Chairman's Message

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It is with great pleasure that I present the Annual Report of Asia Siyaka Commodities PLC ("ASC" or the "Company") for the financial year ended 31 March 2015. The Company, together with its subsidiaries, Asia Siyaka Warehousing (Pvt) Ltd and Siyaka Produce Brokers (Pvt) Ltd (collectively referred to as the "Group") turned in a year of commendable performance despite multiple challenges presented by the external environment. Building on core strengths of the Group and unparalleled industry insights of our leadership, the Group continued to focus increasingly on higher value addition to its stakeholders. Noteworthy achievements during the year under review include growth in all the Group's key business lines, retaining market share and market position as one of the country's leading tea and commodity brokers and embarking on our second warehousing project. Overall, the country's economic environment during the year was conducive to businesses, with interest rates at historical lows and the benign inflationary environment leading to increased consumer behaviour. The tea industry however, experienced multiple challenges due to geo political and economic turmoil in key buying countries; Syria, Iran, Libya and the Middle Eastern region experienced sharp economic downturn due to numerous reasons ranging from drop in oil prices to social unrest and trade restrictions among others. As a result, demand from Sri Lanka's key destination markets decelerated, particularly during the last 2 quarters of the financial year, leading to a sharp decline in global tea prices. Accordingly, average prices at the Colombo Tea Auction decreased 12% during the year under review. Meanwhile, adverse weather conditions during the major part of the year led to a sharp drop in the country's rubber production whilst prices persistently declined against the backdrop of dwindling global demand. On the other hand, the coconut industry experienced a good year upheld by higher production levels and increased prices amidst a shortfall in global supply. Production of minor export crops was negatively impacted by adverse weather conditions during the year.

During the year, our strategic imperatives were centred on enhancing the value proposition to our key stakeholders. We focussed on further expanding the range and depth of services offered to our customers, through strengthening our research capabilities and increasing our engagement with tea factories as well as plantation companies, smallholders and millers. This focus allowed the Group to retain its market position as the fourth leading tea broker in the country whilst market share was maintained at around 14%. The Group's revenue expanded by 10.8% to LKR 607.40 million during the year, supported by growth in all its key business lines. Broking continued to be the Group's mainstay and a strategic approach towards value creation to all our stakeholders' ensured sustenance of our position as an industry leader and innovator in this business line. Despite non-conducive external market conditions both in the tea and rubber industries, our broking income increased by 7.2% during the year.

Meanwhile, building on our position as the industry's pioneer in value-added warehousing we were able to successfully increase our capacity utilisation levels during the year, leading to an 11.0% growth in this business line. Furthermore, the Group's financial services business line, a crucial component of our customer value addition process recorded a healthy 13.5% growth. Overall, the Group's pre-tax profit was largely unchanged from last year at LKR 161.70 million as overhead expenses escalated in line with increases in employee remuneration and capacity building initiatives. During the next financial year, we will focus on building upon our core competencies to achieve operational growth and business expansion. Accordingly, the key focus area for the next financial year will be the construction of our second state-of-the-art warehousing facility which is expected to double our storage capacity. With the commissioning of this facility, the Group will grow as the largest warehouse operator at the Colombo Tea Auction whereas earning contributions from the new initiative are also expected to be significant. On the other hand, challenges in the industry are expected to prevail at least for the first half of the year, as the industry grapples with waning external demand, falling prices, the impending wage hike for plantation sector workers as well as low labour productivity and poor soil conditions. Notwithstanding the above, we remain confident of the Group's ability to weather these challenges, supported by the strength of our leadership and focussed approach to value creation. Acknowledgements I would like to take this opportunity to thank my colleagues on the Board for their continued support and valuable input extended to the Group. I also appreciate the efforts of the Management team and all staff whose commitment, loyalty and dedication is our most valuable asset and look forward to their support as we look to further fortify our position. In addition I am grateful to our customers, regulators, the Government and all other stakeholders for their continued support. Dr. Anura Ekanayake Chairman 22 July 2015 Asia Siyaka CommoditiesPLC Annual Report 2015 11 It is with great pleasure that I present the Annual Report of Asia Siyaka Commodities PLC ("ASC" or the "Company") for the financial year ended 31 March 2015. The Company, together with its subsidiaries, Asia Siyaka Warehousing (Pvt) Ltd and Siyaka Produce Brokers (Pvt) Ltd (collectively referred to as the "Group") turned in a year of commendable performance despite multiple challenges presented by the external environment. Building on core strengths of the Group and unparalleled industry insights of our leadership, the Group continued to focus increasingly on higher value addition to its stakeholders. Noteworthy achievements during the year under review include growth in all the Group's key business lines, retaining market share and market position as one of the country's leading tea and commodity brokers and embarking on our second warehousing project. Overall, the country's economic environment during the year was conducive to businesses, with interest rates at historical lows and the benign inflationary environment leading to increased consumer behaviour. The tea industry however, experienced multiple challenges due to geo political and economic turmoil in key buying countries; Syria, Iran, Libya and the Middle Eastern region experienced sharp economic downturn due to numerous reasons ranging from drop in oil prices to social unrest and trade restrictions among others. As a result, demand from Sri Lanka's key destination markets decelerated, particularly during the last 2 quarters of the financial year, leading to a sharp decline in global tea prices. Accordingly, average prices at the Colombo Tea Auction decreased 12% during the year under review. Meanwhile, adverse weather conditions during the major part of the year led to a sharp drop in the country's rubber production whilst prices persistently declined against the backdrop of dwindling global demand. On the other hand, the coconut industry experienced a good year upheld by higher production levels and increased prices amidst a shortfall in global supply. Production of minor export crops was negatively impacted by adverse weather conditions during the year. During the year, our strategic imperatives were centred on enhancing the value proposition to our key stakeholders. We focussed on further expanding the range and depth of services offered to our customers, through strengthening our research capabilities and increasing our engagement with tea factories as well as plantation companies, smallholders and millers. This focus allowed the Group to retain its market position as the fourth leading tea broker in the country whilst market share was maintained at around 14%. The Group's revenue expanded by 10.8% to LKR 607.40 million during the year, supported by growth in all its key business lines. Broking continued to be the Group's mainstay and a strategic approach towards value creation to all our stakeholders' ensured sustenance of our position as an industry leader and innovator in this business line. Despite non-conducive external market conditions both in the tea and rubber industries, our broking income increased by 7.2% during the year. Meanwhile, building on our position as the industry's pioneer in value-added warehousing we were able to successfully increase our capacity utilisation levels during the year, leading to an 11.0% growth in this business line. Furthermore, the Group's financial services business line, a crucial component of our customer value addition process recorded a healthy 13.5% growth. Overall, the Group's pre-tax profit was largely unchanged from last year at LKR 161.70 million as overhead expenses escalated in line with increases in employee remuneration and capacity building initiatives. During the next financial year, we will focus on building upon our core competencies to achieve operational growth and business expansion. Accordingly, the key focus area for the next financial year will be the construction of our second state-of-the-art warehousing facility which is expected to double our storage capacity. With the commissioning of this facility, the Group will grow as the largest warehouse operator at the Colombo Tea Auction whereas earning contributions from the new initiative are also expected to be significant. On the other hand, challenges in the industry are expected to prevail at least for the first half of the year, as the industry grapples with waning external demand, falling prices, the impending wage hike for plantation sector workers as well as low labour productivity and poor soil conditions. Notwithstanding the above, we remain confident of the Group's ability to weather these challenges, supported by the strength of our leadership and focussed approach to value creation. Acknowledgements I would like to take this opportunity to thank my colleagues on the Board for their continued support and valuable input extended to the Group. I also appreciate the efforts of the Management team and all staff whose commitment, loyalty and dedication is our most valuable asset and look forward to their support as we look to further fortify our position. In addition I am grateful to our customers, regulators, the Government and all other stakeholders for their continued support.