Creating Value since 1928

C T HOLDINGS PLC ANNUAL REPORT 2019 | 2020 CONTENTS

Overview Our Business at a Glance 01 Milestones 02 Profile of Businesses 04 Financial Highlights 06 Operational Spotlight 07

Stewardship Chairman’s Message 08 Profile of Directors 10 Review of Operations 12 Corporate Governance 18 Risk Management 21 Report of the Remuneration Committee 23 Report of the Nominations Committee 24 Report of the Related Party Transactions Review Committee 25 Financial Statements 27

Financial Reports Annual Report of the Board of Directors of the Company 29 Report of the Audit Committee 32 Statement of Directors Responsibility 34 Independent Auditors’ Report 35 Statement of Profit or Loss and Other Comprehensive Income 42 Statement of Financial Position 43 Statement of Changes in Equity 44 Statement of Cash Flows 46 Notes to the Financial Statements 48

Supplementary Five Year Review - Group 134 Group Directory 135 Information of Shareholders 138 Notice of Meeting 141 Notes 142 Form of Proxy 143 Corporate Information Back Cover Inner OUR BUSINESS AT A GLANCE

C T Holdings PLC then known as Ceylon Theatres Limited was incorporated in 1928 with its primary focus on the entertainment industry. The Company owned and operated a string of cinemas in various parts of the country including such well known destinations such as Regal Colombo, Empire and Majestic cinemas.

The Company also set up the first film production and processing facilities in the country with the establishment of Ceylon Studios Ltd in 1956, thus paving the way for the development of the local film production expertise.

Despite the Company’s first production “Asokamala” being unsuccessful, the Company persevered to subsequently produce hit films such as “Golu Hadawatha”, “Akkara Paha”, “Sakman Maluwa” etc. The hit film “Nidhanaya” was adjudged the best Sri Lankan film produced in the past 50 years.

Anticipating the effects of the changes within the film industry in the 1970s and 80s, the Company began to diversify into other areas of business, notably, consolidating its interest in Millers Limited and through it, Cargills (Ceylon) Ltd. Millers Ltd was subsequently merged with C T Holdings PLC.

The Company also diversified into Financial Services and Real Estate. The subsidiary Cargills shed the Department Store concept to introduce and expand the Supermarket concept to Sri Lanka. This change was to be the most significant change to the Group and the backbone of future growth. Cargills also expanded into Food Processing, Dairy, Agri Business and Confectionery. A fully fledged Commercial Bank under the name ‘Cargills Bank’ was also set up by the Group. All this while also staying true to its roots in cinema business by developing cinemas with digital sounds, 3D viewing and upgrading facilities for patrons.

C T Holdings is now a diversified Group with interest in Retail, Fast Moving Consumer Goods, Distribution, Real Estate, Entertainment, Banking and Financial Services.

C T HOLDINGS PLC 01 Annual Report 2019 | 2020 MILESTONES

2006 1928 Cargills commissioned its Ceylon Theatres new state-of-the art meat Limited established, processing facility. focusing primarily on the entertainment industry by Sir Chittampalam A. Gardiner. 2008 Ceylon Theatres merged with 1991 its subsidiary Millers PLC to create an investment holding Completed the Majestic City Company. shopping and entertainment Cinema exhibition operation mall through C T Land transferred to a wholly Development PLC. owned subsidiary, Ceylon Theatres (Private) Limited. 2010 Name of Ceylon Theatres PLC 1996 changed to C T KFC franchise Holdings PLC awarded to Cargills.

2002 Cargills acquired the Walls Ice Cream plant and CPC/ Best foods production facility of jams, cordials and sauces. 1981 Acquired Millers and Cargills 1999 and ventured into retail Entered the Ceramic / Tiles, and distribution under the Plantation and Packaging leadership of Mr. Albert A 2009 sectors. Page. C T Properties Limited 1992 completed its flagship ‘Empire’ residential Entered the financial services sector through development project. C T Smith Stockbrokers (Member, Colombo Stock Exchange) – now re named as C T CLSA Securities (Private) Limited. Cargills diversified into food processing with the acquisition of the Goldi processed meat plant – now known as Cargills Quality Foods Ltd.

C T HOLDINGS PLC Annual Report 2019 | 2020 02 2017 Cargills commissioned the 2012 expanded dairy facility. Cargills entered the brewery Cargills Square mall sector. Gampaha opened with a Ceylon Theatres added three supermarket, KFC and two new screens to the Majestic cinema screens. Cineplex including Sri 2015 Lanka’s first ever 3D cinema. Retail sector comprising the supermarkets spun off into a 2019 separate Company with new CT Holdings completed 90 direct equity injection into the years of operations Company. Cargills opened Cargills Food Two new cinema screens Hall, bringing Sri Lanka’s set up by Ceylon Theatres first gourmet supermarket at Arcade Independence experience at the Colombo Square, the Group’s Regal City Centre Shopping Mall cinema was refurbished. Cargills exited the brewery sector.

2013 2016 2020 Cargills set up the Cargills Bank began expansion Cargills commenced its TGI Fridays Franchise of its network by opening 11 175th year of operations Restaurant in branches. Colombo, Fort. Cargills opened the 400th Cargills Food City supermarket in Wattala in 2014 early 2020 Group received license Launched the Kotmale 2011 to set up and operate a Cheese processing plant in Cargills acquired controlling Commercial Bank. Hatton interest in Kotmale Holdings Cargills Square Mall opened PLC. in Jaffna. 2018 Cargills also acquired Exited the Ceramic / Tiles, Diana Biscuits Plantation and Packaging Regal Cinema in Manufacturers (Private) sectors. Nuwara Eliya fully Limited (subsequently refurbished and re-named Cargills Quality re-opened. Confectioneries (Pvt) Ltd).

C T HOLDINGS PLC 03 Annual Report 2019 | 2020 PROFILE OF BUSINESSES

Retail and Wholesale Fast Moving Consumer Goods Real Estate Distribution (FMCG) C T Land Development is a long The retail sector of the Group The Group’s FMCG brands are established name in the Real Estate functions under Cargills Foods some of the widest consumed and Property sector. The Company Company (Pvt) Ltd. The modern household brands in the Country owns and operates ‘Majestic City’, trade arm covers all districts of which include, ‘Magic’ and the largest and most popular the island through Cargills Food ‘Kotmale’ dairy products, ‘Kist’ shopping and entertainment mall in City and Food City Express store range of jams, cordials, nectars, the Country. The Group also owns formats. This sector maintains a juices, culinary & confectionery, and and operates the Cargills Square backward integration model with ‘Cargills Finest’, ‘Goldi’ and ‘Sams’ Malls in Jaffna and Gampaha. local fruit and vegetable collection and ‘Island’s Finest’ Convenience Property development operations centres in every district of the island. Foods. The sector operates some under C T Properties previously of the most modern facilities with completed the ‘Empire’ luxury Millers Limited the marketing and many ISO International Standard apartment complex in Colombo 2 distribution arm holds the agency certifications among them such and C T Gardens Township project rights for leading international food as ISO 9001: 2000 Quality in Piliyandala. brands reaching 40,000 groceries Management System certification, islandwide. The Company is also ISO 22000: 2005 Food Safety the distributor for the Group’s own Management System certification brands. and ISO 14001: 2004 Environment Management System certification.

C T HOLDINGS PLC Annual Report 2019 | 2020 04 Restaurants Banking and Financial Entertainment The restaurants’ sector includes Services The Group has been associated the world renowned ‘KFC’ and Cargills Bank which was with the national cinema industry for ‘TGI Fridays’ franchises with 40 promoted and launched by the over 90 years with the making of the KFC restaurants and one TGIF Group completed its fifth year first national production and thereon Restaurant. of operations. Capital Market producing landmark motion pictures operations of the Group are carried that have won international acclaim. out under C T CLSA Holdings Ceylon Theatres (Private) Limited is Ltd, which covers stockbroking, engaged in operating Fifteen cinema advisory services and capital market screens in Seven locations. solutions.

C T HOLDINGS PLC 05 Annual Report 2019 | 2020 FINANCIAL HIGHLIGHTS

Group Company In thousands of rupees 2020 2019 Change % 2020 2019 Change %

Operations Revenue 107,817,065 95,547,360 12.84 - - - Results from operating activities 7,277,288 5,290,553 37.55 948,128 346,378 173.73 Profit before taxation 4,254,692 3,888,474 9.42 960,515 362,777 164.77 Profit for the year 2,721,877 2,384,237 14.16 942,608 354,874 165.62 Profit attributable to owners of the Parent 1,404,986 1,642,617 (14.47) 942,608 354,874 165.62

Per Share Data Earnings Per Share (Rs.) 6.98 8.16 (14.46) 4.68 1.76 165.91 Dividends Per Share (Rs.) 4.60 5.50 (16.36) 4.60 5.50 (16.36) Dividend Cover (Times) 1.52 1.48 2.70 1.02 0.32 318.75

Shareholders’ Interest Stated Capital 6,489,758 6,489,758 6,489,758 6,489,758 Total equity attributable to equity holders of the parent 21,189,846 21,448,353 7,440,910 7,623,748 Return on equity attributable to equity holders of the parent (%) 6.63 7.66 12.67 4.65 Total equity attributable to equity holders of the parent per Share (Rs.) 105.20 106.49 36.94 37.85

Leverage Net Finance Income/ (Costs) (2,680,731) (1,481,721) 12,387 16,399 Interest Cover (Times) 2.71 3.57 - - Borrowings (including overdrafts) 30,060,880 16,935,443 374 - Borrowing as a Percentage of total equity attributable to equity holders of the parent (%) 141.86 78.96 N/A N/A

Note Earnings, dividends and shareholders’ funds per share have been calculated based on the number of issued shares presently in issue.

0.43% 0.56% 3.85 % 0.26% 4.05% 0.38%

15.36% 15.69% Retail Retail Composition of Group FMCG Composition of Group FMCG Revenue 2020 Restaurant Revenue 2019 Restaurant Real Estate Real Estate Entertainment Entertainment

80.11% 79.33%

C T HOLDINGS PLC Annual Report 2019 | 2020 06 OPERATIONAL SPOTLIGHT

Revenue - Group Profit for the Year Attributable to Equity Profit for the year - Group Holders of the Parent - Group

(Rs. Bn) (Rs. Bn) (Rs. Bn) 120 3 4

100 3 80 2

60 2

40 1 1 20

0 0 0 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020

Borrowings - Group Dividends per share - Group Earnings Per Share - Group

(Rs. Bn) (Rs. Mn) (Rs. Mn) 25 6 14

30 5 12 25 10 4 20 8 3 15 6 2 10 4

5 1 2

0 0 0 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020

Revenue Total Assets Profit for the year Rs.107.82 Bn Rs.80.37Bn Rs.2.72Bn

Dividend Per Share Earnings Per Share Total Equity Rs.4.60 Rs.6.98 Rs.26.5Bn

C T HOLDINGS PLC 07 Annual Report 2019 | 2020 CHAIRMAN’S MESSAGE

We are pleased to present herewith the against Rs. 95.55 billion in the previous "The Board and Annual Report of C T Holdings PLC financial year, an increase of 12.8%. The for the year ended 31st March 2020. retail and wholesale distribution sector Management This report sets out the details of the which is the largest sector of the group financial performance of C T Holdings accounted for Rs.86.3 billion which is continue to monitor PLC (the Company), the company an increase of 11.6% over the previous and subsidiaries (the Group) as well year. The FMCG sector recorded a the situation on a as statutory and other information and growth in revenue of Rs. 1.5 billion while disclosures. the restaurant sector and real estate day by day basis sectors recorded an increase of Rs. As you are aware, the performance of 279 million and a decrease of Rs. 68 to evolve strategies the company for the current year (year million respectively. The entertainment ended 31st March 2020) was adversely sector which was the most affected by needed to ride affected by the sad events of April 2019 the Easter bomb explosions and the as well as the Covid pandemic at the tail COVID-19 pandemic suffered a de- through the current end of the reporting year. Despite these growth of Rs 87 million. adversities, the performance of the pandemic and also Group has been satisfactory, overall. The Group’s operating profit for the year amounted to rupees to Rs 7.3 maintain the Group I must also mention the rapid initiatives billion compared to Rs. 5.29 billion in taken by the different sectors of the previous year, an increase of 38% on a strong footing the Group to mitigate the adverse over the previous year. The Retail and impacts of the COVID-19 pandemic. Wholesale Distribution, FMCC, and for the future" The efforts of the Retail and FMCG Restaurant sectors recorded growth sectors especially require special over the previous year. While the Real mention for their hard work under Estate and Entertainment sectors trying circumstances. These sectors recorded lower operating profits or a were at the forefront of food production higher loss than in the previous year. and distribution during the lockdown. Many difficulties had to be overcome The banking and financial services such as transport disruption, staffing sector also showed lower performance arrangements, supply chain constraints than in the previous year with the etc. However, the teams rallied to put bottom line being adversely impacted their best efforts to ensure continuous from the bank’s credit operations. The operations. Their endeavors ensured bank was formed with the focus on that delivery of essential goods and the rural economy using advanced food items continued throughout the technology as a key driver of its lockdown period without any significant business. This model is continuously disruptions. refined so that the vision of the bank could be realized speedily Performance The performance of the Group (against Fixed assets and investments the prevailing economic backdrop) has The investments by the Group in been highly satisfactory. The Group Property, Plant and Equipment during achieved Revenues of Rs.107.82 billion the year amounted to Rs. 5.85 billion

C T HOLDINGS PLC Annual Report 2019 | 2020 08 compared to Rs. 5.3 billion in the charges and depreciation also increased Acknowledgments previous financial year. The investments for the year while operating locations’ On behalf of the Board of Directors I have been funded through internally rental costs (booked under cost of sale) wish to place and record my sincere generated funds and borrowings. At reduced during the year. appreciation to our customers, bankers, the company level there were minimal suppliers and principles. We appreciate investments in Property, Plant and Directorate very much your support during the year. Equipment in the current and the All Directors of the company were I also wish to thank the shareholders of previous year. directors throughout the reporting year. C T Holdings for the confidence placed All retiring Directors will be seeking in the Company. Group additions to PPE re-election at the Company’s Annual (Rs. Bn) General meeting. Finally I wish to extend my sincere 7 thanks to my fellow directors and the 6 Stated capital staff for their cooperation and hard work The Stated Capital of the company is during a difficult year. 5 represented by 201,406,978 Ordinary shares (same as in the previous year). 4 There were no new issues of shares (Signed) 3 during the reporting year. Louis Page Chairman 2 Appropriations 1 The company declared an interim 07 October 2020 dividend of Rs.1.80 Per share on 13 0 of December 2019. The Directors are pleased to recommend the final dividend 2016 2017 2018 2019 2020 of Rs 2.80 to be paid out of the profits New accounting standard for the year ended 31 March 2020. During the year the company adopted the new accounting standard (SLFRS Conclusion 16) which had a significant impact We note with appreciation the steps on the results for the year and on the taken by the Government of Sri Lanka statement of financial position of the to control the COVID-19 pandemic in Sri Group. This standard requires that all Lanka. The gradual return to normalcy operational leases be capitalized and and increasing economic activity gives the corresponding liabilities be recorded us the confidence of better times ahead. in the financial statements. Since Certain sectors of the Group such as the bulk of the Retail and Restaurant Real Estate and Entertainment will take locations are leased on long-term a longer time, perhaps 12 to 18 month, leases ranging from 15 to 25 years, to recover. The Board and Management capitalizing such leases brought about continue to monitor the situation on a significant change to the financial day by day basis to evolve strategies statements of the Group. Borrowings of needed to ride through the current the Group increased to Rs. 30 billion at pandemic and also maintain the Group the reporting date, including Rs. 11.8 on a strong footing for the future. billion of lease liabilities. The finance

C T HOLDINGS PLC 09 Annual Report 2019 | 2020 PROFILE OF DIRECTORS

Mr. Anthony A Page Mr. J B L De Silva Mr. Sunil Mendis (Chairman Emeritus) Independent Non-Executive Director Independent Non-Executive Director

Mr. Anthony Page counts over 45 years Mr. J. B. L. De Silva, a Lawyer by Desamanya Sunil Mendis was formerly of management experience in a diverse profession, has substantial experience in the Chairman of Hayleys Group, and a array of businesses. He is a Fellow the rubber trade. He is a past Chairman former Governor of the Central Bank of Member of the Institute of Chartered of the Colombo Rubber Traders’ Sri Lanka. Accountants of Sri Lanka and a Fellow Association and is a Director of other Member of the Institute of Certified listed and non-listed companies. He possesses over 50 years of wide and Management Accountants of Sri Lanka. varied commercial experience, most of Mr. Priya Edirisinghe which has been in very senior positions. He served on the Board of the Colombo Independent Non-Executive Director Mr. Mendis serves as a member of the Stock Exchange and several public Company’s Audit Committee, Related listed and non-listed Companies. Mr. Mr. A. T. Priya Edirisinghe is a Fellow Party Transactions Review Committee, Page also served as a Council Member Member of the Institute of Chartered and Remuneration Committee, and also of the Employers Federation of Ceylon. Accountants of Sri Lanka, Fellow serves on the boards of several other Member of the Chartered Institute Group companies. Board of Directors of Management Accountants (UK), Mr. Louis Page and holds a Diploma in Commercial Mrs. Cecilia Page Muttukumaru Chairman, Non-Executive Director Arbitration. He was the Senior Partner of Non-Executive Director Bakertilly Edirisinghe & Co., Chartered Louis R Page is a Fellow Member of Accountants and currently serves as Ms. Cecilia Page Muttukumaru is the Institute of Chartered Accountants Consultant/Advisor. He is the Managing the Chairman of CT CLSA Securities of Sri Lanka and a Fellow Member of Director of PE Management Consultants (Private) Limited, CT CLSA Capital the Chartered Institute of Management (Pvt) Ltd. He counts over 50 years’ (Private) Limited, and Comtrust Asset Accountants (UK). He is also the experience in both public practice Management (Private) Limited. She Chairman of subsidiary Company Cargills and in the private sector. He serves is a Fellow Member of the Institute of (Ceylon) PLC. He has also held a number on the boards of a number of other Chartered Accountants of Sri Lanka of Board and Senior Management listed and non-listed companies where and a Fellow Member of the Chartered positions at the highest level in overseas in some companies he also serves Institute of Management Accountants public companies and public institutions. as Chairman/Member of the Audit (U.K.). Committee, Related Party Transactions Mr. Ranjit Page Review Committee, and Member of the Dr. A Aravinda Page Remuneration Committee. Deputy Chairman/Managing Director, Non-Executive Director Executive Director Mr. Edirisinghe is the Chairman of Dr. A. Aravinda Page, MA (Cantab), the Company’s Audit Committee and Mr. V. Ranjit Page possesses over 35 M.B.B. Chir, MRCS (UK), is a specialty Related Party Transactions Review years of management experience with registrar in cardiothoracic surgery and is Committee, and a member of the expertise in food retailing, food service, currently attached to Papworth Hospital company’s Remuneration Committee. and manufacturing, having introduced NHS Foundation Trust, Cambridge, UK. the concept of super marketing to the Sri Lankan masses. He also serves on the boards of several C T Holdings Group companies.

C T HOLDINGS PLC Annual Report 2019 | 2020 10 Mr. Joseph Page Holland and has a MBA from the Mr. Imtiaz Abdul Wahid Non-Executive Director University of Sri Jayawardenapura, Non-Executive Director Sri Lanka. Mr. Talwatte has also Mr. Joseph C. Page is the Deputy participated in a Kellogg Executive Mr. M. Imtiaz Abdul Wahid is an Chairman/Managing Director of C T Programme at the Kellogg Graduate Associate Member of the Institute Land Development PLC. He is also a School of Management, Northwestern of Chartered Accountants of Sri Director of Cargills (Ceylon) PLC, Ceylon University, Evanston, Illinois. Lanka and a Fellow Member of the Theatres (Pvt.) Ltd. and C T Properties Chartered Institute of Management Limited. Mr. Talwatte worked at Ernst & Young in Accountants (UK). He has been involved Assurance, Business Risk and Advisory in the operations of the subsidiary Prior to joining C T Land Development Services for 37 years, including 10 Company Cargills (Ceylon) PLC in an PLC, he was the Executive Director of years as Country Managing Partner. executive capacity at different intervals Millers Limited. He has over 35 years of He has worked with Ernst & Young in progressively at higher levels (appointed management experience in the private Cleveland, Ohio and also served on Director 1997 and Deputy Managing sector. Ernst & Young’s Far-East Area Executive Director in 2001) spanning a period of Committee, the Area Advisory Council over 30 years, leaving the services of Mr. R Selvaskandan and the ASEAN Leadership Committee. the Company for employment abroad Independent Non-Executive Director on two occasions in between whereby Mr. Talwatte was President of the CA he also gained valuable exposure Mr. R. Selvaskandan is an Attorney- Sri Lanka for a two year period in holding a number of senior management at-Law (SL) and Solicitor (England& 2002/2003 and the CIMA in 1995/96. positions in overseas companies. He Wales and Hong Kong) and was a He also served as the Chairman of was appointed Managing Director/ senior partner of a leading law firm the Statutory Accounting Standards Deputy CEO of Cargills (Ceylon) PLC in in Hong Kong prior to joining the Committee and the Auditing Standards May 2010. property sector of the C T Holdings Committee, the Urgent Issues Task Group. He is the Chairman of C T Land Force and the Examinations Committee Mr. Sanjay Niles Development PLC, Deputy Chairman of of the ICASL. Executive Director C T Properties Limited and a Partner of Varners, a Law firm based in Sri Lanka. Mr. Talwatte has been closely Mr. Sanjay Chandrahasan Niles is an He has more than 35 years’ experience associated with the development of Associate Member of the Institute in legal practice and management in Sri Corporate Governance in Sri Lanka of Chartered Accountants of Sri Lanka, UK, and Hong Kong. being actively involved with the Code Lanka and the Chartered Institute of of Audit Committees in 2002 and the Management Accountants, UK. He is Mr. A D B Talwatte Code of Corporate Governance in also a Director of CT Land Development 2003. He co-chaired the Committees Independent Non-Executive Director PLC, Executive Director of Ceylon to structure the revised Codes of Theatres (Pvt) Ltd., and a Director of Corporate Governance of 2008, 2012 Mr. A. D. B. Talwatte is a fellow member other Companies within the CT Holdings and 2017 and the Listing Rules of 2008. of the Institute of Chartered Accountants Group. He currently chairs the International of Sri Lanka (ICASL) and the Chartered Integrated Reporting Council of Sri Institute of Management Accountants of Lanka (IIRSL) on behalf of CA Sri Lanka. the U.K. He also holds a Post-Graduate Diploma in Business and Financial Mr. Talwatte serves as an Independent Administration awarded by the ICASL Non-Executive Director on boards of and the University of Wageningen, several listed companies.

C T HOLDINGS PLC 11 Annual Report 2019 | 2020 REVIEW OF OPERATIONS

Business Environment investments of the Company are free of any lien or charge. The Company did not The economy of the country endured have any borrowings at any time during the financial year. a difficult year in 2019 arising from CT Holdings the Easter Sunday attacks targeting churches and tourist hotels. The 15% immediate casualty was the tourism 10% sector with a steep drop in tourist arrivals, when compared to the previous 5% year. The subsequent Covid pandemic 0 also stopped any possible recovery of this sector. The agricultural sector -5% grew by 2.3% compared to 6.5% in the previous year. This drop was in part -10% ASPI due to adverse weather conditions. The -15% services and industries sectors of the CTH economy also grew at lower rates than -20% in the previous year. Worker remittances, Jul-19 Apr-19 Oct-19 Jun-19 Jan-20

a key part of the local economy was Mar-20 Feb-20 Aug-19 Sep-19 Nov-19 Dec-19 May-19 slightly depressed when compared to the previous year. Sri Lanka’s economy C T Holdings PLC grew by 2.3% in 2019 compared to 500,000 180 2,973,319 3.3% in the previous year. 450,000 175 400,000 170 Consumer spending which was 350,000 165 dampened in the early part of the 300,000 160 reporting year increased somewhat commencing from the fourth quarter 250,000 155 of the year due to the package of 200,000 150 150,000 145 incentives offered by the government as Share well as reduction of several direct taxes 100,000 140 Volume subsequent to Presidential elections 50,000 135 Price (Rs.) which was held during the third quarter 0 130 of the year. Jul-19 Apr-19 Oct-19 Jun-19 Jan-20 Mar-20 Feb-20 Aug-19 Sep-19 Nov-19 Dec-19 Parent Company May-19 The parent company, C T Holdings PLC The adverse impact on the tourism sector during the year and the corresponding was not involved in any direct operations effect on the Group’s Hotel property located in Bandarawela necessitated a during the year. The main activities of reduction / renegotiation of the rental terms for the year. The changes to the rental the company is the management of terms resulted in the reduction in rental income of the Company by Rs. 13.9 million investments and properties owned for the year. Dividend income for the year increased by Rs. 785.1 million due to two by the Company. Details of such dividends being declared by Group Companies during the current year compared investments and property assets are to only one dividend being paid in the previous financial year. Interest income for disclosed in the notes to the Financial the year remains stable at about Rs. 13.4 million compared to Rs. 16.5 million in Statements. Most of the properties and the previous financial year. No new investments were undertaken by the company

C T HOLDINGS PLC Annual Report 2019 | 2020 12 during the year other than for a sum of Segmental Profit - Retail & Wholesale protection etc. Through such training Rs. 110 million which was invested in Distribution it is expected that farmers would reap the subsidiary, Ceylon Theaters (Private) (Rs. Mn) better yields at lower costs and earn Limited, which in turn was used by the 3,500 a higher return for the farmers for their subsidiary company for the purpose of investment and labour. 3,000 setting up three cinema screens in the Group’s mini mall under development at 2,500 The Retail sector operates under Dematagoda. Cargills Food Company (Private) Limited 2,000 while Wholesale distribution operates Prices of the company's shares showed 1,500 under Millers Limited. Both subsidiaries significant fluctuations during the year of the Group. due to the economic situation in the 1,000 country. Shares of the company traded The Retail and Wholesale Distribution 500 within a range of a high of Rs 199.00 Sector reports a growth in revenue per share and a low of Rs 130.10 per 0 of Rs.10.5 million (up 13.8% over the share and closed at Rs.160.00 per previous year). Segmental profit for the share. 2016 2017 2018 2019 2020 year amounted to Rs. 926.7 million, which is 62.1% over the previous year. The Retail and Wholesale Distribution Operating Results sector accounts for the largest The Group’s revenue for the year FMCG sector component of the Group’s gross amounted to Rs. 107.8 billion compared revenue. The sector operates Segemental Revenue - FMCG to Rs 95.5 billion for the previous year. supermarkets under the names of All sectors of the group other than the (Rs. Mn) Cargills Food City and Cargills Food City Real Estate and Entertainment sectors 20 Express. This sector celebrated the 35th recorded growth in Revenue. anniversary of Food City by opening its 400th Food City outlet in October 2019. Retail and Wholesale Distribution 15 During the year this sector opened 31 Segemental Revenue - Retail & Wholesale new outlets taking the total number of Distribution outlets to 411 outlets at the end of the 10 financial year. (Rs. Bn) 100 They outgrower a farmer model 5 developed by the subsidiary Cargills 80 over the past several years is well 0 documented, with several multilateral 60

and international Aid organizations 2016 2017 2018 2019 2020 studying the same for implementation in 40 other markets. The company continues The growth seen in the FMCG sector to work with local farmers to enhance over the past 2 to 3 years constitutes 20 the quality of their produce and adopt one of the significant success stories modern agricultural practices. Training within the Group. Such growth and and Advice is provided to farmers in expansion firmly positions the subsidiary 0 such areas as fertilizer and pesticide Cargills as a food company comparable

2016 2017 2018 2019 2020 usage, conservation of water, soil to other leading local and multinational

C T HOLDINGS PLC 13 Annual Report 2019 | 2020 Review of Operations

food companies operating in Sri Lanka The usage of locally sourced fresh manufactured. Supplies are made with revenues and volumes comparable milk in the production of ice cream to the mass market and institutions to such companies. and other products of the dairy sector channels. However, the current year’s is a key component for this sector. growth was fuelled by the growth in the Segmental Profit - FMCG The use of fresh milk reduces the modern trade channel, which includes (Rs. Mn) reliance on imported goods while also Food City supermarkets. The sector 3,500 providing an avenue for the local dairy continues to study all available product farmers to market their produce. For options, due to the increasing demand 3,000 the purpose of collecting fresh milk, for healthier alternatives. This sector 2,500 the dairy sector set up an extensive has commenced the production of network of collection centers with pre-prepared frozen products such as 2,000 facilities to store the collected fresh milk Biryani, Fried Rice and Rice and Curry 1,500 in chilled conditions to preserve it from in the heat and eat format. This will be deterioration. Presently 790 collection marketed through the modern trade 1,000 centers and 31 chilling centers are in channel and would add convenience to 500 operation spread across the island. A consumers. total of 150,000 litres on average was 0 collected from farmers each day during Confectionery - The Confectionery the year 2019/20. The collection of fresh sub-sector operates under Cargills 2016 2017 2018 2019 2020 milk continued throughout the recent Quality Confectioneries (Pvt) Ltd and Dairy - The dairy sector constitutes the lockdown period as well. markets its products under the ‘Kist largest and most profitable sub-sector Biscuits’ brand name. This sub-sector in the FMCG sector. The Sub sector Agrifoods - The Agrifoods sub-sector too, reported growth in Revenue during operates Three processing plants in consists of Nectars, Jams, Sauces, the year, backed by greater focus on Banduragoda, Mulleriyawa and Hatton Cordials, and Juices marketed under a streamlined product range and the marketing products in both Kotmale the ‘Kist’ brand name as well as the introduction of a premium range of and Cargills Magic brands. Backed by Knuckles natural spring bottled water products. several innovative products in the Ice and packed / bottled spices and Cream Yoghurt and Cheese range of condiments. The growth in the Nectars The FMCG sector reported Revenues products, the sub sector has shown and Juices range backed by demand for of Rs. 16.54 million which is above the double digit top line growth for the past healthy alternatives to carbonated drinks previous year by 10.3%. segmental three years. Operating profits too have propelled this sub-sector to achieve profit for the year amounted to Rs. 2.3 grown exponentially over the same strong growth overall. The sector also billion compared to Rs. 1.3 billion in the period. Dairy sub-sector could justifiably introduced ‘KIZZ’ range of sparkling fruit previous year. Consumer confidence claim leadership position in the dairy drinks during the year, along with the in the product range of this sector dairy ice cream range in Sri Lanka. instant noodles product line. and increasing demand and targeted promotions give us the confidence to Some of the products manufactured Convenience Foods - The Convenience expect further growth in this sector in under this sector include dairy ice cream foods sub-sector consists of meat the coming years. in both take-home and impulse ranges, products produced and marketed by yogurt, Fresh and Flavoured Milk, Butter, Cargills Quality Foods Limited under Cheese and other items. the ‘Goldi’, ‘Sam’s’, ‘Finest’ and ‘Island’s finest’ range of products. The company operates a processing facility in Ja-Ela from which the products are

C T HOLDINGS PLC Annual Report 2019 | 2020 14 Restaurants A strong product range localised to properties. Previously the Group Segmental Revenue - Restaurants the Sri Lankan palette is a key strength developed properties such as Empire (Rs. Mn) for KFC. The base product, which is twin towered residential condominium 5 chicken, is also the preferred meat item and CT Gardens Township in in Sri Lanka. These combined with PIliyandala. However,the present focus the high quality and service standards is to develop the properties concerned 4 as well as convenience make KFC a as Investment properties. big draw for customers everywhere Segemental Revenue - Real Estate 3 in Sri Lanka. Over the years KFC has enjoyed strong growth in the take (Rs. Mn) 2 home and delivery channels. This 800 was strengthened during the year 1 with established delivery partners 600 joining KFC’s inhouse delivery service 0 personnel. Growth in these channels will be a key growth driver in the future 400

2016 2017 2018 2019 2020 as well, at a time when eat-in volumes may be challenged due to the anxiety of Segmental Profit - Restaurants customers over the spread of COVID-19 200 (Rs. Mn) virus. KFC is now established in the 400 minds of consumers in Sri Lanka and readily accepted. We foresee further 0 growth and expansion in this sector in 300 the future. 2016 2017 2018 2019 2020 Majestic City shopping and The Restaurants sector reports a 200 entertainment mall is one of the largest growth in both Revenue and Operating and most popular Malls in Colombo. Profits for the year by 7.2% and 21.2% This is operated under C T Land 100 respectively. Revenue growth was Development PLC, a public listed entity achieved largely through expansion, and subsidiary of the Group. Being while same store growth was below conveniently located and boasting 0 par for the year. The investments made a wide range of fashion, food and by this sector in expansion of outlets entertainment options, MC as it is 2016 2017 2018 2019 2020 during the past two years resulted in known, attracts a wide clientele of The Group holds the franchise for an increase in borrowings and interest different segments of the community. KFC quick service restaurants and costs (including interest charges on CT Land commenced a program to TGI Fridays restaurants chain. KFC leases under the new accounting refurbish Majestic City during the year has expanded significantly since its standard). at an investment of about Rs 350 Mn introduction to Sri Lanka in 1996 to which was delayed by the COVID-19 become one of the largest restaurant Real Estate pandemic and will be completed in chains in Sri Lanka. At the end of the The Group owns several properties in the next financial year. The investment current financial year KFC had 40 strategic locations of the island and has is funded by internal sources as well restaurants in operation spread across continued to look at ways to unlock the as borrowings. The refurbishment of the Island including such cities as value of such properties by developing MC Will hold the property in a good Jaffna, Batticaloa and Matara. such properties for sale or as investment

C T HOLDINGS PLC 15 Annual Report 2019 | 2020 Review of Operations

condition amidst competition from newer them to vacate, resulting in vacant to be committed to this sector and malls being developed around the city of shop spaces. Due to these, Revenue channels effort and resources towards Colombo. of the Real Estate sector was lower developing this sector. During the than in the previous year by 12.7%. past few years four locations with Segmental Profit - Real estate The COVID-19 pandemic continues to nine screens were newly set up (Rs. Mn) adversely affect some of the properties with modern projection and sound 2,000 and we expect recovery to be slow for facilities and comfortable seating and this sector. Accordingly, most efforts other facilities. At the reporting date, are being directed towards managing Ceylon Theatres operated 15 screens 1,500 the day to day operations in a cost across seven locations. Three further effective manner and supporting the screens developed at the Mini Mall in tenants, where necessary, to recover Dematagoda will be opened during the 1,000 the businesses volumes lost during the third quarter of the next financial year. pandemic. Segmental Profit - Entertainment 500 Entertainment (Rs. Mn) 50 0 Segemental Revenue - Entertainment (Rs. Mn)

2016 2017 2018 2019 2020 0 400

The Group also developed Mini Malls (50) 300 in some cities outside Colombo. The first such Mini Mall was constructed in (100) Jaffna followed by another in Gampaha. 200 During the year, the Group commenced construction work on two further Mini (150) Malls in Dematagoda and Bandarawela. 100 The Dematagoda project will be 2016 2017 2018 2019 2020 operational during the third quarter of the next financial year. These Mini 0 Further, in keeping with the group ethos Malls will have group entities such as of expanding operations outside of Food City, KFC and Cinemas as anchor 2016 2017 2018 2019 2020 the Colombo metropolis, the Group is tenants. Other similar development This sector is operated under the drawing plans to add further cinemas projects planned by the Group are being company Ceylon Theaters (Private) at outstation locations. Further, as a carefully evaluated prior to deciding on Limited, a wholly owned subsidiary pioneer, the Group will invest to uplift the the implementation. company engaged in movie exhibition. movie industry in Sri Lanka. This sector also has an investment This sector offered rent free and of 33.33% in Cinema Entertainments The entertainment sector faced a very discounted rentals to tenants in the (Private) Limited which is an associate difficult year being affected by adverse aftermath of the April Bomb attacks company involved in distribution of circumstances at both ends of the and for the COVID-19 pandemic. movies in Sri Lanka. C T Holdings financial year. Increasing competition Further, significant drops in volume Group originated from the movie and operational costs also played a part of business of some tenants caused industry. As such, the Group continues in the poor performance of the sector during the financial year. Revenues of

C T HOLDINGS PLC Annual Report 2019 | 2020 16 the Group are down Rs. 86.9 million also functions through access points Market Fund, Comtrust Gilt Edged from 2019 (a drop of 24.6%) while the being operated in 400+ Cargills Food Fund and Comtrust Mudarabah Fund in net loss for the year further increased City supermarkets. Such access points addition to managing private portfolios from the previous year. cover many of the major towns and for corporates and high net worth cities across the island and allow for individuals. Under the present circumstances, the more conveniences to customers to Entertainment sector is working hard carry out their banking activities. The Banking and Financial Services towards curtailing operating costs as Sector, is accounted as an Equity Segmental Profit - Financial Services a means of protecting / sustaining Accounted Investee (Associate). the Company’s operations while also (Rs. Mn) Profitability of this sector has been channeling all efforts to source content for 1,000 adversely affected during the year due exhibition, which has become a challenge to increased provisioning at the Bank, due to the impact of the COVID-19 as portfolio quality has been impacted impact on major movie producing centres 500 by the difficult economic conditions. such as Hollywood, Bollywood and However, the continuous efforts of this Chennai. We expect further deterioration sector to build on the strengths of the in the financial results of the exhibition Group’s ecosystem and concentrated sector in the near term. 0 efforts to broaden the vision to reach the unbanked segments of the population Banking and Financial Services would strengthen the bank and give (500) opportunities for growth in the future. Segemental Revenue - Financial Services

(Rs. Mn) Prior to the COVID-19 pandemic, 3,000 and as per the timeframes set by the (1,000) Central Bank of Sri Lanka preparations 2,500 were being made by the Bank for its 2016 2017 2018 2019 2020 securities to be listed in the Colombo 2,000 Stock Exchange. However, on account CT CLSA Holdings (Pvt) Ltd and of the disruption caused by the 1,500 subsidiaries make up the Financial COVID-19 pandemic, the time frame for 1,000 Services sector of the Group and the listing was extended by the Central is a leading capital market service Bank to June 2021. Further, as per the 500 provider in Sri Lanka. This sector regulations on Capital adequacy, the covers Stock Broking, Investment Bank will require to increase its Tier - 1 0 banking, Capital market solutions Capital from the current Rs 10 Bn to Rs and asset management services. CT 20 bn by the end of the year 2022. 2016 2017 2018 2019 2020 CLSA Securities (Pvt) Ltd the stock The Banking sector of the Group broking arm of this sector is a well consists of the operations of Cargills recognised member of the Colombo Bank which was promoted by the Group Stock Exchange (CSE) and functions as and is in its Sixth year of operations. a broker with a successful track record of attracting foreign investments into the The Bank presently operates 20 stand country’s Stock Exchange. This sector alone branches offering complete also operates four unit trusts - the banking services. Further, the bank Comtrust Equity Fund, Comtrust Money

C T HOLDINGS PLC 17 Annual Report 2019 | 2020 CORPORATE GOVERNANCE

Section 7.10 of the Listing Rules of the Colombo Stock Exchange – “Corporate Governance” sets out the Corporate Governance requirements of listed companies. The Directors hereby confirm that the Company is in compliance with the said section of the Listing Rules as at 31st March 2020.

Corporate Governance within the Group is handled at two levels (a) Subsidiary Company level – each of the listed subsidiaries have Corporate Governance Procedures that are compliant with the requirements of Listing Rules. Subsidiaries that are private companies follow the Corporate Governance procedures adopted for the listed Company immediately above in the Group structure. (b) At Parent Company level – the details of the Parent Company’s compliance with the Listing Rules are set out in the table below.

The overall Policy Framework for the Group is formulated by the Group’s Executive Committee, which is then presented to the Board of Directors of the Parent Company and subsidiaries for approval and adoption. The Policy Framework is periodically reviewed and updated as required.

Compliance Principle Remarks Status 1. Non-Executive Directors The Board shall include at least two Non-Executive Complied The Board of Directors consists of Twelve Directors of Directors; or one third of the total number of Directors whom Ten are Non-Executive Directors. whichever is higher. 2. Independent Directors Two or 1/3rd of Non-Executive Directors appointed Complied Five Directors out of the ten Non- to the Board of Directors, whichever is higher shall be Executive Directors are Independent (See 3 below). ‘independent’. The Board shall require each Non-Executive Director to Complied All Non- Executive Directors submit submit a declaration annually of his/her independence signed declarations of Independence / Non- or non-independence in the prescribed format. Independence annually. 3. Disclosures Relating to Directors The Board shall make a determination annually as to Complied Mr. A D B Talwatte is an independent Director of the the independence or non-independence of each Non- Company. Messrs. J B L De Silva, Priya Edirisinghe, Executive Director and set out in the annual report the Sunil Mendis, and R Selvaskandan are deemed to be names of Directors determined to be ‘independent’. independent as stated below.

C T HOLDINGS PLC Annual Report 2019 | 2020 18 Compliance Principle Remarks Status In the event a Director does not qualify as Complied Messrs. J B L De Silva, Priya Edirisinghe, Sunil Mendis ‘independent’ but if the Board, taking account of all and R Selvaskandan have served in the Company’s the circumstances, is of the opinion that the Director is Board for a continuous period exceeding nine (09) nevertheless ‘independent’, the Board shall specify the years. Further Messrs. Priya Edirisinghe, Sunil Mendis criteria not met and the basis for its determination in and R Selvaskandan also serve as Directors of other the annual report. Group Companies of C T Holdings PLC. Nevertheless, the Board of Directors of the Company, having considered their credentials and integrity have resolved that Messrs. J B L De Silva, Priya Edirisinghe, Sunil Mendis and R Selvaskandan be deemed Independent Directors of the Company. The Board shall publish in its annual report a brief Complied Disclosed in the Annual Report. résumé of each Director on its Board. Upon appointment of a new Director to its Board, the N / A No new Directors were appointed to the Board of the Company shall forthwith provide to the Exchange a Company during the year. brief résumé of such Director for dissemination to the public. 5. Remuneration Committee A listed Company shall have a remuneration committee Complied The Remuneration Committee consisted of three comprising a minimum of two independent Non- Independent Directors and one Non-Executive Executive Directors or exclusively by Non-Executive Director. The Chairman of the Remuneration Directors a majority of whom shall be independent, Committee is a Non-Executive Director. whichever shall be higher. One Non-Executive Director shall be appointed as Chairman of the Committee by the Board. The Remuneration Committee shall recommend to the Complied The functions of the Remuneration Committee Board of Directors, the remuneration payable to the are disclosed in the Report of the Remuneration Executive Directors and Chief Executive Officer. Committee.

C T HOLDINGS PLC 19 Annual Report 2019 | 2020 Corporate Governance

Compliance Principle Remarks Status The annual report should set out the names of Complied The names of the members of the remuneration Directors comprising the Remuneration Committee, Committee are disclosed in the Annual Report under contain a statement of the remuneration policy and set Corporate Information. Details of the Directors’ out the aggregate remuneration paid to Executive and emoluments are disclosed in Notes to the Financial Non- Executive Directors. Statements.

The Remuneration Policy is stated in the Report of the Remuneration Committee. 6. Audit Committee A listed Company shall have an Audit Committee Complied The Audit Committee consists of four Independent comprising a minimum of two Independent Non- Directors. The Chairman of the Audit Committee is an Executive Directors or exclusively by Non-Executive Independent Non-Executive Director. Directors a majority of whom shall be independent whichever shall be higher. One Non-Executive Director shall be appointed Chairman of the committee by the Board. Unless otherwise determined by the Audit Committee Complied The Deputy Chairman / Managing Director and the Chief Executive Officer and the Chief Financial Executive Director are invited to attend the Audit Officer of the listed Company shall attend audit Committee meetings as required. committee meetings. The Chairman or one member of the committee should Complied The Chairman is a Fellow Member of the Institute of be a Member of a recognised professional accounting Chartered Accountants of Sri Lanka and Chartered body. Institute of Management Accountants, UK. Functions of the Audit Committee Complied Disclosed in the Report of the Audit Committee. The annual report should set out the names of Complied The names of the members of the Audit Committee Directors comprising the Audit Committee. are disclosed in the Annual Report under Corporate Information. The committee shall make a determination of the Complied Disclosed in the Report of the Audit Committee. independence of the auditors and shall disclose the basis for such determination in the annual report. The annual report shall contain a report by the Audit Complied Disclosed in the Report of the Audit Committee. Committee, setting out the manner of compliance, during the period to which the annual report relates.

C T HOLDINGS PLC Annual Report 2019 | 2020 20 RISK MANAGEMENT

Risks are internal or external events that 1. Business risk 4. Credit risk can negatively impact the realization The business risks constantly change Credit risk is the risk due to uncertainty of short term objectives or the in nature and complexity in the in the counterparty’s ability to meet implementation of long-term strategies. operating environment of the Group. its financial obligations. The Group’s They can also emerge from missed or The Group’s businesses are subject to Credit risk primarily arises from deposits poorly exploited opportunities. The risk a variety of risks, including laws and with banks as well as credit exposure management process encompasses regulations, market conditions and to customers including outstanding anticipating, identifying, managing and competitive landscape, which require receivables. Strict credit control mitigating internal and external risks and constant monitoring and evaluation by procedures are adopted in order to opportunities to ensure both short and the management. CTH as the Holding assess the credit quality of present long term economic, environmental and Company carefully evaluates all risks and potential customers with further social sustainability of the C T Holdings pertaining to high value investments of mitigating measures undertaken to (CTH) Group. the Group both in existing operating reduce risk. The utilisation of credit limits sectors and new areas (if any). is regularly monitored. CTH risk portfolio is distributed among subsidiary companies and varies 2. Reputational risk 5. Interest rate risk with the nature of each business, Failure to protect the Group’s reputation Except in the case of investment of geographical dispersion and operation could lead to a loss of trust and surplus funds, the Group’s income and of each sector and company. The Board confidence among stakeholders. We operating cash inflows are substantially of Directors of CTH is entrusted with recognise the commercial imperative independent of changes in market the task of assessing and regulating to safeguard the interests of all our interest rates. The Group’s interest rate the risk profile of each operating stakeholders. We therefore endeavor to risk arises from long and short term sector along the lines of the strategic engage with them to take into account borrowings at variable rates linked to objectives of the Parent Company. For their views in developing long term market conditions. Such arrangements, certain key areas, the Group has set strategies. while being advantageous at present up separate monitoring and reporting exposes the Group to interest rate structures dedicated to monitoring and 3. Funding & liquidity fluctuations. The Group monitors its reporting on internal and external risks. The Group’s subsidiaries and associates interest rate exposure on a dynamic Such structures, where appropriate, finance their operations through a basis. have direct reporting responsibilities to combination of retained earnings, and independent committees as well. long term and short term banking 6. Exchange rate risk facilities. Effective management of cash Exposure to Exchange Rate risk is CONSISTENT RISK MONITORING flow is a key component of maintaining minimal. Revenue streams are also The management teams of the strong funding and liquidity positions. largely independent of Exchange Rate respective sectors are responsible for Adequate funding arrangements are fluctuations except in the case of overseeing the implementation and available to meet investments and commodity imports. effectiveness of risk management in contingencies that may occur in the their particular sector. They ensure that ordinary course of business. Further, 7. Product safety the risk management system as a whole the strong relationships maintained The safety and quality of our products is is operational and that the standards with Banks enable companies within of paramount importance to the Group and processes remain current. The the Group to raise funds at competitive as well as being essential for maintaining significant internal and external risks rates as and when required. customer trust and confidence. A faced by CTH along with the mitigating breach in confidence could adversely factors are described below. affect the size of our customer base and financial results. We have

C T HOLDINGS PLC 21 Annual Report 2019 | 2020 Risk Management

detailed and established procedures 10. Legal issues 14. Information systems and cyber for ensuring product integrity and Full provision is made for all legal security quality at all times. There are strict liabilities that are expected to result in The Group is heavily reliant on product safety processes in place. We any material loss to the Company. All computerised operational and financial work in partnership with suppliers to contingent liabilities have been disclosed systems to ensure efficiency of ensure mutual understanding of the in the Financial Statements. operations and financial reporting. These standards required. We also monitor systems and the associated controls developments in areas such as health, 11. Retirement benefit obligations are regularly monitored and reviewed. safety and nutrition in order to respond The retirement benefit obligations Measures have been put in place to appropriately to changing customer are computed based on actuarial protect the Group against factors trends and new legislation. assumptions. The management such as natural disasters, accidents, takes all required steps to ensure data losses, computer viruses and 8. Health and safety risks that such assumptions are accurate unauthorised access. An IT disaster Provision of adequate safety to our and corresponds to past results and recovery plan is also in place. staff and customers is of the utmost current trends. However, any significant importance to us. Injury or loss of life discrepancies between actuarial 15. Commodity price risk cannot be measured in financial terms. assumptions and actual conditions may The Group’s FMCG sector is more We operate stringent health and safety have some impact on future results. The exposed to the volatility in the commodity processes in line with best practice in management considers the possibility of prices. Prices may also be adversely our outlets, manufacturing facilities, such impact as very low. affected by environmental factors cinemas and offices, which also ensure such as drought & floods. Long term that safety practices are inculcated in 12. Risk of natural disasters relationships built with suppliers and all employees. Such procedures are Natural disasters such as earthquakes, forward contracts help in minimising the monitored regularly. storms, and floods, as well as effects of this risk factor to some extent. accidents, acts of terror, infection and 9. Regulatory and political environment other factors beyond the control of 16. Supply chain As a Group predominantly operating the Group could adversely affect the Raw material, semi processed food and within Sri Lanka our business is affected Group’s business operation. Insurance finished goods for re-sale are sourced by the regulatory and political framework covers are obtained against all identified from third-party suppliers, contract within the country. The effect of such risks and natural disasters affecting the manufacturers and primary producers, an environment outside Sri Lanka could assets of the Group and operational which exposes the Group to market affect the Company to the extent that matters. volatility and availability. it affects the entire local economy. We consider these uncertainties in the 13. Competition local and overseas economies when Most sectors of the Group face very 17. COVID-19 developing strategies and reviewing competitive business environments. The Company and subsidiaries performance. We remain vigilant to The management regularly reviews developed effective strategies to future changes. As part of our day the competitor environment in order to minimize, as far as possible, the adverse to day operations we engage with develop appropriate counter strategies. effects arising from the COVID-19 governmental and non-governmental Due to the widespread nature of pandemic. Details of the effect of the organisations to ensure the views of operations, Group’s sales are not pandemic on the Group and steps taken our customers and employees are dependent on a single or small Group of to counter the same were disclosed represented and try to anticipate and customers. to the Colombo Stock Exchange on 1 contribute to important changes in June 2020 and also disclosed in notes public policy whenever possible. to the Financial Statements.

C T HOLDINGS PLC Annual Report 2019 | 2020 22 REPORT OF THE REMUNERATION COMMITTEE

The Remuneration Committee of C T Holdings PLC is appointed by the Board of to the board of the Company which Directors of the Company and reports directly to the Board. will make the final determination upon consideration of such REMUNERATION POLICY recommendations. As is well known, Human Resources in Companies are a vital cog in the wheel to successfully carry out its business activities in a fair and equitable manner in the • Detailed procedures are set out in interest of its shareholders, employees and other stakeholders and in all instances, the Group Policies in respect of all within the laws of the country to enhance / add shareholder value for the benefit of revisions in remuneration payable. its respective stakeholders. Executive Directors and Senior Management are pivotal • The Remuneration Committee drivers and there is a need to ensure that such employees are adequately and fairly shall also recommend the variable compensated in line with market conditions applicable to the respective sectors. incentives/or bonuses within the parameters set out in the Group FRAMEWORK policies. The policy framework for the functioning of the Remuneration Committee of the Company and its subsidiaries is set out in the Group Policies adopted across the Group. In addition • The Board of the respective to the Remuneration Committee of the Holding Company, some listed subsidiaries Company may decide that the and significant non-listed subsidiaries have their own Remuneration Committees. The Remuneration Committee should Chairman and one other member (or two members as appropriate) of the Remuneration include the review of emoluments Committee of the Parent Company shall be members of each of such separate of other levels of employees as well. remuneration committees. In the event a subsidiary Company does not have a separate The procedure for such revision of remuneration committee, the remuneration committee of the immediate holding Company emoluments are also specified in the will function as the remuneration committee for that subsidiary Company as well. Group policies. • Once in three years, the Company COMPOSITION shall commission an independent The Composition of the Remuneration Committees should be in accordance with party to study & report on the the Rules on Corporate Governance of the Securities & Exchange Commission of Sri emoluments of the CEO, Executive Lanka, the Colombo Stock Exchange and the respective company’s Articles. Directors, and senior management / executives, and may include other The composition of the Remuneration Committee of C T Holdings PLC is as follows: levels also in the review as applicable to the relevant sectors. The said Name Non-Executive Directors Report will be discussed by the Louis Page, Chairman Non-Executive Committee for guidance in making Priya Edirisinghe Independent the required assessments. Sunil Mendis Independent MEETINGS J B L De Silva Independent The Remuneration Committee shall The Composition of the Remuneration Committee satisfies the criteria as specified in meet on a needs basis and meets at the standards of Corporate Governance for listed companies. The Executive Director least once a year. of C T Holdings PLC functions as the Secretary to the Committee.

(Signed.) SCOPE Louis Page • The Remuneration Committee shall recommend the remuneration payable to Chairman - Remuneration Committee - Chief Executive Officer and / or equivalent position - Executive Directors, and, 07 October 2020 - Senior Management/Executives,

C T HOLDINGS PLC 23 Annual Report 2019 | 2020 REPORT OF THE NOMINATIONS COMMITTEE

The Nominations Committee of C T Holdings PLC is appointed by the Board of Directors of the Company and reports directly to the Board.

POLICY FRAMEWORK The policy framework for the functioning of the Nominations Committee of the Company and its subsidiaries is set out in the Group Policies adopted across the Group. C T Holdings PLC and subsidiaries are subject to the Nominations Committee of C T Holdings PLC. Nominations to the Boards of all Group Companies shall be reviewed and approved by this Committee prior to appointment.

COMPOSITION The Nominations Committee of C T Holdings comprise the Chairman of the holding company, the Deputy Chairman or Managing Director of the holding company, the Chairman, Executive Committee of the holding company, and a Non-Executive Director nominated by the Board of C T Holdings PLC.

The composition of the Nominations Committee during the year continued to be as follows: Name Description of Directorship Louis Page, Chairman Non-Executive, Chairman of C T Holdings PLC Priya Edirisinghe Independent, Chairman Executive Committee Sunil Mendis Independent, Non-Executive Ranjit Page Executive, Deputy Chairman/MD of C T Holdings PLC

The Composition of the Nominations Committee satisfies the criteria as specified in the standards of Corporate Governance for listed Companies.

SCOPE The scope of the Nominations Committee would be to review all appointments to the Board of Group companies and recommend to the respective Board of Directors of the relevant Company for appointment.

No new appointments were made to the Board of Directors of C T Holdings PLC during the year. However, Directors’ appointments were recommended to be made in subsidiary and sub-subsidiary companies, based on which such appointments were formally approved by the Boards of the respective companies.

MEETINGS The Nominations Committee shall meet once each year or as required.

(Signed.) Louis Page Chairman - Nominations Committee

07 October 2020

C T HOLDINGS PLC Annual Report 2019 | 2020 24 REPORT OF THE RELATED PARTY TRANSACTIONS REVIEW COMMITTEE

The Related Party Transactions Review (RPTR) Committee of C T Holdings PLC • Reviewing and updating the control is appointed by the Board of Directors of the Company. The RPTR Committee procedures in place to ensure that all functions within the overall governance process established by the Board of recurrent and non-recurrent related Directors of the Company and assists the Board in effectively discharging its party transactions are identified, responsibilities. The Committee reports directly to the Board. adequately captured and reported in a timely manner in accordance with FRAMEWORK the applicable rules. The policy framework for the functioning of the RPTR Committee of the Company • Establishing procedures to ensure and its subsidiaries is set out in the Group Policies adopted centrally for the entire that related party transactions that Group. However, the holding Company and all listed subsidiaries have separate are captured within the system are RPTR Committees. The Chairman and one other member (or two members as reviewed in systematic manner appropriate) of the RPTR Committee of the parent Company shall be members and certified by key management of each of such separate RPTR Committees. In the case of non-listed subsidiary personnel with appropriate level of companies, the RPTR committee of the immediate holding Company functions as authority. the RPTR committee for the subsidiary companies as well. • Reviewing all related party transactions as reported by the COMPOSITION management for compliance with the The Composition of the RPTR Committees must be in accordance with the code of RPT code. best practices on related party transactions (RPT code) of the Securities & Exchange • Ensuring that appropriate disclosures Commission of Sri Lanka (SEC), the listing rules of the Colombo Stock Exchange are made as applicable to the CSE and the respective company’s Articles, as appropriate. (where immediate market disclosures are required) and the Annual Report. The composition of the RPTR Committee of C T Holdings PLC is as follows: Name Non-Executive Directors As per the applicable procedures of Priya Edirisinghe, FCA, FCMA (UK) - Chairman Independent the Group the RPTR Committee have A D B Talwatte, FCA, FCMA (UK), MBA Independent obtained; Sunil Mendis Independent • Quarterly declarations of related party transactions from Directors & Senior J B L De Silva Independent Management of all Group companies on recurrent & non-recurrent The Composition of the members of the RPTR Committee satisfies the criteria transactions undertaken by them or as specified in the RPT code of SEC and the listing rules of the Colombo Stock by their close family members. Exchange. The Deputy Chairman / Managing Director and Executive Director • Quarterly declarations of Directors attend RPTR Committee meetings as and when requested by the Committee. The & Senior Management of all Company Secretary functions as the Secretary to the Committee. Group companies who has a Significant Shareholding/ownership SCOPE in a Company or partnership or The Functions of the RPTR Committee, as set out in the Group Policies, include the proprietorship which is outside following: the Group companies and/or of the Subsidiaries and Associate • Developing and recommending for adoption by the Board of Directors of the Companies of Group companies. Company and its listed subsidiaries, a related party transactions policy consistent with that proposed by the RPT Code of the SEC.

C T HOLDINGS PLC 25 Annual Report 2019 | 2020 Report of the Related Party Transactions Review Committee

• Quarterly declarations of Group Financial Officer or equivalent Position in Group over the previous year and general companies on Recurrent and/or Non-Recurrent transactions within the Group terms and conditions applicable to Companies. such transactions with Related Parties are similar to those entered into Likewise, procedures are also in place for the assessment of the need to obtain with non-related parties taking into shareholder approval for specified transactions and to inform the SEC/CSE on the account, if any, due consideration of applicable Non-Recurrent transactions. factors such as volume, cost and any other special benefits which form part RELATED PARTY TRANSACTIONS and parcel of such transactions. The Companies within the Group regularly engage in transactions with other companies observations of the Committee have within the Group. The RPTR Committee receives and reviews details of all related been communicated to the Board of party transactions from the Chief Financial Officers of individual companies and Directors. disposes of the same in accordance with the mandate set out above. The details of the recurrent transactions With regard to non-recurrent transactions, if any, the Committee is empowered to entered into with Related Parties are seek independent expert advice on valuation or any other related matter that the disclosed in notes to the Financial committee deems to be significant. Statements.

MEETINGS (Signed.) In terms of the listing rules of the Colombo Stock Exchange, the RPTR Committees Priya Edirisinghe should meet at least four times a year. Unless otherwise determined by the RPTR Chairman - RPTR Committee Committee the Chief Executive Officer and the Chief Financial Officer of the listed Company shall attend RPTR committee meetings. 07 October 2020 The RPTR Committee of C T Holdings PLC met four times during the year.

Details of the participation of the members of the RPTR committee at such meeting is set out below. Name Meetings Held Meetings Attended Priya Edirisinghe 4 4 A D B Talwatte 4 4 Sunil Mendis 4 3 J B L De Silva 4 4

CONCLUSION Based on its work, the Related Party Transactions Review Committee confirms that there were no non-recurrent transactions with related parties during the year. It also noted that in respect of recurrent transactions, the transactions were in the ordinary course of business, there were no changes to terms or practices followed

C T HOLDINGS PLC Annual Report 2019 | 2020 26 FINANCIAL REPORTS Annual Report of the Board of Directors of the Company 29 Report of the Audit Committee 32 Statement of Directors Responsibility 34 Independent Auditors’ Report 35 Statement of Profit or Loss and Other Comprehensive Income 42 Statement of Financial Position 43 Statement of Changes in Equity 44 Statement of Cash Flows 46 Notes to the Financial Statements 48

C T HOLDINGS PLC 27 Annual Report 2019 | 2020 C T HOLDINGS PLC Annual Report 2019 | 2020 28 ANNUAL REPORT OF THE BOARD OF DIRECTORS OF THE COMPANY

The Directors are pleased to present the Annual Report of C T Holdings PLC for the STATED CAPITAL Year ended 31st March 2020. The stated capital of the Company at the balance sheet date amounted ACTIVITIES to Rs. 6,489,758,332 (2019 - The Group’s Principal activities and important events during the year are discussed Rs. 6,489,758,332) comprising in detail in the Chairman’s Statement and Review of Operations set out on pages 08 201,406,978 ordinary (voting) shares to 09 and 12 to 17 respectively. There were no significant changes to the business (2019 – 201,406,978). activities of the Group during the year. Details of the Employees' Share option RISK MANAGEMENT Scheme of the subsidiary Cargills The overall approach to risk management within the Company and Group is set out (Ceylon) PLC are given in note 27.4 to in pages 21 to 22 the Financial Statements. Except for this neither the company or any other FINANCIAL STATEMENTS subsidiaries have any share ownership or stock option schemes at present. The Audited Financial Statements of the Company & Group for the year ended 31st March 2020 are set out on pages 42 to 133 form an integral part of this annual report. SHAREHOLDERS There were 1,447 registered AUDITORS’ REPORT shareholders as at 31st March 2020 The Independent Auditors’ Report is set out on pages 35 to 41. (2019 – 1,453 shareholders). An analysis of shareholders according to size and ACCOUNTING POLICIES holdings, public holdings and the names of the twenty largest shareholders of the The accounting policies adopted in the preparation of the Financial Statements are Company at the reporting date are given given on notes 48 to 69. on Pages 138 to 140. RATIOS AND MARKET PRICE INFORMATION DIRECTORATE Key ratios and market price information pertaining to the equity of the Group are All Directors of the Company have been set out on page 134 along with the trend for the past five years. Company and Directors throughout the year under subsidiaries have not raised any capital through listed debt instruments during the review. Details of Directors of Group year. companies as at the reporting date are given on pages 135 to 137 of this PROPERTY, PLANT & EQUIPMENT report. Brief profiles of the Directors of The movement of property, plant and equipment during the year is given in note 13 the Company are given on pages 10 to the Financial Statements. The Group’s outlay on property, plant and equipment to 11, including their determination as during the year amounted to Rs. 5.85Bn (2019 – Rs.5.3Bn) while capital outlay on independent and non-executive, as property, plant and equipment during the year at the Company level amounted to appropriate. Rs. 31,000 (2019 – Rs.77,000). The Directors are of the opinion that the carrying amount of properties stated in note 13 to the Financial Statements reasonably reflects their fair values.

Extents, locations, valuations of the Group’s property holdings and investment properties are disclosed in notes 13 and 16 to the Financial Statements.

C T HOLDINGS PLC 29 Annual Report 2019 | 2020 Annual Report of the Board of Directors of the Company

DETAILS OF ATTENDANCE The details of the Directors’ attendance at meetings is given below. Board Meetings AGM Name Held Attended Held Attended Louis Page 4 4 1 1 Ranjit Page 4 4 1 1 J B L De Silva 4 3 1 1 Priya Edirisinghe 4 4 1 1 Sunil Mendis 4 1 1 - Cecilia Page Muttukumaru 4 4 1 1 S C Niles 4 4 1 1 Dr. A Aravinda Page 4 3 1 - Joseph Page 4 1 1 - R. Selvaskandan 4 4 1 1 A D B Talwatte 4 4 1 1 Imtiaz Abdul Wahid 4 4 1 1

DIRECTORS’ REMUNERATION The remuneration of the Directors is given in note 8.1 to the Financial Statements.

DIRECTORS’ INTEREST IN CONTRACTS The Directors’ interest in contracts and proposed contracts with the Company are disclosed under the related party transactions in note 31 to the Financial Statements. The Directors have declared their interests at meetings of the Board.

RELATED PARTY TRANSACTIONS Related party transactions are disclosed in note 31 to the Financial Statements. The Directors hereby confirm that to the best of their knowledge and information available to them, the Company has complied with the requirements of the rules relating to the related party transactions as contained in Section 9 of the listing Rules of the Colombo Stock Exchange.

C T HOLDINGS PLC Annual Report 2019 | 2020 30 DIRECTORS’ SHAREHOLDINGS M/s. KPMG, Chartered Accountants The Directors’ shareholdings in the Company as at the reporting date were as are deemed re-appointed in terms of follows: Section 158 of the Companies Act No.7 of 2007, as Auditors of the Company. Name As at 31-Mar-2020 As at 31-Mar-2019 A resolution authorising the Directors Louis Page 11,000 11,000 to determine their remuneration will Ranjit Page 15,077,014 13,931,102 be submitted at the Annual General J B L De Silva 234 234 Meeting. Priya Edirisinghe - 33,040 By Order of the Board Sunil Mendis - - Cecilia Page Muttukumaru 1,332,000 1,266,750 (Signed.) S C Niles 56,485 56,485 Ranjit Page Dr. A Aravinda Page 418,981 210,068 Deputy Chairman / Managing Director Joseph Page 7,069,172 7,069,172 R. Selvaskandan - - (Signed.) A D B Talwatte - - Priya Edirisinghe Imtiaz Abdul Wahid - - Director 23,964,886 22,577,851

EVENTS AFTER THE REPORTING PERIOD (Signed.) S L W Dissanayake Events occurring after the reporting date of the Company are given in note 35 to the Company Secretary Financial Statements.

07 October 2020 CORPORATE GOVERNANCE The corporate governance practices within the Group are set out in pages 18 to 20 and the report of the Audit Committee is set out on page 32 and 33.

DIVIDENDS The Company paid an interim dividend of Rs. 1.80 per share on 13th December 2019, out of profits for the year ended 31st March 2020 (2019 – Rs 1.80).

The Directors propose a final dividend of Rs. 2.80 (2019 – Rs.3.70) per share payable on or before 20th November 2020, subject to approval of the shareholders at the Annual General Meeting.

AUDITORS The remuneration paid to the Auditors is given in Note 8.3 to the Financial Statements. As far as the Directors are aware, the Auditors do not have any relationship (other than that of an auditor) with the Company.

C T HOLDINGS PLC 31 Annual Report 2019 | 2020 REPORT OF THE AUDIT COMMITTEE

The Audit Committee of C T Holdings The composition of the Audit Committee of C T Holdings PLC is as follows: PLC is appointed by the Board of Name Non-Executive Directors Directors of the Company. The Audit Committee functions within the overall Priya Edirisinghe, FCA, FCMA (UK) Chairman Independent governance process established by A D B Talwatte, FCA, FCMA (UK), MBA Independent the Board of Directors of the Company Sunil Mendis Independent and assists the Board in effectively J B L De Silva Independent discharging its responsibilities. The Committee reports directly to the Board. The Chairman of the Audit Committee is a Fellow member of the Institute of Chartered Accountants of Sri Lanka. The Deputy Chairman / Managing Director and Executive POLICY FRAMEWORK Director of the Company attend Audit Committee meetings as and when requested by The policy framework for the functioning the Committee. The Company Secretary functions as the Secretary to the Committee. of the Audit Committee of the Company and its subsidiaries is set out in SCOPE the Group Policies adopted across The Functions of the Audit Committee, as set out in the Group Policies, include the the Group. In addition to the Audit following: Committee of the holding company, • Oversight of the preparation, presentation and adequacy of disclosures in all listed subsidiaries and significant the Financial Statements of the listed company, in accordance with Sri Lanka non-listed subsidiaries have separate Accounting Standards. Audit Committees. The Chairman and • Oversight of the Company’s compliance with financial reporting requirements, one other member (or two members information requirements of the Companies Act and other relevant financial as appropriate) of the Audit Committee reporting related regulations and requirements. of the parent Company are members • Oversight over the processes to ensure that the Company’s internal controls of each of such separate Audit and risk management, are adequate, to meet the requirements of the Sri Lanka Committees. In the event a non-listed Auditing Standards. subsidiary Company does not have a • Assessment of the independence and performance of the Company’s external separate audit committee, the audit auditors. committee of the immediate holding • To make recommendations to the Board pertaining to appointment, re- Company will function as the audit appointment and removal of external auditors and to approve the remuneration committee for that subsidiary Company and terms of engagement of the external auditors. as well. • The Audit Committee obtains written assurance from the Executive Director, Corporate Affairs (who also functions as the Chief Financial Officer), and the COMPOSITION Company Secretary, when considering the quarterly and annual Financial The Composition of the Audit Statements for recommendation to the Board. Committees is in accordance with the rules on Corporate Governance of the Securities & Exchange Commission of Sri Lanka, the Colombo Stock Exchange and the respective company’s Articles.

C T HOLDINGS PLC Annual Report 2019 | 2020 32 MEETINGS The Audit Committee obtains a In terms of the Group policy, the Audit Committees should meet at least four times statement from Messrs. KPMG a year of which the Company Auditors will attend two of such meetings. Unless confirming independence as required otherwise determined by the Audit Committee the Chief Executive Officer and the by Section 163 (3) of the Companies Chief Financial Officer of the listed Company shall attend audit committee meetings. Act No. 07 of 2007 on the audit of the Statement of Financial Position and the The Audit Committee of CT Holdings PLC met four times during the year two of which related Statements of Income, Changes were with the participation of the Company’s auditors. in Equity, and Cash Flows of the Company and the Group. Details of the participation of the members of the Audit Committee at such meeting is The Audit Committee has recommended set out below. to the Board of Directors that M/s. Name Meetings Held Meetings Attended KPMG be reappointed as Auditors of the Priya Edirisinghe 4 4 Company for the year ending 31st March A D B Talwatte 4 4 2021. Sunil Mendis 4 3

J B L De Silva 4 4 (Signed.) Priya Edirisinghe FINANCIAL STATEMENTS Chairman - Audit Committee Four quarterly Financial Statements as well as the annual Financial Statements were circulated, reviewed and recommended to the Board for approval during the year. 07 October 2020 Conformity of such Financial Statements with the applicable Accounting Standards, Company Law and other Statutes including Corporate Governance Rules and consistency of the presentation of such Financial Statements with the previous quarter / year as the case may be was also confirmed. Departures, if any, are appropriately disclosed.

CONCLUSION Based on its work, the Audit Committee is of the opinion that the control procedures and environment within the Group provide reasonable assurance regarding the monitoring of the operations, accuracy of the Financial Statements, safeguarding of the assets of the Company, and risk profiling and initiatives taken towards mitigating same.

AUDIT AND AUDITORS’ INDEPENDENCE The Audit Committee assessed the independence and performance of the Company’s external auditors and made recommendations to the Board pertaining to for re- appointment. The Audit Committee also reviewed the audit fees for the Company and approved the remuneration and terms of engagement of the external auditors and made recommendations to the Board. When doing so, the Audit Committee reviewed the type and quantum of non-audit services (if any) provided by the external auditors to the Company to ensure that their independence as Auditors has not been impaired.

C T HOLDINGS PLC 33 Annual Report 2019 | 2020 STATEMENT OF DIRECTORS RESPONSIBILITY

MAINTENANCE OF ACCOUNTING DIVIDENDS COMPLIANCE RECORDS In the event of any distribution of Considering the present financial position Under the provisions of the Companies dividends the Board of Directors are of the Group and the forecasts for Act No. 07 of 2007 (‘the Act’), every required to satisfy themselves that the the foreseeable future, the Directors Company is required to maintain Company will, immediately after the have adopted the going concern basis accounting records which correctly relevant distribution is made, satisfy for the preparation of these Financial record and explain the Company’s the solvency test, provided that such a Statements. transactions, and will at any time enable certificate is obtained from the auditors. the financial position of the Company to The Directors confirm that: be determined with reasonable accuracy, ANNUAL REPORT (a) The Company is in compliance enable the Directors to prepare Financial The Board of Directors are required to with the requirements of the Act as Statements in accordance with the Act prepare an Annual Report on the affairs aforementioned. and also enable the Financial Statements of the Company during the accounting (b) These Financial Statements have of the Company to be readily and period ending on the reporting date in the been prepared in accordance with properly audited. prescribed format and circulate the same the requirements of the Companies to every shareholder of the Company Act No. 7 of 2007 and applicable PREPARATION OF FINANCIAL within the time frame prescribed in the Sri Lanka Accounting Standards, STATEMENTS OF THE COMPANY Act. which have been consistently applied AND GROUP and supported by reasonable and The Act places the responsibility on INDEPENDENT AUDIT prudent judgments and estimates. the Board of Directors to ensure that The Act required the Company to (c) The Company obtained the required Financial Statements are prepared appoint an Auditor to audit the Financial certificate of solvency for the within the prescribed time period in Statements of the Company / Group for dividends declared during the year. conformity with the Act. Such Financial the reporting period. Accordingly, M/s (d) All statutory payments have been Statements of a Company shall give a KPMG currently function as the Auditors made up to date. true and fair view of the state of affairs of the Company. Their responsibility with (e) Other than as disclosed in the of the Company as at the reporting date regard to the Financial Statements as Financial Statements, no material and the profit or loss or income and auditors of the Company are set out in issues have arisen pertaining to expenditure, as the case may be, of the Independent Auditors’ Report set out employees and industrial relations of the Company for the accounting period on pages 35 to 41. the Company that requires disclosure ending on that reporting date. or any adjustment to the Financial MANAGEMENT Further the Act also requires that a Statements. The Directors are responsible for the Company with one or more subsidiaries proper management of the resources of at the reporting date to also prepare The Directors are satisfied that the the Company. The internal control system Financial Statements in relation to control procedures within the Company has been designed and implemented the Group including every subsidiary, operated effectively during the year. to obtain reasonable but not absolute which give a true and fair view of the assurance that the Company is protected state of affairs of the Company and its By order of the Board from undue risks, frauds and other subsidiaries as at the reporting date irregularities. and the profit or loss or income and expenditure, as the case may be, of (Signed.) the Company and its subsidiaries for S L W Dissanayake the accounting period ending on that Company Secretary reporting date. 07 October 2020

C T HOLDINGS PLC Annual Report 2019 | 2020 34 INDEPENDENT AUDITORS’ REPORT

TO THE SHAREHOLDERS OF C T HOLDINGS PLC

Report on the Audit of the Financial Statements

Opinion We have audited the financial statements of C T Holdings PLC (“the Company”) and the consolidated financial statements of the Company and its subsidiaries (“the Group”), which comprise the statement of financial position as at 31 March 2020, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information as set out on pages 42 to 133 of the Annual Report.

In our opinion, the accompanying financial statements of the Company and the Group give a true and fair view of the financial position of the Company and the Group as at 31 March 2020, and of their financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

Basis for Opinion We conducted our audit in accordance with Sri Lanka Auditing Standards (SLAuSs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Group in accordance with the Code of Ethics issued by CA Sri Lanka (Code of Ethics), and we have fulfilled our other ethical responsibilities in accordance with the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter We draw attention to Note 10.5.5 of the financial statements wherein the Group has considered all land held and used in business as investment assets. Based on our understanding of the Inland Revenue Act and legal advice provided by the expert, there is significant judgment involved in determining whether the lands held by the entity and used in business are to be considered as “capital assets of the business” or “investment assets” due to the uncertainties that exist with respect of the interpretation of the application. In the event the Group’s position is not held by the Authorities, the impact on the Company and the Group is disclosed in Note 10.5.5 to the financial statements. Our opinion is not modified in respect of this matter.

C T HOLDINGS PLC 35 Annual Report 2019 | 2020 Independent Auditors’ Report

Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Company financial statements and the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the company financial statements and the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

01. Valuation of Investment Property - Group and Company Risk Description As described in Note 16 the Group and the Company has recognised investment property at Rs. 8,186 Mn and Rs. 1,621 Mn respectively (2019: Rs. 7,975 Mn and Rs. 1,583 Mn respectively). Management’s assessment of fair value of investment property is based on valuations performed by a qualified independent property valuer in accordance with recognised industry standards.

Valuation of investment property is considered a Key Audit Matter due to the subjective nature of property valuations using level 3 assumptions which depend on the nature of property, its location and expected future net rental values, market yields, value per square foot, market price per perch, capitalisation rates and comparable market transactions. A change in the key assumptions will have a significant impact to the valuation.

Our audit procedures included, • Assessing the objectivity, independence, competence and qualifications of the external valuer. • Assessing the key assumptions applied and conclusions made in deriving the fair value of the properties and comparing the fair value of properties with evidence of current market values. In addition, assessing appropriateness of the valuation methodologies with reference to recognised industry standards. • Discussions with the management and the external valuer in relation to the possible impact on the key assumptions and the resulting valuation due to COVID-19 pandemic. • Assessing the adequacy of disclosures made in the financial statements in relation to fair value of investment property.

02. Carrying value of inventories - Group Risk Description As described in Note 21 the Group has recognised Inventory at Rs. 10,539 Mn (2019: Rs. 9,766 Mn).

The Group holds a significant level of inventory across a broad and diversified product range, over many locations. At 31 March 2020 13.1% of total assets of the Group consisted of inventory.

Due to the change in consumer demands judgment is exercised with regard to categorisation of stock as obsolete and/or slow moving to be considered for provision/write offs; estimates are then involved in arriving at provisions against cost in respect of slow moving and obsolete inventories located in 14 locations of the subsidiaries and many outlets to arrive at valuation based on lower of cost and net realisable value. Given the level of judgments, estimates, number of items and locations involved this is considered to be a key audit matter.

C T HOLDINGS PLC Annual Report 2019 | 2020 36 Our audit procedures included, • Testing the design and implementation and operating effectiveness of the key controls over inventories. • Assessing whether the Group's policies had been consistently applied in respect of the judgment and estimates made in respect of inventory provisioning. • Considering the principles of accounting for the inventory write offs and also carrying out a comparison of inventory levels, to sales data to corroborate whether slow moving and obsolete inventories had been appropriately identified. • Attending stock counts as at the year end at sample locations of supermarkets, outlets and warehouses. In addition, assessing the effectiveness of the physical count controls in operation at each count location to identify damaged stocks, expired stocks and stock shortages that are written off in a timely manner and evaluating the results of the other cycle counts performed by the management and third parties throughout the period to assess the level of count variances that are also adjusted periodically.

03. Transition to SLFRS 16, Leases - Group Risk Description As described in Note 3.1 & 3.20 (accounting policies) and Note 14 (Leases), the Group has recognised right of use assets at Rs. 10,157 Mn and lease liabilities at Rs. 11,773 Mn, at the date of transition.

The Group adopted SLFRS 16, Leases, on 1 April 2019 on a modified retrospective basis. SLFRS 16 requires, among other matters, a lessee to recognise a right-of-use asset and lease liability for most operating leases.

Impact assessment of SLFRS 16 is significant to our audit, as the balances recognised in the financial statements are material, policy election required for the new accounting standard, the implementation process to identify and process all relevant data associated with the leases is complex and the measurement of the right-of-use asset and lease liability is based on assumptions such as discount rates (incremental borrowing rate) and the lease term, including termination and renewal options.

The adjustments arising from applying SLFRS 16 are material to the Group, and the disclosure of impact is a key focus area in our audit. Therefore, this is considered to be a key audit matter.

Our audit procedures included, • Evaluating management’s process and controls implemented to identify lease contracts to be assessed based on the selected transition approach and any practical expedients applied. • Evaluating the appropriateness of the selection of accounting policies based on the requirements of SLFRS 16 and transition approach. • Assessing whether transition gave rise to any indicators of management bias by evaluating the reasonableness of management’s key judgments and estimates made in preparing the transition adjustments. • Evaluating the completeness, accuracy and relevance of data used in preparing the transition adjustments as of 1 April 2019. • Assessing the adequacy of the disclosures of the impact of the new standard on the consolidated financial statements.

C T HOLDINGS PLC 37 Annual Report 2019 | 2020 Independent Auditors’ Report

04. Revenue - Group Risk Description As described in Note 6 the Group has recognised revenue at Rs. 107,817 Mn (2019: Rs. 95,547 Mn).

For the financial year ended 31 March 2020, revenue from the sale of goods from the retail and FMCG segment continued to be the main revenue stream for the Group amounting to Rs. 107,052 Mn, which is 99.3% of Group revenue.

Based on the Group’s business model, there are many different types of revenues, arising from different types of transactions and events with customers.

We identified revenue recognition as a key audit matter because of its significance to the consolidated financial statements.

Our audit procedures included, • Evaluating the appropriateness of the Group’s revenue recognition policies, including the recognition, measurement and classification criteria as well as disclosure requirements as per SLFRS 15. • Testing the operating effectiveness of key controls over the revenue recognition and measurement. • Testing the operating effectiveness of key IT application controls over revenue, in addition to evaluating the integrity of the general IT control environment. • Performing test of details over revenue by inspecting a sample of invoices and credit notes.

05. Impairment assessment of investment in subsidiaries – Company Risk Description As described in Note 3.2 (Accounting policies) and Note 18 (Investment in subsidiaries), the Company’s investment in C T Properties (Pvt) Limited (CTPL) & Ceylon Theatres (Pvt) Limited (CTL) amounted to Rs. 1,832 Mn & Rs. 275 Mn respectively as at 31 March 2020.

Indicators of Impairment exist in relation to the Company’s Investment in CTPL group & CTL, given the negative retained earnings and lack of revenue and profit which could off-set the negative retained earnings.

The Method used by the management in calculating the recoverable amount of CTPL is fair value less cost of disposal of the properties owned by the companies in the group. CTPL’s main assets are invested in properties, fair value of which had been estimated by an external valuer and categorized under Level 03 based on the inputs to the valuation technique used.

The management has performed calculations for the recoverable amounts of CTL and CTPL and recorded an impairment loss of approximately Rs. 138 Mn and Rs. 66 Mn respectively in 2019/20 financial year.

C T HOLDINGS PLC Annual Report 2019 | 2020 38 Our audit procedures included, • Evaluating the indications of possible impairment of investments in subsidiaries. • Assessing the appropriateness of the valuation techniques used by the external valuer, considering the profile of the properties. • Discussions with management and the external valuers in relation to the possible impact on the key assumptions and the resulting valuation due to COVID-19 pandemic. Then we compare the key assumptions used against externally published market comparable where available or with other benchmark data and challenging the reasonableness of key assumptions based on our knowledge of the industry. • Assessing the adequacy of the disclosures in the financial statements, including the description and appropriateness of the inherent degree of subjectivity and key assumptions in the estimates used to calculate the recoverable amount.

Other Information Management is responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation of financial statements that give a true and fair view in accordance with Sri Lanka Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s and the Group’s financial reporting process.

C T HOLDINGS PLC 39 Annual Report 2019 | 2020 Independent Auditors’ Report

Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SLAuSs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with SLAuSs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company and the Group’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with ethical requirements in accordance with the Code of Ethics regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

C T HOLDINGS PLC Annual Report 2019 | 2020 40 Report on Other Legal and Regulatory Requirements As required by section 163 (2) of the Companies Act No. 07 of 2007, we have obtained all the information and explanations that were required for the audit and, as far as appears from our examination, proper accounting records have been kept by the Company.

CA Sri Lanka membership number of the engagement partner responsible for signing this independent auditor’s report is 2599.

(signed) CHARTERED ACCOUNTANTS Colombo, Sri Lanka

07 October 2020

C T HOLDINGS PLC 41 Annual Report 2019 | 2020 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Group Company For the year ended 31 March 2020 2019 2020 2019 Note Rs. '000 Rs. '000 Rs. '000 Rs. '000

Revenue 6 107,817,065 95,547,360 - - Cost of sales (95,587,142) (85,794,385) - - Gross profit 12,229,923 9,752,975 - - Other income 7 2,397,691 2,677,631 1,254,732 469,021 Distribution expenses (2,980,616) (2,919,362) - - Administrative expenses (3,793,510) (3,700,950) (103,183) (96,375) Other expenses (576,200) (519,741) (203,421) (26,268) Results from operating activities 8 7,277,288 5,290,553 948,128 346,378 Net finance income / (costs) 9 (2,680,731) (1,481,721) 12,387 16,399 Share of profit/(loss) of equity accounted investees, net of tax 19.2 (341,865) 79,642 - - Profit before tax 4,254,692 3,888,474 960,515 362,777 Income tax expense 10.1 (1,532,815) (1,504,237) (17,907) (7,903) Profit for the year 2,721,877 2,384,237 942,608 354,874

Other comprehensive income (OCI) Items that will not be reclassified to profit or loss Actuarial loss on employee benefit liability (67,464) (8,245) (3,554) (3,192) Share of other comprehensive income / (loss) in equity accounted investee, net of tax 19.2 40,875 (23,990) - -

Items that are or may be reclassified subsequently to profit or loss Net change in fair value of FVOCI financial assets (17,210) (72,453) (14,154) (65,565) Tax on other comprehensive income 10.2 17,894 1,408 - - Other comprehensive loss for the year, net of tax (25,905) (103,280) (17,708) (68,757) Total comprehensive income for the year 2,695,972 2,280,957 924,900 286,117

Profit attributable to: Equity holders of the parent 1,404,986 1,642,617 942,608 354,874 Non-controlling interest 1,316,891 741,620 - - 2,721,877 2,384,237 942,608 354,874

Total comprehensive income attributable to: Equity holders of the parent 1,395,917 1,541,261 924,900 286,117 Non-controlling interest 1,300,055 739,696 - - 2,695,972 2,280,957 924,900 286,117

Earnings per share (Rs.) 11 6.98 8.16 4.68 1.76

Figures in brackets indicates deductions. The notes on pages 48 to 133 form an integral part of these Financial Statements.

C T HOLDINGS PLC Annual Report 2019 | 2020 42 STATEMENT OF FINANCIAL POSITION

Group Company As at 31 March 2020 2019 2020 2019 Note Rs. '000 Rs. '000 Rs. '000 Rs. '000

ASSETS Non-current assets Property, plant and equipment 13 32,513,179 29,372,454 2,067 2,131 Right of use of assets 14.1 10,157,100 - 157 - Prepayment on leasehold land and building 15 200,912 218,175 - - Investment property 16 8,185,909 7,975,453 1,620,743 1,583,264 Intangible assets 17 1,590,031 1,617,126 688,467 688,467 Investments in subsidiaries 18 - - 2,082,206 2,175,625 Investment in equity accounted investees 19 6,218,055 6,519,045 2,906,169 2,906,169 Other financial assets 20 294,100 604,709 238,443 243,868 Deferred tax assets 10.5 12,839 5,275 - - Total non-current assets 59,172,125 46,312,237 7,538,252 7,599,524

Current assets Inventories 21 10,539,243 9,766,448 - - Trade and other receivables 22 7,541,390 7,034,635 48,910 29,911 Other financial assets 59,794 131,435 59,794 131,435 Cash and cash equivalents 23 3,056,355 4,094,228 20,547 65,519 Total current assets 21,196,782 21,026,746 129,251 226,865 Total assets 80,368,907 67,338,983 7,667,503 7,826,389

EQUITY Stated capital 24 6,489,758 6,489,758 6,489,758 6,489,758 Reserves 25 1,800,629 1,819,885 40,796 54,950 Retained earnings 12,899,459 13,138,710 910,356 1,079,040 Total equity attributable to equity holders of the parent 21,189,846 21,448,353 7,440,910 7,623,748 Non-controlling interest 5,317,420 4,765,746 - - Total equity 26,507,266 26,214,099 7,440,910 7,623,748

LIABILITIES Non-current liabilities Interest bearing loans and borrowings 26 10,948,688 29,574 145 - Deferred tax liabilities 10.5 1,310,291 1,626,697 - - Employee benefits 27 1,316,770 1,142,816 31,128 26,051 Capital grants 28 38,937 50,420 - - Trade and other payables 29 169,608 3,705,863 - - Total non-current liabilities 13,784,294 6,555,370 31,273 26,051

Current liabilities Trade and other payables 29 17,619,251 14,981,034 24,437 15,148 Current tax liabilities 3,175,395 2,521,169 - - Dividend payable 170,509 161,442 170,509 161,442 Interest bearing loans and borrowings 26 19,112,192 16,905,869 374 - Total current liabilities 40,077,347 34,569,514 195,320 176,590 Total liabilities 53,861,641 41,124,884 226,593 202,641 Total equity and liabilities 80,368,907 67,338,983 7,667,503 7,826,389

The notes on pages 48 to 133 form an integral part of these Financial Statements.

The Board of Directors is responsible for the preparation and presentation of these I certify that these Financial Statements have been prepared in Financial statements. The Financial Statements have been approved by the Board accordance with the requirements of the Companies Act No. 07 of of Directors on 07 October 2020, in Colombo. 2007.

(signed) (signed) (signed) Ranjit Page Priya Edirisinghe S C Niles Deputy Chairman / Director Executive Director Managing Director

C T HOLDINGS PLC 43 Annual Report 2019 | 2020 STATEMENT OF CHANGES IN EQUITY

Group <------Attributable to the owners of the parent ------> Stated Revaluation Fair value Retained Total Non- Total capital reserve reserve earnings reserve controlling Interest Rs. '000 Rs. '000 Rs. '000 Rs. '000 Rs. '000 Rs. '000 Rs. '000

Balance as at 1 April 2018 6,489,758 1,771,050 119,194 12,277,464 20,657,466 4,239,636 24,897,102 Adjustment on initial application of SLFRS 09 from associates, net of tax - - - (130,984) (130,984) - (130,984) Adjusted Balance as at 1 April 2018 6,489,758 1,771,050 119,194 12,146,480 20,526,482 4,239,636 24,766,118

Comprehensive income Profit for the year - - - 1,642,624 1,642,624 741,620 2,384,244 Other comprehensive income Net change in fair value of investments at FVOCI financial assets - - (70,359) - (70,359) (2,094) (72,453) Re-measurements of defined benefit plan - - - (6,117) (6,117) (720) (6,837) Share of other comprehensive income of associates - - - (23,990) (23,990) - (23,990) Total other comprehensive income - - (70,359) (30,107) (100,466) (2,814) (103,280) Total comprehensive income for the year - - (70,359) 1,612,517 1,542,158 738,806 2,280,964

Transactions directly recorded in equity Equity settled share based payment - - - - - 96,554 96,554 Dividends paid - - - (362,533) (362,533) (199,836) (562,369) Put options written on non-controlling interest - - - (257,754) (257,754) (109,414) (367,168) Total contributions by & distributions to owners - - - (620,287) (620,287) (212,696) (832,983) Balance as at 31st March 2019 6,489,758 1,771,050 48,835 13,138,710 21,448,353 4,765,746 26,214,099

Balance as at 1 April 2019 6,489,758 1,771,050 48,835 13,138,710 21,448,353 4,765,746 26,214,099 Adjustment on initial application of SLFRS 16, net of tax - - - (588,856) (588,856) (253,964) (842,820) Adjusted Balance as at 1 April 2019 6,489,758 1,771,050 48,835 12,549,854 20,859,497 4,511,782 25,371,279

Total comprehensive income Profit for the year - - - 1,404,986 1,404,986 1,316,891 2,721,877 Other comprehensive income Net change in fair value of investments at FVOCI financial assets, net of tax - - (16,264) - (16,264) (920) (17,184) Re-measurements of defined benefit plan, net of tax - - - (33,680) (33,680) (15,916) (49,596) Share of other comprehensive income of associates - - - 40,875 40,875 - 40,875 Total other comprehensive income - - (16,264) 7,195 (9,069) (16,836) (25,905) Total comprehensive income for the year - - (16,264) 1,412,181 1,395,917 1,300,055 2,695,972

Transactions directly recorded in equity Share issued to NCI while retaining control - Subsidiary - (3,088) 96 103,326 100,334 125,548 225,882 Equity settled share based payment - - - 83,597 83,597 (32,396) 51,201 Dividends paid - - - (1,107,738) (1,107,738) (526,438) (1,634,176) Put options written on non-controlling interest - - - (141,761) (141,761) (61,131) (202,892) Total contributions by & distributions to owners - (3,088) 96 (1,062,576) (1,065,568) (494,417) (1,559,985) Balance as at 31st March 2020 6,489,758 1,767,962 32,667 12,899,459 21,189,846 5,317,420 26,507,266

Figures in brackets indicates deductions. The notes on pages 48 to 133 form an integral part of these Financial Statements.

C T HOLDINGS PLC Annual Report 2019 | 2020 44 Company Stated Fair value Retained Total capital reserve earnings equity Rs. '000 Rs. '000 Rs. '000 Rs. '000

Balance as at 1st April 2018 6,489,758 120,515 1,089,891 7,700,164

Total comprehensive income for the year Profit for the year - - 354,874 354,874

Other comprehensive income Net change in FVOCI financial assets - (65,565) - (65,565) Defined benefit plan actuarial losses - - (3,192) (3,192) Total other comprehensive income - (65,565) (3,192) (68,757) Total comprehensive income for the year - (65,565) 351,682 286,117

Transactions directly recorded in equity, Dividends paid - 2018/19 (interim) - - (362,533) (362,533) Total contributions by & distributions to owners - - (362,533) (362,533) Balance as at 31st March 2019 6,489,758 54,950 1,079,040 7,623,748

Balance as at 1st April 2019 6,489,758 54,950 1,079,040 7,623,748

Total comprehensive income Profit for the year - - 942,608 942,608

Other comprehensive income Net change in fair value of FVOCI financial assets - (14,154) - (14,154) Defined benefit plan actuarial losses - - (3,554) (3,554) Total other comprehensive income for the year - (14,154) (3,554) (17,708) Total comprehensive income for the year - (14,154) 939,054 924,900

Transactions directly recorded in equity, Dividends paid - 2018/19 (final) & 2019/20 (interim) - - (1,107,738) (1,107,738) Total contributions by & distributions to owners - - (1,107,738) (1,107,738) Balance as at 31st March 2020 6,489,758 40,796 910,356 7,440,910

Figures in brackets indicates deductions. The notes on pages 48 to 133 form an integral part of these Financial Statements.

C T HOLDINGS PLC 45 Annual Report 2019 | 2020 STATEMENT OF CASH FLOWS

Group Company For the year ended 31 March 2020 2019 2020 2019 Rs. '000 Rs. '000 Rs. '000 Rs. '000

Profit before tax 4,254,692 3,888,474 960,515 362,777

Adjustments for: Depreciation of property, plant & equipment 2,677,708 2,517,323 95 839 Amortisation of right of use assets 1,049,556 - 20 - Ammortisation of leasehold right over land - 6,049 - - Amortisation of intangible assets 93,021 96,721 - - Interest income (246,378) (232,713) (13,396) (16,481) Profit on sale of property, plant & equipment (10,142) (43,531) - - Dividend income (5,417) (52,440) (1,207,093) (421,969) Finance costs 2,927,109 1,714,434 1,009 82 Share of loss / (profit) of equity accounted investees 341,865 (79,642) - - Reversal / (charge) for impairment of trade and other receivables 85,020 (48,318) - - Amortisation of deferred income (11,483) (11,481) - - Provision for slow moving and obsolete inventories (2,689) (6,428) - - Change in fair value of investment properties (106,344) (368,101) (37,479) (22,971) Provision for obligation on defined benefit plan 237,930 203,535 2,658 2,746 Equity-settled share-based payment transactions 51,201 96,554 - - Impairment losses on investments in subsidiaries - - 203,419 26,268 Cash generated from / (used in) operating activities before Working capital change 11,335,649 7,680,436 (90,252) (68,709)

Changes in; Inventories (770,106) (210,873) - - Trade and other receivables (591,776) (1,035,583) (19,021) (6,625) Trade and other payables (454,162) 1,614,444 9,290 1,897 Cash generated from / (used in) operating activities 9,519,605 8,048,424 (99,983) (73,437) Interest paid (1,736,105) (1,714,210) (991) (82) Income tax paid (996,293) (1,539,874) (17,907) (11,304) Defined benefit plan payments (131,440) (76,875) (1,135) - Net cash from / (used in) operating activities 6,655,767 4,717,465 (120,016) (84,823)

C T HOLDINGS PLC Annual Report 2019 | 2020 46 Group Company For the year ended 31 March 2020 2019 2020 2019 Rs. '000 Rs. '000 Rs. '000 Rs. '000

Cash flows from investing activities Proceeds from sale of property, plant and equipment 43,305 45,683 - - Interest received 246,378 231,278 13,396 15,046 Dividends received (5,417) 60,974 1,207,093 413,239 Acquisition of property, plant and equipment (5,851,595) (5,297,306) (31) (77) Improvements to investment property (104,112) (327) - - Prepaid lease rentals to acquire rights to use lands (150,887) (50,025) - - Acquisition of intangible assets (65,926) (203,259) - - Withdrawal of investments - - 128,641 - Acquisition of other investments - (285,000) (175,730) (130,000) Net cash from / (used in) investing activities (5,888,254) (5,497,982) 1,173,369 298,208

Cash flows from financing activities Net short term borrowings (148,427) 2,203,309 - - Repayment of long term borrowings (10,834) (9,167) - - Loans obtained during the period 382,250 - - - Lease payments (1,902,861) - - - Payment of finance lease liabilities (1,746) (1,247) - - Dividends paid to owners (1,098,671) (358,703) (1,098,671) (358,703) Dividends paid to non controlling interest (526,438) (199,836) - - Net cash from / (used in) financing activities (3,306,727) 1,634,356 (1,098,671) (358,703) Net increase / (decrease) in cash and cash equivalents (2,539,214) 853,839 (45,318) (145,318)

Cash and cash equivalents at 1st April 1,215,843 362,004 65,519 210,837 Cash and cash equivalents at 31st March (1,323,371) 1,215,843 20,201 65,519

The figures in brackets indicate deductions. The notes from pages 48 to 133 form an integral part of these Financial Statements.

C T HOLDINGS PLC 47 Annual Report 2019 | 2020 NOTES TO THE FINANCIAL STATEMENTS

1. Presentation of the financial This is the first set of the Group’s annual • The effectiveness of the measurement statements Financial Statements in which SLFRS 16 taken by the authorities to support 1.1 Description of the reporting Leases has been applied. The related business and consumers through this entity and business changes to significant accounting disruption and economic downturn. C T Holdings PLC (the ‘Company’) policies are described in Note 3.1. is a company incorporated in Sri The impact of the COVID-19 pandemic Lanka and listed on the Colombo 1.3 Functional and presentation on accounting estimates is discussed Stock Exchange. The address of the currency under the relevant notes to these Company’s registered office is No. 8, These financial statements are financial statements. Sir Chittampalam A Gardiner Mawatha, presented in Sri Lankan Rupees, which Colombo 2. is the Group’s functional currency. All 1.4.2 Judgements financial information presented in Sri Information about critical judgments The consolidated financial statements of Lankan Rupees has been rounded to in applying accounting policies that the Group as at and for the year ended the nearest thousands, except when have the most significant effect on the 31 March 2020 comprise the Company otherwise indicated. amounts recognised in the financial and its subsidiaries (together referred statements is included in the following to as the ‘Group’ and individually as 1.4 Key accounting judgements notes: ‘Group entities’) and the Group’s interest and estimates • Note 3.5 - Revenue Recognition: in equity accounted investees. The In preparing these consolidated financial whether revenue from made-to-order financial statements of all companies statements, management has made products is recognised over time or at within the Group are prepared for a judgements, estimates and assumptions a point in time; common financial year which ends on that affect the application of the Group’s • Note 14 - Lease Term: whether 31 March 2020, except as mentioned in accounting policies and the reported the Group is reasonably certain to Note 19.5. The principle activities of the amounts of assets, liabilities, income exercise extension options; and Group are described in Note 2.1 to the and expenses. Actual results may differ financial statements. from these estimates. Estimates and • Note 10.5 - Deferred Tax Liabilities: underlying assumptions are reviewed Determination of whether lands 1.2 Statement of compliance on an on-going basis. Revisions to should be considered as a capital asset or an investment asset. The financial statements which comprise accounting estimates are recognised the Statement of Financial Position, in the period in which the estimates are Statement of Profit or Loss and Other revised and in any future periods affected. Comprehensive Income, Statement of Changes in Equity, Statement of Cash 1.4.1 Impact of COVID-19 Pandemic Flows and Notes thereto have been The ongoing COVID-19 pandemic has prepared in accordance with Sri Lanka increased the uncertainties of estimates Accounting Standards (LKAS / SLFRSs), used in the preparation of these financial and the requirements of the Companies statements. Act No. 07 of 2007. The Board of Directors of the Company is responsible These estimation uncertainties are for the preparation and presentation of associated with: these financial statements. The financial • The extent and duration of the statements were authorised for issue by expected economic downturn and the the Board of Directors on 07 October duration taken for the global economy 2020. to recover from the downturn.

C T HOLDINGS PLC Annual Report 2019 | 2020 48 1.4.3 Assumptions and estimation uncertainties Information about assumptions and estimation uncertainties at 31 March 2020 that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities in the next financial year is included in the following notes: • Note 27 - Measurement of defined benefit obligations: key actuarial assumptions; • Note 21 - Provision for inventory; • Note 16 - Determination of fair value of investment property: key valuation assumptions; • Note 29.2 - Determination of fair value of exercise price for put liability; • Note 17 - Impairment test of intangible assets and goodwill: key assumptions underlying recoverable amounts; • Note 19 - Equity-accounted investees: whether the Group has significant influence over an investee; and • Note 34 - Recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an outflow of resources • Note 13.2 - Measurement of fair values of freehold land : key valuation assumptions.

1.5 Materiality and Aggregation Each material class of similar items is presented separately in the financial statements. Items of a dissimilar nature or function are presented separately unless they are immaterial.

1.6 Comparative Information Comparative information has been reclassified to conform to the current year’s presentation, where necessary. Except when a standard permits or requires otherwise, comparative information is disclosed in respect of the previous period. Where the presentation or classification of items in the financial statements are amended, comparative amounts are reclassified unless it is impracticable.

1.7 Events after the reporting period All material events after the reporting date have been considered and where appropriate, adjustments or disclosures have been made in respective notes to the financial statements.

1.8 Basis of measurement The financial statements of the Group have been prepared on the historical cost basis except for the following material items in the statement of financial position:

Items Measurement bases Freehold land Fair value Financial instruments at fair value through profit or loss Fair value Debt and equity securities at fair Value through other comprensive income (FVOCI) Fair value Investment property Fair value Defined benefit obligations Present value Share based payment arrangements Fair value Put liability Present value of exercise price

C T HOLDINGS PLC 49 Annual Report 2019 | 2020 Notes to the Financial Statements

1.9 Going Concern A number of Group’s accounting The Management of the C T Holdings PLC has made an assessment of the policies and disclosures require the Group’s ability to continue as a going concern and is satisfied that the group measurement of fair values, for both has the resources to continue in business for a foreseeable future. Furthermore, financial and non-financial assets and management is not aware of any material uncertainties that may cast significant liabilities. The Group measures the doubt upon the Group’s ability to continue as a going concern. Therefore, the fair value of an instrument using the financial statements continue to be prepared on the going concern basis. Refer Note quoted price in an active market for 37 for the impact due to the COVID-19. that instrument. A market is regarded as active if transactions for the asset 1.10 Measurement of fair value or liability take place with sufficient A number of the Group’s accounting policies and disclosures require the frequency and volume to provide pricing measurement of fair values, for both financial and non-financial assets and liabilities. information on an ongoing basis. If there is no quoted price in an active The Group has an established control framework with respect to the measurement market, then the Group uses valuation of fair values. techniques that maximise the use of relevant observable inputs and minimise Significant valuation issues are reported to the Group’s audit committee. the use of unobservable inputs. The chosen valuation technique incorporates When measuring the fair value of an asset or a liability, the Group uses observable all of the factors that market participants market data as far as possible. Fair values are categorised into different levels in a would take into account in pricing a fair value hierarchy based on the inputs used in the valuation techniques as follows. transaction. If an asset or a liability measured at fair value has a bid price • Level 1: Quoted prices (unadjusted) in active markets for identical assets or and an ask price, then the Group liabilities. measures assets and long positions • Level 2: Inputs other than quoted prices included in Level 1 that are at a bid price and liabilities and short observable for the asset or liability, either directly (i.e. as prices) or positions at an ask price. indirectly (i.e. derived from prices). • Level 3: Inputs for the asset or liability that are not based on observable The best evidence of the fair value of a market data (unobservable inputs). financial instrument on initial recognition is normally the transaction price – i.e. If the inputs used to measure the fair value of an asset or a liability fall into different the fair value of the consideration given levels of the fair value hierarchy, then the fair value measurement is categorised in its or received. If the Group determines that entirety in the same level of the fair value hierarchy as the lowest level input that is the fair value on initial recognition differs significant to the entire measurement. from the transaction price and the fair value is evidenced neither by a quoted The Group recognises transfers between levels of the fair value hierarchy at the end price in an active market for an identical of the reporting period during which the change has occurred. asset or liability nor based on a valuation technique for which any unobservable ‘Fair value’ is the price that would be received to sell an asset or paid to transfer a inputs are judged to be insignificant in liability in an orderly transaction between market participants at the measurement relation to the measurement, then the date in the principal or, in its absence, the most advantageous market to which the financial instrument is initially measured Group has access at that date. The fair value of a liability reflects its nonperformance at fair value, adjusted to defer the risk. difference between the fair value on initial recognition and the transaction price. Subsequently, that difference is

C T HOLDINGS PLC Annual Report 2019 | 2020 50 recognised in profit or loss on an appropriate basis over the life of the instrument but no later than when the valuation is wholly supported by observable market data or the transaction is closed out.

Further information about the assumptions made in measuring fair values is included in the following notes: Reference Item Note 16 Investment property Note 30 Financial instruments Note 18 Acquisition of subsidiary Note 13 Freehold Land Note 27.4 Share based payment arrangements

2 Operating segments 2.1 Basis for segmentation The Group has the following six strategic divisions, which are its reportable segments. These divisions offer different products and services, and are managed separately because they require different technology and marketing strategies.

The following summary describes the operations of each reportable segment.

Reportable Segment Operation Retail and Wholesale Operation of a chain of supermarkets and convenient stores. Local distributor for world renown Distribution brands of food and beverages. FMCG Manufacturer / distributor of dairy, agrifoods, convenience foods and confectionery. Restaurants Franchisee / Operator for ‘Kentucky Fried Chicken’ (KFC) and‘TGI Fridays’ Restaurants in Sri Lanka. Real Estate Owner / operator of the ‘Majestic City’ and ‘Cargills Square’ shopping and entertainment malls. Development and sale / rental of residential condominiums and commercial development. Entertainment Import, distribution and exhibition of cinematic content. Financial Services Commercial Banking, stock brokering, capital market solutions and fund management (Associates).

The Group’s chief executive officer reviews the internal management reports of each division at least quarterly. Segment results that are reported to the Group’s chief operating officer include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets, head office expenses, and tax assets and liabilities. Inter segment transfers are based on fair market prices.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment, and intangible assets other than goodwill.

C T HOLDINGS PLC 51 Annual Report 2019 | 2020 Notes to the Financial Statements

3 Significant accounting to grandfather the assesment of which at the Group’s incremental borrowing policies transactions are leases. The Group rate as at 01 April 2019. The right-of- Except for the changes below, the applied SLFRS 16 only to contracts use assets are measured at either: Group has consistently applied the that were previously identified as leases. • Option 1: their carrying amount as if accounting policies to all periods Contracts that were not identifed SLFRS 16 had been applied since the presented in these Financial Statements. under LKAS 17 and IFRIC 4 were commencement date. (Discounted not reassesed for whether there is a using the incremental borrowing rate 3.1 Changes in Significant lease under SLFRS 16. Therefore the at the date of initial application); or definition of a lease under SLFRS 16 Accounting Policies • Option 2: at an amount equal to the was applied only to contracts entered SLFRS 16 – “Leases” lease liability, adjusted by the amount into or changed on or after 1 April 2019. The Group has applied SLFRS 16 with of any prepaid or accrued lease an initial application date of 1 April 2019. payments. As a result, the Group has changed its As a Lessee accounting policy for lease contracts As a lessee, the Group mainly leases The Group has tested its right-of-use as detailed below. A number of other properties and vehicles. As a lessee, assets for impairment on the date of new standards are also effective from the Group previously classified leases transition and has concluded that there 1 April 2019, but they do not have a as operating or finance leases based is no indication that the right-of-use material effect on the Group's Financial on its assessment of whether the lease assets are impaired. Statements. transferred significantly all of the risks and rewards incidental to the ownership The Group used the following practical The Group applied SLFRS 16 using of the underlying asset to the Group. expedient when applying SLFRS 16 to the modified retrospective approach. Under SLFRS 16, the Group recognises leases previously classified as operating Accordingly, the comparative right-of-use asset and lease liabilities for leases under LKAS 17: information presented for 2018/19 is all of its leases. i.e these leases are on- not restated – i.e. it is presented as balance sheet. • applied a single discount rate to previously reported, under LKAS 17 a portfolio of leases with similar and related interpretations. The details At commencement or on modification characteristics; of the changes in accounting policies of a contract that contains a lease • did not recognise right-of-use assets are disclosed below. Additionally, the component, the Group allocates the and liabilities for leases for which the disclosure requirements in SLFRS 16 consideration in the contract to each lease term ends within 12 months of have not been applied to comparative lease component on the basis of its the date of initial application; relative stand-alone price. information. • did not recognise right-of-use assets and liabilities for leases of low value However, for leases of property the Definition of a Lease assets (e.g. IT equipment); Group has elected not to separate Previously, the Group determined • excluded initial direct costs from the at contract inception whether an non-lease components and account for the lease and associated non- measurement of the right-of-use asset arrangement is or contains a lease at the date of initial application; and under IFRIC 4. Under SLFRS 16, the lease components as a single lease • used hindsight when determining the Group now assesses whether a contract component. lease term. is or contains a lease based on the definition of lease, as explained in Note Leases Classified as Operating Leases 3.1. Under LKAS 17 At transition, lease liabilities were On transition to SLFRS 16, the Group measured at the present value of elected to apply the practical expedient remaining lease payments, discounted

C T HOLDINGS PLC Annual Report 2019 | 2020 52 3.1.1 Impact on Financial Statements The impact on transition is summarised below. At 1 April 2019 Group Company Note Rs. ‘000 Rs. ‘000

Right-of-use assets 14.1 8,449,057 177 Deferred tax asset 10.5.1 188,372 - Lease liabilities 14.2 9,720,747 155 Prepayment on leasehold land and building 15.1 (174,180) - Trade and other receivables (352,152) (22) Trade and other payables (764,780) - Retained earnings (588,856) - Non controlling interest (253,964) -

When measuring the lease liabilities for leases that were classified as operating leases, the Group discounted lease payments using its incremental borrowing rate at 1 April 2019. Incremental borrowing rate is 11% - 13%.

At 1 April 2019 Group Company Rs. ‘000 Rs. ‘000

Operating lease commitments as at 31 March 2019 as disclosed under LKAS 17 in the Group/Company’s Financial Statements 26,341,494 242 Adjustment to update for SLFRS 16 (6,441,890) - Impact of discounting using incremental borrowing rate as at 01 April 2019 (10,156,052) (88) Recognition exemption for leases with less than 12 months of lease term at transition (22,805) - Lease liability recognised at 1 April 2019 9,720,747 154

3.2 Basis of consolidation 3.2.1 Business combinations The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.

Goodwill acquired in a business combination is initially measured at cost, being the excess of the cost of the business combination over the Group’s interest in the net amount of the identifiable assets, liabilities and contingent liabilities acquired.

Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.

Goodwill is reviewed for impairment annually, or more frequently, if events or changes in circumstances indicate that the carrying value may be impaired. For the purpose of impairment testing, goodwill acquired in a business combination, from the acquisition date is, allocated to each of the Group’s Cash–generating Units (CGUs) or group of CGUs, which are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

C T HOLDINGS PLC 53 Annual Report 2019 | 2020 Notes to the Financial Statements

Where goodwill forms part of a CGU The Company re-assesses whether or 3.2.5 Interest in equity accounted (or group of CGUs) and part of the not it controls an investee if facts and investees operation within that unit is disposed circumstances indicate that there are The Group’s interests in equity of, the goodwill associated with the changes to one or more of the three accounted investees comprise operation disposed of is included in the elements of control listed above. Total interests in associates. Associates are carrying amount of the operation when comprehensive income of subsidiary is those entities in which the Group has determining the gain or loss on disposal attached to the owners of the Company significant influence, but not control of the operation. Goodwill disposed of and to the non-controlling interest, or joint control, over the financial and in this circumstance is measured based even this result in the non-controlling operating policies. Significant influence on the relative values of the operation interest having a deficit balance. When is presumed to exist when the Group disposed of and the portion of the CGU necessary, adjustments are made to the holds between 20% and 50% of the retained. financial statements of subsidiaries to voting power of another entity. bring their accounting policies into line Significant influence is the power to The consideration transferred does with the Group’s accounting policies. participate in the financial and operating not include amounts related to the policy decisions of the investee, but is settlement of pre-existing relationships. 3.2.3 Loss of control not control or joint control over those When the Group loses control over a Such amounts are generally recognized policies. The considerations made in subsidiary it de-recognises the assets in profit or loss. determining significant influence or joint and liabilities of the subsidiary, any control is similar to those necessary to related non-controlling interests and Any contingent consideration is determine control over subsidiaries. the other components of equity. Any measured at fair value at the date resulting gain or loss is recognised in of acquisition. If an obligation to pay Investments in associates are accounted profit or loss. Any interest retained in contingent consideration that meets for under the equity method. They the former subsidiary is measured at fair the definition of a financial instrument are initially recognised at cost which value when control is lost. Subsequently includes transaction costs. Subsequent is classified as equity, then it is not that retained interest is accounted for remeasured and settlement is accounted as equity accounted investee or as a to initial recognition, the consolidated for within equity. Otherwise, other FVOCI financial asset depending on the financial statements include the Group’s contingent consideration is remeasured level of influence retained. share of the profit or loss and other at fair value at each reporting date and comprehensive income of equity subsequent changes in the fair value 3.2.4 Non-controlling interests accounted investees, after adjustments of the contingent consideration are Non-controlling-interests are measured to align the accounting policies with recognized in profit or loss. at their proportionate share of the those of the Group, from the date that acquiree’s identifiable net assets at the significant influence commences until the 3.2.2 Subsidiaries date of acquisition. date that significant influence ceases. Subsidiaries are entities controlled by the Group. The Group controls an entity Changes in the Group’s interest in When the Group’s share of losses when it is exposed to, or has right to, a subsidiary that do not result in a exceed its interest in an equity variable returns from its involvement loss of control are accounted for accounted investee, the carrying amount with the entity and has the ability to as transactions with owners in their of the investment, including any long affect those returns through its power capacity as owners. Adjustments to term interests that form part thereof, is over the entity. The financial statements non-controlling interests are based on a reduced to zero, and the recognition of of subsidiaries are included in the proportionate amount of the net assets further losses is discontinued except consolidated financial statements from of the subsidiary. No adjustments are to the extent that the Group has an the date on which control commences made to goodwill and no gain or loss is obligation or has made payments on until the date on which control ceases. recognised in profit or loss. behalf of the investee.

C T HOLDINGS PLC Annual Report 2019 | 2020 54 3.2.6 Transactions eliminated on 3.4 Discontinued Operations consolidation A discontinued operation is a component of the Group’s business, the operations Intra-group balances and transactions, and cash flows of which can be clearly distinguished from the rest of the Group and and any unrealised income and which: expenses arising from intra-group • represents a separate major line of business or geographical area of operations; transactions, are eliminated. Unrealised • is part of a single co-ordinated plan to dispose of a separate major line of business gains arising from transactions with or geographical area of operations; or equity accounted investees are eliminated against the investment • is a subsidiary acquired exclusively with a view to re-sell. to the extent of the Group’s interest in the investee. Unrealised losses Classification as a discontinued operation occurs at the earlier of disposal or when are eliminated in the same way as the operation meets the criteria to be classified as held-for sale. unrealised gains, but only to the extent that there is no evidence of impairment. When an operation is classified as discontinued operation, the comparative statement of profit or loss and other comprehensive income is represented as if the 3.3 Foreign Currency - Foreign operation had been discontinued from the start of the comparative year. currency transactions Transactions in foreign currencies are 3.5 Revenue from contracts with customers translated into the respective functional Revenue from contracts with customers is recognised when control of the goods or currencies of Group entities at exchange services are transferred to the customer at an amount that reflects the consideration rates at the dates of the transactions. to which the Group expects to be entitled in exchange for those goods or services. Revenue is recognised upon satisfaction of performance obligation. The revenue Monetary assets and liabilities recognition occurs at a point in time when control of the asset is transferred to denominated in foreign currencies are the customer, generally on delivery of the goods. Group determines at contract translated to the functional currency at inception whether it satisfies the performance obligation over time or at a point in the exchange rate at the reporting date. time. For each performance obligation satisfied overtime, the Group recognises the Non-monetary assets and liabilities revenue over time by measuring the progress towards complete satisfaction of that that are measured at fair value in a performance obligation. foreign currency are translated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Foreign currency differences are generally recognised in profit or loss.

C T HOLDINGS PLC 55 Annual Report 2019 | 2020 Notes to the Financial Statements

3.5.1 Performance obligations and revenue recognition policies

Type of product / Nature and timing of satisfaction of performance Revenue recognition under SLFRS 15 service obligations, including significant payment terms Retail and The Group operates a chain of retail stores selling consumer Revenue is recognised when the goods Wholesale goods and the Group manufactures and sells a range of food are delivered and have been accepted Distribution/ products.In the case of retail, payment of the transaction by customers at their premises. For FMCG price is due immediately when the customer purchases the contracts that permit the customer to goods and takes delivery in store. In the case of Wholesale return an item, revenue is recognised to Distribution, when the products have been delivered to the the extent that it is highly probable that specific location, the risks of obsolescence and loss have a significant reversal in the amount of been transferred to the customer, and either the customer cumulative revenue recognised will not has accepted the products in accordance with the sales occur. contract. Customer loyalty The Group operates a loyalty programme where retail Revenue is recognised when the points programme customers accumulate points for purchases made which are redeemed or when they expire after entitle them to discount on future purchases. A contract the initial sale. A liability is recognised until liability for the award points is reocgnised at the time of the the points are redeemed or expire. sale. Restaurants The Group operates chains of restaurants for KFC and TGIF Revenue from restaurant and shop sales brands operates through franchise arrangements. (food and beverages) is recognized upon rendering of service. Sales are net of discounts. Real Estate - The Group develops and operates commercial shopping Rental income from operating leases is Rental income malls to be rented out to third parties as well as to be used by recognised on a straight-line basis over from operating own. the lease term. When the Group provides leases incentives to its tenants, the cost of the incentives is recognised over the lease term, on a straight-line basis, as a reduction of rental income. Real Estate The Group provides services to the tenants of the commercial Revenue from service and property - Revenue shopping malls operated agreed upon the tenants management charges is recognised in from service agreements or othewise. the accounting period. In the case of and property fixed price contracts, the customer pays management the fixed amount based on a payment charges schedule. If the services rendered exceed the payment, a contract asset is recognised. If the payments exceed the services rendered, a contract liability is recognised.

C T HOLDINGS PLC Annual Report 2019 | 2020 56 3.5.2 Finance and Other income disposal of an item of property, plant awards with non-vesting conditions, a. Financing components of Retail & equipment and investments are the grant-date fair value of the share- and Wholesale Distribution accounted in profit or loss by comparing based payment is measured to reflect The Group does not expect to have any the net sales proceeds with the carrying such conditions and there is no true-up contracts where the period between amounts of property, plant & equipment for differences between expected and the transfer of the promised goods or and investments concerned and are actual outcomes. services to the customer and payment recognised net within “other income” Where a parent grants rights to its by the customer exceeds one year. As in profit or loss. When re-valued assets equity instruments to employees of a consequence, the Group does not are sold, the amounts included in its subsidiary, and the arrangement is adjust any of the transaction prices for the revaluation surplus reserve are accounted for as equity-settled in the the time value of money. transferred to retained earnings. Other consolidated financial statements, the income is recognized on an accrual subsidiary should in its own separate b. Commissions basis. financial statements measure the When the Group is acting as an agent, services received from its employees the commission rather than gross 3.6 Employee benefits in accordance with the requirements of income is recorded as revenue. 3.6.1 Short-term employee benefits SLFRS 2 applicable to equity-settled Short-term employee benefits are share-based payment transactions and c. Dividend income expensed as the related service is corresponding increase recognised in Dividends are received from financial provided. A liability is recognised equity as a capital contribution from the assets measured at fair value through for the amount expected to be paid parent. profit or loss (FVTPL) and at fair value if the Group has a present legal or through other comprehensive income constructive obligation to pay this 3.6.3 Defined contribution plans (FVOCI). Dividends are recognised as amount as a result of past service Defined contribution plan is a post other income in profit or loss when the provided by the employee, and the employment benefit plan under which right to receive payment is established. obligation can be estimated reliably. an entity pays fixed contributions into This applies even if they are paid out of a separate entity and will have no pre-acquisition profits, unless the dividend 3.6.2 Share-based payment legal or constructive obligation to pay clearly represents a recovery of part of the arrangement any further amounts. Obligations for cost of an investment. In this case, the The grant-date fair value of equity contributions to Employees Provident dividend is recognised in OCI if it relates settled share-based payment Fund and Employees Trust Fund to an investment measured at FVOCI. arrangements granted to employees is covering all employees are recognised generally recognised as an expense, as an expense in profit or loss, as d. Interest income with a corresponding increase in equity, incurred. Interest income from financial assets at over the vesting period of the awards. FVTPL is included in the net fair value The amount recognised as an expense Types of contribution plans which are gains / (losses) on these assets. Interest is adjusted to reflect the number of being contributed for by the Group; income on financial assets at amortised awards for which the related service (a) Employee Provident Fund (EPF) cost and financial assets at FVOCI and non-market performance conditions - The Group and employees calculated using the effective interest are expected to be met, such that contribute 12% and 8% respectively method is recognised in the statement the amount ultimately recognised is of the salary to EPF. of profit or loss as part of other income. based on the number of awards that (b) Employees Trust Fund - All meet the related service and non- employees of the Group are members Other income also includes rental market performance conditions at the of the Employees’ Trust Fund (ETF). income from investment properties vesting date. For share-based payment The Group contributes 3% of the (Refer Note 7). Gains and losses on salary of each employee to ETF.

C T HOLDINGS PLC 57 Annual Report 2019 | 2020 Notes to the Financial Statements

3.6.4 Defined benefit plans 3.6.5 Termination benefits FVOCI (other than trade receivables); Defined Benefit Plan is a post Termination benefits are expensed at the 3.8.8 the gain on the re- employment benefit plan other than earlier of when the Group can no longer measurement to fair value of any Defined Contribution Plan. These plans withdraw the offer of those benefits pre-existing interest in an acquiree in a create an obligation on the entity to and when the Group recognises costs business combination; provide agreed benefits to current and for a restructuring. If benefits are not 3.8.9 the reclassification of net past employees and effectively places expected to be settled wholly within 12 gains previously recognised in other actuarial and investment risk on the months of the reporting date, then they comprehensive income. entity. The liability recognised in the are discounted. statement of financial position in respect of Defined Benefit Plan is the present 3.7 Grants 3.9 Income Tax Expense value of the defined benefit obligation at Grants are recognised initially as Income tax expense comprises current the reporting date. The defined benefit deferred income at fair value when there and deferred tax. Current tax and obligation is calculated annually by is reasonable assurance that they will deferred tax is recognised in profit or independent actuaries, using projected be received and the Group will comply loss except to the extent that it relates unit credit method, as recommended with the conditions associated with the to a business combination, or items by LKAS 19-Employee Benefit. The grant, and are then recognised in profit recognised directly in equity or in other present value of the defined benefit or loss as other income on a systematic comprehensive income. obligation is determined by discounting basis over the useful life of the asset. the estimated future cash outflows Grants that compensate the Group 3.9.1 Current tax using interest rates that apply to the for expenses incurred are recognised Current tax comprises the expected currency in which the benefits will be in profit or loss as other income on a tax payable or receivable on the paid, and that have terms to maturity systematic basis in the periods in which taxable income or loss for the year and approximating to the terms of the the expenses are recognised. any adjustment to the tax payable or related liability. receivable in respect of previous years. 3.8 Finance income and Finance The amount of current tax payable or The assumptions based on which the costs receivable is the best estimate of the tax amount expected to be paid or received results of the actuarial valuation were The Group’s finance income and finance that reflects uncertainty related to income determined are included in the 27.3 to costs would include: the Financial Statements. taxes, if any. It is measured using tax 3.8.1 interest income; rates enacted or substantively enacted This liability is not externally funded and 3.8.2 interest expense; at the reporting date. Current tax also the item is grouped under non-current 3.8.3 dividend income; includes any tax arising from dividends. liabilities in the statement of financial 3.8.4 the net gain or loss on position. However, under the Payment the disposal of investments in debt Current tax payable also includes any of Gratuity Act No. 12 of 1983 the securities measured at FVOCI; tax arising from dividends. Current tax liability to an employee arises only on assets and liabilities are offset only if 3.8.5 the net gain or loss on financial completion of five years of continued certain criteria are met. assets at fair value through profit or loss; service. The Group recognizes all actuarial-gains and losses arising 3.8.6 the foreign currency gain or 3.9.2 Deferred tax from defined benefit plans in other loss on financial assets and financial Deferred tax is recognised in respect comprehensive Income and expenses liabilities; of temporary differences between the related to defined benefit plans in staff 3.8.7 impairment losses (and carrying amounts of assets and liabilities expenses in profit or loss. reversals) on investments in debt for financial reporting purposes and the securities carried at amortised cost or amounts used for taxation purposes.

C T HOLDINGS PLC Annual Report 2019 | 2020 58 Deferred tax is not recognised for: Deferred tax is measured at the tax inventories, production or conversion • temporary differences on the initial rates that are expected to be applied costs, and other costs incurred recognition of assets or liabilities in to temporary differences when they in bringing them to their existing a transaction that is not a business reverse, using tax rates enacted or location and condition. In the case of combination and that affects neither substantively enacted at the reporting manufactured inventories and work in accounting nor taxable profit or loss; date. progress, cost includes an appropriate share of production overheads based • temporary differences related The measurement of deferred tax on normal operating capacity. Net to investments in subsidiaries, reflects the tax consequences that realisable value is the estimated selling associates and jointly controlled would follow the manner in which price in the ordinary course of business, entities to the extent that the Group the Group expects, at the reporting less the estimated costs of completion is able to control the timing of the date, to recover or settle the carrying and estimated costs necessary to make reversal of the temporary differences amount of its assets and liabilities. For the sale. and it is probable that they will not this purpose, the carrying amount of reverse in the foreseeable future; and investment property that is measured at The cost of each category of inventory • taxable temporary differences arising fair value is presumed to be recovered of the Group is determined on the on the initial recognition of goodwill. through sale. following basis: • Raw & packing materials - Actual cost Deferred tax assets are recognised Deferred tax assets and liabilities are on a First In First Out - (FIFO) basis for unused tax losses, tax credits and offset if there is a legally enforceable • Finished goods and work-in-progress deductible temporary differences to right to offset current tax liabilities and - Directly attributable manufacturing the extent that it is probable that future assets, and they relate to taxes levied cost taxable profits will be available against by the same tax authority on the same which they can be utilised. Future taxable taxable entity, or on different tax entities, • Merchandising goods - Actual cost on profits are determined based on business but they intend to settle current tax a First In First Out - (FIFO) basis plans for individual subsidiaries in the liabilities and assets on a net basis or • Other inventories - Actual cost Group and the reversal of temporary their tax assets and liabilities will be differences. Deferred tax is not recognized realized simultaneously. Property inventory for the undistributed profits of subsidiaries The Group’s property inventories arise as the parent company has control over 3.10 Dividend distribution where there is a change in use of the dividend policy of its subsidiaries and Dividend distribution to the Company’s investment properties evidenced by distribution of those profits. Deferred tax shareholders is recognized as a liability the commencement of development assets are reviewed at each reporting in the Group’s financial statements in with a view to sale, and the properties date and are reduced to the extent that it the period in which the dividends are are reclassified as inventories at their is no longer probable that the related tax proposed by directors or approved by deemed cost, which is the fair value benefit will be realised; such reductions the Company’s shareholders, as the at the date of re-classification. They are reversed when the probability of future case may be. are subsequently carried at the lower taxable profits improves. of cost and net realisable value. Net 3.11 Inventories realisable value is the estimated selling Un-recognised deferred tax assets are Inventories are measured at the lower price in the ordinary course of business reassessed at each reporting date and of cost and net realisable value. The less costs to complete redevelopment recognised to the extent that it has cost of inventories is based on the and selling expenses. become probable that future taxable first-in first-out principle, and includes profits will be available against which expenditure incurred in acquiring the they can be used.

C T HOLDINGS PLC 59 Annual Report 2019 | 2020 Notes to the Financial Statements

3.12 Property, plant and equipment iii. Depreciation i. Recognition and measurement Items of property, plant and equipment are depreciated from the date they are Items of property, plant and equipment available for use or, in respect of selfconstructed assets, from the date that the asset are measured at cost less accumulated is completed and ready for use. Depreciation is calculated to write off the cost of depreciation and any accumulated items of property, plant and equipment less their estimated residual values using impairment losses. Land is stated at the straight-line basis over their estimated useful lives. Depreciation is generally its fair value. The Group revalues its recognised in profit or loss, unless the amount is included in the carrying amount of Land every 3 years. Cost includes another asset. Leased assets are depreciated over the shorter of the lease term and expenditure that is directly attributable their useful lives unless it is reasonably certain that the Group will obtain ownership to the acquisition of the asset. The cost by the end of the lease term. Land is not depreciated of self-constructed assets includes the following: The estimated useful lives for the current and comparative years of significant items • the cost of materials and direct of property, plant and equipment are as follows: labour; Description No. of years • any other costs directly attributable Freehold buildings 50 to bringing the assets to a working Improvements to leasehold buildings 4 to10 years or period of lease whichever condition for their intended use; and is lower • capitalised borrowing costs. Plant & machinery 5 to 10 Motor vehicles 4 to 5 Purchased software that is integral to the functionality of the related Furniture & fittings 5 equipment is capitalised as part of that equipment. If significant parts of an Depreciation methods, useful lives and residual values are reviewed at each reporting item of property, plant and equipment date and adjusted if appropriate. Fully depreciated property, plant and equipment are have different useful lives, then they are retained in the financial statements until such time when they are no longer in use. accounted for as separate items (major components) of property, plant and iv. Constructions in progress equipment. Any gain or loss on disposal All direct and indirect costs that are related to the construction of fixed assets of an item of property, plant and and incurred before the assets are ready for their intended use are capitalised equipment (calculated as the difference as construction in progress. Construction in progress is stated in the statement between the net proceeds from disposal of financial position at cost less impairment losses. Construction in progress is and the carrying amount of the item) is transferred to fixed assets when it is ready for its intended use. No depreciation is recognised in profit or loss. provided against construction in progress. ii. Subsequent expenditure v. Reclassification to investment property Subsequent expenditure is capitalised When the use of a property changes from owner-occupied to investment property, only when it is probable that the future the property is re-measured to fair value and re-classified as investment property. economic benefits associated with Any gain arising on this re-measurement is recognised in profit or loss to the the expenditure will flow to the Group. extent that it reverses a previous impairment loss on the specific property, with any On-going repairs and maintenance are remaining gain recognised in other comprehensive income and presented in the expensed as incurred. revaluation reserve in equity. Any loss is recognized immediately in profit or loss.

C T HOLDINGS PLC Annual Report 2019 | 2020 60 3.13 Intangible assets and goodwill Any gain or loss on disposal of an i. Recognition and measurement investment property (calculated as the difference between the net proceeds from Asset Measurement basis disposal and the carrying amount of the Goodwill Goodwill arising on the acquisition of subsidiaries is measured at item) is recognised in profit or loss. When cost less accumulated impairment losses. In respect of acquisitions investment property that was previously prior to 1 April 2011, goodwill is included on the basis of its deemed classified as property, plant and cost, which represents the amount recorded under previous GAAP equipment is sold, any related amount (SLAS) In respect of equity accounted investees, the carrying amount included in the revaluation reserve is of goodwill is included in the carrying amount of the investment, and transferred to retained earnings. When any impairment loss is allocated to the carrying amount of the equity the use of a property changes such that accounted investee as a whole. it is re-classified as property, plant and Other Other intangible assets, including computer software, patents, equipment, its fair value at the date of intangible trademarks and licenses, which are acquired by the Group and have re-classification becomes its cost for assets finite useful lives are measured at cost less accumulated amortisation subsequent accounting. and any accumulated impairment losses. 3.15 Assets held for sale ii. Subsequent expenditure Non-current assets, or disposal groups Subsequent expenditure is capitalised only when it increases the future economic comprising assets and liabilities, are benefits embodied in the specific asset to which it relates. All other expenditure, classified as held-for-sale or held-for including expenditure on internally generated goodwill and brands, is recognised in distribution if it is highly probable that profit or loss as incurred. they will be recovered primarily through sale or distribution rather than through iii. Amortisation continuing use. Immediately before Amortisation is calculated to write off the cost of intangible assets less their classification as held-for-sale or held-for- estimated residual values using the straight-line method over their estimated useful distribution, the assets, or components lives, and is generally recognized in profit or loss. Goodwill is not amortised. of a disposal group, are re-measured in accordance with the Group’s other The estimated useful lives for current and comparative periods are as follows: accounting policies. Thereafter, generally the assets, or disposal group, are Description No. of years measured at the lower of their carrying Trademarks and licenses 10 years amount and fair value less costs to sell. Computer software 4 years Any impairment loss on a disposal group is allocated first to goodwill, and then 3.14 Investment property to the remaining assets and liabilities Investment property is property held either to earn rental income or for capital on a pro-rata basis, except that no appreciation or for both, but not for sale in the ordinary course of business or use in loss is allocated to inventories, financial the production or supply of goods or services or for administrative purposes. assets, deferred tax assets, employee benefit assets, investment property Investment property is initially measured at cost and subsequently at fair value with or biological assets, which continue any change therein recognised in profit or loss. Cost includes expenditure that is to be measured in accordance with directly attributable to the acquisition of the investment property. The cost of self- the Group’s other accounting policies. constructed investment property includes the cost of materials and direct labour, Impairment losses on initial classification any other costs directly attributable to bringing the investment property to a working as held-for-sale or held-for-distribution condition for their intended use and capitalised borrowing costs. and subsequent gains and losses on re-measurement are recognised in profit

C T HOLDINGS PLC 61 Annual Report 2019 | 2020 Notes to the Financial Statements

or loss. Gains are not recognised in model for managing financial assets, in All financial assets not classified as excess of any cumulative impairment which case all affected financial assets measured at amortised cost or FVOCI loss. Once classified as held-for-sale or are reclassified on the first day of the as described above are measured held-for-distribution, intangible assets first reporting period following the at FVTPL. This includes all derivative and property, plant and equipment are change in the business model. financial assets. On initial recognition, no longer amortised or depreciated, and the Group may irrevocably designate any equity-accounted investee is no A financial asset is measured at a financial asset that otherwise meets longer equity accounted. amortised cost if it meets both of the requirements to be measured at the following conditions and is not amortised cost or at FVOCI as at FVTPL 3.16 Financial instruments designated as at FVTPL: if doing so eliminates or significantly 3.16.1 Recognition and initial • it is held within a business model reduces an accounting mismatch that measurement whose objective is to hold assets to would otherwise arise. Trade receivables and debt securities collect contractual cash flows; and issued are initially recognised when ii. Financial assets – Business model • its contractual terms give rise on they are originated. All other financial assessment: specified dates to cash flows that are assets and financial liabilities are initially The Group makes an assessment of solely payments of principal and interest recognised when the Group becomes a the objective of the business model on the principal amount outstanding. party to the contractual provisions of the in which a financial asset is held at a instrument. A financial asset (unless it is portfolio level because this best reflects The Group's financial assets classified a trade receivable without a significant the way the business is managed, and under amortised cost includes trade financing component) or financial liability information is provided to management. and other receivable, amounts due from is initially measured at fair value plus, for related companies and cash and cash an item not at fair value through profit The information considered includes: equivalents. or loss (FVTPL), transaction costs that • the stated policies and objectives are directly attributable to its acquisition A debt investment is measured at for the portfolio and the operation or issue. A trade receivable without a FVOCI if it meets both of the following of those policies in practice. These significant financing component is initially conditions and is not designated as at include whether management’s measured at the transaction price. FVTPL: strategy focuses on earning contractual interest income, • it is held within a business model 3.16.2. Classification and subsequent maintaining a particular interest rate whose objective is achieved by both measurement profile, matching the duration of collecting contractual cash flows and i. Financial assets the financial assets to the duration On initial recognition, a financial asset selling financial assets; and of any related liabilities or expected is classified as measured at: amortised • its contractual terms give rise on cash outflows or realising cash flows cost; Financial assets at fair value specified dates to cash flows that are through the sale of the assets; through other comprehensive income solely payments of principal and interest • how the performance of the portfolio (FVOCI) – debt investment; Financial on the principal amount outstanding. is evaluated and reported to the assets at fair value through other Group’s management; comprehensive income (FVOCI) – equity On initial recognition of an equity investment; or Financial assets at fair investment that is not held for trading, • the risks that affect the performance value through profit or loss (FVTPL). the Group may irrevocably elect to of the business model (and the present subsequent changes in the financial assets held within that Financial assets are not reclassified investment’s fair value in OCI. This business model) and how those risks subsequent to their initial recognition election is made on an investment-by are managed; unless the Group changes its business investment basis.

C T HOLDINGS PLC Annual Report 2019 | 2020 62 • how managers of the business contractual term that could change the timing or amount of contractual cash flows are compensated – e.g. whether such that it would not meet this condition. In making this assessment, the Group compensation is based on the fair considers: value of the assets managed or the • contingent events that would change the amount or timing of cash flows; contractual cash flows collected; and • terms that may adjust the contractual coupon rate, including variable-rate features; • the frequency, volume and timing • prepayment and extension features; and of sales of financial assets in prior periods, the reasons for such sales • terms that limit the Group’s claim to cash flows from specified assets (e.g. and expectations about future sales nonrecourse features). activity. A prepayment feature is consistent with the solely payments of principal and interest Transfers of financial assets to third criterion if the prepayment amount substantially represents unpaid amounts of parties in transactions that do not qualify principal and interest on the principal amount outstanding, which may include for de-recognition are not considered reasonable additional compensation for early termination of the contract. Additionally, sales for this purpose, consistent with for a financial asset acquired at a discount or premium to its contractual par amount, the Group’s continuing recognition of a feature that permits or requires prepayment at an amount that substantially the assets. Financial assets that are held represents the contractual par amount plus accrued (but unpaid) contractual interest for trading or are managed and whose (which may also include reasonable additional compensation for early termination) is performance is evaluated on a fair value treated as consistent with this criterion if the fair value of the prepayment feature is basis are measured at FVTPL. insignificant at initial recognition. iii. Financial assets – Assessment iv. Financial assets – Subsequent measurement and gains and losses: whether contractual cash flows are Financial assets These assets are subsequently measured at fair value. Net solely payments of principal and at FVTPL gains and losses, including any interest or dividend income, are interest: recognised in profit or loss. For the purposes of this assessment, Financial assets These assets are subsequently measured at amortised cost ‘principal’ is defined as the fair value of at amortised using the effective interest method. The amortised cost the financial asset on initial recognition. cost is reduced by impairment losses. Interest income, foreign ‘Interest’ is defined as consideration exchange gains and losses and impairment are recognised in for the time value of money and for the profit or loss. Any gain or loss on derecognition is recognised in credit risk associated with the principal profit or loss. amount outstanding during a particular period of time and for other basic Debt These assets are subsequently measured at fair value. Interest lending risks and costs (e.g. liquidity risk investments at income calculated using the effective interest method, foreign and administrative costs), as well as a FVOCI exchange gains and losses and impairment are recognised in profit margin. profit or loss. Other net gains and losses are recognised in OCI. On derecognition, gains and losses accumulated in OCI are In assessing whether the contractual reclassified to profit or loss. cash flows are solely payments of Equity These assets are subsequently measured at fair value. principal and interest, the Group investments at Dividends are recognised as income in profit or loss unless the considers the contractual terms of the FVOCI dividend clearly represents a recovery of part of the cost of the instrument. This includes assessing investment. Other net gains and losses are recognised in OCI whether the financial asset contains a and are never reclassified to profit or loss.

C T HOLDINGS PLC 63 Annual Report 2019 | 2020 Notes to the Financial Statements

v. Financial Liabilities - Classification, in equity in accordance with SLFRS 9 - 3.16.4 De-recognition Subsequent Measurement and Gains Financial Instruments. i. Financial assets and Losses The Group de-recognises a financial Financial liabilities are classified The initial redemption liability is a asset when the contractual rights to as measured at amortised cost or reduction of parent’s equity if the risks the cash flows from the financial asset FVTPL. A financial liability is classified and rewards of ownership remain expire, or it transfers the rights to as at FVTPL if it is classified as held- with the non-controlling interest or a receive the contractual cash flows in a for-trading, it is a derivative or it is reduction of non-controlling interest transaction in which substantially all of designated as such on initial recognition. equity if the risks and rewards of the risks and rewards of ownership of Financial liabilities at FVTPL are ownership transfer to the parent. If the financial asset are transferred or in measured at fair value and net gains and the present value of the redemption which the Group neither transfers nor losses, including any interest expense, amount exceeds the carrying value retains substantially all of the risks and are recognised in profit or loss. Other of the non-controlling interest, any rewards of ownership and it does not financial liabilities are subsequently excess is recorded against parent’s retain control of the financial asset. measured at amortised cost using equity. If the contract is exercised, any the effective interest method. Interest noncontrolling interest equity is allocated The Group enters into transactions expense and foreign exchange gains to parent equity. No adjustments are whereby it transfers assets recognised and losses are recognised in profit or made to goodwill upon settlement of the in its statement of financial position, but loss. Any gain or loss on derecognition contract. The redemption liability is offset retains either all or substantially all of is also recognised in profit or loss. by the cash payment. If the contract the risks and rewards of the transferred lapses un-exercised where the risks and assets. In these cases, the transferred Financial liabilities measured at rewards of ownership have transferred assets are not de-recognised. amortised cost include interest bearing to the parent, a non-controlling interest loans and borrowings, trade and other equity is reinstated. In substance, the ii. Financial liabilities payables and amounts due to related parent has sold those shares back The Group de-recognises a financial companies. to the noncontrolling interest and it is liability when its contractual obligations a transaction with a non-controlling are discharged or cancelled, or expire. 3.16.3 Derivative financial instruments interest. The non-controlling interest The Group also de-recognises a Derivatives are initially recognised equity amount is reinstated at an amount financial liability when its terms are at fair value; any directly attributable equal to its share of the carrying values modified and the cash flows of the transaction costs are recognised in profit of the subsidiary’s net assets at the modified liability are substantially or loss as incurred. Subsequent to initial date of lapse plus the goodwill from different, in which case a new financial recognition, derivatives are measured the subsidiary’s initial acquisition. Any liability based on the modified terms is at fair value, and changes therein are difference between the redemption recognised at fair value. generally recognised in profit or loss. liability and the non-controlling interest equity adjustment is recognised against On de-recognition of a financial i. Financial liability on put options the parent’s equity. No adjustments are liability, the difference between the written over non-controlling interest made to goodwill. If the contract lapses carrying amount extinguished and The financial liability is recognised at unexercised where the risks and rewards the consideration paid (including any the present value of the redemption of ownership remain with the non- non-cash assets transferred or liabilities amount and accreted through finance controlling interest, then no adjustment assumed) is recognised in profit or loss. charges in the profit or loss over is made to the carrying value of the non- the contract period up to the final controlling interest and theredemption iii. Offsetting redemption amount. Any adjustments to liability is de-recognised against the Financial assets and financial liabilities the redemption amount are recognised parent’s equity. are offset and the net amount presented

C T HOLDINGS PLC Annual Report 2019 | 2020 64 in the statement of financial position future expected credit losses that have estimated. Goodwill is tested annually when, and only when, the Group not been incurred) discounted at the for impairment. For impairment testing, currently has a legally enforceable right financial asset’s original effective interest assets are grouped together into the to set off the amounts and it intends rate (that is, the effective interest rate smallest group of assets that generates either to settle them on a net basis or to computed at initial recognition). An cash inflows from continuing use that are realise the asset and settle the liability impairment loss is calculated as the largely independent of the cash inflows simultaneously. difference between an asset’s carrying of other assets or CGUs. Goodwill amount and the present value of the arising from a business combination is 3.17 Impairment estimated future cash flows discounted allocated to CGUs or groups of CGUs 3.17.1 Non-derivative financial assets at the asset’s original effective interest that are expected to benefit from the The Group assesses on a forward rate. Losses are recognised in profit or synergies of the combination. The looking basis the expected credit losses loss and reflected in a provision account. recoverable amount of an asset or CGU associated with its debt instruments is the greater of its value in use and its carried at amortised cost and FVOCI. In relation to trade receivables, a fair value less costs to sell. Value in use The impairment methodology applied provision for impairment is made when is based on the estimated future cash depends on whether there has been a there is objective evidence (such as the flows, discounted to their present value significant increase in credit risk. probability of insolvency or significant using a pre-tax discount rate that reflects financial difficulties of the debtor) that current market assessments of the time For trade receivables, the Group applies the Group will not be able to collect all value of money and the risks specific the simplified approach permitted by of the amounts due under the original to the asset or CGU. An impairment SLFRS 9, which requires expected terms of the invoice. Impaired debts are loss is recognised if the carrying lifetime losses to be recognised from derecognised when they are assessed amount of an asset or CGU exceeds its initial recognition of the receivables. as uncollectible. recoverable amount. Impairment losses The Group has established a provision are recognised in profit or loss. They matrix that is based on its historical If in a subsequent period the amount are allocated first to reduce the carrying credit loss experience, adjusted for of the impairment loss decreases amount of any goodwill allocated forward-looking factors specific to the and the decrease can be related to the CGU, and then to reduce the debtors and the economic environment. objectively to an event occurring after carrying amounts of the other assets the impairment was recognised, the in the CGU on a pro rata basis. An At each reporting date the Group previously recognised impairment loss is impairment loss in respect of goodwill assesses whether there is objective reversed, to the extent that the carrying is not reversed. For other assets, an evidence that financial assets not carried value of the asset does not exceed its impairment loss is reversed only to the at fair value through profit or loss are amortised cost at the reversal date. Any extent that the asset’s carrying amount impaired. If there is objective evidence subsequent reversal of an impairment does not exceed the carrying amount (such as significant financial difficulty loss is recognised in profit or loss. that would have been determined, net of the obligor, breach of contract, or it of depreciation or amortisation, if no becomes probable that the debtor will 3.17.2 Non-financial assets impairment loss had been recognised. enter bankruptcy), the asset is tested for At each reporting date, the Group impairment. reviews the carrying amounts of its non- 3.18 Stated capital - Ordinary financial assets (other than biological shares The amount of the loss is measured assets, investment property, inventories Ordinary shares are classified as equity. as the difference between the asset’s and deferred tax assets) to determine Incremental costs directly attributable to carrying amount and the present value whether there is any indication of the issue of ordinary shares are of estimated future cash flows (excluding impairment. If any such indication exists, recognised as a deduction from equity, then the asset’s recoverable amount is net of any tax effects.

C T HOLDINGS PLC 65 Annual Report 2019 | 2020 Notes to the Financial Statements

3.19 Provisions 3.20.1.1 As a Lessee The lease liability is initially measured at A provision is recognised if, as a result At commencement or on modification the present value of the lease payments of a past event, the Group has a of a contract that contains a lease that are not paid at the commencement present legal or constructive obligation component, the Group allocates the date, discounted using the interest rate that can be estimated reliably, and it is consideration in the contract to each implicit in the lease or, if that rate cannot probable that an outflow of economic lease component on the basis of its be readily determined, the Company’s benefits will be required to settle the relative stand-alone prices. However, incremental borrowing rate. Generally, obligation. Provisions are determined for the leases of property the Group the Group entities uses its incremental by discounting the expected future has elected not to separate non-lease borrowing rate as the discount rate. cash flows at a pre-tax rate that reflects components and account for the lease current market assessments of the time and non-lease components as a single The Group entities determines its value of money and the risks specific to lease component. incremental borrowing rate by obtaining the liability. interest rates from various external The Group recognises a right-of-use financing sources and makes certain 3.20 Leases asset and a lease liability at the lease adjustments to reflect the terms of the The Group has applied SLFRS 16 using commencement date. The right-of-use lease and type of the asset leased. the modified retrospective approach and asset is initially measured at cost, which therefore the comparative information comprises the initial amount of the lease Lease payments included in the has not been restated and continues liability adjusted for any lease payments measurement of the lease liability to be reported under LKAS 17 and made at or before the commencement comprise the following: IFRIC 4. The details of accounting date, plus any initial direct costs incurred • fixed payments, including in- policies under LKAS 17 and IFRIC 4 are and an estimate of costs to dismantle substance fixed payments; and remove the underlying asset or to disclosed separately if they are different • variable lease payments that restore the underlying asset or the site from those under SLFRS 16 and the depend on an index or a rate, initially on which it is located, less any lease impact of changes is disclosed in Note measured using the index or rate as incentives received. 3.1.1. at the commencement date; • amounts expected to be payable 3.20.1 Policy Applicable from 1 April The right-of-use asset is subsequently under a residual value guarantee; and 2019 depreciated using the straight-line At inception of a contract, the Group method from the commencement date • the exercise price under a purchase assesses whether a contract is, or to the end of the lease term, unless option that the Group is reasonably contains, a lease. A contract is, or the lease transfers ownership of the certain to exercise, lease payments contains, a lease if the contract conveys underlying asset to the Group by the in an optional renewal period if the right to control the use of an end of the lease term or the cost of the Group is reasonably certain to identified asset for a period of time in the right-of-use asset reflects that the exercise an extension option, and exchange for consideration. To assess Group will exercise a purchase option. penalties early termination of a lease whether a contract conveys the right to In that case the right-of-use asset will unless the Group is reasonably certain control the use of an identified asset, the be depreciated over the useful life of the not to terminate early. Group uses the definition of a lease in underlying asset, which is determined SLFRS 16. on the same basis as those of property The lease liability is measured at and equipment. In addition, the right- amortised cost using the effective This policy is applied to contracts of-use asset is periodically reduced by interest method. It is remeasured entered into, on or after 1 April 2019. impairment losses, if any, and adjusted when there is a change in future lease for certain remeasurements of the lease payments arising from a change in an liability. index or rate, if there is a change in

C T HOLDINGS PLC Annual Report 2019 | 2020 66 the Group’s estimate of the amount To classify each lease, the Group makes • fulfilment of the arrangement was expected to be payable under a an overall assessment of whether the dependent on the use of a specific residual value guarantee, if the Group lease transfers substantially all of the risk asset or assets; and changes its assessment of whether it and rewards incidental to ownership of • the arrangement has conveyed the will exercise a purchase, extension or the underlying asset. If this is the case, right to use the asset. An arrangement termination option or if there is a revised then the lease is a finance lease; if not conveyed the right to sue the asset if in-substance fixed lease payment. then it is an operating lease. As part of one of the following was met: this assessment, the Group considers - the purchaser had the ability or When the lease liability is remeasured in certain indicators such as whether right to operate the asset while this way, a corresponding adjustment the lease is for the major part of the obtaining or controlling more than is made to the carrying amount of the economic useful life of the asset. an insignificant amount of the right-of-use asset, or is recorded in output; profit or loss if the carrying amount of When the Group is an intermediate - the purchaser had the ability or the right-of-use asset has been reduced lessor, it accounts for its interest in right to control physical access to zero. the head lease and the sub-lease to the asset while obtaining separately. It assesses the lease or controlling more than an The Group presents right-of-use assets classification of sub-lease with reference insignificant amount of the output; that do not meet the definition of to the right-of-use asset arising from or investment property in “Right-of-use” the head lease, not with reference to - facts and circumstances indicated assets and lease liabilites in interest the underlying asset. If a head lease that it was remote that other bearing loans and borrowings in the is a short-term lease to which the parties would take more than an statement of Financial Position. Group applies the exemption described insignificant amount of the output, above, then it classifies sub-lease as an and the price per unit was neither Short term leases and leases of low- operating lease. fixed per unit of output nor equal to value assets the current market price per unit of The Group has elected not to recognise The Group recognises lease payments output. right-of-use assets and lease liabilities received under operating leases as for leases of low-value assets and short- rental income on a straight-line basis 3.20.2.1 As a Lessee term leases. The Group recognises the over the lease term as part of ‘other In the comparative period, as a lessee lease payments associated with these income’. the Group classified leases that leases as an expense on a straight-line transferred substantially all of the risks basis over the lease term. Generally, the accounting policies to the and rewards of ownership as finance Group as a lessor in the comparative leases. When this was the case, the 3.20.1.2 As a Lessor period were not different from SLFRS leased assets were measured initially at At inception or on modification of 16. an amount equal to the lower of their a contract that contains a lease fair value and the present value of the component, the Group allocates the 3.20.2 Policy Applicable before 1 minimum lease payments. Minimum consideration in the contract to each April 2019 lease payments were the payments lease component on the basis of their For contracts entered into before 1 April over the lease term that the lessee relative stand-alone prices. 2019, the Group determined whether was required to make, excluding any the arrangement was or contained contingent rent. Subsequent to initial When the Group acts as a lessor, it a lease based on the assessment of recognition, the assets were accounted determines at lease inception Whether whether: for in accordance with the accounting each lease is a finance lease or an policy applicable to that asset. operating lease.

C T HOLDINGS PLC 67 Annual Report 2019 | 2020 Notes to the Financial Statements

Assets held under other leases were 4 New and amended 5 Financial risk management classified as operating leases and were standards issued but not effective The Group has exposure to the not recognised in the Group’s Statement as at the reporting date following risks from its use of financial of Financial Position. Payments made The Institute of Chartered Accountants instruments: under operating leases were recognised of Sri Lanka has issued number of • Credit risk in profit or loss on a straight-line basis new Sri Lanka Accounting Standards • Liquidity risk over the term of the lease. Lease (SLFRSs/ LKASs) and amendments incentives received were recognised that are effective for annual periods • Market risk as an integral part of the total lease beginning after the current financial year. • Currency risk expense, over the term of the lease. Accordingly, these standards have not • Operational risk been applied in preparing these financial 3.20.2.2 As a Lessor statements and the Group plans to This note presents information about When the Group acted as a lessor, it apply these standards if applicable as the Group’s exposure to each of the determined at lease inception whether and when they become effective. above risks, the Group’s objectives, each lease was a finance lease or an policies and processes for measuring operating lease. Group does not expect the following and managing risk, and the Group’s new Accounting standards, management of capital. Risk To classify each lease, the Group made amendments and interpretations that will management framework The Board an overall assessment of whether the become effective for future accounting of Directors has overall responsibility lease transferred substantially all of the periods will have a significant impact on for the establishment and oversight risk and rewards incidental to ownership the financial statements. of the Company’s risk management of the underlying asset. If this was the • Amendments to references to framework. The Group’s risk case, then the lease was a finance conceptual framework in Sri Lanka management policies are established lease; if not, then it was an operating Financial Reporting Standards. to identify and analyze the risks faced lease. As part of this assessment, the by the Group, to set appropriate risk Group considered certain indicators • Amendments to Sri Lanka Accounting limits and controls, and to monitor such as whether the lease was for the Standard - LKAS 1 “Presentation risks and adherence to limits. Risk major part of the economic life of the to Financial Statements” and Sri management policies and systems are asset. Lanka Accounting Standard - LKAS 8 “Accounting Policies, Changes in reviewed regularly to reflect changes in market conditions and the Group’s 3.21 Operating profit Accounting Estimates and Errors” activities. The Group, through its Operating profit is the result generated • Amendments to Sri Lanka Accounting training and management standards from the continuing principal revenue Standard - SLFRS 3 Business and procedures, aims to develop a producing activities of the Group as well Combinations. disciplined and constructive control as other income and expenses related • Sri Lanka Accounting Standard - environment in which all employees to operating activities. Operating profit SLFRS 17 Insurance Contracts. understand their roles and obligations. excludes net finance costs, share of • Amendments to SLFRS 9, LKAS profit of equity accounted investees and 39, and SLFRS 7 - Interest rate 5.1 Credit risk income taxes. benchmark reforms. Amendments Credit risk is the risk of financial loss to to Sri Lanka Accounting Standard - the Group if a customer or counter party SLFRS 10 “Presentation to Financial to a financial instrument fails to meet Statements” and Sri Lanka Accounting its contractual obligations and arises Standard - LKAS 28 “Investments in principally from the Group’s receivables Associates and Joint Ventures” from customers. The Group is exposed

C T HOLDINGS PLC Annual Report 2019 | 2020 68 to credit risk on trade receivables and processes, personnel, technology and infrastructure, and from external factors other receivables, due from related party other than credit, market and liquidity risks such as those arising from legal and and bank balances. regulatory requirements and generally accepted standards of corporate behaviour. Operational risks arise from all of the Group’s operations. The Group’s objective is a. Trade and other receivables to manage operational risk so as to balance the avoidance of financial losses and The creditworthiness of each customer damage to the Group’s reputation with overall cost effectiveness and to avoid control is evaluated prior to sanctioning credit procedures that restrict initiative and creativity. The primary responsibility for the facilities. Appropriate procedures for development and implementation of controls to address operational risk is assigned follow-up and recovery are in place to to management. This responsibility is supported by the development of overall monitor credit risk. Group standards for the management of operational risk in the following areas: • Requirements for appropriate segregation of duties, including the independent 5.2 Liquidity risk authorisation of transactions; Liquidity risk is the risk that the Group • Requirements for the reconciliation and monitoring of transactions; will encounter difficulty in meeting the • Compliance with regulatory and other legal requirements; obligations associated with its financial liabilities that are settled by delivering • Documentation of controls and procedures; cash or another financial asset. The • Development of contingency plans; Group’s approach to managing liquidity • Training and professional development; is to ensure, as far as possible, that it • Ethical and business standards; will always have sufficient liquidity to meet its liabilities when due, under both • Risk mitigation, including insurance where this is effective. normal and stressed conditions without incurring unacceptable losses or risking a. Cash and cash equivalents damage to the Group’s reputation. Cash and cash equivalents comprise cash balances and call deposits with maturities of three months or less from the acquisition date that are subject to an insignificant 5.3 Market risk risk of changes in their fair value, and are used by the Group in the management of Market risk is the risk that changes in its short-term commitments. market prices, such as foreign exchange rates and interest rates will affect the The Cash Flow Statement has been prepared using the “Indirect method” of Group’s income. The objective of market preparing cash flows in accordance with the Sri Lanka Accounting Standard (LKAS risk management is to manage and 07) - Statement of Cash Flows. control market risk exposures within acceptable parameters, while optimizing the return.

5.4 Currency risk Currency risk is the risk that the value of a financial instrument will fluctuate due to a change in foreign exchange rates.

5.5 Operational risk Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Group’s

C T HOLDINGS PLC 69 Annual Report 2019 | 2020 Notes to the Financial Statements

6. Revenue In thousands of rupees Group Company For the year ended 31st March 2020 2019 2020 2019

The following is an analysis of the Group’s revenue Sale of goods 107,051,866 94,662,990 - - Rendering of services 266,632 353,531 - - Investment property rentals 498,567 530,839 - - 107,817,065 95,547,360 - -

7. Other income In thousands of rupees Group Company For the year ended 31st March 2020 2019 2020 2019

Dividend income 5,417 52,440 1,207,093 421,969 Rental income 158,697 191,721 10,160 24,081 Gain on disposal of property, plant and equipment 10,142 43,531 - - Merchandising income 1,777,978 1,808,454 - - Foreign exchange gain 20,945 4,140 - - Amortisation of deferred income 11,483 11,481 - - Sundry income 283,781 197,763 - - Change in fair value of investment property (Note 16.1) 106,344 368,101 37,479 22,971 Change in fair value of short term investments 22,904 - - - 2,397,691 2,677,631 1,254,732 469,021

8. Results from operating activities In thousands of rupees Group Company For the year ended 31st March 2020 2019 2020 2019

8.1 Expenses by nature The following items have been included in results from operating activities: Employee costs (Note 8.2) 7,580,545 6,832,693 51,808 61,767 Depreciation of property, plant and equipment 2,677,708 2,517,323 95 839 Amortisation of intangible assets 93,021 96,721 - - Directors’ emoluments 490,951 453,082 36,370 32,484 Auditor's remuneration (Note 8.3) 22,870 23,009 1,059 961 Impairment loss on investments in subsidiaries (Note 18.1) - - 203,419 26,268 Impairment of trade and other receivables 85,020 (48,318) - - Impairment of inventories (2,689) (6,428) - - Depreciation of right of use assets (Note 14.1) 1,049,556 - 20 -

C T HOLDINGS PLC Annual Report 2019 | 2020 70 In thousands of rupees Group Company For the year ended 31st March 2020 2019 2020 2019

8.2 Employee costs Salaries, wages and other related expenses 6,677,156 5,996,552 42,268 49,036 Equity-settled share-based payments 50,214 94,691 1,094 2,062 Defined benefit plan cost - retirement benefit obligations 237,924 203,536 2,675 4,731 Defined contribution plan costs - EPF & ETF 615,251 537,914 5,771 5,938 7,580,545 6,832,693 51,808 61,767

8.3 Auditor's remuneration Audit and audit related expenses 21,569 21,771 700 620 Non-audit services 1,301 1,238 359 341 22,870 23,009 1,059 961

9. Net finance income / (costs) In thousands of rupees Group Company For the year ended 31st March 2020 2019 2020 2019

Finance income Interest income 246,378 232,713 13,396 16,481 246,378 232,713 13,396 16,481

Finance costs Interest on bank loans (1,558,718) (1,521,982) (220) - Interest on overdraft facilities (170,808) (192,452) (771) (82) Interest on lease Liabilities (Note 14.3) (1,197,583) - (18) - (2,927,109) (1,714,434) (1,009) (82) Net finance income / (costs) recognised in profit or loss (2,680,731) (1,481,721) 12,387 16,399

C T HOLDINGS PLC 71 Annual Report 2019 | 2020 Notes to the Financial Statements

10. Income tax expense In thousands of rupees Group Company For the year ended 31st March Note 2020 2019 2020 2019

10.1 Amounts recognised in profit or loss Current tax expenses Current tax on profits for the year 10.4.1 1,696,636 1,542,411 17,907 5,669 Current tax on profits in respect of prior years 10.4.1 (46,116) (102,143) - 2,234 1,650,520 1,440,268 17,907 7,903

Deferred tax expenses Deferred tax on profits for the year 10.4.1 (117,705) 65,424 - - Deferred tax on profits in respect of prior years - (1,455) - - (117,705) 63,969 - - Total income tax expense recognised in profit or loss 1,532,815 1,504,237 17,907 7,903

10.2 Amounts recognised in other comprehensive income Re-measurement of obligation on defined benefit plan 17,920 1,408 - - Fair value gain (26) - - - Total income tax expense recognised in other comprehensive income 17,894 1,408 - -

10.3 Tax rates applicable for group companies (a) Standard rate In accordance with new Inland Revenue Act No. 24 of 2017, the standard corporate tax rate is 28% for all companies other than as disclosed below.

(b) Companies liable to income tax other than at standard rate (i) Part of the profits of Cargills (Ceylon) PLC is taxed at 40%. (ii) In accordance with the Inland revenue Act No. 10 of 2006 and subsequent amendments thereto, the income of Cargills Quality Confectioneries (Private) Limited is exempt from Income Tax until the year of assessment 2019/20.

C T HOLDINGS PLC Annual Report 2019 | 2020 72 10.4 Reconciliation of effective tax In thousands of rupees Group Company For the year ended 31st March 2020 2019 2020 2019

10.4.1 Reconciliation of effective tax Profit before tax 4,254,692 3,888,474 960,515 362,777 Income tax using the Company’s standard tax rate 1,191,314 1,088,773 268,944 101,578 Effect of different tax rate [Refer 10.4.1(a)] - 22,899 - - Inter-company entries 374,474 402,089 - - Non-deductible expenses 1,931,567 1,133,720 1,186 646 Deductible expenses (1,587,638) (962,372) (14,258) (11,052) Tax-exempt income (282,849) (203,292) (254,158) (86,283) Other sources of income 36,042 60,196 3,751 4,615 Allowable deductions out of un-recognised tax losses (8,903) (20,815) (5,466) (9,504) Current year losses 24,722 15,544 - - Tax on dividend received 17,907 5,669 17,907 5,669 1,696,636 1,542,411 17,907 5,669 Change in un-recognised temporary differences (117,705) 63,969 - - Income tax on profit in respect of prior years (46,116) (102,143) - 2,234 Income tax expense recognised in profit or loss 1,532,815 1,504,237 17,907 7,903

(a) Tax losses Tax losses brought forward 2,524,606 2,436,541 382,038 415,981 Tax losses added 88,292 55,513 - - Tax losses utlised (31,797) (74,338) (19,520) (33,943) Adjustments related to prior years (15,859) (12,820) 3,559 - Adjustment on finalisation liability (502) 119,710 - - Tax losses carried forward 2,564,740 2,524,606 366,077 382,038

C T HOLDINGS PLC 73 Annual Report 2019 | 2020 Notes to the Financial Statements

10. Income Tax Expense (Contd.) Group Company For the year ended 31st March 2020 2019 2020 2019

10.4.2 Reconciliation of effective tax - In percentages Income tax using the Company’s standard tax rate 28.00 28.00 28.00 28.00 Effect of different tax rate [Refer 10.4.2(a)] - 0.59 - - Inter-company entries 8.80 10.34 - - Non-deductible expenses 45.40 29.16 0.12 0.18 Deductible expenses (37.31) (24.75) (1.48) (3.05) Tax-exempt income (6.65) (5.23) (26.46) (23.78) Other sources of income 0.85 1.55 0.39 1.27 Allowable deductions out of un-recognised tax losses (0.21) (0.54) (0.57) (2.62) Current year losses 0.58 0.40 - - Tax on dividend received 0.42 0.15 1.86 1.56 40.00 39.67 1.86 1.56

Change in un-recognised temporary differences (2.77) 1.65 - - Income tax on profit in respect of prior years (1.08) (2.63) - 0.62 Income tax expense recognised in profit or loss 36.03 38.69 1.86 2.18

10.5 Deferred tax (assets) / liabilities 10.5.1 Movement in deferred tax (assets) / liabilities Movement in net balance Classified as Net balance Recognised in In thousands of rupees As at 1st profit or loss Other As at 31st Deferred Deferred April 2018 comprehensive March 2019 tax liabilities tax assets income

For the year ended 31st March 2019 Accelerated tax depreciation [refer note 10.5.1(i)] 2,280,840 175,305 - 2,456,145 2,456,145 - Fair value gains 71,194 - - 71,194 71,194 - Retirement benefit obligations (286,869) (34,530) (1,408) (322,810) - (322,810) Tax losses [refer note 10.5.2(ii)] (210,448) (24,648) - (235,096) - (235,096) Decrease in future tax rates (3,874) - - (3,874) - (3,874) Provisions (370,627) (63,555) - (434,182) - (434,182) Other 78,648 11,397 - 90,045 90,045 - Tax assets / (liabilities) before set-off 1,558,864 63,969 (1,408) 1,621,422 2,617,384 (995,962) Set-off of tax - - - - (990,687) 990,687 Net tax assets / (liabilities) 1,558,864 63,969 (1,408) 1,621,422 1,626,697 (5,275)

C T HOLDINGS PLC Annual Report 2019 | 2020 74 Movement in net balance Classified as Recognised in In thousands of rupees As at profit or Other Equity As at Deferred Deferred 1st April loss comprehensive 31st March tax tax 2019 income 2020 liabilities assets

For the year ended 31st March 2020 Accelerated tax depreciation [refer note 10.5.1(i)] 2,456,145 36,745 - - 2,492,890 2,492,890 - Fair value gains 71,194 3,537 26 - 74,757 74,757 - Retirement benefit obligations (322,810) (29,249) (17,920) - (369,979) - (369,979) Tax losses [refer note 10.5.2(ii)] (235,096) 7,197 - - (227,899) - (227,899) Decrease in future tax rates (3,874) - - - (3,874) - (3,874) Provisions (434,182) 150,556 - - (283,626) - (283,626) Lease liabilities - (310,495) - - (310,495) - (310,495) Other 90,045 24,005 - 114,050 114,050 - Adjustment on initial application of SLFRS 16 - - - (188,372) (188,372) - (188,372) Tax assets / (liabilities) before set-off 1,621,422 (117,705) (17,894) (188,372) 1,297,452 2,681,697 (1,384,245) Set-off of tax - - - - - (1,371,406) 1,371,406 Net tax assets / (liabilities) 1,621,422 (117,705) (17,894) (188,372) 1,297,452 1,310,291 (12,839)

(i) Accelerated tax depreciation on property, plant and equipment. (ii) Tax losses are available for deduction against future taxable income.

10.5.2 Deferred income tax assets and liabilities during the year were calculated after setting off balances within the same tax jurisdiction.

10.5.3 Deferred tax has been computed taking into consideration the tax rates effective from 1 April 2017 which is 14%, 28% or 40% for all standard rate companies. A weighted averaged rate is applied when income is taxed at different tax rates. Details of tax rates for individual companies are shown in Note 10.3. Deferred Taxation is provided for all Group companies except those companies with tax losses available for carry forward exceeding taxable temporary differences and companies which are exempt from income tax.

10.5.4 Un-accounted deferred tax assets A deferred tax asset is recognised only to the extent that it is probable that taxable profit will be available in the foreseeable future, against which such deductible temporary timing differences could be utilised. The deferred tax effect on undistributed reserves of subsidiaries has not been recognised where the parent can control the timing of the reversal of these temporary differences.

The break down of the tax effect of un-accounted deferred tax assets is given below; In thousands of rupees Group Company For the year ended 31st March 2020 2019 2020 2019

Deductible temporary differences 4,409 4,417 4,409 4,417 Tax losses 491,195 477,049 102,502 106,970 495,604 481,466 106,911 111,387

C T HOLDINGS PLC 75 Annual Report 2019 | 2020 Notes to the Financial Statements

10. Income Tax Expense (Contd.) 10.5.5 Deferred tax liabilities on freehold lands The Income Tax Act No. 24 of 2017 and new tax rates including capital gains taxes are effective from 1st April 2018. Accordingly, the income tax charge for the year ended 31st March 2020 has been computed on rates applicable in the year of assessment 2019/2020. The provision for deferred tax at 31st March 2020 has been calculated at rates and on capital gains applicable post 1st April, 2018. Due to uncertainties that exist on the interpretation of the new law relating to freehold land for tax purposes, significant judgement was exercised to determine the provision required for deferred taxes on capital gains applicable to freehold land.

Having sought independent professional legal advice, the Group is of the view that the freehold land used in the business falls under the category of “Investment Assets” and accordingly deferred tax has been provided on the related gain on revaluation. In the event it is deemed that freehold land be considered as “Capital Assets used in the business”, the Company and Group would have to make an additional deferred tax charge as follows:

Statement of profit or loss and other comprehensive income In millions of rupees Group Company For the year ended 31st March 2020 2019 2020 2019

Unrecognised through profit or loss 53 90 6 3 Unrecognised through other comprehensive income - - - - 53 90 6 3

Statement of financial position In thousands of rupees Group Company For the year ended 31st March 2020 2019 2020 2019

Unrecognised through profit or loss 2,217 2,164 368 362 Unrecognised through other comprehensive income - - - - 2,217 2,164 368 362

C T HOLDINGS PLC Annual Report 2019 | 2020 76 11. Earnings per share 11.1 Basic earnings per share Earnings per share is calculated by dividing the profit attributable to equity holders of the Company by weighted average number of ordinary shares outstanding during the year.

Group Company For the year ended 31st March 2020 2019 2020 2019

Basic earnings per share in rupees 6.98 8.16 4.68 1.76

In thousands of rupees Profit for the year attributable to owners of the Company 1,404,986 1,642,617 942,608 354,874

In thousands of numbers Weighted-average number of ordinary shares Issued ordinary shares as at 31st March 201,407 201,407 201,407 201,407

11.2 Diluted earnings per share Diluted earnings per share computation is the same as in the note 11.1.

12. Dividend per share For the year ended 31st March 2020 For the year ended 31st March 2019 Date of Dividend Dividend Date of Dividend Dividend payment per share (In thousands payment per share (In thousands Rs. of rupees) Rs. of rupees)

First interim - 2018/19 - - - 29-Nov-18 1.80 362,533 First interim - 2019/20 13-Dec-19 1.80 362,533 - - - Final - 2018/19 - - - 7 Aug 19 3.70 745,205 Final 2019/20 (proposed) - 2.80 563,940 - - - - 4.60 926,473 - 5.50 1,107,738

C T HOLDINGS PLC 77 Annual Report 2019 | 2020 Notes to the Financial Statements

13. Property, plant and equipment 13.1 Reconciliation of carrying amount Group Freehold Freehold Improvements Plant & Motor Furniture Capital Total land buildings to lease machinery vehicles & fittings work in hold progress In thousands of rupees buildings

Cost / Valuation As at 1st April 2018 11,409,378 1,825,106 8,658,033 17,747,621 1,300,447 94,031 1,385,212 42,419,828 Additions 499,089 133,084 1,422,847 2,065,101 173,525 338 1,003,322 5,297,306 Disposals - - - (16,140) (31,608) - - (47,748) As at 31st March 2019 11,908,467 1,958,190 10,080,880 19,796,582 1,442,364 94,369 2,388,534 47,669,386

As at 1st April 2019 11,908,467 1,958,190 10,080,880 19,796,582 1,442,364 94,369 2,388,534 47,669,386 Additions - 573,053 1,262,162 2,576,496 309,846 6,417 1,123,622 5,851,596 Disposals - - - (122,430) (45,563) (16,327) - (184,320) As at 31st March 2020 11,908,467 2,531,243 11,343,042 22,250,648 1,706,647 84,459 3,512,156 53,336,662

Accumulated depreciation and impairment losses As at 1st April 2018 - 791,211 3,958,488 10,034,998 996,114 44,394 - 15,825,205 Charge for the year - 115,817 560,543 1,697,049 133,191 10,723 - 2,517,323 Disposals - - - (13,993) (31,603) - - (45,596) As at 31st March 2019 - 907,028 4,519,031 11,718,054 1,097,702 55,117 - 18,296,932

As at 1st April 2019 - 907,028 4,519,031 11,718,054 1,097,702 55,117 - 18,296,932 Charge for the year - 114,198 667,523 1,713,189 173,571 9,227 - 2,677,708 Disposals - - - (89,300) (45,540) (16,317) - (151,157) As at 31st March 2020 - 1,021,226 5,186,554 13,341,943 1,225,733 48,027 - 20,823,483

Carrying Value As at 31st March 2019 11,908,467 1,051,162 5,561,849 8,078,528 344,662 39,252 2,388,534 29,372,454

As at 31st March 2020 11,908,467 1,510,017 6,156,488 8,908,705 480,914 36,432 3,512,156 32,513,179

C T HOLDINGS PLC Annual Report 2019 | 2020 78 Company Improvements Plant & Motor Furniture Total to leasehold machinery vehicles & fittings In thousands of rupees buildings

Cost / revaluation As at 1st April 2018 4,854 2,417 41,024 - 48,295 Additions - - - 77 77 As at 31st March 2019 4,854 2,417 41,024 77 48,372

As at 1st April 2019 4,854 2,417 41,024 77 48,372 Additions - - - 31 31 As at 31st March 2020 4,854 2,417 41,024 108 48,403

Accumulated depreciation and impairment losses As at 1st April 2018 2,735 2,412 40,255 - 45,402 Charge for the year 73 - 763 3 839 As at 31st March 2019 2,808 2,412 41,018 3 46,241

As at 1st April 2019 2,808 2,412 41,018 3 46,241 Charge for the year 72 2 6 15 95 As at 31st March 2020 2,880 2,414 41,024 18 46,336

Carrying value As at 31st March 2019 2,046 5 6 74 2,131 As at 31st March 2020 1,974 3 - 90 2,067

C T HOLDINGS PLC 79 Annual Report 2019 | 2020 Notes to the Financial Statements

13. Property, plant and equipment (Contd.) 13.2 Details of lands as at 31st March Location Valuation technique Land extent Building area No. of In thousands (Sq. ft.) buildings of rupees Value Company: C T Holdings PLC Kandy Technique (1) 170 Perches 9,650 4 537,000 Negombo Technique (1) 91 Perches 17,500 1 271,125 Bandarawela Technique (2) 2.8 Acres 30,600 4 607,600 Nuwara Eliya Technique (1) 60 Perches 6,500 3 144,568 Company: Cargills (Ceylon) PLC Colombo 01 Technique (1) 141 Perches 124,215 1 2,266,075 Colombo 02 Technique (1) 81.5 Perches 20,970 2 774,630 Canal Row, Colombo 01 Technique (2) 15 Perches 12,300 1 284,897 Dematagoda Technique (1) 84 Perches 37,967 1 288,792 Company: Cargills Foods Company (Private) Limited Kandy Technique (2) 88 Perches 25,174 1 1,311,204 Maharagama Technique (1) 145 Perches 15,827 1 508,550 Nuwara Eliya Technique (1) 57 Perches 9,617 1 212,501 Mattakuliya (111) Technique (2) 330 Perches 80,967 2 719,033 Kohuwala Technique (1) 29 Perches 6,225 1 104,600 Mattakuliya (141) Technique (1) 288 Perches 44,469 4 446,000 Gampaha Technique (1) 82.6 Perches 39,565 1 123,900 Moratuwa Technique (1) 78.6 Perches - - 250,103 Ingiriya (A,C,D,B1) Technique (1) 26 Acres - - 243,000 Negombo Cost 28.8 Acres - - 495,685 Company: Cargills Quality Foods Limited Mattakuliya Technique (1) 1.3 Acres 16,517 - 363,400 Ja - Ela Technique (1) 5.1 Acres 38,381 - 319,575 Ja - Ela Technique (1) 4 Acres 28,976 - 93,050 Company: Cargills Agrifoods Limited Katana Technique (1) 11.3 Acres 68,624 4 314,280 Company: Millers Limited Kelaniya Technique (1) 1.5 Acres 55,770 2 214,500 Company: C P C Lanka Limited Katoolaya Estate, Thawalantenne Technique (1) 4 Acres 16,706 1 14,350

C T HOLDINGS PLC Annual Report 2019 | 2020 80 Location Valuation technique Land extent Building area No. of In thousands (Sq. ft.) buildings of rupees Value Company: Kotmale Dairy Products (Private) Limited Mulleriyawa Technique (1) 1.7 Acres 28,862 3 124,430 Bogahawatta Technique (1) 1 Acres 8,764 6 21,600 Kuduoya Estate, Ruwanpura, Hatton Technique (1) 17.4 Acres 12,479 4 56,000 Company: Cargills Quality Dairies (Private) Limited Mirigama, Baduragoda Technique (1) 49.8 Perches - - 7,000 Mirigama, Baduragoda Cost 38.5 Perches - - 3,404 Company: The Empire Investments Company (Private) Limited Bandarawela Technique (1) 85 Perches 6,345 1 341,865 Katubedda Technique (1) 1.15 Acres 3,500 - 445,750 Total 11,908,467

13.3 Measurement of fair values of freehold land - Group (a) Valuation process The Group’s freehold lands are stated at their revalued amounts, being the fair value at the date of revaluation less any subsequent accumulated impairment losses. The Group has revalued all of its freehold land in the reporting period ending 31st March 2018. The value measurements were carried out in conformity with the requirements of the Sri Lanka Accounting Standards by Mr. Tissa Weeratne, Chartered Valuation Surveyor, UK & Fellow, Institute of Valuers of Sri Lanka, with appropriate qualifications and recent experience in the valuation of properties in the relevant locations. Mr. T Weeratne is not related to the Group. The surplus arising on such valuations have been transferred to Revaluation Reserves.

(b) Valuation techniques used Valuation technique (1) : market comparable approach The bare lands are valued using the market comparable approach. Under the market comparable approach, a property’s fair value is estimated based on comparable transactions. The valuer used the comparable method of valuation involving analysing data obtained from local selling prices for the entire portfolio, by property type. The market comparable approach is based upon the principle of substitution under which a potential buyer will not pay more for the property than it will cost to buy a comparable substitute property. The unit of comparison applied by the Group is the price per perch.

Valuation techniques (2) : income capitalisation method The commercial property (shopping malls & theatres) are valued using the income capitalisation method where a property’s fair value is estimated based on the normalised net operating income generated by the property, which is divided by the capitalisation (discount) rate. The difference between gross and net rental income includes expense at rates estimated by the valuer.

C T HOLDINGS PLC 81 Annual Report 2019 | 2020 Notes to the Financial Statements

13. Property, plant and equipment (Contd.) (c) Fair value hierarchy The fair value measurement for all the lands are categorised as a Level 3 fair value based on the inputs to the valuation technique used. A significant increase in the market value per perch, capitalisation rate and market rent used in arriving at fair value would result in a significant increase in fair value, and vice versa. There has been no change to the valuation technique during the year.

Level 1 - Quoted prices in active markets Level 2 - Significant observable inputs Level 3 - Significant unobservable inputs

(d) Information about fair value measurements using significant unobservable inputs (Level 3) Property valuations are inherently subjective as they are made on the basis of assumptions made by the valuer which may not prove to be accurate. For these reasons we have classified the land valuations as Level 3 as defined by SLFRS 13.

(e) The following table shows the valuation techniques used by Group in measuring level 3 fair values and the significant unobservable inputs used. Valuation technique Significant unobservable inputs "Sensitivity of the input to the fair value" Market comparable method : This Market price per perch. The valuer has The estimated fair value would increase / method considers the selling price of used a range of prices for respective (decrease) if: a similar property within a reasonably lands based on adjusted fair value • Cost per square foot was higher / recent period of time in determining the taking into account other valuation (lower); or fair value of property being revalued. considerations. Market price per • Market value per perch was higher / This involves evaluation of recent active perch ranges between Rs. 5,000 - Rs. (lower) market prices of similar assets, making 16,100,000 per perch appropriate adjustments for difference in size, nature and location of the property Income method : The net income Contractual rentals agreed; Occupancy Estimated fair value will increase / generated by the property is used in rates 100%, Capitalization rates 5%- (decrease) if market interest rate increase conjunction with certain factors is used 7%, Repairs and insurance 22%-25%, / (decrease) to calculate its fair value. Valuer has used market price per perch for excess land in existing location using a range of prices for similar lands based on adjusted fair value taking into account other valuation consideration ranges between Rs. 2,000,000 - Rs. 18,000,000 per perch

C T HOLDINGS PLC Annual Report 2019 | 2020 82 13.4 If land were stated at the historical cost basis, the carrying amounts would have been as follows: In thousands of rupees Group As at 31st March 2020 2019

Freehold land 6,812,288 6,812,288

13.5 Leased assets capitalised in property, plant and equipment In thousands of rupees Group Company As at 31st March 2020 2019 2020 2019

Improvements to leasehold buildings Capitalised 11,343,042 10,080,880 4,854 4,854 Accumulated depreciation (5,186,554) (4,519,031) (2,880) (2,808) Carrying value 6,156,488 5,561,849 1,974 2,046

13.6 Security The details of assets mortgaged for banking facilities obtained have been given in the note 26.3 to the Financial Statements.

13.7 Details on classes of assets (a) Land & buildings consist of freehold land, road ways & buildings. (b) Improvements to leasehold buildings include the cost of civil work incurred in setting up new outlets on leasehold premises. (c) Furniture & fittings consist of tools, implements, furniture & fittings, office & other equipment. (e) Capital work in progress consists of expenditure incurred on projects where operations had not commenced as at the reporting date.

13.8 Other information Property, plant and equipment of the Group and the Company included: In millions of rupees Group Company As at 31st March 2020 2019 2020 2019

Fully depreciated assets 5,927 4,111 41 33

As per the policy and especially due to the impact the COVID-19 Pandemic could have on Group assets, the Group reviewed the carrying values of property, plant and equipment as at the reporting date and determined that no impairment is necessary. The Group has evaluated its business continuity plans and is satisfied that all necessary steps have been taken to safeguard its assets.

Depreciation amounting to Rs. 2,122 Mn (2019 - Rs. 2,093 Mn) and Rs. 556 Mn (2019 - Rs. 425 Mn) has been charged respectively to the cost of sales and, administration and other expenses of the Group.

C T HOLDINGS PLC 83 Annual Report 2019 | 2020 Notes to the Financial Statements

14. Leases Information about leases for which a Group is lessee is presented below : In thousands of rupees Group Company As at 31st March 2020 2019 2020 2019

14.1 Right of use assets Balance as at 1st April - - - - Recognition of right of use assets on initial application of SLFRS 16 8,278,229 - 155 - Transfers from prepayment on leasehold land and building on initial application of SLFRS 16 174,180 - - - Transfers from prepayments on initial application of SLFRS 16 22 - 22 - Transfer from previous years LKAS Adjustment on initial application of SLFRS 16 (3,374) - - - Adjusted balance as at 1st April 8,449,057 - 177 - Additions 2,757,599 - - - Depreciation (1,049,556) - (20) - Balance as at 31st March 10,157,100 - 157 -

14.2 Lease liabilities Balance as at 1st April - - - - Recognition of lease liability on initial application of SLFRS 16 9,720,747 - 155 - Transfers from prepayment on leasehold land and building on initial application of SLFRS 16 - - - - Adjusted balance as at 1st April 9,720,747 - 155 - Additions 2,757,599 - - Interest expense 1,197,583 - 18 - Payments (1,902,861) - - - Balance as at 31st March 11,773,068 - 173 -

Lease liabilities included in the statement of financial position as at 31st March Current 850,431 - 28 - Non - current 10,922,637 - 145 - 11,773,068 - 173 -

Maturity analysis - contractual undiscounted cash flows Less than one year 2,157,100 - 30 - One to five years 9,865,697 - 121 - More than five years 12,631,489 - 61 - Total undiscounted liabilities as at 31st March 24,654,286 - 212 -

*Lease liabilities is presented under Note 26.

C T HOLDINGS PLC Annual Report 2019 | 2020 84 In thousands of rupees Group Company As at 31st March 2020 2019 2020 2019

14.3 Amounts recognised in profit or loss 2019/2020 - Leases under SLFRS 16 Depreciation of right-of-use assets 1,049,556 - 20 - Interest expense on lease liabilities 1,197,583 - 18 - Income from sub - leasing right of use assets presented in 'other income' (33,043) - (2,400) - 2,214,096 - (2,362) -

2018/2019 - Operating leases under LKAS 17 Lease expense - 1,788,762 - 30 Income from sub-leasing presented in 'other income' - (36,660) - (2,400) - 1,752,102 - (2,364)

14.4 Amounts recognised in Statement of Cash Flows Total cash outflow for leases (1,902,861) - - - (1,902,861) - - -

15. Prepayment on leasehold land and building

15.1 Reconciliation of carrying amount In thousands of rupees Group Company As at 31st March 2020 2019 2020 2019

Cost As at 1st April 251,597 201,572 - - Transfer to right of use assets on initial application of SLFRS 16 (201,570) - - - Additions 150,885 50,025 - - As at 31st March 200,912 251,597 - -

Accumulated amortisation As at 1st April 27,390 21,341 - - Transfer to right of use assets on initial application of SLFRS 16 (27,390) - - - Charge for the year - 6,049 - - As at 31st March - 27,390 - - 200,912 224,207 - -

Carrying value Current portion (Note 22) - 6,032 - - Non-current portion 200,912 218,175 - - 200,912 224,207 - -

C T HOLDINGS PLC 85 Annual Report 2019 | 2020 Notes to the Financial Statements

15. Prepaid lease rentals to acquire rights to use lands (Contd.) Property Lease period Amount Rs.'000

Cargills Foods Company (Pvt) Limited Kolonnawa land 99 years 200,912

The prepaid leases as at 31st March 2020 relate to contracts that are to commence after 01st April 2020. No lease contracts have been signed as at 31st March 2020.

16. Investment Property 16.1 Reconciliation of carrying amount In thousands of rupees Group Company As at 31st March 2020 2019 2020 2019

As at 1st April 7,975,453 7,607,025 1,583,264 1,560,293 Improvements during the year 104,112 327 - - Change in fair value 106,344 368,101 37,479 22,971 As at 31st March 8,185,909 7,975,453 1,620,743 1,583,264

Investment property comprise both commercial properties leased to third parties as well as land held for capital appreciation. Changes in fair values are recognised as gains in profit or loss and included in ‘other income’. All gains are unrealised.

16.2 Measurement of fair values (a) Valuation process The valuations of investment property for the reporting period were performed by Mr. Tissa Weeratne, Chartered Valuation Surveyor, UK & Fellow, Institute of Valuers of Sri Lanka, an accredited independent valuer with a recognised and relevant professional qualification and with recent experience in the locations and categories of the investment property being valued. The valuation models applied are in accordance with those recommended by the International Valuation Standards Committee and are consistent with the principles in SLFRS 13. For all investment properties, their current use equates to the highest and best use and changes in Level 3 fair values are reviewed annually at each reporting date.

(b) Valuation techniques used Valuation technique (1): Market comparable approach The bare lands are valued using the market comparable approach. Under the market comparable approach, a property’s fair value is estimated based on comparable transactions. The valuer used the comparable method of valuation involving analysing data obtained from local selling prices for the entire portfolio, by property type. The market comparable approach is based upon the principle of substitution under which a potential buyer will not pay more for the property than it will cost to buy a comparable substitute property. The unit of comparison applied by the Group is the price per perch.

Valuation techniques (2): Income capitalisation method The commercial property (shopping malls & theatres) are valued using the income capitalisation method where a property’s fair value is estimated based on the normalised net operating income generated by the property, which is divided by the capitalisation (discount) rate. The difference between gross and net rental income includes expense at rates estimated by the valuer.

C T HOLDINGS PLC Annual Report 2019 | 2020 86 (c) Fair value hierarchy The fair value measurement for all the investment properties are categorised as a Level 3 fair value based on the inputs to the valuation technique used. A significant increase in the market value per perch, capitalisation rate and market rent used in arriving at fair value would result in a significant increase in fair value, and vice versa. There has been no change to the valuation technique during the year.

Level 1 - Quoted prices in active markets Level 2 - Significant observable inputs Level 3 - Significant unobservable inputs

(d) Information about fair value measurements using significant unobservable inputs (Level 3) Property valuations are inherently subjective as they are made on the basis of assumptions made by the valuer which may not prove to be accurate. For these reasons we have classified the investment property valuations as Level 3 as defined by SLFRS 13.

Group Description of the Valuation Land extent Building No. of In thousands of rupees property technique area buildings Fair value Change in fair value (Sq. ft.) 2020 2019 2020 2019 Company: Cargills (Ceylon) PLC Land - Colombo 02 Technique (1) 78 Perches 5,146 1 705,337 690,216 15,121 23,361 Commercial property - Jaffna Technique (2) Leasehold 99,164 1 197,145 196,244 (515) 7,271 Company: Millers Limited Bare land - Nittambuwa Technique (1) 112 Perches - - 134,950 134,775 175 6,325 Company: C T Land Development PLC Commercial property - Technique (2) 257 Perches 277,514 1 3,843,767 3,702,128 38,943 196,682 Colombo 04 Company: C T Real Estate (Private) Limited Bare land Piliyandala Technique (1) 114 Perches - - 102,600 102,600 - 22,800 Commercial property - Technique (2) 154.9 23,985 2 120,434 117,710 2,724 3,292 Piliyandala Perches Company: C T Properties Lakeside (Private) Limited Bare land - Boralesgamuwa Technique (1) 43 Acres 11,400 1 1,200,000 1,200,000 - - Company: C T Properties G S (Private) Limited Bare land - Kotahena Technique (1) 199.6 Perches - - 1,498,500 1,468,530 29,970 69,930 Company: Frederick North Hotel Company (Private) Limited Bare land - Boralasgamuwa Technique (1) 2.5 Acres 23,168 4 383,176 363,250 19,926 38,440 Total 8,185,909 7,975,453 106,344 368,101

C T HOLDINGS PLC 87 Annual Report 2019 | 2020 Notes to the Financial Statements

16. Investment Property (Contd.) Company Description of the Valuation Land extent Building No. of In thousands of rupees property technique area (Sq. ft.) buildings Fair value Change in fair value 2020 2019 2020 2019 Land - Kandy Technique (1) 170 Perches 9,650 4 591,750 558,900 32,850 21,900 Land - Negombo Technique (1) 91.0 Perches 17,500 1 277,300 277,300 - 6,175 Commercial Technique (2) 2.8 Acres 30,600 4 599,240 597,240 2,000 (10,360) property - Bandarawela Land - Nuwara Technique (1) 60 Perches 6,500 3 152,453 149,824 2,629 5,256 Eliya Total 1,620,743 1,583,264 37,479 22,971

(e) The following table shows the valuation techniques used by Group in measuring level 3 fair values and the significant unobservable inputs used. Valuation technique Significant unobservable inputs Sensitivity of the input to the fair value Market comparable method: This Construction cost per square foot ranges The estimated fair value would increase/ method considers the selling price of between Rs. 450 - Rs. 9,000 Market price (decrease) if: a similar property within a reasonably per perch. The valuer has used a range • cost per square foot was higher / (lower); or recent period of time in determining of prices for respective lands based on • market value per perch was higher / the fair value of property being adjusted fair value taking into account other (lower)" revalued. This involves evaluation valuation consideration ranges between Rs. of recent active market prices of 800,000 - Rs.11,000,000 per perch similar assets, making appropriate adjustments for difference in size, nature and location of the property Income method: The net income Contractual rentals agreed Occupancy The estimated fair value would increase / generated by the property is used rates 70%-95%, Capitalization rates 5%- (decrease) if: in conjunction with certain factors is 8%, Repairs and insurance 20%- 25%, • contractual rentals were higher / (lower); used to calculate its fair value. Valuer has used market price per perch • occupancy rates were higher/ (lower); for excess land in existing location using a range of prices for similar lands based on • capitalization rate was (higher) / lower; adjusted fair value taking into account other • repair and insurance was (higher) / lower; or valuation consideration ranges between Rs. • market value per perch was higher / (lower) 2,000,000 - Rs. 18,000,000 per perch

(f) Income and expense During the year ended 31st March 2020 Rs. 549.44 Mn (2019: Rs. 576 Mn) rental and ancillary income from investment properties was recognised in the Group profit or loss. Direct operating expenses, including repairs and maintenance, arising from investment property that generated rental income amounted to Rs. 207.76 Mn (2019: Rs. 192.60 Mn). The Group did not incur any direct operating expenses arising from investment properties that did not generate rental income (2019: Nil).

C T HOLDINGS PLC Annual Report 2019 | 2020 88 (g) Restrictions and obligations As at 31st March 2020, there were no restrictions on the realisability of investment property or the remittance of income and proceeds of disposal (2019: Rs. nil) except for the restriction mentioned as note (i) below. There are no obligations to construct or develop the Group’s residential or development land investment property or has no obligation to complete any construction of any property as at the reporting date. i. Restrictions on realisability of bare land located at Boralesgamuwa Sri Lanka Land Reclamation and Development Corporation (SLRDC) has issued an acquisition notice for this land under the Weras Reservoir Project on 29th March 2013. Due to impracticability of estimating the compensation to be received from SLRDC or fair value of the land as at 31st March 2020, the said land is stated at its previous revalued amount in the Financial Statements.

17. Intangible assets 17.1 Reconciliation of carrying amount Group Company Goodwill Trademarks Computer Total Goodwill Total In thousands of rupees Software

Cost As at 1st April 2018 1,323,227 237,643 341,870 1,902,740 688,467 688,467 Additions - 50,055 153,204 203,259 - - As at 31st March 2019 1,323,227 287,698 495,074 2,105,999 688,467 688,467

As at 1st April 2019 1,323,227 287,698 495,074 2,105,999 688,467 688,467 Additions - 9,528 56,398 65,926 - - As at 31st March 2020 1,323,227 297,226 551,472 2,171,925 688,467 688,467

Accumulated amortisation/ impairment losses As at 1st April 2018 71,746 128,193 192,213 392,152 - - Charged during the year - 18,902 77,819 96,721 - - As at 31st March 2019 71,746 147,095 270,032 488,873 - -

As at 1st April 2019 71,746 147,095 270,032 488,873 - - Charged during the year - 22,509 70,512 93,021 - - As at 31st March 2020 71,746 169,604 340,544 581,894 - -

Net carrying value As at 31st March 2019 1,251,481 140,603 225,042 1,617,126 688,467 688,467 As at 31st March 2020 1,251,481 127,622 210,928 1,590,031 688,467 688,467

C T HOLDINGS PLC 89 Annual Report 2019 | 2020 Notes to the Financial Statements

17. Intangible assets (Contd.) 17.2 Impairment loss and subsequent reversal of goodwill (a) Consolidation goodwill Goodwill on acquisition as at the reporting date has been tested for impairment. For the purposes of impairment testing, goodwill has been allocated to the Group’s CGUs (operating divisions) as follows.

In thousands of rupees Group Company As at 31st March 2020 2019 2020 2019

FMCG 634,760 634,760 - - Corporate 688,467 688,467 - - 1,323,227 1,323,227 - -

There has been no permanent impairment of intangible assets that require a provision during the year. Recoverable value of goodwill has been estimated based on the expected future cash flows. When testing for impairment for goodwill, the recoverable amount is determined on the basis of value-in-use calculations. These calculations use cash flow projections based on financial budgets which are approved by management and are discounted at an appropriate pre-tax discount rate equivalent to the average treasury bond rate.

The key assumptions used are given below; • Business Growth - long term average growth for each division. The weighted average growth rate used is consistent with the forecast included in industry reports • Inflation - current inflation rates • Margin - past performance and budgeted expectations • Discount rate - risk free adjusted for the specific risk relating to the industry

(b) Company - Merger goodwill The Company goodwill relates to the property assets and investments acquired through the merger of Millers PLC with C T Holdings PLC (previously Ceylon Theatres PLC) in the financial year 2007/08. At the reporting date, the market value of the said quoted investments and property assets exceed the book value and the recognized goodwill. Therefore, no impairment was deemed to be necessary to the carrying value of goodwill stated in the Financial Statements.

C T HOLDINGS PLC Annual Report 2019 | 2020 90 18. Investments in subsidiaries 18.1 Reconciliation of carrying amount In thousands of rupees Group Company As at 31st March 2020 2019 2020 2019

Cost As at 1st April - - 2,679,958 2,679,958 Additions - - 110,000 - As at 31st March - - 2,789,958 2,679,958

Less : Provision for impairment As at 1st April - - (504,333) (478,065) Impairment recognised - - (203,419) (26,268) As at 31st March - - (707,752) (504,333)

Net carrying amount - - 2,082,206 2,175,625

18.2 Breakdown of the cost by investment Group Company Principal Ownership Ownership Name of the investee Total cost of investment Total cost of investment activity interest and interest and (In thousands of rupees) (In thousands of rupees) voting power voting power As at 31st March 2020 2019 2020 2019 2020 2019 2020 2019 Quoted Cargills (Ceylon) PLC R & WD 69.87% 70.20% 168,763 168,763 69.87% 70.20% 168,763 168,763 C T Land Development Real estate 67.86% 67.86% 513,913 513,913 67.86% 67.86% 513,913 513,913 PLC Kotmale Holdings PLC FMCG 69.86% 69.86% 1,964,833 1,964,833 - - - - 2,647,509 2,647,509 682,676 682,676 Un-quoted C T Properties Limited Real estate 92.03% 92.03% 2,488,925 2,488,925 73.61% 73.61% 1,831,850 1,831,850 Ceylon Theatres (Private) Entertainment 85.54% 85.54% 300,432 300,432 55.00% 55.00% 275,432 165,432 Limited Cargills Quality Foods FMCG 69.87% 70.20% 1,193,453 1,193,453 - - - - Limited Cargills Agrifoods Limited FMCG 69.87% 70.20% 45,630 45,630 - - - - C P C Lanka Limited FMCG 69.87% 70.20% 14,200 14,200 - - - - Cargills Quality Diaries FMCG 69.87% 70.20% 75,000 75,000 - - - - (Private) Limited Cargills Distributors FMCG 69.87% 70.20% 50,261 50,261 - - - - (Private) Limited Cargills Food Processors Restaurants 69.87% 70.20% 221,500 221,500 - - - - (Private) Limited

C T HOLDINGS PLC 91 Annual Report 2019 | 2020 Notes to the Financial Statements

18. Investments in subsidiaries (Contd.)

Group Company Principal Ownership Ownership Name of the investee Total cost of investment Total cost of investment activity interest and interest and (In thousands of rupees) (In thousands of rupees) voting power voting power As at 31st March 2020 2019 2020 2019 2020 2019 2020 2019 Cargills Food Services Restaurants 69.87% 70.20% 213,500 213,500 - - - - (Private) Limited Millers Limited R & WD 69.87% 70.20% 300,000 300,000 - - - - Cargills Foods Company R & WD 64.28% 64.58% 475,000 475,000 - - - - (Private) Limited Cargills Quality Confectioneries (Private) FMCG 69.87% 70.20% 1,535,547 1,535,547 - - - - Limited Dawson Office Complex Real estate 69.87% 70.20% 101 101 - - - - (Private) Limited Cargills Frozen Products FMCG 69.87% 70.20% 50,250 50,250 - - - - (Pvt) Limited Ceylon Agro Development FMCG 69.87% 70.20% 160,019 160,019 - - - - Company (Pvt) Ltd C T Property Management Real estate 92.03% 92.03% ------Company (Private) Limited C T Real Estate (Private) Real estate 92.03% 92.03% ------Limited C T Properties Lakeside Real estate 92.03% 92.03% ------(Private) Limited C T Properties GS (Pvt) Ltd Real estate 92.03% 92.03% 615,446 615,446 - - - - Kotmale Products Limited FMCG 69.53% 69.86% 185,400 185,400 - - - - Kotmale Milk Foods FMCG 69.53% 69.86% ------Limited Kotmale Dairy Products FMCG 69.53% 69.86% 13,030 13,030 - - - - (Private) Limited Kotmale Milk Products FMCG 69.53% 69.86% ------Limited Frederick North Hotel Real estate 69.87% 70.20% 311,000 311,000 - - - - Company Limited The Empire Investments Real estate 69.87% 70.20% 776,000 776,000 - - - - Company (Private) Limited 9,024,694 9,024,694 2,107,282 1,997,282 11,672,203 11,672,203 2,789,958 2,679,958

C T HOLDINGS PLC Annual Report 2019 | 2020 92 18.2.1 Composition of the Group Information about the composition of the Group at the end of the reporting period is as follows: Number of wholly Number of non wholly owned subsidiaries owned subsidiaries In thousands of rupees 2020 2019 2020 2019

Retail & wholesale distribution - - 2 2 Real estate - - 9 9 FMCG - - 13 13 Restaurants - - 2 2 Entertainment - - 1 1 Intermediary Investment Company - - 1 1 - - 28 28

18.3 Non-controlling interest 18.3.1 Details of non-wholly owned subsidiaries that have material non-controlling interests

(a) Summarised financial information The summarised financial information below represents amounts before intra-group eliminations. In thousands of rupees Cargills C T Land (Ceylon) PLC Development PLC As at 31st March 2020 2019 2020 2019

Assets Current assets 21,822,233 21,632,870 207,781 490,566 Non-current assets 49,375,858 36,642,556 4,743,616 4,249,510 Total assets 71,198,091 58,275,426 4,951,397 4,740,076

Liabilities Current liabilities 39,546,115 34,365,900 216,590 52,602 Non-current liabilities 13,287,158 5,966,625 793,122 742,160 Equity 18,364,818 17,942,901 3,941,685 3,945,314 Total equity and liabilities 71,198,091 58,275,426 4,951,397 4,740,076

Equity attributable to: Owners of the Company 12,831,498 12,595,917 2,674,827 2,677,290 Non-controlling interests 5,533,320 5,346,984 1,266,858 1,268,024 18,364,818 17,942,901 3,941,685 3,945,314

C T HOLDINGS PLC 93 Annual Report 2019 | 2020 Notes to the Financial Statements

18. Investments in subsidiaries (Contd.) In thousands of rupees Cargills C T Land (Ceylon) PLC Development PLC For the year ended 31st March 2020 2019 2020 2019

Revenue (Including other income) 109,237,070 96,842,665 628,677 840,895 Expenses (106,475,651) (94,808,852) (441,347) (428,667) Profit for the year 2,761,419 2,033,813 187,330 412,228 Other comprehensive income / (loss) (15,914) (32,334) (8,146) 4,287 Total comprehensive income 2,745,505 2,001,479 179,184 416,515

Profit for the year attributable to: Owners of the Company 1,929,403 1,427,737 127,122 279,738 Non-controlling interests 832,016 606,076 60,208 132,490 Profit for the year 2,761,419 2,033,813 187,330 412,228

Other comprehensive income attributable to : Owners of the Company (11,119) (22,698) 5,529 2,909 Non-controlling interests (4,795) (9,636) 2,618 1,379 Other comprehensive income / (loss) (15,914) (32,334) (8,146) 4,287

Total comprehensive income attributable to: Owners of the Company 1,918,284 1,405,038 121,594 282,647 Non-controlling interests 827,221 596,441 57,590 133,868 Total comprehensive income for the year 2,745,505 2,001,479 179,184 416,515

Dividends paid to non-controlling interests 465,004 152,111 58,756 26,114

Details of net cash inflows / (outflows) Net cash inflow from operating activities 6,476,207 4,465,728 93,879 283,359 Net cash outflow from investing activities (5,422,917) (5,042,124) (140,081) (170,175) Net cash inflow / (outflow) from financing activities (3,389,641) 1,634,205 (187,271) (82,350) Net cash inflow / (outflow) (2,336,351) 1,057,809 (233,473) 30,834

Proportion of ownership interest and voting power held by non-controlling-interest 30.13% 29.80% 32.14% 32.14%

C T HOLDINGS PLC Annual Report 2019 | 2020 94 19. Investments in equity accounted investees 19.1 Breakdown of investments in equity accounted investees

Name of the investee Principal activity Group Company Ownership interest Total cost of investment Ownership interest Total cost of investment and voting power (in thousands of rupees) and voting power (in thousands of rupees) % %

As at 31st March 2020 2019 2020 2019 2020 2019 2020 2019 In thousands of rupees C T CLSA Holdings Financial 25.81% 25.81% 154,636 141,326 25.81% 25.81% 33,342 33,342 Limited services Cinema Entertainments Entertainment 30.92% 30.92% 11,033 10,854 16.67% 16.67% 1,375 1,375 (Private) Limited Cargills Bank Limited Banking 53.17% 53.17% 6,052,386 6,366,865 25.29% 25.29% 2,871,452 2,871,452 6,218,055 6,519,045 2,906,169 2,906,169

19.2 Summarised financial information as included in their own financial statements of equity accounted investees.

C T CLSA Holdings Cinema Cargills Bank Limited Total Limited Entertainments (Private) Limited For the year ended 31st March In thousands of rupees 2020 2019 2020 2019 2020 2019 2020 2019 Profit / (loss) and other comprehensive income Revenue 371,372 333,652 18,090 25,633 2,362,242 2,349,209 2,751,704 2,708,494 Other income 62,339 56,517 2,389 2,784 90,072 166,830 154,800 226,131 Total Expenses (385,802) (338,306) (19,902) (25,597) (3,118,914) (2,393,234) (3,524,618) (2,757,137) Profit / (loss) for the year 47,909 51,863 577 2,820 (666,600) 122,805 (618,114) 177,488 Other comprehensive income / (loss) for the year 3,662 3,477 - 75,103 (46,809) 78,765 (43,332) Total comprehensive income for the year 51,571 55,340 577 2,820 (591,497) 75,996 (539,349) 134,156 Directly adusted to equity* Impact on adopting new SLFRSs - - - - - (246,365) - (246,365) Transactions with owners Dividend paid - (27,473) - (4,694) - - - (32,167) Dividends received during the year - 7,091 - 555 - 770 - 8,416 Balance sheet Total assets 854,106 964,069 73,359 87,698 39,138,534 33,803,120 40,065,999 34,854,887 Total liabilities (254,973) (416,507) (37,677) (52,593) (28,706,069) (22,779,158) (28,998,719) (23,248,258) Net assets 599,133 547,562 35,682 35,105 10,432,465 11,023,962 11,067,280 11,606,629 Percentage of ownership interest as at 31st March 25.81% 25.81% 30.92% 30.92% 53.17% 53.17%

C T HOLDINGS PLC 95 Annual Report 2019 | 2020 Notes to the Financial Statements

19. Investments in equity accounted investees (Contd.)

C T CLSA Holdings Cinema Cargills Bank Limited Total Limited Entertainments (Private) Limited For the year ended 31st March In thousands of rupees 2020 2019 2020 2019 2020 2019 2020 2019 Reconciliation of carrying amount of interests in associates Group’s of share of net assets of associates 154,636 141,326 11,033 10,854 5,546,588 5,861,067 5,712,257 6,013,247 Goodwill - - - - 505,798 505,798 505,798 505,798 Carrying amount of interest in associates 154,636 141,326 11,033 10,854 6,052,386 6,366,865 6,218,055 6,519,045 Share of profit / (loss) 12,365 13,379 179 972 (354,409) 65,291 (341,865) 79,642 Share of other comprehensive income Items that will not be re-classified subsequently to - - - 7,388 (1,965) 7,388 (1,965) profit or loss: Items that may be re-classified subsequently to profit 945 897 - - 32,542 (22,922) 33,487 (22,025) or loss: Share of other comprehensive income / (loss) 945 897 - - 39,930 (24,887) 40,875 (23,990) Share of Impact on adopting new SLFRSs - - - - - (130,984) - (130,984)

*Impact on adopting SLFRS 9 – “Financial Instruments” on fair value through other Comprehensive Income Reserves and Accumulated Losses.

19.3 The summarised financial information presented above represents amounts shown in the associate’s Financial Statements prepared in accordance with Sri Lanka Financial Reporting Standards (SLFRS). All of the above associates are accounted for using the equity method in these consolidated Financial Statements.

19.4 None of the Group equity accounted investees are publicly listed entities and consequentially do not have published price quotations.

19.5 The financial year end date of Cargills Bank Limited is 31st December due to the industry requirement and Financial Statements for the year ended 31st December 2019 have been used for the purposes of applying the equity method. Further, there are no significant transactions between the dates of the Financial Statements of the said companies and 31st March 2020 which require any adjustments.

19.6 Restriction on voting power Cargills Bank Limited The Group’s voting rights in Cargills Bank Ltd is below 50% as per the investment conditions imposed by the regulator. As such the Group does not have controlling power over the investee and accordingly the investment in Cargills Bank Limited is equity accounted.

C T HOLDINGS PLC Annual Report 2019 | 2020 96 20. Other financial assets 20.1 Breakdown of other non-current investments Group Company Shares / Units Carrying Value Shares / Units Carrying Value (Numbers) (In thousands of Rs.) (Numbers) (In thousands of Rs.) 2020 2019 2020 2019 2020 2019 2020 2019

Investments in quoted companies Ceylon Printers PLC 118,830 118,830 7,665 5,942 118,830 118,830 7,665 5,942 Office Equipment PLC 163,700 163,700 12,114 11,495 163,700 163,700 12,114 11,458 Paragon (Ceylon) PLC 213,060 213,060 12,720 9,225 213,060 213,060 12,720 9,225 Overseas Realty (Ceylon) PLC 4,500 4,500 54 74 4,500 4,500 54 74 Lanka IOC PLC 525,000 525,000 8,295 6,344 325,000 325,000 5,135 5,688 Hotel Developers (Lanka) PLC 27,700 27,700 ------The HDFC Bank of Sri Lanka 70,000 70,000 1,407 1,820 70,000 70,000 1,407 1,820 Lanka Walltiles PLC 1,499,628 1,499,628 61,634 89,978 1,499,628 1,499,628 61,634 89,978 Sierra Cables PLC 49,500 49,500 104 336 - - - - Aitken Spence PLC 267,500 267,500 8,213 13,536 - - - - 112,206 138,750 100,729 124,185

Investments in un-quoted companies Lanka Film Distributors Company (Private) Limited 100 100 100 100 100 100 100 100

Other investments Comtrust Gilt Edged Fund (Unit trust) 15,166,600 42,696,600 181,794 465,859 12,481,794 11,639,590 137,614 119,583 294,100 604,709 238,443 243,868

20.1.1 The Group’s shareholdings in the ordinary share capital of Office Equipment PLC, Ceylon Printers PLC and Paragon (Ceylon) PLC range between 19.64% to 21.30%. However, these companies have not been treated as equity accounted investees since the Group exercises no significant influence in the operations of the companies concerned.

20.1.2 C T Land Development PLC, a subsidiary Company, has disposed 27,530,424 of units for a consideration of Rs. 325 Mn during the year.

C T HOLDINGS PLC 97 Annual Report 2019 | 2020 Notes to the Financial Statements

21. Inventories In thousands of rupees Group Company As at 31st March 2020 2019 2020 2019

Raw material and consumables 1,565,882 1,113,027 - - Work-in-progress 80,713 60,949 - - Finished goods 8,792,613 8,311,892 - - Goods in transit 58,093 261,821 - - Food and beverages - restaurant operations 126,663 106,169 - - 10,623,964 9,853,858 - -

Less - provision for obsolete and slow moving items (84,721) (87,410) - - 10,539,243 9,766,448 - -

22. Trade and other receivables In thousands of rupees Group Company As at 31st March 2020 2019 2020 2019

Trade receivables (other than from related companies) 3,759,581 3,804,732 6 2 Amounts due form related companies (Note 31.3) 55,189 31,284 20,819 13,764 Current tax assets 1,067,110 898,189 3,167 2,130 Advances and other receivables 774,468 633,343 24,918 13,410 Loans given to employees (Note 22.1) 103,758 64,874 - - Prepayment on leasehold land and building - 6,032 - - Prepayments and accrued income 2,013,975 1,743,852 - 605 7,774,081 7,182,306 48,910 29,911

Less : provision for impaired / doubtful debts (Note 22.3) (232,691) (147,671) - - 7,541,390 7,034,635 48,910 29,911

22.1 Loans given to employees As at 1st April 64,874 41,305 - - Loans granted during the year 67,626 60,220 - - Recoveries (28,742) (36,651) - - As at 31st March 103,758 64,874 - -

22.2 Credit and market risks, and impairment losses Information about the Group’s exposure to credit, and impairment losses for trade and other receivables, excluding construction contracts in progress, is included in note 30.5.

C T HOLDINGS PLC Annual Report 2019 | 2020 98 22.3 Movement in the provision for impaired / doubtful debts In thousands of rupees Group Company As at 31st March 2020 2019 2020 2019

As at 1st April 147,671 195,989 - - Impairment losses recognised /(reversed) 85,020 (48,318) - - As at 31st March 232,691 147,671 - -

23. Cash and cash equivalents In thousands of rupees Group Company As at 31st March 2020 2019 2020 2019

Cash and bank balances 2,155,819 3,121,308 1,045 2,204 Short term deposits with banks (Note 23.1) 900,536 972,920 19,502 63,315 Cash and cash equivalents 3,056,355 4,094,228 20,547 65,519 Bank overdraft (Note 26) (4,379,726) (2,878,385) (346) - Cash and cash equivelents in the statement of cash flows (1,323,371) 1,215,843 20,201 65,519

23.1 Short term deposits with bank Re-purchase agreements - 786,377 - - Fixed & other deposits 900,536 186,543 19,502 63,315 900,536 972,920 19,502 63,315

24. Stated capital Group Company As at 31st March 2020 2019 2020 2019

Issued and fully paid shares (In thousand rupees) Issued ordinary shares as at 1st April 6,489,758 6,489,758 6,489,758 6,489,758 Issued for the year - - - - Issued ordinary shares as at 31st March 6,489,758 6,489,758 6,489,758 6,489,758

No. of shares in issue (In thousands) Issued ordinary shares as at 1st April 201,407 201,407 201,407 201,407 Issued during the year - - - - Issued ordinary shares as at 31st March 201,407 201,407 201,407 201,407

Fully paid ordinary shares carry one vote per share and carry a right to dividends. All ordinary shares rank equally with regard to the Company’s residual assets.

C T HOLDINGS PLC 99 Annual Report 2019 | 2020 Notes to the Financial Statements

25. Reserves In thousands of rupees Group Company As at 31st March 2020 2019 2020 2019

Revaluation reserve (Note 25.1) 1,767,962 1,771,050 - - Fair value reserve (Note 25.2) 32,667 48,835 40,796 54,950 1,800,629 1,819,885 40,796 54,950

25.1 Revaluation reserve The revaluation reserve arises on the revaluation of land as described in note 13.2 and is reflected net of the amounts capitalised through a share issue. Distributions from the properties revaluation reserve can be made where they are in accordance with the requirements of the Company’s articles and any other statutes. The Directors do not currently intend to make any distribution from the properties revaluation reserve.

25.2 Fair value reserve The fair value reserve represents the cumulative net change in the fair value of equity securities designated at fair value through other comprehensive income (FVOCI); and the cumulative net change in fair value of debt securities at FVOCI until the assets are derecognised or reclassified. This amount is reduced by the amount of loss allowance.

26. Interest bearing loans and borrowings In thousands of rupees Group Company As at 31st March 2020 2019 2020 2019

Non-current liabilities Loans from banks 18,331 29,165 - - Finance lease liabilities (Note 26.1) 7,720 409 - - Lease liabilities (Note 14.2) 10,922,637 - 145 - 10,948,688 29,574 145 -

Current liabilities Loans from banks 13,877,919 14,026,346 - - Finance lease liabilities (Note 26.1) 4,116 1,138 - - Bank overdraft 4,379,726 2,878,385 346 - Lease liabilities (Note 14.2) 850,431 - 28 - 19,112,192 16,905,869 374 -

C T HOLDINGS PLC Annual Report 2019 | 2020 100 26.1 Finance lease liabilities In thousands of rupees Group Company As at 31st March 2020 2019 2020 2019

As at 1st April 1,665 2,912 - - Obtained during the year 15,612 - - - Repayments during the year (1,746) (1,247) - - As at 31st March 15,531 1,665 - - Finance charges allocated to future periods (3,695) (118) - - Net liability 11,836 1,547 - -

Current portion of finance lease liabilities 4,116 1,138 - - Non-current portion of finance lease liabilities 7,720 409 - - Net liability 11,836 1,547 - -

26.2 Information about the Group’s exposure to risks is covered in Note 30.4.

26.3 Terms and repayment schedule Terms and conditions of outstanding loans are as follows :

Institution and facility Principal Amount Repayment terms & interest rate Security offered amount Outstanding Rs. '000 Rs. '000 Cargills (Ceylon) PLC Bank overdraft Commercial Bank of 100,000 56,072 On demand, based on monthly Corporate guarantee from Ceylon PLC AWPLR+1.0% C T Holdings PLC Deutsche Bank 45,000 44,050 On demand, based on the prevailing Clean basis market rates MCB Bank Limited 500,000 499,355 On demand, based on monthly Clean basis AWPLR Nations Trust Bank 200,000 - On demand, based on weekly Clean basis PLC AWPLR+1.0% Sampath Bank PLC 100,000 - On demand, based on monthly Clean basis AWPLR+1.0% 599,477

C T HOLDINGS PLC 101 Annual Report 2019 | 2020 Notes to the Financial Statements

26. Interest bearing loans and borrowings (Contd.) Institution and facility Principal Amount Repayment terms & interest rate Security offered amount Outstanding Rs. '000 Rs. '000 Short term loans Bank of Ceylon 1,500,000 - 1-12 months, based on the prevailing Clean basis market rates Commercial Bank of 1,600,000 1,295,000 1-12 months, based on the prevailing Corporate guarantee for Ceylon PLC market rates Rs.50 Mn. from C T Holdings PLC Hatton National Bank 250,000 - 1-4 months, based on weekly AWPLR Clean basis PLC Nations Trust Bank 2,800,000 1,700,000 1-3 months, based on the prevailing Clean basis PLC market rates Sampath Bank PLC 1,800,000 - 1-6 months, based on the prevailing Clean basis market rates 2,995,000 3,594,477

Cargills Foods Company (Private) Limited Bank overdraft Bank of Ceylon 115,000 - On demand, based on monthly Clean basis AWPLR+0.5% Cargills Bank Limited - 593,732 On demand, based on the prevailing Fully secured against cash market rates Commercial Bank of 50,000 1,373,304 On demand, based on monthly Corporate guarantee from Ceylon PLC AWPLR+1.0% Cargills (Ceylon) PLC Deutsche Bank 500,000 524,934 On demand, based on the prevailing Clean basis market rates 2,491,970

Short term loans Bank of Ceylon 500,000 - 1-12 months, based on the prevailing Clean basis market rates Commercial Bank of 2,950,000 2,650,000 1-12 months, based on the prevailing Corporate guarantee of Ceylon PLC market rates Rs.250.0 Mn. from Cargills (Ceylon) PLC Hatton National Bank 2,500,000 1,720,000 1-4 months, based on weekly AWPLR Clean basis PLC

C T HOLDINGS PLC Annual Report 2019 | 2020 102 Institution and facility Principal Amount Repayment terms & interest rate Security offered amount Outstanding Rs. '000 Rs. '000 Standard Chartered 2,600,000 1,550,000 1-4 months, based on the prevailing Clean basis Bank market rates Union Bank PLC 300,000 - 1-4 months, based on monthly Clean basis AWPLR+1.00% 5,920,000 8,411,970

Cargills Agrifoods Limited Bank overdraft Cargills Bank Limited - 39,010 On demand, based on the prevailing Fully secured against cash market rates Commercial Bank of 150,000 - On demand, based on monthly Corporate guarantee for Ceylon PLC AWPLR+1.0% Rs.155 Mn. from Cargills (Ceylon) PLC National Develoment - 3 On demand, based on the prevailing Clean basis Bank PLC market rates 39,013

Cargills Food Processors (Private) Limited Bank overdraft Cargills Bank Limited - 51,965 On demand, based on the prevailing Fully secured against cash market rates Commercial Bank of 100,000 - On demand, based on monthly Corporate guarantee for Ceylon PLC AWPLR +1.0% Rs.50 Mn. from Cargills (Ceylon) PLC Deutsche Bank 100,000 - On demand, based on the prevailing Clean basis market rates 51,965

Short term loans Commercial Bank of 250,000 - 1-12 months, based on the prevailing Corporate guarantee from Ceylon PLC market rates Cargills (Ceylon) PLC - 51,965

C T HOLDINGS PLC 103 Annual Report 2019 | 2020 Notes to the Financial Statements

26. Interest bearing loans and borrowings (Contd.) Institution and facility Principal Amount Repayment terms & interest rate Security offered amount Outstanding Rs. '000 Rs. '000 Cargills Food Services (Private) Limited Bank overdraft Commercial Bank of - 2,045 On demand, based on the prevailing Clean basis Ceylon PLC market rates Deutsche Bank 5,000 4,831 On demand, based on the prevailing Clean basis market rates 6,876

Short term loans Hatton National Bank 85,000 48,000 1-6 months, based on weekly Clean basis PLC AWPLR+0.5% 48,000 54,876

Cargills Quality Confectioneries (Private) Limited Bank Overdrafts Commercial Bank of 100,000 44,329 On demand, based on monthly Corporate guarantee for Ceylon PLC AWPLR +1.0% Rs.150 Mn. from Cargills (Ceylon) PLC 44,329

Short term loans Hatton National Bank 200,000 - 1-4 months, based on weekly AWPLR Corporate guarantee for PLC Rs. 200 Mn. from Cargills (Ceylon) PLC - 44,329

C T HOLDINGS PLC Annual Report 2019 | 2020 104 Institution and facility Principal Amount Repayment terms & interest rate Security offered amount Outstanding Rs. '000 Rs. '000 Cargills Quality Dairies (Private) Limited Bank overdraft Commercial Bank of 30,000 25,790 On demand, based on monthly Corporate guarantee for Ceylon PLC AWPLR +1.0% Rs.70 Mn. from Cargills (Ceylon) PLC Cargills Bank Limited - 84,397 On demand, based on the prevailing Fully secured against cash market rates Deutsche Bank 100,000 98,768 On demand, based on the prevailing Clean basis market rates Seylan Bank PLC - 14,864 On demand, based on monthly Clean basis AWPLR +2.5% 223,819

Short term loans Commercial Bank of 1,470,000 1,470,000 1-12 months, based on the prevailing Clean basis Ceylon PLC market rates Hatton National Bank 2,000,000 450,400 1-4 months, based on weekly AWPLR Clean basis PLC Standard Chartered 1,150,000 1,150,000 1-12 months, based on the prevailing Clean basis Bank market rates 3,070,400 3,294,219

Cargills Quality Foods Limited Bank overdraft Commercial Bank of 5,000 44,533 On demand, based on monthly Corporate guarantee for Ceylon PLC AWPLR +1.0% Rs. 125 Mn. from Cargills (Ceylon) PLC Deutsche Bank 350,000 349,157 On demand, based on the prevailing Clean basis market rates 393,690

C T HOLDINGS PLC 105 Annual Report 2019 | 2020 Notes to the Financial Statements

26. Interest bearing loans and borrowings (Contd.) Institution and facility Principal Amount Repayment terms & interest rate Security offered amount Outstanding Rs. '000 Rs. '000 Short term loans Commercial Bank of 145,000 145,000 1-12 months, based on the prevailing Corporate guarantee from Ceylon PLC market rates Cargills (Ceylon) PLC Hatton National Bank 750,000 526,518 1-4 months, based on weekly AWPLR Clean basis PLC Standard Chartered 750,000 500,000 1-12 months, based on the prevailing Clean basis Bank market rates 1,171,518 1,565,208

Millers Limited Bank overdraft Cargills Bank Limited - 4,927 On demand, based on the prevailing Fully secured against cash market rates Deutsche Bank 200,000 199,115 On demand, based on the prevailing Clean basis market rates Hatton National Bank 200,000 - On demand, based on weekly AWPLR Corporate Guarantee for PLC Rs. 335 Mn. from Cargills (Ceylon) PLC 204,042

Short term loans Commercial Bank of 200,000 175,000 1-12 months, based on the prevailing Corporate Guarantee for Ceylon PLC market rates Rs. 215 Mn. from Cargills (Ceylon) PLC Standard Chartered 250,000 - 1-3 months, based on the prevailing Corporate Guarantee for Bank market rates Rs. 250 Mn. from Cargills (Ceylon) PLC 175,000 379,042

C T HOLDINGS PLC Annual Report 2019 | 2020 106 Institution and facility Principal Amount Repayment terms & interest rate Security offered amount Outstanding Rs. '000 Rs. '000 Ceylon Agro Development Company (Private) Limited Short term loans Hatton National Bank 100,000 92,000 1-6 months, based on weekly Clean basis PLC AWPLR+0.5% 92,000

Kotmale Dairy Products (Private) Limited Bank overdraft Bank of Ceylon 10,000 - On demand, based on the prevailing Corporate guarantee from market rates Kotmale Holdings PLC. Mortgage over stocks and book debtors Commercial Bank of - 28,825 On demand, based on monthly Letter of Comfort obtained Ceylon PLC AWPLR +1.0% from Cargills Quality Dairies (Private) Limited Seylan Bank PLC - 98,352 On demand, based on the prevailing Clean basis market rates 127,177

Import Loan facility / Series of Loan on Import Bank of Ceylon 40,000 - Based on the prevailing market interset Corporate guarantee from rates Kotmale Holdings PLC. Mortgage over stocks and book debtors

Short term loans Hatton National Bank 150,000 148,500 1-4 months, based on weekly AWPLR Clean basis PLC Commercial Bank of 100,000 100,000 1-12 months, based on the prevailing Letter of Comfort obtained Ceylon PLC market rates from Cargills Quality Dairies (Private) Limited 248,500 376,067

C T HOLDINGS PLC 107 Annual Report 2019 | 2020 Notes to the Financial Statements

26. Interest bearing loans and borrowings (Contd.) Institution and facility Principal Amount Repayment terms & interest rate Security offered amount Outstanding Rs. '000 Rs. '000 Kotmale Milk Products Limited Bank overdraft Pan Asia Bank 5,000 - On demand, based on the prevailing Corporate guarantee from Corporation Limited market rates Kotmale Holdings PLC

Import Loan facility Pan Asia Bank 20,000 - Based on the prevailing market rates Corporate guarantee from Corporation Limited Kotmale Holdings PLC -

The Empire Investment Company (Private) Limited Short term loans Hatton National Bank 150,000 147,500 1-4 months, based on weekly AWPLR Corporate Guarantee for PLC Rs. 150 Mn. from Cargills (Ceylon) PLC 147,500

Dawson Office Complex (Private) Limited Bank overdraft Hatton National Bank - 3 On demand, based on weekly AWPLR Clean basis PLC 3

Ceylon Theatres (Pvt) Ltd Short term loans Commercial Bank of 50,000 28,332 59 equal monthly Installments of Rs Coporate Guarantee from CT Ceylon PLC 833,400.00 and final installment of Rs Holdings PLC 829,400.00 (AWPLR + 2%) 28,332

C T HOLDINGS PLC Annual Report 2019 | 2020 108 Institution and facility Principal Amount Repayment terms & interest rate Security offered amount Outstanding Rs. '000 Rs. '000 Bank overdraft Commercial Bank of 50,000 18,402 Payable on demand (AWPLR + 1.0%) Coporate Guarantees of Ceylon PLC Rs 25 Mn each from CT Holdings PLC and CT Land Development PLC 18,402 46,734

CT Land Development PLC Bank overdraft Commercial Bank of 200,000 178,573 Payable on demand (AWPLR + 1.0%) Negative pledge executed Ceylon PLC over the "Majestic City" property situated at No 10 Station Road, Colombo 4 178,573

C T Properties Ltd Bank overdraft Cargills Bank Limited - 45 Payable on demand. Based on the No security provided* prevailing market rates C T Holdings PLC Bank overdraft Cargills Bank Ltd - 236 Payable on demand. Based on the No security provided* prevailing market rates Cargills Bank Ltd - 109 Payable on demand. Based on the No security provided* prevailing market rates

Bank overdraft 4,379,726 Short term loans 13,896,250 18,275,976

C T HOLDINGS PLC 109 Annual Report 2019 | 2020 Notes to the Financial Statements

27. Employee benefits 27.1 Reconciliation of carrying amount In thousands of rupees Group Company As at 31st March 2020 2019 2020 2019

Balance as at 1st April 1,142,816 1,007,911 26,051 20,113 Current service cost 112,960 43,544 170 1,161 Interest cost 124,970 159,991 2,488 1,585 Benefits paid (131,440) (76,875) (1,135) - Actuarial loss 67,464 8,245 3,554 3,192 Balance as at 31st March 1,316,770 1,142,816 31,128 26,051

(a) Amounts recognised in profit or loss Current service cost 112,960 43,544 170 1,161 Interest cost 124,970 159,991 2,488 1,585 237,930 203,535 2,658 2,746

(b) Amounts recognised in other comprehensive income Actuarial loss 67,464 8,245 3,554 3,192 67,464 8,245 3,554 3,192

27.2 Actuaries The Group engaged the actuaries, Messrs. Actuarial and Management Consultants (Private) Limited to carry out the actuarial valuation of different companies within the Group.

27.3 Actuarial assumptions & sensitivity analysis (a) Actuarial assumptions The following were the principal actuarial assumptions at the reporting date:

In thousands of rupees Group Company As at 31st March 2020 2019 2020 2019

Discount rate 10% - 11% 11% 10% 11% Future salary growth 5% - 10% 7.5% - 10% 7.5% 7.5%

In addition to the above, demographic assumptions such as mortality, withdrawal and disability, and retirement age were considered for the actuarial valuation. “A 67/07 mortality table” issued by the Institute of Actuaries, London was used to estimate the gratuity liability of all Group companies.

C T HOLDINGS PLC Annual Report 2019 | 2020 110 (b) Sensitivity analysis Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below. In thousands of rupees Group Company As at 31st March 2020 2019 2020 2019

Increase Discount rate (1% movement) (63,266) (53,380) (645) (764) Future salary growth (1% movement) 74,879 63,744 575 824

Decrease Discount rate (1% movement) 69,715 59,679 665 805 Future salary growth (1% movement) (68,009) (57,961) (570) (795)

27.4 Share-based payment arrangements of subsidiaries a) Description of share based payment arrangements An Employee Share Option Scheme (ESOS) proposed by the Directors of the subsidiary Cargills (Ceylon) PLC (CCP) for the benefit of it's employees and those of its subsidiaries (''Group'') was approved by the shareholders of CCP at an Extra Ordinary General Meeting held on 29th June 2017.

Under the terms of the ESOS, which are in compliance with the Listing Rules of the Colombo Stock Exchange, a maximum number of Seven million six hundred seventy nine thousand nine hundred and ninety seven (7,679,997) ordinary voting shares could be issued which is equivalent to 3.0% of the issued capital of CCP. The share options would be granted in three tranches which would constitute – a) First tranche – 3,839,999 options constituting 1.50% of the issued shares of the Company at an exercise price of Rs. 184.98 b) Second tranche – 1,919,999 options constituting 0.75% of the issued shares of the Company at an exercise price of Rs. 172.33; and c) Third tranche – 1,919,999 options constituting 0.75% of the issued shares of the Company at an exercise price of Rs. 211.40;

Each of the aforesaid tranches are subdivided in to sub tranches with different vesting periods and exercise periods. Share options would be issued to employees who are eligible for the award of the share options for a consideration that is equivalent to the volume weighted average price during the period of thirty (30) market days immediately prior to the respective grant dates for each tranche.

C T HOLDINGS PLC 111 Annual Report 2019 | 2020 Notes to the Financial Statements

The key terms and conditions related to the grants under these tranches are as follows; all options are to be settled by the physical delivery of shares.

Type of Tranche Number of Vesting Condition Vesting Vesting Date Exercise Period Exercise options Period Duration Tranche 1 Sub Tranche 1 1,280,000 Remaining in 3 Months September 30,2017 October 1,2017 1 Year & 6 employment up until to March 31, Months the vesting date. 2019 Sub Tranche 2 1,280,000 9 Months March 31,2018 April 1,2018 to 2 Years March 31, 2020 Sub Tranche 3 1,279,999 1 Year & 9 March 31,2019 April 1,2019 to 2 Years Months March 31, 2021 Tranche 2 Sub Tranche 1 640,000 Remaining in 1 Year & 4 July 31,2019 August 1,2019 employment up until Months to March 31, 8 Months the vesting date. 2020 Sub Tranche 2 640,000 And meeting the 2 Years March 31,2020 April 1,2020 to 1 Year performance related March 31, 2021 conditions relating to Sub Tranche 3 639,999 3 Years March 31,2021 April 1,2021 to 1 Year FY 2018/19. March 31, 2022 Tranche 3 Sub Tranche 1 640,000 Remaining in 1 Year & 4 July 31,2020 August 1,2020 employment up until Months to March 31, 8 Months the vesting date. 2021 Sub Tranche 2 640,000 And meeting the 2 Years March 31,2021 April 1,2021 to 1 Year performance related March 31, 2022 conditions relating to Sub Tranche 3 639,999 3 Years March 31,2022 April 1,2022 to 1 Year FY 2019/20. March 31, 2023 Total Share Options 7,679,997

Grant date As per "SLFRS 2 - Share-based Payments" the entity should recognise the value/cost of the share options granted to employees through the ESOS scheme based on the Grant Date of the share options. The date of obtaining the shareholder approval for ESOS is recognised as the Grant date for all 3 tranches of the ESOS scheme which is 29th June 2017.

C T HOLDINGS PLC Annual Report 2019 | 2020 112 27.4.1 Measurement of fair values As required by SLFRS 2 on “Share-based Payment”, the fair value of the ESOS was estimated at the grant date using the Binomial Valuation Model taking into consideration various terms and conditions upon which the share options are granted.

The inputs used in measurement of fair value at the grant date of ESOS were as follows: Tranches Description of the valuation input Tranche 1 Tranche 2 Tranche 3

Expected dividend yield rate (%) 1.5 1.5 1.5 Risk free rate (%) 10.73 10.73 10.73 Probability of share price increase (%) 80 80 80 Probability of share price decrease (%) 20 20 20 Size of annual increase of share price (%) 18 18 18 Size of annual reduction in share price (%) 10 10 10 Exercise price (Rs.) 184.98 172.33 211.4

The probability of price movements of the Company share price has been arrived at by taking into consideration share price movements of Company during the last five year period.

27.4.2 Reconciliation of outstanding share options The number and weighted-average exercise prices of share options under the ESOS scheme were as follows : In thousands of options Number of *WAEP Number of *WAEP options 2020 options 2019 2020 (Rs.) 2019 (Rs.)

Outstanding as at 1st April 6,383 189.12 7,680 188.42 Forfeited during the year (1,903) 180.73 (76) 184.98 Exercised during the year - - (1,221) 184.98 Granted during the year - - - - Outstanding as at 31st March 4,480 192.69 6,383 189.12 Exercisable as at 31st March 1,280 184.98 2,560 184.98

*WAEP - Weighted Average Exercise Price

Pursuant to the Employee Share Option Scheme of the Company approved by the Shareholders on 29 June 2017, 1,221,116 options were exercised by employees during the period 1st to 31st March 2019 and shares in respect of such exercised options were issued on 30 April 2019. No options were exercised during the current year.

C T HOLDINGS PLC 113 Annual Report 2019 | 2020 Notes to the Financial Statements

28. Capital Grants 28.1 Reconciliation of carrying amount - Government grants In thousands of rupees Group As at 31st March 2020 2019

Gross As at 1st April 116,907 116,907 Received during the year - - As at 31st March 116,907 116,907

Accumulated amortisation As at 1st April 66,487 55,006 Amortised during the year 11,483 11,481 As at 31st March 77,970 66,487

Net carrying value As at 31st March 38,937 50,420

28.2 Grants received Granted By Purpose of the Basis of amortisation In thousand of rupees grant Amount Balance Amortised Balance received as at during the as at 1-Apr-19 year 31-Mar-20 United States Kilinochchi Based on the corresponding 92,002 39,184 (9,075) 30,109 Agency for project expenditure being incurred International Development (USAID) and Connecting Regional Economies (USAID/CORE) Dehiattakandiya Based on depreciation 24,905 11,236 (2,408) 8,828 project applicable corresponding to the plant & machinery acquired from the grant. 116,907 50,420 (11,483) 38,937

C T HOLDINGS PLC Annual Report 2019 | 2020 114 29. Trade and other payables In thousands of rupees Group Company As at 31st March 2020 2019 2020 2019

Current Trade creditors (other than from related companies) 10,394,651 9,898,808 - - Amounts Due to related companies (Note 31.3) 1,358 10,001 6,385 5,287 Accruals, other accounts payable & provisions 3,563,857 5,072,225 18,052 9,861 Put options written on non-controlling interest (Note 29.2) 3,659,385 - - - 17,619,251 14,981,034 24,437 15,148

Non current Security deposits (Note 29.1) 169,608 249,370 - - Put options written on non-controlling interest (Note 29.2) - 3,456,493 - - 169,608 3,705,863 - -

29.1 Security deposits This represents deposits which are repayable at the termination of tenancy agreements.

29.2 Put options written on non-controlling interest When an entity writes a put option with the non-controlling shareholders in an existing subsidiary on their equity interests in that subsidiary, and the put option granted to non-controlling shareholders provides for settlement in cash or in another financial asset by the entity, the entity is required to recognise a liability for the present value of the exercise price of the option as per LKAS 32. Accordingly Group has recognised a put liability as at reporting date.

The Group has accounted for its written put option over non-controlling shareholders using the present access method and determined such as its accounting policy to be applied consistently.

The determination of present value of the exercise price (i.e. fair value) for put options related to non-controlling interests has involved management judgements and estimates of vital factors such as the likelihood of exercise of the option and the timing thereof, adherence to the conditions of the shareholder agreement by both parties, projected cash flows of the underlying operations, the weighted average cost of capital, etc. A change in any of these factors may have a significant impact on future results and cash flows.

C T HOLDINGS PLC 115 Annual Report 2019 | 2020 Notes to the Financial Statements

29. Trade and other payables (Contd.) Subsequent measurement Subsequent changes in the carrying amount of the put liability will be recognised within equity.

Group As at 31st March 2020 2019 Rs. '000 Rs. '000

Put option over Non Controlling Interest (NCI) 3,659,385 3,456,493

The put option over NCI relates to Put Option agreement between Cargills Foods Company (Private) Limited (CFC), International Finance Corporation (IFC), and Cargills Ceylon PLC (CCP)

IFC has subscribed for 4,130,424 shares of CFC (representing 8% shares of the Company) for an aggregate subscription price of Rs. 2,550 Mn on 25 February 2015. Therefore IFC is considered the investor of CFC and non-controlling interest to CCP and CCP acts as the grantor / sponsor to the contract.

CCP has granted IFC an option (The Put Option) to sell their shares to CCP during the put period on up to three occasions at the Put Price.

As per the Put Option agreement the Put Price means in relation to any given exercise of the put option, the price (calculated as of the date of settlement of purchase of the relevant Put shares by the grantor) that provides IFC an IRR of 9% in local currency terms; provided that the put price, shall be suitably adjusted to account for any dividends received by IFC on the Put shares and there shall not be any discount for liquidity or minority stake.

The assumptions on which the above present value of the exercise price has been determined are as follows : • Conditions of the Shareholder Agreement will not be breached by either party until the Put Period arrives • In the event of non-listing of the Company by CCP, IFC will wait until the end of the Put Period to exercise the Put Option • IRR 9% • Pricing date as 31st March 2020 • A year is assumed to have 365 days

The present value of the exercise price has been derived based on an exercise price of Rs. 4,263,498,814/- which has been computed after adjusting for an IRR of 9% and a put period from 25 February 2015 (which is the share certificate date) to 10 February 2021 (which is assumed as the exercise date).

C T HOLDINGS PLC Annual Report 2019 | 2020 116 30 Financial instruments – Fair values and risk management 30.1 Accounting classifications and fair values The following table shows the carrying amounts and fair values of financial assets and financial liabilities. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.

In thousands of rupees Fianancial assets at FVTPL FVOCI equity amortised cost equity instruments instruments As at 31st March Note 2020 2019 2020 2019 2020 2019

Group Financial Assets Financial assets measured at fair value - Other financial assets 20 - - 181,894 465,959 112,206 138,750

Financial assets not measured at fair value - Trade receivables and amounts due from related companies 22 3,814,770 3,836,016 - - - - - Other financial assets 59,794 131,435 - - - - - Other receivables 22 878,226 698,217 - - - - - Cash and cash equivalents 23 3,056,355 4,094,228 - - - - Total financial assets 7,809,145 8,759,896 - - - -

Financial liabilities Financial liabilities at Financial liabilities not measured at fair value Amortised cost

- Interest bearing loans and borrowings 26 30,060,880 16,935,443 - Security deposits 29 169,608 249,370 - Trade creditors and amounts due to related companies 29 10,396,009 9,908,809 - Put liability 29 3,659,385 3,456,493 Total financial liabilities 44,285,882 30,550,115

Company Financial assets Financial assets measured at fair value - Other financial assets 20 - - 137,714 119,683 100,729 124,185

Financial assets not measured at fair value - Trade receivables 22 20,825 13,766 - - - - - Other financial assets 59,794 131,435 - - - - - Other receivables 22 24,918 13,410 - - - - - Cash and cash equivalents 23 20,547 65,519 - - - - Total financial assets 126,084 224,130 - - - -

Financial liabilities Financial liabilities at Financial liabilities not measured at fair value Amortised cost

- Interest bearing loans and borrowings 26 519 - - Amounts due to related companies 29 6,385 5,287 Total financial liabilities 6,904 5,287

C T HOLDINGS PLC 117 Annual Report 2019 | 2020 Notes to the Financial Statements

30 Financial instruments – Fair values and risk management (Contd.) 30.2 Fair Value Hierarchy The table below analyzes financial instruments carried at fair value, by valuation method.

The different levels have been defined as follows: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2: Input other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) Level 3: Quoted prices (unadjusted) in active markets for identical assets or liabilities

Group In thousands of rupees Level 1 Level 2 Level 3 Total As at 31st March 2020 2019 2020 2019 2020 2019 2020 2019

Freehold land and buildings - - - - 13,418,484 12,959,629 13,418,484 12,959,629 Investment property - - - - 8,185,909 7,975,453 8,185,909 7,975,453 Other Investments 112,206 138,750 181,794 465,859 100 100 294,100 604,709

Company In thousands of rupees Level 1 Level 2 Level 3 Total As at 31st March 2020 2019 2020 2019 2020 2019 2020 2019

Investment property - - - - 1,620,743 1,583,264 1,620,743 1,583,264 Other Investments 100,729 124,185 137,614 119,583 100 100 238,443 243,868

30.2.1 Assets and Liabilities Measured at Fair Value - Recurring The following table shows the valuation techniques used by both Group in measuring level 3 fair values and the significant unobservable inputs used.

Asset and Valuation technique Significant Sensitivity of the input to the liabilities unobservable inputs fair value Market comparable method: Price per perch of Estimated fair value will This method considers the selling price of a similar land/ Price per square increase (decrease) if ; Price property within a reasonably recent period of time in foot per perch/ sq ft increases/ Property, determining the fair value of property being revalued. (decreases) plant and This involves evaluation of recent active market prices equipment - of similar assets, making appropriate adjustments for Freehold land difference in size, nature and location of the property and building Income method: Cash flows from Estimated fair value will The net income generated by the property is used in property discounted increase (decrease) if ; market conjunction with certain factors is used to calculate at an appropriate rate interest rate increases/ its fair value. (decreases)

C T HOLDINGS PLC Annual Report 2019 | 2020 118 Asset and Valuation technique Significant Sensitivity of the input to the liabilities unobservable inputs fair value Market comparable method: Construction cost per The estimated fair value would This method considers the selling price of a similar square foot Rs 450- increase/ (decrease) if property within a reasonably recent period of time in Rs 9,000 determining the fair value of property being revalued. Cost per square foot was This involves evaluation of recent active market prices Market price per higher/(lower) of similar assets, making appropriate adjustments for perch. The valuer difference in size, nature and location of the property has used a range of Market value per perch was prices for respective higher/(lower) lands based on adjusted fair value taking into account other valuation considerations- Rs 800,000-Rs 11,000,000 per perch Income method: Contractual rentals The estimated fair value would The net income generated by the property is used in agreed increase/ (decrease) if conjunction with certain factors is used to calculate Investment its fair value. Occupancy rates Contractual rentals were property - 70%-95% higher/ (lower) Freehold land and building Capitalization rates 5%-8% Occupancy rates were higher/ (lower) Repairs and insurance 20%-25% Capitalization rate was (higher)/ lower Valuer has used market price per perch for excess land Repair and insurance was in existing location (higher)/ lower using a range of prices for similar Market value per perch was lands based on higher/ (lower) adjusted fair value taking into account other valuation consideration Rs 2,000,000- 18,000,000 per perch

C T HOLDINGS PLC 119 Annual Report 2019 | 2020 Notes to the Financial Statements

30 Financial instruments – Fair values and risk management (Contd.) 30.3 Capital management The Group manages its capital to ensure that entities in the Group will be able to continue as going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The Group’s overall strategy remains unchanged from 2017.

The capital structure of the Group consists of below: In thousands of rupees Group Company As at 31st March 2020 2019 2020 2019

Debt (long and short term borrowings, excluding derivatives) Interest bearing loans and borrowings 30,060,880 16,935,443 519 - Put liability 3,659,385 3,456,493 - - Net debt 33,720,265 20,391,936 519 -

Equity (all capital and reserves of the Group that are managed as capital) Stated capital 6,489,758 6,489,758 6,489,758 6,489,758 Reserves 1,800,629 1,819,885 40,796 54,950 Retained earnings 12,899,459 13,138,710 910,356 1,079,040 Non-controlling interest 5,317,420 4,765,746 - - Total equity 26,507,266 26,214,099 7,440,910 7,623,748 Total debt and equity 60,227,531 46,606,035 7,441,429 7,623,748

The Group is not subject to any externally imposed capital requirements.

30.4 Financial risk management Please refer accounting policies in Note 5.

The Group has exposure to the following risks arising from financial instruments: • credit risk • liquidity risk and • market risk

Risk management framework The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Group’s risk management processes are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management systems are reviewed regularly to reflect changes in market conditions and the Group’s activities.

The Audit Committee oversees how management monitors compliance with the Group’s risk management processes/ guidelines and procedures and reviews the adequacy of the risk management framework in relation to the risks. The Audit Committee is assisted in its oversight role by Risk Management team and Internal Audit, who undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.

C T HOLDINGS PLC Annual Report 2019 | 2020 120 30.5 Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers and investments in debt securities.

The carrying amount of financial assets represents the maximum credit exposure. In thousands of rupees Group Company As at 31st March 2020 2019 2020 2019

Trade receivables 3,814,770 3,836,016 20,825 13,766 Other receivables 878,226 698,217 24,918 13,410 Other financial assets 59,794 131,435 59,794 131,435 Cash and cash equivalents 3,056,355 4,094,228 20,547 65,519 7,809,145 8,759,896 126,084 224,130

30.5.1 Trade receivables Trade receivables net of provisions for impairments were at the ageing set out below. Neither past due nor impaired 20,819 32,300 20,819 13,764 1 - 30 days 1,787,865 2,400,537 6 2 31 - 60 days 885,690 541,617 - - 61 - 90 days 447,982 316,081 - - More than 90 days 439,723 397,810 - - 3,582,079 3,688,345 20,825 13,766

Based on historic payment behaviour and extensive analysis of customer credit risk, including underlying customers’ credit ratings, if available, the management believes that the unimpaired amounts that are past due by more than 30 days are still collectible in full.

Impairment and risk exposure Individual receivables which are known to be uncollectible are written off by reducing the carrying amount directly. The other receivables are assessed collectively to determine whether there is objective evidence that an impairment has been incurred but not yet been identified. For these receivables the estimated impairment losses are recognised in a separate provision for impairment.

The movement in the provision for impairment in respect of trade and other receivables during the year is given in note 22.3.

30.5.2 Cash and cash equivalents The Group held cash and cash equivalents of Rs. 3.06 Bn at 31st March 2020 (2019: Rs. 4.09 Bn). The cash and cash equivalents are held with bank and financial institution counter-parties, with high credit ratings.

30.5.3 Corporate guarantees The Group’s policy is to provide financial guarantees only to subsidiaries. As at 31st March 2020, the Company had issued guarantees to certain banks in respect of credit facilities granted to subsidiaries (refer notes 34.1 & 34.2)

C T HOLDINGS PLC 121 Annual Report 2019 | 2020 Notes to the Financial Statements

30 Financial instruments – Fair values and risk management (Contd.) 30.6 Liquidity risk Exposure to liquidity risk - Contractual maturities of financial liabilities at the reporting date.

Contractual cash flows In thousands of rupees Carrying Contractual Within Between More than Total value maturity 1 year 1-5 years 5 years

As at 31st March 2019 Bank overdraft 2,878,385 2,878,385 2,878,385 - - 2,878,385 Loans from banks 14,055,511 14,167,161 14,136,330 30,831 - 14,167,161 Trade and other payables 18,686,897 18,686,897 14,981,034 3,705,863 - 18,686,897 Finance lease liabilities 1,547 1,547 1,138 409 - 1,547 35,622,340 35,733,990 31,996,887 3,737,103 - 35,733,990

As at 31st March 2020 Bank overdraft 4,379,726 4,379,726 4,379,726 - - 4,379,726 Loans from banks 13,896,250 14,009,274 13,986,574 22,700 - 14,009,274 Trade and other payables 17,788,859 17,788,859 17,619,251 169,608 - 17,788,859 Finance lease liabilities 11,836 11,836 4,116 7,720 - 11,836 Lease Liabilities 11,773,068 24,654,286 2,157,100 9,865,697 12,631,489 24,654,286 47,849,739 60,843,981 38,146,767 10,065,725 12,631,489 60,843,981

30.7 Market risk The Group is exposed to currency risk on sales and purchases that are denominated in a currency other than the Sri Lankan rupees (LKR).The Group also has limited exposure in respect of recognised foreign currency assets and liabilities. Currency risk exposure is not material to the Group.

30.7.1 Currency risk The Group is exposed to currency risk on sales and purchases that are denominated in a currency other than the Sri Lankan rupees (LKR).The Group also has limited exposure in respect of recognised foreign currency assets and liabilities. Currency risk exposure is not material to the Group.

30.7.2 Interest rate risk The Group is exposed to interest rate risk on borrowings and deposits. The Group’s interest rate policy seeks to minimise the cost and volatility of the Group’s interest expense by maintaining a diversified portfolio of fixed rate, floating rate and inflation- linked liabilities.

The Group adopt policy of ensuring borrowings are maintained at manageable level while optimizing return. Interest rates are negotiated leveraging on the strength of the Cargills Group and thereby ensuring the availability of cost -effective funds at all time, while minimizing the negative effect of market fluctuations. Further, the Group has considerable banking facilities with several reputed banks which has enabled the Group to negotiate competitive rates.

C T HOLDINGS PLC Annual Report 2019 | 2020 122 30.7.3 Listed equity securities are susceptible to market price risk arising from uncertainties of future values of the investment securities. The Group manages the equity price risk through diversification and placing limits on individual and total equity portfolio investments. The Group’s equity risk management policies are;

• Equity investment decisions are based on fundamentals rather than on speculation; and • Decisions are based on in depth macroeconomic and industry analysis as well as research reports on company performance. Market price risk exposure is not material to the Group.

31. Related parties 31.1 Transactions with key management personnel According to the LKAS 24 - “Related Party Disclosures”, Key Management Personnel are those having authority and responsibility for planning, directing and controlling the activities of the entity. Accordingly, the Board of Directors (including Executive & Non-Executive Directors) of the Company have been classified as Key Management Personnel of the entity. (a) Mrs. R Page, wife of Mr. Ranjit Page , is a Director of the Double Yummm (Private) Limited with which Cargills Foods Company (Private) Limited had regular transactions in the ordinary course of business and the amount outstanding as at 31st March 2020 was Rs. 19.92 Mn (2019 - Rs. 10.73 Mn). Purchases for re-sale in the ordinary course of business for the year amounted to Rs. 130.52 Mn (2019 - Rs. 114.2 Mn) and rental income earned for the year amounted to Rs. 0.58 Mn (2019 - Rs. 0.84 Mn). (b) Short term employment benefits paid to key management personnel have been disclosed in the Note 8.1 to these Financial Statements. There are no post employment benefits paid during the year. (c) No unsecured loans to Directors have been granted during the year.

Close Family Members (CFM) of a KMP are those family members who may be expected to influence, or be influenced by, that individual in their dealings with the entity. They may include; (a) the individual's domestic partner and children; (b) children of the individual's domestic partner; and (c) dependents of the individual or the individual's domestic partner

CFM are related parties to the entity. There were no transactions with CFM during the year

C T HOLDINGS PLC 123 Annual Report 2019 | 2020 Notes to the Financial Statements

31. Related parties (Contd.) 31.2 Other related party transactions Transactions that are carried out in the ordinary course of business between the Company and other Group companies as well as between Group companies who are defined as related parties in Sri Lanka Accounting Standards (LKAS - 24 ‘Related party Disclosures’) are disclosed below. a.) Transactions between the Company and the other Group companies Related Company Common Directors Transaction 2020 2019 Rs.'000 Rs.'000 Ranjit Page Recovery of Expenditure (1,003) (1,670) R. Selvaskandan Settlement 1,000 1,183 Louis Page C T Properties Limited Joseph Page Ms. Cecilia Page Muttukumaru S C Niles Louis Page Rent Income 7,048 4,224 R. Selvaskandan Settlement 1,028 (3,462) Joseph Page Ceylon Theatres (Private) Limited Ms. Cecilia Page Muttukumaru S C Niles M I Abdul Wahid Rent Income 5,280 22,883 Millers Limited M I Abdul Wahid Settlement (5,280) (17,602) Rent Income 2,341 2,611 Cinema Entertainment (Private) Limited R. Selvaskandan Settlement (1,305) (1,305) Louis Page Recovery of Expenditure (1,094) (2,062) Ranjit Page M I Abdul Wahid Cargills (Ceylon) PLC Priya Edirisinghe Sunil Mendis Joseph Page

C T HOLDINGS PLC Annual Report 2019 | 2020 124 b) Transactions between Group companies In thousands of rupees Balance Net Amount Balance Purchase Receipt / Interest Dividend as at Received / as at / Sale of Rendering Received / Received / 31-Mar-19 (Paid) 31-Mar-20 Goods of Paid Paid Services Subsidiary Cargills (Ceylon) PLC (1,018,477) (23,958) (1,042,435)     Cargills Foods Company (Private)Limited 335,854 389,669 725,523     Cargills Quality Foods Limited (62,439) (2,912) (65,351)     Cargills Quality Diaries (Private)Limited (143,899) (272,473) (416,371)     The Empire Investments Company (Private) Limited 21,989 11,901 33,890 -  - - Kotmale Holdings PLC 122,569 (120,908) 1,661 -  - - Kotmale Products Limited 137,780 (195,555) (57,775) - - - - Kotmale Milk Foods Limited 4,239 (4,239) - - - - - Kotmale Dairy Products (Private) Limited (410,133) 556,636 146,503    - Kotmale Milk Products Limited 136,798 (136,798) - - - - - Cargills Quality Confectioneries (Private) Limited (25,762) (29,135) (54,897)   - - Cargills Agrifoods Limited (5,660) (136,618) (142,278)     C P C Lanka Limited (19,313) (34,597) (53,910)     Cargills Food Processors (Private) Limited 15,027 (7,665) 7,362     Cargills Food Services (Private) Limited 2,349 (2,507) (158)    - Millers Limited (27,029) (66,081) (93,110)     Dawson Office Complex (Private) Limited 66,021 90 66,111 - - - - Ceylon Agro Development Company (Private) Limited 334 2,160 2,494  - - - C T Land Development PLC (7,325) (6,312) (13,637)   -  Ceylon Theatres (Private) Limited 25,902 43,147 69,049   - - C T Properties Limited 1,970,934 (1,053,965) 916,969 - - - - C T Property Management Company (Private) Limited (1,737) 1,737 - - - - - C T Real Estate (Private) Limited (342,091) 333,717 (8,374) - - - - C T Properties Lakeside (Private) Limited (88,273) 88,273 - - - - - C T Properties G S (Private) Limited (686,883) 686,883 - - - - - Frederick North Hotel Company Limited - 326 326 - - - - Equity accounted investees Cinema Entertainments (Private) Limited (10,001) 11,730 1,729 - - -  Cargills Bank Limited 26,600 13,635 40,235 - - - -

C T HOLDINGS PLC 125 Annual Report 2019 | 2020 Notes to the Financial Statements

31. Related parties (Contd.) 31.3 Related party balances In thousands of rupees Group Company As at 31st March 2020 2019 2020 2019

(a) Amount due from subsidiary companies Ceylon Theatres (Private) Limited - - 12,979 6,960 C T Properties Limited - - - - Millers Limited - - 5,281 5,281 - - 18,260 12,241

(b) Amount due from other related companies United Hotels Co. Limited 303 1,103 - - Cargills Bank Limited 40,235 26,600 - - Ceylon Hotels Corporation PLC 522 518 - - Galle Face Hotel Company Limited 3,039 2,026 - - Kandy Hotels Company (1938) PLC 194 1,037 - - Cinema Entertainments (Private) Limited 10,896 - 2,559 1,523 55,189 31,284 2,559 1,523 Total amounts due from related companies 55,189 31,284 20,819 13,764

(c) Amounts due to subsidiary companies Cargills (Ceylon) PLC - - 6,381 5,287 C T Properties Limited - - 4 - - - 6,385 5,287

(d) Amount due to other related companies Unidil Packaging Ltd 1,358 - - - Cinema Entertainments (Private) Limited - 10,001 - - 1,358 10,001 - - Total amounts due to related companies 1,358 10,001 6,385 5,287

31.4 Parent Company and ultimate controlling entity Odeon Holdings (Ceylon) (Private) Limited holds 41.85% (2019 – 41.85%) of the ordinary share capital of the Company.

C T HOLDINGS PLC Annual Report 2019 | 2020 126 32. Operating segments The Group has six reportable segments, as described in Note 2.1, which are the Group’s strategic business units. The strategic business units offer different products and services, and are managed separately because they require different management strategies. For each of the strategic business units, the Group’s chief decision maker reviews internal management reports at least on a quarterly basis.

32.1 Geographical information The Group does not distinguish its turnover into significant geographical segments.

32.2 The accounting policies of the reportable segments are the same as the Group’s accounting policies described in note 2.1. Segment profit represents the profit before tax earned by each segment without allocation of corporate net income and Directors’ salaries, share of profit of associates, other gains and losses. This is the measure reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance.

For the purposes of monitoring segment performance and allocating resources between segments: (a) All assets are allocated to reportable segments other than interests in associates and assets used by the head office. Goodwill is allocated to reportable segments as described in note 17.1. Assets used jointly by reportable segments are allocated on the basis of the revenues earned by individual reportable segments. (b) All liabilities are allocated to reportable segments other than liabilities of the head office, if there are any.

Retail & Wholesale FMCG Restaurants Real Estate Entertainment Group Distribution 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 Revenue Gross revenue 86,643,155 77,087,853 24,682,579 21,102,808 4,152,067 3,873,329 559,710 594,634 266,632 353,531 116,304,143 103,012,155 Eliminations of inter (345,011) (1,288,836) (8,142,067) (6,112,160) - - (96,461) (63,799) - - (8,583,539) (7,464,795) segment revenue Corporate and other 96,461 - unallocated revenue External revenue 86,298,144 75,799,017 16,540,512 14,990,648 4,152,067 3,873,329 463,249 530,835 266,632 353,531 107,817,065 95,547,360

Segment result Results from operating 3,133,941 1,718,202 3,582,985 2,402,906 386,134 318,582 360,786 717,954 (78,403) (61,629) 7,385,442 5,096,015 activities Corporate and other (108,154) 137,958 unallocated operating profit Total results from 7,277,288 5,290,553 operating activities

Reportable Segment 926,708 571,672 2,263,280 1,323,326 198,146 239,026 187,841 489,102 (108,560) (75,559) 3,467,414 2,547,567 Profit after tax Corporate and other (745,537) (163,330) unallocated operating profit 2,721,877 2,384,237

C T HOLDINGS PLC 127 Annual Report 2019 | 2020 Notes to the Financial Statements

32. Operating segments (Contd.)

Retail & Wholesale FMCG Restaurants Real Estate Entertainment Group Distribution 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 Reportable Segment Profit after attributable to owners of the parent Reportable Segment 599,535 377,225 1,580,786 928,448 138,439 167,798 120,906 338,384 (94,812) (64,632) 2,344,854 1,747,223 Profit after attributable to owners of the parent Corporate and other (939,868) (104,599) unallocated operating profit 1,404,986 1,642,624

Net Finance Costs (1,815,682) (652,248) (484,688) (413,761.00) (138,914) (14,083) (71,330) (25,620) (30,687) (8,627) (2,541,300) (1,114,339) Corporate and other (139,431) (367,382) unallocated (2,680,731) (1,481,721)

Non Current Assets Property, plant & 16,093,820 14,752,061 6,816,197 5,722,384 1,119,118 1,199,828 974,543 712,120 339,986 277,443 25,343,664 22,663,836 equipment Right of use asset 8,752,383 50,025 47,742 21,875 1,109,031 - 48,447 - 20,694 6,065 9,978,297 77,965 Investment properties 118,429 118,254 34,267 31,260 - - 7,226,229 6,993,357 - - 7,378,925 7,142,871 Intangible assets and 148,728 144,316 47,033 43,670 135,782 149,870 5,425 5,620 - - 336,968 343,476 goodwill Other investments - - 42 32 42 32 127,482 346,277 - - 127,566 346,341 Deferred tax assets - - 12,838 5,274 ------12,838 5,274 Total Segment Non- 25,113,360 15,064,656 6,958,119 5,824,495 2,363,973 1,349,730 8,382,125 8,057,374 360,680 283,508 43,178,258 30,579,763 current assets

Prepayment on ------leasehold land and building Investment in ------Subsidiary 25,113,360 - 6,958,119 - 2,363,973 - 8,382,125 - 721,360 - - -

Current assets Inventories 8,004,536 7,841,497 2,382,345 1,800,030 128,178 108,384 - - 2,532 4,412 10,517,591 9,754,323 Trade and other 3,435,327 3,649,329 2,683,360 1,192,986 118,797 207,590 362,690 226,368 44,972 44,578 6,645,146 5,320,851 receivables Cash and cash 1,516,537 2,584,336 836,051 1,030,972 175,968 113,655 11,324 67,301 18,842 2,148 2,558,722 3,798,412 equivalents

C T HOLDINGS PLC Annual Report 2019 | 2020 128 Retail & Wholesale FMCG Restaurants Real Estate Entertainment Group Distribution 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 Total Segment current 12,956,400 14,075,162 5,901,756 4,023,988 422,943 429,629 374,014 293,669 66,346 51,138 19,721,459 18,873,586 assets

Total Segement Assets 38,069,760 29,139,818 12,859,875 9,848,483 2,786,916 1,779,359 8,756,139 8,351,043 427,026 334,646 62,899,717 49,453,349 Investments in equity 6,218,055 6,519,045 accounted investees Corporate and other 11,251,135 11,366,589 un-allocated assets Total assets 80,368,907 67,338,983

Segment liabilities Non-current liabilities Borrowings 9,719,642 7,308,300 32,272 3,169,592 1,068,854 100,000 11,204 - 35,724 29,165 10,867,696 10,607,057 Employee benefits 621,192 548,363 93,584 78,379 - - 51,358 38,819 2,394 6,082 768,528 671,643 Capital Grants - - 38,936 50,418 - - (83,978) - - - (45,042) 50,418 Trade and other ------175,102 249,371 - - 175,102 249,371 payables Deferred tax liabilities 105,205 350,223 563,853 562,606 24,898 92,569 475,602 460,272 883 - 1,170,440 1,465,670 Total segment non- 10,446,039 8,206,886 728,644 3,860,995 1,093,752 192,569 629,288 748,462 39,001 35,247 12,936,724 13,044,159 current liabilites

Current liabilities Trade and other 10,541,374 11,534,512 2,286,327 1,950,731 624,491 684,839 89,958 33,401 28,780 62,753 13,570,930 14,266,236 payables Current tax liabilities 779,783 416,003 1,942,890 1,619,490 310,108 368,736 6,061 27,239 837 4,263 3,039,679 2,435,731 Borrowings 9,373,880 1,574,097 5,419,623 982,343 344,361 232,745 332,028 47 104,896 58,504 15,574,789 2,847,736 Total segment current 20,695,037 13,524,612 9,648,840 4,552,564 1,278,960 1,286,320 428,047 60,687 134,513 125,520 32,185,398 19,549,703 liabilities

Total segment liabilites 31,141,076 21,731,498 10,377,484 8,413,559 2,372,712 1,478,889 1,057,335 809,149 173,514 160,767 45,122,122 32,593,862 Corporate and 8,739,519 8,531,023 unallocated liabilites

Total liabilities 53,861,641 41,124,885

C T HOLDINGS PLC 129 Annual Report 2019 | 2020 Notes to the Financial Statements

33. Commitments The capital expenditure commitments of the Company and Group approved by the Directors were as follows:

33.1 Capital commitments In thousands of rupees Group Company As at 31st March 2020 2019 2020 2019

(a) Subsidiary Company Cargills (Ceylon) PLC Approved and contracted 1,411,267 1,473,460 - -

(b) The subsidiary Company C T Land Development PLC has awarded Contracts amounting to Rs.360.8 Mn as a part of the company's refurbishment programme. The upgrading and extension of the Food Zone was completed at a cost of Rs. 78 Mn on 30th November 2019 and the Airconditioning works amounting to Rs. 173 Mn were completed on 31st July 2020. The Electrical and other works are still in progress and are expected to be completed by November 2020. The value of work completed as at 31st March 2020 has been capitalized and the value of partly completed works are included under Capital Work in Progress.

33.2 Financial commitments In thousands of rupees Group Company As at 31st March 2020 2019 2020 2019

(a) Future payments of operating lease rentals* - within 1 year - 2,095,122 - - - between 1 - 5 years - 9,274,663 - - - more than 5 years - 14,656,878 - - - 26,026,663 - -

(b) Settlement of letter of credits and import bills 380,588 207,093 - - 380,588 207,093 - -

*Future payments of operating lease rentals for the current year are disclosed in Note 14.2 under 'Maturity analysis - contractual undiscounted.

34 Contingent liabilities 34.1 Letters of guarantee The Company and subsidiaries Cargills (Ceylon) PLC and Kotmale holdings PLC have given letters of gurantee to Commercial Banks on behalf of subsidiary companies totalling to Rs. 2.125 Bn (2019: Rs. 1.875 Bn). The Directors do not expect any claim on these guarantees. Accordingly, no provision has been made in the Financial Statements for any possible losses.

34.2 Bank guarantee Cargills (Ceylon) PLC has provided Bank Guarantees to Lion Brewery (Ceylon) PLC and its subsidiary Pearl Springs (Pvt) Ltd to the value of Rs. 13.08 Mn to cover contingent tax liabilities in connection with the disposal of the investment in Millers Brewery Limited.

Cargills (Ceylon) PLC has provided Bank Guarantees to Sri Lanka Customs amounting to Rs. 2.5 Mn.

C T HOLDINGS PLC Annual Report 2019 | 2020 130 Corporate Guarantees are given by the company and the subsidiary Company CT Land Development PLC to Commercial Bank of Ceylon PLC, which has granted banking facilities not exceeding Rs. 75,000,000 and Rs.25,000,000 respectively to Ceylon Theatres (Pvt) Ltd. There are no other material contingent liabilities as at the reporting date.

The Directors do not expect any claim on these guarantees. Accordingly, no provision has been made in the Financial Statements.

34.3 Income tax a. The income tax exemption claimed under the Inland Revenue Act No 10 of 2006 is being contested by the Department of Inland Revenue. The contingent liability on potential income tax payment is as follows:

Cargills Quality Foods Limited - Rs. 20.62 Mn and Kotmale Dairy Products (Private) Limited Rs. 18.2 Mn.

Having sought professional advice, the Management is confident that the tax exemptions are applicable and as such no liabilities would arise. Accordingly, no provision has been made in the Financial Statements. Where necessary, interim stay orders have been obtained on any recovery actions. b. The Deputy Commisioner of Inland Revenue has made an additional assessment of Income Tax for the year ended 31st March 2018 of Rs. 49.5 Mn on the subsidiary Company C T Land Development PLC and also imposed a penalty of Rs. 29.6 Mn by considering the difference between the total value of credits in the subsidiary Company's current account and the declared revenue as undeclared revenue. The subsdiary Company's Financial Statements have been prepared on an accruals basis as per generally accepted accounting principles and have been duly audited and reported on by the Auditors. The declared revenue of the subsidiary Company according to its Financial Statements is accurate and the assumption made by the Deputy Commissioner that all deposits other than fund transfers need to be considered as revenue cannot be accepted. A full reconciliation between the subsidiary Company's declared revenue and the total value of deposits credited to our Bank Account has been carried out and included in an appeal made to the CGIR through its Tax Consultants.

No adjustments have been made in the Financial Statements in this regard as the management of the subsidiary Company believes that there is no likelihood of an unfavourable outcome.

35 Events after the reporting period (a) Proposed Dividends The Company and following subsidiaries have declared the following final dividends out of the profits for the year ended 31st March 2020 (i) Company – final dividend of Rs 2.80 per share (on 201,406,978 shares now in issue) (ii) Subsidiary, Cargills (Ceylon) PLC – final dividend of Rs 3.20 per share (on 257,221,043 shares now in issue) (iii) Subsidiary, C T Land Development PLC – final dividend of Rs 0.75 per share (on 812,500,000 shares now in issue)

The above final dividends are to be submitted for approval by the shareholders at the respective Annual General Meetings of the companies concerned. As required by the Section 56 (2) of the Companies Act No. 07 of 2007, the Boards of Directors of the respective companies have confirmed that the Companies concerned satisfy the ‘Solvency Test’. In accordance with LKAS 10 - “Events after the reporting period”, the proposed dividends have not been recognised as a liability in the Financial Statements.

C T HOLDINGS PLC 131 Annual Report 2019 | 2020 Notes to the Financial Statements

35 Events after the reporting period (Contd.) (b) International Finance Corporation (IFC) has given notice of its intention to exit its investment in Cargills Foods Company (Private) Limited by exercising the put option. The Board had resolved to accept the exit notice.

(c) The subsidiary CT Land Development PLC has signed a Maintenance and Service Agreement with Messrs. Ceyline Engineering Services (Pvt) Ltd effective from 01st July 2020 under which it will manage the maintenance and other services provided by the engineering division of the company.

Other than the above mentioned events no material events have occurred since the reporting date which require adjustments to or disclosure in the Financial Statements.

36 Going concern C T Properties Limited The subsidiary C T Properties Ltd Group recorded accumulated losses of Rs. 1,589,032,808/- as at 31st March 2020 (2019: Rs. 1,559,311,844/-). This indicates the existence of a material uncertainty which may cast significant doubt about the Company’s ability to continue as a going concern. Note 16.2(g) indicates a potential restriction on the realisability of a land owned by the subsidiary. However, the net realisable values of the property assets and investments exceed the value at which such assets are stated in the statement of financial position. Further, the related party dues would not be demanded for repayment in a manner that would affect the Company’s ability to function as going concern due to the investments and borrowings for the same operations. Having taken into consideration the financial position and future prospects, the Directors have a reasonable expectation that the Company has adequate resources to continue to be in operation in the foreseeable future. Accordingly, the Directors have adopted a Going Concern method of accounting of the subsidiary concerned as at the reporting date.

Ceylon Theatres (Pvt) Limited The Company had net current asset deficiency of Rs. 103,842,045 as at 31st March 2020 (2019 : Rs. 91,376,226) and has recognized current year losses of Rs. 108,561,266 (2019 : 73,649,035). Notwithstanding this, the Financial Statements have been prepared on a going concern basis. The Company is fairly confident that it can secure amendments to the covenants and to the terms of its current bank borrowings. At this time, the Company is attempting to secure various options from its lenders to amend the terms of its credit facilities. The Company has received government assistance in terms of a Term Loan of Rs. 10 Mn.The continuation of the Company’s activities depends on the resumption of its operations within a reasonable time and restore, and then maintain, its profitability. The Company's Financial Statements do not reflect adjustments that would be necessary if the going concern assumption were not appropriate. This is because management believes that the aforementioned measures it has taken or intends to take will mitigate the effect of the conditions and events that cast doubt on the appropriateness of this assumption.

37 Impact Due to the COVID-19 The overall impact of the pandemic on the different sectors of the Group varies according to the specific circumstances. The retail sector continued operations albeit on a reduced scale with volumes dependent mainly on home deliveries. Despite the suddenness of the imposition of the curfew and the inability of much of the staff to report for work due to the travel ban between districts, the retail sector successfully mobilised the available staff and reassigned resources to respond to the immediate needs of supplying basic essentials to customers. The FMCG sector continued operations on a lower scale, based on the changing customer demands for the particular time. This sector, however, continued milk collection from dairy farmers without interruption throughout the period. The Restaurants were largely non-operational, with only delivery operations being carried out.

C T HOLDINGS PLC Annual Report 2019 | 2020 132 Of the other operating segments, the Banking sector, under Cargills Bank, continued operations throughout the lockdown period whereas the Financial Services sector was not operational during the period due to the closure of the Colombo Stock Exchange. All investment properties of the Group were shut down during the lockdown and all cinemas operated by the subsidiary, Ceylon Theatres (Pvt) Ltd have been shut down since 15th March 2020 and reopened only on 27th June 2020.

The response of the Group to the Pandemic centered around safety, welfare and secure employment of our staffs, support to suppliers through timely payments, provision of goods to customers in a safe environment, as far as possible, and management of expenses to mitigate the adverse impact of the pandemic.

The Company and subsidiaries have adequate cash and / or credit lines to meet all ongoing operational and financial commitments. There have been no significant changes in the terms of borrowings from financial institutions. Further, the cost of accessing funds has improved due to the relief measures adopted by the Central Bank of Sri Lanka.

The Group do not expect material changes in fixed assets as a result of COVID-19. However, cost of key raw materials has increased during COVID-19 which resulted in increased value of inventory in hand. Trade receivables has also increased as a result of COVID-19 since the settlements were delayed due to the lockdown situation in the country. However, post lockdown the debtor collection has improved by leaps and bounds, thereby the Group does not expect material impairment from the impact of COVID-19.

The prospects for the future are largely dependent on macro-economic factors connected to the impact of the COVID-19 virus in Sri Lanka and other parts of the globe. Sustained adversity on a global level will have implications for the operations of the Group due to the possible adverse impact on purchasing power, cost and availability of imported food items etc. The Group has installed processes for these factors to be regularly monitored and take action accordingly.

38. Comparative information Comparative Information is re-classified wherever necessary to conform to the current year’s presentation in order to provide a better presentation.

39. Directors’ Responsibility statement Board of Directors is responsible for the preparation and fair presentation of these Financial Statements in accordance with Sri Lanka Accounting Standards.

The Board of Directors acknowledges their responsibility for Financial Statements as set out in the Annual Report of the Board of Director’s, Statement of Directors’ Responsibility, and the certification on the Statement of Financial Position.

C T HOLDINGS PLC 133 Annual Report 2019 | 2020 FIVE YEAR REVIEW - GROUP

As at / for the year ended 31st March 2020 2019 2018 2017 2016 In thousands of rupees

Financial Results Revenue 107,817,065 95,547,360 92,134,483 85,037,781 72,399,182 Results from operations 7,277,288 5,233,973 6,802,234 5,798,305 4,135,309 Net finance costs (2,680,731) (1,425,141) (1,319,208) (1,131,121) (393,626) Profit before taxation 4,254,692 3,888,474 5,791,257 4,690,108 3,662,324 Tax expenses (1,532,815) (1,504,237) (2,051,792) (2,023,094) (1,344,117) Profit after tax for the year from discontinued operations - - - - - Profit for the year 2,721,877 2,384,237 3,739,465 2,667,014 2,318,207

Attributable to - Owners of the parent 1,404,986 1,642,617 2,597,342 1,747,876 1,626,228 Non-controlling Interest 1,316,891 741,620 1,142,123 919,138 691,979 2,721,877 2,384,237 3,739,465 2,667,014 2,318,207 Financial Position Stated capital 6,489,758 6,489,758 6,489,758 3,194,008 3,194,008 Reserves 14,700,088 14,958,595 14,167,708 15,600,031 15,665,674 Total equity attributable to equity holders of the parent 21,189,846 21,448,353 20,657,466 18,794,039 18,859,682 Non-controlling interest 5,317,420 4,765,746 4,239,636 3,405,406 4,662,872 Total equity 26,507,266 26,214,099 24,897,102 22,199,445 23,522,554

Borrowings Borrowings 30,060,880 16,935,443 14,719,710 15,817,948 11,508,553 Non-current payables 169,608 3,456,493 3,089,325 2,761,159 2,251,743 30,230,488 20,391,936 17,809,035 18,579,107 13,760,296

Net Assets Current assets 21,196,782 21,026,746 18,717,656 15,514,916 14,418,707 Current liabilities (40,077,347) (34,569,514) (30,865,988) (30,499,922) (24,212,544) Net current liabilities (18,880,565) (13,542,768) (12,148,332) (14,970,526) (9,793,837) Non-current liabilities (13,784,294) (6,555,370) (5,973,075) (5,163,367) (4,428,623) Non-current assets 59,172,125 46,312,237 43,018,509 42,347,818 37,745,014 Total net assets 26,507,266 26,214,099 24,897,102 22,199,445 23,522,554

Ratios & Statistics Growth in Revenue (%) 12.84 3.70 8.35 17.46 15.93 Earnings per share (Rs.) 6.98 8.16 12.90 8.68 8.07 Growth in earnings (%) (14.47) (36.76) 48.60 7.48 99.09 Shareholders’ funds per share (Rs.) 104.71 106.49 102.57 93.31 93.64 Growth in shareholders’ funds (%) (1.67) 3.83 9.91 (0.35) 8.70 Return on shareholders’ funds (%) 6.66 7.66 12.57 9.30 8.62 Non-current assets to shareholders’ funds (%) 280.58 215.92 208.25 225.25 200.14 Current ratio (times) 0.53 0.61 0.61 0.51 0.60 Debt equity ratio (times) 1.14 0.78 0.72 0.84 0.58 Dividend per share (Rs.) 4.60 5.50 5.50 5.20 3.80 Dividend cover (times) 1.52 1.48 2.34 1.67 2.12 Market price per share (Rs.) 160.00 162.90 175.00 148.90 129.90 Price earnings ratio (times) 22.94 19.97 13.57 17.16 16.09 Net asset value per share 131.61 130.15 123.62 110.22 116.79

Note All per share details have been calculated, for all periods, based on the number of shares in issue as at 31st March 2020.

C T HOLDINGS PLC Annual Report 2019 | 2020 134 GROUP DIRECTORY

PARENT COMPANY Millers Limited Cargills Agrifoods Limited C T Holdings PLC Address: 40 York Street, Colombo 1 Address: 40, York Street, Colombo 01. Address: No 8, Sir Chittampalam A Phone: +94112427777 Phone: +94112427777 Gardiner Mawatha, Colombo 02. Fax: +94112338704 Fax: +94112338704 Phone: +94112431243 Directors: Imtiaz Abdul Wahid, D G O Directors: Imtiaz Abdul Wahid, Sidath Fax: +94112447956 Dias, Sidath Kodikara (up to 31 August Kodikara (up to 31 August 2019), Email: [email protected] 2019), Dilantha Jayawardhana (w. e. f. Dilantha Jayawardhana (w. e. f. 31 Chairman Emeritus: Mr. Anthony A Page 31 August 2019) August 2019) Directors: Louis Page (Chairman), Ranjit Page, Priya Edirisinghe, Sunil Mendis, J FMCG CPC (Lanka) Limited B L De Silva, Cargills Quality Foods Limited Address: 40, York Street, Colombo 01. Cecilia Page Muttukumaru, Dr. A Address: 40, York Street, Colombo 01. Phone: +94112427777 Aravinda Page, Joseph Page, R Phone: +94112427777 Fax: +94112338704 Selvaskandan, A D B Talwatte, Fax: +94112338704 Directors: Imtiaz Abdul Wahid, Sidath Imtiaz Abdul Wahid, S C Niles Directors: Ranjit Page (Chairman), Imtiaz Kodikara (up to 31 August 2019), Abdul Wahid, J C M Victoria, S L W Dilantha Jayawardhana (w. e. f. 31 RETAIL AND WHOLESALE Dissanayake, Sidath Kodikara (up to 31 August 2019) DISTRIBUTION August 2019), Dilantha Jayawardhana Ceylon Agro Development Company Cargills (Ceylon) PLC (w. e. f. 31 August 2019) (Private) Limited Address: 40, York Street, Colombo 01. Address: 40, York Street, Colombo 01. Phone: +94112427777 Cargills Distributors (Private) Limited Phone: +94112427777 Fax: +94112338704 Address: 40, York Street, Colombo 01. Fax: +94112338704 Email: [email protected] Phone: +94112427777 Directors: Imtiaz Abdul Wahid, Haridas Directors: Louis Page (Chairman), Fax: +94112338704 Fernando, Keerthi Gunasekara, Talaal Ranjit Page, Imtiaz Abdul Wahid, Priya Directors: Imtiaz Abdul Wahid, Sidath Maruzook, Saranga Wijesundara Edirisinghe, Sanjeev Gardiner, Kodikara (up to 31 August 2019), Y Kanagasabai, Sunil Mendis, Joseph Dilantha Jayawardhana (w. e. f. 31 Kotmale Holdings PLC Page, Errol Perera, Asoka Pieris, Deva August 2019) Address: 40, York Street, Colombo 01. Rodrigo (up to 27 August 2020), Ms. Phone: +94112427777 Indira Malwatte (w. e. f. 1 February Cargills Quality Dairies (Private) Fax: +94112338704 2020), Asite Talwatte (w. e. f. 28 August Limited Directors: Ranjit Page (Chairman), 2020) Address: 40, York Street, Colombo 01. Phone: +94112427777 Imtiaz Abdul Wahid, Priya Edirisinghe, Sunil Mendis, Joseph Page Cargills Foods Company (Private) Fax: +94112338704 Limited Directors: Imtiaz Abdul Wahid, D G Kotmale Products Limited Address: 40, York Street, Colombo 01 O Dias, S L W Dissanayake, Sidath Address: 40, York Street, Colombo 01. Phone: +94112427777 Kodikara (up to 31 August 2019), Phone: +94112427777 Fax: +94112338704 Dilantha Jayawardhana (w. e. f. 31 Fax: +94112338704 Directors: Ranjit Page (Chairman), August 2019) Directors: Imtiaz Abdul Wahid, S L W Sidath Kodikara (up to 31 August 2019), Dissanayake Imtiaz Abdul Wahid, Priya Edirisinghe, Y Kanagasabai, Sunil Mendis, Asoka Pieris

C T HOLDINGS PLC 135 Annual Report 2019 | 2020 Group Directory

Kotmale Milk Foods Limited Cargills Enterprise Solutions (Private) C T Properties Limited Address: 40, York Street, Colombo Limited Address: 28th Floor, West Tower, World 01. Phone: +94112427777 Address: 40, York Street, Colombo 01. Trade Centre, Colombo 01. Fax: +94112338704 Phone: +94112427777 Phone: +94112005700 Directors: Imtiaz Abdul Wahid, S L W Fax: +94112338704 Fax: +94112336727 Email: Dissanayake Directors: R Theagarajah (Chairman), [email protected] Rohan Muttiah, S C Niles, Ranjit Page, Directors: Ranjit Page (Chairman), R Kotmale Dairy Products (Private) Imtiaz Abdul Wahid Selvaskandan, Joseph Page, Cecilia Limited Page Muttukumaru, S C Niles, Louis Address: 40, York Street, Colombo RESTAURANTS Page, Errol Perera, Jayantha Perera 01. Phone: +94112427777 Cargills Food Processors (Private) Fax: +94112338704 Limited C T Property Management Company Directors: Imtiaz Abdul Wahid, S L W Address: 40, York Street, Colombo 01. (Private) Limited Dissanayake Phone: +94112427777 Address: 28th Floor, West Tower, World Fax: +94112338704 Trade Centre, Colombo 01. Kotmale Milk Products Limited Directors: Imtiaz Abdul Wahid, J C M Phone:+94112005700 Fax: Address: 40, York Street, Colombo 01. Victoria, Sidath Kodikara (up to 31 +94112336727 Phone: +94112427777 August 2019), Dilantha Jayawardhana Directors: R Selvaskandan (Chairman), Fax: +94112338704 (w. e. f. 31 August 2019) Joseph Page, S C Niles, Louis Page, Directors: Imtiaz Abdul Wahid, S L W Errol Perera, Jayantha Perera Dissanayake Cargills Foods Services (Private) Limited C T Real Estate (Private) Limited Cargills Frozen Products (Pvt) Limited Address: 40, York Street, Colombo 01. Address: 28th Floor, West Tower, World Address: 40, York Street, Colombo 01. Phone: +94112427777 Trade Centre, Colombo 01. Phone: +94112427777 Fax: +94112338704 Phone: +94112005700 Fax: Fax: +94112338704 Directors: Imtiaz Abdul Wahid, Sidath +94112336727 Directors: Imtiaz Abdul Wahid, D G Kodikara (up to 31 August 2019), Directors: R Selvaskandan (Chairman), O Dias, S L W Dissanayake, Sidath Dilantha Jayawardhana (w. e. f. 31 Joseph Page, Cecilia Page Kodikara (up to 31 August 2019), August 2019) Muttukumaru, S C Niles, Louis Page, Dilantha Jayawardhana (w. e. f. 31 Errol Perera, Jayantha Perera August 2019) REAL ESTATE C T Properties Lakeside (Private) C T Land Development PLC Cargills Quality Confectionaries Limited Address: 4th Floor, Majestic City, 10 (Private) Limited Address: 28th Floor, West Tower, World Station Road, Colombo 04. Address: 40, York Street, Colombo 01. Trade Centre, Colombo 01. [email protected] Phone: +94112427777 Phone: +94112005700 Phone: +94112508673-4 Fax: +94112338704 Fax: +94112336727 Fax: +94112592427 Directors: Imtiaz Abdul Wahid, Sidath Directors: R Selvaskandan (Chairman), Email: [email protected] Kodikara (up to 31 August 2019), Joseph Page, Cecilia Page Directors: R Selvaskandan (Chairman), Dilantha Jayawardhana (w. e. f. 31 Muttukumaru, S C Niles, Joseph Page, Mrs. M G Perera, Priya August 2019) Louis Page, Errol Perera, Jayantha Edirisinghe, Sunil Mendis, Perera S C Niles, Louis Page, Ranjit Page, Dr. T Senthilverl

C T HOLDINGS PLC Annual Report 2019 | 2020 136 C T Properties G S (Private) Ltd ENTERTAINMENT C T CLSA Holdings Limited Address: 28th Floor, West Tower, World Ceylon Theatres (Private) Limited Address: 4-15, Majestic City, 10 Station Trade Centre, Colombo 01. Address: No 8, Sir Chittampalam A Road, Colombo 04. Phone: +117468500 Gardiner Mawatha, P O Box 2042, Phone: +94112552290 Fax: +117468502 Colombo 02. Fax: +94112552289 Directors: Louis Page (alternate - R Phone: +94112431243, Directors: Priya Edirisinghe (Chairman), Selvaskandan), Ranjit Page (alternate - +94112555565 Fax: +94112447956 Cecilia Page Muttukumaru, Louis Page, S C Niles) Chairman Emeritus: Donald Skinner, Zakir Mohamedally Mr. Anthony A Page Dawson Office Complex (Private) Directors: Louis Page (Chairman), R C T CLSA Securities (Private) Limited Limited Selvaskandan, Joseph Page, Cecilia Address: 4-14, Majestic City, 10 Station Address: 40 York Street, Colombo 01. Page Muttukumaru, S C Niles, Errol Road, Colombo 04. Phone: +94112427777 Perera, Mrs. M G Perera, Imtiaz Abdul Phone: +94112552290 Fax: +94112338704 Wahid Fax: +94112552289 Director: Imtiaz Abdul Wahid, Dilantha Email: [email protected] Jayawardhana Cinema Entertainments (Private) Directors: Cecilia Page Muttukumaru Limited (Chairperson), Priya Edirisinghe, Donald Frederick North Hotel Company Address: No 8, Sir Chittampalam A Skinner, Kanishka Hewage (Private) Limited Gardiner Mawatha, Colombo 02. Address: 40 York Street, Colombo 01. Phone: +94112478752, C T CLSA Capital (Private) Limited Phone: +94112427777 +94112478753 Fax: +94112478754 Address: 4-15 A, Majestic City, 10 Fax: +94112338704 Directors: Errol Perera (Chairman) Station Road, Colombo 04. Directors: Imtiaz Abdul Wahid, S C Niles (alternate - S C Niles, w e f 22 May Phone: +94112584843, +94112503523 2019), M I J A Cader (alternate - M J Fax: +94112580181 The Empire Investment Company R Hasheem, w e f 01 Oct 2019), G R Email: [email protected] (Private) Limited Pathmaraj, R Selvaskandan, M M J N I Directors: Cecilia Page Muttukumaru Address: 40 York Street, Colombo 01. Cader (w e f 01 Oct 2019). (Chairperson), Donald Skinner, S C Phone: +94112427777 Fax: Niles, Zakir Mohamedally +94112338704 BANKING & FINANCIAL SERVICES Directors: Ranjit Page, S C Niles, Comtrust Asset Management Limited Cargills Bank Limited Anthony A Page Address: 4-07, Majestic City, 10 Station Address: 696 Galle Road, Colombo 04. Road, Colombo 04. Phone: +94117640000 Phone: +94112506347, +94112506204 Fax: +94112055575 Fax: +94112506347 Email: [email protected], Email: [email protected] Directors: Ranjit Page(Chairman), Directors: Cecilia Page Muttukumaru Rajendra Theagarajah (up to 30 (Chairperson), Donald Skinner, Joseph September 2020), P S Mathavan, Page Mangala Boyagoda, Faizal Salieh, Richard Ebell, Mrs. Ruvini Fernando, Ms. Marianne Page, Yudhishtran Kanagasabai, Senarath Bandara (from 8 September 2020)

C T HOLDINGS PLC 137 Annual Report 2019 | 2020 INFORMATION OF SHAREHOLDERS

1. DISTRIBUTION OF SHAREHOLDERS 31st March 2020 31st March 2019 Size of Shareholdings Shareholders Holdings Shareholders Holdings Numbers % Numbers % Numbers % Numbers % 1 - 1,000 Shares 689 47.62 135,897 0.07 678 46.66 132,174 0.07 1,001 - 10,000 Shares 437 30.20 1,649,575 0.82 452 31.11 1,709,825 0.85 10,001 - 100,00 Shares 252 17.41 7,420,175 3.68 255 17.55 7,670,978 3.81 100,001 - 1,000,000 Shares 50 3.46 14,181,180 7.04 50 3.44 13,167,895 6.54 Over 1,000,000 Shares 19 1.31 178,020,151 88.39 18 1.24 178,726,106 88.74 Total 1,447 100.00 201,406,978 100.00 1,453 100.00 201,406,978 100.00

2. ANALYSIS OF SHAREHOLDERS 31st March 2020 31st March 2019 Size of Shareholdings Shareholders Holdings Shareholders Holdings Numbers % Numbers % Numbers % Numbers % Institutions 120 8.29 121,093,333 60.12 111 7.64 122,089,284 60.62 Individuals 1,327 91.71 80,313,645 39.88 1,342 92.36 79,317,694 39.38 Total 1,447 100.00 201,406,978 100.00 1,453 100.00 201,406,978 100.00

31st March 2020 31st March 2019 Size of Shareholdings Shareholders Holdings Shareholders Holdings Numbers % Numbers % Numbers % Numbers % Residents 1,316 90.95 170,267,877 84.54 1,318 90.71 168,615,635 83.72 Non-Residents 131 9.05 31,139,101 15.46 135 9.29 32,791,343 16.28 Total 1,447 100.00 201,406,978 100.00 1,453 100.00 201,406,978 100.00

C T HOLDINGS PLC Annual Report 2019 | 2020 138 3. MAJOR SHAREHOLDERS Name of Shareholder 31st March 2020 31st March 2019 Number of % Number of % Shares Shares Odeon Holdings (Ceylon) (Pvt) Ltd 84,281,323 41.85 84,281,323 41.85 Mr. Anthony A. Page 17,501,287 8.69 17,501,287 8.69 Mr. Ranjit Page 15,077,014 7.49 13,931,102 6.92 Ms. M.M. Page 10,344,872 5.14 10,325,134 5.13 Sir Chittampalam A Gardiner Trust 10,120,004 5.02 10,120,004 5.02 Employees Provident Fund 7,686,987 3.82 7,686,987 3.82 Mr. Joseph Page 7,069,172 3.51 7,069,172 3.51 Mrs. T. Selvaratnam 5,667,250 2.81 5,667,250 2.81 BNYMSANV Re-LF Ruffer Absolute Return Fund 3,288,000 1.63 3,686,188 1.83 Ms. Tanya Selvaratnam 2,821,500 1.40 2,821,500 1.40 Mr. T Selvaratnam 2,821,500 1.40 2,821,500 1.40 BNYMSANV Re-LF Ruffer Investment Funds : LF Ruffer Pacific and 2,200,000 1.09 2,200,000 1.09 Emerging Markets Fund Northern Trust Company S/A Hosking Global Fund PLC 2,141,614 1.06 2,240,200 1.11 BNYMSANV Re-LF Ruffer Total Return Fund 2,100,000 1.04 4,730,000 2.35 Melstacorp PLC 1,623,050 0.81 1,623,050 0.81 SSBT - Retail Employees Superannuation Trust 1,464,919 0.73 - - Mrs. Cecilia Page Muttukumaru 1,332,000 0.66 1,266,750 0.63 Ms. A.M. Basnayake 1,049,659 0.52 1,049,659 0.52 The Galle Face Hotel Co. Ltd 915,503 0.45 915,503 0.45 Citibank Hong Kong S/A Hostplus Pooled Superannuation Trust 796,282 0.40 - - GF Capital Global Limited - - 737,450 0.37 Mr. P E Muttukumaru - - 700,000 0.35 Others 21,105,042 10.48 20,032,919 9.95 Total 201,406,978 100.00 201,406,978 100.00

C T HOLDINGS PLC 139 Annual Report 2019 | 2020 Information of Shareholders

4. SHARE VALUATION The market value of ordinary shares of the Company on 31st March 2020 was Rs. 160.00 (2019 - Rs. 162.90). The highest and lowest values recorded during the year ended 31st March 2020 were Rs. 199.00 (2019 - Rs. 189.00) and Rs. 130.10 (2019 - Rs. 162.90) respectively.

5. PUBLIC SHAREHOLDING Description 2020 2019 Shareholders (No's) 1,435 1,438 Shareholding (%) 36.99% 37.92% Float adjusted market capitalisation (Rs.'000) 11,920,071 12,441,247

The Company complies with the Minimum Public Holding requirement of the Main Board as per Option 1 of Section 7.13.1 (a) of the CSE Listing Rules.

C T HOLDINGS PLC Annual Report 2019 | 2020 140 NOTICE OF MEETING

Notice is hereby given that the Eighty Ninth Annual General Meeting (AGM) of C T Holdings PLC will be held at the Sri Lanka Foundation, 100, Padanama Mawatha, 100 Independence Square, Colombo 7 on Friday, 29 October 2020 at 9.30 a.m. and the business to be brought before the meeting will be:

The business to be brought before the Meeting will be to: 1) Read the Notice convening the Meeting 2) To receive and consider the Annual Report of the Directors and the Financial Statements for the year ended 31st March 2020 with the report of the Auditors thereon. 3) To declare a dividend as recommended by the Directors. 4) To re-elect Directors a. Mr. S. C. Niles, and b. Mr. M. I. Abdul Wahid who retire by rotation, and c. Mr. L. R. Page, d. Mr. J B L De Silva, e. Mr. A T P Edirisinghe and f. Mr. Sunil Mendis, who retire in terms of Section 210 (2) (b) of the Companies Act No. 07 of 2007 having surpassed seventy years of age and offer themselves for re-election in terms of Section 211 (1) and (2) of the Companies Act No, 07 of 2007.

Ordinary Resolution (i) “Resolved that Mr. L. R. Page, a retiring Director, who has attained the age of Seventy-One years be and is hereby reappointed a Director of the Company and it is hereby declared that the age limit of Seventy years referred to in Section 210 of the Companies Act No. 07 of 2007 shall not apply to the appointment of the said Director”, and

Ordinary Resolution (ii)“Resolved that Mr. J B L De Silva, a retiring Director, who has attained the age of Seventy-Four years be and is hereby reappointed a Director of the Company and it is hereby declared that the age limit of Seventy years referred to in Section 210 of the Companies Act No. 07 of 2007 shall not apply to the appointment of the said Director”, and

Ordinary Resolution (iii) “Resolved that Mr. A T P Edirisinghe, a retiring Director, who has attained the age of Seventy-Five years be and is hereby reappointed a Director of the Company and it is hereby declared that the age limit of Seventy years referred to in Section 210 of the Companies Act No. 07 of 2007 shall not apply to the appointment of the said Director”, and

Ordinary Resolution (iv) “Resolved that Mr. Sunil Mendis, a retiring Director, who has attained the age of Seventy-Six years be and is hereby reappointed a Director of the Company and it is hereby declared that the age limit of Seventy years referred to in Section 210 of the Companies Act No. 07 of 2007 shall not apply to the appointment of the said Director”

5) To authorise the Directors to determine contributions to charities. 6) To authorise the Directors to determine the remuneration of the Auditors, Messrs. KPMG, who are deemed re-appointed as auditors at the Annual General Meeting of the Company in terms of Section 158 of the Companies Act No. 7 of 2007.

By order of the Board C T Holdings PLC

(Signed) S L W Dissanayake Company Secretary

Colombo 07 October 2020

Note: A shareholder is entitled to appoint a proxy to attend and vote in his/her stead and a proxy need not be a shareholder of the Company. A form of proxy is enclosed for this purpose. The instrument appointing a proxy must be completed and deposited at the registered office of the Company not less than 48 hours before the time fixed for the holding of the Meeting.

C T HOLDINGS PLC 141 Annual Report 2019 | 2020 NOTES

C T HOLDINGS PLC Annual Report 2019 | 2020 142 FORM OF PROXY

I/We...... of ...... being the Shareholder / Shareholders of C T HOLDINGS PLC hereby appoint (1) ...... of ...... or failing him/her

(2) The Chairman of the Meeting as my/our proxy to vote as indicated for me/us and on my / our behalf at the Eighty Ninth Annual General Meeting of the Company to be held on 29 October 2020 and at any adjournment thereof.

No. Resolution For Against 1. To adopt the Financial Statements for the year ended 31st March 2020

2. To declare a dividend as recommended by the Directors

3a. To re-elect Mr. S. C. Niles as a Director

3b. To re-elect Mr. M. I. Abdul Wahid as a Director

3c. To re-elect Mr. L. R. Page as a Director

3d. To re-elect Mr J B L De Silva as a Director

3e. To re-elect Mr A T P Edirisinghe as a Director

3f. To re-elect Mr Sunil Mendis as a Director

4. To authorise the Directors to determine contribution to charities

5. To authorise the Directors to determine the remuneration of the Auditors, Messrs. KPMG, who are deemed re-appointed as Auditors at the Annual General Meeting.

The proxy may vote as he/she thinks fit on any other resolution brought before the meeting.

Dated this ...... day of ...... 2020

...... Signature of the Shareholder Witnesses

Note: (a) A proxy need not be a member of the Company. (b) Instructions as to completion appear on the reverse hereof

C T HOLDINGS PLC 143 Annual Report 2019 | 2020 INSTRUCTIONS AS TO COMPLETION To be valid, this Proxy form should be completed, signed and deposited at the Registered Office of the Company at No. 8, Sir Chittampalam A Gardiner Mawatha, Colombo 2, not less than 48 hours before the time appointed for holding the meeting. In perfecting the Form of Proxy, please ensure that all details are legible.

If you wish to appoint a person other than the Chairman as your proxy, please insert the relevant details at (1) overleaf and initial against this entry.

Please indicate with an X in the space provided how your Proxy is to vote on each resolution. If no indication is given, the proxy at his/her discretion will vote as he/she thinks fit.

In case of a Company/Corporation, the Proxy must be under its Common Seal which should be affixed and attested in the manner prescribed by its Articles of Association.

In the case of joint holders, only one needs to sign. The votes of the senior holder who tenders a vote will alone be counted.

In the case of non-resident Shareholders, the stamping will be attended to upon the return of the completed Form of Proxy to Sri Lanka.

C T HOLDINGS PLC Annual Report 2019 | 2020 144 CORPORATE INFORMATION

Name of Company Registered Office Related Party Transactions Review C T Holdings PLC No 8, Sir Chittampalam A Gardiner Committee Mawatha, Colombo 2, Sri Lanka Priya Edirisinghe (Chairman) Registration No Telephone: +94 11 2431243 J B L De Silva PQ 210 Email: [email protected] Sunil Mendis Fax: +94 11 2447956 A D B Talwatte Legal Form Postal Address: PO Box 327, Colombo Quoted Public Company with limited Auditors liability incorporated in Sri Lanka on Exchange Listing KPMG, Chartered Accountants 29th September 1928 and re-registered Colombo Stock Exchange under the Companies Act No. 7 of Tax Consultants 2007. Executive Committee PricewaterhouseCoopers, Priya Edirisinghe (Chairman) Chartered Accountants Chairman Emeritus Ranjit Page Anthony A Page Sunil Mendis Bankers Joseph Page Cargills Bank Ltd Board of Directors R Selvaskandan Commercial Bank of Ceylon PLC Louis Page (Chairman) Imtiaz Abdul Wahid Hatton National Bank PLC Ranjit Page (Deputy Chairman / Nations Trust Bank PLC Managing Director) Audit Committee Sampath Bank PLC J B L De Silva Priya Edirisinghe (Chairman) Standard Chartered Bank Priya Edirisinghe J B L De Silva Sunil Mendis Sunil Mendis Cecilia Page Muttukumaru A D B Talwatte Dr. A Aravinda Page Joseph Page Remuneration Committee R Selvaskandan Louis Page (Chairman) A D B Talwatte J B L De Silva Imtiaz Abdul Wahid Priya Edirisinghe S C Niles (Executive Director) Sunil Mendis

Company Secretary Nominations Committee Sarath Dissanayake Louis Page (Chairman) Priya Edirisinghe Sunil Mendis Ranjit Page Creating Value since 1928

C T Holdings PLC No 08, Sir Chittampalam A Gardiner Mawatha, Colombo 02.