of the Ceylon Institute of Planting. 7

10 BOARD OF DIRECTORS D. A. Ratwatte Non- Executive Director Having commenced his career with Messers. Whittall Boustead Ltd prior to nationalisation he has contributed many years of his life to planting. After the nationalisation of estates he managed two of the most prestigious plantations in up-country after which he was invited to serve on the Board of Directors of the Janatha Estates Development Board VI. After the privatization of management of the Regional Plantation Companies in 1992, Mr. Ratwatte took charge of the operations of Maturata Plantations Ltd. in the capacity of General Manager-Plantations in charge of the plantations in both Udapussellawa/Maturata and the plantations coming within the purview of Maturata Plantations Ltd. in the Deniyaya district, low-country. In 1999 he joined Lankem Tea & Rubber Plantations (Private) Ltd. (LT&RP), Managing Agents, as a Regional Director in charge of the Western High Grown properties in the Kotagala and Agarapatana districts. He was appointed to the Board of LT&RP in 2002 and joined the Board of KPPLC in He serves as a Director in other Companies of the Colombo Fort Land and Building Group. He is also in the panel of Visiting Agents, appointed by the Ministry of Plantation Industries. Mr. D. A. Ratwatte is a Fellow of the National Institute of Plantation Management. G. D. V. Perera Non- Executive Director He commenced his career in planting with Mackwoods Estates & Agencies Limited in With the nationalization of Estates, he worked as an Estate Manager and Visiting Agent and was subsequently promoted as a Director of JEDB in the Nuwara Eliya Region. He has provided his services to the prestigious Commonwealth Development Corporation (CDC) of UK on tea projects in Tanzania and was resident there. After the privatisation of the management of Regional Plantation Companies, he returned to Sri Lanka and joined Forbes Plantation Management Services Ltd., as a Plantation Director of Balangoda Plantations Limited in He joined Lankem Tea & Rubber Plantations (Pvt) Ltd (LT&RP), Managing Agents in 1996 and was appointed to the Directorates of LT&RP in 2002 and KPPLC in He also serves as a Director in other Companies of the Colombo Fort Land and Building Group. He is a past Chairman of the Planters Association of Ceylon. He is a Director of the Plantation Human Development Trust. Mr. G.D.V. Perera is a Member of the Ceylon Institute of Planting and a Fellow of the National Institute of Plantation Management. He is a member of the consultative committee on Tea Research. A. M. De S. Jayaratne Independent Non- Executive Director Mr. A. M. de S. Jayaratne was appointed to the Board of Kotagala Plantations PLC in December He is a former Chairman of Forbes & Walker Ltd, Colombo Stock Exchange, Ceylon Chamber of Commerce and The Finance Commission. He also served as Sri Lanka s High Commissioner in Singapore. Mr. Jayaratne is a Director of several listed and unlisted companies. He holds a Bachelor of Science degree in Economics and is a Fellow of the Institute of Chartered Accountants of Sri Lanka and of England and Wales. Dr. L.M.K. Tillekeratne Independent Non- Executive Director Appointed to the Board in January, Dr. Tillekeratne is a globally renowned rubber scientist and technologist with nearly 40 years national and international experience in research and development. As the Director/ CEO of the Rubber Research Institute of Sri Lanka which is the first rubber research institute in the world, he held enormous responsibilities in guiding the Sri Lankan rubber industry along a growth path that includes the small holder sector. He has extensive practical experience in policy development, industry problem solving and dissemination of technology to users. His knowledge of global rubber industry is extensive. He has launched many projects to upgrade the skills, technological capabilities and productivity of the rubber farms. He is an inventor having won the prestigious Presidential Award and international acclaim for commercialized inventions that led to him being appointed Chairman, Sri Lanka Inventors Commission. Having retired from Government service in August 2006, he serves the industry as a freelance consultant; while having served as a Professor in Polymer Chemistry, University of Sri Jayewardenepura until Further, he is serving as an expert in Rubber Processing and Testing to United Nations Industrial Development Organisation (UNIDO). Under the GROW Liberia program of Adam Smith International of UK, Dr. Tillekeratne is extending his assistance to Liberia to improve the quality of RSS and to certify the quality of the rubber produced. He holds a Diploma in Research Management from the University of Los banos, Phillipine. He also has a Master of Science Degree, in Physical Methods of Analysis and a Doctorate in Polymer Chemistry and Technology from the University of Aston, Birmingham UK. Dr. Tillekeratne is a Fellow of the Plastic & Rubber Institute of UK, Institute of Chemistry Ceylon and the National Academy of Sciences, Sri Lanka. 8 Kotagala Plantations PLC Annual Report 2016/17

11 RISK MANAGEMENT The Risk Management process At Kotagala, we emphasise the importance of having a strong working culture within the organization that strengthens the internal processes. Risk Management is no longer an additional set of processes but embedded in the business process itself.the risks could influence the achievement of the strategy of business, operational and financial objectives therefore the Directors have taken the initiative to identify the organisations major risks and introduced several measures to mitigate the risks faced by the Company. The following are some of the major risk factors that the company is exposed to while carrying out its business and the actions implemented to reduce or eliminate risk. Operational risk The company carries out continuous planning, quality control and disaster recovery management strategies in order to ensure the continuous operation of business. Tangible assets are insured against identifiable risks and the associated insurance policies are reviewed and evaluated annually. Provision is also made for asset defects and malfunctions and for obsolescence due to advances in technology. We go to the best suppliers to ensure that defect free products are purchased. The factories in the estates and other infrastructure are continuously upgraded when required. Exposure to reputation risk is minimized through product quality controls and a comprehensive quality management process which includes upgrading our factories to adhere to HACCP standards Weather The Company s product portfolio being Tea and Rubber, helps to minimize the impact as tea requires wet and rubber requires drier weather conditions. The location of our tea estates in the High grown and Low grown elevation categories also helps in this regard. The Company has the option of increasing or decreasing quantities of bought crop according to weather patterns. Prudent agricultural practices such as rain guards for rubber trees and planting of TRI recommended clones and other agricultural practices to minimise drought effects and proactive planning has helped the company to minimise the risk of adverse weather conditions. Business Risk Prices are cyclical and have an impact on earnings. Tea Auctions in Colombo are influenced by global demand and supply, and foreign currency exchange rates. The company mitigates this impact by producing high quality tea and rubber. The direct export of rubber facilitates price stability and entering into forward contracts with rubber buyers helps reduce market risk. Kotagala Plantations process a full range of teas (low grown, high grown and CTC) and different types of rubber which helps reduce market instability. Initiatives have been taken for diversification into other crops like cinnamon and oil palm which will reduce over dependence on tea and rubber. The Company possesses synergistic benefits from being in a group which includes a chemical supplier and another company in the plantation business. Healthy relationships are maintained with our suppliers. Fluctuations in the exchange rates are closely monitored and hedging techniques applied when required. In order to minimize the dependence on a single distribution channel (brokers) the company has continued to establish its export operations. Further the company has leased out a portion of land to Mlesna (Ceylon) Ltd in Kotagala for the purpose of the sub lessee to carry out sales and operate a tea centre for their products. This facility also has provision to market KPPLC garden mark packs. Legal and regulatory The Company addresses this area with great concern in order to protect its corporate image. Quality assurance standards in factories have been established over a period of time (ISO, HACCP) and continuous reviews are conducted to ensure they are maintained. The Company s legal division ensures full compliance with all regulatory requirements including labour regulations, adherence to laws and instructions of governing authorities such as Provisions of the Companies Act, Securities & Exchange Commission and Colombo Stock Exchange requirements. The Company also obtains expert advice from its Auditors, Tax consultants, Actuaries, TRI, RRI as and when required. As a public listed company we also strive for a high standard of corporate governance in the conduct of our business. Human resources Kotagala Plantations has entered into Collective Agreements with trade unions as a member of the employers federation. This helps to ensure industrial peace and a well negotiated and affordable wage. Human Resource Management is given priority, where continuous training and development programmes and workshops are held in order to motivate and develop our human resources. Governance Risk These risks are dealt with preventively through the actions of the company s legal department and through frequent internal & external audits to monitor compliance. The company s management culture stresses ethical performance in this area, following best practices at all times. Liquidity We strive to maintain sufficient liquidity is available to meet our debt commitments and provide for our operational capital requirements. Loans and overdraft facilities are arranged with banks to meet planned cash flow commitments. 9

12 RISK MANAGEMENT Employee related risks Risks such as omissions, fraud, judgmental errors, negligence, are examples of employee related risks. The company has a set up a competent internal audit department which carries out exhaustive checks on a routine basis in order to eliminate the above mentioned risks. The Internal audit department functions independently and reports directly to the Executive Directors. They ensure all receipts have been banked, lodging of funds have been deployed for the intended activity. Suitable delegated authority levels have been set up and succession plans are formulated. We maintain a conducive working environment for all staff Information Proper internal controls have been established in order to secure the information system. Routine and surprise audit checks are carried out to detect any deficiencies and improvements are suggested. The company has implemented sound backup systems and procedures, and has also entered into maintenance contracts with established agents and uses licensed software. 10 Kotagala Plantations PLC Annual Report 2016/17

13 ENTERPRISE GOVERNANCE Enterprise Governance is the combination of Business Governance and Corporate Governance, it is the set of responsibilities and practices exercised by the Board and executive management with the goal of providing strategic direction, ensuring that objectives are achieved, ascertaining that risks are managed appropriately and verifying that the organization s resources are used responsibly. Enterprise Governance is such an important framework. It encapsulates Corporate Governance, Performance Management, Internal Control and Risk Management, and it strives to achieve a balance between conformance and performance. to further establish our Company as a good corporate citizen that values responsibility. The strategic options, implementation and risk control strategies are closely monitored in order to deliver better results. The Company is in compliance with the majority of the good corporate governance practices recommended by The Institute of Chartered Accountants of Sri Lanka and the listing rules of the Colombo Stock Exchange. Given below is a demonstration as to how we adhere to good Corporate Governance practices. At Kotagala Plantations PLC we are firmly committed to the standards set for governance. The Company s performances are managed to the best interest of its shareholders whilst maintaining high ethical standards. The Board is committed to adhere to various business practices in order Corporate Governance Principle Composition of the Board Company s adherence Directors The Board consists of an Executive Director and nine Non-Executive Directors three of whom are Independent. The Directors possess a strong balanced blend of skills, experience to offer guidance in core areas important to KPPLC. These Directors are named below and profiled on pages 7 and 8 S. D. R. Arudpragasam - Non Executive (Chairman) C.P.R. Perera - Independent Non- Executive (Deputy Chairman) A. Rajaratnam - Non-Executive D. S. AbeyRatna - Non Executive M. S. Madugalle - Executive (Chief Executive Officer) R. C. Peries - Non Executive D.A. Ratwatte - Non-Executive G.D.V. Perera - Non-Executive A. M. De S. Jayaratne - Independent Non-Executive L. M. K. Tillekeratne - Independent Non-Executive The Non- Executive Directors have submitted declarations of their independence or nonindependence to the Board of Directors. Mr. C.P.R. Perera has served on the Board for more than nine years. He is a Director on the Boards of other Companies in which a majority of the Directors of the Company are Directors and also has significant shareholdings in another. He serves on the Board of the Ultimate Parent Company, The Colombo Fort Land and Building PLC (CFLB) and holds Directorships on certain subsidiaries of CFLB. However the Board having taken into consideration all other circumstances listed in the Rules pertaining to the Criteria for Defining Independence is of the opinion that Mr. C.P.R. Perera is nevertheless Independent. Mr. A.M. De S. Jayaratne is a Director of the Ultimate Parent Company, The Colombo Fort Land and Building PLC (CFLB) and serves on the Boards of several subsidiaries of CFLB. However the Board having taken into consideration all other circumstances listed in the Rules pertaining to the Criteria for Defining Independence is of the opinion that Mr. A.M. De S. Jayaratne is nevertheless Independent. 11

14 ENTERPRISE GOVERNANCE Corporate Governance Principle Decision making of the Board Company Secretaries Independent Judgement Obtaining independent professional advice Managing Agents Finance Acumen Supply of Information Nomination Committee/Appointments to the Board Disclosure of appointments of New Directors to the Shareholders. Company s adherence Directors In addition to attending Board Meetings, matters are referred to the Board and decided by Resolutions in writing. The Board is responsible for:- Ensuring the conduct of the Company s affairs in the best interest of its stakeholders. Identifying Strategic options implementation and monitoring their success. Appointment of the Directors, ensuring staff succession and determining remuneration of senior executives and staff in consultation with the respective Committees. Ensuring an effective internal control system. Ensuring a proactive risk management system. Ensuring compliance with highest ethical standards and legal standards. Approval of major capital investments acquisition expansions and Budgets Approval of interim and annual financial statements for publication. The Company and all Directors may seek advice from Corporate Managers & Secretaries (Pvt) Ltd who are qualified to act as Secretaries as per the provisions of the Companies Act No. 7 of The Board of Directors at all times exhibit high standards of integrity, commitment & independence of judgement. Advice is sought from independent experts whenever board deems it necessary. The Directors are updated on the changes in the plantation industry as well as on the general aspects which may affect the Company s operations. The Board of Directors has delegated the management of Plantation and the task of achieving the strategic objectives set out by the Board to the managing agents Lankem Tea & Rubber Plantations (Pvt) Ltd (LT &RP). The Board of LT&RP meets every month and review the progress towards achieving the budgets and discuss the operational issues. The successful implementation of the Capital Expenditure programmes and focussing on the development strategies are also key priorities. The Board comprises of four finance professionals who together with Director Finance - LT&RP possess the knowledge and the competence to offer the Board the necessary guidance on matters relating to finance. Prior to each meeting all Directors are given a file of Board Papers which includes Summarized Financial Statements, operational statistics, performance reviews, sales reports, Schedules of Capital Expenditure and a Progress Report, covering all significant issues with the comparatives of prior year and budget. This information is provided at least 7 days prior to the meeting which gives Directors adequate time for qualitative deliberation and analysis. Apart from the above, Directors Consultants, General Managers and Deputy General Managers meet monthly in order to discuss financial and non-financial matters. New Directors are proposed for Appointment by the Nomination Committee in consultation with the Chairman of the Company, in keeping with the provisions of the Articles of Association of the Company in relation to same and in compliance with the Rules of Corporate Governance. The Company s Nomination Committee comprises of Mr. A.M. de S. Jayaratne Chairman, Mr. C.P.R. Perera, Independent Non- Executive Directors, Mr. S.D.R. Arudpragasam, Non-Executive Director (Appointed w.e.f. 1st April, 2017). Mr. N.H.B.S. Perera, Independent Non- Executive Director, CFLB resigned w.e.f. 31st March, 2017) The new appointments are made available to shareholders by making announcement to the Colombo Stock Exchange 12 Kotagala Plantations PLC Annual Report 2016/17

15 Corporate Governance Principle Re-Election of Directors Annual General Meeting Communication with Stakeholders Company s adherence In terms of the Articles of Association of the company a Director appointed to the Board holds office until the next Annual General Meeting, at which he seeks re-election by the shareholders. The Articles require one-third of the Directors in office (excluding the Managing Director and the Appointed Directors) to retire by rotation at each Annual General Meeting. The Directors who retire are those who have been longest in office since their last election. Retiring Directors are eligible for re-election by the shareholders. Relations with Shareholders The Company always welcomes the active participation of the shareholders at the Annual General Meeting. Questions put up by the shareholders are answered thus promoting a healthy dialogue. The required number of days notice has been given to the shareholders in terms of the Companies Act No.7 of 2007 and the Articles of Association of the Company. The Company publishes the Annual Report together with the interim reports in order to communicate information to the shareholders in a timely manner. Major Transactions There have been no transactions during the year under review which fall within the definition of Major Transactions as set out in the Companies Act. Price Sensitive Information Others Financial Reporting Disclosures Going Concern Internal Control Due care is exercised with respect to share price sensitive information. The Company maintains a website under the name which offers any individual or body, information on the Company and its affairs. The Company s principal communicator with all its stakeholders are its Annual Report and Quarterly Financial Statements. The shareholders are free to communicate with the Company. Whenever possible, the Company implements their suggestions. Accountability and Audit The Board attaches high priority to timely publication of quarterly and annual results with comprehensive details (both financial & non financial) going beyond statutory requirements. This enables both existing and prospective shareholders to make fair assessments on the company s performance and future prospects. The financial statements are prepared in accordance with Sri Lanka Accounting Standards. The Company s accounting formats and procedures are in compliance with the procedures laid down by the regulatory authorities. The Annual Report of the Board of Directors is on pages 28 to 30 of this report. The Statement of Directors responsibilities for the financial reporting is on page 31 and the auditors report on the financial statements is on the page 32 of this annual report. The Board of Directors after reviewing the financial position and the cash flow of the Company are of the opinion that the Company has adequate resources to continue operations well in the foreseeable future. Therefore the Board adopts the going concern basis in preparing Financial Statements. The Directors are responsible for maintaining an effective internal control system and proactive risk management strategy. Internal controls cover both financial and operational matters and risk management to safe guard the assets of the Company. The risk management strategy of the Company is on pages 9 and 10 of this report. The Company also ensures that effective internal and external audit procedures are followed and the Board reviews the reports in order to maintain the progress of the systems & results. 13

16 ENTERPRISE GOVERNANCE Corporate Governance Principle Internal & External Audits Company s adherence The Internal Audit division comprises of the Internal Audit Manager and Assistants who report directly to the Executive Directors. They are empowered to examine and review the financial reporting systems, internal control procedures, accounting policies and compliance with accounting standards. It also reviews the adequacy of systems for compliance with legal, regulatory and ethical requirement and company policies. The Company maintains a professional relationship with the external auditors, KPMG. This ensures their objectivity, independence and compliance with regulatory and ethical requirements. Accountability and Audit Audit Committee The Audit Committee Report is set out on page 15 of this Report. Directors Remuneration Remuneration Committee The Remuneration Committee Report is set out on page 16. Disclosure of Remuneration Aggregate remuneration paid to Directors is disclosed in Note 7 to the Financial Statements. Related Party Transactions Related Party Transactions Review Committee Compliance with Legal Requirements Social & Environmental Matters Rights of Employees /Other Stakeholders The Related Party Transactions are disclosed in Note 33 to the Financial Statements. The Report of the Related Party Transactions Review Committee appears on page 17 Other The Board of Directors through the company s Legal & Finance divisions makes every endeavour to ensure that the business complies with all laws and regulations. The Company has for many years recognized the benefits that accrue from responsible employment, environmental and community policies which are dealt with in detail in the Chairman s Review and CEO s Review. The Company identifies the rights of employees. Several employee performance enhancing mechanisms such as performance appraisals and training initiatives are in place for the career building of our employees. A series of best practices and techniques are now embedded in the business and applied intelligently within the organization. Constant responsiveness to all stakeholder interests and an effective risk management process are critical success factors to ensure that the governance process will continue to add value in the future. The Extent to which the good Corporate Governance practices are adopted in the Company is given as above in this report. 14 Kotagala Plantations PLC Annual Report 2016/17

17 AUDIT COMMITTEE REPORT 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 to ensure that the financial reporting system is in adherence with the Sri Lanka Accounting Standards and other regulatory and statutory requirements. It also reviews the adequacy of internal controls and the business risks. The Committee peruses the operational reviews and assesses the future prospects of the business operations and the fact that the going concern assumption used in the preparation of the Financial Statements is appropriate. Composition The Audit Committee for the financial year ended 31st March, 2017 comprised of two Independent Non-Executive Directors and a Non- Executive Director of Kotagala Plantations PLC and an Independent Non- Executive Director of The Colombo Fort Land and Building PLC (CFLB) (Ultimate Parent Company). The names of the members are set out below: Mr. A.M. De S. Jayaratne - Chairman (Independent Non-Executive Director - KPPLC) Mr. S. D.R. Arudpragasam (Non Executive Director-KPPLC) Mr. C.P.R. Perera (Independent Non- Executive Director-KPPLC) Mr. N.H.B.S. Perera (Independent Non- Executive Director, CFLB) (Resigned w.e.f. 31st March, 2017) The members have varied experience and financial expertise with a high standing of integrity and business acumen to carry out their role effectively and efficiently. Two of the members are finance professionals including the Chairman. The Company s Secretaries, Corporate Managers & Secretaries (Private) Limited function as the Secretaries to the Audit Committee. Meetings and Attendance The Audit Committee has met on five occasions during the financial year ended 31st March, 2017 and the attendance was as follows; Other members of the Board and Senior Management Personnel of the Company as well as the External Auditors were present at discussions where appropriate. The Proceedings of the Audit Committee are reported to the Board of Directors. Terms of Reference The role of the Committee which has specific terms of reference is set out in the Audit Committee Charter and addresses the Purpose of the Committee, its duties and responsibilities including the scope and functions of the Committee. Compliance The Committee has scrutinized the quarterly accounts and the accounts for the year ended 31st March, 2017 and has taken necessary measures to ensure that the Interim Financial Statements and the Annual Report are timely published and they are prepared and presented in accordance with Sri Lanka Accounting Standards. External Audit The Company has appointed KPMG as its External Auditors and the services provided by them are segregated between audit/ assurance services and other advisory services. The Committee after evaluating the independence and performance of the External Auditors has recommended to the Board the reappointment of KPMG as Auditors for the financial year ending 31st March, 2018 subject to the approval of the Shareholders at the Annual General Meeting. Conclusion The Audit Committee is satisfied that the accounting policies and operational controls provide reasonable assurance that the company is managed in accordance with the Group policies and adequate controls are in place to safeguards the Company s Assets. A.M. De S. Jayaratne Chairman Audit Committee 26th May 2017 Mr. A.M. De S. Jayaratne 5/5 Mr. S. D. R. Arudpragasam 4/5 Mr. C. P.R. Perera 5/5 Mr. N. H. B. S. Perera 5/5 (Resigned w.e.f. 31st March, 2017) 15

18 REMUNERATION COMMITTEE REPORT The Remuneration Committee comprise of the following members; Mr. A.M. De S. Jayaratne Mr. C.P.R. Perera Mr. N.H.B.S. Perera Mr. S.D.R. Arudpragasam - Chairman Independent Non- Executive Director - Member Independent Non-Executive Director - Member- Independent Non-Executive Director, The Colombo Fort Land & Building PLC (Ultimate Parent Company) (Resigned w.e.f. 31st March, 2017) - Member Non-Executive Director (Appointed w.e.f. 1st April, 2017) The Committee analyses and reviews the remuneration packages of the key management personnel prior to the determination of such packages and guidelines are set for the compensation structures of the Management Staff. Some members of the Board participate in the deliberations where appropriate. It is ensured that the remuneration of executives at each level of management is competitive and they are rewarded in a fair manner based on their performance. A.M. De S. Jayaratne Chairman Remuneration Committee 26th May Kotagala Plantations PLC Annual Report 2016/17

19 RELATED PARTY TRANSACTIONS REVIEW COMMITTEE REPORT The Related Party Transactions Review Committee is entrusted with the responsibility of ensuring compliance with the rules and regulations governing Related Party Transactions for Listed Entities. It focuses on ensuring that the Stakeholders interests are protected in all related party transactions. Composition The Related Party Transactions Review Committee of Kotagala Plantations PLC comprises of the following members: Mr.A.M.De S.Jayaratne - Chairman - Independent / Non-Executive Mr. C.P.R.Perera - Member - Independent / Non-Executive Mr.D.S.AbeyRatna - Member - Non-Executive Mr. S.D.R.Arudpragasam - Member - Non-Executive The Company s Secretaries, Corporate Managers & Secretaries (Private) Ltd. function as the Secretaries to the Related Party Transactions Review Committee. Meetings and Attendance The Related Party Transactions Review Committee has met on three occasions during the financial year ended 31st March, 2017 and the attendance was as follows; Mr. A.M. De S. Jayaratne- Chairman 3/3 Mr. C. P.R. Perera 3/3 Mr. S. D. R. Arudpragasam 2/3 Mr.D.S.AbeyRatna 1/3 Functions of the Committee: * Review all proposed Related Party Transactions (Except for exempted transactions) * Determining whether the relevant Related Party Transaction is fair to, and in the best interests of the Company and its stakeholders. * Establish guidelines for Senior Management to follow in ongoing dealings with related parties. * Direct the transactions for Board approval / Shareholder approval as deemed appropriate. * Ensuring that immediate market disclosures and disclosures in the Annual Report as required by the applicable rules and regulations are made in a timely and detailed manner. Conclusion The Related Party Transactions Review Committee has reviewed the Related Party Transactions entered into during the financial year under review and has communicated its comments and observations to the Board of Directors. The Committee is free to seek external professional advice on matters within their purview when necessary. The Board of Directors have also declared in the Annual Report that there were no recurrent related party transactions which exceeded the respective thresholds mentioned in Section 9 of the Colombo Stock Exchange Listing Rules. However non- recurrent related party transactions which exceeded the respective thresholds are duly disclosed on page 81 of the Annual Report. The Company has complied with the requirements of the Listing Rules on Related Party Transactions. A.M. De S. Jayaratne Chairman Related Party Transactions Review Committee 26th May 2017 * Obtain updates on previously reviewed Related Party Transactions from Senior Management and approve any material changes. 17

20 OUR PLANTATIONS T - Tea, R - Rubber, OP - Oil Palm Estate Crop Planting District Kotagala Region Area in Tea( Ha) Area in Rubber ( Ha) Area In Oil Palm (Ha) Others ( Ha) Total (Ha) Mature Immature Nursery Mature Immature Nursery Mature Immature Nursery Others Timber/ foresty Bogahawatte T Nuwara Eliya Reserved for Future Planting (Ha) Building Roads etc (Ha) Total Extent (Ha) Chrystler s Farm T Nuwara Eliya Craigie Lea T Nuwara Eliya Derryclare T Nuwara Eliya Drayton T Nuwara Eliya Kelliewatte T Nuwara Eliya Mayfield T Nuwara Eliya Mount Vernon T Nuwara Eliya Stonycliff T Nuwara Eliya Yuliefield T Nuwara Eliya Region Total 2, , , Horana/Kalutara Region Gkiyanakande T/R/OP Kalutara Rayigam T/R/OP Kalutara Vogan T/R/OP Kalutara Hedigalle T/R Kalutara Eduragala T/R Kalutara Arapolakanda R/OP Kalutara Dalkeith R/OP Kalutara , Sorana R/OP Kalutara Usk Valley R/OP Kalutara Millewa R Kalutara Padukka R Colombo Paiyagalla R Kalutara Regional Total , , , , , Company Total 2, , , , , , Kotagala Plantations PLC Annual Report 2016/17

21 OUR PEOPLE Workers Clerical, Technical & Other Staff Executives 2016/ / / / / / / /16 Total Employees 8,258 9, ,884 9,739 Total Region Wise Kotagala 5,215 5, ,505 5,712 Horana 3,043 3, ,356 4,001 Head Office ,258 9, ,884 9,739 Gender Wise Male 3,383 3, ,858 4,317 Female 4,875 5, ,026 5,422 8,258 9, ,884 9,739 Age Distribution Below 30 Years 1,103 1, ,188 1, Years 3,729 3, ,021 4,260 Over 45 Years 3,426 3, ,675 3,816 8,258 9, ,884 9, Service Distribution Below 5 Years 2,154 2, ,389 2, Years 2,893 3, ,117 3,503 Over 15 Years 3,211 3, ,378 3,420 8,258 9, ,884 9,739 19