Creating Value since 1928

C T Holdings PLC - Annual Report 2017-18 Contents

Our Business at a Glance 01 / Milestones 02 / What we do... 04 / Financial Highlights 06 / Chairman’s Report 08 Profile of Directors 11 / Review of Operations 14 / Corporate Governance 22 / Risk Management 25 Report of the Remuneration Committee 27 / Report of the Nominations Committee 28 Report of the Related Party Transactions Review Committee 29

Financial Statements Annual Report of the Board of Directors of the Company 33 / Report of the Audit Committee 36 Statement of Directors’ Responsibilities 38 / Independent Auditors’ Report 39 Statement of Profit or Loss and other Comprehensive Income 44 / Statement of Financial Position 45 Statement of Changes in Equity 46 / Statement of Cash Flows 48 Notes to the Financial Statements 50 / Five Year Review – Group 123 / Group Directory 124 Information to Shareholders 127

Notice of Meeting 130 / Form of Proxy 131 / Corporate Information Inner Back Cover

We are... Professionals inspired by the ingrained family values inherited over generations Value Creators driven by innovation and technology towards building strong brands Accountable firmly committed to transparency and good governance brands Dedicated to people as our most important asset Socially Responsible pursuing trusted leadership 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’ has also been 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. 02 C T Holdings PLC Annual Report 2017/18 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 1996 PLC changed to C T Holdings PLC KFC franchise 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 completed its flagship 1992 ‘Empire’ residential development project. Entered the financial services sector through 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. 03 C T Holdings PLC Annual Report 2017/18

2012 Cargills entered the brewery sector. Ceylon Theatres added three 2017 new screens to the Majestic Cineplex including Sri 2015 Cargills commissioned the Lanka’s first ever 3D cinema. Retail sector comprising the expanded dairy facility. supermarkets spun off into a Cargills Square mall separate company with new Gampaha opened with a direct equity injection into the supermarket, KFC and two Company. cinema screens. Two new cinema screens set up by Ceylon Theatres at Arcade Independence Square, the Group’s Regal cinema was refurbished. Cargills exited the brewery sector.

2013 2016 Cargills set up the Cargills Bank began expansion TGI Fridays Franchise of its network by opening 11 2018 Restaurant in branches. Colombo, Fort. Regal Cinema in Nuwara Eliya fully refurbished and re-opened. 2014 Group received license 2011 to set up and operate a Cargills acquired controlling Commercial Bank. interest in Kotmale Holdings Cargills Square Mall opened PLC. in Jaffna. Cargills also acquired Exited the Ceramic / Tiles, Diana Biscuits Plantation and Packaging Manufacturers (Private) sectors. Limited (subsequently re-named Cargills Quality Confectioneries (Pvt) Ltd). 04 C T Holdings PLC Annual Report 2017/18 What we do...

Retail and Wholesale Distribution The retail sector of the Group functions under Cargills Foods Company (Pvt) Ltd. The modern trade arm covers all districts of the island through Cargills Food City and Food City Express store formats. Cargills Food City has been rated the 10th most valuable brand in Sri Lanka as per the Brand Finance Index ratings of 2017 with a AA+ rating and is the only Retailer ranked in the top ten of national brands. This sector maintains a backward integration model with local fruit and vegetable collection centres in every district of the island.

Millers Limited the marketing and distribution arm holds the agency rights for leading international food brands reaching 40,000 groceries islandwide. The Company is also the distributor for the Group’s own brands.

Fast Moving Consumer Goods (FMCG) The Group’s FMCG brands are some of the widest consumed household brands in the Country which include, ‘Magic’ and ‘Kotmale’ dairy products, ‘Kist’ range of jams, cordials, nectars, juices and accompaniments, ‘Cargills Finest’, ‘Goldi’ and ‘Sams’ processed meats and ‘Kist’ brand of confectioneries. The sector operates some of the most modern facilities with many ISO International Standard certifications among them such as ISO 9001: 2000 Quality Management System certification, ISO 22000: 2005 Food Safety Management System certification and ISO 14001: 2004 Environment Management System certification.

Real Estate C T Land Development is a long established name in the Real Estate and Property sector. The Company owns and operates ‘Majestic City’, the largest and most popular shopping and entertainment mall in the Country. The Group also owns and operates the Cargills Square Malls in Jaffna and Gampaha. Property development operations under C T Properties previously completed the ‘Empire’ luxury apartment complex in Colombo 2 and C T Gardens Township project in Piliyandala. 05 C T Holdings PLC Annual Report 2017/18

Restaurants The restaurants’ sector includes the world renowned ‘KFC’ and ‘TGI Fridays’ franchises with 31 KFC restaurants and one flagship TGIF Restaurant.

Banking and Financial Services Cargills Bank which was promoted and launched by the Group completed its third year of operations. Capital Market operations of the Group are carried out under C T CLSA Holdings Ltd, which covers stockbroking, advisory services and capital market solutions.

Entertainment The Group has been associated with the national cinema industry for over 85 years with the making of the first national production and thereon producing landmark motion pictures that have won international acclaim. Ceylon Theatres (Private) Limited is engaged in operating Fifteen cinema screens in Seven locations. 06 C T Holdings PLC Annual Report 2017/18 Financial Highlights

Group Company 2018 2017 Change % 2018 2017 Change %

Operations Revenue 92,134,483 85,037,781 8.35 - - - Results from operating activities 6,802,234 5,798,305 17.31 32,887 (142,988) 123.00 Profit before taxation 5,791,257 4,690,108 23.48 1,138,168 1,323,215 (13.98) Profit for the year 3,739,465 2,667,014 40.21 1,119,572 1,298,524 (13.78)

Profit attributable to owners of the Parent 2,597,342 1,747,876 48.60 1,119,572 1,298,524 (13.78)

Per Share Data Earnings Per Share (Rs.) 12.90 8.68 48.60 5.56 6.45 (13.78) Dividends Per Share (Rs.) 5.50 5.20 5.77 5.50 5.20 5.77 Dividend Cover (Times) 2.34 1.67 40.12 1.01 1.24 (18.54)

Shareholders’ Interest Stated Capital 6,489,758 3,194,008 6,489,758 3,194,008 Total equity attributable to equity holders of the parent 20,657,466 18,794,039 7,700,164 7,580,200 Return on equity attributable to equity holders of the parent (%) 12.57 9.30 14.54 17,13 Total equity attributable to equity holders of the parent per Share (Rs.) 102.57 93.31 38.23 37.64

Leverage Net Finance Costs (1,319,208) (1,131,121) 1,105,281 1,466,203 Interest Cover (Times) 5.16 5.13 (0.03) 0.10 Borrowings (including overdrafts) 17,809,035 18,579,107 - - Borrowing as a Percentage of total equity attributable to equity holders of the parent (%) 86.21 98.86 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.

Composition of Group Revenue 2018 Composition of Group Profit 2018

Retail 80% Retail 39.91% FMCG 15.16% FMCG 18.68% Restaurants 3.42% Restaurants 5.41% Real Estate 0.55% Real Estate 36.87% Entertainment 0.36% Entertainment - 0.87% 07 C T Holdings PLC Annual Report 2017/18

Rs. 92.13 Bn Revenue

Revenue Profit for the year Rs. Bn Rs. Bn 100 4

Rs. 3.74 Bn 80 3 Profit for the year 60 2 40

1 20 Rs. 12.90 0 0 14 15 16 17 14 15 16 17 Earnings Per Share 18 18

Borrowings Earnings Per Share Rs. Bn Rs. 20 14 Rs. 61.74 Bn 12 15 Total Assets 10

8 10 6

4 5 Rs. 5.50 2 Dividend Per Share 0 0 14 15 16 17 14 15 16 17 18 18

Rs. 24.90 Bn Total Equity 08 C T Holdings PLC Annual Report 2017/18 Chairman’s Report

Rs.92.13 Bn Rs.5.50 Group Revenue DPS Increased by 8.35% over the previous year Up Rs. 0.30 over 2017

We are pleased to present the Annual the Group also invested in training and Group additions to PPE Report of the CT Holdings Group for development of the management and Rs. Bn the year ended 31st March 2018. staff in order to upgrade the capabilities 6 of the team in a rapidly changing The Group achieved a satisfactory top marketplace. As we persist with 5 line growth amidst a relatively subdued this policy into the next year, we are economic environment which has confident that our plans will continue to 4 been impacted by inclement weather deliver results in the future as well. affecting the key Agriculture sector 3 of the Company, while tightening Contribution to the regional 2 fiscal conditions have also impacted economy consumer spending. Group Revenue During the year, a substantial amount 1 increased by Rs. 7.1 Bn (8.35%) over of investments were made outside the the previous year to reach Rs. 92.13 Colombo metropolitan area. Merging 0 14 15 16 17 Bn. Profit for the year, net of one-off the Group’s operations with the goal 18 gains from disposal of Property and of contributing to the development of Investments (further explained in review regional economies comprising farmers of operations) amounted to Rs. 2.47 and primary producers forms a key Dividends per share Bn, which is slightly below the previous component of the Group’s strategy. Rs. year by Rs. 193 Mn (7.23%). 10 The investments made by the Group Consistent investment policy provide a ready market for the dairy 8 The Group follows a consistent, prudent farming and agribusiness community and well laid out plan of investments as well as other primary producers. 6 across all the sectors of operations As at the year end, the Group had which is targeted at maintaining and collection centres across the Island. The 4 improving the position of its brands availability of a ready market enables in the marketplace. The investments farmers to concentrate on improving allow for both expansion of the network yields and productivity with the 2 as well as upgrading the logistical assurance of being able to obtain a fair infrastructure. During the year the price for their produce. Available market 0 14 15 16 17 Group invested Rs. 4.80 Bn in property opportunities also enables farmers to 18 plant & equipment covering all the pursue alternate crop options beyond main operating sectors. Additionally, the staple rice production. 09 C T Holdings PLC Annual Report 2017/18

"The Group achieved a satisfactory top line growth amidst a relatively subdued economic environment which has been impacted by inclement weather affecting the key Agriculture sector of the Company, while tightening fiscal conditions have also impacted consumer spending"

Employment opportunities afforded Entertainment Sector Directorate within the Group also forms a key C T Holdings had its origins in the All Directors of the Company as at the component of our contribution. Largely movie business back in 1928. Although Balance Sheet date were Directors because of the low entry qualification presently the Entertainment sector throughout the year ended 31st March criteria for recruitment and the training is smaller in comparison with the 2018. and development opportunities other sectors of the Group, I need to provided for the selected youth. The mention a significant development Stated Capital career development thus provided, has here. Subsequent to the end of the During the year the Company issued enabled many to pursue employment current year, moves have been made 18,309,725 ordinary voting shares and higher education options both by the National Film Corporation (NFC) in the Company credited as fully locally and overseas. Despite this, some to takeover exclusive island wide paid by capitalizing a sum of Rs. of the sectors within the Group struggle distribution of all movies, both imported 3,295,750,500 from and out of the to attract adequately competent staff to and locally produced. This is in effect Reserves of the Company in the fill many vacancies that arise. a nationalisation of film distribution proportion of One (01) share for every across Sri Lanka. Previous experience Ten (10) shares at a consideration of Mini Malls with the NFC in this regard had been a Rs. 180.00 per share. Consequent The Group successfully completed disappointment and we have expressed to the share issue, the stated capital its third investment property – Cargills our strong opposition to this move of the Company at the reporting date Square, Gampaha in the latter part by the NFC. We are hopeful that an amounted to Rs. 6,489,758,332 of last year which utilises synergies acceptable compromise would be (2017 - Rs. 3,194,007,832) comprising across the Group to offer customers worked out at the earliest. 201,406,978 ordinary (voting) shares a Food City, KFC and the Cineplex. (2017 – 183,097,253). The success of this venture has given Fixed Assets and Investments the Group the confidence to further The investment by the Group in The following subsidiaries also issued expand on the Mini Mall concept and property, plant and equipment shares as follows during the year: take it to other major towns and cities during the year amounted to Rs. 4.8 (a) Cargills (Ceylon) PLC - 31,999,927 in the Country. The Group already Bn compared to Rs. 4.6 Bn in the ordinary voting shares in the owns properties in key locations in previous financial year. The investments Company credited as fully paid major cities. Efforts would be made to have been funded through internally by capitalizing a sum of Rs. unlock the value of these properties by generated funds and borrowings. 6,399,985,400 lying in the reserves developing the same along the lines At the Company level there were no of the Company in the proportion of the Mini Malls already constructed, investments in property, plant and of One (01) share for every Seven subject to local conditions and demand. equipment either during the current or (07) shares at a consideration of Rs previous year. 200.00 per share. 10 C T Holdings PLC Annual Report 2017/18 Chairman’s Report

(b) C T Land Development PLC – Acknowledgments 32,500,000 ordinary voting shares I take this opportunity to express in the Company credited as fully my sincere thanks to all Customers, paid by capitalizing a sum of Rs. Patrons, Bankers, Suppliers Principals 1,495,000,000 lying in the reserves for their continued patronage and of the Company in the proportion support. I also wish to thank all of Two (02) shares for every Three members of our staff and my fellow (03) shares at a consideration of Rs. Directors for their assistance and 46.00 per share. cooperation during this year.

Appropriations The Group has followed a consistent (Signed) dividend policy for several years, while Louis Page retaining adequate funds for expansion. Chairman The Company declared a first interim dividend of Rs. 1.80 per share on 29th 03 August 2018 September 2017 (2017 – Rs. 1.70) and a second interim dividend of Rs 3.70 per share on 12th March 2018 (2017 – Rs. 3.50 per share). The Directors do not recommend a final dividend out of the profits for the year ended 31st March 2018.

Conclusion Although the bottom line performance for this year has been impacted by the present economic climate, adequate steps are being taken to alter the situation and return to a growth trajectory. Continuous improvements made by the Group and the steady investments would help the Group to withstand any adversity and overcome the same. We take confidence from the progress made in the broader economic developments in our country and expect better times ahead. We therefore look forward to the future with optimism. 11 C T Holdings PLC Annual Report 2017/18 Profile of Directors

Mr. Anthony A Page Mr. Priya Edirisinghe (Chairman Emeritus) Independent Non-Executive Director

Mr. Anthony A. Page counts over 45 years of management Mr. A. T. Priya Edirisinghe is a Fellow Member of the Institute experience in a diverse array of businesses. He is a Fellow of Chartered Accountants of Sri Lanka, Fellow Member of Member of the Institute of Chartered Accountants of Sri Lanka the Chartered Institute of Management Accountants (UK), and a Fellow Member of the Institute of Certified Management and holds a Diploma in Commercial Arbitration. He was the Accountants of Sri Lanka. Senior Partner of Baker Tilly Edirisinghe & Co., Chartered Accountants and currently serves as Consultant/Advisor. He He served on the Board of the Colombo Stock Exchange and is the Managing Director of PE Management Consultants several public listed and non-listed Companies. Mr. Page also (Pvt) Ltd. He counts over 45 years’ experience in both public served as a Council Member of the Employers Federation of practice and in the private sector. He serves on the boards Ceylon. of a number of other listed and non-listed companies where in some companies he also serves as Chairman / Member of the Audit Committee, Related Party Transactions Review Board of Directors Committee and Member of the Remuneration Committee. Mr. Louis Page Chairman, Non-Executive Director Mr. Edirisinghe is the Chairman of the Company’s Audit and Related Party Transactions Review Committees and a Louis R. Page is a Fellow Member of the Institute of Chartered member of the Company’s Remuneration and Nominations Accountants of Sri Lanka and a Fellow Member of the Committees. Chartered Institute of Management Accountants (UK). He is the Chairman of Cargills (Ceylon) PLC and Cargills Bank Ltd. In a career spanning more than 40 years, he has also Mr. Sunil Mendis held a number of Board and Senior Management positions Independent Non-Executive Director at the highest level in overseas public companies and public institutions. Desamanya Sunil Mendis was formerly the Chairman of Hayleys Group, and a former Governor of the Central Bank of Sri Lanka. Mr. Ranjit Page Deputy Chairman / Managing Director, Executive Director He possesses around 50 years of wide and varied commercial experience, most of which has been in very senior positions. Mr. V. Ranjit Page possesses over 35 years of management Mr. Mendis serves as a member of the Company’s Audit experience with expertise in food retailing, food service, Committee, Related Party Transaction Review Committee and and manufacturing, having introduced the concept of super Remuneration Committees, and also serves on the Boards of marketing to the Sri Lankan masses. He also serves on the several other Group companies. boards of several companies in the C T Holdings Group.

Mrs. Cecilia Muttukumaru Mr. J B L De Silva Non-Executive Director Independent Non-Executive Director Mrs. Cecilia Muttukumaru is the Chairperson of C T CLSA Mr. J. B. L. De Silva, a Lawyer by profession, has substantial Securities (Private) Limited, C T CLSA Capital (Private) Limited, experience in the rubber trade. He is a past Chairman of the and Comtrust Asset Management (Private) Limited. She is a Colombo Rubber Traders’ Association and is a Director of Fellow Member of the Institute of Chartered Accountants of other listed and non-listed companies. Sri Lanka and a Fellow Member of the Chartered Institute of Management Accountants (U.K.). 12 C T Holdings PLC Annual Report 2017/18 Profile of Directors

Dr. A. Aravinda Page Mr. A D B Talwatte Non-Executive Director Independent Non-Executive Director

Dr. A. Aravinda Page, MA (Cantab), M.B.B. Chir, MRCS Mr. Asite Talwatte is a fellow member of the Institute of (UK), is a specialty registrar in cardiothoracic surgery and is Chartered Accountants of Sri Lanka (ICASL) and the currently attached to Papworth Hospital NHS Foundation Chartered Institute of Management Accountants of the U.K. Trust, Cambridge, UK. He also holds a Post-Graduate Diploma in Business and Financial Administration awarded by ICASL and the University of Wageningen, Holland and has a MBA from the University Mr. Joseph Page of Sri Jayawardenapura, Sri Lanka. Mr. Talwatte has also Non-Executive Director participated in a Kellogg Executive Programme at the Kellogg Graduate School of Management, Northwestern University, Mr. Joseph C. Page is the Deputy Chairman / Managing Evanston, Illinois. Director of C T Land Development PLC. He is also a Director of Cargills (Ceylon) PLC, Ceylon Theaters (Pvt) Ltd and C T Mr. Talwatte worked at Ernst & Young in Assurance, Business Properties Limited. Risk and Advisory Services for 37 years, including 10 years as Country Managing Partner. He has worked with Ernst & Young Prior to joining C T Land Development PLC, he was the in Cleveland, Ohio and also served on Ernst & Young’s Far- Executive Director of Millers Limited. He has over 35 years of East Area Executive Committee, the Area Advisory Council management experience in the private sector. and the ASEAN Leadership Committee.

Mr. Talwatte was President of the CA Sri Lanka for a 2 Mr. R Selvaskandan year period in 2002/2003 and the CIMA in 1995/96. He Independent Non-Executive Director also served as the Chairman of the Statutory Accounting Standards Committee and the Auditing Standards Committee, Mr. R. Selvaskandan is an Attorney-at-Law (SL) and Solicitor the Urgent Issues Task Force and the Examinations (England & Wales and Hong Kong) and was a senior partner Committee of ICASL. At CIMA he served as Chairman of of a leading law firm in Hong Kong prior to joining the property the Management and Professional Development (MPD) sector of the C T Holdings Group. He is the Chairman of C T Committee. Land Development PLC, Deputy Chairman of C T Properties Limited and a Partner of Varners, a Law firm based in Sri Mr. Talwatte has been closely associated with the Lanka. He has more than thirty years’ experience in legal development of Corporate Governance in Sri Lanka being practice and management in Sri Lanka, UK and Hong Kong actively involved with the Code of Audit Committees in 2002 and the Code of Corporate Governance of 2003. He co- chaired the Committees to structure the revised Code of Corporate Governance (of 2008) and the Listing Rules and a Committee on Corporate Governance set up by ICASL jointly with the SEC to review and revise the Code of Corporate Governance. He currently chairs the Committee to review the applicability of Integrated Reporting in Sri Lanka and the Committee reviewing the Corporate Governance Code.

Mr. Talwatte has served as a Non-Executive Director on boards of listed companies, public companies and state owned enterprises. 13 C T Holdings PLC Annual Report 2017/18

Mr. Imtiaz Abdul Wahid Non-Executive Director

Mr. M. Imtiaz Abdul Wahid is an Associate Member of the Institute of Chartered Accountants of Sri Lanka and a Fellow Member of the Chartered Institute of Management Accountants (UK). He has been involved in the operations of the subsidiary company Cargills (Ceylon) PLC in an executive capacity at different intervals progressively at higher levels (appointed Director 1997 and Deputy Managing Director in 2001) spanning a period of over 25 years, leaving the services of the company for employment abroad on two occasions in between whereby he also gained valuable exposure holding a number of senior management positions in overseas companies. He was appointed Managing Director/ Deputy CEO of Cargills (Ceylon) PLC in 2010.

Mr. S C Niles Executive Director

Mr. Sanjay Niles is an Associate Member of the Institute of Chartered Accountants of Sri Lanka and the Chartered Institute of Management Accountants, UK. He is also a Director of CT Land Development PLC, Managing Director of Ceylon Theatres (Pvt) Ltd and a Director of other Companies within the CT Holdings Group. 14 C T Holdings PLC Annual Report 2017/18 Review of Operations

Business environment separate annual reports which report in The equity shares of the Company Statistics released by the Central Bank detail their operating activities, financial traded between a high of Rs. 195.00 of Sri Lanka confirm that Sri Lanka’s performance and other key matters. As and a low of Rs. 140.00 during the economy grew at a slower pace in such the ensuing report gives details of year. The trend of share trading 2017 when compared to the previous subsidiaries that do not fall within any of statistics and the trading compared to year, achieving a growth rate of 3.1% the listed entities of the Group as well the performance of the All Share Price for the year. Production of rice and as summarised information of listed Index (ASPI) of the Colombo Stock local fruit & vegetables in the country subsidiaries (and sub-subsidiaries). Exchange are given below. The trading declined from the previous year. Further, prices of the Company’s ordinary the Agriculture sector as a whole The primary income of C T Holdings shares are adjusted for the issue of contracted in three of the four quarters is dividends from subsidiaries and shares by capitalisation of reserves. The of the calendar year 2017. The adverse other investments. During the year shares closed at Rs. 175.00 as at the impact resulted in the increased retail the Company received dividends year end. prices of rice, local fruit and vegetables amounting to Rs. 1.09 Bn. The listed as well as reduced consumption in subsidiary Cargills (Ceylon) PLC During the year, the Company, agriculture dependent households. declared two interim dividends of Rs. capitalised a sum of Rs. 3,295,750,500 1.90 per share and Rs. 4.1 per share from and out of the reserves of the Remittances of workers from overseas respectively, the Company’s share of Company by the issue of One (01) also slightly declined in 2017 compared the dividends declared amounted to Rs ordinary share for every Ten (10) shares to 2016. Such a decline, affected 943.5 Mn for the year. Similarly, another held, credited as fully paid, to existing by the difficult conditions in some of listed subsidiary, C T Land Development shareholders at a consideration of Rs. the middle eastern countries further PLC declared interim dividends of Rs. 180.00 per share. The new shares, impacted consumption. The continued 1.50 per share and Rs. 2.0 per share rank Pari Passu in all respects with depreciation of the Sri Lankan Rupee respectively from which the Company the existing issued ordinary shares against the US Dollar and other received a total amount of Rs. 115.8 of the Company. Consequent to this currencies also had the effect to Mn. No Final dividends are proposed to share issue the stated capital of the increasing prices and operational be declared by either subsidiary. Company at the balance sheet date expenses. amounted to Rs. 6,489,758,332 The Company earned rental income of (2017 - Rs. 3,194,007,832) comprising Industries and services sectors of the Rs. 23.8 Mn (2017 – Rs. 29.0 Mn) from 201,406,978 ordinary (voting) shares economy both grew in 2017 albeit at a Group Companies a sum of Rs. 112.7 (2017 – 183,097,253). lower rate than in 2016. On a positive Mn (2017 – Rs. 4.3 Mn) was booked side tourist arrivals and tourism related as gain on fair value of Investment The subsidiaries, Cargills (Ceylon) PLC earning continued to grow in 2017 with Properties. and C T Land Development PLC, also arrivals topping 2 million tourists and capitalised part of the reserves by the tourism earnings edging closer to US$ The company does not have any issue of ordinary shares as follows – 4 Bn. interest bearing borrowing or debt (a) Cargills (Ceylon) PLC issued of servicing costs for the year. Surplus 31,999,927 ordinary voting shares Parent Company funds amounting to Rs. 118.95 Mn in the Company credited as fully C T Holdings is the parent Company at the reporting date have been paid in the proportion of One (01) of the Group encompassing 36 invested in the Group’s Comtrust Gilt share for every Seven (07) shares companies including 29 subsidiaries Edged Fund. Temporary surpluses are held at a consideration of Rs. and 6 associates. Most of the key invested in overnight deposits. The yield 200.00 per share by capitalizing a operating activities of the Group are obtained on the Comtrust Gilt Edged sum of Rs. 6,399,985,400 lying in carried out at subsidiary company level. Fund investment for the year amounted the reserves of the Company. The listed subsidiary companies publish to 7.80%. 15 C T Holdings PLC Annual Report 2017/18

(b) C T Land Development PLC issued CT Holdings of 32,500,000 ordinary voting shares in the Company credited as 35.0% fully paid in the proportion of Two 30.0% (02) shares for every Three (03) 25.0% shares held at a consideration of Rs. 46.00 per share by capitalizing 20.0% a sum of Rs. 1,495,000,000 lying in 15.0% the reserves of the Company. 10.0% 5.0% Operating Results 0 The Group revenue for the year amounted to Rs. 92.1 Bn compared -5.0% to Rs. 85.04 Bn in 2017, an increase Jul-17 Apr-17 Oct-17 Jan-18 Jun-17 Mar-18 Feb-18 Aug-17 Sep-17 Nov-17 Dec-17 of 8.35%, with the main sectors May-17 recording increases over last year. Net profit increased from Rs. 2.67 Bn in ASPI CTH 2017 to Rs. 3.74 Bn for the current year. However, the current year’s CT Holdings PLC profit included Rs. 1.01 Bn profit from the sale of freehold property by the 600,000 200.00 subsidiary Cargills (Ceylon) PLC and 190.00 Rs. 255 Mn included under share of 500,000 profit of equity accounted investees, 180.00 400,000 on account of disposal of subsidiary 170.00 by the associate Cargills Bank. If these 300,000 non-recurrent items are excluded, the 160.00 profit for the year would be below last 200,00 150.00 year by 7.23%. The sales proceeds from the disposal of freehold property 100,000 140.00 was used to settle some of the Group’s 0 130.00 borrowings, which resulted in borrowing costs being contained at about the Jul-17 Apr-17 Oct-17 Jan-18 Jun-17 Mar-18 Feb-18 Aug-17 Sep-17 Nov-17 Dec-17 same levels as the previous year, May-17 despite the trend of sustained high Share Volume Price interest rates prevailing for most of the current year. 16 C T Holdings PLC Annual Report 2017/18 Review of Operations

Retail & Wholesale Distribution The retail and wholesale distribution sector is operated under the subsidiaries Cargills Foods Company (Pvt) Ltd and Millers Ltd respectively.

The retail component consists of 353 Supermarkets under ‘Cargills Food City’ and ‘Cargills Food City Express’. The sector set up 38 new stores during the year. The Group has continued to invest in this sector in view of the attractive market opportunities, considering the low market penetration for modern trade in the Island compared to some of the countries in the South and South East Asian region. The expansion of the store foot print is funded by a combination of borrowings and Millers Ltd markets a range of internationally recognised food and beverage brands internally generated funds. covering approximately 40,000 outlets across the Island. The Company also markets the Group’s own brands in the mass market. Turnover of this sector grew by Rs. 6.1 Bn over the previous year to reach 75.2 Revenue Segmental Profit Bn for the year 2017/18 continuing a Rs. Bn Rs. Mn successful growth trend over several 80 2,000 years. Profitability, however, was adversely impacted by the broader factors such as the adverse impact on 60 1,500 agricultural production brought about by the drought conditions that prevailed 40 1,000 over the last two years.

The investments made by the Group 20 500 in this sector over several years and efforts directed at building capacity 0 0 across every level within the sector 14 15 16 17 14 15 16 17 sustain this sector even in adverse 18 18 times. We are confident that the conditions would improve in the coming periods which would provide better returns on the investments that are being made in this sector. The sector invested Rs. 4.0 Bn during the year on property, plant & equipment. 17 C T Holdings PLC Annual Report 2017/18

Fast Moving Consumer Goods (FMCG) The Group manufactures and markets some of the most widely consumed food brands in the country. Commencing from food processing operations this sector has achieved continuous growth each year to become a substantial contributor to the Group’s top and bottom lines.

The current year’s profitability, however, was adversely affected by increased raw material costs due to the adversities faced in the agricultural sector as explained above and due to increased marketing and promotion expenses.

The FMCG sector also effectively The Group markets its processed meats under the Goldi, Sams and Finest brand functions as the further processing names. These brands are well accepted in the market and are marketed through operation for the regional agriculture different channels including Food City. Bottled water is marketed under the ‘Kist and dairy farming sectors with Knuckles’ brand name. which important linkages have been established over the years. The dairy sub-sector collects approximately Revenue Segmental Profit 135,000 litres of fresh milk through Rs. Mn Rs. Mn its collection centres. The fresh milk 15,000 1,000 is subsequently processed into Ice Cream, Yoghurt, flavoured milk and 800 cheese under ‘Cargills Magic’ and 10,000 ‘Kotmale’ brands. Part of the milk 600 collected is also sold as fresh milk. Similarly, the Agri business entity 400 also collects fresh fruit, vegetables, 5,000 condiments, spices etc and these are 200 further processed or directly cleaned and packed as the case may be and 0 0 14 15 16 17 14 15 16 17 marketed under the ‘Kist’ brand name. 18 18 Kist encompassed Sauces, Jams, Cordials, Nectar, Juices and other products such as Spices. Demand for fruit based drinks continues to grow each year as a healthier alternative to carbonated drinks. A range of confectionery items are also marketed under the ‘Kist Biscuits’ brand name. 18 C T Holdings PLC Annual Report 2017/18 Review of Operations

Restaurants The Group holds the franchises for Sri Lanka for the world renown Kentucky Fried Chicken (KFC) and TGI Fridays restaurants, which come under the Group’s Restaurants sector.

This sector has enjoyed significant growth over the past three years – almost entirely from KFC. The growth was achieved, despite the notable increase in the restaurant and eat out options in Sri Lanka. High quality quick service times and the localised menu range which appeals to the local palette are key success factors for the significant growth. One new restaurant was opened during the year taking the total to 31 outlets island wide.

Revenue for the sector for the year Revenue Segmental Profit grew by 10.6 % over the previous Rs. Mn Rs. Mn year to reach Rs. 3.61 Bn while profit 4,000 300 increased by 47.5 % to reach Rs. 239.1 Mn. 200 3,000

The TGI Fridays operates one 100 Restaurant in Colombo. Although 2,000 improvements have been made in 0 this operation, it continues to trail the 1,000 volume required to achieve break even (100) profitability.

0 (200) 14 15 16 17 14 15 16 17 18 18 19 C T Holdings PLC Annual Report 2017/18

Real Estate The Group owns valuable real estate portfolio details of which are disclosed in the financial statements. Many of the properties are owned by subsidiaries involved in different sectors of operation of the Group. The Real Estate sector (as reported herein) includes the properties developed and leased out for rental income or investment properties held by the Group for capital appreciation.

The malls operated by the Group are as follows – • Majestic City shopping and entertainment mall located in Colombo 5 is owned and operated by the subsidiary C T Land Development PLC. The mall which Profit of this segment for the current year has been boosted by the profit on sale on was completed in1988. with a a key property owned by the Group and located in Colombo 2. The said property built up area of 277,500 sq. ft. was disposed for a consideration of Rs. 4.2 Bn and the Group booked a profit of Rs. comprises 240 outlets with fashion 1.011 bn on this transaction. The proceeds on disposal of the property was used to boutiques, retail outlets, food zone, settle the Group’s borrowings for a corresponding amount. cinemas, banks, children’s play area, hair and beauty salon etc. After excluding the one off gain, profit of the sector amounted to Rs. 132 Mn which • Cargills Square (Jaffna) - the mall is is lower than the previous year by Rs. 66 Mn (33.3%). The main reason for this drop built on a leased land and includes is due to the lower gain booked on the valuation of investment property. The Group’s a Food City outlet, Cargills Bank policy is to value its freehold property at the end of each year. Sector revenue was branch, KFC outlet, 3 Cinema approximately the same as the previous year. As per the Sri Lanka Accounting screens operated by the Group Standards, credit is taken for rental income in equal amounts over the period of Company, Ceylon Theatres and the lease. As such there would be minimal variations in rental income between other tenants. succeeding years within each cycle of rent revisions unless affected by variations in • Cargills Square (Mini Mall, occupancy. Gampaha) - this Mini Mall is entirely occupied by Group companies with Revenue Segmental Profit Food City, KFC and two screens Rs. Bn Rs. Mn operated by the Group company 700 2,000 Ceylon Theatres. 600 The Group is now drawing up plans 1,500 to take this Mini Mall concept to other 500 key provincial towns as well. The 400 Group already owns properties in key 1,000 locations such as Kandy, Negombo, 300 Bandarawela, Dematagoda and 200 500 Katubedda which would be released for such development. 100 0 0 14 15 16 17 14 15 16 17 18 18 20 C T Holdings PLC Annual Report 2017/18 Review of Operations

Banking & Financial Services The banking and financial services sectors are reflected as associates (equity accounted investees) in the financial statements.

The banking sector comprises Cargills Bank, which was promoted and launched by the Group. Now in its third year of commercial operations, the bank has made good progress during the year. Built on the backbone of technology and innovation, Cargills Bank plans to grow and expand through the use of digital banking platforms and applications.

Three branches opened during the calendar year 2017 took the total branches in operation to 17, while investments from overseas for many years. This Group also operates four unit trusts contact points are established in - the Comtrust Equity Fund, Comtrust Money Market Fund, Comtrust Gilt Edged every Cargills Food City branch, giving Fund and Comtrust Adl Mudarabah Fund in addition to managing private portfolios customers access to the bank in over for corporates and high net worth individuals. 350 locations. Joining of Cargills Food City and Cargills Bank in this manner Profits of this sector for the year was boosted by the profit on disposal of a offers unique synergies and value to subsidiary of Cargills Bank. The total gain from the disposal of this investment both companies. In accordance with amounted to Rs. 255 Mn. the focus of the Group, the bank also focuses much resources in providing Revenue Segmental Profit banking services to the un-banked in Rs. Mn Rs. Mn the Agriculture, Small Business (SME) 2,500 400 and other similar sectors. 2,000 300 As the promoters of this Bank, we are excited by the future prospects of 1,500 200 Cargills Bank. 1,000 100 The Financial services sector operates under CT CLSA Holdings 500 0 and encompassed Stock Broking, Investment banking, Capital market 0 (100) solutions and asset management 18 14 15 16 17 14 15 16 17 services through three subsidiaries. CT 18 CLSA Securities (Pvt) Ltd, a member of the Colombo Stock Exchange, is a strong player in the local stock market with a track record of attracting 21 C T Holdings PLC Annual Report 2017/18

Entertainment The entertainment sector consists of the subsidiary Ceylon Theatres (Pvt) Ltd which is involved in the film exhibition operations and the associate Cinema Entertainments (Pvt) Ltd which handles distribution activities.

Ceylon Theatres presently operates 15 screens across 7 locations. The company set up two new screens in the Cargills Square Mall in Gampaha at the end of the previous year. Further, the Regal cinema in Nuwara Eliya, which has been shut down for several years was also re-opened by modifying the single screen cinema into two screens. The initial response of the patrons to the two new cinemas has been very encouraging. whole. It is imperative that a high standard be maintained in the production of local movie content, which in turn will increase interest among the movie going public The economic developments in the of Sri Lanka. It is our firm view that well produced Sinhala Language movies would country as well as increasing disposable attract the largest patronage locally. income offers attractive opportunities for the entertainment sector. In addition Although the sector expanded the coverage during the year, the results were to the new cinemas opened during the not satisfactory. Sector revenue remained broadly same as in the previous year. current and previous year, the company However, the sector incurred a loss of Rs. 38 Mn for the year. Performance was will look to expand to key town areas adversely affected by increased staff and running costs. Difficulties in sourcing outside of Colombo with the Group’s good quality content and poor attendances in our Cinemas in Jaffna and Nuwara Mini Malls. Plans will also be drawn Eliya due to unavailability of new content arising from the disruption in supply also up in future to expand the cinemas in affected revenues and profits. The sector management is working towards improving Kandy and Negombo (presently closed the sourcing issues and manage costs increases. Despite this setback, due to the down) to a multi-screen concept. As reasons mentioned, the management remain positive about this sector for the future. pioneers in the movie industry in Sri Lanka for close to 90 years, Ceylon Revenue Segmental Profit Theatres remain deeply committed to Rs. Mn Rs. Mn development of the local cinema. 400 40

During the year, the company 20 supported the ‘Jaffna Films Festival’ 300 which exhibited over 40 movies from 0 across the globe in several languages. 200 The company also sponsored a trophy (20) and cash reward for the best short film from among the entrants from Sri 100 (40) Lanka. Such initiatives, we believe, will encourage talented individuals to enter the local production scene and aid the 0 (60) 14 15 16 17 18 14 15 16 17 improvement of the local cinema as a 18 22 C T Holdings PLC Annual Report 2017/18 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 2018.

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.

Principle Compliance Remarks Status

1. Non-Executive Directors

The Board shall include at least two Non-Executive Complied The Board of Directors consists of Directors; or one third of the total number of Directors Twelve Directors of whom Ten are Non- whichever is higher. Executive Directors.

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 ‘independent’. 3 below).

The Board shall require each Non-Executive Director to Complied All Non- Executive Directors submit submit a declaration annually of his/her independence or signed declarations of Independence / non-independence in the prescribed format. Non-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 the independence or non-independence of each Non- Director of the Company. Messrs J B L Executive Director and set out in the annual report the De Silva, Priya Edirisinghe, Sunil Mendis, names of Directors determined to be ‘independent’. and R Selvaskandan are deemed to be independent as given below. 23 C T Holdings PLC Annual Report 2017/18

Principle Compliance Remarks Status

In the event a Director does not qualify as ‘independent’ Complied Messrs J B L De Silva, Priya Edirisinghe, but if the Board, taking account of all the circumstances, Sunil Mendis and R Selvaskandan have is of the opinion that the Director is nevertheless served in the Company’s Board for a ‘independent’, the Board shall specify the criteria not met continuous period exceeding nine (09) and the basis for its determination in the annual report. years. Further Messrs Priya Edirisinghe, Sunil Mendis and R Selvaskandan also serve as Directors of other 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 résumé Complied Disclosed in the Annual Report. of each Director on its Board.

Upon appointment of a new Director to its Board, the N / A There were no new Directors appointed Company shall forthwith provide to the Exchange a brief to the Board of the Company during the résumé of such Director for dissemination to the public. year.

5. Remuneration Committee

A listed company shall have a remuneration committee Complied The Remuneration Committee consisted comprising a minimum of two independent Non-Executive of three Independent Directors and one Directors or exclusively by Non-Executive Directors a Non-Executive Director. The Chairman of majority of whom shall be independent, whichever shall be the Remuneration Committee is a Non- higher. One Non-Executive Director shall be appointed as Executive Director. Chairman of the Committee by the Board.

The Remuneration Committee shall recommend to the Complied The functions of the Remuneration Board of Directors, the remuneration payable to the Committee are disclosed in the Report of Executive Directors and Chief Executive Officer. the Remuneration Committee.

The annual report should set out the names of Directors Complied The names of the members of the comprising the Remuneration Committee, contain a remuneration Committee are disclosed statement of the remuneration policy and set out the in the Annual Report under Corporate aggregate remuneration paid to Executive and Non- Information. Details of the Directors’ Executive Directors. emoluments are disclosed in Notes to the financial statements. 24 C T Holdings PLC Annual Report 2017/18 Corporate Governance

Principle Compliance Remarks Status

6. Audit Committee

A listed company shall have an Audit Committee Complied The Audit Committee consisted of four comprising a minimum of two Independent Non-Executive Independent Directors. The Chairman of Directors or exclusively by Non-Executive Directors a the Audit Committee is an Independent majority of whom shall be independent whichever shall Non-Executive Director. be higher. One Non-Executive Director shall be appointed Chairman of the committee by the Board.

Unless otherwise determined by the Audit Committee the Complied The Managing Director and Executive Chief Executive Officer and the Chief Financial Officer of the Director are invited to attend the Audit listed company shall attend audit committee meetings. Committee meetings as required.

The Chairman or one member of the committee should be Complied The Chairman is a Fellow Member of a Member of a recognised professional accounting body. the Institute of Chartered Accountants of Sri Lanka and Chartered 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 Directors Complied The names of the members of the Audit comprising the Audit Committee. 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 independence of the auditors and shall disclose the basis Committee. 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, setting out the manner of compliance, during Committee. the period to which the annual report relates. 25 C T Holdings PLC Annual Report 2017/18 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. Credit risk They can also emerge from missed or The Group’s businesses are subject to arises from cash and cash equivalents, poorly exploited opportunities. The risk a variety of risks, including laws and deposits with banks as well as credit management process encompasses regulations, market conditions and exposure to customers including anticipating, identifying, managing and competitive landscape, which require outstanding receivables. Strict credit mitigating internal and external risks constant monitoring and evaluation by control procedures are adopted in and opportunities to ensure both short the management. CTH as the Holding order to assess the credit quality of and long term economic, environmental Company carefully evaluates all risks present and potential customers with and social sustainability of the C T pertaining to high value investments of further mitigating measures undertaken Holdings (CTH) Group. the Group both in existing operating to reduce risk. The utilisation of credit sectors and new areas (if any). limits 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 and Failure to protect the Group’s reputation Except in the case of investment of operation of each sector and company. could lead to a loss of trust and surplus funds at the Parent Company The Board of Directors of CTH is confidence among stakeholders. We level, the Group’s income and entrusted with the task of assessing recognise the commercial imperative operating cash inflows are substantially and regulating the risk profile of each to safeguard the interests of all our independent of changes in market operating sector along the lines of stakeholders. We therefore endeavour interest rates. The Group’s interest rate the strategic objectives of the Parent to engage with them to take into risk arises from long term borrowings Company. For certain key areas, the account their views in developing long at variable rates linked to market Group has set up separate monitoring term strategies. conditions. Such arrangements, while and reporting structures dedicated to being advantageous at present exposes monitoring and reporting on internal 3. Funding & liquidity the Group to interest rate fluctuations. and external risks. Such structures, The Group’s subsidiaries and The Group analyses its interest rate where appropriate, have direct associates finance their operations exposure on a dynamic basis. reporting responsibilities to independent through a combination of retained committees as well. earnings, and long term and short term 6. Exchange rate risk loans. 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 ordinary course of business. Further, 7. Product safety that the risk management system the strong relationships maintained The safety and quality of our products as a whole is operational and that with Banks enable companies within is of paramount importance to the the standards and processes remain the Group to raise funds at competitive Group as well as being essential current. The internal and external risks rates as and when required. for maintaining customer trust and faced by CTH along with the mitigating confidence. A breach in confidence factors are described below. could affect the size of our customer base and financial results. We have 26 C T Holdings PLC Annual Report 2017/18 Risk Management

detailed and established procedures 10. Legal issues 14. Information systems and for ensuring product integrity and Full provision is made for all legal cyber security quality at all times. There are strict liabilities that are expected to result The Group is heavily reliant on product safety processes in place in any material loss to the Company. computerised operational and and regular management reports. We All contingent liabilities have been financial systems to ensure efficiency work in partnership with suppliers to disclosed in the financial statements. of operations and financial reporting. ensure mutual understanding of the These systems and the associated standards required. We also monitor 11. Retirement benefit controls are regularly monitored and developments in areas such as health, obligations reviewed. Measures have been put safety and nutrition in order to respond The retirement benefit obligations in place to protect the Group against appropriately to changing customer are computed based on actuarial factors such as natural disasters, trends and new legislation. assumptions. The management accidents, computer viruses and takes all required steps to ensure unauthorised accesses. An IT disaster 8. Health and safety risks that such assumptions are accurate recovery plan is also in place. Provision of adequate safety to our and corresponds to past results and staff and customers is of the utmost current trends. However, any significant 15. Commodity price risk importance to us. Injury or loss of discrepancies between actuarial The Group’s FMCG sector is more life cannot be measured in financial assumptions and actual conditions may exposed to the volatility in the terms. We operate stringent health have some impact on future results. The commodity prices. Prices may also and safety processes in line with best management considers the possibility be effected by environmental factors practice in our outlets, manufacturing of such impact as very low. such as drought & floods. Long term facilities and offices, which also ensure relationships built with suppliers and that safety practices are inculcated in 12. Risk of natural disasters forward contracts help in minimising the all employees. Such procedures are Natural disasters such as earthquakes, effects of this risk factor to some extent. monitored regularly. storms, and floods, as well as accidents, acts of terror, infection and 16. Supply chain 9. Regulatory and political other factors beyond the control of Raw material, semi processed food and environment the Group could adversely affect the finished goods for re-sale are sourced As a Group predominantly operating Group’s business operation. Insurance from third-party suppliers, contract within Sri Lanka our business is covers are obtained against all identified manufacturers and primary producers affected by the regulatory and political risks and natural disasters affecting the exposes the group to market volatility framework within the country. The assets of the Group and operational and availability. effect of such an environment outside matters. Sri Lanka could affect the Company to the extent that it affects the entire 13. Competition local economy. We consider these The Retail and Wholesale distribution uncertainties in the local and overseas sector faces a very competitive economies when developing strategies environment. The management regularly and reviewing performance. We remain reviews the competitor environment in vigilant to future changes. As part of our order to develop appropriate counter day to day operations we engage with strategies. Due to the widespread governmental and non-governmental nature of operations, Group’s sales organisations to ensure the views of are not dependent on a single or small our customers and employees are group of customers. represented and try to anticipate and contribute to important changes in public policy whenever possible. 27 C T Holdings PLC Annual Report 2017/18 Report of the Remuneration Commit tee

The Remuneration Committee of C T Holdings PLC is appointed by the Board of • The Board of the respective Directors of the Company and reports directly to the Board. Company may decide that the Remuneration Committee should Policy Framework include the review of emoluments The policy framework for the functioning of the Remuneration Committee of the of other levels of employees as well. Company and its subsidiaries is set out in the Group Policies adopted across The procedure for such revision of the Group. In addition to the Remuneration Committee of the Holding Company, emoluments are also specified in some listed subsidiaries and significant non-listed subsidiaries may have separate the Group policies. Remuneration Committees. The Chairman and one other member (or two members • Once in three years, the company as appropriate) of the Remuneration Committee of the Parent Company shall shall commission an independent be members of each of such separate remuneration committees. In the event party to study & report on the a subsidiary company does not have a separate remuneration committee, the emoluments of the CEO, Executive remuneration committee of the immediate holding company will function as the Directors, and senior management remuneration committee for that subsidiary company as well. / executives, and may include other levels also in the review as Composition applicable to the relevant sectors. The Composition of the Remuneration Committees must be in accordance with the The said Report will be discussed rules on Corporate Governance of the Securities & Exchange Commission of Sri by the Committee for guidance in Lanka, the Colombo Stock Exchange and the respective company’s Articles. making the required assessments.

The composition of the Remuneration Committee of CT Holdings PLC is as follows: The CTH Remuneration Committee Chairman and Members were also involved in the consultations, review Name Non-Executive Directors and recommendations in the Employee Louis Page, Chairman Non-Executive Share Option Scheme established at the subsidiary Cargills (Ceylon) PLC. Priya Edirisinghe Independent

Sunil Mendis Independent Meetings The Remuneration Committee shall J B L De Silva Independent meet on a needs basis and at least once a year. The Composition of the Remuneration Committee satisfies the criteria as specified in the standards of Corporate Governance for listed Companies. The Executive Director functions as the Secretary to the Committee. (Signed) Louis Page Scope Chairman - Remuneration Committee • The Remuneration Committee shall recommend the remuneration payable to – 03 August 2018 - Chief Executive Officer and / or equivalent position - Executive Directors, and, - Senior Management/Executives, to the board of the company which will make the final determination upon consideration of such recommendations. • Detailed procedures are set out in the Group Policies in respect of all revisions in remuneration payable. • The Remuneration Committee shall also recommend the variable incentives/or bonuses within the parameters set out in the Group policies. 28 C T Holdings PLC Annual Report 2017/18 Report of the Nominations Commit tee

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 have one single Nominations Committee. Nominations to the Boards of all Group Companies shall be reviewed and approved by this Committee prior to appointment.

Composition The Nominations Committee of CT Holdings shall comprise the Chairman of the holdings 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 CT Holdings PLC.

The composition of the Nominations Committee during the year was as follows:

Name Non-Executive Directors

Louis Page, Chairman Non-Executive

Priya Edirisinghe Independent

Sunil Mendis Independent

Ranjit Page Executive

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 CT Holdings PLC during the year.

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

(Signed) Louis Page Chairman - Nominations Committee

03 August 2018 29 C T Holdings PLC Annual Report 2017/18 Report of the Related Party Transactions Review Commit tee

The Related Party Transactions Review (RPTR) Committee of C T Holdings PLC Scope is appointed by the Board of Directors of the Company. The RPTR Committee The Functions of the RPTR Committee, functions within the overall governance process established by the Board of as set out in the Group Policies, include Directors of the Company and assists the Board in effectively discharging its the following – responsibilities. The Committee reports directly to the Board. • Developing and recommending for adoption by the Board of Policy Framework Directors of the Company and its The policy framework for the functioning of the RPTR Committee of the Company listed subsidiaries, a related party and its subsidiaries is set out in the Group Policies adopted across the Group. In transactions policy consistent with addition to the RPTR Committee of the holding company and all listed subsidiaries that proposed by the RPT Code of have separate RPTR Committees. The Chairman and one other member (or two the SEC. members as appropriate) of the RPTR Committee of the parent company shall • Reviewing and updating the control be members of each of such separate RPTR Committees. In the event a non- procedures in place to ensure that listed subsidiary company does not have a separate RPTR committee, the RPTR all recurrent and non-recurrent committee of the immediate holding company will function as the RPTR committee related party transactions are for that subsidiary company as well. identified, adequately captured and reported in a timely manner Composition in accordance with the applicable The Composition of the RPTR Committees must be in accordance with the code of rules. best practices on related party transactions (RPT code) of the Securities & Exchange • Establishing procedures to ensure Commission of Sri Lanka (SEC), the listing rules of the Colombo Stock Exchange that related party transaction that and the respective company’s Articles, as appropriate. are captured within the system are reviewed in systematic manner The composition of the RPTR Committee of CT Holdings PLC is as follows: and certified by key management personnel with appropriate level of authority. Name Non-Executive Directors • Reviewing all related party Priya Edirisinghe FCA, FCMA (UK), Chairman Independent transactions as reported by the management for compliance with A D B Talwatte FCA, FCMA (UK), MBA Independent the RPT code. Sunil Mendis Independent • Ensuring that appropriate J B L De Silva Independent disclosures are made as applicable to the CSE where immediate market disclosures are required and the The Composition of the members of the RPTR Committee satisfies the criteria Annual Report. as specified in the RPT code of SEC and the listing rules of the Colombo Stock Exchange. The Deputy Chairman / Managing Director and Executive Director attend RPTR Committee meetings as and when requested by the Committee. The Company Secretary functions as the Secretary to the Committee. 30 C T Holdings PLC Annual Report 2017/18 Report of the Related Party Transactions Review Commit tee

Procedures are also in place for the RPTR Committee to obtain and have obtained; Conclusion • Quarterly declarations of related party transactions from Directors & Senior Based on its work, the Related Party Management of all Group companies on recurrent & non-recurrent transactions Transactions Review Committee undertaken by them or by their close family members. confirms that there were no non- • Quarterly declarations of Directors & Senior Management of all Group companies recurrent transactions with related who has a Significant Shareholding/ownership in a Company or partnership or parties during the year. It also noted proprietorship which is outside the Group companies and/or of the Subsidiaries that in respect of recurrent transactions, and Associate Companies of Group companies the transactions were in the ordinary • Quarterly declarations of Group Financial Officer or equivalent Position in Group course of business, there were no companies on Recurrent and/or Non-Recurrent transactions within the Group changes to terms or practices followed Companies. over the previous year and general terms and conditions applicable to Likewise, procedures are also in place for the assessment of the need to obtain such transactions with Related Parties shareholder approval for specified transactions and to inform the SEC/CSE on the are similar to those entered into applicable Non-Recurrent transactions. with non-related parties taking into account, if any, due consideration of Related Party Transactions factors such as volume, cost and any other special benefits which form part Companies within the Group regularly engage in transactions with other companies and parcel of such transactions. The within the Group. The Committee receives and reviews details of all related party observations of the Committee have transactions from the Chief Financial Officers of individual companies and disposes been communicated to the Board of of the same in accordance with the mandate set out above. Directors. In respect of non-recurrent transactions, if any, the Committee is empowered to The details of the recurrent transactions seek independent expert advice on valuation or any other related matter that the entered into with Related Parties are committee deems to be significant. disclosed in Note 30 to the Financial Statements. Meetings In terms of the listing rules of the Colombo Stock Exchange, the RPTR Committees should meet at least four times a year. Unless otherwise determined by the RPTR committee the chief executive officer and the chief financial officer of the listed Priya Edirisinghe company shall attend RPTR committee meetings. Chairman - RPTR Committee

The RPTR Committee of C T Holdings PLC met four times during the year. 03 August 2018

Details of the participation of the members of the RPTR committee at such meeting is set out below.

Name Meetings Held Meetings Attended

A T P Edirisinghe, Chairman 4 4

A D B Talwatte 4 4

Sunil Mendis 4 3

J B L De Silva 4 3 31 C T Holdings PLC Annual Report 2017/18

Financial Statements Annual Report of the Board of Directors of the Company 33 / Report of the Audit Committee 36 Statement of Directors’ Responsibilities 38 / Independent Auditors’ Report 39 Statement of Profit or Loss and other Comprehensive Income 44 / Statement of Financial Position 45 Statement of Changes in Equity 46 / Statement of Cash Flows 48 Notes to the Financial Statements 50 / Five Year Review – Group 123 / Group Directory 124 Information to Shareholders 127 32 C T Holdings PLC Annual Report 2017/18 33 C T Holdings PLC Annual Report 2017/18 Annual Report of the Board of Directors of the Company

The Directors are pleased to present Property, plant & equipment the Annual Report of C T Holdings PLC The movement of property, plant and equipment during the year is given in note 13 for the Year ended 31st March 2018. to the financial statements. The Group’s outlay on property, plant and equipment during the year amounted to Rs. 4.80 Bn (2017 – Rs 4.57 Bn) while there was no Activities capital outlay on property, plant and equipment during the year at the Company The Group’s Principal activities and level (2017 – Rs Nil). The Directors are of the opinion that the carrying amount of important events during the year are properties stated in note 13 to the financial statements reasonably reflects their fair discussed in detail in the Chairman’s values. Statement and Review of Operations set out on pages 08 to 10 and 14 to 21 Extents, locations, valuations of the Group’s property holdings and investment respectively. There were no significant properties are disclosed in note 13.2 and 15.2 to the financial statements. changes to the business activities of the Group during the year. Stated capital During the year, the Company issued 18,309,725 ordinary voting shares credited as Risk management fully paid by capitalizing a sum of Rs. 3,295,750,500 from and out of the Reserves The overall approach to risk of the Company at Rs. 180.00 per share. Subsequent to this share issue, the stated management within the Company and capital of the Company at the balance sheet date amounted to Rs. 6,489,758,332 Group is set out in pages 25 to 26. (2017 - Rs. 3,194,007,832) comprising 201,406,978 ordinary (voting) shares (2017 – 183,097,253). Financial statements During the year, the shareholders of the subsidiary Cargills (Ceylon) PLC approved The Audited Financial Statements of the a Share Ownership Scheme for its employees amounting to 3% of the issued share Company & Group for the year ended capital of the Company (please refer note 26.2 for further details). 31st March 2018 and given on pages 44 to 122 form an integral part of this Except for the above neither the Company nor any of the subsidiaries have any annual report. Employee Share Ownership or Stock Option Schemes at present. Auditors’ report Shareholders The Independent Auditors’ Report is set There were 1,495 registered shareholders as at 31st March 2018 (2017 -1,518 out on pages 39 to 43. shareholders). An analysis of shareholders according to size and holdings, public holdings and the names of the twenty largest shareholders of the Company at the Accounting policies reporting date are given on Pages 127 to 129. The accounting policies adopted in the preparation of the financial statements Directorate are given on notes 1 to 5. All Directors of the Company have been Directors throughout the year under review. Details of Directors of group companies as at the reporting date are given on pages Ratios and market price 124 to 126 of this report. information Key ratios and market price information Brief profiles of the Directors of the Company are given on pages 11 to 13, including pertaining to the equity of the Group their determination as independent and non-executive, as appropriate. are set out on page 123 along with the trend for the past five years. Company and subsidiaries have not raised any capital through listed debt instruments during the year. 34 C T Holdings PLC Annual Report 2017/18 Annual Report of the Board of Directors of the Company

Details of attendance The details of the Directors’ attendance at meetings is given below.

Name of Director Board Meetings AGM / EGM

Held Attended Held Attended

Louis Page 5 5 2 1

Ranjit Page 5 4 2 2

J B L De Silva 5 4 2 1

Priya Edirisinghe 5 5 2 2

Sunil Mendis 5 4 2 2

Mrs. Cecilia Muttukumaru 5 5 2 1

S C Niles 5 5 2 2

Joseph Page 5 2 2 1

R Selvaskandan 5 5 2 1

Dr. A Aravinda Page 5 1 2 1

A D B Talwatte 5 5 2 2

Imtiaz Abdul Wahid 5 5 2 2

Directors’ remuneration The remuneration of the Directors is given in note 8 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 30 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 30 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. 35 C T Holdings PLC Annual Report 2017/18

Directors’ shareholdings Auditors The Directors’ shareholdings in the Company were as follows: The remuneration paid to the Auditors is given in Note 8.3 to the financial As at 31-Mar- As at 31-Mar- statements. 2018 2017

Louis Page 11,000 10,000 As far as the Directors are aware, the Auditors do not have any relationship Ranjit Page 12,933,350 11,231,945 (other than that of an auditor) with the J B L De Silva 234 213 Company. M/s. KPMG, Chartered Accountants are deemed re-appointed Priya Edirisinghe 33,040 30,036 in terms of Section 158 of the Sunil Mendis - - Companies Act No.7 of 2007, as Auditors of the Company. Mrs. Cecilia Muttukumaru 1,532,750 1,290,000 A resolution authorising the Directors S C Niles 56,485 51,350 to determine their remuneration will Joseph Page 7,069,172 6,426,520 be submitted at the Annual General Meeting. R Selvaskandan - -

Dr. A Aravinda Page 46,365 19,650 By Order of the Board

A D B Talwatte - -

Imtiaz Abdul Wahid - - Ranjit Page 21,682,396 19,059,714 Deputy Chairman / Managing Director Events after the reporting period Events occurring after the reporting date of the Company are given in note 34 to the financial statements. Priya Edirisinghe Director Corporate governance The corporate governance practices within the Group are set out in pages 22 to 24 and the report of the Audit Committee is set out on page 36 and 37. S L W Dissanayake Dividends Company Secretary The Company paid the following dividends during the year. (a) First interim dividend of Rs. 1.80 per share on 29th September 2017, out of 03 August 2018 profits for the year ended 31st March 2018 (2017 – Rs 1.70). (b) Second interim dividend of Rs. 3.70 per share on 14th March 2018, out of profits for the year ended 31st March 2018 (2017 – Rs 3.50).

In view of the two interim dividends paid during the year the Directors do not propose a final dividend for the year. 36 C T Holdings PLC Annual Report 2017/18 Report of the Audit Commit tee

The Audit Committee of C T Holdings The composition of the Audit Committee of CT Holdings PLC is as follows: PLC is appointed by the Board of Directors of the Company. The Audit Name Non-Executive Committee functions within the overall Directors governance process established by the Board of Directors of the Company Priya Edirisinghe FCA, FCMA (UK), Chairman Independent and assists the Board in effectively A D B Talwatte FCA, FCMA (UK), MBA Independent discharging its responsibilities. The Committee reports directly to the Sunil Mendis Independent Board. J B L De Silva Independent Policy Framework The policy framework for the functioning The Chairman of the Audit Committee is a Fellow member of the Institute of of the Audit Committee of the Company Chartered Accountants of Sri Lanka. The Deputy Chairman / Managing Director and and its subsidiaries is set out in Executive Director of the Company attend Audit Committee meetings as and when the Group Policies adopted across requested by the Committee. The Company Secretary functions as the Secretary to the Group. In addition to the Audit the Committee. Committee of the holding company, all listed subsidiaries and significant Scope non-listed subsidiaries have separate The Functions of the Audit Committee, as set out in the Group Policies, include the Audit Committees. The Chairman and following – one other member (or two members • Oversight of the preparation, presentation and adequacy of disclosures in as appropriate) of the Audit Committee the financial statements of a listed company, in accordance with Sri Lanka of the parent company are members Accounting Standards. of each of such separate Audit • Oversight of the Company’s compliance with financial reporting requirements, Committees. In the event a non-listed information requirements of the Companies Act and other relevant financial subsidiary company does not have a reporting related regulations and requirements. separate audit committee, the audit • Oversight over the processes to ensure that the Company’s internal controls committee of the immediate holding and risk management, are adequate, to meet the requirements of the Sri Lanka company will function as the audit Auditing Standards. committee for that subsidiary company • Assessment of the independence and performance of the Company’s external as well. auditors. • To make recommendations to the Board pertaining to appointment, re- Composition appointment and removal of external auditors and to approve the remuneration The Composition of the Audit and terms of engagement of the external auditors. Committees are in accordance with the rules on Corporate Governance The Audit Committee also obtains written assurance statements from the Chief of the Securities & Exchange Financial Officer, Company Secretary and the Legal Officer when the committee Commission of Sri Lanka, the Colombo considers recommendation to the Board the quarterly and annual financial Stock Exchange and the respective statements. company’s Articles. 37 C T Holdings PLC Annual Report 2017/18

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 Audit Committee of CT Holdings PLC met four times during the year two of the related Statements of Income, which were with the participation of the Company’s auditors. Changes 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 set out below. The Audit Committee has recommended to the Board of Directors that M/s. KPMG be reappointed as Name Meetings Meetings Auditors of the Company for the year Held Attended ending 31st March 2019. A T P Edirisinghe, Chairman 4 4

A D B Talwatte 4 4

Sunil Mendis 4 3 Priya Edirisinghe J B L De Silva 4 3 Chairman - Audit Committee

03 August 2018 Financial Statements Four quarterly financial statements as well as the annual financial statements were circulated, reviewed and recommended to the Board for approval during the year. 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, requirements 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 and safeguarding of assets of the Company.

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 appointment / 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. 38 C T Holdings PLC Annual Report 2017/18 Statement of Directors’ Responsibilities

Maintenance of Accounting Records Compliance Under the provisions of the Companies Act No. 07 of 2007 (‘the Act’), every Considering the present financial company is required to maintain accounting records which correctly record and position of the Group and the forecasts explain the Company’s transactions, and will at any time enable the financial position for the foreseeable future, the Directors of the Company to be determined with reasonable accuracy, enable the Directors to have adopted the going concern basis prepare financial statements in accordance with the Act and also enable the financial for the preparation of these financial statements of the Company to be readily and properly audited. statements.

Preparation of Financial Statements of the Company and Group The Directors confirm that: The Act places the responsibility on the Board of Directors to ensure that financial (a) The Company is in compliance statements are prepared within the prescribed time period in conformity with the with the requirements of the Act as Act. Such financial statements of a Company shall give a true and fair view of the aforementioned. state of affairs of the Company as at the reporting date and the profit or loss or (b) These financial statements have income and expenditure, as the case may be, of the Company for the accounting been prepared in accordance with period ending on that reporting date. the requirements of the Companies Act No. 7 of 2007 and applicable Sri Further the Act also requires that a Company with one or more subsidiaries at Lanka Accounting Standards, which the reporting date to also prepare financial statements in relation to the Group have been consistently applied including every subsidiary, which give a true and fair view of the state of affairs of and supported by reasonable and the Company and its subsidiaries as at the reporting date and the profit or loss or prudent judgments and estimates. income and expenditure, as the case may be, of the Company and its subsidiaries (c) The Company obtained the required for the accounting period ending on that reporting date. certificate of solvency for the dividends declared during the year. Dividends (d) All statutory payments have been In the event of any distribution of dividends the Board of Directors are required to made up to date. satisfy themselves that the Company will, immediately after the relevant distribution is made, satisfy the solvency test, provided that such a certificate is obtained from The Directors are satisfied that the the auditors. control procedures within the Company operated effectively during the year. Annual Report By order of the Board The Board of Directors are required to prepare an Annual Report on the affairs of the Company during the accounting period ending on the reporting date in the prescribed format and circulate the same to every shareholder of the Company within the time frame prescribed in the Act. S L W Dissanayake Company Secretary Independent audit The Act required the Company to appoint an Auditor to audit the financial 03 August 2018 statements of the Company / Group for the reporting period. Accordingly, M/s KPMG presently function as the Auditors of the Company. Their responsibility with regard to the financial statements as auditors of the Company are set out in the Independent Auditor‘s Report set out on pages 39 to 43.

Management The Directors are responsible for the proper management of the resources of the Company. The internal control system has been designed and implemented to obtain reasonable but not absolute assurance that the Company is protected from undue risks, frauds and other irregularities. 39 C T Holdings PLC Annual Report 2017/18 Independent Auditors’ Report

To the Shareholders of C T Holdings PLC

Report on the Audit of the Consolidated Financial Statements Opinion We have audited the financial statements of CT 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 2018, 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 set out on pages 44 to 122 of the Annual Report.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Company and the Group as at 31 March 2018, 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(e) 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 or investment assets due to the uncertainties that exist with respect to the interpretation of the application. In the event the Group’s position is not held by the Authorities, the impact on the Company and Group is disclosed in note 10.5(e) to the financial statements. Our opinion is not modified in respect of this matter.

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. 40 C T Holdings PLC Annual Report 2017/18 Independent Auditors’ Report

01. Valuation of Land and Investment Properties - Company and Group As described in Note 3.11 and 3.13 (Accounting policies), Note 13 (Property, Plant and Equipment) and Note 15 (Investment properties), the fair value of land amounted to Rs. 11,409 Mn and investment properties amounted to Rs.7,607 Mn as at 31 March 2018.

Key audit matter Management’s assessment of fair value of these freehold land and investment properties is based on valuations performed by a qualified independent property valuer in accordance with recognised industry standards.

The valuation of the properties requires the application of significant judgment and estimation in the selection of the appropriate valuation methodology to be used and in estimating the key assumptions applied. These key assumptions include market comparables, taking into consideration for differences such as location, size and tenure. A change in the key assumptions will have an impact on the valuation.

Our audit procedures included, • Assessing the objectivity and independence of the external valuer including competence and qualification of the external valuer. • Assessing the appropriateness of the valuation techniques used by the external valuer, taking into account the profile of the land and investment properties. • Discussions with management and the external valuer and compare the key assumptions used against externally published market comparables where available or with other benchmark data and challenging the reasonableness of key assumptions based on our knowledge. • 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.

02. Impairment assessment of investment in subsidiaries - Company As described in Note 3.1 (Accounting policies) and Note 17 (Investment in subsidiaries), the Company’s investment in C T Properties (Private) Limited (CTP) amounted to Rs. 1,832 Mn as at 31 March 2018.

Key audit matter • Indicators of Impairment exist in relation to the Company’s Investment in CTP group, 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 is fair value less cost of disposal of the properties owned by the companies in the group. CTP’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. • A cumulative impairment loss of approximately Rs.478 Mn was recorded as at 31 March 2018 (2017- Rs.464 Mn) 41 C T Holdings PLC Annual Report 2017/18

Our Audit Procedures included, • Assessing the appropriateness of the valuation techniques used by the external valuer, taking into account the profile of the properties. • Discussions with management and the external valuers and 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 Consolidated 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. 42 C T Holdings PLC Annual Report 2017/18 Independent Auditors’ Report

Auditors’ 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. 43 C T Holdings PLC Annual Report 2017/18

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.

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.

The engagement partner on the audit resulting in this independent auditors’ report’s membership number is 1798.

Chartered Accountants Colombo

03 August 2018 44 C T Holdings PLC Annual Report 2017/18 Statement of Profit or Loss and other Comprehensive Income In thousands of rupees Note Group Company For the year ended 31st March 2018 2017 2018 2017

Revenue 6 92,134,483 85,037,781 - - Cost of sales (81,070,103) (74,492,946) - - Gross profit 11,064,380 10,544,835 - - Other income 7 3,488,284 2,248,693 136,574 33,285 Distribution expenses (2,838,503) (2,338,849) - - Administrative expenses (4,383,795) (4,216,578) (90,332) (73,228) Other expenses (528,132) (439,796) (13,355) (103,045) Results from operating activities 8 6,802,234 5,798,305 32,887 (142,988) Finance income 260,406 373,217 1,105,467 1,466,388 Finance expense (1,579,614) (1,504,338) (186) (185) Net finance income / (expense) 9 (1,319,208) (1,131,121) 1,105,281 1,466,203 Share of profit / (loss) of equity accounted investees, net of income tax 18.1 308,231 22,924 - - Profit before taxation 5,791,257 4,690,108 1,138,168 1,323,215 Income tax expense 10 (2,051,792) (2,023,094) (18,596) (24,691) Profit for the year 3,739,465 2,667,014 1,119,572 1,298,524

Other comprehensive income, net of tax Items that will not be re-classified subsequently to profit or loss: Revaluation of property, plant and equipment 13 653,499 - - - Re-measurement of obligation on defined benefit plan (48,292) (24,377) (2,111) 1,106 Share of other comprehensive income of equity accounted investees 18.1 1,285 (2,458) - - 606,492 (26,835) (2,111) 1,106

Items that may be re-classified subsequently to profit or loss: Net change in fair value of available-for-sale financial assets 9.2 40,428 (37,647) 9,538 (29,293) Share of other comprehensive income of equity accounted investees 18.1 14,166 - - - 54,594 (37,647) 9,538 (29,293) Total other comprehensive income for the year, net of tax 661,086 (64,482) 7,427 (28,187) Total comprehensive income for the year 4,400,551 2,602,532 1,126,999 1,270,337

Profit for the year attributable to: Owners of the parent 2,597,342 1,747,876 1,119,572 1,298,524 Non-controlling interest 1,142,123 919,138 - - 3,739,465 2,667,014 1,119,572 1,298,524

Total comprehensive income for the year attributable to: Owners of the parent 3,100,836 1,694,049 1,126,999 1,270,337 Non-controlling interest 1,299,715 908,483 - - 4,400,551 2,602,532 1,126,999 1,270,337

Earnings per share (Rs.) 11 12.90 8.68 5.56 6.45 Dividends per share (Rs.) 12 5.50 5.20 5.50 5.20

The notes on pages 50 to 122 are an integral part of these financial statements 45 C T Holdings PLC Annual Report 2017/18 Statement of Financial Position

In thousands of rupees Note Group Company As at 31st March 2018 2017 2018 2017

Assets Non-current assets Property, plant and equipment 13 26,594,623 23,307,407 2,893 5,569 Prepaid lease rentals to acquire rights to use lands 14 174,199 180,245 - - Investment properties 15 7,607,025 10,524,586 1,560,293 1,447,550 Intangible assets and goodwill 16 1,510,588 1,527,680 688,467 688,467 Investments in subsidiaries 17 - - 2,201,893 2,215,248 Investments in equity accounted investees 18 6,602,911 6,293,711 2,906,169 2,906,169 Other investments 19 522,162 464,625 309,433 291,762 Deferred tax assets 10.5 7,001 49,564 - - Total non-current assets 43,018,509 42,347,818 7,669,148 7,554,765

Current assets Inventories 20 9,549,147 8,340,128 - - Trade and other receivables 21 5,950,734 4,673,958 12,423 14,147 Cash and cash equivalents 22 3,217,775 2,500,830 210,837 270,710 Total current assets 18,717,656 15,514,916 223,260 284,857 Total assets 61,736,165 57,862,734 7,892,408 7,839,622

Equity and liabilities Equity attributable to owners of the parent Stated capital 23 6,489,758 3,194,008 6,489,758 3,194,008 Reserves 24 1,890,244 4,583,173 120,515 399,514 Retained earnings 12,277,464 11,016,858 1,089,891 3,986,678 Total equity attributable to equity holders of the parent 20,657,466 18,794,039 7,700,164 7,580,200 Non-controlling interest 4,239,636 3,405,406 - - Total equity 24,897,102 22,199,445 7,700,164 7,580,200

Liabilities Non-current liabilities Borrowings 25 39,878 2,569 - - Employee benefits 26 1,007,911 828,996 20,113 15,504 Deferred income / revenue 27 78,665 103,607 - - Trade and other payables 28 3,280,756 2,940,780 - - Deferred tax liabilities 10.5 1,565,865 1,287,415 - - Total non-current liabilities 5,973,075 5,163,367 20,113 15,504

Current liabilities Trade and other payables 28 13,407,772 12,288,384 13,248 9,823 Current tax liabilities 2,620,772 2,163,869 1,271 1,805 Borrowings 25 14,679,832 15,815,379 - - Dividends payable 157,612 232,290 157,612 232,290 Total current liabilities 30,865,988 30,499,922 172,131 243,918 Total equity & liabilities 61,736,165 57,862,734 7,892,408 7,839,622

The notes on pages 50 to 122 are an integral part of these financial I certify that these Financial Statements have been prepared in statements. The Board of Directors is responsible for the preparation accordance with the requirements of the Companies Act No 7 of and presentation of these Financial statements. The Financial 2007. Statements have been approved by the Board of Directors on 03 August 2018.

Ranjit Page Priya Edirisinghe S C Niles Deputy Chairman / Director Executive Director Managing Director 46 C T Holdings PLC Annual Report 2017/18 Statement of Changes in Equity

Group <------Attributable to the owners of the parent ------> Available Non- Stated Revaluation for sale General Retained Total controlling Total In thousands of rupees Capital Reserve Reserve Reserve Earnings Interest

For the year ended 31st March 2017 Balance at 1st April 2016 3,194,008 4,127,957 123,083 367,220 11,047,414 18,859,682 4,662,872 23,522,554 Total comprehensive income for the year Profit for the year - - - - 1,747,876 1,747,876 919,138 2,667,014 Other comprehensive income Net change in fair value of available-for-sale financial assets - - (35,087) - - (35,087) (2,560) (37,647) Re-measurements of defined benefit plan - - - - (16,282) (16,282) (8,095) (24,377) Share of other comprehensive income of associates - - - - (2,458) (2,458) - (2,458) Total other comprehensive income for the year - - (35,087) - (18,740) (53,827) (10,655) (64,482) Total comprehensive income for the year - - (35,087) - 1,729,136 1,694,049 908,483 2,602,532

Transactions with owners directly recorded in equity Dividends paid - - - - (1,464,778) (1,464,778) (682,134) (2,146,912) Put options written on non-controlling interest - - - - (357,613) (357,613) (151,803) (509,416) Total contributions by & distributions to owners - - - - (1,822,391) (1,822,391) (833,937) (2,656,328)

Changes in ownership interest Acquisition of subsidiaries ------(39,692) (39,692) Disposal of ownership interest - - - - (4,253) (4,253) 13,840 9,587 Acquisition of non controlling interest - - - - 66,952 66,952 (171,068) (104,116) Acquisition of equity accounted investees ------(1,135,092) (1,135,092) Total changes in ownership - - - - 62,699 62,699 (1,332,012) (1,269,313) Balance as at 31st March 2017 3,194,008 4,127,957 87,996 367,220 11,016,858 18,794,039 3,405,406 22,199,445

For the year ended 31st March 2018 Balance at 1st April 2017 3,194,008 4,127,957 87,996 367,220 11,016,858 18,794,039 3,405,406 22,199,445 Total comprehensive income for the year Profit for the year - - - - 2,597,342 2,597,342 1,142,123 3,739,465 Other comprehensive income Revaluation of property, plant and equipment - 490,430 - - - 490,430 163,069 653,499 Net change in fair value of available-for-sale financial assets - - 31,198 - - 31,198 9,230 40,428 Re-measurements of defined benefit plan - - - - (33,585) (33,585) (14,707) (48,292) Share of other comprehensive income of associates - - - - 15,451 15,451 - 15,451 Total other comprehensive income for the year - 490,430 31,198 - (18,134) 503,494 157,592 661,086 Total comprehensive income for the year - 490,430 31,198 - 2,579,208 3,100,836 1,299,715 4,400,551

Transactions directly recorded in equity Issue of shares 3,295,750 (74,999) - (213,538) (3,007,213) - - - Equity settled share based payment ------150,970 150,970 Dividends paid - - - - (1,007,035) (1,007,035) (518,663) (1,525,698) Transfer to retained earnings - (2,772,338) - (153,682) 2,926,020 - - - Put options written on non-controlling interest - - - - (230,374) (230,374) (97,792) (328,166) Total contributions by & distributions to owners 3,295,750 (2,847,337) - (367,220) (1,318,602) (1,237,409) (465,485) (1,702,894) Balance as at 31st March 2018 6,489,758 1,771,050 119,194 - 12,277,464 20,657,466 4,239,636 24,897,102 47 C T Holdings PLC Annual Report 2017/18

Company Available Stated Revaluation for sale General Retained In thousands of rupees Capital Reserve Reserve Reserve Earnings Total

For the year ended 31st March 2017 Balance at 1st April 2016 3,194,008 74,999 140,270 213,538 4,151,826 7,774,641 Total comprehensive income for the year Profitfor the year - - - - 1,298,524 1,298,524

Other comprehensive income Net change in fair value of available-for-sale financial assets - - (29,293) - - (29,293) Defined benefit plan actuarial gains / (losses) - - - - 1,106 1,106 Total other comprehensive income for the year - - (29,293) - 1,106 (28,187) Total comprehensive income for the year - - (29,293) - 1,299,630 1,270,337

Transactions with owners directly recorded in equity Contributions by & distributions to owners Dividends paid - 2015/16 (final) - - - - (512,673) (512,673) Dividends paid - 2016/17 (first interim) - - - - (311,265) (311,265) Dividends paid - 2016/17 (second interim) - - - - (640,840) (640,840) Total contributions by & distributions to owners - - - - (1,464,778) (1,464,778) Balance as at 31st March 2017 3,194,008 74,999 110,977 213,538 3,986,678 7,580,200

For the year ended 31st March 2018 Balance at 1st April 2017 3,194,008 74,999 110,977 213,538 3,986,678 7,580,200

Total comprehensive income for the year Profitfor the year - - - - 1,119,572 1,119,572

Other comprehensive income Net change in fair value of available-for-sale financial assets - - 9,538 - - 9,538 Defined benefit plan actuarial gains / (losses) - - - - (2,111) (2,111) Total other comprehensive income for the year - - 9,538 - (2,111) 7,427 Total comprehensive income for the year - - 9,538 - 1,117,461 1,126,999

Transactions with owners directly recorded in equity Contributions by & distributions to owners Issue of shares 3,295,750 (74,999) - (213,538) (3,007,213) - Dividends paid - 2017/18 (first interim) - - - - (329,575) (329,575) Dividends paid - 2017/18 (second interim) - - - - (677,460) (677,460) Total contributions by & distributions to owners 3,295,750 (74,999) - (213,538) (4,014,248) (1,007,035) Balance as at 31st March 2018 6,489,758 - 120,515 - 1,089,891 7,700,164

The notes on pages 50 to 122 are an integral part of these financial statements. 48 C T Holdings PLC Annual Report 2017/18 Statement of Cash Flows

In thousands of rupees Note Group Company For the year ended 31st March 2018 2017 2018 2017

Cash flows from operating activities Profit for the year 5,791,257 4,690,108 1,138,168 1,323,215

Adjustments for: Depreciation of property, plant & equipment 13 2,248,973 1,873,811 2,681 2,729 Amortisation of leasehold right over land 14 6,046 4,348 - - Amortisation of intangible assets 16 109,796 71,098 - - Interest income 9 (223,884) (298,822) (17,821) (16,864) Profit on sale of property, plant & equipment 7 (1,024,583) (38,790) - - Dividend income 9 (33,310) (28,424) (1,087,646) (1,427,146) Finance cost 9 1,579,614 1,504,338 186 185 Share of loss of equity accounted investees 18.1 (308,231) (22,924) - - Reversal / (charge) for impairment of trade and other receivables 21 10,341 29,652 - - Amortisation of deferred income 27 (24,942) (18,551) - - Provision for slow moving and obsolete inventories 35,464 (16,749) - Change in fair value of investment properties 15 (371,587) (424,774) (112,743) (4,300) Impairment losses on property, plant and equipment 45,350 (193) - Provision for obligation on defined benefit plan 26 188,773 152,667 2,498 2,200 Gain on disposal of available for sale investments 9 - (39,338) - (22,378) Net change in fair value of available for sale investments 31,023 - - - Equity-settled share-based payment transactions 148,063 - - - Impairment of improvements to investment properties 15 - 23,865 - - Impairment losses on investments in subsidiaries 17 - - 13,355 103,045 Cash generated from operating activities before working capital 8,208,163 7,461,322 (61,322) (39,314) Change in inventories (1,244,483) (1,092,477) - - Change in trade and other receivables (1,272,400) (492,001) 1,724 8,129 Change in amounts due from related parties - 6,358 - - Change in trade and other payables 1,119,439 1,073,299 3,421 (2,545) Change in amounts due to related parties - (375) - - Cash generated from operating activities 6,810,719 6,956,126 (56,177) (33,730) Interest paid (1,579,288) (1,503,471) (186) (185) Income tax paid (1,255,901) (1,471,600) (19,130) (27,527) Defined benefit plan payments 26 (76,125) (56,117) - - Net cash from / (used in) operating activities 3,899,405 3,924,938 (75,493) (61,442) 49 C T Holdings PLC Annual Report 2017/18

In thousands of rupees Note Group Company For the year ended 31st March 2018 2017 2018 2017

Cash flows from investing activities Proceeds from sale of property, plant and equipment 1,042,891 87,316 - - Interest received 9 223,884 298,822 17,821 16,864 Dividends received 9 39,650 34,944 1,079,512 1,428,029 Proceeds from sale of investments (40,000) 1,027,644 - 925,957 Proceeds from sale of ownership interest - 9,587 - Acquisition of property, plant and equipment 13 (4,801,821) (4,570,740) - - Prepaid lease rentals to acquire rights to use lands 14 - (153,669) - - Proceeds from sale of investment property 15 3,144,580 - - - Acquisition of non-controlling interests - (104,116) - - Acquisition of intangible assets (92,704) (185,165) - - Acquisition of subsidiary, net of cash acquired - (143,108) - (790,632) Acquisition of investment in equity accounted investees - (3,219,621) - - Acquisition of other investments - (76,187) - (46,187) Net cash from / (used in) investing activities (483,520) (6,994,293) 1,097,333 1,534,031

Cash flows from financing activities Net short term borrowings (567,973) 4,857,320 - - Repayment of long term borrowings 25.1 (199,967) (537,529) - - Loans obtained during the year 25.1 50,000 - - - Payment of finance lease liabilities 25.2 (1,246) (2,246) - - Dividends paid to owners (1,081,713) (1,439,383) (1,081,713) (1,439,384) Dividends paid to non controlling interest (518,663) (682,134) - - Net cash from / (used in) financing activities (2,319,562) 2,196,028 (1,081,713) (1,439,384) Net decrease in cash and cash equivalents 1,096,323 (873,327) (59,873) 33,205

Cash and cash equivalents at 1st April (734,319) 139,008 270,710 237,505 Net decrease in cash and cash equivalents 1,096,323 (873,327) (59,873) 33,205 Cash and cash equivalents at 31st March 362,004 (734,319) 210,837 270,710

Cash and cash equivalents at 31st March Cash and cash at bank 2,035,865 1,645,781 2,367 4,469 Short term deposits 1,181,910 855,049 208,470 266,241 3,217,775 2,500,830 210,837 270,710 Bank overdrafts (2,855,771) (3,235,149) - - 22 362,004 (734,319) 210,837 270,710

The notes on pages 50 to 122 are an integral part of these financial statements. 50 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

1. Presentation of the financial 1.3. Functional and presentation currency statements These financial statements are presented in Sri Lankan Rupees, which is the Group’s 1.1. Description of the reporting functional currency. All financial information presented in Sri Lankan Rupees has been rounded to the nearest thousands, except when otherwise indicated. entity and business C T Holdings PLC (the ‘Company’) 1.4. Key accounting judgements and estimates is a company incorporated in Sri Lanka and listed on the Colombo In preparing these consolidated financial statements, management has made Stock Exchange. The address of the judgements, estimates and assumptions that affect the application of the Group’s Company’s registered office is No. 8, accounting policies and the reported amounts of assets, liabilities, income and Sir Chittampalam A Gardiner Mawatha, expenses. Actual results may differ from these estimates. Estimates and underlying Colombo 2. The consolidated financial assumptions are reviewed on an on-going basis. Revisions to accounting estimates statements of the Company as at are recognised in the period in which the estimates are revised and in any future and for the year ended 31st March periods affected. 2018 comprise the Company and its subsidiaries (together referred to as 1.4.1. Judgments the ‘Group’ and individually as ‘Group Information about critical judgments in applying accounting policies that have the entities’) and the Group’s interest in most significant effect on the amounts recognised in the financial statements is associates. The financial statements included in the following notes: of all companies within the Group are prepared for a common financial Reference Item year which ends on 31st March 2018, except as mentioned in note 18.4. The Note 13 Property, plant and equipment principal Activities of the Group are Note 15 Investment properties described in note 2.1 to the financial statements. Note 16 Goodwill and other intangible assets Note 17 Impairment of investments 1.2. Statement of compliance Note 26 Employee benefits The financial statements which comprise the statement of financial Note 10.5 Deferred taxation position, statement of profit or loss Note 17 Consolidation: whether the group has de-facto control over an and other comprehensive income, investee statement of changes in equity, statement of cash flows and notes thereto have been prepared in 1.4.2. Assumptions and estimation uncertainties accordance with new Sri Lanka Information about assumptions and estimation uncertainties that have a significant Accounting Standards (SLFRSs), and risk of resulting in a material adjustment in the year ending 31st March 2018 is the requirements of the Companies Act, included in the following notes: no 07 of 2007. The Board of Directors of the Company is responsible for the preparation and presentation of these financial statements. The financial statements were authorised for issue by the Board of Directors on 03 August 2018. 51 C T Holdings PLC Annual Report 2017/18

The Management of the C T Holdings Reference Item PLC has made an assessment of Note 26 Measurement of defined benefit obligations: key actuarial the Group’s ability to continue as a assumptions; going concern and is satisfied that the group has the resources to continue Note 10.5 Recognition of deferred tax assets: availability of future taxable in business for a foreseeable future. profit against which carry forward tax losses can be used; Furthermore, management is not aware Note 17 Impairment test: key assumptions underlying recoverable amounts; of any material uncertainties that may cast significant doubt upon the Group’s Note 33 Recognition and measurement of provisions and contingencies: ability to continue as a going concern. key assumptions about the likelihood and magnitude of an outflow Therefore, the financial statements of resources; and continue to be prepared on the going Note 17 Acquisition of subsidiary: fair value of the consideration transferred concern basis. (including contingent consideration) and fair value of the assets acquired and liabilities assumed, measured on a provisional basis. 1.9. Measurement of fair value A number of the Group’s accounting policies and disclosures require the 1.5. Materiality and Aggregation measurement of fair values, for both Each material class of similar items is presented separately in the financial financial and non-financial assets and statements. Items of a dissimilar nature or function are presented separately unless liabilities. they are immaterial. The Group has an established 1.6. Comparative Information control framework with respect to the Comparative information has been reclassified to conform to the current year’s measurement of fair values. presentation, where necessary. Except when a standard permits or requires otherwise, comparative information is disclosed in respect of the previous period. Significant valuation issues are reported Where the presentation or classification of items in the financial statements are to the Group’s audit committee. amended, comparative amounts are reclassified unless it is impracticable. When measuring the fair value of an 1.7. Events after the reporting period asset or a liability, the Group uses All material events after the reporting date have been considered and where observable market data as far as appropriate, adjustments or disclosures have been made in respective notes to the possible. Fair values are categorised financial statements. into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows. 1.8. Basis of measurement The financial statements have been prepared on the historical cost basis except for • Level 1: Quoted prices (unadjusted) the following material items in the statement of financial position: in active markets for identical assets or liabilities. Items Measurement bases • Level 2: Inputs other than quoted prices included in Level 1 that are Freehold land Fair value observable for the asset or liability, Financial instruments at fair value through profit or loss Fair value either directly (i.e. as prices) or indirectly (i.e. derived from prices). Available-for-sale financial assets Fair value • Level 3: Inputs for the asset Investment property Fair value or liability that are not based on observable market data Defined benefit obligations Present value (unobservable inputs). Share based payment arrangements Fair value 52 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

If the inputs used to measure the fair value of an asset or a liability fall into different The Group’s chief executive officer levels of the fair value hierarchy, then the fair value measurement is categorised in its reviews the internal management entirety in the same level of the fair value hierarchy as the lowest level input that is reports of each division at least significant to the entire measurement. quarterly. Segment results that are reported to the Group’s chief operating The Group recognises transfers between levels of the fair value hierarchy at the end officer include items directly attributable of the reporting period during which the change has occurred. to a segment as well as those that can be allocated on a reasonable basis. Further information about the assumptions made in measuring fair values is included Unallocated items comprise mainly in the following notes: corporate assets, head office expenses, and tax assets and liabilities. Inter- segment transfers are based on fair Reference Item market prices. Note 15 Investment property Segment results, assets and liabilities Note 29 Financial instruments include items directly attributable to Note 17 Acquisition of subsidiary a segment as well as those that can be allocated on a reasonable basis. Note 13 Freehold Land Segment capital expenditure is the Note 26.2 Share based payment arrangements total cost incurred during the period to acquire property, plant and equipment, and intangible assets other than goodwill. 2. Operating segments 2.1. Basis for segmentation The Group has the following six strategic divisions, which are its reportable 3. Significant accounting segments. These divisions offer different products and services, and are managed policies separately because they require different technology and marketing strategies. Unless otherwise indicated, the accounting policies set out below have The following summary describes the operations of each reportable segment. been applied consistently to all periods Reportable Segment Operation presented in these financial statements and have been applied consistently by Retail and Distribution Operation of a chain of supermarkets and Group entities. Wholesale convenient stores. Local distributor for world renown brands of food and beverages. 3.1. Basis of consolidation FMCG Manufacturer / distributor of processed meat, dairy, jams, 3.1.1. Business combinations cordials, sauces and confectionery. The Group accounts for business combinations using the acquisition Restaurants Franchisee / Operator for ‘Kentucky Fried Chicken’ (KFC) and method when control is transferred ‘TGI Fridays’ Restaurants in Sri Lanka. to the Group. The consideration Real Estate Owner / operator of the ‘Majestic City’ and ‘Cargills Square’ transferred in the acquisition is generally shopping and entertainment malls. Development and sale / measured at fair value, as are the rental of residential condominiums and commercial development. identifiable net assets acquired. Any goodwill that arises is tested annually Entertainment Import, distribution and exhibition of cinematic content. for impairment. Any gain on a bargain Financial Commercial Banking, stock brokering, capital market solutions purchase is recognised in profit or loss Services and fund management (Associates). immediately. Transaction costs are 53 C T Holdings PLC Annual Report 2017/18

expensed as incurred, except if related financial statements of subsidiaries to Significant influence is the power to to the issue of debt or equity securities. bring their accounting policies into line participate in the financial and operating with the Group’s accounting policies. policy decisions of the investee, but is The consideration transferred does not control or joint control over those not include amounts related to the 3.1.3. Loss of control policies. The considerations made in settlement of pre-existing relationships. When the Group loses control over a determining significant influence or joint Such amounts are generally recognized subsidiary it de-recognises the assets control is similar to those necessary to in profit or loss. and liabilities of the subsidiary, any determine control over subsidiaries. related non-controlling interests and Any contingent consideration is the other components of equity. Any Investments in associates are measured at fair value at the date resulting gain or loss is recognised in accounted for under the equity method. of acquisition. If an obligation to profit or loss. Any interest retained in They are initially recognised at cost. pay contingent consideration that the former subsidiary is measured at fair which includes transaction costs. meets the definition of a financial value when control is lost. Subsequently Subsequent to initial recognition, the instrument is classified as equity, then that retained interest is accounted for consolidated financial statements it is not remeasured and settlement is as equity accounted investee or as include the Group’s share of the profit accounted for within equity. Otherwise, an available-for-sale financial asset or loss and other comprehensive other contingent consideration is depending on the level of influence income of equity accounted investees, remeasured at fair value at each retained. after adjustments to align the reporting date and subsequent changes accounting policies with those of the in the fair value of the contingent 3.1.4. Non-controlling interests Group, from the date that significant consideration are recognized in profit Non-controlling-interests are measured influence commences until the date that or loss. at their proportionate share of the significant influence ceases. acquiree’s identifiable net assets at the 3.1.2. Subsidiaries date of acquisition. When the Group’s share of losses Subsidiaries are entities controlled by exceed its interest in an equity the Group. The Group controls an entity Changes in the Group’s interest in accounted investee, the carrying when it is exposed to, or has right to, a subsidiary that do not result in a amount of the investment, including variable returns from its involvement loss of control are accounted for any long term interests that form with the entity and has the ability to as transactions with owners in their part thereof, is reduced to zero, and affect those returns through its power capacity as owners. Adjustments to the recognition of further losses is over the entity. The financial statements non-controlling interests are based on a discontinued except to the extent of subsidiaries are included in the proportionate amount of the net assets that the Group has an obligation or consolidated financial statements from of the subsidiary. No adjustments are has made payments on behalf of the the date on which control commences made to goodwill and no gain or loss is investee. until the date on which control ceases. recognised in profit or loss. 3.1.6. Transactions eliminated on The Company re-assesses whether or 3.1.5. Interest in equity accounted consolidation not it controls an investee if facts and investees Intra-group balances and transactions, circumstances indicate that there are The Group’s interests in equity and any unrealised income and changes to one or more of the three accounted investees comprise expenses arising from intra-group elements of control listed above. Total interests in associates. Associates are transactions, are eliminated. Unrealised comprehensive income of subsidiary is those entities in which the Group has gains arising from transactions with attached to the owners of the Company significant influence, but not control equity accounted investees are and to the non-controlling interest, or joint control, over the financial and eliminated against the investment even this result in the non-controlling operating policies. Significant influence to the extent of the Group’s interest interest having a deficit balance. When is presumed to exist when the Group in the investee. Unrealised losses necessary, adjustments are made to the holds between 20% and 50% of the voting power of another entity. 54 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

are eliminated in the same way as Classification as a discontinued programme or when it is no longer unrealised gains, but only to the extent operation occurs at the earlier of probable that the points under the that there is no evidence of impairment. disposal or when the operation meets programme will be redeemed. the criteria to be classified as held-for- 3.2. Foreign Currency - Foreign sale. 3.4.2. Rendering of services currency transactions The Group recognises revenue from When an operation is classified rendering of services in proportion Transactions in foreign currencies as discontinued operation, the to the stage of completion of the are translated into the respective comparative statement of profit or loss transaction at the reporting date. The functional currencies of Group entities and other comprehensive income is stage of completion is assessed with at exchange rates at the dates of the represented as if the operation had reference to surveys of work performed. transactions. been discontinued from the start of the comparative year. 3.4.3. Commissions Monetary assets and liabilities When the Group acts in the capacity of denominated in foreign currencies are an agent rather than as the principal in translated to the functional currency at 3.4. Revenue a transaction, the revenue recognised is the exchange rate at the reporting date. Revenue from the sale of goods in the the net amount of commission made by Non-monetary assets and liabilities course of ordinary activities is measured the Group. that are measured at fair value in a at the fair value of the consideration foreign currency are translated to the received or receivable, net of returns, 3.4.4. Investment property rental functional currency at the exchange trade discounts and volume rebates. income rate at the date that the fair value was Rental income from investment determined. Non-monetary items that 3.4.1. Sale of goods property is recognised as revenue on are measured based on historical cost Revenue is recognized when significant a straight-line basis over the term of in a foreign currency are translated risks and rewards of ownership have the lease. Lease incentives granted are using the exchange rate at the date been transferred to the customer, recognised as an integral part of the of the transaction. Foreign currency recovery of the consideration is total rental income, over the term of the differences are generally recognised in probable, the associated costs lease. profit or loss. and possible return of goods can be estimated reliably, there is no 3.4.5. Cinema Operations 3.3. Discontinued Operations continuing management involvement with the goods, and the amount of Revenue from cinema operations is A discontinued operation is a revenue can be measured reliably. recognised at the point of issuance of component of the Group’s business, Revenue is measured net of returns, tickets. the operations and cash flows of which trade discounts and volume rebates. can be clearly distinguished from the The timing of the transfer of risks 3.4.6. Apartment Sale rest of the Group and which: and rewards varies depending on the Revenue is recognised based on individual terms of the sales agreement. sale agreements when completion • represents a separate major line of is certified by the project Architect/ business or geographical area of Loyalty programme Engineer and substantial amount operations; Revenue is allocated between the from the total sale value as per the • is part of a single co-ordinated plan loyalty programme and the other agreement has been received by the to dispose of a separate major line components of the sale. The amount Company. of business or geographical area of allocated to the loyalty programme operations; or is deferred, and is recognised as 3.4.7. Dividend Income • is a subsidiary acquired exclusively revenue when the Group has fulfilled Dividend income is recognised when with a view to re-sell. its obligations to supply the discounted the Company’s right to receive the products under the terms of the payment is established. 55 C T Holdings PLC Annual Report 2017/18

3.4.8. Others Where a parent grants rights to its past employees and effectively places Gains or losses on the disposal of equity instruments to employees of actuarial and investment risk on the Property, Plant & Equipment have been its subsidiary, and the arrangement is entity. The liability recognised in the accounted for in the profit or loss at accounted for as equity-settled in the statement of financial position in respect the date of disposal. Other income is consolidated financial statements, the of Defined Benefit Plan is the present recognised on an accrual basis. subsidiary should in its own separate value of the defined benefit obligation at financial statements measure the the reporting date. The defined benefit 3.5. Employee benefits services received from its employees obligation is calculated annually by 3.5.1. Short-term employee in accordance with the requirements of independent actuaries, using projected benefits SLFRS 2 applicable to equity-settled unit credit method, as recommended Short-term employee benefits are share-based payment transactions and by LKAS 19-Employee Benefit. The expensed as the related service is corresponding increase recognised in present value of the defined benefit provided. A liability is recognised equity as a capital contribution from the obligation is determined by discounting for the amount expected to be paid parent. the estimated future cash outflows if the Group has a present legal or using interest rates that apply to the constructive obligation to pay this 3.5.3. Defined contribution plans currency in which the benefits will be amount as a result of past service Defined contribution plan is a post paid, and that have terms to maturity provided by the employee, and the employment benefit plan under which approximating to the terms of the obligation can be estimated reliably. an entity pays fixed contributions into related liability. a separate entity and will have no 3.5.2. Share-based payment legal or constructive obligation to pay The assumptions based on which the arrangement any further amounts. Obligations for results of the actuarial valuation were The grant-date fair value of equity- contributions to Employees Provident determined are included in the note settled share-based payment Fund and Employees Trust Fund 26.1(b) to the Financial Statements. arrangements granted to employees is covering all employees are recognised generally recognised as an expense, as an expense in profit or loss, as This liability is not externally funded and with a corresponding increase in incurred. Types of contribution plans the item is grouped under non-current equity, over the vesting period of the which are being contributed for by the liabilities in the statement of financial awards. The amount recognised as Group; position. However, under the Payment an expense is adjusted to reflect the of Gratuity Act No. 12 of 1983 the number of awards for which the related (a) Employee Provident Fund (EPF) liability to an employee arises only on service and non-market performance - The Group and employees completion of five years of continued conditions are expected to be met, contribute 12% and 8% respectively service. The company recognizes such that the amount ultimately of the salary to EPF. all actuarial-gains and losses arising recognised is based on the number from defined benefit plans in other of awards that meet the related (b) Employees Trust Fund - All comprehensive Income and expenses service and non-market performance employees of the Group are related to defined benefit plans in staff conditions at the vesting date. For members of the Employees’ Trust expenses in profit or loss. share-based payment awards with Fund (ETF). The Group contributes non-vesting conditions, the grant-date 3% of the salary of each employee 3.5.5. Termination benefits fair value of the share-based payment to ETF. Termination benefits are expensed is measured to reflect such conditions at the earlier of when the Group and there is no true-up for differences 3.5.4. Defined benefit plans can no longer withdraw the offer of between expected and actual Defined Benefit Plan is a post- those benefits and when the Group outcomes. employment benefit plan other than recognises costs for a restructuring. If Defined Contribution Plan. These plans benefits are not expected to be settled create an obligation on the entity to wholly within 12 months of the reporting provide agreed benefits to current and date, then they are discounted. 56 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

3.6. Grants to a business combination, or items • taxable temporary differences Grants are recognised initially as recognised directly in equity or in other arising on the initial recognition of deferred income at fair value when there comprehensive income. goodwill. is reasonable assurance that they will be received and the Group will comply 3.8.1. Current tax Deferred tax assets are recognised with the conditions associated with the Current tax comprises the expected for unused tax losses, tax credits grant, and are then recognised in profit tax payable or receivable on the and deductible temporary differences or loss as other income on a systematic taxable income or loss for the year and to the extent that it is probable that basis over the useful life of the asset. any adjustment to the tax payable or future taxable profits will be available Grants that compensate the Group receivable in respect of previous years. against which they can be utilised. for expenses incurred are recognised The amount of current tax payable or Future taxable profits are determined in profit or loss as other income on a receivable is the best estimate of the based on business plans for individual systematic basis in the periods in which tax amount expected to be paid or subsidiaries in the Group and the the expenses are recognised. received that reflects uncertainty related reversal of temporary differences. to income taxes, if any. It is measured Deferred tax is not recognized for the 3.7. Finance income and finance using tax rates enacted or substantively undistributed profits of subsidiaries as enacted at the reporting date. Current the parent company has control over costs tax also includes any tax arising from the dividend policy of its subsidiaries The Group’s finance income and dividends. and distribution of those profits. finance costs would include: Deferred tax assets are reviewed at Current tax payable also includes any each reporting date and are reduced to • interest income; tax arising from dividends. Current tax the extent that it is no longer probable • interest expense; assets and liabilities are offset only if that the related tax benefit will be • dividend income; certain criteria are met. realised; such reductions are reversed • the net gain or loss on the disposal when the probability of future taxable of available-for-sale financial assets; 3.8.2. Deferred tax profits improves. • the net gain or loss on financial Deferred tax is recognised in respect assets at fair value through profit or of temporary differences between Un-recognised deferred tax assets are loss; the carrying amounts of assets and reassessed at each reporting date and • the foreign currency gain or loss liabilities for financial reporting purposes recognised to the extent that it has on financial assets and financial and the amounts used for taxation become probable that future taxable liabilities; purposes. profits will be available against which • the gain on the re-measurement they can be used. to fair value of any pre-existing Deferred tax is not recognised for: interest in an acquiree in a business • temporary differences on the initial Deferred tax is measured at the tax combination; recognition of assets or liabilities in rates that are expected to be applied • impairment losses recognised on a transaction that is not a business to temporary differences when they financial assets (other than trade combination and that affects neither reverse, using tax rates enacted or receivables); accounting nor taxable profit or substantively enacted at the reporting • the reclassification of net gains loss; date. previously recognised in other • temporary differences related comprehensive income. to investments in subsidiaries, The measurement of deferred tax associates and jointly controlled reflects the tax consequences that 3.8. Income Tax entities to the extent that the Group would follow the manner in which Income tax expense comprises current is able to control the timing of the the Group expects, at the reporting and deferred tax. Current tax and reversal of the temporary differences date, to recover or settle the carrying deferred tax is recognised in profit or and it is probable that they will not amount of its assets and liabilities. For loss except to the extent that it relates reverse in the foreseeable future; this purpose, the carrying amount of and 57 C T Holdings PLC Annual Report 2017/18

investment property that is measured at the commencement of development ii. Subsequent expenditure fair value is presumed to be recovered with a view to sale, and the properties Subsequent expenditure is capitalised through sale. are reclassified as inventories at their only when it is probable that the future deemed cost, which is the fair value economic benefits associated with Deferred tax assets and liabilities are at the date of re-classification. They the expenditure will flow to the Group. offset if there is a legally enforceable are subsequently carried at the lower On-going repairs and maintenance are right to offset current tax liabilities of cost and net realisable value. Net expensed as incurred. and assets, and they relate to taxes realisable value is the estimated selling levied by the same tax authority on the price in the ordinary course of business iii. Depreciation same taxable entity, or on different tax less costs to complete redevelopment Items of property, plant and equipment entities, but they intend to settle current and selling expenses. are depreciated from the date they tax liabilities and assets on a net basis are available for use or, in respect of or their tax assets and liabilities will be 3.11. Property, plant and selfconstructed assets, from the date realized simultaneously. equipment that the asset is completed and ready for use. Depreciation is calculated to i. Recognition and measurement write off the cost of items of property, 3.9. Dividend distribution Items of property, plant and equipment plant and equipment less their Dividend distribution to the Company’s are measured at cost less accumulated estimated residual values using the shareholders is recognized as a liability depreciation and any accumulated straight-line basis over their estimated in the Group’s financial statements in impairment losses. Land is stated at its useful lives. Depreciation is generally the period in which the dividends are fair value. Cost includes expenditure recognised in profit or loss, unless proposed by directors or approved by that is directly attributable to the the amount is included in the carrying the Company’s shareholders, as the acquisition of the asset. The cost of amount of another asset. Leased case may be. self-constructed assets includes the assets are depreciated over the shorter following: of the lease term and their useful lives 3.10. Inventories unless it is reasonably certain that Inventories are measured at the lower • the cost of materials and direct the Group will obtain ownership by of cost and net realisable value. The labour; the end of the lease term. Land is not cost of inventories is based on the • any other costs directly attributable depreciated. first-in first-out principle, and includes to bringing the assets to a working expenditure incurred in acquiring the condition for their intended use; and inventories, production or conversion • capitalised borrowing costs. costs, and other costs incurred in bringing them to their existing Purchased software that is integral location and condition. In the case of to the functionality of the related manufactured inventories and work in equipment is capitalised as part of that progress, cost includes an appropriate equipment. If significant parts of an share of production overheads based item of property, plant and equipment on normal operating capacity. Net have different useful lives, then they are realisable value is the estimated selling accounted for as separate items (major price in the ordinary course of business, components) of property, plant and less the estimated costs of completion equipment. Any gain or loss on disposal and estimated costs necessary to make of an item of property, plant and the sale. equipment (calculated as the difference between the net proceeds from Property inventory disposal and the carrying amount of the The Group’s property inventories arise item) is recognised in profit or loss. where there is a change in use of investment properties evidenced by 58 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

The estimated useful lives for the v. Reclassification to investment Other intangible assets current and comparative years of property Other intangible assets, including significant items of property, plant and When the use of a property changes computer software, patents, equipment are as follows: from owner-occupied to investment trademarks and licenses, which are property, the property is re-measured acquired by the Group and have finite Description No. of years to fair value and re-classified as useful lives are measured at cost less Freehold 50 investment property. Any gain arising accumulated amortisation and any buildings on this re-measurement is recognised accumulated impairment losses. in profit or loss to the extent that it Improvements 4 to or period of reverses a previous impairment loss on ii. Subsequent expenditure to leasehold lease whichever the specific property, with any remaining Subsequent expenditure is capitalised buildings is lower gain recognised in other comprehensive only when it increases the future Plant & 5 to 10 income and presented in the revaluation economic benefits embodied in the machinery reserve in equity. Any loss is recognized specific asset to which it relates. All immediately in profit or loss. other expenditure, including expenditure Motor vehicles 4 to 5 on internally generated goodwill and Furniture & 5 3.12. Intangible assets and brands, is recognised in profit or loss as fittings goodwill incurred. i. Recognition and measurement iii. Amortisation Depreciation methods, useful lives Asset Measurement Basis Amortisation is calculated to write and residual values are reviewed at off the cost of intangible assets less Goodwill Goodwill arising each reporting date and adjusted if their estimated residual values using on the acquisition appropriate. Fully depreciated property, the straight-line method over their of subsidiaries is plant and equipment are retained in estimated useful lives, and is generally measured at cost less the financial statements until such time recognized in profit or loss. Goodwill is accumulated impairment when they are no longer in use. not amortised. losses. In respect of acquisitions prior to 1 iv. Constructions in progress The estimated useful lives for current April 2011, goodwill is All direct and indirect costs that are and comparative periods are as follows: related to the construction of fixed included on the basis assets and incurred before the assets of its deemed cost, Description No. of years are ready for their intended use are which represents the Trademarks and 10 years capitalised as construction in progress. amount recorded under licenses Construction in progress is stated in the previous GAAP (SLAS) statement of financial position at cost In respect of equity Computer software 4 years less impairment losses. Construction in accounted investees, progress is transferred to fixed assets the carrying amount when it is ready for its intended use. of goodwill is included No depreciation is provided against in the carrying amount construction in progress. of the investment, and any impairment loss is allocated to the carrying amount of the equity accounted investee as a whole. 59 C T Holdings PLC Annual Report 2017/18

3.13. Investment property sale or distribution rather than through i. Recognition and derecognition Investment property is property held continuing use. Immediately before The Group initially recognises loans either to earn rental income or for classification as held-for-sale or held-for and receivables on the date when capital appreciation or for both, but distribution, the assets, or components they are originated. All other financial not for sale in the ordinary course of of a disposal group, are re-measured assets (including assets designated as business or use in the production or in accordance with the Group’s at fair value through profit or loss) are supply of goods or services or for other accounting policies. Thereafter, recognised initially on the trade date, administrative purposes. generally the assets, or disposal group, when the Group becomes a party to the are measured at the lower of their contractual provisions of the instrument. Investment property is initially measured carrying amount and fair value less at cost and subsequently at fair value costs to sell. The Group de-recognises a financial with any change therein recognised asset when the contractual rights to in profit or loss. Cost includes Any impairment loss on a disposal the cash flows from the asset expire, expenditure that is directly attributable group is allocated first to goodwill, or it transfers the rights to receive the to the acquisition of the investment and then to the remaining assets and contractual cash flows in a transaction property. The cost of self-constructed liabilities on a pro-rata basis, except in which substantially all the risks and investment property includes the cost that no loss is allocated to inventories, rewards of ownership of the financial of materials and direct labour, any other financial assets, deferred tax assets, asset are transferred, or it neither costs directly attributable to bringing employee benefit assets, investment transfers nor retains substantially all the investment property to a working property or biological assets, which of the risks and rewards of ownership condition for their intended use and continue to be measured in accordance and does not retain control over the capitalised borrowing costs. with the Group’s other accounting transferred asset. Any interest in such policies. Impairment losses on initial transferred financial assets that is Any gain or loss on disposal of an classification as held-for-sale or held- created or retained by the Group is investment property (calculated as the for-distribution and subsequent gains recognised as a separate asset or difference between the net proceeds and losses on re-measurement are liability. The Group de-recognises a from disposal and the carrying amount recognised in profit or loss. Gains financial liability when its contractual of the item) is recognised in profit or are not recognised in excess of any obligations are discharged or loss. When investment property that cumulative impairment loss. Once cancelled, or expired. Financial assets was previously classified as property, classified as held for- sale or held and liabilities are offset and the net plant and equipment is sold, any related for-distribution, intangible assets and amount presented in the statement amount included in the revaluation property, plant and equipment are no of financial position when, and only reserve is transferred to retained longer amortised or depreciated, and when, the Group has a legal right to earnings. When the use of a property any equity-accounted investee is no offset the amounts and intends either changes such that it is re-classified as longer equity accounted. to settle them on a net basis or to property, plant and equipment, its fair realise the asset and settle the liability value at the date of re-classification 3.15. Financial instruments simultaneously. becomes its cost for subsequent 3.15.1. Non-derivative financial accounting. assets and liabilities The Group classifies non-derivative 3.14. Assets held for sale financial assets into the categories of Non-current assets, or disposal groups financial assets at fair value through comprising assets and liabilities, are profit or loss, held-to-maturity financial classified as held-for-sale or held-for assets, loans and receivables and distribution if it is highly probable that available-for-sale financial assets. The they will be recovered primarily through Group classifies non-derivative financial liabilities into the other financial liabilities category. 60 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

ii. Non-derivative financial assets - Measurement iii. Non-derivative financial liabilities - Measurement Asset Measurement Basis Non-derivative financial liabilities are Financial assets at A financial asset is classified as at fair value through initially recognised at fair value less any fair value through profit or loss if it is classified as held-for-trading or directly attributable transaction costs. profit or loss is designated as such on initial recognition. Directly Subsequent to initial recognition, these attributable transaction costs are recognised in profit or liabilities are measured at amortised loss as incurred. Financial assets at fair value through cost using the effective interest method. profit or loss are measured at fair value and changes therein, including any interest or dividend income are Other financial liabilities comprise recognised in profit or loss. loans and borrowings, debt securities issued, bank overdrafts, and trade Held-to-maturity If the Group has the positive intent and ability to hold and other payables. Bank overdrafts financial assets debt securities to maturity, then such financial assets are that are repayable on demand and classified as held-to-maturity. These assets are initially form an integral part of the Group’s recognized at fair value plus any directly attributable cash management are included transaction costs. Subsequent to initial recognition, held as a component of cash and cash to maturity financial assets are measured at amortized equivalents for the statement of cash cost using the effective interest method, less any flows. impairment losses.

Loans and Loans and receivables are financial assets with fixed 3.15.2. Derivative financial receivables or determinable payments that are not quoted in an instruments active market. Such assets are recognised initially at fair Derivatives are initially recognised value plus any directly attributable transaction costs. at fair value; any directly attributable Subsequent to initial recognition, loans and receivables transaction costs are recognised in are measured at amortised cost using the effective profit or loss as incurred. Subsequent interest method, less any impairment losses. to initial recognition, derivatives are measured at fair value, and changes Available-for-sale Available-for-sale financial assets are non-derivative therein are generally recognised in profit financial assets financial assets that are designated as available-for-sale or loss. or are not classified in any of the above categories of financial assets. These assets are recognised initially at i. Financial liability on put options fair value plus any directly attributable transaction costs. written over non-controlling- Subsequent to initial recognition, they are measured at interest fair value and changes therein, other than impairment The financial liability is recognised at the losses and foreign currency differences on available- present value of the redemption amount for-sale debt instruments, are recognised in other and accreted through finance charges comprehensive income and accumulated in the fair value in the profit or loss over the contract reserve in equity. When these assets are derecognised, period up to the final redemption the gain or loss accumulated in equity is reclassified to amount. Any adjustments to the profit or loss. redemption amount are recognised in equity in accordance with LKAS 39 - Financial Instruments Recognition and Measurement. 61 C T Holdings PLC Annual Report 2017/18

The initial redemption liability is a If the contract lapses unexercised Objective evidence that financial assets reduction of parent’s equity if the risks where the risks and rewards of are impaired includes; and rewards of ownership remain ownership remain with the non- • default or delinquency by a debtor, with the non-controlling interest or a controlling interest, then no adjustment • restructuring of an amount due to reduction of non-controlling interest is made to the carrying value of the Group on terms that the Group equity if the risks and rewards of the non-controlling interest and the would not consider otherwise, ownership transfer to the parent. If the redemption liability is de-recognised • indications that a debtor or issuer present value of the redemption amount against the parent’s equity. will enter bankruptcy, exceeds the carrying value of the • adverse changes in the payment non-controlling interest, any excess is 3.16. Stated capital - Ordinary status of borrowers or issuers, recorded against parent’s equity. shares economic conditions that correlate Ordinary shares are classified as equity. with defaults or If the contract is exercised, any non- Incremental costs directly attributable • the disappearance of an active controlling interest equity is allocated to the issue of ordinary shares are market for a security. to parent equity. No adjustments are recognised as a deduction from equity, • observable data indicating that there made to goodwill upon settlement of net of any tax effects. is a measurable decrease in the the contract. The redemption liability is expected cash flows from a group offset by the cash payment. 3.17. Impairment of financial assets. If the contract lapses un-exercised 3.17.1. Non-derivative financial where the risks and rewards of assets In addition, for an investment in ownership have transferred to the A financial asset not classified as at fair an equity security, a significant or parent, a non-controlling interest value through profit or loss, including prolonged decline in its fair value equity is reinstated. In substance, an interest in an equity-accounted below its cost is objective evidence of the parent has sold those shares investee, is assessed at each reporting impairment. back to the non-controlling interest date to determine whether there is and it is a transaction with a non- objective evidence that it is impaired. controlling interest. The non-controlling interest equity amount is reinstated A financial asset is impaired if there at an amount equal to its share of the is objective evidence of impairment carrying values of the subsidiary’s net as a result of one or more events that assets at the date of lapse plus the occurred after the initial recognition of goodwill from the subsidiary’s initial the asset, and that loss event(s) had acquisition. Any difference between an impact on the estimated future the redemption liability and the non- cash flows of that asset that can be controlling interest equity adjustment is estimated reliably. recognised against the parent’s equity. No adjustments are made to goodwill. 62 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

Category Measurement Basis

Financial assets The Group considers evidence of impairment for these assets measured at amortised cost (loans measured at amortised and receivables and held-to-maturity financial assets) at both a specific asset and collective level. cost All individually significant assets are individually assessed for impairment. Those found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Assets that are not individually significant are collectively assessed for impairment by grouping together assets with similar risk characteristics.

In assessing collective impairment, the Group uses historical information on the timing of recoveries and the amount of loss incurred, and makes an adjustment if current economic and credit conditions are such that the actual losses are likely to be greater or lesser than suggested by historical trends.

An impairment loss is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognised in profit or loss and reflected in a provisions account against loans and receivables or held-to-maturity investment securities. Interest on the impaired asset continues to be recognised. When the Group considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, then the previously recognised impairment loss is reversed through profit or loss.

Available-for-sale Impairment losses on available-for sale financial assets are recognised by reclassifying the losses financial assets accumulated in the fair value (available for sale) reserve in equity to profit or loss. The cumulative loss that is reclassified from equity to profit or loss is the difference between the acquisition cost (net of any principal repayment and amortization) and the current fair value, less any impairment loss recognised previously in profit or loss. If, in a subsequent period, the fair value of an impaired available-for-sale debt security increases and the increase can be related objectively to an event occurring after the impairment loss was recognised, then the impairment loss is reversed, with the amount of the reversal recognised in profit or loss. However, any subsequent recovery in the fair value of an impaired available for-sale equity security is recognized in other comprehensive income.

Equity-accounted An impairment loss in respect of an equity-accounted investee is measured by comparing the investees recoverable amount of the investment with its carrying amount. An impairment loss is recognised in profit or loss. An impairment loss is reversed if there has been a favourable change in the estimates used to determine the recoverable amount.

3.17.2. Non-financial assets for impairment. For impairment testing, or CGU is the greater of its value in The carrying amounts of the Group’s assets are grouped together into the use and its fair value less costs to non-financial assets (investment smallest group of assets that generates sell. An impairment loss is recognised property, inventories and deferred cash inflows from continuing use if the carrying amount of an asset or tax assets) are reviewed at each that are largely independent of the CGU exceeds its recoverable amount. reporting date to determine whether cash inflows of other assets or cash Impairment losses are recognised there is any indication of impairment. generating units (CGUs). Goodwill in profit or loss. Impairment losses If any such indication exists, then arising from a business combination recognised in respect of CGUs are the asset’s recoverable amount is is allocated to CGUs or groups of allocated first to reduce the carrying estimated. Goodwill and indefinite-lived CGUs that are expected to benefit amount of any goodwill allocated to intangible assets are tested annually from the synergies of the combination. the CGU (group of CGUs), and then The recoverable amount of an asset to reduce the carrying amounts of 63 C T Holdings PLC Annual Report 2017/18

the other assets in the CGU (group 3.19.2. Leased assets 3.21. Fair value measurement of CGUs) on a pro-rata basis. An Assets held by the Group under ‘Fair value’ is the price that would impairment loss in respect of goodwill leases which transfer to the Group be received to sell an asset or is not reversed. For other assets, an substantially all of the risks and rewards paid to transfer a liability in an impairment loss is reversed only to the of ownership are classified as finance orderly transaction between market extent that the asset’s carrying amount leases. On initial recognition, the participants at the measurement date does not exceed the carrying amount leased asset is measured at an amount in the principal or, in its absence, the that would have been determined, net equal to the lower of its fair value and most advantageous market to which of depreciation or amortisation, if no the present value of the minimum the Group has access at that date. The impairment loss had been recognised. lease payments. Subsequent to initial fair value of a liability reflects its non- recognition, the asset is accounted performance risk. 3.18. Provisions for in accordance with the accounting A provision is recognised if, as a result policy applicable to that asset. Assets A number of Group’s accounting of a past event, the Group has a held under other leases are classified policies and disclosures require the present legal or constructive obligation as operating leases and are not measurement of fair values, for both that can be estimated reliably, and it is recognised in the Group’s statement of financial and non-financial assets and probable that an outflow of economic financial position. liabilities benefits will be required to settle the obligation. Provisions are determined 3.19.3. Lease payments The Group measures the fair value of by discounting the expected future Payments made under operating leases an instrument using the quoted price cash flows at a pre-tax rate that reflects are recognised in profit or loss on a in an active market for that instrument. current market assessments of the time straight-line basis over the term of the A market is regarded as active if value of money and the risks specific to lease. Lease incentives received are transactions for the asset or liability the liability. recognised as an integral part of the take place with sufficient frequency and total lease expense, over the term of the volume to provide pricing information lease. Minimum lease payments made 3.19. Leases on an ongoing basis. under finance leases are apportioned 3.19.1. Determining whether an between the finance expense and the If there is no quoted price in an active arrangement contains a lease reduction of the outstanding liability. market, then the Group uses valuation At inception of an arrangement, The finance expense is allocated to techniques that maximise the use the Group determines whether the each period during the lease term so as of relevant observable inputs and arrangement is or contains a lease. to produce a constant periodic rate of minimise the use of unobservable At inception or on reassessment of interest on the remaining balance of the inputs. The chosen valuation technique an arrangement that contains a lease, liability. incorporates all of the factors that the Group separates payments and market participants would take into other consideration required by the 3.20. Operating profit account in pricing a transaction. arrangement into those for the lease and those for other elements on the Operating profit is the result generated If an asset or a liability measured at basis of their relative fair values. If the from the continuing principal revenue fair value has a bid price and an ask Group concludes for a finance lease producing activities of the Group as well price, then the Group measures assets that it is impracticable to separate the as other income and expenses related and long positions at a bid price and payments reliably, then an asset and to operating activities. Operating profit liabilities and short positions at an ask a liability are recognised at an amount excludes net finance costs, share of price. equal to the fair value of the underlying profit of equity accounted investees and asset; subsequently, the liability is income taxes. reduced as payments are made and an imputed finance cost on the liability is recognised using the Group’s incremental borrowing rate. 64 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

The best evidence of the fair value of a 4.1. New accounting standards 4.1.3. SLFRS 16 – Leases financial instrument on initial recognition issued but not effective as at SLFRS 16 eliminates the current dual is normally the transaction price – i.e. reporting date accounting model for lessees which the fair value of the consideration given 4.1.1. SLFRS 9 – Financial distinguishes between On-Balance or received. If the Group determines Instruments: Sheet finance leases and Off-Balance that the fair value on initial recognition Classification & Measurement SLFRS Sheet operating leases. Instead there differs from the transaction price and 9, as issued, reflects the first phase will be a single On-Balance Sheet the fair value is evidenced neither by of work on replacement of LKAS accounting model that is similar to a quoted price in an active market 39 and applies to classification and current finance lease accounting. for an identical asset or liability nor measurement of financial assets & SLFRS 16 will be applicable for the based on a valuation technique for liabilities, depending on the entity’s financial periods beginning on or after which any unobservable inputs are business model for managing 1 January 2019. The impact on the judged to be insignificant in relation to contractual cash flows characteristics implementation of the above standard the measurement, then the financial of the financial asset. SLFRS 9 will be has not been quantified yet. instrument is initially measured at effective for financial periods beginning fair value, adjusted to defer the on or after 1 January 2018. difference between the fair value on 5. Financial risk management initial recognition and the transaction The actual impact of adopting SLFRS The Group has exposure to the price. Subsequently, that difference 9 on the Group’s consolidated financial following risks from its use of financial is recognised in profit or loss on an statements in 2018-19 is not known instruments: appropriate basis over the life of the and cannot be reliably estimated • Credit risk instrument but no later than when because it will be dependent on the • Liquidity risk the valuation is wholly supported financial instruments that the Group by observable market data or the • Market risk holds and economic conditions at that transaction is closed out. • Operational risk time as well as accounting elections and judgements that it will make in the This note presents information about future. The new standard will require the Group’s exposure to each of the 4. Standards issued but not the Group to revise its accounting above risks, the Group’s objectives, yet effective processes and internal controls related policies and processes for measuring The Institute of Chartered Accountants to reporting financial instruments and and managing risk, and the Group’s of Sri Lanka has issued the following these changes are not yet complete. management of capital. new and amendments to Sri Lanka Accounting Standards and which 4.1.2. SLFRS 15 – Revenue from Risk management framework are effective after the period end of contract with customers: The Board of Directors has overall 31 March 2018. However these new SLFRS 15, establishes a responsibility for the establishment and amendments to standards have comprehensive framework for and oversight of the Company’s not been applied in preparing these determining revenue recognition by a 5 risk management framework. The financial statements. The extent of step model and will replace the existing Group’s risk management policies are the impact of these Standards to the LKAS 18 & LKAS 11. SLFRS 15, will established to identify and analyze Financial Statements has not been be applicable for the financial periods the risks faced by the Group, to set determined as at 31 March 2018. beginning on or after 1 January 2018. appropriate risk limits and controls, and to monitor risks and adherence to The impact on the implementation of the above standard has not been quantified yet. 65 C T Holdings PLC Annual Report 2017/18

limits. Risk management policies and 5.3. Market risk • Requirements for appropriate systems are reviewed regularly to reflect Market risk is the risk that changes segregation of duties, including changes in market conditions and the in market prices, such as foreign the independent authorisation of Group’s activities. The Group, through exchange rates and interest rates transactions; its training and management standards will affect the Group’s income. The • Requirements for the reconciliation and procedures, aims to develop a objective of market risk management and monitoring of transactions; disciplined and constructive control is to manage and control market • Compliance with regulatory and environment in which all employees risk exposures within acceptable other legal requirements; understand their roles and obligations. parameters, while optimizing the return. • Documentation of controls and procedures; 5.1. Credit risk 5.4. Currency risk • Development of contingency plans; Credit risk is the risk of financial loss Currency risk is the risk that the value of • Training and professional to the Group if a customer or counter a financial instrument will fluctuate due development; party to a financial instrument fails to to a change in foreign exchange rates. • Ethical and business standards; meet its contractual obligations and • Risk mitigation, including insurance arises principally from the Group’s 5.5. Operational risk where this is effective. receivables from customers. The Group Operational risk is the risk of direct or is exposed to credit risk on trade indirect loss arising from a wide variety receivables and other receivables, due Cash and cash equivalents of causes associated with the Group’s from related party and bank balances. Cash and cash equivalents comprise processes, personnel, technology cash balances and call deposits with and infrastructure, and from external Trade and other receivables maturities of three months or less from factors other than credit, market and The creditworthiness of each customer the acquisition date that are subject to liquidity risks such as those arising is evaluated prior to sanctioning credit an insignificant risk of changes in their from legal and regulatory requirements facilities. Appropriate procedures for fair value, and are used by the Group and generally accepted standards of follow-up and recovery are in place to in the management of its short-term corporate behaviour. Operational risks monitor credit risk. commitments. arise from all of the Group’s operations. The Group’s objective is to manage The Cash Flow Statement has been 5.2. Liquidity risk operational risk so as to balance the prepared using the “Indirect method” Liquidity risk is the risk that the Group avoidance of financial losses and of preparing cash flows in accordance will encounter difficulty in meeting the damage to the Group’s reputation with the Sri Lanka Accounting Standard obligations associated with its financial with overall cost effectiveness and to (LKAS 07) - Statement of Cash Flows. liabilities that are settled by delivering avoid control procedures that restrict cash or another financial asset. The initiative and creativity. The primary Group’s approach to managing liquidity responsibility for the development is to ensure, as far as possible, that it and implementation of controls to will always have sufficient liquidity to address operational risk is assigned meet its liabilities when due, under both to management. This responsibility normal and stressed conditions without is supported by the development incurring unacceptable losses or risking of overall Group standards for the damage to the Group’s reputation. management of operational risk in the following areas: 66 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

6. Revenue Please refer accounting policy in Note 3.4. In thousands of rupees Group Company For the year ended 31st March 2018 2017 2018 2017

The following is an analysis of the Group’s revenue Sales of goods 91,293,127 84,135,191 - - Rendering of services 336,159 340,352 - - Investment property rentals 505,197 562,238 - - 92,134,483 85,037,781 - -

7. Other income In thousands of rupees Group Company For the year ended 31st March 2018 2017 2018 2017

Gain on sale of property, plant and equipment 1,024,583 38,790 - - Amortisation of deferred income 23,447 11,481 - - Merchandising income 1,796,825 1,471,436 - - Change in fair value of investment property (refer note 15) 371,587 424,774 112,743 4,300 Rental income 94,292 52,783 23,831 28,985 Sundry Income 177,550 249,429 - - 3,488,284 2,248,693 136,574 33,285

8. Results from operating activities In thousands of rupees Group Company For the year ended 31st March 2018 2017 2018 2017

8.1 Expenses by nature The following items have been included in results from operating activities: Employee costs (refer note 8.2) 6,112,489 5,702,193 48,050 30,487 Depreciation of property, plant and equipment 2,248,973 1,873,811 2,681 2,729 Amortisation of intangible assets 109,796 71,098 - - Directors’ emoluments 324,556 313,016 30,283 26,127 Fees payable to the company’s auditor (refer note 8.3) 26,178 13,908 1,039 990 Impairment of trade and other receivables 10,341 29,652 - - Impairment loss on investments in subsidiary - - 13,355 103,045 Impairment losses recognised for the year in respect of property, plant and equipment - (193) - - Impairment of inventories 93,838 (16,749) - - 67 C T Holdings PLC Annual Report 2017/18

In thousands of rupees Group Company For the year ended 31st March 2018 2017 2018 2017

8.2 Employee costs Salaries, wages and other related expenses 5,248,949 5,099,585 38,017 24,948 Equity-settled share-based payments 148,063 - 3,225 - Defined benefit plan cost - retirement benefit obligation 188,773 152,667 2,498 2,200 Defined contribution plan costs - EPF & ETF 526,704 449,941 4,310 3,339 6,112,489 5,702,193 48,050 30,487

8.3 Fees payable to the company’s auditor Audit and audit related expenses 20,874 8,914 840 500 Non-audit services 5,304 4,994 - 490 26,178 13,908 840 990

9. Net finance income / (expense) Please refer accounting policies in Note 3.2, 3.7 and 3.15. In thousands of rupees Group Company For the year ended 31st March 2018 2017 2018 2017

9.1 Recognised in profit or loss Finance income Interest income 223,884 298,822 17,821 16,864 Net foreign exchange gain 3,212 6,633 - - Dividends from equity investments 33,310 28,424 1,087,646 1,427,146 Gain on disposal of available-for-sale investments - 39,338 - 22,378 Total finance income 260,406 373,217 1,105,467 1,466,388

Finance expense Finance cost on bank loans (1,358,409) (1,233,546) - - Finance cost on overdraft facilities (221,205) (270,792) (186) (185) Total finance expense (1,579,614) (1,504,338) (186) (185) Net finance income / (expenses) recognised in profit or loss (1,319,208) (1,131,121) 1,105,281 1,466,203

9.2 Recognised in other comprehensive income Net change in fair value of available-for-sale financial assets 10,686 (7,137) 9,538 1,217 Net change in fair value of available-for-sale financial assets reclassified to profit or loss 29,742 (30,510) - (30,510) 40,428 (37,647) 9,538 (29,293) 68 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

10. Income tax expense Please refer accounting policies in Note 3.8.

In thousands of rupees Group Company For the year ended 31st March 2018 2017 2018 2017

10.1 Amounts recognised in profit or loss Current tax expenses Current tax on profits for the year 1,783,589 1,707,185 18,596 24,719 Current tax on profits in respect of prior years (2) 5,433 - (28) 1,783,587 1,712,618 18,596 24,691 Deferred tax expenses Deferred tax on profits for the year 340,243 311,866 - - Deferred tax on profits in respect of prior years (72,038) (1,390) - - 268,205 310,476 - - Total income tax expense recognised in profit or loss 2,051,792 2,023,094 18,596 24,691

10.2 Amounts recognised in other comprehensive income Re-measurement of obligation on defined benefit plan (17,945) 9,814 - - Share of other comprehensive income of equity accounted investee 6,009 971 - - Total income tax expense recognised in other comprehensive income (11,936) 10,785 - -

10.3 Tax rate applicable for Group companies (a) Standard rate 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 2017/18. (iii) Under the Inland Revenue Act No. 10 of 2006 and subsequent amendments thereto, Cargills Quality Dairies (Private) Limited, Cargills Quality Foods Limited, Cargills Agrifoods Limited and Kotmale Dairy Products (Private) Limited are subject to a concessionary tax rate of 10%. However, as the Department of Inland revenue is contesting the income tax exemptions claimed, provisions have been made for income tax at the normal rate for the financial years ended 31st March 2012 to 31st March 2018, although tax returns continue to be filed based on concessionary tax rate. 69 C T Holdings PLC Annual Report 2017/18

10.4 Reconciliation of effective tax Group Company For the year ended 31st March 2018 2017 2018 2017

10.4.1 In thousands of rupees Profit before tax 5,791,257 4,690,108 1,138,168 1,323,215

Income tax using the Company’s standard tax rate 1,621,552 1,313,230 318,687 370,500 Effect of different tax rate [Refer 10.4.1(a)] (3,472) (1,911) - - Inter-company entries 314,811 381,634 - - Non-deductible expenses 1,234,480 1,083,082 765 30,291 Deductible expenses (1,335,327) (878,893) (4,991) (1) Tax-exempt income (423,105) (598,212) (308,796) (393,207) Other sources of income 106,728 61,317 4,990 4,722 Allowable deductions out of un-recognised tax losses (4,010) (25,984) (3,729) (4,307) Current year losses 9,727 28,235 - - Irrecoverable economic service charges / (ESC) - (231) - - Tax on dividend received 262,210 344,918 11,670 16,721 1,783,594 1,707,185 18,596 24,719 Change in un-recognised temporary differences 340,243 310,476 - - Income tax on profit in respect of prior years (72,045) 5,433 - (28) Income tax expense recognised in profit or loss 2,051,792 2,023,094 18,596 24,691

(a) Effect of different tax rate Income tax @ 12% 2,495 1,351 - - Income tax @ 10% 714 652 - - Income tax @ 40% 263 (92) - - 3,472 1,911 - -

10.4.2 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)] (0.06) (0.04) - - Inter-company entries 5.44 8.14 - - Non-deductible expenses 21.32 23.09 0.07 2.29 Deductible expenses (23.06) (18.74) (0.44) - Tax-exempt income (7.31) (12.75) (27.13) (29.72) Other sources of income 1.84 1.31 0.44 0.36 Allowable deductions out of un-recognised tax losses (0.07) (0.55) (0.33) (0.33) Current year losses 0.17 0.60 - - Irrecoverable economic service charges / (ESC) - - - - Tax on dividend received 4.53 7.35 1.03 1.26 30.80 36.40 1.64 1.87 Change in un-recognised temporary differences 5.88 6.62 - - Income tax on profit in respect of prior years (1.24) 0.12 - - Income tax expense recognised in profit or loss 35.44 43.14 1.64 1.87 70 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

Group Company For the year ended 31st March 2018 2017 2018 2017

(a) Effect of different tax rates Income tax @ 12% 0.04 0.03 - - Income tax @ 10% 0.01 0.01 - - Income tax @ 40% 0.01 - - - 0.06 0.04 - -

10.5 Deferred tax (assets) / liabilities (a) Movement in deferred tax balances Movement in net balance Classified as asset In thousands of rupees Recognised in or liability As at 1st April profit or other As at 31st Deferred Deferred comprehensive March tax tax loss income liability assets

For the year ended 31st March 2017 Accelerated tax depreciation [refer note 10.5(a)(i)] 1,584,911 365,346 - 1,950,257 1,950,257 - Fair value gains 71,194 - - 71,194 71,194 - Retirement benefit obligation (198,784) (28,046) (9,814) (236,644) - (236,644) Tax losses [refer note 10.5(a)(ii)] (313,351) 8,915 - (304,436) - (304,436) Decrease in future tax rates (3,874) - - (3,874) - (3,874) Provisions (180,963) 4,459 - (176,504) - (176,504) Other (21,944) (40,198) - (62,142) - (62,142) Tax assets / (liabilities) before set-off 937,189 310,476 (9,814) 1,237,851 2,021,451 (783,600) Set-off of tax - - - - (734,036) 734,036 Net tax assets / (liabilities) 937,189 310,476 (9,814) 1,237,851 1,287,415 (49,564)

For the year ended 31st March 2018 Accelerated tax depreciation [refer note 10.5(a)(i)] 1,950,257 330,583 - 2,280,840 2,280,840 - Fair value gains 71,194 - - 71,194 71,194 - Retirement benefit obligation (236,644) (32,280) (17,945) (286,869) - (286,869) Tax losses [refer note 10.5(a)(ii)] (304,436) 93,988 - (210,448) - (210,448) Decrease in future tax rates (3,874) - - (3,874) - (3,874) Provisions (176,504) (194,123) - (370,627) - (370,627) Other (62,142) 140,790 - 78,648 78,648 - Tax assets / (liabilities) before set-off 1,237,851 338,958 (17,945) 1,558,864 2,430,682 (871,818) Set-off of tax - - - - (864,817) 864,817 Net tax assets / (liabilities) 1,237,851 338,958 (17,945) 1,558,864 1,565,865 (7,001)

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

(b) The deferred income tax assets and liabilities during the year were calculated after setting off balances within the same tax jurisdiction. 71 C T Holdings PLC Annual Report 2017/18

(c) Deferred tax has been computed taking into consideration the tax rates of 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.

(d) 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 2018 2017 2018 2017

Deductible temporary differences 11,823 43,332 5,171 2,781 Tax losses 301,188 365,321 116,504 120,233 313,011 408,653 121,675 123,014

(e) Deferred tax 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, 2018 has been computed on rates applicable in the year of assessment 2017/2018. The provision for deferred tax at 31st March 2018 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 in the statement of profit or loss for the year ended 31st March 2018 amounting to Rs. 318 Mn and Rs. 1.878 Bn and other comprehensive income amounting to Rs. 40 Mn and Rs. 173 Mn with a consequential increase in the deferred tax liability on the statement of financial position.

10.6 Income tax treatments 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 payments is as follows:

Cargills Agrifoods Limited - Rs. 34.8 Mn (2017: Rs. 77.23 Mn), Cargills Quality Dairies (Private) Limited - Rs. 208.8 Mn (2017: Rs. 208.87 Mn), Cargills Quality Foods Limited - Rs. 122.6 Mn (2017: Rs. 222.60 Mn) and Kotmale Dairy Products (Private) Limited - Rs. 76.94 Mn (2017: Rs. 61.40 Mn). Having sought professional advice, the Management is confident that the tax exemptions are applicable and as such no liabilities would arise.

An additional tax assessment of Rs 243.58 Mn has been issued to Cargills (Ceylon) PLC by the Department of Inland Revenue for the Y/A 2013/2014. Having sought professional advice, a valid petition of appeal was made to the Commissioner General of Inland Revenue. Accordingly, no provision has been made in the financial statements of the subsidiary company Cargills (Ceylon) PLC or the Group. 72 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

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 2018 2017 2018 2017

Basic earning per share in rupees 12.90 8.68 5.56 6.45

In thousands of rupees Profit for the year attributable to owners of the Company 2,597,342 1,747,876 1,119,572 1,298,524

In thousands no. of shares Weighted-average number of ordinary shares Issued ordinary shares as at 1st April 201,407 183,097 201,407 183,097 Effect of shares issued during the year 23.1 - 18,310 - 18,310 Issued ordinary shares as at at 31st March 201,407 201,407 201,407 201,407

In accordance with LKAS 33, the current and prior period amounts for basic EPS are adjusted for the capitalization of reserves as if the capitalisation of reserve had occurred at the beginning of the earliest period presented.

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

12. Dividends For the year ended 31st March 2018 2017 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 29-Sep-17 1.80 329,575 19-Jan-17 1.70 311,265 Second interim 14-Mar-18 3.70 677,460 28-Mar-17 3.50 640,840 5.50 1,007,035 5.20 952,105 73 C T Holdings PLC Annual Report 2017/18

13. Property, plant & equipment Please refer accounting policies in Note 3.11, 3.17.2 and 3.19.2.

13.1 Reconciliation of carrying amount Group Improvements In thousands of rupees Freehold Freehold to leasehold Plant & Motor Furniture & Under land buildings buildings machinery vehicles fittings construction Total

Cost / Valuation As at 1st April 2016 10,191,558 2,244,501 4,480,682 13,420,798 1,148,995 260,901 904,312 32,651,747 Additions 451,797 75,285 792,887 1,818,476 194,373 248 1,237,674 4,570,740 Losses recognised in profit or loss - - (889) (6,716) - - - (7,605) On Acquisition of Subsidiaries - - - 946 4,131 - - 5,077 Disposals - - (1,135) (84,643) (95,864) (2,887) - (184,529) Transfers (236,292) (64,535) - - - - - (300,827) As at 31st March 2017 10,407,063 2,255,251 5,271,545 15,148,861 1,251,635 258,262 2,141,986 36,734,603

As at 1st April 2017 10,407,063 2,255,251 5,271,545 15,148,861 1,251,635 258,262 2,141,986 36,734,603 Additions 249,598 250,743 2,111,956 2,770,468 108,299 9,985 (699,228) 4,801,821 Revaluation 608,149 ------608,149 Disposals - - - (25,617) (43,842) - - (69,459) Transfers 144,568 (680,888) 1,274,532 (56,146) (15,645) (259,301) (57,546) 349,574 As at 31st March 2018 11,409,378 1,825,106 8,658,033 17,837,566 1,300,447 8,946 1,385,212 42,424,688

Accumulated depreciation and impairment losses As at 1st April 2016 - 613,869 2,793,755 7,311,754 822,797 160,746 - 11,702,921 Charge for the year - 94,852 472,617 1,167,025 131,473 7,844 - 1,873,811 Losses recognised in profit or loss - - (884) (6,699) (215) - - (7,798) Disposals - - - (51,824) (83,999) (180) - (136,003) Transfers - (5,735) - - - - - (5,735) As at 31st March 2017 - 702,986 3,265,488 8,420,256 870,056 168,410 - 13,427,196

As at 1st April 2017 - 702,986 3,265,488 8,420,256 870,056 168,410 - 13,427,196 Charge for the year - 78,173 615,906 1,405,291 139,261 10,342 - 2,248,973 Disposals - - - (7,638) (43,513) - - (51,151) Transfers - 10,052 77,094 277,927 30,310 (190,336) - 205,047 As at 31st March 2018 - 791,211 3,958,488 10,095,836 996,114 (11,584) - 15,830,065

Carrying Value As at 1st April 2017 10,407,063 1,552,265 2,006,057 6,728,605 381,579 89,852 2,141,986 23,307,407 As at 31st March 2018 11,409,378 1,033,895 4,699,545 7,741,730 304,333 20,530 1,385,212 26,594,623 74 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

Company Improvements Plant & Motor Total to machinery vehicles leasehold In thousands of rupees buildings

Cost / Valuation As at 1st April 2016 4,854 2,707 41,024 48,585 Additions - - - - As at 31st March 2017 4,854 2,707 41,024 48,585

As at 1st April 2017 4,854 2,707 41,024 48,585 Losses recognised in profit or loss - (290) - (290) As at 31st March 2018 4,854 2,417 41,024 48,295

Accumulated depreciation and impairment losses As at 1st April 2016 2,589 2,647 35,051 40,287 Charge for the year 73 57 2,599 2,729 As at 31st March 2017 2,662 2,704 37,650 43,016

As at 1st April 2017 2,662 2,704 37,650 43,016 Losses recognised in profit or loss - (295) - (295) Charge for the year 73 3 2,605 2,681 As at 31st March 2018 2,735 2,412 40,255 45,402

Carrying Value As at 1st April 2017 2,192 3 3,374 5,569 As at 31st March 2018 2,119 5 769 2,893 75 C T Holdings PLC Annual Report 2017/18

13.2 Details of lands

As at 31st March Valuation Land extent Building No. of In thousands of rupees technique area buildings (Sq. ft.) Fair value Change in fair value 2018 2017 2018 2017

C T Holdings PLC

Kandy Technique (1) 170 Perches 9,650 4 537,000 435,500 101,500 -

Negombo Technique (1) 91 Perches 17,500 1 271,125 240,250 30,875 -

Bandarawela Technique (2) 2.8 Acres 30,600 4 607,600 628,000 (20,400) -

Nuwara Eliya Technique (1) 60 Perches 6,500 3 144,568 - - -

Cargills (Ceylon) PLC

Colombo 01 Technique (1) 141 Perches 124,215 1 2,266,075 2,252,000 14,075 -

Colombo 02 Technique (1) 81.5 Perches 20,970 2 774,630 721,600 53,030 -

Canal Row, Technique (2) 15 Perches 12,300 1 284,897 240,500 44,397 - Colombo 01.

Dematagoda Technique (1) 84 Perches - - 288,792 275,792 13,000 -

Cargills Foods Company (Private) Limited

Kandy Technique (2) 88 Perches 25,174 1 1,311,204 1,289,176 22,028 -

Maharagama Technique (1) 145 Perches 15,827 1 508,550 479,500 29,050 -

Nuwara Eliya Technique (1) 57 Perches 9,617 1 212,501 197,882 14,619 -

Mattakuliya (111) Technique (2) 330 Perches 80,967 2 719,033 710,371 8,662 -

Kohuwala Technique (1) 29 Perches 6,225 1 104,600 100,000 4,600 -

Mattakuliya (141) Technique (1) 288 Perches 44,469 4 446,000 439,200 6,800 -

Gampaha Technique (1) 82.6 Perches 39,565 - 123,900 72,175 51,725 -

Moratuwa Technique (1) 78.6 Perches - - 250,103 249,600 503 -

Ingiriya (A,C,D,B1) Technique (1) 26 Acres - - 243,000 - (6,598) -

Cargills Quality Foods Limited

Mattakuliya Technique (1) 1.3 Acres 16,517 - 363,400 342,000 21,400 -

Ja - Ela Technique (1) 5.1 Acres 38,381 - 319,575 291,470 28,105 -

Ja - Ela Technique (1) 4 Acres 28,976 - 93,050 72,400 20,650 -

Cargills Agrifoods Limited

Katana Technique (1) 11.3 Acres 66,624 - 314,280 269,000 45,280 - 76 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

As at 31st March Valuation Land extent Building No. of In thousands of rupees technique area buildings (Sq. ft.) Fair value Change in fair value 2018 2017 2018 2017

Millers Limited

Kelaniya Technique (1) 1.5 Acres 55,770 2 214,500 185,250 29,250 -

C P C Lanka Limited

Katoolaya Estate, Technique (1) 4 Acres 16,706 1 14,350 12,100 2,250 - Thawalantenne.

Kotmale Dairy Products (Private) Limited

Mulleriyawa Technique (1) 1.7 Acres 28,862 3 124,430 78,500 45,930 -

Bogahawatta Technique (1) 1 Acres 8,764 6 21,600 20,000 1,600 -

Kuduoya Estate, Technique (1) 17.4 Acres 12,479 4 56,000 51,399 4,601 - Ruwanpura, Hatton.

Cargills Quality Dairies (Private) Limited

Mirigama, Technique (1) 49.8 Perches - - 7,000 6,000 1,000 - Baduragoda.

The Empire Investments Company (Private) Limited

Bandarawela Technique (1) 85 Perches 4,230 1 341,865 347,000 (5,135) -

Katubedda Technique (1) 1.15 Acres 3,500 - 445,750 400,398 45,352 -

Total 11,409,378 10,407,063 608,149 -

Change in fair value is made up as follows

Amounts recognised in other comprehensive income 653,499 -

Amounts recognised in profit or loss (45,350) -

Total 608,149 -

13.2 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. 77 C T Holdings PLC Annual Report 2017/18

(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) 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) Key unobservable inputs: Valuation technique (1) : - market comparable approach Unobservable input - Market value per perch

Valuation technique (2) : - income capitalisation method Unobservable inputs - Estimated rental value (ERV), Equivalent yield

13.3 If revalued freehold land recorded under property, plant and equipment were stated on the historical cost basis, the carrying amounts would be as follows:

In thousands of rupees Group As at 31st March 2018 2017

Freehold land 6,313,199 6,063,601 78 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

13.4 Leased assets capitalised in property, plant and equipment In thousands of rupees Capitalised Accumulated Carrying value As at 31st March Amount Amortisation 2018 2017

Group Improvements to leasehold buildings 8,658,033 (3,958,488) 4,699,545 2,006,057

13.5 Security The details of assets mortgaged for banking facilities obtained have been given in the note 25.4 to the financial statements.

13.6 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) Property, plant and equipment under construction consists of expenditure incurred on projects where operations had not commenced as at the reporting date.

13.7 Other information Property, plant and equipment of the Group and the Company included: In millions of rupees Group Company As at 31st March 2018 2017 2018 2017

Fully depreciated assets 3,209.89 2,798.57 33.03 33.03

14. Prepaid lease rentals to acquire rights to use lands Please refer accounting policy in Note 3.19.3. In thousands of rupees Group Company As at 31st March 2018 2017 2018 2016

Cost As at 1st April 201,572 48,223 - - Additions - 153,349 - - As at 31st March 201,572 201,572 - -

Accumulated amortisation As at 1st April 15,295 10,947 - - Change for the year 6,046 4,348 - - As at 31st March 21,341 15,295 - - 180,231 186,277 - -

Carrying value Current portion 6,032 6,032 - - Non-current portion 174,199 180,245 - - 180,231 186,277 - - 79 C T Holdings PLC Annual Report 2017/18

15. Investment Properties Please refer accounting policies in Note 3.13. In thousands of rupees Group Company As at 31st March 2018 2017 2018 2017

15.1 Reconciliation of Carrying Amount As at 1st April 10,524,586 9,828,265 1,447,550 1,443,250 Improvements during the year - 320 - - Re-classification from / (to) property, plant and equipment (144,568) 295,092 - - Transfer to profit or loss - (23,865) - - Change in fair value 371,587 424,774 112,743 4,300 Disposal (3,144,580) - - - At 31st March 7,607,025 10,524,586 1,560,293 1,447,550

Investment properties 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.

15.2 Measurement of fair values (a) Valuation process The valuations of investment properties 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 2 and 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) 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. 80 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

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 Location Land extent Building No. of Valuation In thousands of rupees of the area (sq. buildings technique property ft.) Fair value Change in fair value 2018 2017 2018 2017

Company:- C T Holdings PLC Land Nuwara Eliya 60 Perches 6,500 3 Technique (1) - 139,300 5,268 6,300 Company:- Cargills (Ceylon) PLC Land Colombo 02 78 Perches 5,146 1 Technique (1) 666,855 647,600 41,912 19,800 Commercial Jaffna Leasehold 99,164 1 Technique (2) 188,646 173,510 (7,522) (1,579) property Company:- Millers Limited Bare land Nittambuwa 112 Perches - - Technique (1) 128,450 118,875 9,575 16,625 Company:- Dawson Office Complex (Private) Limited Land Colombo 02 1.5 Acres 21,070 2 Technique (1) - 2,344,300 - 90,500 Bare land Colombo 02 94 Perches - - Technique (1) - 800,280 - 28,080 Company:- C T Land Development PLC Commercial Colombo 04 257 Perches 277,514 - Technique (2) 3,505,446 3,306,764 198,683 188,817 property Company:- C T Real Estate (Private) Limited Bare land Piliyandala 114 Perches - - Technique (1) 79,800 71,200 8,600 6,888 Commercial Piliyandala 154.9 Perches 23,985 2 Technique (2) 114,418 116,057 (1,639) (2,265) property Company:- C T Properties Lakeside (Private) Limited Bare land Boralesgamuwa 43 Acres 11,400 1 Technique (1) 1,200,000 1,200,000 - - Company:- C T Properties G S (Private) Limited Bare land Kotahena 199.6 Acres - - Technique (1) 1,398,600 1,298,700 99,900 58,700 Company:- Frederick North Hotel Company (Private) Limited Bare land Boralasgamuwa 2.5 Acres 23,168 4 Technique (1) 324,810 308,000 16,810 12,908 Total 7,607,027 10,524,586 371,587 424,774 81 C T Holdings PLC Annual Report 2017/18

Company Description Location Land extent Building No. of Valuation In thousands of rupees of the area (sq. buildings technique Fair value Change in fair value property ft.) 2018 2017 2018 2017 Land Kandy 170 Perches 9,650 4 Technique (1) 537,000 447,000 90,000 8,500 Land Negombo 91.0 Perches 17,500 1 Technique (1) 271,125 240,250 30,875 (3,500) Commercial Bandarawela 2.8 Acres 30,600 4 Technique (2) 607,600 621,000 (13,400) (7,000) property Land Nuwara Eliya 60 Perches 6,500 3 Technique (1) 144,568 139,300 5,268 6,300 Total 1,560,293 1,447,550 112,743 4,300

(e) Key unobservable inputs: Valuation technique (1) : - market comparable approach Unobservable input - Market value per perch

Valuation technique (2) : - income capitalisation method Unobservable inputs - Estimated rental value (ERV), Equivalent yield

(f) Income and expense During the year ended 31st March 2018 Rs. 532.85 Mn (2017: 549.45 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. 198.37 Mn (2017: Rs. 195.02 Mn). The Group did not incur any direct operating expenses arising from investment properties that did not generate rental income (2017: Nil).

(g) Restrictions and obligations As at 31st March 2018 there were no restrictions on the realisability of investment property or the remittance of income and proceeds of disposal (2017: 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 2018, the said land is stated at its previous revalued amount in the financial statements. 82 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

16. Intangible assets and goodwill Please refer accounting policies in Note 3.12 and 3.17.2. Group Company In thousands of rupees Goodwill Trademarks Computer Total Goodwill and Software As at 31st March Licenses

Cost As at 1st April 2016 1,229,723 184,173 117,471 1,531,367 688,467 Additions 93,504 11,694 173,471 278,669 - As at 31st March 2017 1,323,227 195,867 290,942 1,810,036 688,467

As at 1st April 2017 1,323,227 195,867 290,942 1,810,036 688,467 Additions - 41,776 50,928 92,704 - As at 31st March 2018 1,323,227 237,643 341,870 1,902,740 688,467

Accumulated amortisation / impairment losses As at 1st April 2016 71,746 94,109 45,403 211,258 - Recognised during the year - 14,537 56,561 71,098 - As at 31st March 2017 71,746 108,646 101,964 282,356 -

As at 1st April 2017 71,746 108,646 101,964 282,356 - Recognised during the year - 19,547 90,249 109,796 - As at 31st March 2018 71,746 128,193 192,213 392,152 -

Net carrying value As at 1st April 2017 1,251,481 87,221 188,978 1,527,680 688,467 As at 31st March 2018 1,251,481 109,450 149,657 1,510,588 688,467

16.1 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 As at 31st March 2018 2017

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. 83 C T Holdings PLC Annual Report 2017/18

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.

17. Investments in subsidiaries Please refer accounting policies in Note 3.1.

17.1 Investments in subsidiaries - Company

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

2018 2017 2018 2017

Quoted subsidiary companies

Cargills (Ceylon) PLC R & WD 70.20% 70.20% 168,763 168,763

C T Land Development PLC Real estate 67.86% 67.86% 513,913 513,913

682,676 682,676

Un-quoted subsidiary companies

C T Properties Limited Real estate 73.61% 73.61% 1,831,850 1,831,850

Ceylon Theatres (Private) Limited Entertainment 55.00% 55.00% 165,432 165,432

1,997,282 1,997,282

Less: Provision for impairment

As at 1st April (464,710) (361,665)

Impairment recognised during the year (13,355) (103,045)

As at 31st March (478,065) (464,710)

Total 2,201,893 2,215,248

There is no significant restriction on the Company’s or its subsidiaries’ ability to access or use the assets and settle the liabilities of the Group. 84 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

Impairment of investment Details of the respective amounts of impairment of investment in subsidiaries recognised in the profit / (loss) under other expenses is stated below.

In thousands of rupees Company As at 31st March 2018 2017

Carrying amount 1,831,850 1,831,850 Less: Recoverable amount (1,353,785) (1,367,140) Impairment loss for the Company 478,065 464,710

The method used in calculating recoverable amount is fair value less cost of disposal. The Company’s main assets are investment properties, the fair values of which had been categorised under Level 3 based on the inputs to the valuation technique used.

17.2 Investments in subsidiaries - Group Name of the investee Principal Ownership interest and Total cost of investment activity voting power (in thousands of rupees)

2018 2017 2018 2017

Quoted Subsidiaries Cargills (Ceylon) PLC R & WD 70.20% 70.20% 168,763 168,763 C T Land Development PLC Real estate 67.86% 67.86% 513,913 513,913 682,676 682,676 Sub - subsidiaries Kotmale Holdings PLC FMCG 69.86% 69.86% 1,964,833 1,964,833 1,964,833 1,964,833 Un-quoted Subsidiaries C T Properties Limited Real estate 92.03% 92.03% 2,488,925 2,488,925 Ceylon Theatres (Private) Limited Entertainment 85.54% 85.54% 300,432 300,432 2,789,357 2,789,357 85 C T Holdings PLC Annual Report 2017/18

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

2018 2017 2018 2017

Sub - subsidiaries Cargills Quality Foods Limited FMCG 70.20% 70.20% 1,193,453 1,193,453 Cargills Agrifoods Limited FMCG 70.20% 70.20% 45,630 45,630 C P C Lanka Limited FMCG 70.20% 70.20% 14,200 14,200 Cargills Quality Diaries (Private) Limited FMCG 70.20% 70.20% 75,000 75,000 Cargills Distributors (Private) Limited FMCG 70.20% 70.20% 50,261 50,261 Cargills Food Processors (Private) Restaurants 70.20% 70.20% 213,500 213,500 Limited Cargills Food Services (Private) Limited Restaurants 70.20% 70.20% 160,000 160,000 Millers Limited R & WD 70.20% 70.20% 300,000 300,000 Cargills Foods Company (Private) Limited R & WD 64.58% 64.58% 475,000 475,000 Cargills Quality Confectioneries (Private) FMCG 70.20% 70.20% 1,445,547 1,445,547 Limited Dawson Office Complex (Private) Limited Real estate 70.20% 70.20% 101 2,350,101 Cargills Frozen Products (Pvt) Limited FMCG 70.20% 70.20% 50,250 50,250 Ceylon Agro Development Company FMCG 70.20% 70.20% 160,019 160,019 (Pvt) Ltd C T Property Management Company Real estate 92.03% 92.03% - - (Private) Limited C T Real Estate (Private) Limited Real estate 92.03% 92.03% - - C T Properties Lakeside (Private) Limited Real estate 92.03% 92.03% - - C T Properties GS (Pvt) Ltd Real estate 92.03% 92.03% 615,446 615,446 Kotmale Products Limited FMCG 69.86% 69.86% 185,400 185,400 Kotmale Milk Foods Limited FMCG 69.86% 69.86% - - Kotmale Dairy Products (Private) Limited FMCG 69.86% 69.86% 13,030 13,030 Kotmale Milk Products Limited FMCG 69.86% 69.86% - - Kotmale Marketing (Private) Limited FMCG 69.86% 69.86% - - Frederick North Hotel Company Limited Real estate 70.20% 70.20% 311,000 311,000 The Empire Investments Company Real estate 70.20% 70.20% 776,000 776,000 (Private) Limited 6,083,837 8,433,837 11,520,703 13,870,703

R & WD - Retail & Wholesale Distribution FMCG - Fast Moving Consumer Goods 86 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

17.2.1 Composition of the Group Information about the composition of the Group at the end of the reporting period is as follows: Number of Number of wholly-owned non wholly subsidiaries owned subsidiaries As at 31st March 2018 2017 2018 2017

Retail & wholesale distribution - - 3 3 Real estate - - 9 9 FMCG - - 14 14 Restaurants - - 2 2 Entertainment - - 1 1 - - 29 29

17.3 Non-controlling interest 17.3.1 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 2018 2017 2018 2017

Assets Current assets 19,115,574 15,932,377 326,668 103,872 Non-current assets 33,676,707 33,371,059 4,027,301 3,981,613 Total assets 52,792,281 49,303,436 4,353,969 4,085,485

Liabilities Current liabilities 30,523,915 30,274,672 64,155 72,258 Non-current liabilities 5,448,055 4,656,841 679,764 628,762 Equity 16,820,311 14,371,923 3,610,048 3,384,467 Total liabilities 52,792,281 49,303,436 4,353,967 4,085,487

Equity attributable to : Owners of the Company 11,807,858 10,089,090 2,449,779 2,296,832 Non-controlling interests 5,012,453 4,282,833 1,160,269 1,087,635 16,820,311 14,371,923 3,610,048 3,384,467 87 C T Holdings PLC Annual Report 2017/18

In thousands of rupees Cargills C T Land (Ceylon) PLC Development PLC For the year ended 31st March 2018 2017 2018 2017

Revenue (Including other income) 94,407,480 86,038,249 803,350 847,336 Expenses (91,076,559) (83,754,053) (393,339) (344,516) Profit for the year 3,330,921 2,284,196 410,011 502,820 Other comprehensive income 703,402 (39,554) (3,813) 21,026 Total comprehensive income 4,034,323 2,244,642 406,198 523,846

Profit for the year attributable to: Owners of the Company 2,338,307 1,603,518 278,233 334,061 Non-controlling interests 992,614 680,678 131,778 158,190 Profit for the year 3,330,921 2,284,196 410,011 492,251

Other comprehensive income attributable to : Owners of the Company 493,788 (27,767) (2,588) 12,282 Non-controlling interests 209,614 (11,787) (1,225) 5,816 Other comprehensive income 703,402 (39,554) (3,813) 18,098

Total comprehensive income attributable to: Owners of the Company 2,832,095 1,575,751 275,645 346,343 Non-controlling interests 1,202,228 668,891 130,553 164,006 Total comprehensive income for the year 4,034,323 2,244,642 406,198 510,349

Dividends paid to non-controlling interests 400,512 524,003 54,839 78,927

Details of net cash inflows / (outflows) Net cash inflow from operating activities 3,694,478 3,755,083 227,838 226,657 Net cash inflow / (outflow) from investing activities (681,155) (6,776,934) (32,186) (13,081) Net cash inflow / (outflow) from financing activities (2,177,113) 2,479,307 (168,031) (234,134) Net cash inflow / (outflow) 836,210 (542,544) 27,621 (20,558)

Proportion of ownership interest and voting power held by non-controlling-interest 29.80% 29.80% 32.14% 32.14% 88 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

17.3.2 Issue of shares by subsidiaries - Others (a) Dawson Office Complex (Private) Limited re-purchased 23,500,001 of its shares held by the subsidiary Cargills (Ceylon) PLC at a price of 155.15 per share. The total consideration of this re-purchase amounted to 3,646,025,155.

(b) Cargills Quality Foods Limited transferred its entire shareholding of Cargills Food Processors (Private) Limited (5,700,002 shares) to Cargills (Ceylon) PLC at a consideration of Rs. 61.5 Mn.

(c) Cargills (Ceylon) PLC and C T Land Development PLC, issued ordinary voting shares in the Company credited as fully paid by capitalizing reserves. Please refer note 23.1 for details.

18. Investments in equity accounted investees Please refer accounting policies in Note 3.15.1 and 3.17.1. Ownership interest Total cost of and voting power investment (in thousands of rupees) As at 31st March 2018 2017 2018 2017

Group C T CLSA Holdings Limited 25.81% 25.81% 134,133 117,797 Cinema Entertainments (Private) Limited 30.65% 30.65% 11,334 6,022 Cargills Bank Limited 53.17% 53.17% 6,457,444 6,169,892 6,602,911 6,293,711

Company C T CLSA Holdings Limited 25.81% 25.81% 33,342 33,342 Cinema Entertainment (Private) Limited 16.67% 16.67% 1,375 1,375 Cargills Bank Limited 25.29% 25.29% 2,871,452 2,871,452 2,906,169 2,906,169 89 C T Holdings PLC Annual Report 2017/18

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

In thousands of rupees C T CLSA Cinema Entertainments Cargills Bank Total Holdings Limited (Private) Limited Limited As at / for the year ended 31st March 2018 2017 2018 2017 2018 2017 2018 2017

Profit / (loss) and other comprehensive income Revenue 477,010 297,895 33,882 - 1,616,150 1,798,360 2,127,042 2,096,255 Other income 3,999 6,156 889 - 580,176 54,912 585,064 61,068 Total Expenses (365,339) (247,387) (15,630) - (1,683,467) (1,827,258) (2,064,436) (2,074,645) Profit / (loss) for the year 115,670 56,663 19,141 - 512,859 26,014 647,670 82,677 Other comprehensive income for the year 1,583 (1,869) - - 28,293 (3,715) 29,876 (5,584) Total comprehensive income for the year 117,253 54,794 19,141 - 541,152 22,299 677,546 77,093

Transactions with owners Dividend paid 53,846 24,728 1,809 449 - - 55,655 25,177 Dividends received during the year 13,918 6,382 555 138 600 - 15,072 6,520 Movement due to change in shareholding - - - - - (9,609) - (9,609) Expense on right issue - - - - - (798) - (798)

Balance sheet Total assets 3,703,073 1,333,905 61,441 70,583 32,512,711 21,416,906 36,277,226 22,821,394 Total liabilities (3,183,379) (877,503) (24,462) (50,936) (21,318,380) (10,763,427) (24,526,221) (11,691,866) Net assets 519,695 456,402 36,979 19,647 11,194,331 10,653,479 11,751,005 11,129,528

Percentage of ownership interest as at 31st March 25.81% 25.81% 30.65% 30.65% 53.17% 53.17%

Reconciliation of carrying amount of interests in associates Group’s of share of net assets of associates 134,133 117,797 11,334 6,022 5,951,646 5,664,094 6,097,113 5,787,913 Goodwill - - - 505,798 505,798 505,798 505,798 Carrying amount of interest in associates 134,133 117,797 11,334 6,022 6,457,444 6,169,892 6,602,911 6,293,711

Share of: - Profit / (loss) 29,854 14,625 5,867 - 272,510 8,299 308,231 22,924 - Other comprehensive income 409 (482) - - 15,042 (1,976) 15,451 (2,458) 30,263 14,143 5,867 - 287,552 6,323 323,682 20,466

18.2 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.

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

18.4 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 2017 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 2018 which require any adjustments. 90 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

18.5 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.

19. Other investments Please refer accounting policies in Note 3.15.1 and 3.17.1.

19.1 Other non-current investments Group Company Shares / Units Carrying Value Shares / Units Carrying Value (Numbers) (In thousands of Rs.) (Numbers) (In thousands of Rs.) As at 31st March 2018 2017 2018 2017 2018 2017 2018 2017

Investments in quoted companies Ceylon Printers PLC 118,830 118,830 8,187 6,417 118,830 118,830 8,187 6,417 Office Equipment PLC 163,700 163,700 9,004 9,298 163,700 163,700 9,004 9,298 Paragon (Ceylon) PLC 213,060 213,060 13,423 14,488 213,060 213,060 13,423 14,488 Overseas Realty (Ceylon) PLC 4,500 4,500 81 91 4,500 4,500 81 91 Lanka IOC PLC 525,000 525,000 15,803 15,925 325,000 325,000 9,783 9,425 Hotel Developers (Lanka) PLC 27,700 27,700 - 27,700 27,700 - - The HDFC Bank of Sri Lanka 70,000 70,000 2,345 2,513 70,000 70,000 2,345 2,513 Lanka Walltiles PLC 1,499,628 1,499,628 147,563 139,465 1,499,628 1,499,628 147,563 139,465 Sierra Cables PLC 49,500 49,500 140 147 - - - - Aitken Spence PLC 267,500 267,500 13,535 14,334 - - - - 210,081 202,678 190,386 181,697

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) 25,683,000 24,886,713 311,981 261,847 11,639,590 10,843,303 118,947 109,965 312,081 261,947 119,047 109,965 522,162 464,625 309,433 291,762

19.2 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. 91 C T Holdings PLC Annual Report 2017/18

20. Inventories Please refer accounting policies in Note 3.10. In thousands of rupees Group Company As at 31st March 2018 2017 2018 2016

Raw material and consumables 1,293,681 1,089,397 - - Work-in-progress 50,426 62,798 - - Finished goods 8,146,129 7,018,899 - - Goods in transit 80,430 162,631 - - Food and beverages - restaurant operations 72,319 64,777 - - 9,642,985 8,398,502 - - Less - provision for obsolete and slow moving items (93,838) (58,374) - - 9,549,147 8,340,128 - -

21. Trade and other receivables Please refer accounting policies in Note 3.15.1 and 3.17.1. In thousands of rupees Group Company As at 31st March 2018 2017 2018 2016

Trade receivables (other than from related parties) 2,995,982 2,281,576 287 285 Dues from related parties (Refer note 30.3) 31,055 16,048 11,973 13,128 Current tax asset 860,157 675,907 - - Advances and other receivables 830,996 497,515 163 163 Loans given to employees (Refer note 21.1) 41,305 26,860 - - Prepayments and accrued income 1,387,228 1,361,700 - 571 6,146,723 4,859,606 12,423 14,147 Less : provision for impaired / doubtful debts (Refer note 21.3) (195,989) (185,648) - - 5,950,734 4,673,958 12,423 14,147

21.1 Loans given to employees As at 1st April 26,860 19,694 - - Loans granted during the year 53,131 40,543 - - Less: recoveries (38,686) (33,377) - - As at 31st March 41,305 26,860 - -

21.2 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 29.5.

21.3 Movement in the provision for impaired / doubtful debts As at 1st April 185,648 154,644 - - Impairment losses recognised 10,341 29,652 - - On acquisition of subsidiaries - 1,352 - - As at 31st March 195,989 185,648 - - 92 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

22. Cash and cash equivalents Please refer accounting policies in Note 3.15.1 and 3.17.1. In thousands of rupees Group Company As at 31st March 2018 2017 2018 2017

Cash and bank balances 2,035,865 1,645,781 2,367 4,469 Short term deposits with banks (Refer note 22.1) 1,181,910 855,049 208,470 266,241 Cash and cash equivalents in the statement of financial position 3,217,775 2,500,830 210,837 270,710 Bank overdrafts (Refer note 25) (2,855,771) (3,235,149) - - Cash and cash equivalents in the statement of cash flows 362,004 (734,319) 210,837 270,710

22.1 Short term deposits with bank Re-purchase agreements 169,181 127,318 - - Fixed & other deposits 1,012,729 727,731 208,470 266,241 1,181,910 855,049 208,470 266,241

23. Stated capital - ordinary shares Please refer accounting policies in Note 3.16. In thousands of rupees Group Company As at 31st March 2018 2017 2018 2017

Issued and fully paid shares Issued ordinary shares as at 1st April 3,194,008 3,194,008 3,194,008 3,194,008 Issued for the year (Refer note 23.1) 3,295,750 - 3,295,750 - Issued ordinary shares as at 31st March 6,489,758 3,194,008 6,489,758 3,194,008

No. of shares in issue Issued ordinary shares as at 1st April 183,097 183,097 183,097 183,097 Issued for the year (Refer note 23.1) 18,310 - 18,310 - 201,407 183,097 201,407 183,097

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.

23.1 Capitalisation share issue The shareholders of the Company, at an Extra Ordinary General Meeting of the Company held on 20th March 2018, approved the issue of 18,309,725 ordinary voting shares in the Company credited as fully paid by capitalizing a sum of Rs. 3,295,750,500 from and out of the Reserves of Rs 4,414,580,084 of the Company in the proportion of One (01) share for every Ten (10) shares held as at the Entitlement Date, at a consideration of Rs 180.00 per share. The new shares, rank Pari Passu in all respects with the existing issued ordinary shares of the Company, including the right to participate in any dividend declared after the date of allotment. All Shareholders appearing in the Central Depository Systems (Pvt) Ltd (CDS) and the Shareholders Register maintained by the Company as at end of trading on 20th March 2018 were allotted the capitalised shares as mentioned above. Consequent to this share issue the stated capital of the Company at the balance sheet date amounted to Rs. 6,489,758,332 (2017 - Rs. 3,194,007,832) comprising 201,406,978 ordinary (voting) shares (2017 – 183,097,253).

On the same day, at Extra Ordinary General Meeting of the Companies concerned, the shareholders of Cargills (Ceylon) PLC and C T Land Development PLC also approved the following share issues – 93 C T Holdings PLC Annual Report 2017/18

(a) The issue of 31,999,927 ordinary voting shares in the Cargills (Ceylon) PLC, credited as fully paid by capitalizing a sum of Rs. 6,399,985,400 lying in the reserves of the Company in the proportion of One (01) share for every Seven (07) shares held as at the Entitlement Date, at a consideration of Rs. 200.00 per share.

(b) The issue of 32,500,000 ordinary voting shares in the C T Land Development PLC, credited as fully paid by capitalizing a sum of Rs. 1,495,000,000 lying in the reserves of the Company in the proportion of Two (02) shares for every Three (03) shares held as at the Entitlement Date, at a consideration of Rs 46.00 per share.

The new shares, rank Pari Passu in all respects with the existing issued ordinary shares of the Company, including the right to participate in any dividend declared after the date of allotment. All Shareholders appearing in the Central Depository Systems (Pvt) Ltd (CDS) and the Shareholders Register maintained by the Company as at end of trading on 20th March 2018 were allotted the capitalised shares as mentioned above.

In thousands of rupees For the year ended 31st March 2018

The movement in reserves due to the capitalisation of reserves of the Company. Revaluation reserve 74,999 General reserve 213,538 Retained earnings 3,007,213 To Share Capital 3,295,750

The movement in reserves due to the capitalisation of reserves of the subsidiary Companies. Revaluation reserve 2,772,338 General reserve 153,682 To Retained earnings 2,926,020

24. Reserves In thousands of rupees Group Company As at 31st March 2018 2017 2018 2017

Revaluation reserve (Refer note 24.1) 1,771,050 4,127,957 - 74,999 Available for sale reserve (Refer note 24.2) 119,194 87,996 120,515 110,977 General reserve (Refer note 24.3) - 367,220 - 213,538 1,890,244 4,583,173 120,515 399,514

24.1 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.

A sum of Rs. 2,847.34 Mn was transferred from revaluation reserve during the year persuant to the share issue mentioned in Note 23.1. 94 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

24.2 Available for sale reserve The Available for sale reserve represents the cumulative gains and losses arising on the revaluation of available-for-sale financial assets that have been recognised in other comprehensive income, net of amounts re-classified to profit or loss when those assets have been disposed of or are determined to be impaired.

24.3 General reserve General reserve represents the amounts set aside by the Directors for general application.

A sum of Rs. 367.22 Mn was transferred from general reserve during the year persuant to the share isue is mentioned in Note 23.1.

25. Borrowings Please refer accounting policies in Note 3.15 and 3.19. In thousands of rupees Group Unsecured – measured Secured – measured Total at amortised cost at amortised cost As at 31st March 2018 2017 2018 2017 2018 2017

Non-current liabilities Loans from banks - - 38,332 - 38,332 - Finance lease liabilities - - 1,546 2,569 1,546 2,569 - - 39,878 2,569 39,878 2,569

Current liabilities Current portion of secured bank loans - - 10,001 198,300 10,001 198,300 Current portion of finance lease liabilities - - 1,024 921 1,024 921 Other short term loans from banks 9,678,036 10,981,009 2,135,000 1,400,000 11,813,036 12,381,009 Bank overdrafts 1,230,001 3,180,953 1,625,770 54,196 2,855,771 3,235,149 10,908,037 14,161,962 3,771,795 1,653,417 14,679,832 15,815,379

Total liabilities Secured bank loans (Refer note 25.1) - - 48,333 198,300 48,333 198,300 Finance lease liabilities (Refer note 25.2) - - 2,570 3,490 2,570 3,490 Other short term bank loans (Refer note 25.4-b) 9,678,036 10,981,009 2,135,000 1,400,000 11,813,036 12,381,009 Bank overdrafts (Refer note 25.4-c) 1,230,001 3,180,953 1,625,770 54,196 2,855,771 3,235,149 10,908,037 14,161,962 3,811,673 1,655,986 14,719,710 15,817,948 95 C T Holdings PLC Annual Report 2017/18

In thousands of rupees Group As at 31st March 2018 2017

25.1 Secured bank loans As at 1st April 198,300 735,829 Loans obtained during the year 50,000 - Repayments during the year (199,967) (537,529) As at 31st March 48,333 198,300

Non-current portion of secured bank loans 38,332 - Current portion of secured bank loans 10,001 198,300 48,333 198,300

25.2 Finance lease liabilities As at 1st April 4,158 - On acquisition of subsidiaries - 6,404 Repayments during the year (1,246) (2,246) As at 31st March 2,912 4,158 Less: Finance charges allocated to future periods (342) (668) Net liability 2,570 3,490

Non-current portion of finance lease liabilities 1,546 2,569 Current portion of finance lease liabilities 1,024 921 2,570 3,490

25.3 Information about the Group’s exposure to risks is covered in Note 29.4.

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

25.4 (a) Loans from banks

Financial Institution Security Repayment Terms Nominal Currency In thousands of rupees and Maturity Interest Rate Principal Amount Value outstanding

Ceylon Theatres (Private) Limited

Commercial Bank PLC Corporate guarantee 59 equal monthly AWPLR+2% LKR 50,000 48,333 of Rs 50 Mn from C T instalments of Rs Holdings PLC. 833,400 each and Rs 829,400/- together with interets after grace period of 3 months.

Company total - Ceylon Theatres (Private) Limited 48,333

Total - Loans from banks 48,333 96 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

25.4 (b) Other short term loans from banks

Financial Institution Security Repayment Nominal Interest Currency In thousands of rupees Terms and Rate Principal Amount Maturity Value outstanding

Cargills (Ceylon) PLC

Commercial Bank of Corporate guarantee Payable on 1-12 months, LKR 1,500,000 1,055,000 Ceylon PLC for Rs 50 Mn from C T demand based on the Holdings PLC. prevailing market rates

Seylan Bank PLC No security provided Payable on 1-3 months, based LKR 1,000,000 - demand on the prevailing market rates

Hatton National Bank No security provided Payable on 1-4 months, LKR 2,000,000 - PLC demand based on weekly AWPLR+0.75%

Sampath Bank PLC No security provided Payable on 1-6 months, based LKR 1,800,000 880,000 demand on the prevailing market rates

Nations Trust Bank PLC No security provided Payable on 1-3 months, based LKR 2,800,000 1,060,000 demand on the prevailing market rates

Bank of Ceylon No security provided Payable on 1-12 months, LKR 1,500,000 - demand based on the prevailing market rates

Company total - Cargills (Ceylon) PLC 2,995,000

Cargills Foods Company (Private) Limited

Standard Chartered No security provided Payable on 1-4 months, based LKR 2,100,000 1,999,679 Bank demand on the prevailing market rates

Bank of Ceylon No security provided Payable on 1-12 months, LKR 500,000 500,000 demand based on the prevailing market rates

Hatton National Bank No security provided Payable on 1-4 months, LKR 1,250,000 1,075,000 PLC demand based on weekly AWPLR+0.75%

Commercial Bank of Corporate guarantee of Payable on 1-12 months, LKR 950,000 950,000 Ceylon PLC Rs 250 Mn from Cargills demand based on the (Ceylon) PLC prevailing market rates 97 C T Holdings PLC Annual Report 2017/18

Financial Institution Security Repayment Nominal Interest Currency In thousands of rupees Terms and Rate Principal Amount Maturity Value outstanding

ICICI Bank Limited No security provided Payable on 1-3 months, LKR 600,000 600,000 demand based on monthly LIBOR+0.95% p. a.

Company total - Cargills Foods Company (Private) Limited 5,124,679

Cargills Food Services (Private) Limited

Commercial Bank PLC No security provided Payable on 1 month,based LKR 75,000 - demand on the prevailing market rates

Company total - Cargills Food Services (Private) Limited -

Cargills Quality Confectioneries (Private) Limited

Hatton National Bank Corporate guarantee for Payable on 1-4 months, LKR 200,000 65,000 PLC Rs. 200 Mn from Cargills demand based on weekly (Ceylon) PLC AWPLR+0.75%

Commercial Bank of No security provided Payable on 1-12 months, LKR 10,000 10,000 Ceylon PLC demand based on the prevailing market rates

Company total - Cargills Quality Confectioneries (Private) Limited 75,000

Cargills Quality Dairies (Private) Limited

Standard Chartered No security provided Payable on 1-12 months, LKR 1,200,000 825,000 Bank demand based on the prevailing market rates

Hatton National Bank No security provided Payable on 1-4 months, LKR 1,750,000 1,675,000 PLC demand based on weekly AWPLR+0.75%

Company total - Cargills Quality Dairies (Private) Limited 2,500,000

Cargills Quality Foods Limited

Standard Chartered No security provided Payable on 1-6 months, based LKR 600,000 400,000 Bank demand on the prevailing market rates

Hatton National Bank No security provided Payable on 1-4 months, LKR 750,000 567,357 PLC demand based on weekly AWPLR+0.75% 98 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

Financial Institution Security Repayment Nominal Interest Currency In thousands of rupees Terms and Rate Principal Amount Maturity Value outstanding

Commercial Bank of No security provided Payable on 1-12 months, LKR 70,000 70,000 Ceylon PLC demand based on the prevailing market rates

Company total - Cargills Quality Foods Limited 1,037,357

Millers Limited

Standard Chartered Corporate guarantee Payable on 1-4 months, based LKR 250,000 - Bank of Rs. 250.0 Mn from demand on the prevailing Cargills (Ceylon) PLC market rates

Commercial Bank of Corporate Guarantee for Payable on 1-12 months, LKR 200,000 65,000 Ceylon PLC Rs. 215 Mn from Cargills demand based on the (Ceylon) PLC prevailing market rates

Hatton National Bank Corporate Guarantee for Payable on 1-4 months, LKR 175,000 - PLC Rs. 335 Mn from Cargills demand based on weekly (Ceylon) PLC AWPLR+0.75%

Company total - Millers Limited 65,000

Ceylon Agro Development Company (Private) Limited

Hatton National Bank No security provided Payable on 1-4 months, LKR - 16,000 PLC demand based on weekly AWPLR+0.75%

Company total - Ceylon Agro Development Company (Private) Limited 16,000

Kotmale Dairy Products (Private) Limited

Bank of Ceylon Corporate guarantee Payable on Based on the LKR 40,000 - from Kotmale Holdings demand prevailing market PLC. Mortgage over rates stocks and book Bank of Ceylon Payable on Based on the LKR 40,000 - debtors. demand prevailing market rates

Company total - Kotmale Dairy Products (Private) Limited - 99 C T Holdings PLC Annual Report 2017/18

Financial Institution Security Repayment Nominal Interest Currency In thousands of rupees Terms and Rate Principal Amount Maturity Value outstanding

Kotmale Milk Products Limited

Pan Asia Bank Corporate guarantee Payable on Based on the LKR 5,000 - Corporation Limited from Kotmale Holdings demand prevailing market PLC rates

Pan Asia Bank Corporate guarantee Payable on Based on the LKR 20,000 - Corporation Limited from Kotmale Holdings demand prevailing market PLC rates

Company total - Kotmale Milk Products Limited -

Total - Other short term bank loans 11,813,036

25.4 (c) Bank overdrafts

Cargills Ceylon PLC

Commercial Bank PLC Corporate guarantee Payable on Based on monthly LKR 200,000 25,945 from C T Holdings PLC demand AWPLR+1.0% p. a.

Seylan Bank PLC No security provided Payable on Based on weekly LKR 100,000 - demand AWPLR+2.5% p.a.

Nations Trust Bank PLC No security provided Payable on Based on weekly LKR 200,000 - demand AWPLR+1.0% p. a.

Deutsche Bank No security provided Payable on Based on the LKR 45,000 21,842 demand prevailing market rates

Muslim Commercial No security provided Payable on Based on the LKR 675,000 - Bank Limited demand prevailing market rates

Sampath Bank PLC No security provided Payable on Based on monthly LKR 100,000 - demand AWPLR+1.0% p. a.

Company total - Cargills Ceylon PLC 47,787 100 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

Financial Institution Security Repayment Nominal Interest Currency In thousands of rupees Terms and Rate Principal Amount Maturity Value outstanding

Cargills Foods Company (Private) Limited

Cargills Bank Limited No security provided* Payable on Based on the LKR - 333,380 demand prevailing market rates

Deutsche Bank No security provided Payable on Based on the LKR 500,000 418,425 demand prevailing market rates

Commercial Bank PLC Corporate guarantee Payable on Based on monthly LKR 50,000 379,962 from Cargills (Ceylon) demand AWPLR+0.1% p.a. PLC

Bank of Ceylon No security provided Payable on Based on monthly LKR 115,000 89,146 demand AWPLR+0.5% p.a.

Company total - Cargills Foods Company (Private) Limited 1,220,913

Cargills Agrifoods Limited

Commercial Bank PLC Corporate guarantee for Payable on AWPLR+1% LKR 150,000 123,211 Rs. 155 Mn from Cargills demand (Ceylon) PLC

Cargills Bank Limited No security provided* Payable on Market rate LKR - 27,129 demand

Company total - Cargills Agrifoods Limited 150,340

Cargills Food Processors (Private) Limited

Cargills Bank Limited No security provided* Payable on Market rate LKR - 135,385 demand

Deutsche Bank No security provided Payable on Market rate LKR 100,000 23,301 demand

Commercial Bank PLC Corporate guarantee for Payable on Based on monthly LKR 100,000 58,364 Rs. 50 Mn from Cargills demand AWPLR+1% (Ceylon) PLC

Company total - Cargills Food Processors (Private) Limited 217,050 101 C T Holdings PLC Annual Report 2017/18

Financial Institution Security Repayment Nominal Interest Currency In thousands of rupees Terms and Rate Principal Amount Maturity Value outstanding

Cargills Food Services (Private) Limited

Deutsche Bank No security provided Payable on Based on the LKR 5,000 925 demand prevailing market rates

Hatton National Bank No security provided Payable on Based on the LKR - 8 PLC demand prevailing market rates

Commercial Bank PLC No security provided Payable on 1 month,based LKR 75,000 54,000 demand on the prevailing market rates

Commercial Bank PLC No security provided Payable on Based on the LKR - 5,670 demand prevailing market rates

Company total - Cargills Food Services (Private) Limited 60,603

C P C (Lanka) Limited

Cargills Bank Limited No security provided* Payable on Based on the LKR - 5,867 demand prevailing market rates

Company total - C P C (Lanka) Limited 5,867

Cargills Quality Confectioneries (Private) Limited

Commercial Bank PLC Corporate guarantee for Payable on Based on monthly LKR 90,000 23,048 Rs. 150 Mn from demand AWPLR+1% p. a. Cargills (Ceylon) PLC”

Company total - Cargills Quality Confectioneries (Private) Limited 23,048

Cargills Quality Dairies (Private) Limited

Commercial Bank PLC Corporate guarantee for Payable on Based on monthly LKR 250,000 163,513 Rs. 70 Mn from Cargills demand AWPLR+1% p. a. (Ceylon) PLC

Seylan Bank PLC No security provided Payable on Based on monthly LKR 200,000 13,589 demand AWPLR+2.5% p. a.

Cargills Bank Limited No security provided* Payable on Based on the LKR - 127,651 demand prevailing market rates 102 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

Financial Institution Security Repayment Nominal Interest Currency In thousands of rupees Terms and Rate Principal Amount Maturity Value outstanding

Deutsche Bank No security provided Payable on Based on the LKR 100,000 83,779 demand prevailing market rates

Company total - Cargills Quality Dairies (Private) Limited 388,532

Cargills Quality Foods Limited

Commercial Bank of Corporate guarantee for Payable on Based on monthly LKR 80,000 177,829 Ceylon PLC Rs125 Mn From Cargills demand AWPLR+1% p. a. (Ceylon) PLC

Deutsche Bank No security provided Payable on Based on the LKR 350,000 340,689 demand prevailing market rates

Hatton National Bank No security provided Payable on Based on weekly LKR - 41 PLC demand AWPLR+0.75%

Company total - Cargills Quality Foods Limited 518,559

Millers Limited

Cargills Bank Limited No security provided* Payable on Based on the LKR - 12,210 demand prevailing market rates

Deutsche Bank No security provided Payable on Based on the LKR 200,000 149,822 demand prevailing market rates

Company total - Millers Limited 162,032

Ceylon Agro Development Company (Private) Limited

Cargills Bank Limited No security provided* Payable on Based on the LKR - 33 demand prevailing market rates

Company total - Ceylon Agro Development Company (Private) Limited 33 103 C T Holdings PLC Annual Report 2017/18

Financial Institution Security Repayment Nominal Interest Currency In thousands of rupees Terms and Rate Principal Amount Maturity Value outstanding

Kotmale Dairy Products (Private) Limited

Bank of Ceylon Corporate guarantee Payable on Based on the LKR 10,000 - from Kotmale Holdings demand prevailing market PLC. Mortgage over rates stocks and book debtors

Seylan Bank PLC No security provided Payable on Based on the LKR - 28,764 demand prevailing market rates

Company total - Kotmale Dairy Products (Private) Limited 28,764

C T Land Development PLC

Commercial Bank of Negative Pledge to Payable on Market rate LKR 100,000 2,268 Ceylon PLC be executed over the demand “Majestic city” property at No 10 Station Road Colombo 04.

Company total - C T Land Development PLC 2,268

Ceylon Theatres (Private) Limited

Commercial Bank of Corporate guarantee Payable on AWPLR+1% LKR 25,000 29,975 Ceylon PLC of Rs. 25 Mn from C T demand Land Development PLC.

Company total - Ceylon Theatres (Private) Limited 29,975

Total - Bank overdrafts 2,855,771

* These overdrawn balances represent un-presented cheques. Bank balance is in credit. ** AWPLR weekly as at 31st March 2018 was 11.55% 104 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

26. Employee benefits Please refer accounting policies in Note 3.5. In thousands of rupees Group Company As at 31st March 2018 2017 2018 2017

26.1 Movement in defined benefit liability Balance as at 1st April 828,996 694,345 15,504 14,410

Amounts recognised in profit or loss Current service cost 94,404 80,042 952 759 Interest cost 94,369 72,625 1,546 1,441 188,773 152,667 2,498 2,200

Amounts recognised in other comprehensive income Actuarial (gain)/loss 66,267 34,191 2,111 (1,106) 66,267 34,191 2,111 (1,106)

Other Benefit paid (76,125) (56,117) - - On acquisition of subsidiary - 3,910 - - (76,125) (52,207) - - Balance as at 31st March 1,007,911 828,996 20,113 15,504

(a) 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.

(b) Actuarial assumptions i The following were the principal actuarial assumptions at the reporting date Group Company As at 31st March 2018 2017 2018 2017

Discount rate 10% - 11% 10.5% - 12% 10.00% 10.00% Future salary growth 10% - 12.5% 7.50% - 10% 7.50% 7.50%

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. 105 C T Holdings PLC Annual Report 2017/18

ii 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.

Group Company As at 31st March 2018 2017 2018 2017

Increase Discount rate (1% movement) (49,272) (38,835) (814) (70) Future salary growth (1% movement) 59,792 47,385 1,006 82

Decrease Discount rate (1% movement) 54,688 43,359 166 81 Future salary growth (1% movement) (54,197) (43,187) (957) (72)

26.2 Share-based payment arrangements of subsidiaries i Description of share-based payment arrangements An Employee Share Option Scheme (ESOS) proposed by the Directors of the subsidiary Cargills (Ceylon) PLC (CCP) 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 six million seven hundred and twenty thousand (6,720,000) 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) a first tranche of 3,360,000 options constituting 1.50% of the issued shares of the Company; (b) a second tranche of 1,680,000 options constituting 0.75% of the issued shares of the Company; (c) a third tranche of 1,680,000 options constituting 0.75% of the issued shares of the Company;

Each of the aforesaid tranches would be 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. The first tranche would be issued in three equal sub tranches commencing from 30th September 2017 at a value of Rs. 211.40 per share. The second tranche would be issued in three equal sub tranches commencing from 31st July 2019 at a value of Rs. 196.95 per share.

Subsequent to the adoption of the ESOS, the shareholders of CCP approved the issue of 31,999,927 shares (net of fractional shares) in the Company, to the shareholders of the Company credited as fully paid by capitalizing a sum of Rs 6,399,985,400 lying in the reserves of the Company in the proportion of One (01) share for every Seven (07) shares held as at the entitlement date, at a consideration of Rs. 200.00 per share.

Consequent to this share issue, the number of options granted and the exercise price has changed as follows – (a) Total number of options to be issued – 7,679,997 options constituting 3% of the issued shares of the Company; (b) First tranche – 3,839,999 options constituting 1.50% of the issued shares of the Company at an exercise price of Rs. 184.98 (c) Second tranche – 1,919,999 options constituting 0.75% of the issued shares of the Company at an exercise price of Rs. 179.33; (d) Third tranche – 1,919,999 options constituting 0.75% of the issued shares of the Company; 106 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

Each of the aforesaid tranches would be subdivided in to sub tranches with different vesting periods and exercise periods. 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 Vesting conditions Number of Vesting Vesting Date Exercise Period Exercise Tranche options Period Duration

Tranche 1

Sub Tranche 1 Remaining in employment up 1,280,000 3 Months September October 1,2017 to 1 Year & 6 until the vesting date. 30,2017 March 31, 2019 Months

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 Remaining in employment 640,000 1 Year & 4 July 31, 2019 August 1, 2019 to 8 Months up until the vesting date, and Months March 31, 2020 meeting the performance related conditions relating to FY 2018/19.

Sub Tranche 2 640,000 2 Years March 31, 2020 April 1,2020 to 1 Year March 31, 2021

Sub Tranche 3 639,999 3 Years March 31, 2021 April 1,2021 to 1 Year March 31, 2022

Tranche 3

Sub Tranche 1 Remaining in employment 640,000 1 Year & 4 July 31, 2020 August 1, 2020 to 8 Months up until the vesting date, and Months March 31, 2021 meeting the performance related conditions relating to FY 2019/20.

Sub Tranche 2 640,000 2 Years March 31, 2021 April 1, 2021 to 1 Year March 31, 2022

Sub Tranche 3 639,999 3 Years March 31, 2022 April 1,2022 to 1 Year March 31, 2023

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 recognized as the Grant date for all 3 tranches of the ESOS scheme which is 29th June 2017. 107 C T Holdings PLC Annual Report 2017/18

Exercise Price Based on a Grant date of 29th June 2017 the exercise price of Tranche 1 of the ESOS is Rs.184.98 , being the Volume Weighted Average Price (VWAP) of the CCP share during thirty (30) market days immediately prior to the Grant date. ii 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:

Description of the valuation input Tranches 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 CCP share price has been arrived at by taking into consideration share price movements of CCP during the last five year period.

The employees of a subsidiaries of CCL are also entitled for this scheme of its parent as consideration for the services they provide to the subsidiary. In such occations, the arrangement is accounted for as equity-settled in the consolidated financial statements of CCL where the subsidiary in its own separate financial statements measure the services received from its employees in accordance with the requirements of SLFRS 2 applicable to equity-settled share-based payment transactions and recognised the corresponding increase in equity as a capital contribution from the parent. iii Reconciliation of outstanding share options The number and weighted-average exercise prices of share options under the ESOS scheme was as follows :

Number of *WAEP In thousands of options options 2018 2018 (Rs.)

Outstanding as at 1 April - - Forfeited during the year - - Exercised during the year - - Granted during the year 3,840 184.98 Outstanding as at 31 March 3,840 184.98 Exercisable as at 31 March 1,280 184.98

*WAEP - Weighted Average Exercise Price iv Expense recognised in profit or loss For details of the related employee benefit expenses, please refer Note 8. 108 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

27. Deferred income / revenue Please refer accounting policies in Note 3.6.

27.1 Movement In deferred income / revenue In thousands of rupees Grants received Deferred rent Total As at 31st March 2018 2017 2018 2017 2018 2017

Gross As at 1st April 116,907 116,907 55,727 55,727 172,634 172,634 Received during the year ------As at 31st March 116,907 116,907 55,727 55,727 172,634 172,634

Accumulated Amortisation As at 1st April 43,525 32,044 25,502 18,432 69,027 50,476 Amortised during the year 11,481 11,481 13,461 7,070 24,942 18,551 As at 31st March 55,006 43,525 38,963 25,502 93,969 69,027

Net carrying value As at 31st March 61,901 73,382 16,764 30,225 78,665 103,607

27.2 Grants received

Granted By Purpose of the Basis of amortisation In thousands of rupees grant Amount Balance Amortised Balance received as at during the as at 31- 1-Apr-17 year Mar-18

United States Agency for Kilinochchi Based on the 86,664 57,332 (9,074) 48,258 International Development project corresponding expenditure (USAID) and Connecting being incurred Regional Economies (USAID / CORE)

Dehiattakandiya Based on depreciation 23,612 16,050 (2,407) 13,643 project applicable corresponding to the plant & machinery acquired from the grant.

110,276 73,382 (11,481) 61,901 109 C T Holdings PLC Annual Report 2017/18

28. Trade and other payables Please refer accounting policies in Note 3.15.1(iii). In thousands of rupees Group Company As at 31st March 2018 2017 2018 2017

Current Trade creditors (other than from related parties) 9,145,431 8,228,170 249 103 Dues to related parties (Refer note 30.3) 9,165 1,264 3,225 - Accruals, other accounts payable & provisions 4,253,176 4,058,950 9,774 9,720 13,407,772 12,288,384 13,248 9,823

Non current Security deposits (Refer note 28.1) 191,431 179,621 - - Put options written on non-controlling interest (Refer note 28.2) 3,089,325 2,761,159 - - 3,280,756 2,940,780 - - 16,688,528 15,229,164 13,248 9,823

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

28.2 Put options written on non-controlling interest The put option over non-controlling interest relates to the Put Option agreement entered into 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 25th February 2015. Therefore IFC is considered the investor of CFC and non-controlling interest to the Group 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 granter) 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. - Weighted average cost of capital of CCP is 11.9%. - Pricing date is 31st March 2018. - 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 25th February 2015 (which is the share certificate date) to 10th February 2021 (which is assumed as the exercise date). 110 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

29. Financial instruments – Fair values and risk management 29.1 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 Group Company As at 31st March Note 2018 2017 2018 2017

Financial assets Loans and receivables - Trade receivables 21 3,027,037 2,297,624 12,260 13,413 - Other receivables 21 872,301 524,375 163 163 - Cash and Cash equivalents 22 3,217,775 2,500,830 210,837 270,710 Total loans and receivables 7,117,113 5,322,829 223,260 284,286

Available-for-sale financial assets - Other investments 19 522,162 464,625 309,433 291,762 Total available-for-sale financial assets 522,162 464,625 309,433 291,762 Total financial assets 7,639,275 5,787,454 532,693 576,048

Financial liabilities Financial liabilities measured at amortised cost - Borrowings 25 14,719,710 15,817,948 - - - Security deposits 28 191,431 179,621 - - - Trade creditors 28 9,154,596 8,229,434 3,474 103 Total financial liabilities 24,065,737 24,227,003 3,474 103

29.2 Fair Value Hierarchy When measuring the fair value of an asset or a liability, the group uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy as follows:

• Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities; • Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (for example, as prices) or indirectly (for example, derived from prices); and • Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Available-for-sale financial assets (other investments) are classified as Level 1 and there have been no transfers between level 1 and 2 during the current or prior year. 111 C T Holdings PLC Annual Report 2017/18

29.3 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 2018 2017 2018 2017

Debt (long and short term borrowings, excluding derivatives) Borrowings 14,719,710 15,817,948 - - Non-current trade creditors 3,089,325 2,761,159 - - Net debt 17,809,035 18,579,107 - -

Equity (all capital and reserves of the Group that are managed as capital) Stated capital 6,489,758 3,194,008 6,489,758 3,194,008 Reserves 1,890,244 4,583,173 120,515 399,514 Retained earnings 12,277,464 11,016,858 1,089,891 3,986,678 Non-controlling interest 4,239,636 3,405,406 - - Total equity 24,897,102 22,199,445 7,700,164 7,580,200 Total debt and equity 42,706,137 40,778,552 7,700,164 7,580,200

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

29.4 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. 112 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

29.5 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 2018 2017 2018 2017

Trade receivables 3,027,037 2,297,624 12,260 13,413 Other receivables 872,301 524,375 163 163 Cash and cash equivalents 3,217,775 2,500,830 210,837 270,710 Other investments 522,162 464,625 309,433 291,762 7,639,275 5,787,454 532,693 576,048

29.5.1 Trade receivables Trade receivables before provisions for impairments were at the ageing set out below.

Neither past due nor impaired 54,326 16,048 12,259 13,128 1 - 30 days 1,920,050 1,675,252 1 284 31 - 60 days 560,913 331,980 - 1 61 - 90 days 204,453 91,592 - - More than 90 days 287,295 182,752 - - 3,027,037 2,297,624 12,260 13,413

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 21.3.

29.5.2 Cash and cash equivalents The Group held cash and cash equivalents of Rs. 3.2 Bn at 31st March 2018 (2017: Rs. 2.5 Bn). The cash and cash equivalents are held with bank and financial institution counter-parties, with high credit ratings.

29.5.3 Corporate guarantees The Group’s policy is to provide financial guarantees only to subsidiaries. As at 31st March 2018, the Company had issued guarantees to certain banks in respect of credit facilities granted to subsidiaries (refer note 33.1) 113 C T Holdings PLC Annual Report 2017/18

29.6 Liquidity risk Exposure to liquidity risk - Contractual maturities of financial liabilities at the reporting date.

Contractual cash flows In thousands of rupees Within Between Between Between More than Total 1 year 1-2 years 2-3 years 3-5 years 5 years

As at 31st March 2018 Bank overdrafts 2,855,771 - - - - 2,855,771 Secured bank loans 48,333 - - - - 48,333 Other short term bank loans 11,813,036 - - - - 11,813,036 Trade and other payables 13,407,772 191,431 - - 3,089,325 16,688,528 28,124,912 191,431 - - 3,089,325 31,405,668

As at 31st March 2017 Bank overdrafts 3,235,149 - - - - 3,235,149 Secured bank loans 198,300 - - - - 198,300 Other short term bank loans 12,381,009 - - - - 12,381,009 Trade and other payables 12,288,384 179,621 - - 2,761,159 15,229,164 28,102,842 179,621 - - 2,761,159 31,043,622

30. Related parties 30.1 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 2018 was Rs. 8.36 Mn (2017 - Rs. 6.23 Mn). Purchases for re-sale in the ordinary course of business for the year amounted to Rs. 79.98 Mn (2017 - Rs. 68.95 Mn) and rental income earned for the year amounted to Rs. 0.98 Mn (2017 - Rs. 1.08 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. 114 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

30.2 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 other Group companies In thousands of rupees

Related Company Common Directors Transaction 2018 2017

C T Properties Limited Ranjit Page Recovery of (1,513) (1,386) R. Selvaskandan expenditure Louis Page Issue of shares - (784,000)

Joseph Page Settlement - 2,658 Ms. Cecilia Muttukumaru S C Niles

Ceylon Theatres (Private) Limited Louis Page Rent income 3,520 3,469 R. Selvaskandan Joseph Page Settlement (4,712) (13,134) Ms. Cecilia Muttukumaru S C Niles M I Abdul Wahid

Millers Limited M I Abdul Wahid Rent income 21,122 26,958

Settlement (19,362) (26,403)

Cinema Entertainments (Private) Limited R. Selvaskandan Rent income 2,611 2,573

Settlement (2,821) (3,071)

Cargills (Ceylon) PLC L R Page Recovery of (3,225) - V R Page expenditure M I Abdul Wahid 115 C T Holdings PLC Annual Report 2017/18

B. Transactions between Group companies In thousands of rupees

Balance as Net Balance as Purchase Receipt / Interest Dividend at 1-Apr- Amount at 31-Mar- / Sale of Rendering Received / Received / 17 Received / 18 Goods of Services Paid Paid (Paid)

Subsidiary

Cargills (Ceylon) PLC 13,974 874,585 888,559 √ √ √ √

Cargills Foods Company (Private) 99,334 (409,605) (310,271) √ √ √ √ Limited

Cargills Quality Foods Limited 2,317 64,876 67,193 √ √ √ √

Cargills Distributors (Private) - (41) (41) - - - - Limited

Cargills Quality Diaries (Private) 86,974 (38,513) 48,461 √ √ √ √ Limited

Cargills Frozen Products (Private) - (688) (688) - - - - Limited

The Empire Investments Company ------(Private) Limited

Kotmale Holdings PLC (40,958) (37,843) (78,801) - √ √ -

Kotmale Products Limited (137,779) 20,920 (116,859) - - - -

Kotmale Milk Foods Limited (144,383) 7,012 (137,371) - - - -

Kotmale Dairy Products (Private) 332,318 23,576 355,894 √ √ - √ Limited

Kotmale Milk Products Limited (4,885) (11,792) (16,677) - - - -

Cargills Quality Confectioneries 31 (1,971) (1,940) √ √ √ - (Private) Limited

Cargills Agrifoods Limited 3,344 81,730 85,074 √ √ √ √

C P C Lanka Limited 1,014 15,088 16,102 √ √ √ √

Cargills Food Processors (Private) 12,980 (5,773) 7,207 √ √ √ √ Limited 116 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

Balance as Net Balance as Purchase Receipt / Interest Dividend at 1-Apr- Amount at 31-Mar- / Sale of Rendering Received / Received / 17 Received / 18 Goods of Services Paid Paid (Paid)

Cargills Food Services (Private) 818 (307) 511 √ √ √ - Limited

Millers Limited 9,267 8,892 18,159 √ √ √ √

Dawson Office Complex (Private) - (28,834) (28,834) - - √ √ Limited

Ceylon Agro Development - 1 1 √ - - - Company (Private) Limited

C T Land Development PLC 185 (534) (349) - √ - -

Ceylon Theatres (Private) Limited 16,245 (39,749) (23,504) √ √ - √

C T Properties Limited 730,624 (2,641,671) (1,911,047) - - √ -

C T Property Management 1,353 186 1,539 - - - - Company (Private) Limited

C T Real Estate (Private) Limited 350,942 (3,642) 347,300 √ - - -

C T Properties Lakeside (Private) 87,249 722 87,971 - - - - Limited

C T Properties G S (Private) 699,245 (14,385) 684,860 - √ - - Limited

Equity accounted investees

C T CLSA Holdings Limited (159) (91) (250) √ - - -

Cinema Entertainments (Private) 1,979 (10,894) (8,915) - √ - - Limited

Cargills Bank Limited 11,584 16,586 28,170 - √ - - 117 C T Holdings PLC Annual Report 2017/18

30.3 Related party balances In thousands of rupees Group Company As at 31st March 2018 2017 2018 2017

(a) Amount due from subsidiary companies Ceylon Theatres (Private) Limited - - 9,508 10,700 C T Properties Limited - - 487 2,000 Millers Limited - - 1,760 - - - 11,755 12,700

(b) Amount due from other related companies United Hotels Co. Limited 451 856 - - Cargills Bank Limited 28,170 11,584 - - Ceylon Hotels Corporation PLC 450 266 - - Galle Face Hotel Company Limited 890 502 - - Kandy Hotels Company (1938) PLC 1,094 861 - - Cinema Entertainments (Private) Limited - 1,979 218 428 31,055 16,048 218 428 Total amounts due from related companies 31,055 16,048 11,973 13,128

(c) Amounts due to subsidiary companies Cargills (Ceylon) PLC - - 3,225 - - - 3,225 -

(d) Amount due to other related companies CT CLSA Securities (Pvt) Ltd - 638 - - CT CLSA Capital (Pvt) Ltd - 218 - - Comtrust Asset Management (Pvt) Ltd - 249 - - CT CLSA Holdings Ltd - 159 - - Ceylon Printers PLC 250 - - - Cinema Entertainments (Private) Limited 8,915 - - - 9,165 1,264 - - Total amounts due to related companies 9,165 1,264 3,225 -

30.4 Parent Company and ultimate controlling entity Odeon Holdings (Ceylon) (Private) Limited holds 41.81% (2017 – 41.75%) of the ordinary share capital of the Company. 118 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

31. 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.

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

31.2 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 16.1. 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. 119 C T Holdings PLC Annual Report 2017/18 2017 60,987 149,504 (667,462) (460,870) (536,249) (594,872) 5,648,801 5,798,305 2,667,014 3,334,476 1,747,876 2,208,746 1,873,811 1,812,824 (6,055,489) (1,131,121) 91,093,270 85,037,781 Group 2018 66,855 (14,507) (679,424) (405,877) (591,622) (727,586) 6,816,741 6,802,234 3,739,465 4,418,889 2,597,342 3,003,219 2,248,973 2,182,118 (7,176,306) (1,319,208) 99,310,789 92,134,483 - 2017 3,966 31,587 30,874 26,257 51,409 340,352 340,352 - (159) 2018 Entertainment 60,177 (42,394) (38,639) (33,051) 336,159 336,159 2017 10,592 (56,979) (98,776) 563,538 506,559 552,994 330,438 198,196 2018 Real Estate 7,275 96,555 (59,918) 565,115 505,197 1,697,836 1,629,290 1,143,345 - 2017 (4,165) 266,718 162,030 113,746 171,170 3,268,984 3,268,984 - 2018 Restaurants (9,888) 379,343 239,080 167,836 174,685 3,614,482 3,614,482 2017 919,078 645,198 587,704 (242,759) 1,943,319 (5,048,029) 17,850,166 12,802,137 FMCG 2018 825,664 579,621 720,143 (371,592) 2,047,225 (5,659,674) 19,629,448 13,969,774 2017 991,949 (950,480) (194,515) 2,854,183 1,892,056 1,225,349 69,070,229 68,119,749 2018 Distribution Retail & Wholesale (306,538) 2,734,731 1,763,494 1,145,468 1,219,838 (1,456,714) 75,165,585 73,708,871 In thousands of rupees For the year ended 31st March Revenue revenue Gross Eliminations of inter segment revenue External revenue Segment results operating Results from activities Corporate and other un-allocated operating profit Reportable segment profit after tax Results from operating Results from activities Reportable segment profit Reportable segment profit for the year attributable to owners of the parent Corporate and other un-allocated operating profit Net finance expense Corporate and other un-allocated operating profit Corporate and other un-allocated operating profit Depreciation Corporate and other un-allocated operating profit 120 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements 2017 49,562 32,335 180,725 722,950 6,293,711 9,144,089 2,172,286 4,024,219 8,335,388 9,564,176 42,424,934 57,862,734 14,531,893 27,893,041 17,343,293 Group 2018 7,001 30,138 193,153 204,297 6,602,911 9,890,098 2,994,345 5,313,855 9,543,597 6,751,524 45,243,156 61,736,165 17,851,797 27,391,359 20,205,246 - - 366 447 2017 3,519 8,710 61,399 12,069 45,811 325,131 263,732 254,209 - - 518 111 2018 3,363 4,705 7,388 Entertainment 53,035 49,154 393,630 340,595 328,391 - - - - 2017 62,698 174,908 112,210 151,882 547,327 9,445,301 10,319,418 10,144,510 - - - - 2018 Real Estate 273,263 154,080 119,183 193,034 613,996 7,703,367 7,430,104 6,623,074 - - - 59 2017 30,531 65,534 94,682 220,794 124,729 1,320,383 1,099,589 1,004,848 - - - 59 2018 Restaurants 97,158 74,235 311,613 140,220 115,999 895,078 1,322,749 1,011,136 - 60 2017 49,196 23,625 627,821 4,443,334 1,183,096 1,491,863 1,768,375 5,635,150 4,934,448 10,078,484 - 60 FMCG 2018 2,296 38,170 22,750 897,815 4,622,353 1,840,873 1,883,665 5,422,526 5,359,250 10,044,879 - - - 2017 28,724 883,892 118,875 9,631,458 2,249,606 6,497,960 20,381,518 10,750,060 10,602,461 - - - 2018 Distribution 50,017 128,450 Retail & Wholesale 1,844,774 3,164,425 7,582,334 25,778,531 12,591,533 13,186,998 13,008,531 Investments in equity accounted investees Corporate and other un-allocated assets Total assets Total Total segment assets Total Total segment current assets segment current Total Cash and cash equivalents Trade and other receivables Trade Current assets Current Inventories Total segment non-current segment non-current Total assets Deferred tax assets Deferred Other investments Goodwill and other intangible assets Investment properties Prepaid lease rentals to acquire to acquire lease rentals Prepaid rights to use lands Segment assets assets Non-current plant and equipment Property, In thousands of rupees As at 31st March 121 C T Holdings PLC Annual Report 2017/18 2017 2,569 179,621 103,607 474,798 9,822,206 1,995,591 1,971,164 1,210,569 25,841,083 35,663,289 23,869,919 10,125,803 11,748,525 Group 2018 78,664 39,878 191,431 590,652 7,536,812 2,450,715 2,319,124 1,418,499 29,302,251 36,839,063 26,983,127 11,637,045 12,895,367 - - - - - 2017 4,266 4,083 4,083 42,023 37,940 33,674 - - - 2018 4,263 4,980 Entertainment 39,976 59,426 43,312 38,332 146,977 103,665 - 2017 26,879 79,757 30,226 29,647 378,467 271,831 631,001 391,507 179,621 1,009,468 - 2018 Real Estate 2,268 63,607 38,431 16,764 40,189 780,290 104,306 675,984 427,600 191,431 - - - - 2017 92,705 92,705 291,105 173,616 564,607 1,122,033 1,029,328 - - - - 2018 Restaurants 86,264 86,264 277,653 305,990 527,359 1,197,266 1,111,002 - 2017 2,569 73,381 50,410 510,668 384,308 7,418,325 6,907,657 4,330,033 1,071,544 1,506,080 - FMCG 2018 1,546 61,900 64,761 640,922 512,715 8,383,973 7,743,051 4,744,524 1,355,528 1,642,999 - - - 2017 719,286 732,707 342,049 390,658 5,232,834 9,564,407 16,249,234 15,516,527 - - - 2018 Distribution 721,327 872,642 391,920 480,722 Retail & Wholesale 6,572,624 18,793,745 17,921,103 10,627,152 Corporate and other un-allocated liabilities Total liabilities Total Total segment liabilities Total Total segment current liabilities segment current Total Borrowings Current tax liabilities Current Current liabilities Current and other payables Trade Total segment non-current segment non-current Total liabilities Deferred tax liabilities Deferred Trade and other payables Trade Deferred income Deferred Employee benefits Segment liabilities liabilities Non-current Borrowings In thousands of rupees As at 31st March

122 C T Holdings PLC Annual Report 2017/18 Notes to the Financial Statements

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

In thousands of rupees Group Company As at 31st March 2018 2017 2018 2017

32.1 Capital commitments Approved and contracted 2,026,543 2,112,839 - -

32.2 Financial commitments (a) Settlement of letter of credits and import bills 112,157 36,173 - - (b) Operating lease commitments where the Group is the lessee; - within 1 year 1,115,657 1,212,518 - - - between 1 - 5 years 6,849,979 6,260,567 - - - more than 5 years 12,142,942 11,479,496 - - 20,108,578 18,952,581 - -

33. Contingencies 33.1 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. 2.175 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.

Cargills (Ceylon) PLC has provided bank guarantees to Lion Brewery (Ceylon) PLC and its subsidiary Pearl Springs (Private) Limited to the value of Rs. 700 Mn in 2015 to cover contingent tax liabilities in connection with the disposal of the investment in Millers Brewery Limited. The Directors do not expect any claim on these guarantees. Accordingly, no provision has been made in the financial statements for any possible losses there from.

33.2 Income tax Income tax exemptions claimed are being contested by the Department of Inland Revenue. This is further explained in note 10.6.

34. Events after the reporting period No material events have occurred since the reporting date which require adjustments to or disclosure in the financial statements.

35. Going Concern The subsidiary C T Properties Ltd recorded accumulated losses of Rs. 1,890,638,382/- as at 31st March 2018 (2017: Rs. 1,829,547,603/-). 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 15.2(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. 123 C T Holdings PLC Annual Report 2017/18 Five Year Review – Group

As at / for the year ended 31st March 2018 2017 2016 2015 2014

(In thousands of rupees) Financial Results Revenue 92,134,483 85,037,781 72,399,182 62,452,231 56,768,293 Results from operations 6,802,234 5,798,305 4,135,309 2,127,552 3,002,800 Net finance costs (1,319,208) (1,131,121) (393,626) (667,970) (933,975) Profit before taxation 5,791,257 4,690,108 3,662,324 1,421,691 2,010,411 Tax expenses (2,051,792) (2,023,094) (1,344,117) (701,923) (578,931) Profit after tax for the year from discontinued operations - - - 420,435 152,504 Profit for the year 3,739,465 2,667,014 2,318,207 1,140,203 1,583,984

Attributable to - Owners of the parent 2,597,342 1,747,876 1,626,228 816,846 1,279,841 Non-controlling Interest 1,142,123 919,138 691,979 323,357 304,143 3,739,465 2,667,014 2,318,207 1,140,203 1,583,984

Financial Position Stated capital 6,489,758 3,194,008 3,194,008 3,194,008 3,194,008 Reserves 14,167,708 15,600,031 15,665,674 14,156,800 13,754,323 Total equity attributable to equity holders of the parent 20,657,466 18,794,039 18,859,682 17,350,808 16,948,331 Non-controlling interest 4,239,636 3,405,406 4,662,872 4,195,112 3,824,693 Total equity 24,897,102 22,199,445 23,522,554 21,545,920 20,773,024

Borrowings Borrowings 14,719,710 15,817,948 11,508,553 12,384,754 17,605,055 Non-current payables 3,089,325 2,761,159 2,251,743 1,974,311 - 17,809,035 18,579,107 13,760,296 14,359,065 17,605,055

Net Assets Current assets 18,717,656 15,514,916 14,418,707 12,618,347 11,584,180 Current liabilities (30,865,988) (30,499,922) (24,212,544) (20,887,330) (25,349,345) Net current liabilities (12,148,332) (14,970,525) (9,793,837) (8,268,983) (13,765,165) Non-current liabilities (5,973,075) (5,163,367) (4,428,623) (4,330,326) (3,003,203) Non-current assets 43,018,509 42,347,818 37,745,014 34,145,229 37,541,392 Total net assets 24,897,102 22,199,445 23,522,554 21,545,920 20,773,024

Ratios & Statistics Growth in annual turnover (%) 8.35 17.46 15.93 10.01 (16.30) Earnings per share (Rs.) 12.90 8.68 8.07 4.06 6.35 Growth in earnings (%) 48.60 7.48 99.09 (36.18) (40.00) Shareholders’ funds per share (Rs.) 102.57 93.31 93.64 86.15 84.15 Growth in shareholders’ funds (%) 9.91 (0.35) 8.70 2.37 (7.09) Return on shareholders’ funds (%) 12.57 9.30 8.62 4.71 7.55 Non-current assets to shareholders’ funds (%) 208.25 225.25 200.14 196.79 221.50 Current ratio (times) 0.61 0.51 0.60 0.60 0.46 Debt equity ratio (times) 0.72 0.84 0.58 0.67 0.85 Dividend per share (Rs.) 5.50 5.20 3.80 3.40 8.30 Dividend cover (times) 2.34 1.67 2.12 1.19 0.77 Market price per share (Rs.) 175.00 148.90 129.90 128.00 135.00 Price earnings ratio (times) 13.57 17.16 16.09 31.56 21.26 Net asset value per share 123.62 110.22 116.79 106.98 103.14

Note All per share details have been calculated, for all periods, based on the number of shares in issue as at 31st March 2018. 124 C T Holdings PLC Annual Report 2017/18 Group Directory

Parent company FMCG Ceylon Agro Development C T Holdings PLC Cargills Quality Foods Limited Company (Private) Limited Address: No 8, Sir Chittampalam A Address: 40, York Street, Colombo 01. Address: 40, York Street, Colombo 01. Gardiner Mawatha, Colombo 02. Phone: +94112427777 Phone: +94112427777 Phone: +94112431243 Fax: +94112338704 Fax: +94112338704 Fax: +94112447956 Directors: Ranjit Page (Chairman), Directors: Imtiaz Abdul Wahid, Email: [email protected] Imtiaz Abdul Wahid, Sidath Kodikara, Haridas Fernando, Keerthi Gunasekara, Chairman Emeritus: P S Mathavan, J C M Victoria, Talaal Maruzook, Saranga Wijesundara Mr. Anthony A Page S L W Dissanayake Directors: Louis Page (Chairman), Kotmale Holdings PLC Ranjit Page, Priya Edirisinghe, Cargills Distributors (Private) Address: 40, York Street, Colombo 01. Sunil Mendis, J B L De Silva, Limited Phone: +94112427777 Mrs. Cecilia Muttukumaru, Address: 40, York Street, Colombo 01. Fax: +94112338704 Dr. A Aravinda Page, Joseph Page, Phone: +94112427777 Directors: Ranjit Page (Chairman), R Selvaskandan, A D B Talwatte, Fax: +94112338704 Imtiaz Abdul Wahid, P S Mathavan, Imtiaz Abdul Wahid, S C Niles Directors: Imtiaz Abdul Wahid, Priya Edirisinghe, Sunil Mendis, Sidath Kodikara Joseph Page Retail and Wholesale Distribution Cargills (Ceylon) PLC Cargills Quality Dairies (Private) Kotmale Products Limited Address: 40, York Street, Colombo 01. Limited Address: 40, York Street, Colombo 01. Phone: +94112427777 Phone: +94112427777 Address: 40, York Street, Colombo 01. Fax: +94112338704 Fax: +94112338704 Phone: +94112427777 Directors: Imtiaz Abdul Wahid, Email: [email protected] Fax: +94112338704 S L W Dissanayake Directors: Louis Page (Chairman), Directors: Imtiaz Abdul Wahid, Ranjit Page, Imtiaz Abdul Wahid, Sidath Kodikara, P S Mathavan, Sidath Kodikara, Priya Edirisinghe, D G O Dias, S L W Dissanayake, Kotmale Milk Foods Limited P S Mathavan, Sanjeev Gardiner, Address: 40, York Street, Colombo Sunil Mendis, Anthony A Page, Cargills Agrifoods Limited 01. Phone: +94112427777 Joseph Page, Errol Perera, Fax: +94112338704 Address: 40, York Street, Colombo 01. Deva Rodrigo Directors: Imtiaz Abdul Wahid, Phone: +94112427777 S L W Dissanayake Fax: +94112338704 Cargills Foods Company (Private) Directors: Imtiaz Abdul Wahid, Limited Sidath Kodikara, P S Mathavan Kotmale Dairy Products (Private) Address: 40, York Street, Colombo 01 Limited Phone: +94112427777 CPC (Lanka) Limited Address: 40, York Street, Colombo Fax: +94112338704 Address: 40, York Street, Colombo 01. 01. Phone: +94112427777 Directors: Ranjit Page (Chairman), Phone: +94112427777 Fax: +94112338704 Sidath Kodikara, Imtiaz Abdul Wahid, Fax: +94112338704 Directors: Imtiaz Abdul Wahid, Priya Edirisinghe, Y Kanagasabai, Directors: Imtiaz Abdul Wahid, S L W Dissanayake Ms. Farida Khambata, Sunil Mendis Sidath Kodikara Kotmale Milk Products Limited Millers Limited Address: 40, York Street, Colombo 01. Address: 40 York Street, Colombo 1 Phone: +94112427777 Phone: +94112427777 Fax: +94112338704 Fax: +94112338704 Directors: Imtiaz Abdul Wahid, Directors: Imtiaz Abdul Wahid, S L W Dissanayake P S Mathavan, D G O Dias 125 C T Holdings PLC Annual Report 2017/18

Cargills Frozen Products (Pvt) Real Estate C T Properties Lakeside (Private) Limited C T Land Development PLC Limited Address: 40, York Street, Colombo 01. Address: 4th Floor, Majestic City, 10 Address: 28th Floor, West Tower, World Phone: +94112427777 Station Road, Colombo 04. Trade Centre, Colombo 01. Phone: Fax: +94112338704 [email protected] +94112005700 Fax: +94112336727 Directors: Imtiaz Abdul Wahid, Phone: +94112508673-4 Directors: R Selvaskandan (Chairman), Sidath Kodikara, D G O Dias, Fax: +94112592427 Joseph Page, S L W Dissanayake Email: [email protected] Mrs. Cecilia Muttukumaru, S C Niles, Directors: R Selvaskandan (Chairman), Louis Page, Errol Perera, Cargills Quality Confectionaries Joseph Page, Mrs. M G Perera, Jayantha Perera (Private) Limited Priya Edirisinghe, Sunil Mendis, Address: 40, York Street, Colombo 01. S C Niles, Anthony A Page, Louis Page, C T Properties G S (Private) Ltd Phone: +94112427777 Ranjit Page, Dr. T Senthilverl Address: 28th Floor, West Tower, World Fax: +94112338704 Trade Centre, Colombo 01. Phone: Directors: Imtiaz Abdul Wahid, C T Properties Limited +117468500 Fax: +117468502 Sidath Kodikara Address: 28th Floor, West Tower, World Directors: Louis Page (alternate - Trade Centre, Colombo 01. R Selvaskandan), Cargills Enterprise Solutions Phone: +94112005700 Ranjit Page (alternate - S C Niles) (Private) Limited Fax: +94112336727 Email: [email protected] Dawson Office Complex (Private) Address: 40, York Street, Colombo 01. Directors: Ranjit Page (Chairman), Phone: +94112427777 Limited R Selvaskandan, Joseph Page, Fax: +94112338704 Address: 40 York Street, Colombo 01. Mrs. Cecilia Muttukumaru, S C Niles, Directors: R Theagarajah (Chairman), Phone: +94112427777 Louis Page, Errol Perera, S C Niles, Rohan Muttiah, Ranjit Page, Fax: +94112338704 Jayantha Perera Imtiaz Abdul Wahid Director: Imtiaz Abdul Wahid

C T Property Management Restaurants Frederick North Hotel Company Company (Private) Limited Cargills Food Processors (Private) (Private) Limited Address: 28th Floor, West Tower, World Limited Address: 40 York Street, Colombo 01. Trade Centre, Colombo 01. Phone: Phone: +94112427777 Address: 40, York Street, Colombo 01. +94112005700 Fax: +94112336727 Fax: +94112338704 Phone: +94112427777 Directors: R Selvaskandan (Chairman), Directors: Imtiaz Abdul Wahid, S C Niles Fax: +94112338704 Joseph Page, S C Niles, Louis Page, Directors: Imtiaz Abdul Wahid, Errol Perera, Jayantha Perera Sidath Kodikara, P S Mathavan, Empire Investment Company (Private) Limited J C M Victoria C T Real Estate (Private) Limited Address: 40 York Street, Colombo 01. Address: 28th Floor, West Tower, World Phone: +94112427777 Fax: Cargills Foods Services (Private) Trade Centre, Colombo 01. Phone: +94112338704 Limited +94112005700 Fax: +94112336727 Directors: Ranjit Page, S C Niles, Address: 40, York Street, Colombo 01. Directors: R Selvaskandan (Chairman), Anthony A Page Phone: +94112427777 Joseph Page, Fax: +94112338704 Mrs. Cecilia Muttukumaru, S C Niles, Directors: Imtiaz Abdul Wahid, Louis Page, Errol Perera, Sidath Kodikara, P S Mathavan Jayantha Perera 126 C T Holdings PLC Annual Report 2017/18 Group Directory

Entertainment C T CLSA Holdings Limited Ceylon Theatres (Private) Limited Address: 4-15, Majestic City, 10 Station Address: No 8, Sir Chittampalam A Road, Colombo 04. Gardiner Mawatha, P O Box 2042, Phone: +94112552290 Fax: Colombo 02. +94112552289 Phone: +94112431243, Directors: Priya Edirisinghe (Chairman), +94112555565 Fax: +94112447956 Mrs. Cecilia Muttukumaru, Louis Page, Chairman Emeritus: Donald Skinner Mr. Anthony A Page Directors: Louis Page (w e f 30 January C T CLSA Securities (Private) 2018), R Selvaskandan, Joseph Page, Limited Mrs. Cecilia Muttukumaru, S C Niles, Address: 4-14, Majestic City, 10 Station Anthony A Page (up to 30th January Road, Colombo 04. 2018), Errol Perera (w e f 30 January Phone: +94112552290 Fax: 2018), Mrs. M G Perera, +94112552289 Email: [email protected] Imtiaz Abdul Wahid Directors: Mrs. Cecilia Muttukumaru (Chairperson), Priya Edirisinghe, Cinema Entertainments (Private) Donald Skinner, Kanishka Hewage Limited Address: No 8, Sir Chittampalam A C T CLSA Capital (Private) Limited Gardiner Mawatha, Colombo 02. Address: 4-15 A, Majestic City, 10 Phone: +94112478752, Station Road, Colombo 04. +94112478753 Fax: +94112478754 Phone: +94112584843, Directors: M I J A Cader (Chairman), +94112503523 Fax: +94112580181 G R Pathmaraj, R Selvaskandan Email: [email protected] Directors: Mrs. Cecilia Muttukumaru Banking & Financial Services (Chairperson), Donald Skinner, Cargills Bank Limited S C Niles, Zakir Mohamedally Address: 696 Galle Road, Colombo 04. Phone: +94117640000 Comtrust Asset Management Fax: +94112055575 Limited Email: [email protected], Address: 4-07, Majestic City, 10 Station Directors: Louis Page (Chairman), Road, Colombo 04. Ranjit Page, Rajendra Theagarajah, Phone: +94112506347, P S Mathavan, Mangala Boyagoda, +94112506204 Fax: +94112506347 Kamalini De Silva (up to 17th January Email: [email protected] 2018), Faizal Salieh, Richard Ebell Directors: Mrs. Cecilia Muttukumaru (Chairperson), Donald Skinner, Joseph Page 127 C T Holdings PLC Annual Report 2017/18 Information to Shareholders

1. Distribution of Shareholders

Size of Shareholdings 31st March 2018 31st March 2017

Shareholders Holdings Shareholders Holdings

Numbers % Numbers % Numbers % Numbers %

1 - 1,000 Shares 682 45.62 135,055 0.07 772 50.86 198,779 0.11

1,001 - 10,000 Shares 479 32.04 1,812,074 0.90 437 28.79 1,976,336 1.08

10,001 - 100,00 Shares 272 18.19 8,129,415 4.03 252 16.60 7,800,855 4.26

100,001 - 1,000,000 Shares 43 2.88 11,513,763 5.72 39 2.57 11,491,546 6.28

Over 1,000,000 Shares 19 1.27 179,816,671 89.28 18 1.18 161,629,737 88.27

Total 1,495 100.00 201,406,978 100.00 1,518 100.00 183,097,253 100.00

2. Analysis of Shareholders

Size of Shareholdings 31st March 2018 31st March 2017

Shareholders Holdings Shareholders Holdings

Numbers % Numbers % Numbers % Numbers %

Institutions 119 7.96 122,796,787 60.97 117 7.71 112,566,249 61.48

Individuals 1,376 92.04 78,610,191 39.03 1,401 92.29 70,531,004 38.52

Total 1,495 100.00 201,406,978 100.00 1,518 100.00 183,097,253 100.00

Residents 1,363 91.17 167,779,362 83.30 1,387 91.37 152,506,855 83.29

Non-Residents 132 8.83 33,627,616 16.70 131 8.63 30,590,398 16.71

Total 1,495 100.00 201,406,978 100.00 1,518 100.00 183,097,253 100.00 128 C T Holdings PLC Annual Report 2017/18 Information to Shareholders

3. Major Shareholders

Name of Shareholder 31st March 2018 31st March 2017

Number of % Number of % Shares Shares

Odeon Holdings (Ceylon) (Pvt) Ltd 84,210,323 41.81 76,442,848 41.75

Mr. Anthony A. Page 17,501,287 8.69 15,910,261 8.69

Mr. Ranjit Page 12,933,350 6.42 11,231,945 6.13

Sir Chittampalam A Gardiner Trust 10,120,004 5.03 9,200,004 5.03

Ms. M.M. Page 9,930,855 4.93 8,849,731 4.83

Employees Provident Fund 7,686,987 3.82 6,988,170 3.82

Mr. Joseph Page 7,069,172 3.51 6,426,520 3.51

Mrs. T. Selvaratnam 5,667,250 2.81 5,152,045 2.81

BNYMSANV Re-CF Ruffer Total Return Fund 4,730,000 2.35 4,300,000 2.35

BNYMSANV Re-CF Ruffer Absolute Return Fund 3,686,188 1.83 3,351,080 1.83

Mrs. Tanya Selvaratnam 2,821,500 1.40 2,565,000 1.40

Mr. T Selvaratnam 2,821,500 1.40 2,565,000 1.40

BNYMSANV Re-First State Investments ICVC - Stewart Investors Indian 2,303,051 1.14 2,093,683 1.14 Subcontinent Fund

BNYMSANV Re-CF Ruffer Investment Funds : CF Ruffer Pacific Fund 2,200,000 1.09 2,000,000 1.09

HSBC Intl Nom Ltd - JPMCB - Pacific Assets Trust PLC 1,966,745 0.98 1,686,445 0.92

Melstacorp PLC 1,623,050 0.81 1,475,500 0.81

Mrs. Cecilia Muttukumaru 1,532,750 0.76 1,290,000 0.70

Ms. A.M. Basnayake 1,012,659 0.50 890,588 0.49

Mr. P.E. Muttukumaru 943,787 0.47 853,000 0.47

The Galle Face Hotel Co. Ltd 915,503 0.45 832,275 0.45

Others 19,731,017 9.80 18,993,158 10.37

Total 201,406,978 100.00 183,097,253 100.00 129 C T Holdings PLC Annual Report 2017/18

4. Share valuation The market value of ordinary shares of the Company on 31st March 2018 was Rs 175.00 (2017 - Rs 148.90). The highest and lowest values recorded during the year ended 31st March 2018 were Rs 195.00 (2017 - Rs 150.00) and Rs 140.00 (2017 - Rs 114.00) respectively.

5. Public shareholding

31st March 2018 31st March 2017

Shareholders Shareholders

Numbers % Numbers %

Public shareholding 1,479 38.33 1,502 38.92

130 C T Holdings PLC Annual Report 2017/18 Notice of Meeting

Notice is hereby given that the Eighty Seventh Annual General Meeting of C T Holdings PLC will be held at the auditorium, the Institute of Chartered Accountants of Sri Lanka, 30A, Malalasekera Mawatha, Colombo 07 on Tuesday, 28th August 2018 at 9.30 a.m. and the business to be brought before the meeting will be:

1) To receive and consider the Annual Report of the Directors and the financial statements for the year ended 31st March 2018 with the report of the Auditors thereon. 2) To re-elect Directors a. R Selvaskandan, b. Mr. L R Page and c. Mr. J C Page who retire by rotation, and 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. J B L De Silva, a retiring Director, who has attained the age of Seventy-Two 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. A T P Edirisinghe, a retiring Director, who has attained the age of Seventy-Two 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. Sunil Mendis, 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”

3) To authorise the Directors to determine contributions to charities. 4) 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

S L W Dissanayake Company Secretary

Colombo 03 August 2018

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. 131 C T Holdings PLC Annual Report 2017/18 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 Seventh Annual General Meeting of the Company to be held on 28th August 2018 and at any adjournment thereof.

No. Resolution For Against

1 To adopt the Financial Statements for the year ended 31st March 2018

2a To re-elect Mr. R Selvaskandan as a Director

2b To re-elect Mr. L R Page as a Director

2c To re-elect Mr. J C Page as a Director

2d To re-elect Mr J B L De Silva as a Director

2e To re-elect Mr A T P Edirisinghe as a Director

2f To re-elect Mr Sunil Mendis as a Director

3 To authorise the Directors to determine contribution to charities

To authorise the Directors to determine the remuneration of the Auditors, Messrs. 4 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 ...... 2018

...... 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 132 C T Holdings PLC Annual Report 2017/18

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. Corporate Information

Name of Company Registered Office Related Party Transactions C T Holdings PLC No 8, Sir Chittampalam A Gardiner Review 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 Postal Address: PO Box 327, Colombo Legal Form Quoted Public Company with limited Auditors Exchange Listing liability incorporated in Sri Lanka on 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 R Selvaskandan Board of Directors Commercial Bank of Ceylon PLC Imtiaz Abdul Wahid Louis Page (Chairman) Hatton National Bank PLC Ranjit Page (Deputy Chairman / Nations Trust Bank PLC Audit Committee Managing Director) NDB Bank Ltd J B L De Silva Priya Edirisinghe (Chairman) People’s Bank Priya Edirisinghe J B L De Silva Sampath Bank PLC Sunil Mendis Sunil Mendis Standard Chartered Bank Mrs. Cecilia 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 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.