Dilmah

CEYLON TEA SERVICES PLC.
ANNUAL REPORT 2010/11

Ceylon Tea Services PLC & Its Subsidiary / Annual Report 2010/2011 1
Page No.
Financial Highlights 02
Chairmans Review 03
Board of Directors 05
Corporate Governance 07
Audit Committee Report 09
Remuneration Committee Report 09
MJF Charitable Foundation / Dilmah Conservation 10
Directors Report 18
Directors Responsibilities 21
Report of the Auditors 22
Balance Sheet 23
Income Statement 24
Statement of Changes in Equity 25
Cash Flow Statement 26
Notes to the Financial Statements 27
Five Year Summary 46
Information to Investors 47
Notice of Meeting 49
Form of Proxy 51
Contents
Financial Highlights
CONSOLIDATED
For The Year Ended 31
st
March
2011 2010 %
Rs. 000 Rs. 000 CHANGE

Turnover 5,789,033 4,949,561 17.0%
Net Proft before Income Tax 1,480,888 1,294,061 14.4%
Income Tax on Profts (80,062) (78,639) 1.8%
Net Proft after Income Tax 1,400,826 1,215,422 15.3%
Gross Dividends 700,000 600,000 16.7%
As at 31
st
March
Shareholders Funds 6,150,990 5,350,164 15.0%
Non-current Liabilities 78,281 62,239 25.8%
Current Assets 5,711,567 4,866,652 17.4%
Current Liabilities 616,748 535,106 15.3%
Property, Plant & Equipment 888,957 977,903 -9.1%
Intangible Assets 3,525 5,529 -36.2%
Long Term Investments 241,970 97,425 148.4%
Per Ordinary Share
Earnings (Rs.) 70.04 60.77 15.3%
Dividends (Rs.) 35.00 30.00 16.7%
Net Current Assets (Rs.) 254.74 216.58 17.6%
Market Value (Rs.) 800.00 480.00 66.7%
Net Assets per Share (Rs.) 307.55 267.51 15.0%
Key Ratios
Return on Average Shareholder Funds (%) 24.36 25.66 -5.1%
Price Earnings Ratio 11.42 7.90 44.6%
Interest Cover (times) 795.89 693.75 14.7%
Dividend Cover (times) 2.00 2.03 -1.2%
Liquidity (times) 9.26 9.09 1.8%

Chairmans Review
I am pleased to present the Annual Report and Audited Financial Statements for the year ended 31st March 2011.
TURNOVER AND PROFITABILITY
Sales Turnover improved by 16.9% from Rs. 4,949.6 million in the previous year to Rs. 5,789.0 million. The subsidiary
MJF Beverages (Pvt) Ltd recorded Sales of Rs. 11.0 million. In an environment refecting higher costs of packaging
materials and a strong Rupee, your Company has done well to contain costs and produce a good result. The Rupee
appreciated 2.5% against the US Dollar, which is our base currency. Its impact was offset by the strong Australian dollar,
our major currency.
TRADING ENVIRONMENT
The year 2010 was remarkable in the history of the tea industry, in its achievement of both, the highest ever crop and net
sale average price (NSA) at 331 million kilos and Rs. 370.61 per kilo respectively. They were the result of good weather
and market forces. If all plantations were well maintained and there is even basic marketing of Ceylon tea, we could
expect far greater earnings from the industry than US$ 1.5 billion earned during the year. In my statements of the past
ten years, I covered the neglect and deterioration of some plantations and failure to market our tea by continuing to
remain suppliers of raw material, primarily.
Plantations are our national assets. Their present owners are mere caretakers for the next generation. If the current
trend in plantations is not arrested forthwith, there may be little left for the next generation. At this point, government
and industry stakeholders should work together to reach a strategy to retrieve the tea industry from its present plight
towards making it viable, as it was some years ago. The tea industry has been subject to severe punishment from land
reform, nationalisation and trade union action. It is not too late now to rehabilitate the industry, and redirect it to become
productive and make greater contribution to the economy.
I am not raising alarm bells in stating that the tea industry may soon become a liability, if corrective action is not initiated
immediately. The confict with trade unions is, in my opinion, largely due to lack of an ongoing dialogue between
plantation owners and trade unions. If a cordial environment prevails between the two parties, wage negotiations may
become cordial and understanding - not a confrontation. A better appreciation of each others diffculties and problems
could make talks friendly. Trade unions function reasonably well under good, responsible employers. I believe that, if
senior staff at regional plantation companies are given greater authority by their owners, and owners themselves, show
active interest in issues with trade unions, there could be a more favourable environment.
The outlook for tea prices is somewhat hazy at the present time. Quite apart from conficts in the important Middle
East and North African markets, there appears to be a concentration of forces among the biggest corporations. Big retail
chains are focused on their house brands and may team up with the biggest two brands in each category, delete others
and create a discreetly controlled environment in their stores. If this strategy sees the light of day, the discount culture
will disappear; a greater form of exploitation of raw material producers and consumers may surface. This will be a
ruthless replacement of discounts which destroyed quality and good value. That may be the path of globalisation!
DILMAH INNOVATIONS
Dilmah has traditionally taken the lead in bringing innovation to a global tea category that has suffered decline as a
result of commoditisation and multinational dominance. Signature events such as the Dilmah Th Culinaire, Dilmah
Tea Sommelier, Chefs & the Teamaker, Real High Tea and Tea in the Five Senses are innovations in the tea category that
seeks to educate and inspire hospitality professionals to offer their guests a completely new tea experience. The events
foster greater interest in quality tea, and greater respect for this healthy, natural and versatile beverage.
Chairmans Review (Contd...)
Last year, I stated that unique Dilmah marketing and PR concepts are being shamelessly replicated by global brands.
This unhappy situation has got worse since, exposing the absence of tea knowledge and integrity among them. These
events remind me of the words of Mr. William Gorman, Executive Chairman of The UK Tea Council, in an interview
with Eric Ellis in the Fortune magazine: This is an industry that has been incredibly slow to innovate, and relatively
young Dilmah has shown it how.
EMPOWERING INDIGENOUS COMMUNITIES IN SRI LANKA
One of the key initiatives of Dilmah Conservation is to empower indigenous communities in Sri Lanka. The Ahikuntika
Gypsy community and the Veddah Indigenous community have been identifed for this purpose and Dilmah
Conservation has initiated programmes of empowerment for these communities. Often considered irrelevant in the 21st
Century context, our engagement with them has the objective solely of aiding the community to record and preserve
their ancient traditions, whilst at the same time integrating themselves socially and economically into the present time.
Dilmah Conservation facilitated the Ahikuntika Varigasabha (communal gathering) which was held after 60 years in
January this year in Thambuththegama. In July, with the facilitation of Dilmah Conservation, the Veddah Varigasabha
was held for the frst time in the East of Sri Lanka in Vakarai. Dilmah Conservation is also building an Ahikuntika
Community Centre and will renovate the Veddah Museum in Dambane.
MJF CHARITABLE FOUNDATION AND DILMAH CONSERVATION
Your Companys contributions to above activities have attracted praise and recognition from people and institutions
around the world and, importantly, from numerous Dilmah users who commend the Company for its commitment to
Corporate Social Responsibility.
DIVIDENDS
Shareholders are rewarded with the Companys highest dividend to date of Rs. 35.00 per share in the payment of a Final
Dividend of Rs. 22.50 adding to the Interim Dividend of Rs. 12.50 per share.
Your Companys paid up capital of Rs. 10 million at the IPO reached a value of Rs. 20 billion during the year when the
share price reached Rs. 1,000/-. An original purchase of 1,000 shares has yielded Rs. 3,200,250/- in dividends and with
bonus issues it has grown to 20,000 in shares showing a value of Rs. 16 million at the year end. Proper marketing of
Ceylon tea delivers good results.
OUTLOOK
Current indications are that the Company will deliver a good result this year, too. Our production capacity is being
enhanced in anticipation of sales growth in the foreseeable future.
APPRECIATION
I thank my colleagues, staff, our distributors, consumers and media worldwide, as well as our suppliers, for their
contribution and goodwill towards your Company.
Merrill J Fernando
Chairman
28
th
July 2011
Mr. Merrill J. Fernando
Chairman
Merrill J Fernando is the founder of the MJF Group of Companies and the global brand, DILMAH which re-launched
Ceylon Tea successfully. He developed the frst ever brand owned in a tea producing country, which is competing
successfully with multinational brands to become a respected global brand name. He pioneered value addition to tea at
origin, combined with branding and marketing with the objective of retaining in Sri Lanka the profts which are lost to the
producer through traders whose blending and packing centers are overseas.
Mr. Fernando established the MJF Charitable Foundation, a charity that works to create better conditions for plantation
workers, underprivileged children, elders and society victims. His primary objective is to make tea a sustainable industry
and to make business a matter of human service.

Mr. Himendra S. Ranaweera
Deputy Chairman/CEO
Mr. Himendra S Ranaweera worked with the MJF Group of Companies for 20 years and is now its Deputy Chairman.
He was appointed to the Board of Ceylon Tea Services PLC in April 1998. Mr. Ranaweera has over 40 years experience in
Operations Management in Sri Lanka and overseas.

Mr. Malik J. Fernando
Director
Mr. Malik J Fernando is Director Operations of the MJF Group. He was appointed to the Board of Ceylon Tea Services PLC
in September 1991 as an Executive Director. Mr. Fernando had his secondary education at Stonyhurst College, England
and obtained a B.Sc. in Management from Babson College, Boston. He joined the MJF Group as a Management Trainee
nearly 26 years ago. As the head of Operations he also oversees the diversifcation activities of the Group.
Mr. Dilhan C. Fernando
Director
Mr. Dilhan C Fernando is Director Marketing of the MJF Group. He was appointed to the Board of Ceylon Tea Services PLC
in September 1991 as an Executive Director. Mr. Fernando had his secondary education at Stonyhurst College, England
and graduated from the London School of Economics with a BSc (Hons) in Economics. He joined the MJF Group as a
Management Trainee nearly 21 years ago. He leads the Marketing Division with a dedicated team.
Ms. Minette Perera
Director
Ms. Minette Perera, is the Finance Director of the MJF Group. She was appointed to the Board of Ceylon Tea Services PLC
in September 2000 as an Executive Director. Ms. Perera is a Fellow Member of the Institute of Chartered Accountants
of Sri Lanka, the Chartered Institute of Management Accountants of UK and the Association of Chartered Certifed
Accountants of UK. She has over 30 years working experience as a qualifed accountant having worked in leading local
and international companies, and she has held board positions before joining the Company eleven years ago.
Board of Directors
Mr. Roshan Tissaaratchy
Director
Mr. Roshan Tissaaratchy, is Director Sales of the MJF Group and was appointed to the Board of Ceylon Tea Services PLC
in April 2005 as an Executive Director. Mr. Tissaaratchy is a Graduate of the University of Colombo and a Member of the
Chartered Institute of Marketing of UK. He also has an MBA from the University of Sri Jayawardenapura. He has over 20
years working experience in all aspects of Sales and Marketing and in a number of industries and in advertising.
Mr. Rajan Asirwatham
Non Executive Director
Mr. Rajan Asirwatham was appointed to the Board of Ceylon Tea Services PLC on 04th September 2008 as a Non Executive
Director. He is a Fellow member of the Institute of Chartered Accountants of Sri Lanka. After a distinguished career at
Ford Rhodes, now known as KPMG Ford, Rhodes, Thornton and Co., he retired as its Senior Partner and Country Head
on 31st March 2008.
Mr. Asiriwatham currently is the Chairman of the Financial Services Stability Committee of the Central Bank of Sri Lanka,
member of the advisory council of the Ceylon Chamber of Commerce and is on the Council of the Colombo University.
Mr. Gritakumar E. Chitty
Non Executive Director
Mr. Gritakumar E Chitty, Attorney-at-Law and Advocate of the Supreme Court since 1968, is a former, Assistant Secretary-
General and founding Registrar of the UN International Law of the Sea Tribunal, Hamburg, in which capacity he was its
chief executive and head of legal affairs (1996 - 2001). He was in a law practice in Sri Lanka from 1968, joined the United
Nations, New York, in 1975 serving for over 20 years. He was Principal Legal Offcer in the UN Offce of Legal Affairs.
Since 2002 he is an Adviser to the Sri Lanka Delegation to the UN.
He is a Member of the Appeals Board of the International Sea Bed Authority, a member of the Editorial Board of the Law
Journal The Law and Practice of International Courts & Tribunals and a practitioner before the UN Disputes Tribunal
and the UN Appeals Tribunal, and a Trustee of the Weeramantry International Centre for Peace Education and Research.
Mr. Chitty is a Life Member of the Bar Association of Sri Lanka and Member, American Society of International Law.
Board of Directors (Contd...)
The Board of Directors of Ceylon Tea Services PLC is committed towards attaining highest standards of Corporate
Governance and Corporate Ethics with the objective of safeguarding the interest of all stakeholders and ensuring future
business sustainability. We resolutely believe the need to balance interests of all stakeholders and endorse the independence
of business and society.
The Board of Directors
The Board, recognize that they are responsible for the formulation and implementation of overall business strategies and
policies, setting standards on a short, medium and long term basis and adopting good governance in the management of
the affairs of the Company.
Composition of the Board
The Board comprises of the Chairman, Deputy Chairman/CEO, four Executive Directors and two Non Executive
Independent Directors. The board is made up of members with substantial experience and knowledge concerning the
industry and the Executive Directors specialize in their respective functional areas. The names and profles of the directors
are given on pages 05 to 06.
The board has assessed the independence of Non-Executive Directors and is in the view that two of the board members
namely Mr. Rajan Asirwatham and Mr. Gritakumar Chitty are Independent as per Listing Rules of the Colombo Stock
Exchange. The Non Executive Directors submit annual declarations of their independence/non-independence as per
Listing Rules.
Responsibilities of the Board
The Executive Chairman leads the Board and takes overall responsibility for its effectiveness and effciency. The Board is
overall responsible for the Companys performance, whilst fulflling the shareholders and other stakeholder expectations.
The Board achieves this through Formulation of Business Strategy and Direction, Establishing Corporate Policy, Budgetary
Planning and Control over major Capital Investments and Expenses and ensuring suffcient Internal Controls are in place
to safeguard Companys Assets. The Board in discharging its duties seeks independent professional advice from external
parties when necessary. Formal Board meetings are held once a quarter and special Board meetings are held, when
circumstances arise.
Supply of information
The Board has suffcient access to information. Accurate and relevant information relating to the matters referred are made
available to them well in advance. This includes proftability reports, Key Performance Indicators, appraisals and cost
beneft analysis. Whenever information made available to them is insuffcient they call for additional information.

Board Committees
To facilitate focused attention on specifc areas of review and in pursuance of the Listing Rules of the Colombo Stock
Exchange, the board has appointed two sub committees: the Audit Committee and the Remuneration Committee.
Audit Committee
The Audit Committee is made up of two Non Executive Independent Directors, namely Mr. Rajan Asirwatham (Chairman)
and Mr. Gritakumar Chitty. The Audit Committee held quarterly meetings during the current fnancial year and the report
of the Audit Committee is given on page 09.
Remuneration Committee
The Remuneration Committee is made up of two Non Executive Independent Directors, namely Mr. Gritakumar Chitty
(Chairman) and Mr. Rajan Asirwatham. The Remuneration Committee held two meetings during the current fnancial
year and the report of the Remuneration Committee is given on page 09.
Corporate Governance
Performance Reviews
Market Review The individual market performances are evaluated on a monthly and quarterly basis. The actual
performance is compared with the budgets, prior year performance, competitor activities, media communications and
other marketing activities.
Financial Review The Chairman and Executive Directors review the monthly fnancial performance of the Company.
The review covers proftability, cash fows, budgets and key performance indicators of the Company.
Audit Review The internal audit function forms an important unit of the Company and the internal auditor carries
out a program of fnancial auditing of various functions and processes. The Company also has a team of ISO trained
auditors, who carry out regular system audits and report their fndings to the management. Any non compliance is
discussed and attended immediately. As required by the certifcation process, external auditors of ISO and HACCP
verify and review the systems and procedures of the Company and submit their reports.

HR Review The Company carries out an appraisal of each and every employee on a bi-annual basis. The review
identifes the strengths and weaknesses of the employees, whilst evaluating his/her contribution to the performance
of the Company. This review also identifes the training needs and external/internal training programs are conducted
to meet the identifed needs.
Executive Management Team
The CEO and Operational Directors are responsible for the operational management of the company. They are ably
supported by senior managers covering all relevant areas of activities. All managers are professionally qualifed in
their respective felds and the Company has paid emphasis on continuous professional development in their respective
functional and cross functional areas.
Systems and Internal Controls
The Board has overall responsibility of the systems of internal control and has put in place suffcient internal controls
to protect its assets, and to ensure the compliance with statutory requirements. The Company is ISO 9001: 2008 Quality
Management System, ISO 22000: 2005 and HACCP Food Safety Management System, BRC- Global Standard for Food Safety
and ISO/IEC 17025: 2005 Laboratory Accreditation for Chemical Testing, certifed. All systems are well documented with
clearly defned processes, duties and responsibilities. The Company has Process Performance Indicators (PPI) covering all
operational and functional areas of the organization. These PPIs are monitored monthly and management reviews are
held quarterly.
Risk Review
Evaluation of risk is an ongoing process adopted by the Company. The Board reviews and deliberates on the various risks
the Company may face and takes proactive decisions to ensure that all reasonable steps are taken to reduce or eliminate
such risk.
Financial Reporting
The Company publishes quarterly and annual accounts on time, with suffcient details to evaluate the Company
performance. Published fnancial statements are prepared in accordance with Sri Lanka Accounting Standards and
Colombo Stock Exchange disclosure requirements. The Directors ensure that confdential and price sensitive information
are not made public until published.
Relationship with Shareholders
Shareholders are encouraged to be present, actively participate and vote at the Annual General Meeting and the Directors
consider the AGM as an opportunity to constructively communicate with shareholders. The shareholders have the option
of raising any question relating to the performance of the Company and when ever possible the Company implements
their suggestions.
Corporate Governance (Contd...)
The Audit Committee appointed by the Board of Directors of Ceylon Tea Services PLC, comprises of two Non Executive
Directors, both of whom are Independent as per the Listing Rules of the Colombo Stock Exchange.
The members of the Committee during the year under review were Mr. Rajan Asirwatham (Chairman) and Mr. Gritakumar
Chitty. The Chairman of the Audit Committee is a qualifed Chartered Accountant. The Deputy Chairman/CEO and
the Finance Director attend the meetings of the Audit Committee by invitation. The Committee held quarterly meetings
during the fnancial year under review.
The primary function of the Committee is to assist the Board in fulflling its oversight responsibilities, primarily through
overseeing managements conduct of the Companys fnancial reporting process and systems of internal accounting and
fnancial controls, monitoring the independence and performance of the Companys External Auditors and providing an
avenue of communication among the External Auditors, management and the Board.
The committee regularly reviews the scope of the internal audit function and reviews audit programs proposed. The internal
audit fndings are discussed and follow up reviews of audit fndings are undertaken to ensure that audit recommendations
are being implemented. The committee also assesses the effectiveness of the internal audit function. The committee is of
the view that the internal controls prevalent within the Company are satisfactory and provides reasonable assurance that
the fnancial position of the Company is well monitored and the assets are safeguarded.
The Committee has recommended to the Board of Directors that Messrs Ernst & Young be re-appointed the Auditors
for the year ending 31st March 2012 subject to the approval of the shareholders at the Annual General Meeting. The
Committee has reviewed the non audit services provided by the External Auditors to ensure that their independence as
Auditors has not been compromised. The Audit committee has also made its recommendations to the Board of Directors
on the fees payable to the Auditors for approval by the Board.
Sgd.
Rajan Asirwatham
Chairman Audit Committee
28
th
July 2011
Report of the Audit Committee
The Remuneration Committee, appointed by and responsible to the Board comprises of two Independent Non Executive
Directors. The members of the Committee during the year under review were Mr. Gritakumar Chitty (Chairman) and
Mr. Rajan Asirwatham. The Committee held two meetings during the year under review.
The remuneration policy of the Company is formulated to attract and retain high calibre personnel and motivate them to
develop and implement the business strategy in order to optimize long term shareholder value creation.
The committee is responsible for determining the compensation of the senior management and to lay down guidelines and
parameters for the compensation structure of all management staff of the Company. The Deputy Chairman/CEO and the
Finance Director attend the meetings of the Remuneration Committee by invitation and in this decision making process
necessary information and recommendations are obtained from the Deputy Chairman/CEO.
The remuneration packages are aligned to the individual performance and to the strategic priorities.
Sgd.
Mr. Gritakumar Chitty
Chairman Remuneration Committee
28
th
July 2011
Report of the Remuneration Committee
Dilmah is the worlds genuinely Ethical Tea, going beyond Fair Trade, in
that all packaging profts are retained in Sri Lanka and fund the work of the
MJF Charitable Foundation for the beneft of our workers, the community
and the future of our industry. Te Foundation funds and manages over
300 projects, touching the lives of over 10,000 underprivileged people each
year. www.mjfoundation.org
Dilmah Conservation is an extension to our social justice commitment.
We recognize that environmental protection is integral to human welfare.
Together with its resource partner IUCN, the worlds largest global
environmental network, Dilmah is promoting biodiversity, species/habitat
protection & awareness of sustainability by encouraging a harmonious co-
existence of man and nature. www.dilmahconservation.org
Business is a Matter of Human Service

Human Service in the Tea Gardens
The tea plantation workers have long been one of the most exploited workforces. They have for generations endured
sub-standard living conditions and their wellbeing was an underpinning factor in the Founders crusade to market his
very own home-grown brand of 100% pure Ceylon Tea. While exploitation of workers the world over has increasingly
come under the microscope, the reality is that tea plantation workers are not exploited by mean-spirited employers, but
by a system of trade by which Ceylon Tea has largely been bound for over a century.
A system by which, the vast majority of proft generated from the fruits of their labour
is made by overseas based organisations and brands, leaving producers in Sri Lanka
struggling to make ends meet and unable to pay their workers a decent wage.
Hard working communities deserve to be able to lead self-sustaining and dignifed
lives without an ignominious reliance on handouts from charitable organisations.
Sadly, however, the consequences of entrenched neglect and exploitation spanning
many decades cannot be remedied overnight, and redressing their issues requires
considerable attention and assistance. Therefore, a sizeable focus of the Foundation
revolves around the plantation industry and the upliftment of its workers.
Education is an area that is of particular concern to the Founder and on which he has
placed a special emphasis. Plantation workers have been deprived of accessing higher
education and the numbers that have gone on to receive University educations have
been shamefully below the national average. In fact, there is no documented evidence
of anyone from this community as having ever qualifed as a doctor of medicine, which is a tragic indictment on successive
governments spanning more than a century.
Such a damning statistic demonstrates the endemic lack of opportunities and resources that have systematically impeded
plantation workers and their kith and kin from accessing higher education. In rectifying this anomaly, the Foundation set
up a scholarship scheme, which has thus far provided scholarships to more than 188 students, of which 94 students have
already gained entrance to Universities an enlightening and encouraging statistic within a relatively short space of time.
Signifcantly, this includes two students who have gained admission to Medical College. The success of the Dilmah brand,
from plant to cup, is overwhelming testimony that there is no fairer trade than farmers marketing their own produce.
Small Entrepreneur Programme
The success stories that emerged from the distribution of equipment following the tsunami, to enable communities to
resume their vocations, prompted the Foundation to develop its Poverty Alleviation Programme a long-term, socio-
economic relief effort. Central to this scheme is the Small Entrepreneur Programme (S.E.P.), through which deserving
individuals are provided with necessary equipment and funding to launch a vocational-based business, or to improve
their existing business. The tsunami marginalised many people, as in addition to the loss of life, there was also wide-
spread loss of livelihoods, with many losing their homes, business premises and the
tools of their trade.
S.E.P. helped to re-establish these people in business by identifying those who had the
capability, commitment and desire to better themselves and their families, by translating
their commitment and dedication into a product or a service. S.E.P. assists benefciaries
with a grant of up to Rs 50,000 per entrepreneur in the form of equipment, but never
cash. Thereafter, additional support is granted to those that demonstrate the ability
to develop their business further. S.E.P. also includes an apprenticeship programme
whereby successful enterprises are monitored on a quarterly basis and required to take
on trainees. These trainees, in turn, could qualify for S.E.P. assistance themselves, who
in turn take on apprentices in the course of developing their own businesses. The ripple
effect therefore is increased sustainability which benefts the lives of more and more
people within the community.
In just the frst two years of the programme, 264 S.E.Ps were initiated, which translated
in to many more lives being brightened and improved. New entrepreneurs that have been helped by the scheme include
ayurvedic medical practitioners, carpenters, builders, hairdressers, potters, mushroom farmers, beauty therapists, and
textile manufacturers. To date, S.E.P. has supported more than 690 small entrepreneurs and has touched the lives of over
1,500 people. S.E.P. has been internationally acclaimed as one of the most effective self-help programmes since it focuses
on building on an individuals talents allowing them to live independent and productive lives.
MJF Charitable Foundation
Prisons Small Entrepreneur Programme - Reform & Integrate
An extension of S.E.P., Prisons S.E.P. through the Reform and Integrate programme focuses on transforming individuals
released on parole from the correctional system to lead productive lives by re-building their reputation within the
community and instilling confdence in them to carry on with their lives. Launched in
October 2007, the Reform & Integrate Programme is the frst of its kind in Sri Lanka and
probably around the world.
As in many countries, once imprisoned, individuals, even if rehabilitated and motivated
to mend their ways, face an uphill task to re-establish themselves within the community
as regular citizens, due to a lack of adequate re-integration systems in place. Many
employers shun people who have been convicted and are unwilling to take risks. The
consequence therefore is that many of these prisoners are unable to sustain themselves
once released which increases their chances of resorting to crime once again.
It is a vicious cycle which undoubtedly contributes to the high recidivism rate of nearly
50 percent and the Prisons S.E.P. was established with the objective of attempting to
break this cycle and give these individuals a second chance at life. Prisoners are carefully
selected for the programme and must have a good rehabilitation record during their
period of incarceration. Those selected must also have undergone vocational training
within the correctional system or as in S.E.P. those that have prior experience in a vocation are supplied with the tools of
their trade so that they can establish a means of earning an honest livelihood.
To date, 192 former prisoners have beneftted from the programme which has been hailed as a success in combating
recidivism.
Enabling the Differently-abled
Individuals with disabilities are often marginalised and their prospects for employment poor. In a bid to counter this
discrimination, the Foundation has implemented wide-ranging programmes to provide better care for these individuals
as well as assist them to become productive citizens. The Foundation initially began providing assistance to the Ratmalana
School for the Hearing & Visual Impaired, on the outskirts of Colombo and then moved on to sponsoring similar schools
in more remote areas where funding is scarce.
The Moneragala School for the Hearing & Visual Impaired was one such school taken under the wing of the Foundation, and
the success of its vocational institute embodies the philosophy of the Foundation, which is to create sustainable livelihoods
as opposed to fostering dependency, a common feature of most charitable initiatives.
The construction of a state-of-the-art facility for people with disability in Ambalantota,
on the South Coast of the country is a centre of excellence and is another signifcant
endeavour by the Foundation in caring for the needs of the differently-abled.
The Diri Daru Piyasa Centre is one of four phases in what is the Foundations most
extensive project which also includes a centre for women, a facility for differently-abled
children, and a facility for marginalised children from the slums. Situated in Moratuwa
on the outskirts of southern Colombo, the US$ 20 million project has seen the completion
of the frst two stages with the remaining two stages to follow.
The confict which lasted for nearly three decades resulted in large numbers, over and
above what could be constituted as the average, of people who lost one or more limbs.
Many of these were caused by the insidious presence of land mines which precipitated
a large demand for prosthetic limbs. The AIDEX (Aid to the Ex-Abled) Annual Sports
Festival is organised by a disability charity, which supplies prosthetics for artifcial limb
users throughout Sri Lanka. The event has been sponsored by Dilmah from its inception
to help them realise their potential and to encourage them to live non-dependent lives with dignity. This event brings
together over 350 participants from across the island, including from the poorest regions of the country. In addition to the
sponsorship, Dilmah also makes special grants to select individuals so as to empower them to become more productive
citizens of the community.
MJF Kids
In the vicinity of the MJF Group, lie some of the most impoverished urban dwellings in the countrys capital, Colombo.
The majority of the people in these slums are uneducated, which is a trend that tends to repeat itself from one generation
to the next as products of their environment. Sadly, therefore, the children miss out on an education as their parents often
keep them at home to care for other children or to help with work.
Essentially, the future prospects of these children are bleak and most are destined to work in menial jobs later in life.
Compounding this issue is the prevalence of domestic violence and abusive behaviour, a trait that manifests itself in
impoverished, uneducated and crowded communes. As a result, it is impossible for these children to enjoy a normal and
secure childhood.
In an endeavour to break this vicious cycle of entrenched poverty in the nearby slums, the Foundation set up the MJF Kids
programme. The objective of the programme is to provide these children with education, life-skills training, and a general
exposure to progressive alternatives outside of their own limited and often dreadful life-experiences. As a consequence,
they will be equipped to step outside of their existing environs and establish a better quality of life for themselves and
their families, one day.
Today, more than 515 children form the MJF Kids and are exposed to a life of possibility. The children gather a few times
each week at the MJF premises and are guided by caring teachers in arts, crafts, sewing and IT, and are assisted in their
school curriculum such as in English, science and mathematics. The children also undergo character-building exercises,
leadership programmes and group activities.
With the Dilmah offce forming the backdrop as the base and home of the MJF Kids, the response by the kids to the many
opportunities that have come their way has been overwhelmingly positive. What is taken for granted by many children
was a new and enlightening experience for the MJF Kids; from basic hygiene, to painting a picture with water colours;
from learning to flter water, to using a keyboard and mouse.
The MJF Kids are the pride and joy of the Founder and following its success, the programme is being replicated in other
impoverished areas including the Founders hometown of Pallansena, a little fshing hamlet in Negombo, and at the Diri
Daru Piyasa in Moratuwa.
Empowering the North of Sri Lanka
The MJF Charitable Foundation celebrated the 100
th
Anniversary of International Womens Day in 2011 by awarding
livelihood support to 100 war affected women in the North of Sri Lanka. The MJF Charitable Foundation commenced
key projects in the Northern peninsula in an effort to empower this region which has suffered adverse socio-economic
conditions due to the 30 year confict that prevailed. In November 2010, the MJF Kids programme was replicated and
launched in Point Pedro. This is the second phase of the project which commenced last year to empower the women of the
Northern peninsula who are mostly war widows, through the MJF Foundation Small Entrepreneur Programme (SEP).
The support extended is in line with the Foundations globally acclaimed SEP which seeks to empower individuals in a
sustainable and dignifed manner. The support consisted of assistance for processing dry fsh, goat rearing and sewing
and dress making, which are cottage industries that these women, who are heading single parent households, can engage
in. To date 160 war affected women have been supported in the North of Sri Lanka.
Womens Empowerment
The tendency for women to experience domestic violence is greater in impoverished environments, which are also
conditions that go hand-in-hand with alcoholism and substance-abuse among men. It is a deadly mix with women bearing
the brunt of the consequences, often, with little recourse to adequate support mechanisms.
In Sri Lanka, a developing country with extensive poverty levels, a survey by the Ministry of Child Development and
Womens Empowerment in 2006 revealed that more than 60 percent of women across the island undergo domestic violence
at home, underscoring the magnitude of the problem.
A contributing factor to this sad and unacceptable state of affairs is the general lack of freedom and resources that women
have to empower themselves in dealing with the problem. This includes education on the subject in which they can be
informed on ways to free themselves from such environments and not have to suffer in silence all their lives.
The alleviation from abuse through empowerment of women is a matter close to the heart of the Founder and is an area
in which the Foundation has endeavoured to make a difference. Hence the inclusion of a centre for women as one of four
dedicated sections in the Foundations boldest endeavours to date, the Centre for Dignity and Empowerment for the
under-privileged.
The extensive project in Moratuwa, on the outskirts of Colombo caters to abused women, children with Downs syndrome,
differently-abled children and the MJF Kids Moratuwa.
Reconciliation Through the Power of Nature
Following the conclusion of the three-decade-long war in Sri Lanka, the need for reconciliation is of paramount importance.
Root causes and distrust between communities still prevail and need to be resolved. Recognising this need, Dilmah
Conservation initiated an environmental programme around which to build a common Sri Lankan identity, with the
younger generation as its principle target. Sri Lanka is considered a biodiversity hotspot
yet many of the younger generation were deprived of enjoying its beauty due to the
confict. This project provides an opportunity for children to participate in workshops,
to share information on birds and nature, participate in exchange programmes and
feld excursions to the North, South and the East of Sri Lanka. Through these activities
the project aims to establish a common bond amongst children across the island by
creating awareness and pride for this great resource.
Together with the Field Ornithology Group of Sri Lanka (FOGSL), the Center for
Childrens Happiness, Jaffna (CCH), and the University of Jaffna the project aims to
transcend boundaries through the power of nature. FOGSL provides the expertise
and staff led by eminent environmentalist Prof. Sarath Kotagama, while CCH assists
Dilmah Conservation to translate publications and coordinate the programme with
schools. The University of Jaffna will be evaluating the project. To date 500 students
have participated in exchange programmes where children from the North of Sri
Lanka visit heritage sites such as Sinharajah and children from the South visit the arid
habitats and lagoon systems of the North to learn about the rich biodiversity of Sri Lanka. The study of birds is another
main element of the programme which seeks to bridge the gap created by the confict, using nature as a key catalyst. A
signifcant outcome of this project is the development of posters on the Birds of Sri Lanka for the frst time in all three
languages Sinhala, Tamil and English.
Uplifting the Ahikuntika Gypsy community
Gypsies or the Ahikuntika people as they are known in Sri Lanka are a minority community that have been steadily
declining in their numbers. The Gypsies are believed to be descendents from an ancient nomadic group in Andra Pradesh,
India. They are conversant in Telegu (South Indian language), Sinhala and Tamil but due to social changes and the emergence
of technology, they fnd it diffcult to adapt and are discriminated against by the rest of society. The Gypsy community is
scattered in Anuradhapura, Puttlam, Moratuwa, Galgamuwa and other areas of the Sri Lanka. Their traditional vocations
are snake charming, taming monkeys for performing and fortune telling. However, due to the current economic pressures,
the Gypsies are forced to engage in daily labour.
Dilmah Conservation has stepped forward to empower the Ahikuntika community by enhancing their social standards and
by restoring their vanishing culture and traditions. The frst step in this programme was to strengthen the communitys
identity by reinstating the most signifcant annual event of the community after a lapse of over half a century. The traditional
gathering, known as the Varigasabha, resumed after 60 years on 28
th
January, 2011 in Kudagama. At the Varigasabha
the community leaders drew up a Charter outlining the heritage of the gypsy community and the issues - mainly poverty
- that they face and which threaten their identity and survival. This document, known as the Kudagama Charter, will be
presented by the Ahikuntikaya leaders to the President of Sri Lanka, with the facilitation of Dilmah Conservation.
Dilmah Conservation is also constructing an Ahikuntikaya Cultural Centre which will serve as a museum and community
centre which will help create a network amongst the Ahikuntikaya and preserve their traditions and culture.
Dilmah Conservation
MJF Centre in Moratuwa DCSARC
The Dilmah Conservation Sustainable Agricultural Research Centre (DCSARC) was established at the Moratuwa MJF
Centre and will focus on bio-char research. The objective is to convince government authorities involved in agricultural
activities that the technology is now available to introduce a sustainable system of agriculture without being bound to
either extremes of chemical fertilizer or organic fertilizer by themselves. The main CO
2
pool in the world is locked in the
soils, and the centre will conduct carbon release tests before and after bio-char usage to prove that carbon sequestration
could be achieved by applying bio-char in agriculture.
Garden in a Tray: Due to unwholesome weather conditions, the harvest of crops are declining drastically and a food
shortage is expected. In order to remedy the situation, a practical concept called Garden in a Tray was introduced by
DCSARC. This miniature garden consists of 25 one month old vegetable plants placed in a tray, inclusive of the medium.
The vegetables include tomato, okra, aubergine, capsicum, chilli, salad leaves, bitter gourd, beetroot, Bushita pea and
cabbage. These trays are ideal for households and even apartments with limited space. Once fully grown, the trays provide
a crop of vegetables for 3 months.
MJF 081 A New High Yield Tomato Variety: The DCSARC unveiled a new tomato variety named MJF 081 which was
especially developed as a tribute to Merrill J. Fernando, Founder of Dilmah tea, on his 81
st
birthday. MJF 081 was developed
through selections made from introductions from Taiwan. The selected introduction was tested for yield trials in different
agro-ecological zones. The key characters of this variety are its high yield 28t/ha which is 40% more than the normal
yield of 20t/ha, and its high carotene levels which are 10 times more than the normal yield.
Elephant Conservation
With Sri Lankas expanding population, the encroachment of man into traditional elephant habitats has dramatically
increased, leading to a human-elephant confict which takes a vicious toll on elephant populations. Dilmah Conservations
maiden project endeavours to mitigate the effect of this confict by focussing on the Elephant Transit Home (ETH) in Uda
Walawe. Here, Dilmah Conservation has assisted the Department of Wildlife Conservation to establish proper facilities
for the treatment of captured wild elephants by caring for, nurturing and eventually releasing back into the wild, baby
elephants that have been orphaned as a result of the human-elephant confict. The establishment of an Elephant Information
Centre by Dilmah Conservation at Uda Walawe plays an important educational role as well, displaying for the beneft of
visitors and researchers who visit the facility, the story of the elephant.
Dilmah Conservation
The Board of Directors of Ceylon Tea Services PLC have pleasure in presenting their 30th Annual Report together with the
Audited Financial Statements of the Company for the year ended 31st March 2011, prepared in accordance with Section
152 of the Companies Act no 7 of 2007, the relevant Listing Rules of the Colombo Stock Exchange and recommended best
accounting practices.
Principal activities of the Group
The principal activity of the Company is to manufacture, export and market tea bags and packets under the brand name
Dilmah. The principal activity of the Subsidiary Company is to manufacture, export and market tea in the form of liquid
tea concentrate and ready to drink tea.
Review of the year
A review of the business of the Group and its performance during the year with comments on fnancial results, future
strategies and prospects are contained in the Chairmans review on pages 03 to 04.
This Report together with the Financial Statements, given on pages 23 to 45, refects the state of affairs of the Company.
Group results and appropriations
For the year ended 31
st
March 2011 2010
Rs. 000 Rs. 000
Revenue 5,789,033 4,949,561
Proft after tax 1,400,826 1,215,422
Balance from previous year 3,250,164 2,022,172
Final dividend for last year (350,000) -
Interim dividend for the current year (250,000) (250,000)
Reversal/(Temporary Reductions) on long term investment - 262,570
Balance to be carried forward 4,050,990 3,250,164
Proposed fnal dividend 450,000 350,000
Dividends
The Directors recommend the payment of a fnal dividend of Rs. 22/50 per share in respect of the year ended 31st March
2011. In December 2010, the Company after having confrmed the status of solvency paid an interim dividend of Rs.12/50
per share. Therefore the total dividend for the year ended 31st March 2011 amounts to Rs.35/- per share, compared to
Rs.30/- per share, paid for the last fnancial year.
Corporate Donations
We continue with the Company philosophy that business is a matter of human service, which was explained in the last
couple of Annual General Meetings. For the current year, the Company made a donation of Rs. 135.0 million (2009/2010
Rs. 125.7 million) to the MJF Charitable Foundation. The activities of the Foundation are given on pages 10 to 17 of this
Annual Report. Other Donations by the Company during the year amounted to Rs. 232,425/- (2009/10 - Rs. 86,500/-).
Taxation
According to Paragraph (c) of sub Section (2) of Section 16 of the Inland Revenue Act No.10 of 2006, the profts and income
of the export of Tea bags each containing made tea wholly of Sri Lanka origin, not exceeding four grams in weight is
exempted from income tax for each year of assessment within the period of fve years commencing on April 1, 2006. As
per the Government Gazette notifcation No 1582/23 dated 31st December 2008, the tax exemption was extended to Tea
packets or bags, each containing made tea wholly of Sri Lanka origin, not exceeding fve hundred grams in weight.
Other income is liable to tax at 35%.
Employment
As at 31st March 2011, 529 persons were employed by the Group (31st March 2010 - 456)
Statutory Payments
The Directors confrm that, to the best of their knowledge all statutory payments in relation to taxes and duties and in
relation to employees have been made promptly on the due dates.
Report of the Directors
st
March 2011
Compliance with Laws & Regulations
To the best of the knowledge and belief of the Directors, the Group has not engaged in any activities contravening the laws
& regulations of the country.
Property, Plant & Equipment
The expenditure incurred in the acquisition of Property, Plant & Equipment during the year under review was Rs. 48.2
million (2009/10 - Rs. 387.4 million). The details are shown in Note 3.1 of the Notes to the Accounts. The market value of
Property, Plant & Equipment is considered not materially different to the values stated.
Investments
Investments made by the Company are detailed in Notes 6 and 7 of the Notes to the Accounts.
Loans granted to Related Parties
Details of loans granted to related parties are given in Note 8 of the Notes to the Accounts.
Stated Capital
The Stated Capital of the Company is Rs. 200,000,000/- divided into 20,000,000 Ordinary Shares. There was no change in
the Stated Capital during the year.
Shareholding
As at 31st March 2011, there were 695 (659 as at 31st March 2010) registered shareholders and their distribution is shown
on page 47.
The twenty major shareholders as at 31st March 2011 and the number of shares held and their percentage shareholding
are given on page 48.
Reserves
The total reserves as at 31st March 2011 stand at Rs. 5,951.0 million (2009/10 Rs. 5,150.2 million) including general
reserves of Rs.1,900 million (2009/10 Rs.1,900 million) .
Going Concern
On the basis of current fnancial projections and facilities available, the Directors are confdent that the Group has adequate
resources to continue business operations. Accordingly the Directors consider that it is appropriate to adopt the going
concern basis in preparing the fnancial statements.
Events occurring after the Balance Sheet Date
No signifcant events have occurred after the Balance Sheet date, which require adjustments to or disclosure in the Financial
Statements.
Directorate
The Directors of the Group are listed on the rear cover page of the report.
Mr. Merrill J Fernando retires` in terms of Section 210 of the Companies Act No.7 of 2007. A resolution is proposed to re-
appoint Mr. Merrill J Fernando in terms of Section 211 (1) of the said Companies Act No.7 of 2007.
Mr. Gritakumar E Chitty retires` in terms of Section 210 of the Companies Act No.7 of 2007. A resolution is proposed to
re-appoint Mr. Gritakumar E Chitty in terms of Section 211 (1) of the said Companies Act No.7 of 2007.
Mr. Himendra S Ranaweera retires by rotation in terms of section 24 of the Articles of Association of the Company and
being eligible offers himself for re-election at the Annual General Meeting.
Interests Register
The Group maintains an Interests Register in terms of the Companies Act, No.7 of 2007. Relevant disclosures made by
the Directors on contracts and proposed contracts with the Group/Company appear under Note no 29.1.2/29.2.2 in
Related Party Disclosure to the Financial Statements on pages 44 to 45 of the Report. These interests have been declared at
Directors meetings.
Directors Emoluments
During the year under review, total remuneration of the Executive Directors amounted to Rs. 74,724,865/- and Non
Executive Directors amounted to Rs. 575,000/- (2009/10 Executive Directors Rs. 57,475,847/-, Non Executive Directors
Rs. 600,000/-)
Report of the Directors (Contd...)
st
March 2011
Directors Shareholding
The direct shareholdings of Directors together with that of their spouses and dependent children are as follows:
As at 31
st
March 2011 2010
Mr. Merrill J Fernando 200 200
Mr. Malik J Fernando 24,200 24,200
Mr. Dilhan C Fernando 24,200 24,200
Mr. Himendra S Ranaweera 20,084 20,084
Ms. Minette Perera 200 200
Mr. Roshan Tissaaratchy 4,000 4,000
Mr. Rajanayagam Asiriwatham 4,800 4,800
Mr. Gritakumar E Chitty - -
The indirect shareholdings of Directors together with that of their spouses and dependent children are as follows:
As at 31
st
March 2011 2010
Mr. Merrill J Fernando, Mr. Malik J Fernando, Mr. Dilhan C Fernando
MJF Teas (Private) Limited 13,075,382 13,075,382
MJF Exports (Private) Limited 4,256,712 4,256,712
MJF Sons (Private) Limited 25,300 25,300
Corporate Governance
The Directors are responsible for the formulation and implementation of overall business strategies, policies and setting
standards in the short, medium and long term basis adopting good governance in the management of the affairs of the
Company. A separate report on Corporate Governance Practices adopted by the Company is given on pages 07 to 08 of
the report.
Group Auditors
Ernst & Young, Chartered Accountants, served as the Group Auditors during the year under review and the Auditors
Report is given on page 22 of the report. The Auditors have confrmed that they have no interest in or relationship with the
Company or its Subsidiary other than that of Auditors. They confrm that they are independent in accordance with the
Code of Ethics of the Institute of Chartered Accountants of Sri Lanka.
The Audit Fees payable and fees for other services rendered are noted hereunder:-
Fees payable to Auditors for the current fnancial year Rs. 590,000/- (2009/10 - Rs. 535,000/-)
Fees payable for other services rendered Rs. 693,740/- (2009/10 - Rs. 773,791/-)
Auditors Ernst & Young have expressed their willingness to continue in offce. A resolution to reappoint them as Auditors
and to authorize the Directors to fx their remuneration will be proposed at the Annual General Meeting.
Annual General Meeting
The Annual General Meeting will be held at 4.00 p.m. on 9th September 2011 at No.111, Negombo Road, Peliyagoda. The
Notice of the Annual General Meeting appears on page 49.
For and on Behalf of the Board,
Mr. Himendra S Ranaweera Mr. Malik J Fernando Ms. Minette Perera
Deputy Chairman/CEO Director Director/Secretary
28
th
July 2011
Report of the Directors (Contd...)
st
March 2011
The following statement sets out the responsibility of Directors, in relation to the Financial Statements. This should be read
in conjunction with the Auditors responsibility in relation to the Financial Statements, setout in the report of the Auditors
on page 22 of this report.
The Companies Act No. 07 of 2007 requires the Directors to prepare Financial Statements for each year giving a true and
fair view of the state of the affairs of the Company as at end of the fnancial year and the fnancial performance for the
year. The Directors are also responsible to ensure that proper accounting books and records are maintained, to prepare the
Financial Statements with reasonable accuracy.
The Board accepts the responsibility for the integrity and objectivity of the Financial Statements and the Directors are
responsible to ensure that in preparing the Financial Statements, appropriate accounting policies have been selected and
applied in a consistent manner and that material departures, if any, have been disclosed and explained.
It is the responsibility of the Directors to ensure that the Financial Statements have been prepared in conformity with Sri
Lanka Accounting Standards and that all assumptions and estimates, which have been used in the preparation of the
Financial Statements, are based on reasonable and prudent judgment taken with due care and consideration. The Directors
are required to prepare these Financial Statements on a going concern basis, unless it is inappropriate to presume that the
Company will continue as a going concern.
The Directors are required to take reasonable steps to safeguard the assets of the Company and to ensure the implementation
of appropriate and suffcient internal controls to prevent fnancial and other irregularities.
The Directors are of the opinion that the Financial Statements presented in the report from pages 23 to 45 have been
prepared in accordance with the above and that they discharged their duties as set out in this statement.
The Directors confrm that the Auditors of the Company, Messrs Ernst & Young were provided every opportunity to
undertake whatever inspections they considered necessary to enable them to form their opinion on the Financial Statements.
The Directors confrm that to the best of their knowledge all taxes, duties and levies payable by the Company and all
contributions, levies and taxes payable on behalf of and in respect of the employees of the Company and all other known
statutory dues as were due and payable by the Company as at the Balance Sheet date have been paid, or where relevant
provided for.
By Order of the Board,
Minette Perera
Secretary
28
th
July 2011
Statement of Directors Responsibilities in Relation to the Preparation of
Financial Statements
Report on the Financial Statements
We have audited the accompanying fnancial statements of Ceylon Tea Services PLC (Company), the consolidated
fnancial statements of the Company and its subsidiary, which comprise the balance sheets as at 31 March 2011, and the
income statements, statements of changes in equity and cash fow statements for the year then ended, and a summary of
signifcant accounting policies and other explanatory notes.
Managements Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these fnancial 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 fnancial 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
Our responsibility is to express an opinion on these fnancial 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 fnancial statements are free from material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fnancial statements.
An audit also includes assessing the accounting policies used and signifcant estimates made by management, as well as
evaluating the overall fnancial statement presentation.
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
In our opinion, so far as appears from our examination, the Company maintained proper accounting records for the year
ended 31 March 2011 and the fnancial statements give a true and fair view of the Companys state of affairs as at 31 March
2011 and its proft and cash fows for the year then ended in accordance with Sri Lanka Accounting Standards.
In our opinion, the consolidated fnancial statements give a true and fair view of the state of affairs as at 31 March 2011 and
the proft and cash fows for the year then ended, in accordance with Sri Lanka Accounting Standards, of the Company
and its subsidiary dealt with thereby, so far as concerns the shareholders of the Company.
Report on Other Legal and Regulatory Requirements
In our opinion, these fnancial statements also comply with the requirements of Sections 151(2) and 153(2) to 153(7) of the
Companies Act No. 07 of 2007.
Sgd.
Ernst & Young
Chartered Accountants
Colombo
28
th
July 2011
Independent Auditors Report
to the Shareholders of Ceylon Tea Services PLC
Balance Sheet
As at 31
st
March 2011
Group Company
Note 2011 2010 2011 2010
ASSETS Rs. 000 Rs. 000 Rs. 000 Rs. 000
Non-current Assets
Property, Plant and Equipment 3 888,957 977,317 691,100 760,654
Leasehold Property 4 - 586 - 586
Intangible Assets 5 3,525 5,529 3,212 4,863
Investment in Subsidiary 6 - - 179,901 300,750
Other Investments 7 241,970 97,425 241,970 97,425
1,134,452 1,080,857 1,116,183 1,164,278
Current Assets
Inventories 9 996,386 772,230 993,974 767,143
Trade and Other Receivables 10 2,381,070 2,250,965 2,374,857 2,244,239
Loans Due from Related Party 8 - 50,000 - 50,000
Amounts Due from Related Party 11 - - 26,545 26,247
Cash and Cash Equivalents 18 2,334,111 1,793,457 2,331,828 1,780,630
5,711,567 4,866,652 5,727,204 4,868,259
Total Assets 6,846,019 5,947,509 6,843,387 6,032,537
EQUITY AND LIABILITIES
Capital and Reserves
Stated Capital 12 200,000 200,000 200,000 200,000
General Reserves 13 1,900,000 1,900,000 1,900,000 1,900,000
Retained Earnings 4,050,990 3,250,164 4,050,241 3,336,358
Total Equity 6,150,990 5,350,164 6,150,241 5,436,358
Non-current Liabilities
Deferred Tax Liabilities 14 8,217 15,400 8,217 15,400
Other Deferred Liabilities 15 63,583 42,270 62,688 41,658
Interest Bearing Loans and Borrowings 16 6,481 4,569 6,481 4,569
78,281 62,239 77,386 61,627
Current Liabilities
Trade and Other Payables 17 576,134 494,564 575,146 494,010
Interest Bearing Loans and Borrowings 16 3,901 2,310 3,901 2,310
Income Tax Liabilities 36,713 38,232 36,713 38,232
616,748 535,106 615,760 534,552
Total Equity and Liabilities 6,846,019 5,947,509 6,843,387 6,032,537

These fnancial statements are in compliance with the requirements of the Companies Act No. 07 of 2007.

Sgd. Buddhika Dissanayaka
Financial Controller
The Board of Directors is responsible for the preparation and presentation of these fnancial statements.
Signed for and on behalf of the Board by,
Sgd. Himendra S Ranaweera Sgd. Minette Perera
Deputy Chairman/Chief Executive Offcer Director
The accounting policies and notes on pages 27 through 45 form an integral part of these fnancial statements.

Colombo
28
th
July 2011
Income Statement
Year Ended 31
st
March 2011
Group Company
Note 2011 2010 2011 2010
Rs. 000 Rs. 000 Rs. 000 Rs. 000
Revenue 19 5,789,033 4,949,561 5,783,664 4,940,755
Cost of Sales (3,417,972) (3,078,522) (3,384,887) (3,035,047)
Gross Proft 2,371,061 1,871,039 2,398,777 1,905,708
Other Income and Gains 20 160,639 112,988 160,639 112,988
Administrative Expenses (532,229) (461,715) (647,460) (455,450)
Selling and Distribution Costs (849,444) (847,807) (848,873) (846,528)
Foreign Exchange Gain 254,015 544,622 254,015 544,440
Finance Cost 21.1 (1,863) (1,868) (1,860) (1,867)
Finance Income 21.2 78,709 76,802 78,707 76,801
Proft Before Tax 22 1,480,888 1,294,061 1,393,945 1,336,092
Income Tax Expense 23 (80,062) (78,639) (80,062) (78,639)
Proft for the Year 1,400,826 1,215,422 1,313,883 1,257,453
Basic Earnings Per Share 24 70.04 60.77
Dividend Per Share 25 35.00 30.00


Group
Note Stated General Retained Total
Capital Reserves Earnings
Rs. 000 Rs. 000 Rs. 000 Rs. 000
As at 01 April 2009 200,000 1,900,000 2,022,172 4,122,172
Proft for the Year - - 1,215,422 1,215,422
Interim Dividend - 2010 25 - - (250,000) (250,000)
Reversal of Temporary Reductions on Long
Term Investments - - 262,570 262,570
As at 01 April 2010 200,000 1,900,000 3,250,164 5,350,164
Final Dividend - 2010 25 - - (350,000) (350,000)
As at 31 March 2011 200,000 1,900,000 4,050,990 6,150,990
Company Note Stated General Retained Total
Capital Reserves Earnings
Rs. 000 Rs. 000 Rs. 000 Rs. 000
As at 01 April 2009 200,000 1,900,000 2,066,335 4,166,335
Reversal of Temporary Reductions on Long
Term Investments - - 262,570 262,570
As at 01 April 2010 200,000 1,900,000 3,336,358 5,436,358
Final Dividend - 2010 25 - - (350,000) (350,000)
As at 31 March 2011 200,000 1,900,000 4,050,241 6,150,241
Statement of Changes in Equity
Year Ended 31
st
March 2011
Cash Flow Statement
Year Ended 31
st
March 2011
Note Group Company
2011 2010 2011 2010
Rs. 000 Rs. 000 Rs. 000 Rs. 000
Cash Flows From / (Used in) Operating Activities
Proft before Income Tax Expense 1,480,888 1,294,061 1,393,945 1,336,092
Adjustments for
Depreciation and Amortisation 144,411 132,905 124,033 112,740
Foreign Exchange Gain (96,169) (44,537) (96,241) (44,531)
Interest Expenses 21.1 1,863 1,868 1,860 1,867
Dividend Income 20 (1,263) (5,594) (1,263) (5,594)
Interest Income 21.2 (78,709) (76,802) (78,707) (76,801)
Proft on disposal of Property, Plant and Equipment 20 (46,044) (1,700) (46,044) (1,700)
Proft on disposal of Long Term Investments 20 (109,627) (77,414) (109,627) (77,414)
Reversal of change in value of Long Term Investments - (22,084) - (22,084)
Provision for fall in value of Investments 6 - - 120,849 -
Provision for Defned Beneft Plans 22,830 8,610 22,546 8,299
Operating Proft before Working Capital Changes 1,318,180 1,209,313 1,331,351 1,230,874
Increase in Inventories (224,156) (5,945) (226,831) (5,770)
Increase in Trade and Other Receivables (60,876) (27,970) (61,390) (26,213)
Increase in Amounts Due from Related Party - - (298) (107,838)
Decrease in Amounts Due to Related Party - (90,280) - (19,931)
Increase in Trade and Other Payables 81,762 40,747 81,329 41,268
Cash Generated from Operations 1,114,910 1,125,865 1,124,161 1,112,390
Defned Beneft Plan Costs Paid 15 (1,516) (1,339) (1,516) (1,339)
Interest Paid (1,863) (1,868) (1,860) (1,867)
Income Tax Paid (84,654) (47,793) (84,654) (47,793)
Net Cash Flows From Operating Activities 1,026,877 1,074,865 1,036,131 1,061,391
Cash Flows From / (Used in) Investing Activities
Acquisition of Property, Plant and Equipment 3 (48,192) (387,410) (46,973) (386,483)
Acquisition of Intangible Assets 5 (1,771) (1,505) (1,771) (1,408)
Acquisition of Other Investments (264,792) - (264,792) -
Proceeds from disposal of Other Investments 229,874 596,130 229,874 596,130
Proceeds from disposal of Property, Plant and Equipment 49,482 2,607 49,482 2,607
Recoveries of Interest Bearing Loans 50,000 50,000 50,000 50,000
Dividend Received 1,263 5,594 1,263 5,594
Interest Received 72,495 73,572 72,493 73,571
Net Cash Flows From Investing Activities 88,359 338,988 89,576 340,011
Cash Flows From/ (Used in) Financing Activities
Dividend Paid 25 (600,000) (250,000) (600,000) (250,000)
Principal Payment under Finance Lease Liabilities 16.1 (3,431) (2,275) (3,431) (2,275)
Net Cash Flows Used in Financing Activities (603,431) (252,275) (603,431) (252,275)
Effect of Exchange Rate Changes on Cash and Cash Equivalents 28,849 10,954 28,922 10,955
Net Increase in Cash and Cash Equivalents 540,654 1,172,532 551,198 1,160,082
Cash and Cash Equivalents at the beginning of the year 18 1,793,457 620,925 1,780,630 620,548
Cash and Cash Equivalents at the end of the year 18 2,334,111 1,793,457 2,331,828 1,780,630
1. CORPORATE INFORMATION
1.1 General

Ceylon Tea Services PLC is a public limited liability Company incorporated and domiciled in Sri Lanka and listed
on the Colombo Stock Exchange. The registered offce of the Company and the principal place of business is situated
at No. 111, Negombo Road, Peliyagoda.
1.2 Principal Activities and Nature of Operations
Company
The principal activities of the Company are to manufacture, export and market tea bags and packets under the
brand name Dilmah.
Subsidiary MJF Beverages (Pvt) Ltd
The principal activities of the subsidiary Company are to manufacture, export, and market tea in the form of liquid
tea concentrate and ready to drink tea. The subsidiary Company has commenced its commercial operations on July
22, 2008.
1.3 Parent Enterprise and Ultimate Parent Enterprise
The Companys parent undertaking is MJF Teas (Pvt) Ltd. In the opinion of the Directors, the Companys ultimate
parent undertaking and controlling party is MJF Holdings Limited, which is incorporated in Sri Lanka.
1.4 Date of Authorization for Issue
The fnancial statements of Ceylon Tea Services PLC and its Subsidiary for the year ended 31 March 2011 was
authorized for issue in accordance with a resolution of the Board of Directors on 28 July 2011.
2. GENERAL ACCOUNTING POLICIES
2.1 BASIS OF PREPARATION

The consolidated fnancial statements have been prepared on a historical cost basis and presented in Sri Lankan
Rupees, unless stated otherwise.
2.1.1 Statement of Compliance
The consolidated fnancial statements of Ceylon Tea Services PLC and its Subsidiary (the Group) have been
prepared in accordance with Sri Lanka Accounting Standards (SLAS). The preparation and presentation of these
fnancial statements is in compliance with the Companies Act No. 07 of 2007.
2.1.2 Basis of Consolidation
(a) Subsidiary
The consolidated fnancial statements of Ceylon Tea Services PLC and its subsidiary are prepared as at 31
March each year. The fnancial statements of the subsidiary are prepared for the same reporting year as the
parent Company using consistent accounting policies.
All intra-group balances, transactions, income and expenses and proft and losses resulting from intra-group
transactions are eliminated in full.
The subsidiary is consolidated from the date the Parent obtains control until such time as control ceases.
The total profts and losses for the year of the Company and of its subsidiary included in consolidation are
shown in the consolidated income statement.
Notes to the Financial Statements
Year Ended 31
st
March 2011
All assets and liabilities of the Company and of its subsidiary included in the consolidation are shown in the
consolidated balance sheet. The consolidated cash fow statement includes the cash fows of the Company
and its subsidiary.

(b) Country of Incorporation
The subsidiary is incorporated in Sri Lanka.
2.1.3 Comparative Information
The accounting policies have been consistently applied by the Group. Previous years fgures and phrases have
been re-arranged wherever necessary, to conform to the current years presentation.
2.2 SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES & ASSUMPTIONS
The preparation of consolidated fnancial statements, requires management to make judgments, estimates and
assumptions that effect the reported amounts of assets, liabilities, income and expense and the disclosure of
contingent liabilities at the reporting date. The key judgments, estimates and associated assumptions are assessed
on an ongoing basis and are based on historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances.
The following key judgments, estimates and assumptions addresses amongst others that require subjective and
complex judgment.
a) Judgment
Inventories
Company reviews the existence and usability of inventories based on a perpetual inventory count. Provisions
are made when Management determines obsolete stock and/or assesses a reduction in recoverable value.
Allowance for Doubtful Debts
Company reviews at each balance sheet date all receivables to assess whether an allowance should be recorded
in the income statement. Management uses judgment in estimating such allowance considering the duration
of outstanding and any other factors management is aware of that indicates uncertainty in recoverability.
b) Estimates
Depreciation of Property, Plant and Equipment
Management assigns useful lives and residual values to property, plant and equipment based on the
intended use of assets and the economic lives of these assets. Subsequent changes in circumstances such as
technological advances or utilization of the assets concerned could result in the actual useful lives or residual
values differing from initial estimates. Management reviews annually the residual values and useful lives of
major items of property, plant and equipment.
c) Assumptions
Defned Beneft Plan
The cost of the retirement beneft plan of employees is determined using an actuarial valuation. The actuarial
valuation is based on assumptions concerning the rate of interest, rate of salary increase, special premium,
retirement age and going concern of the Company. Due to the long term nature of the plan, such estimates are
subject to signifcant uncertainty.
2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.3.1 Foreign Currency Translations
The consolidated fnancial statements are presented in Sri Lankan Rupees, which is the Groups functional and
presentation currency. Transactions in foreign currencies are initially recorded at the functional currency rate ruling
Notes to the Financial Statements (Contd...)
Year Ended 31
st
March 2011
at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at
the functional currency rate of exchange ruling at the balance sheet date. All differences are taken to the Income
Statement.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the
exchange rates as at the dates of the initial transactions. Non monetary items measured at fair value in a foreign
currency are translated using the exchange rates at the date when the fair value was determined. The resulting
gains and losses are accounted for in the income statement.
2.3.2 Taxation
a) Current Taxes
Company
Current income tax assets and liabilities for the current and prior periods are measured at the amount expected
to be recovered from or paid to the Taxation Authorities. The tax rates and tax laws used to compute the
amount are those that are enacted or substantively enacted by the balance sheet date.
According to Paragraph (c) of sub Section (2) of Section 16 of the Inland Revenue Act No.10 of 2006, the profts
and income from export of Tea bags each containing made tea wholly of Sri Lanka origin, not exceeding four
grams in weight is exempted from income tax for each year of assessment within the period of fve years
commencing on April 1, 2006.
However, as per the Government Extraordinary Gazette notifcation number 1582/23 dated December 31,
2008, the profts and income from export of Tea packets or bags each containing made tea wholly of Sri
Lanka origin, not exceeding fve hundred grams in weight is exempted from income tax commencing from
April 1, 2009 until expiry of the above said period.
The provision for income tax is based on the elements of income and expenditure as reported in the fnancial
statements and computed in accordance with the provisions of the Inland Revenue Act.
Subsidiary
The Subsidiary Company has entered into an agreement registered under the terms of Section 17 (2) of the
Board of Investment Law No. 4 of 1978 with the Board of Investment Sri Lanka, under which the Companys
proft and income are exempted from Income Tax for a period of 5 years from the year in which the Company
commences to make profts or any year of assessment not later than 2 years reckoned from the date of
commencement of commercial operations or production which ever is earlier.
b) Deferred Taxation
Deferred income tax is provided, using the liability method, on all temporary differences at the balance
sheet date between the tax bases of assets and liabilities and their carrying amounts for fnancial reporting
purposes.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused
tax assets and unused tax losses, to the extent that it is probable that taxable proft will be available against
which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax
losses can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the
extent that it is no longer probable that suffcient taxable proft will be available to allow all or part of the
deferred income tax asset to be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year
when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the balance sheet date.
Year Ended 31
st
March 2011
2.3.3 Intangible Assets

Intangible assets are capitalized at cost only when future economic benefts are probable. Cost includes purchase
price together with any directly attributable expenditure. Intangible asset is amortised on a straight-line basis over
the estimated useful life of 3 years.
2.3.4 Inventories
Inventories are valued at the lower of cost and net realisable value, after making due allowances for obsolete and
slow moving items. Net realisable value is the price at which inventories can be sold in the ordinary course of
business less the estimated cost of completion and the estimated cost necessary to make the sale.
The cost incurred in bringing inventories to its present location and conditions are accounted using the following
cost formulae:-
Raw Materials
Purchased Tea Stock At actual cost on frst-in frst-out basis
Manufactured Tea Stock At actual cost on weighted average basis
Packing Material At actual cost on weighted average basis
Finished Goods and Work-in-Progress At the cost of direct materials, including appropriate production
over heads.
Consumables and Spares At actual cost on weighted average basis
Goods in Transit At actual cost
2.3.5 Trade and Other Receivables
Trade receivables are stated at the amounts they are estimated to realise net of allowances for bad and doubtful
receivables.
Other receivables and dues from Related Parties are recognised at cost less allowance for bad and doubtful
receivables.
2.3.6 Cash and Cash Equivalents
Cash and cash equivalents are defned as cash in hand, demand deposits and short term highly liquid investments,
readily convertible to known amounts of cash and subject to insignifcant risk of changes in value.
For the purpose of cash fow statement, cash and cash equivalents consist of cash in hand and deposits in banks
net of outstanding bank overdrafts. Investments with short maturities i.e. three months or less from the date of
acquisition are also treated as cash equivalents.
2.3.7 Property, Plant and Equipment
a) Cost and Valuation
All items of Property, Plant and Equipment are initially recorded at cost. Where items of Property, Plant and
Equipment are subsequently revalued, the entire class of such assets is revalued. Revaluations are made with
suffcient regularity to ensure that their carrying amounts do not differ materially from their fair values at
the balance sheet date. All other Property, Plant and Equipment are stated at historical cost less accumulated
depreciation and less accumulated impairment in value.
b) Restoration Costs
Expenditure incurred on repairs or maintenance of Property, Plant and Equipment in order to restore or
maintain the future economic benefts expected from originally assessed standard of performance, is
recognised as an expense when incurred.
Year Ended 31
st
March 2011
c) Depreciation
The provision for depreciation is calculated by using a straight line method on the cost of all Property, Plant
and Equipment other than leasehold land, in order to write off such amounts over the estimated useful lives
as follows:
Buildings Over 40 years
Plant and Machinery Over 10 years
Furniture and Fittings Over 6.67 years
Offce and Stores Equipment Over 5 years
Computer Hardware Over 3 years
Motor Vehicles Over 5 years
d) Derecognition
An item of Property, Plant and Equipment is derecognised upon disposal or when no future economic benefts
are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the
difference between the net disposal proceeds and the carrying amount of the asset) is included in the Income
Statement in the year the asset is derecognised.
2.3.8 Leases
Finance leases, which transfer to the Company substantially all the risks and benefts incidental to ownership of the
leased item, are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the
present value of the minimum lease payments. Lease payments are apportioned between the fnance charges and
reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability.
Finance charges are charged refected in the income statement.
Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease
term, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term. The
depreciation policy for depreciable leased assets is consistent with that for depreciable asset that are owned as
described in Note 2.3.8.
2.3.9 Investments
Cost of investment includes purchase cost and acquisition charges such as brokerages, fees, duties and bank
regulatory fees. The Group distinguishes and presents current and non-current investment in the Balance Sheet.
a) Long Term Investments
Quoted investments in equity securities held on a long term basis are stated at lower of cost and market value
determined on a portfolio basis whilst the non-quoted long term investments are stated at cost. Temporary
reductions and reversals of such values of marketable equity securities on a portfolio basis are dealt in
Equity.
The cost of the investment is the cost of acquisition inclusive of brokerage fees, duties and bank fees.
The carrying amount of other long term investments is reduced to recognise a decline other than temporary
in the value of investments, determined on an individual investment basis.
b) Other Investments
Treasury bills and other interest bearing securities held for resale in the near future to beneft from short term
market movements are accounted for at cost plus relevant proportion of the discounts or premiums.
Year Ended 31
st
March 2011
2.3.10 Provisions
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past
event, where it is probable that an outfow of resources embodying economic benefts will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation.
2.3.11 Retirement Beneft Obligations
a) Defned Beneft Plan - Gratuity
The Group measures the present value of the promised retirement benefts of gratuity, which is a defned
beneft plan with the advice of an Actuary every three years using the Projected Unit Credit Method.
The key assumptions used by the Actuary, include the following:
2011 2010
Discount Rate 10% 12%
Future Salary Increase 10% 10%
Retirement Age 55 Years 55 Years
The Group will continue as a going concern
The gratuity liability is not externally funded. This item is grouped under Other Deferred Liabilities in the Balance
Sheet.
However, as per the payment of Gratuity Act No. 12 of 1983 this liability only arises upon completion of 5 years of
continued service.
b) Defned Contribution Plans - Employees Provident Fund and Employees Trust Fund
Employees are eligible for Employees Provident Fund Contributions and Employees Trust Fund Contributions
in line with the respective statutes and regulations. The Group contributes 12% and 3% of gross emoluments
of employees to Employees Provident Fund and Employees Trust Fund respectively.
2.3.12 Impairment of Non-fnancial Assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any
such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of
the assets recoverable amount. When the carrying amount of an asset exceeds its recoverable amount, the asset is
considered impaired and is written down to its recoverable amount.
For assets, an assessment is made at each reporting date as to whether there is any indication that previously
recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group
makes an estimate of recoverable amount. A previously recognised impairment loss is reversed only if there has
been a change in the estimates used to determine the assets recoverable amount since the last impairment loss
was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That
increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had
no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the income statement
unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase.
2.3.13 Income Statement
Revenue Recognition
Revenue is recognised to the extent that it is probable that the economic benefts will fow to the Group and the
revenue and associated costs incurred or to be incurred can be reliably measured. Revenue is measured at the fair
value of the consideration received or receivable net of trade discounts, value added taxes, and other sales taxes
and after eliminating intra-group sales. The following specifc criteria are used for the purpose of recognition of
revenue.
Year Ended 31
st
March 2011
a) Sale of Goods
Revenue from sale of goods is recognised when the signifcant risks and rewards of ownership of the goods
have passed to the buyer, with the Group retaining neither continuing managerial involvement to the degree
usually associated with ownership, nor effective control over the goods sold.
b) Turnover Based Taxes
Turnover based taxes include Value Added Tax, Nation Building Tax and Economic Service Charge. The
Company and its subsidiary pay such taxes in accordance with the respective statutes.

c) Interest
Revenue is recognized on a time proportion basis that takes into accounts the effective interest rate on
assets.
d) Dividend
Dividend income is recognised when the shareholders right to receive the payment is established (on net
basis).
e) Others
Other income is recognised on an accrual basis.
Gains and losses arising from incidental activities to main revenue generating activities and those arising
from a group of similar transactions which are not material, are aggregated, reported and presented on a net
basis.
2.4 BUSINESS SEGMENT REPORTING
A business segment is distinguishable component of an enterprise that is engaged in providing an individual
product or service or a group of related products or services that is subject to risk and returns that are different from
those of other business segments. The accounting policies adopted for segment reporting are the same accounting
policies adopted for preparing and presenting consolidated fnancial statements of the Group.
2.5 EFFECTS OF SRI LANKA ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE
a) The effective date of SLAS 44, 45 and 39 was changed during the year to be effective for fnancial periods
beginning on or after 01 January 2012. These three standards have been amended and forms a part of the new
set of fnancial reporting standards mentioned under note (b) below.
b) Following the convergence of Sri Lanka Accounting Standards with the International Financial Reporting
Standards, the Council of the Institute of Chartered Accountants of Sri Lanka has adopted a new set of
fnancial reporting standards that would apply for fnancial periods beginning on or after 01 January 2012.
The application of these fnancial reporting standards is substantially different to the prevailing standards.
Year Ended 31
st
March 2011
3. PROPERTY, PLANT AND EQUIPMENT
3.1 Group
3.1.1 Gross Carrying Amounts Balance as at Additions Disposals Balance as at
01.04.2010 31.03.2011
At Cost Rs. 000 Rs. 000 Rs. 000 Rs. 000
Buildings on Leasehold Land 71,705 - (4,231) 67,474
Plant and Machinery 1,555,089 11,141 (425) 1,565,805
Furniture and Fittings 5,052 91 - 5,143
Offce and Stores Equipment 33,317 4,760 (7) 38,070
Computer Hardware 34,349 4,704 (634) 38,419
Motor Vehicles 86,850 27,496 (5,160) 109,186
1,786,362 48,192 (10,457) 1,824,097
3.1.2 Assets on Finance Lease
Motor Vehicles 10,730 6,935 - 17,665
10,730 6,935 - 17,665
Total Gross Carrying Amount 1,797,092 55,127 (10,457) 1,841,762

3.1.3 Depreciation Balance as at Charge for Disposals Balance as at
01.04.2010 the year 31.03.2011
At Cost Rs. 000 Rs. 000 Rs. 000 Rs. 000
Buildings on Leasehold Land 4,591 1,843 (2,313) 4,121
Plant and Machinery 700,007 116,958 (425) 816,540
Motor Vehicles 55,411 12,203 (4,267) 63,347
817,231 138,490 (7,606) 948,115
Motor Vehicles 2,544 2,146 - 4,690
2,544 2,146 - 4,690
Total Depreciation 819,775 140,636 (7,606) 952,805
2011 2010
Rs. 000 Rs. 000
3.1.6 Net Book Value 888,957 977,317
3.1.7 During the fnancial year, the Group acquired Property, Plant and Equipment to the aggregate value of
Rs. 55,126,502/- (2010 - Rs. 387,410,353/-). Cash payments amounting to Rs. 48,191,460/- (2010 - Rs. 387,410,353/-)
were made during the year for purchase of Property, Plant and Equipment.
3.1.8 Property, Plant and Equipment include fully depreciated assets having a gross carrying amounts of Rs. 558,325,625/-
(2010 - Rs. 474,455,730/-)
3.1.9 During the fnancial year, the Group has acquired Motor Vehicles by mean of a fnance lease to the aggregate value
of Rs. 6,935,040/- (2010 - Nil)

Year Ended 31
st
March 2011
3. PROPERTY, PLANT AND EQUIPMENT (Contd.)
3.2 Company
3.2.1 Gross Carrying Amounts Balance as at Additions Disposals Balance as at
01.04.2010 31.03.2011
At Cost Rs. 000 Rs. 000 Rs. 000 Rs. 000
Buildings on Leasehold Land 4,231 - (4,231) -
Plant and Machinery 1,387,820 11,141 (425) 1,398,536
Motor Vehicles 86,850 26,296 (5,160) 107,986
1,544,837 46,973 (10,457) 1,581,353
Motor Vehicles 10,730 6,935 - 17,665
10,730 6,935 - 17,665
Total Gross Carrying Amount 1,555,567 53,908 (10,457) 1,599,018

3.2.3 Depreciation Balance as at Charge for Disposals Balance as at
01.04.2010 the year 31.03.2011
At Cost Rs. 000 Rs. 000 Rs. 000 Rs. 000
Buildings on Leasehold Land 2,313 - (2,313) -
Plant and Machinery 679,179 100,231 (425) 778,985
Motor Vehicles 55,411 12,033 (4,267) 63,177
792,369 118,465 (7,606) 903,228
Motor Vehicles 2,544 2,146 - 4,690
2,544 2,146 - 4,690
Total Depreciation 794,913 120,611 (7,606) 907,918
2011 2010
Rs. 000 Rs. 000
3.2.5 Net Book Value 691,100 760,654

3.2.6 During the fnancial year, the Company acquired Property, Plant and Equipment to the aggregate value of
Rs. 53,907,204/- (2010 - Rs. 386,483,797/-). Cash payments amounting to Rs. 46,972,164/- (2010 - Rs. 386,483,797/-)
were made during the year for purchase of Property, Plant and Equipment.
3.2.7 Property, Plant and Equipment include fully depreciated assets having a gross carrying amounts of Rs. 558,325,625/-
(2010 - Rs. 475,455,730/-)
3.2.8 During the fnancial year, the Company has acquired Motor Vehicles by mean of a fnance lease to the aggregate
value of Rs. 6,935,040/- (2010 - Nil)

Year Ended 31
st
March 2011
4. LEASEHOLD PROPERTY
Group/Company Balance Additions Disposals Balance
As at As at
01.04.2010 31.03.2011
At Cost Rs. 000 Rs. 000 Rs. 000 Rs. 000
Leasehold Land 586 - (586) -
586 - (586) -
5. INTANGIBLE ASSETS Group Company
2011 2010 2011 2010
Computer Software Rs. 000 Rs. 000 Rs. 000 Rs. 000
5.1 Cost
As at 1 April 28,345 26,840 27,388 25,980
Acquired during the year 1,771 1,505 1,771 1,408
Write off during the year (11,144) - (11,144) -
As at 31 March 18,972 28,345 18,015 27,388
5.2 Amortisation
As at 1 April 22,816 17,753 22,525 17,753
Amortisation for the year 3,775 5,063 3,422 4,772
Write off during the year (11,144) - (11,144) -
As at 31 March 15,447 22,816 14,803 22,525
5.3 Net book value 3,525 5,529 3,212 4,863
5.4 During the fnancial year, the Group acquired Intangible Assets to the aggregate value of Rs. 1,770,907/-
(2010 - Rs. 1,505,146/-) and Company - Rs. 1,770,907/- (2010 - Rs. 1,408,191/-). Cash payments amounting to
Group - Rs. 1,770,907/- (2010 - Rs. 1,505,146/-) and Company - Rs. 1,770,907/- (2010 - Rs. 1,408,191/-) were made
during the year for purchase of Intangible Assets.
6. INVESTMENT IN SUBSIDIARY
Holding Holding Carrying Directors Carrying Directors
% % Value Valuation Value Valuation
2011 2010 2011 2011 2010 2010
Non-Quoted Rs. 000 Rs.000 Rs.000 Rs.000
MJF Beverages (Pvt) Ltd. 100 100 300,750 179,901 300,750 300,750
Less - Provision for fall in value of Investments (120,849) - - -
179,901 179,901 300,750 300,750
7. OTHER INVESTMENTS
Group/Company
2011 2010
Summary Rs. 000 Rs. 000
Non Current
Investments in Equity Securities (Note 7.1) 241,970 97,425
Total Carrying Value of Other Investments 241,970 97,425
Year Ended 31
st
March 2011
7.1 Investments in Equity Securities-Non Current
(a) Quoted No. of Shares Carrying Market Carrying Market
2011 2010 Value Value Value Value
2011 2011 2010 2010
Rs. 000 Rs. 000 Rs. 000 Rs. 000

Renuka City Hotels PLC 17,500 17,500 450 5,822 450 4,218
Maskeliya Plantation PLC 800 800 12 22 12 24
Watawala Plantation PLC 600 600 9 150 9 106
Hapugastenna Plantation PLC 100 100 1 7 1 4
Kahawatte Plantation PLC 12,707,400 - 216,407 494,318 - -
John Keells Holdings PLC 713 584,713 91 204 71,953 107,587
Total Investments in Quoted Equity Securities 216,970 500,523 72,425 111,939
(b) Non-Quoted No. of Shares Carrying Directors Carrying Directors
2011 2010 Value Valuation Value Valuation
2011 2011 2010 2010
Rs. 000 Rs. 000 Rs. 000 Rs. 000
Rainforest Ecolodge (Pvt) Ltd. 2,500,000 2,500,000 25,000 25,000 25,000 25,000
Total Investments in Non-Quoted Equity Securities 25,000 25,000 25,000 25,000
Total Carrying Value of Other Investments 241,970 97,425
8. LOANS DUE FROM RELATED PARTY
Group/Company
2011 2011 2011 2010 2010 2010
Amount Amount Amount Amount
Receivable Receivable Receivable Receivable
Within 1 Year After 1 Year Total Within 1 Year After 1 Year Total
Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000
MJF Holdings Limited - - - 50,000 - 50,000
- - - 50,000 - 50,000
As At New Loans Loans As At
01.04.2010 Granted Recovered 31.03.2011
Rs. 000 Rs. 000 Rs. 000 Rs. 000
MJF Holdings Limited * 50,000 - (50,000) -
50,000 - (50,000) -
* Applicable rate of interest is at 1% p.a above the six months average weighted Government Treasury Bill rate.
Loan is recoverable on an annual equal installment of Rs. 50,000,000/- commencing from March 2006. During the
year the loan has been fully settled by MJF Holdings Limited.
Year Ended 31
st
March 2011
9. INVENTORIES Group Company
2011 2010 2011 2010
Rs. 000 Rs. 000 Rs. 000 Rs. 000
Raw Materials 730,523 505,809 728,789 504,049
Work-in-progress 93,072 81,859 93,072 81,859
Finished Goods 90,632 49,719 89,954 46,392
Goods in Transit 20,738 77,901 20,738 77,901
Consumables and Spares 61,421 56,942 61,421 56,942
996,386 772,230 993,974 767,143

10. TRADE AND OTHER RECEIVABLES Group Company
2011 2010 2011 2010
Rs. 000 Rs. 000 Rs. 000 Rs. 000
Trade Debtors 2,055,387 2,021,354 2,053,367 2,018,388
Other Debtors 20,880 5,682 16,687 3,794
Deposits, Advances and Prepayments 304,803 223,929 304,803 222,057
2,381,070 2,250,965 2,374,857 2,244,239
11. AMOUNT DUE FROM RELATED PARTY Group Company
2011 2010 2011 2010
Rs. 000 Rs. 000 Rs. 000 Rs. 000

MJF Beverages (Pvt) Ltd. - - 26,545 26,247

12. STATED CAPITAL 2011 2010
Number - 000 Rs. 000 Number - 000 Rs. 000

Fully Paid Ordinary Shares 20,000 200,000 20,000 200,000

13. RESERVES Group Company
2011 2010 2011 2010
Rs. 000 Rs. 000 Rs. 000 Rs. 000
Revenue Reserves
General Reserve 1,900,000 1,900,000 1,900,000 1,900,000

14. DEFERRED TAX LIABILITIES Balance Sheet Income Statement
Group/Company 2011 2010 2011 2010
Rs. 000 Rs. 000 Rs. 000 Rs. 000

Deferred Tax Liability
Capital Allowances for Tax Purposes 14,485 21,649 (7,164) 8,073
Deferred Tax Assets
Defned Beneft Plans (6,268) (6,249) (20) (1,044)
Deferred Income Tax Charge/(Reversal) (7,184) 7,029
Net Deferred Tax Liability 8,217 15,400
Year Ended 31
st
March 2011
15. OTHER DEFERRED LIABILITIES Group Company
2011 2010 2011 2010
Retirement Benefts Obligation-Gratuity Rs. 000 Rs. 000 Rs. 000 Rs. 000
As at 1 April 42,270 34,999 41,658 34,698
Interest Cost 5,068 4,200 4,999 4,164
Current Service Cost 5,774 4,782 5,560 4,507
Benefts Paid (1,516) (1,339) (1,516) (1,339)
Actuarial (Gain)/Loss 11,987 (372) 11,987 (372)
As at 31 March 63,583 42,270 62,688 41,658
16. INTEREST BEARING LOANS AND BORROWINGS
Group/Company 2011 2011 2011 2010 2010 2010
Amount Amount Total Amount Amount Total
Repayable Repayable Repayable Repayable
Within 1 Year After 1 Year Within 1 Year After 1 Year
Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000
Finance Leases (Note 16.1) 3,901 6,481 10,382 2,310 4,569 6,879
3,901 6,481 10,382 2,310 4,569 6,879
16.1 Finance Leases
New Leases/
As At Hire Purchases Repayment As At
01.04.2010 Obtained 31.03.2011
Rs. 000 Rs. 000 Rs. 000 Rs. 000
Motor Vehicles
Gross Liability 12,543 9,051 (4,799) 16,794
Finance Charges allocated to future periods (5,664) (2,116) 1,368 (6,412)
Net liability 6,879 6,935 (3,431) 10,382
17. TRADE AND OTHER PAYABLES Group Company
2011 2010 2011 2010
Rs. 000 Rs. 000 Rs. 000 Rs. 000
Trade Payables 179,378 159,494 179,378 159,494
Sundry Creditors including Accrued Expenses 396,756 335,070 395,768 334,516
576,134 494,564 575,146 494,010

18. CASH AND CASH EQUIVALENTS IN CASH FLOW STATEMENT

Group Company
2011 2010 2011 2010
Components of Cash and Cash Equivalents Rs. 000 Rs. 000 Rs. 000 Rs. 000

Favourable Cash and Cash Equivalents Balance
Fixed and Call Deposits 1,433,232 1,254,186 1,430,949 1,254,186
Cash and Bank Balances 900,879 539,271 900,879 526,444
Total Cash and Cash Equivalents For the
Purpose of Cash Flow Statement 2,334,111 1,793,457 2,331,828 1,780,630
Year Ended 31
st
March 2011
19. SEGMENT INFORMATION AND REVENUE
Group Company
19.1 Revenue 2011 2010 2011 2010
Rs. 000 Rs. 000 Rs. 000 Rs. 000

Export Sales 5,788,047 4,948,224 5,783,664 4,940,755
Local Sales 986 1,337 - -
5,789,033 4,949,561 5,783,664 4,940,755
19.2 Segment Information

19.2.1 Business Segment - Group
Tea Bags Tea Packets Bulk Tea and Other Total
Value Added Tea
2011 2010 2011 2010 2011 2010 2011 2010
Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000
Revenue 4,915,755 4,282,128 620,415 479,407 252,863 188,026 5,789,033 4,949,561
Cost of Sales (2,766,694) (2,540,085) (442,276) (369,528) (209,002) (168,909) (3,417,972) (3,078,522)
Segment Gross Proft 2,149,061 1,742,043 178,139 109,879 43,861 19,117 2,371,061 1,871,039
19.2.2 Business Segment - Company
Tea Bags Tea Packets Bulk Tea and Other Total
Value Added Tea
2011 2010 2011 2010 2011 2010 2011 2010
Revenue 4,915,755 4,282,128 620,415 479,407 247,494 179,220 5,783,664 4,940,755
Cost of Sales (2,766,694) (2,540,085) (442,276) (369,528) (175,917) (125,434) (3,384,887) (3,035,047)
Segment Gross Proft 2,149,061 1,742,043 178,139 109,879 71,577 53,786 2,398,777 1,905,708
Management considers that there is no suitable basis for allocating assets, related liabilities and operating expenses
to business segments. Accordingly, segment assets, segment liabilities, segment operating expenses and other
segment information by business segment is not disclosed.

20. OTHER INCOME AND GAINS
Group Company
2011 2010 2011 2010
Rs. 000 Rs. 000 Rs. 000 Rs. 000

Dividend from Equity Securities 1,263 5,594 1,263 5,594
Rent Income - Related Parties 1,609 3,217 1,609 3,217
Incentives - Sri Lanka Tea Board - 2,840 - 2,840
Proft on Disposal of Property, Plant and Equipment 46,044 1,700 46,044 1,700
Proft on Disposal of Investments 109,627 77,414 109,627 77,414
Reversal of change in value of Long Term Investments - 22,084 - 22,084
Other Income 2,096 139 2,096 139
160,639 112,988 160,639 112,988
Year Ended 31
st
March 2011
21. FINANCE COST AND INCOME Group Company
2011 2010 2011 2010
21.1 FINANCE COST Rs. 000 Rs. 000 Rs. 000 Rs. 000

Interest Expense on Overdraft 495 666 492 665
Finance Lease Charges 1,368 1,202 1,368 1,202
1,863 1,868 1,860 1,867

21.2 FINANCE INCOME

Income from Investments :
- Interest on Deposits and Saving Accounts 76,781 68,559 76,779 68,558
- Interest on Loans to Related Parties 1,928 8,243 1,928 8,243
78,709 76,802 78,707 76,801

22. PROFIT FROM CONTINUING OPERATIONS Group Company
Stated after Charging 2011 2010 2011 2010
Rs. 000 Rs. 000 Rs. 000 Rs. 000
Included in Cost of Sales
Employee Benefts including the following 228,995 193,598 219,094 182,407
- Defned Beneft Plan Costs -Gratuity 283 312 - -
- Defned Contribution Plan Costs - EPF and ETF 18,749 15,504 17,657 14,339
Depreciation 119,374 103,334 101,540 85,539
Product Development Expenses 2,714 4,347 2,712 4,330

Included in Administrative Expenses
Employee Benefts including the following 144,624 128,274 144,624 128,243
- Defned Beneft Plan Costs -Gratuity 22,546 8,299 22,546 8,299
- Defned Contribution Plan Costs - EPF and ETF 9,675 8,229 9,675 8,229
Depreciation 21,260 24,508 19,071 22,429
Amortisation of Intangible Assets 3,775 5,063 3,422 4,772
Donations - Approved Charities 135,050 125,676 135,050 125,676
- Other Donations 182 87 182 86
Included in Selling and Distribution Costs
Export Promotion 666,636 746,211 666,636 746,211
Year Ended 31
st
March 2011
23. INCOME TAX EXPENSE Group Company
2011 2010 2011 2010
Rs. 000 Rs. 000 Rs. 000 Rs. 000
Current Income Tax
Current Tax Expense on Ordinary Activities for the
Year (Note 23.1) 87,155 70,399 87,155 70,399
Under Provision of current taxes in respect of prior years 91 1,211 91 1,211
Deferred Income Tax
Deferred Taxation Charge/(Reversal) (Note 23.2) (7,184) 7,029 (7,184) 7,029
80,062 78,639 80,062 78,639

23.1 Reconciliation between Current Tax Expense and the product of Accounting Proft.

Group Company
2011 2010 2011 2010
Rs. 000 Rs. 000 Rs. 000 Rs. 000

Accounting Proft (Proft before Tax) 1,480,888 1,294,061 1,393,945 1,336,092
Aggregate Disallowed Items 484,947 252,340 483,087 252,340
Aggregate Allowable Expenses (105,981) (101,565) (103,649) (101,565)
Aggregate Allowable Income (159,951) (109,632) (156,935) (109,632)
Qualifying Payments (500) (500) (500) (500)
Exempted Proft (1,291,996) (983,833) (1,208,541) (1,025,864)
Taxable Proft 407,407 350,871 407,407 350,871
Statutory Tax Rate 15% 288,061 269,079 288,061 269,079
Statutory Tax Rate 35% 119,346 81,792 119,346 81,792
407,407 350,871 407,407 350,871
Income Tax 84,980 68,989 84,980 68,989
Social Responsibility Levy 2,175 1,410 2,175 1,410
Current Income Tax Expense 87,155 70,399 87,155 70,399
Estimated Current Tax Expense for the Year 87,155 70,399 87,155 70,399
23.2 Deferred Tax Income
Group Company
2011 2010 2011 2010
Rs. 000 Rs. 000 Rs. 000 Rs. 000
Deferred Tax Income arising due to
- Origination and reversal of Timing Differences (7,184) 7,029 (7,184) 7,029

Year Ended 31
st
March 2011
24. EARNINGS PER SHARE
24.1 Basic Earnings Per Share is calculated by dividing the proft for the year attributable to ordinary shareholders by
the weighted average number of ordinary shares outstanding during the year.
24.2 The following refects the income and share data used in the basic Earnings Per Share computation
Amount Used as the Numerator:
2011 2010
Rs. 000 Rs. 000

Proft for the Year 1,400,826 1,215,422

Number of Ordinary Shares Used as the Denominator: 2011 2010
Number 000 Number 000
Weighted Average number of Ordinary Shares in issue 20,000 20,000
25. DIVIDEND PER SHARE 2011 2010
Dividend Dividend
Declared and paid during the year Per Share Per Share
Equity Dividend on Ordinary Shares: Rs. Rs. 000 Rs. Rs. 000

Final Dividend - 2010 17.50 350,000 - -
Interim Dividend - 2011 12.50 250,000 12.50 250,000
600,000 250,000

Proposed for approval at AGM (not recognised as a liability as at the Balance Sheet date)
Equity Dividend on Ordinary Shares:
Final Dividend - 2011 22.50 450,000 17.50 350,000

26. COMMITMENTS AND CONTINGENCIES
26.1 Commitments

26.1 Capital Expenditure Commitments
The Company has purchase commitments for acquisition of Property, Plant and Equipment incidental to the
ordinary course of business as follows,.
2011 2010
Rs. 000 Rs. 000

Contracted but not provided for - Tea bagging Machines 230,644 -
26.1.2 Operational Commitments
There are no Operational Commitments as at the balance sheet date.

26.2 Contingencies
2011 2010
Rs. 000 Rs. 000

Letters of Guarantee 94,239 56,910
27. ASSETS PLEDGED

There are no Assets Pledged as at the Balance Sheet date.
28. EVENTS OCCURRING AFTER THE BALANCE SHEET DATE

There have been no material events occurring after the Balance Sheet date that require adjustments to or disclosure
in the fnancial statements.
Year Ended 31
st
March 2011
29. RELATED PARTY DISCLOSURES
Details of signifcant related party disclosures are as follows:

29.1 Group
29.1.1 Transactions with the parent and related entities

Parent Other* Total
MJF Teas (Pvt) Ltd
2011 2010 2011 2010 2011 2010
Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000

Export Sales - 400 2,851,601 2,248,396 2,851,601 2,248,796
Local Sales - - 986 1,337 986 1,337
Transfer of Tea and Packing Material 1,224,431 836,177 217,387 255,857 1,441,818 1,092,034
Purchase of Packing Material - - (845,835) (677,015) (845,835) (677,015)
Rent Paid - - (42,300) (37,005) (42,300) (37,005)
Rent Received - - 1,609 3,217 1,609 3,217
Transport Charges Paid - - (20,935) (13,168) (20,935) (13,168)
Loan Recoveries - - 50,000 50,000 50,000 50,000
Donation Paid - - (135,000) (125,676) (135,000) (125,676)
*Transactions carried out with other companies within the Group
The following amounts have been disclosed under Trade Receivables and Payables respectively in the Balance
Sheet.

2011 2010
Company Name Receivable/ Receivable/
(Payable) (Payable)
Rs. 000 Rs. 000

Dilmah Australia (Pty) Limited 1,490,424 1,391,641
Forbes & Walkers (Pvt) Ltd. (11) 674
PCL Solutions (Pvt) Ltd. (Formally Known as Package Care Limited) (24) (24)
Packages Lanka (Pvt) Ltd. (4,974) (4,407)
Print Care PLC (9,982) (10,196)
Timber Concepts (Pvt) Ltd. (1,688) (5,399)
Printcare Universal (Pvt) Ltd. (Formally Known as Universal Packaging Limited) (21,716) (30,694)
1,452,029 1,341,595

29.1.2 Transactions with Key Management Personnel of the entity or parent

The Group/Company considers the members of its Board of Directors are the key management personnel

Key Management Personnel Compensation
2011 2010
Rs. 000 Rs. 000

Short-term employee benefts 75,300 58,076
75,300 58,076
Year Ended 31
st
March 2011
29. RELATED PARTY DISCLOSURES (Contd.)
Details of signifcant related party disclosures are as follows:

29.2 Company
29.2.1 Transactions with the parent and related entities

Parent Fellow Subsidiary Other* Total
MJF Teas (Pvt) Ltd MJF Beverages (Pvt) Ltd.
2011 2010 2011 2010 2011 2010 2011 2010

Export Sales - - - - 2,851,078 2,248,396 2,851,078 2,248,396
Transfer of Tea and
Packing Material 1,224,431 836,177 - - 217,387 255,857 1,441,818 1,092,034
Purchase of Packing
Material - - - - (845,835) (677,015) (845,835) (677,015)
Purchase of Tea - - (5,708) (7,173) - - (5,708) (7,173)
Rent Paid - - - - (40,680) (38,906) (40,680) (38,906)
Rent Received - - - - 1,609 3,217 1,609 3,217
Transport Charges Paid - - - - (20,804) (13,415) (20,804) (13,415)
Loan Recoveries - - - - 50,000 50,000 50,000 50,000
Donation Paid - - - - (135,000) (125,676) (135,000) (125,676)
Reimbursement of
Expenses Incurred - - 298 503 - - 298 503
*Transactions carried out with other companies within the Group.
Amounts due from Related Party is disclosed under Note 11, whilst the following amounts have been disclosed
under Trade Receivables and Payables respectively in the Balance Sheet.

2011 2010
Company Name Receivable/ Receivable/
(Payable) (Payable)
Rs. 000 Rs. 000

Dilmah Australia (Pty) Limited 1,490,424 1,391,641
Forbes & Walkers (Pvt) Ltd. (11) 674
PCL Solutions (Pvt) Ltd. (Formally Known as Package Care Limited) (24) (24)
Packages Lanka (Pvt) Ltd. (4,974) (4,407)
Print Care PLC (9,982) (10,196)
Timber Concepts (Pvt) Ltd. (1,688) (5,399)
Printcare Universal (Pvt) Ltd. (Formally Known as Universal Packaging Limited) (21,716) (30,694)
1,452,029 1,341,595

29.2.2 Transactions with Key Management Personnel of the entity or parent

The Group/Company considers the members of its Board of Directors are the key management personnel.

Key Management Personnel Compensation
2011 2010
Rs. 000 Rs. 000

Short-term employee benefts 75,300 58,076
75,300 58,076
Year Ended 31
st
March 2011
2011 2010 2009 2008 2007
TRADING RESULTS (Rs. 000)
Turnover 5,783,664 4,940,755 4,428,780 4,354,890 3,316,955
Operating Expenses 4,881,220 4,337,025 3,960,052 3,600,396 2,824,164
Other Income 493,361 734,229 103,413 383,996 551,599
Interest Expense 1,860 1,867 2,444 2,455 1,049
Proft before Income Tax 1,393,945 1,336,092 569,697 1,136,034 1,043,341
Income Tax on Profts 80,062 78,639 49,930 52,322 53,500
Proft after Income Tax 1,313,883 1,257,453 519,767 1,083,712 989,841
SHAREHOLDERS FUNDS (Rs. 000)
Stated Capital 200,000 200,000 200,000 200,000 200,000
Reserves 5,950,241 5,236,358 3,966,335 4,499,137 3,735,426
NET ASSETS 6,150,241 5,436,358 4,166,335 4,699,137 3,935,426
ASSETS (Rs. 000)
Property, Plant & Equipment 691,100 761,240 483,632 282,202 317,883
Intangible Assets 3,212 4,863 8,227 8,022 3,932
Investments 421,871 398,175 531,487 855,223 345,003
Current Assets 5,727,204 4,868,259 3,686,411 3,943,387 3,710,614
LIABILITIES (Rs. 000)
Non-current Liabilities 77,386 61,627 49,914 40,843 38,347
Current Liabilities 615,760 534,552 493,508 348,854 403,659
NET ASSETS (Rs. 000) 6,150,241 5,436,358 4,166,335 4,699,137 3,935,426
Market Price Per Share (Rs.) 800.00 480.00 270.00 305.00 180.00
Dividend Per Share (Rs.) 35.00 30.00 25.00 22.50 15.00
Total Dividend Rs. 000s (Gross) 700,000 600,000 500,000 450,000 300,000
No of Shares 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000
RATIOS
Return on Average Shareholders Funds (%) 22.68 26.19 11.73 25.10 27.88
Earnings Per Share (Rs) 65.69 62.87 25.99 54.19 49.49
Interest Cover (times) 750.43 717.02 234.10 463.74 995.61
Dividend Cover (times) 1.88 2.10 1.04 2.41 3.30
Liquidity (times) 9.30 9.11 7.47 11.30 9.19

Five Year Summary - Company
st
March
1. STOCK EXCHANGE LISTING
The issued ordinary shares of Ceylon Tea Services PLC are listed on the Colombo Stock Exchange.

2. ORDINARY SHAREHOLDERS
Number of Shares Number of Total %
Shareholders Holding Holding
1 - 1,000 582 62,338 0.31%
1,001 - 5,000 63 175,317 0.88%
5,001 - 10,000 21 161,180 0.81%
10,001 - 50,000 23 543,651 2.72%
50,001 - 100,000 2 119,500 0.60%
100,001 - 500,000 1 156,020 0.78%
500,001 - 1,000,000 - - 0.00%
1,000,001 - Over 3 18,781,994 93.90%

Total 695 20,000,000 100.00%

3. ANALYSIS OF SHAREHOLDERS
Number of Shares Number of Total %
Shareholders Holding Holding
Individuals 641 2,387,337 11.94%
Institutions 54 17,612,663 88.06%
Total 695 20,000,000 100.00%
2,488,922 (12.44%) Shares were held by the public as at 31st March 2011. (31st March 2010 2,555,143 (12.78%))

4. SHARE TRADING
2011 2010 2009 2008 2007
No of Transactions 74 211 106 134 180
No of Shares Traded 1,466,000 73,900 36,300 2,195,400 41,700
Value of Shares Traded 956,821,140 26,780,550 10,863,400 711,586,925 15,003,050
5. DIVIDENDS
2011 2010 2009 2008 2007
Interim - per share Rs. 12/50 Rs. 12/50 Rs. 25/00 Rs. 8/00 Rs. 7/00
Final - per share Rs. 22/50 Rs. 17/50 Nil Rs.14/50 Rs. 8/00
Amount (Rs.000s) Gross 700,000 600,000 500,000 450,000 300,000
6. EARNINGS (restated on current number of shares)
2011 2010 2009 2008 2007
Earnings/share Rs. 70.04 60.77 24.36 53.74 49.39
P/E Ratio 11.42 7.90 11.09 5.67 3.64
Information to Investors
As at 31
st
March 2011
7. MARKET VALUES (Rs.)
2011 2010 2009 2008 2007
Highest 1,000.00 550.00 350.00 325.00 599.00
Lowest 650.00 300.00 255.00 201.00 162.00
Year End 800.00 480.00 270.00 305.00 180.00

The weighted average trading price for the year was Rs. 652.67
8. MARKET CAPITALIZATION (Rs. Million)
2011 2010 2009 2008 2007
Capital & Reserves 6,150 5,350 4,122 4,688 3,933
Market Capitalization 16,000 9,600 5,400 6,100 3,600

9 TOP 20 SHAREHOLDINGS AS AT 31
ST
MARCH 2011

31.03.11 31.03.10
Total % Total %
Shares Shares
M.J.F. Teas (Pvt) Ltd 13,075,382 65.38% 13,075,382 65.38%
M.J.F. Exports (Pvt) Ltd 4,256,712 21.28% 4,256,712 21.28%
Dr.T.Senthilverl 1,449,900 7.25% - 0.00%
HSBC Intl. Nom Ltd - BBH Genesis Smaller Companies - 0.00% 1,450,400 7.25%
Mrs. S.T. Fernando 156,020 0.78% 156,020 0.78%
The Gilpin Fund Limited 68,700 0.34% 74,400 0.37%
Mr.H.A.Van Starrex 50,800 0.25% 42,588 0.21%
Mrs. S. Wanniarachchi 43,884 0.22% 87,084 0.44%
Mr. A.W. Atukorala 36,600 0.18% 36,500 0.18%
Lunuganga Trust 35,703 0.18% - 0.00%
Est Of Mr.G.M.Bawa - 0.00% 35,704 0.18%
Mr. M.W. De Silva 34,830 0.17% 34,830 0.17%
Bartleet Finance Limited/Hans Anton Van Starrex 30,500 0.15% - 0.00%
Mr. J.W. Burton 29,570 0.15% 29,570 0.15%
Merrill J Fernando & Sons (Pvt) Ltd 25,300 0.13% 25,300 0.13%
Mrs. A.S. Fernando 24,284 0.12% 24,284 0.12%
Mr. D.C. Fernando 24,200 0.12% 24,200 0.12%
Mr. M.J. Fernando 24,200 0.12% 24,200 0.12%
Dr. K. Poologasundram 23,808 0.12% 23,808 0.12%
Mr. H.R. Peries 21,200 0.11% 21,200 0.11%
Miss S.T. Fernando 21,142 0.11% 42,284 0.21%
Mrs.S.T.F.Ortiz 21,142 0.11% - 0.00%
Mr. N.K.A.De Silva - 0.00% 20,284 0.10%
Amalgamated Graphite Ltd - 0.00% 20,000 0.10%
19,453,877 97.27% 19,504,750 97.52%
Information to Investors (Contd...)
As at 31
st
March 2011
Shareholder Name
Notice is hereby given that the 30th Annual General Meeting of Ceylon Tea Services PLC will be held at 111, Negombo
Road, Peliyagoda on 9th September 2011 at 4.00 p.m. for the following purposes:
1. To receive and adopt the Report of the Directors and statement of accounts for the year ended 31st March 2011
along with the Report of the Auditors thereon.
2. To declare a Final Dividend as recommended by Directors.
3. To pass the ordinary resolution set out below to re-elect Mr. Merrill J Fernando who is 81 years of age, as a Director
of the Company.

IT IS HEREBY RESOLVED that Mr. Merrill J Fernando who is 81 years of age be and is hereby re-elected a Director
of the Company and it is hereby declared as provided for in section 211 of the Companies Act. No.7 of 2007 that
the age limit of 70 years referred to in section 210 of the said Companies Act shall not apply to Mr. Merrill J
Fernando
4. To pass the ordinary resolution set out below to re-elect Mr. Gritakumar E Chitty who is 72 years of age, as a
Director of the Company.

IT IS HEREBY RESOLVED that Mr. Gritakumar E Chitty who is 72 years of age be and is hereby re-elected a
Director of the Company and it is hereby declared as provided for in section 211 of the Companies Act. No.7 of 2007
that the age limit of 70 years referred to in section 210 of the said Companies Act shall not apply to Mr. Gritakumar
E. Chitty
5. To re-elect as a Director, Mr. Himendra S Ranaweera who retires by rotation under section 24 of the Articles of
Association.
6. To authorize the Directors to make donations.
7. To re-appoint Ernst & Young, Chartered Accountants, as Auditors of the Company and to authorize the Directors
to determine their remuneration.
8. Any other business of which due notice has been given.
By order of the Board,
Minette Perera
Secretary.
Colombo
28
th
July 2011
Note:
A member is entitled to appoint a proxy to attend and vote instead of himself, for which purpose a form of Proxy is
enclosed with this Annual Report. The instrument appointing a proxy must be registered at the Registered Offce not later
than 48 hours before the time fxed for the Meeting.
Notice of Meeting
Notes
Form of Proxy
Ceylon Tea Services PLC
Registered Offce: 111, Negombo Road, Peliyagoda, Sri Lanka
I/We .........................................................................................................................................................................................................
of ...............................................................................................................................................................................................................
......................................................................................................................................................................................................................

being member/s of CEYLON TEA SERVICES PLC hereby appoint:
..................................................................................................................................................................................................................of
.....................................................................................................................................................................................or failing him/her
Mr. Merrill Joseph Fernando of Colombo or failing him
Mr. Malik Joseph Fernando of Colombo or failing him
Mr. Dilhan Chrishantha Fernando of Colombo or failing him
Mr. Himendra Somasiri Ranaweera of Colombo or failing him
Ms. Minette Delicia Anne Perera of Colombo or failing her
Mr. Roshan Conrad Tissaaratchy of Colombo or failing him
Mr. Rajanayagam Nalliah Asirwatham of Colombo or failing him
Mr. Gritakumar Edmund Chitty of Colombo or failing him
As my / our Proxy to attend and vote for me / us on my / our behalf at the Thirtieth Annual General Meeting of the
Company to be held on the 9th September 2011 at 4.00 p.m. and any adjournment thereof and at every poll which may be
taken in consequence of the aforesaid meeting.
As Witness my hand / our hands this ...........................................................day of ..................................................... 2011
Signature: ...................................................
N.B. 1. Please delete the inappropriate words.
2. Instructions as to completion are noted on the reverse hereof.
3. A Proxy need not be a member of the Company.
Instructions as to Completion
1. Kindly perfect the Proxy by flling legibly your full name and address and by signing in the space provided and
flling in the date of signature.
2. In the case of corporate members, the proxy form must be under the seal or hand of an authorized offcer or
attorney.
3. If the proxy form is signed by an attorney, the relevant Power of Attorney should accompany the proxy form for
registration, if such Power of Attorney has not already been registered with the Company.
4. The completed proxy form should be deposited at the registered offce of the Company at the address given below
not less than 48 hours before the time appointed for the Meeting.
CEYLON TEA SERVICES PLC
111, Negombo Road
Peliyagoda
Ceylon Tea Services PLC. 111 Negombo Road, Peliyagoda, Sri Lanka.
( 011 482 2000 info@dilmahtea.com www.dilmahtea.com
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Dilmah

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CEYLON TEA SERVICES PLC.

ANNUAL REPORT 2010/11

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