Creating Value since 1928 C T Holdings PLC Annual Report 2015/16 CONTENTS
02 Our Business at a Glance 04 Milestones 06 Our Presence 08 Financial Highlights 10 Chairman’s Statement 12 Profile of Directors 14 Management Discussion and Analysis 20 Corporate Governance 22 Risk Management 24 Report of the Audit Committee 26 Report of the Remuneration Committee 27 Related Party Transactions Review Committee Report 28 Report of the Nominations Committee
Financial Statements 30 Annual Report of the Board of Directors of the Company 32 Statement of Directors’ Responsibilities 33 Independent Auditors’ Report 34 Statement of Profit or Loss and other Comprehensive Income 35 Statement of Financial Position 36 Statement of Changes in Equity 38 Statement of Cash Flows 40 Notes to the Financial Statements 99 Five Year Review - Group 100 Group Directory 102 Information to Shareholders 104 Notice of Meeting 107 Form of Proxy Inner Back Cover Corporate Information 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 Dedicated to people as our most important asset Socially responsible pursuing trusted leadership
C T Holdings PLC Annual Report 2015/16 01 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 as Regal Colombo, Empire and Majestic cinemas. C T Holdings is 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 now a diversified the development of the local film production expertise. Group with interest Despite the Company’s first production “Asokamala” being unsuccessful, the in Retail, Fast Company persevered to subsequently produce hit films such as “Golu Hadawatha”, “Akkara Paha”, “Sakman Maluwa” etc. The hit film “Nidhanaya” was adjudged the Moving Consumer best Sri Lankan film produced in the past 50 years. Goods, Distribution, 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 Real Estate, its interest in Millers Limited and through it, Cargills (Ceylon) Ltd. Millers Ltd was subsequently merged with C T Holdings PLC. Entertainment,
The Company also diversified into Financial Services and Real Estate. The subsidiary Banking and Cargills shed the Department Store concept to introduce and expand the Financial Services. 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 name ‘Cargills Bank’ has also been set up by the Group.
All this while also staying true to the roots in the cinema business by developing the cinemas with digital sounds, 3D viewing and upgraded 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 2015/16 87 Years and counting
8,800+ Employees Rs. 52.16 Bn Assets 375+ Locations 8 18+ Businesses Processing Facilities Milestones
1928 1991 1996 2002 2008 Ceylon Theatres Completed the KFC franchise Cargills acquired the Ceylon Theatres merged Limited established, Majestic City awarded to Walls Ice Cream plant with Millers PLC to focusing primarily on shopping and Cargills. and CPC/Best foods create an investment the entertainment entertainment mall production facility holding Company. industry by Sir through C T Land of jams, cordials and Chittampalam A. Development PLC. sauces. Cinema exhibition Gardiner. operation transferred to a wholly owned subsidiary Ceylon Theatres (Private) Limited.
1981 1992 1999 2006 Acquired Millers and Entered the financial services sector Entered the Ceramic Cargills commissioned its Cargills and ventured through C T Smith Stockbrokers / Tiles, Plantation and new state of the art meat into retail and distribution (Member, Colombo Stock Packaging sectors. processing facility. under the leadership of Mr. Exchange) – now re named as C T Albert A Page. 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.
04 C T Holdings PLC Annual Report 2015/16 2009 2011 2013 2015 C T Properties Limited Cargills acquired controlling C T Properties Limited Retail sector comprising the completed its flag ship interest in Kotmale Holdings entered into a JV supermarkets spun off into a ‘Empire’ residential PLC. Cargills acquired Diana agreement with Edmonton separate company with new direct development project. Biscuits Manufactures (Private) Pte Ltd (subsidiary of equity injection into the Company. Limited (subsequently re Keppel Land Ltd Singapore) - named Cargills Quality to engage in property Two new cinema screens set up Confectioneries (Pvt) Ltd). development projects in Sri by Ceylon Theatres at Arcade Lanka. Independence Square, the Group’s Regal cinema was fully refurbished. Cargills set up the TGI Fridays Franchise Cargills exited the brewery sector. Restaurant in Colombo, Fort.
2010 2012 2014 2016 Name of Ceylon Theatres Cargills entered the Group received license to set up Cargills Bank network PLC changed to C T brewery sector. and operate a Commercial Bank. increased to 11 Holdings PLC. branches. Ceylon Theatres added Cargills Square Mall opened in three new screens to Jaffna CT Properties acquired the Majestic Cineplex Disposed of the shareholding in control of its project in including Sri Lanka’s first Lanka Ceramic PLC, exited the Kotahena due to the exit ever 3D cinema. Ceramic / Tiles, Plantation and of the JV partner. Packaging sectors.
C T Holdings PLC Annual Report 2015/16 05 Our Presence
Retail and Wholesale Distribution FMCG
The retail sector of the Group functions under Cargills Foods The Group’s FMCG brands are some of the widest consumed Company (Pvt) Ltd. The modern trade arm covers 24 districts household brands in the Country which include, ‘Magic’ and of the island through Cargills Food City and Food City Express ‘Kotmale’ dairy products, ‘Kist’ range of jams, cordials, nectars, store formats. Cargills Food City has been rated the 10th juices and accompaniments, ‘Cargills Finest’, ‘Goldi’ and ‘Sams’ most valuable brand in Sri Lanka as per the Brand Finance processed meats and ‘Kist’ brand of confectioneries. The sector Index ratings of 2016 with a AA+ rating and is the only Retailer operates some of the most modern facilities with many ISO ranked in the top ten of national brands. This sector maintains International Standard certifications among them such as ISO a backward integration model with local fruit and vegetable 9001: 2000 Quality Management System certification, ISO collection centres in every district of the island. 22000: 2005 Food Safety Management System certification and ISO 14001: 2004 Environment Management System Millers Limited the marketing and distribution arm holds the certification. agency rights for leading international food brands such as ‘Bonlac’, ‘Kraft’, ‘Cadbury’, ’Toblerone’,‘Nabisco’, ‘Tang’ etc. reaching 40,000 groceries islandwide. The Company is also the distributor for the Group’s own brands.
Restaurants Real Estate
The restaurants sector includes the world renowned ‘KFC’ and C T Land Development is a long established name in the Real ‘TGIFridays’ franchises with 27 KFC restaurants and one flagship Estate and Property sector. The Company owns and operates TGIF Restaurant. ‘Majestic City’, the largest and most popular shopping and entertainment mall in the Country. The Group also owns and operates the Cargills Square Mall in Jaffna. 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.
06 C T Holdings PLC Annual Report 2015/16 Entertainment Banking & Financial Services
The Group has been associated with the national cinema Capital Market operations of the Group are carried out under industry for over 80 years with the making of the first national C T CLSA Holdings Ltd, which covers Stockbroking, advisory production and thereon producing landmark motion pictures services and capital market solutions. The Group is also that have won international acclaim. Ceylon Theatres (Private) the promoter shareholder of Cargills Bank, which presently Limited is engaged in operating eleven cinema screens in five operates eleven branches. locations.
C T Holdings PLC Annual Report 2015/16 07 Financial Highlights
Group Company 2016 2015 % Change 2016 2015 % Change
Operations Revenue 72,399,182 62,452,231 15.93 - - - Results from operating activities 4,135,309 2,127,552 94.37 (91,445) (223,407) (59.07) Profit before taxation 3,662,324 1,421,691 157.60 592,191 395,666 49.67 Profit for the year from continuing operations 2,318,207 719,768 222.08 568,871 383,057 48.51 Profit for the year 2,318,207 1,140,203 103.32 568,871 383,057 48.51
Profit attributable to owners of the Company 1,626,228 816,846 99.09 568,871 383,057 48.51
Per Share Data Earnings Per Share (Rs.) 8.88 4.46 99.14 3.11 2.09 48.66 Dividends Per Share (Rs.) 3.80 3.40 11.76 3.80 3.40 11.76 Dividend Cover (Times) 2.34 1.31 78.63 0.82 0.60 36.67
Shareholders’ Interest Stated Capital 3,194,008 3,194,008 3,194,008 3,194,008 Total equity attributable to equity holders of the parent 18,859,682 17,350,808 7,774,641 7,918,981 Return on equity attributable to equity holders of the parent (%) 8.62 4.71 7.32 4.84 Total equity attributable to equity holders of the parent per Share (Rs.) 103.00 94.76 42.46 43.25
Leverage Net Finance Costs 393,626 667,970 - - Interest Cover (Times) 6.89 2.70 - - Borrowings (including overdrafts) 13,760,296 14,359,065 - - Borrowing as a Percentage of total equity attributable to equity holders of the parent (%) 72.96 82.76 - -
Note Earnings, dividends and shareholders’ funds per share have been calculated based on the number of issued shares presently in issue.
08 C T Holdings PLC Annual Report 2015/16 Revenue Profit for the year Rs. Bn Rs. Mn 80 4,000 Rs. 72.34 Bn 3,500 Revenue 60 3,000
2,500
40 2,000
1,500
20 1,000
500 Rs. 2.32 Bn 0 0 Profit for the year 12 13 14 15 16 12 13 14 15 16
Earnings Per Share Dividends per Share Rs. Rs. 12 10
10 8 8 Rs. 8.88 6 6 Earnings Per Share 4 4
2 2
0 0 12 13 14 15 16 12 13 14 15 16
Composition of Revenue Composition of Profit Rs. 3.80 Dividends Per Share
2016 2016
Retail 79.43% Retail 47.24% Real estate 0.87% Real estate 14.56% Rs. 23.52 Bn FMCG 15.37% FMCG 34.12% Restaurants 3.88% Restaurants 3.00% Entertainment 0.46% Entertainment 1.08% Total Equity
C T Holdings PLC Annual Report 2015/16 09 Chairman’s Statement
We are pleased to present the Annual Report of C T Holdings PLC for the year ended 31st March 2016. Rs. 1.63 Bn The operating results for the year show substantial growth and improvement over the previous year and reflects the efforts devoted by the management of the Group Profit for the companies in expanding and developing the operations of every sector within the Group. year attributable
Firstly, the improvement in internal efficiencies to owners
Extensive efforts were made in improving internal efficiencies in the two previous Rs. Mn financial years. These efforts covered every operational sector of the Group. Strong 2,500 focus was also directed at the Retail sector, which has more than 300 separate individual operating locations. The efforts at improving efficiencies have shown considerable progress and improved results, which are reflected in the financial results 2,000 for the year. Despite the progress made, improving of efficiencies is a continuous process and further opportunities exist. Accordingly, the Group plans for investments 1,500 in the back-office during the next two financial years targeting further enhancements that would yield bottomline results while enhancing customer experience and employee motivation 1,000
Secondly, improved consumer spending 500 Based on available statistics, consumer spending has been buoyant. This buoyancy has been sustained into the current year. The retail sector, in particular, was able to see real volume growth exceeding 10% across many geographical areas and locations. 0 The volume growth fed positively into the growth of the operating results for the 12 13 14 15 16 year. Although some adversity related to adverse weather conditions has occurred control borrowings would ensure that subsequent to the end of the financial year we expect volume growth to continue into increases in debt levels would be the next year as well. modest and servicing of such debts would be operationally sustainable. Thirdly, the streamlining of businesses and exits The Group has been enjoying several years of continuous growth and expansion in its Real Estate operations. In parallel, the Group has also been rationalising its operations and exiting The property development Joint non-core sectors. The Group’s available resources as well as funds raised by the Venture entered into with Edmonton disposal of non-core investments are being pooled into businesses which are scalable Pte Ltd (subsidiary of Keppel Land, and offer the best return to the shareholders. The prudent deployment of funds Singapore) was terminated during the thus raised in the previous years has helped in much improved results in the current year, with the Group acquiring the JV year. There were no significant changes in this regard in the current year. However, partner’s stake at an investment of Rs this process will continue, with the existing portfolio being continually evaluated 550 Million. There are presently no simultaneously with identifying market opportunities, so that investments could be plans for the re-commencement of this made in areas that capture the most attractive opportunities. project. However, the Group will look for opportunities on a smaller scale in Lastly, the rationalisation of the debt portfolio investment property by developing During the year, the total borrowings of the Group and net finance costs declined some of the freehold properties of by 4.17% and 41.07% respectively. The Group is conscious of the need to properly the Group. Such investments would manage its external debt and borrowing costs. Future investments being considered, complement the existing holdings such especially into the FMCG, and Banking and Financial services sectors may temporarily as Majestic City (Colombo 4) and Jaffna increase the Group’s debt levels. However, the processes set in place to plan and Square.
10 C T Holdings PLC Annual Report 2015/16 Fixed Assets and Investments The investment by the Group in property, plant and equipment during the year amounted to Rs. 1.87 Bn compared to Rs. 2.0 Bn in the previous financial year. The investments have been funded through internally generated funds and borrowings. At the Company level there were no investments in property, plant and equipment The efforts during the year (2015 - Rs. 10.4 Mn). at improving Directorate I am pleased to welcome Mr. A D B Talwatte (retired Country Managing Partner of efficiencies have Ernst & Young, Sri Lanka) to the Board of C T Holdings PLC. Mr. Talwatte comes with extensive knowledge and wide experience across several business sectors and we look shown considerable forward to his valuable input to the functioning of the Board. progress and All other Directors of the Company were Directors for the entire year under review. improved results Stated Capital The stated capital of the Company is represented by 183,097,253 ordinary shares. There were no new issue of shares during the year.
Appropriations The company declared an interim dividend of Rs. 1.00 per share on 18th January 2016 (2015 – Rs. 0.80). The Directors are pleased to recommend a final dividend of Rs. 2.80 per share (2015 – Rs. 2.60). The dividend is payable, subject to shareholder approval, on 14th July 2016. The proposed final dividend has not been reflected as a liability in the financial statements at the Balance Sheet date. Rs. 13.76 Bn Conclusion We all look back with satisfaction on the performance of the Group during the Borrowings year. We are confident that the level of financial performance could be sustained Rs. Bn and enhanced in the coming years. The improving economic picture also gives us 25 confidence for the future although possible external shocks continue to be a concern. The results of our continuous focus on improvements in internal efficiencies is a key strength which would off-set any possible adversities in the future. We look forward 20 with optimism to the next year.
Acknowledgments 15 On behalf of the Board of Directors, I wish to place on record my sincere thanks to our Customers, Bankers, Suppliers and Principals and appreciate the support extended 10 to us during the year. I also thank our shareholders for their encouragement and continued confidence in our Group. 5 Finally, I wish to mention my sincere thanks to all my fellow Directors and staff for the assistance and cooperation rendered during the year. 0 12 13 14 15 16 (Signed) Louis Page Chairman
10th June 2016
C T Holdings PLC Annual Report 2015/16 11 Profile of Directors
Mr. Anthony A Page Mr. J B L De Silva Mr. Sunil Mendis (Chairman Emeritus) Independent Non-Executive Director Independent Non-Executive Director Mr. Anthony Page counts over 40 years Mr. J. B. L. De Silva, a Lawyer by Desamanya Sunil Mendis was formerly of management experience in a diverse profession, has substantial experience in the Chairman of Hayleys Group, and a array of businesses. He is a Fellow the rubber trade. He is a past Chairman former Governor of the Central Bank Member of the Institute of Chartered of the Colombo Rubber Traders’ of Sri Lanka. He possesses around 50 Accountants of Sri Lanka and a Fellow Association and is a Director of other years of wide and varied commercial Member of the Institute of Certified listed and non-listed companies. experience, most of which has been in Management Accountants of Sri Lanka. very senior positions. Mr. Mendis serves He served on the Board of the Colombo Mr. Priya Edirisinghe as a member of the Company’s Audit Stock Exchange and several public listed Independent Non-Executive Director and Remuneration Committees, and and non-listed Companies. Mr. Page also serves on the Boards of several Mr. A. T. Priya Edirisinghe is a Fellow also served as a Council Member of the other Group companies. Member of the Institute of Chartered Employers Federation of Ceylon. Accountants of Sri Lanka, Fellow Mrs. Cecilia Muttukumaru Member of the Chartered Institute Non-Executive Director Board of Directors of Management Accountants (UK), and holds a Diploma in Commercial Mrs. Cecilia K. Muttukumaru is the Mr. Louis Page Arbitration. He was the Senior Partner Chairperson of C T CLSA Securities (Chairman) of HLB Edirisinghe & Co., Chartered (Private) Limited, C T CLSA Capital Non-Executive Director Accountants and currently serves as (Private) Limited, and Comtrust Asset Louis R. Page is a Fellow Member of Consultant/Advisor. He is the Managing Management (Private) Limited. She is the Institute of Chartered Accountants Director of PE Management Consultants a Fellow Member of the Institute of of Sri Lanka and a Fellow Member of (Pvt) Ltd. He counts over 45 years’ Chartered Accountants of Sri Lanka the Institute of Chartered Management experience in both public practice and and a Fellow Member of the Chartered Accountants (UK). He is the Chairman of in the private sector. He serves on the Institute of Management Accountants Cargills (Ceylon) PLC and Cargills Bank boards of a number of other listed and (U.K.). Ltd. He has also held a number of Board non-listed companies where in some and Senior Management positions at companies he also serves as Chairman/ Dr. A. Aravinda Page the highest level in overseas public Member of the Audit Committee Non-Executive Director and Member of the Remuneration companies and public institutions. Dr. A. Aravinda Page, MA (Cantab), Committee. Mr. Edirisinghe is the M.B.B. Chir, MRCS (UK), is a specialty Chairman of the Company’s Audit Mr. Ranjit Page registrar in cardiothoracic surgery and is Committee and a member of the (Deputy Chairman / Managing Director) currently attached to Papworth Hospital Company’s Remuneration Committee. Executive Director NHS Foundation Trust, Cambridge, UK. Mr. V. Ranjit Page possesses over 30 years of management experience with expertise in food retailing, food service, and manufacturing, having introduced the concept of super marketing to the Sri Lankan masses. He also serves on the boards of several C T Holdings Group companies.
12 C T Holdings PLC Annual Report 2015/16 Mr. Joseph Page Mr. A D B Talwatte Mr. Talwatte served as the Chairman Non-Executive Director Independent Non-Executive Director of the Statutory Accounting standards Committee and the Auditing standards Mr. Joseph C. Page is the Deputy Mr. Asite Talwatte is a fellow member of Committee, the Urgent Issues Task Chairman / Managing Director of C T the Institute of Chartered Accountants Force and the Examinations Committee Land Development PLC. He is also a of Sri Lanka (ICASL) and the Chartered of ICASL. At CIMA he served as Director of C T Properties Limited and Institute of Management Accountants of Chairman of the Management and Managing Director of Ceylon Theatres the U.K. He also holds a Post-Graduate Professional Development (MPD) (Pvt) Ltd. Prior to joining C T Land Diploma in Business and Financial Committee. Development PLC, he was the Executive Administration awarded by ICASL and Director of Millers Limited. He has over the University of Wageningen, Holland Mr. Talwatte has been closely associated thirty years of management experience and has a MBA from the University with the development of Corporate in the private sector. of Sri Jayawardenapura, Sri Lanka. Governance in Sri Lanka being actively Mr. Talwatte has also participated involved with the Code of Audit Mr. R Selvaskandan In a Kellogg Executive Programme Committees in 2002 and the Code of Independent Non-Executive Director at the Kellogg Graduate School of Corporate Governance of 2003. He co- Management, Northwestern University, Mr. R. Selvaskandan is an Attorney-at- chaired the Committees to structure the Evanston, Illinois. Law (SL) and Solicitor (England & Wales revised Code of Corporate Governance and Hong Kong) and was a senior (of 2008) and the Listing Rules and a Mr. Talwatte worked at Ernst & Young in partner of a leading law firm in Hong Committee on Corporate Governance Assurance, Business Risk and Advisory Kong prior to joining the property sector set Up by ICASL jointly with the SEC to Services for 37 years, including 10 years of the C T Holdings Group. He is the review and revise the Code of Corporate as Country Managing Partner. He has Chairman of C T Land Development Governance. He currently chairs the worked with Ernst & Young in Cleveland, PLC, Deputy Chairman of C T Properties Committee to review the applicability Ohio and also served on Ernst & Young’s Limited and a Partner of Varners, a Law of Integrated Reporting in Sri Lanka and Far-East Area Executive Committee, the firm based in Sri Lanka. He has more the Committee reviewing the Corporate Area Advisory Council and the ASEAN than thirty years’ experience in legal Governance Code. Leadership Committee. practice and management in Sri Lanka, UK and Hong Kong. Mr. Talwatte has served as a Non- Mr. Talwatte was President of the Executive Director on boards of listed Institute of Chartered Accountants of Sri companies, public companies and state Lanka (ICASL) for a two year period in owned enterprises. 2002/2003 and the Chartered Institute of Management Accountants in 1995/96.
C T Holdings PLC Annual Report 2015/16 13 Management Discussion and Analysis
Retail and Wholesale Distribution The retail sector functions under Cargills FMCG Sector Foods Company (Pvt) Ltd which operates The retail and wholesale distribution The FMCG sector of the Group has the Food City and Food City express sector constitutes the largest sector by shown tremendous growth in the past supermarkets across 24 districts of the value accounting for 79% of the total three years to become a key component Island. The chain of stores has continued revenue and 47% of the net profit of the of the Group. The FMCG sector is to grow during the current period by Group. The sector performed creditably broadly classified into Dairy, Agrifoods, the addition of 28 new stores to reach during the current year, coming out of a Meats and Confectionery subsectors. 297 stores in total as at the end of the very difficult period in the previous year. Taken together, these units operate year. The key advantage of the retail Top and bottom lines showed growth of 8 production facilities and a primary sector is its backward integration model 13% and 9.6 times respectively. processing centre. and the quality and freshness of its fresh produce, which are backed by collection The Dairy business, the largest in the Revenue centres in every district of the Island and Rs. Bn FMCG sector, presently collects an two dedicated warehouses / sorting 70 average of 100,000 litres of fresh milk per centres that collect approximately day from 15,000 small holders through 100,000 tons of fresh produce (fruit & 60 22 chilling centres, making it the second vegetable) each day. largest private sector collector of fresh 50 milk in the Island. Therefore successive The low island wide penetration increases in farm gate prices had a of modern trade offers attractive 40 tempering effect on the performance opportunities for the retail sector to for the year. Nevertheless, this business 30 further grow, which the Group would be again performed creditably both in looking to exploit. revenue and profits. Investments were 20 made into this subsector during the year The Wholesale distribution sector to increase capacity in both collection 10 holds internationally recognized food and production. brands such as Kraft, Toblerone, Bonlac, 0 Cadbury, Nabisco, Tang, Meadowlea, 12 13 14 15 16 Products i.e. pasturised and UHT milk, Belle, Alpelle etc and is also the mass Ice Cream, Yoghurt, Ready to drink Market distributor for own brands Classic range etc., are marketed under the Segmental Profit mackerel and Milca Cheese. The present Rs. Mn ‘Magic’, ‘Heavenly’ and ‘Kotmale’ coverage reaches 40,000 retail outlets 2,000 brands, which are all household names. islandwide. These brands allow the sub-sector to target different market segments with Revenue of this sector for the year varied products and multiple price 1,500 amounted to Rs 58.3 Bn (2015 – Rs 51.4 points. Bn). Revenue growth was backed by strong underlying volume growth. Net The Agrifoods business consists of 1,000 profit for the year amounted to Rs 979.6 “Kist” nectars, cordials, jams, sauces Mn (2015 – Rs 102.2 Bn). and “Knuckles” bottled water. All sub categories sustained attractive growth 500 over the previous year. Here too, investments were made in capacity enhancements in the Nectar and water 0 bottling lines. 12 13 14 15 16
14 C T Holdings PLC Annual Report 2015/16 The Meats business markets its products Revenue Segmental Profit under the ‘Goldi’ and ‘Sams’ brand Rs. Mn Rs. Mn names. In addition to the mass market 12,000 800 and institutional segments, the meats 700 business also supplies fresh meat for sale 10,000 through the Food City outlets. Although, 600 processed meats are a target for adverse 8,000 publicity, steps taken by the sub-sector 500 to publicise nutritional information 6,000 400 in a transparent manner has been welcomed by the market. While the 300 processed meats segment presented 4,000 limited opportunity for growth, the 200 management is exploring the feasibility 2,000 100 to further diversify in the sector while addressing the increasing demand for 0 0 healthier food options. 12 13 14 15 16 12 13 14 15 16
C T Holdings PLC Annual Report 2015/16 15 Management Discussion and Analysis Contd.
The Confectionery business has not lived The Restaurants sector grew revenue Real Estate up to the early promise or expectation. and profits by 22% and 148% The real estate sector consisted Growth has been steady but gradual respectively to reach Rs 2.8 Bn and Rs 62 of both Investment property and in a market dominated by two strong Mn respectively. property development. The property players. The Company has, however, Revenue development business has, however, reached a stable position as at the Rs. Mn reduced with the completion of the end of the financial year and future 3,000 ‘Empire’ and ‘CT Gardens’ Township growth prospects remain positive. projects. Further, during the year the Selective investments have been made 2,500 Group acquired the stake owned by in technical expertise and the upgrade its Joint Venture partner – Edmonton of machinery. Product development 2,000 Pte Ltd (subsidiary of Keppel Land, has also progressed successfully with Singapore) in the project at Kotahena for some of the present products being re- 1,500 a sum of Rs 550 Mn. This project would formulated and re-launched successfully. not be immediately revived, as the Group evaluates the options available to The FMCG sector recorded a turnover of 1,000 take matters forward. Rs 11.1 Bn which was 27.6% higher than the previous year. Profit for the year was 500 The two Investment properties of the 82 % higher than the previous year at Rs Group – Majestic City and Cargills 707.5 Mn. We see great potential in this 0 Square (Jaffna) both performed sector especially the Dairy business. 12 13 14 15 16 well during the year with MC in 100% occupancy. Both properties Restaurants Segmental Profit/(Loss) are strategically located and attract Rs. Mn The restaurants sector is operated customers from all walks of life by 200 under two separate companies, which offering a wide choice of shopping and entertainment alternatives. Despite respectively manage the KFC and the 150 TGI Fridays restaurant businesses. several new shopping / entertainment destinations under development, we 100 KFC business turned to profitability in expect the steady performance of this 2016 from a dismal 2015 performance, 50 sector to continue. The Group will also on the back of enhanced quality and look at developing its other freehold service with substantial training effort 0 lands as investment properties. in team building and motivation. A dedicated management team worked (50) Turnover of this sector dropped from tirelessly to turnaround the performance the previous year mostly on account (100) during this year. Investments were made of the completion of the property by the Group in the refurbishment development projects. Turnover for the (150) year amounted to Rs 626.8 Mn for the of four of the restaurants during the 12 13 14 15 16 year while a concentrated effort has year with profit for the year amounting successfully been made to increase the to Rs 301.9 Mn, which includes fair value delivery component of daily sales. KFC gain on investment property amounting Sri Lanka which currently operates 27 to Rs 180.8 Mn. restaurants islandwide was awarded the best franchise for the Indian Subcontinent for the year 2015.TGI Fridays has substantially improved since its commencement. However, targeted volume levels are still to be reached.
16 C T Holdings PLC Annual Report 2015/16 Revenue Segmental Profit/(Loss) Rs. Mn Rs. Mn 700 350
600 300
250 500 200 400 150 300 100 200 50
100 0
0 (50) 12 13 14 15 16 12 13 14 15 16
C T Holdings PLC Annual Report 2015/16 17 Management Discussion and Analysis Contd.
Entertainment Segmental Profit/(Loss) Revenue Rs. Mn Rs. Mn The roots of the Group originate from the entertainment industry and it 40 1,000 continues to maintain strong links with this sector through the cinemas business. 20 800 Presently 11 screens are operated by the Group in five locations. The cinemas in Negombo and Nuwara Eliya have been 0 600 closed to allow for future refurbishment or development. (20) 400
This sector, too, returned to profit from heavy losses in the previous two years (40) 200 through better sourcing of content and cost management. Revenue for the year increased to Rs 330.5 Mn compared to (60) 0 12 13 14 15 16 12 13 14 15 16 the previous year’s Rs 199 Mn. Profit for the year amounted to Rs 22.4 Mn. Banking and Financial Services The Group will continue to invest in Segmental Profit/(Loss) modernising its cinemas and increase The Cargills Bank in which CT Holdings Rs. Mn the number of screens per location to a and Cargills were the principal 50 multiplex concept. promoters is still in its nascent stages. The Bank has completed this full year 0 of commercial operations with eleven Revenue Rs. Mn (11) branches now being operated (50) 350 at locations widely dispersed from each other. The planned expansion (100) 300 of the branch network (which are awaiting regulatory approval) and the (150) 250 introduction of innovative banking products and solutions would allow for (200) 200 rapid expansion of the bank.
150 Subsequent to the reporting date, (250) 12 13 14 15 16 Cargills Bank has announced a rights 100 issue to raise a sum of Rs 6.4 Bn in tier 1 50 capital to comply with current banking regulations. The Group will subscribe for 0 its full quota at this rights issue. 12 13 14 15 16
18 C T Holdings PLC Annual Report 2015/16 Financial Review Real Estate sector. As prescribed in the said Act and as recommended by the Group turnover for the year amounted Statement of Alternative Treatment to Rs 72.3 Bn compared to Rs 62.5 Bn in (SoAT) on Accounting for Super Gain the previous year. Profit for the current Tax dated 24 November 2015 issued by and previous years amounted to Rs 2.32 the Institute of Chartered Accountants Bn and Rs 1.14 Bn respectively. of Sri Lanka, such expenditure which is deemed to be an expenditure 2013/14 The Group funds its investments by a and recorded as an adjustment to the combination of internally generated opening retained earnings of the current funds and bank borrowings. The Group year. debt as at 31st March 2016 and 2015 stood at Rs 13.76 Bn and Rs 14.36 Bn respectively, a reduction of 4.17%. Net finance costs also declined by 41.07%. The overall average borrowing cost for the year amounted to 7.24%.
The Finance Act No 10 of 2015 imposed a Super Gains Tax on certain Companies. The Group’s liability to this tax amounted to Rs 123.2 Mn, with approximately 44% being borne by the
C T Holdings PLC Annual Report 2015/16 19 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 2016.
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 Ten Directors of Directors; or one third of the total number of Directors whom Nine are Non- Executive Directors. whichever is higher. 2. Independent Directors Two or 1/3 of Non-Executive Directors appointed to Complied Five Directors out of the nine Non-Executive Directors the Board of Directors, whichever is higher shall be are Independent. (See 3 below) ‘independent’. The Board shall require each Non-Executive Director to Complied All Non- Executive Directors submit signed declarations submit a declaration annually of his/her independence or of Independence / Non-Independence annually. non-independence in the prescribed format. 3. Disclosures relating to Directors The Board shall make a determination annually as to Complied M/s. J B L De Silva and A D Talwatte are independent the independence or non-independence of each Non- Directors of the Company. Mr. Priya Edirisinghe, Mr. Executive Director and set out in the annual report the Sunil Mendis, and Mr. R Selvaskandan deemed to be names of Directors determined to be ‘independent’. independent as given below.
In the event a Director does not qualify as ‘independent’ Complied Mr. Priya Edirisinghe has served in the Company’s but if the Board, taking account of all the circumstances, Board for a continuous period exceeding nine (09) years. is of the opinion that the Director is nevertheless Further Mr. Priya Edirisinghe, Mr. Sunil Mendis and Mr. ‘independent’, the Board shall specify the criteria not met R Selvaskandan also serve as Directors of other Group and the basis for its determination in the annual report. Companies of C T Holdings PLC. Nevertheless, the Board of Directors of the Company, having considered their credentials and integrity have resolved that M/s. 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.
20 C T Holdings PLC Annual Report 2015/16 Principle Compliance Remarks Status Upon appointment of a new Director to its Board, the Complied The résumé of Dr. A D B Talwatte, who was appointed a Company shall forthwith provide to the Exchange a brief Director during the year, was submitted to the Colombo résumé of such Director for dissemination to the public. Stock Exchange for dissemination to the Public. 5. Remuneration Committee A listed company shall have a remuneration committee Complied The Remuneration Committee consisted of three comprising a minimum of two independent Non- Independent Directors and one Non-Executive Director. Executive Directors or exclusively by Non-Executive The Chairman of the Remuneration Committee is a Non- Directors a majority of whom shall be independent, Executive Director. whichever shall be higher. One Non-Executive Director shall be appointed as Chairman of the Committee by the Board. The Remuneration Committee shall recommend the Complied The functions of the Remuneration Committee are remuneration payable to the Executive Directors and disclosed in the Report of the Remuneration Committee. Chief Executive Officer, to the Board. The annual report should set out the names of Directors Complied The names of the members of the remuneration comprising the Remuneration Committee, contain a Committee are disclosed in the Annual Report under statement of the remuneration policy and set out the Corporate Information. Details of the Directors’ aggregate remuneration paid to Executive and Non- emoluments are disclosed in Notes to the Financial Executive Directors. Statements.
6. Audit Committee A listed company shall have an Audit Committee Complied The Audit Committee consisted of three Independent comprising a minimum of two Independent Non- Directors. The Chairman of the Audit Committee is an Executive Directors or exclusively by Non-Executive Independent Non-Executive Director. Directors a majority of whom shall be independent whichever shall be higher.
One Non-Executive Director shall be appointed Chairman of the committee by the Board. Unless otherwise determined by the Audit Committee Complied The Managing Director is invited to attend the Audit the Chief Executive Officer and the Chief Financial Officer Committee meetings as required. of the listed company shall attend audit committee meetings. The Chairman or one member of the committee should Complied The Chairman is a Fellow Member of the Institute of be a Member of a recognised professional accounting Chartered Accountants of Sri Lanka and Chartered body. Institute of Management Accountants, UK. Functions of the Audit Committee Complied Disclosed in the Report of the Audit Committee. The annual report should set out the names of Directors Complied The names of the members of the Audit Committee comprising the Audit Committee. are disclosed in the Annual Report under Corporate Information. The committee shall make a determination of the Complied Disclosed in the Report of the Audit Committee independence of the auditors and shall disclose the basis for such determination in the annual report. The annual report shall contain a report by the audit Complied Disclosed in the Report of the Audit Committee committee, setting out the manner of compliance, during the period to which the annual report relates.
C T Holdings PLC Annual Report 2015/16 21 Risk Management
Risks are internal or external events that 1. Business Risk 4. Credit Risk can negatively impact the realisation The business risks constantly change Credit risk is the risk due to uncertainty in of short term objectives or the in nature and complexity in the counterparty’s ability to meet its financial implementation of long-term strategies. operating environment of the Group. obligations. Credit risk arises from cash They can also emerge from missed or The Group’s businesses are subject and cash equivalents, deposit with banks poorly exploited opportunities. The risk to a variety of risks, including laws and as well as credit exposure to customers management process encompasses regulations, market conditions and including outstanding receivables. Strict anticipating, identifying, managing and competitive landscape, which require credit control procedures are adopted mitigating internal and external risks and constant monitoring and evaluation by in order to assess the credit quality of opportunities to ensure both short and the management. CTH as the Holding present and potential customers with long term economic, environmental and Company carefully evaluates all risks further mitigating measures undertaken social sustainability of the C T Holdings pertaining to high value investments of to reduce risk. The utilisation of credit (CTH) Group. the Group both in existing operating limits is regularly monitored. sectors and new areas (if any). CTH risk portfolio is distributed among 5. Interest Rate Risk subsidiary companies and varies with the 2. Reputational Risk nature of each business and operation Except in the case of investment of of each sector and company. The Board Failure to protect the Group’s reputation surplus funds at the Parent Company of Directors of CTH is entrusted with the could lead to a loss of trust and level the Group’s income and task of assessing and regulating the risk confidence among stakeholders. We operating cash inflows are substantially profile of each operating sector along recognise the commercial imperative independent of changes in market the lines of the strategic objectives of to safeguard the interests of all our interest rates. The Group’s interest rate the Parent Company. For certain key stakeholders. We therefore endeavour risk arises from long term borrowings areas, the Group has set up separate to engage with them to take into at variable rates linked to market monitoring and reporting structures account their views in developing long conditions. Such arrangements, while dedicated to monitoring and reporting term strategies. being advantageous at present exposes on internal and external risks. Such the Group to interest rate fluctuations. structures, where appropriate, have 3. Funding & Liquidity The Group analyses its interest rate direct reporting responsibilities to The Group’s subsidiaries and associates exposure on a dynamic basis. independent committees as well finance their operations through a combination of retained earnings, 6. Exchange Rate Risk Consistent Risk Monitoring long term and short term loans. Exposure to Exchange Rate risk is The management teams of the Effective management of cash flows minimal. Revenue streams are also respective companies are responsible is a key component of maintaining largely independent of Exchange for overseeing the implementation and strong funding and liquidity positions. Rate fluctuations except in the case of effectiveness of risk management in their Adequate funding arrangements are commodity imports. particular sector. They ensure that the available to meet investments and risk management system as a whole is contingencies that may occur in the 7. Product Safety operational and that the standards and ordinary course of business. Further, the The safety and quality of our products is processes remain current. strong relationships maintained with of paramount importance to the Group Banks enable the Group to raise funds at as well as being essential for maintaining CTH as the Holding Company primarily competitive rates as and when required. customer trust and confidence. A breach faces the internal and external risks that in confidence could affect the size of are described in the following section. our customer base and financial results.
22 C T Holdings PLC Annual Report 2015/16 We have detailed and established 10. Legal issues 14. Information Systems procedures for ensuring product Full provision is made for all legal The Group is heavily reliant on integrity and quality at all times. There liabilities that are expected to result computerised operational and are strict product safety processes in in any material loss to the Company. financial systems to ensure efficiency of place and regular management reports. All contingent liabilities have been operations and financial reporting. These We work in partnership with suppliers disclosed in the Financial Statements. systems and the associated controls to ensure mutual understanding of the are regularly monitored and reviewed. standards required. We also monitor 11. Retirement Benefit Measures have been put in place to developments in areas such as health, Obligations protect the Group against factors such safety and nutrition in order to respond as natural disasters, accidents, computer appropriately to changing customer The retirement benefit obligations viruses and unauthorised accesses. An IT trends and new legislation. are computed based on actuarial assumptions. The management disaster recovery plan is also in place. 8. Health and Safety Risks takes all required steps to ensure that such assumptions are accurate 15. Commodity Price Risk Provision of adequate safety to our and corresponds to past results and The Group’s FMCG sector is staff and customers is of the utmost current trends. However, any significant more exposed to the volatility in importance to us. Injury or loss of life discrepancies between actuarial the commodity prices. Long term cannot be measured in financial terms. assumptions and actual conditions may relationships built with suppliers and We operate stringent health and safety have some impact on future results. The forward contracts help in minimising the processes in line with best practice in management considers the possibility of effects of this risk factor. our outlets, manufacturing facilities and such impact as very low. offices, which also ensure that safety practices are inculcated in all employees. 12. Risk of Natural Disasters Such procedures are monitored regularly. Natural disasters such as earthquakes, storms, and floods, as well as accidents, 9. Regulatory and Political acts of terror, infection and other factors Environment beyond the control of the Group could adversely affect the Group’s business As a Group predominantly operating operation. Insurance covers are obtained within Sri Lanka our business is affected against all identified risks and natural by the regulatory and political framework disasters affecting the assets of the within the country. The effect of such Group and operational matters. an environment outside Sri Lanka could affect the Company to the extent that 13. Competition it affects the entire local economy. We consider these uncertainties in the The Retail and Wholesale distribution local and overseas economies when sector faces a very competitive developing strategies and reviewing environment. The management regularly performance. We remain vigilant to reviews the competitor environment in future changes. As part of our day- order to develop appropriate counter to-day operations we engage with strategies. Due to the widespread nature governmental and non-governmental of operations, Group’s sales are not organisations to ensure the views of dependant on a single or small group of our customers and employees are customers. represented and try to anticipate and contribute to important changes in public policy whenever possible.
C T Holdings PLC Annual Report 2015/16 23 Report of the Audit Committee
The Audit Committee of C T Holdings Scope The Audit Committee functions PLC is appointed by the Board of within the overall governance process The functions of the Audit Committee as Directors of the Company and reports established by the Board of Directors of specified in the Group’s policies cover directly to the Board. Key individual the Company and assists the Board in the following: listed subsidiaries have separate Audit effectively discharging its responsibilities. Committees with representation from yy Oversight of the preparation, the Audit Committee of the Holding Meetings presentation and adequacy of Company. disclosures in the financial statements The Audit Committee of the Holding of a listed company, in accordance Company met once during the year, the Composition with Sri Lanka Accounting Standards. meeting being attended by the auditors The Audit Committee consisted of three yy Oversight of the Company’s of the Company as well. Additional Independent Non-Executive Directors meetings may be called for as required. during the year ended 31st March 2016. They are: Four quarterly financial statements as well as the annual financial Name Non-Executive Directors statements were circulated, reviewed A T P Edirisinghe FCA, FCMA (UK) Chairman Independent and recommended to the Board for approval during the year. In all instances, Sunil Mendis Independent the Audit Committee also obtained J B L De Silva Independent declarations from relevant key officials confirming that the respective financial The Chairman of the Audit Committee statements are in conformity with the is a Fellow member of the Institute of compliance with financial reporting applicable Accounting Standards, Chartered Accountants of Sri Lanka. requirements, information Company Law and other Statutes requirements of the Companies Act including Corporate Governance Rules The Composition of the members of the and other relevant financial reporting and that the presentation of such Audit Committee satisfies the criteria as related regulations and requirements. financial statements are consistent with specified in the standards of Corporate yy Oversight over the processes to those of the previous quarter or Year as Governance for listed Companies. ensure that the Company’s internal the case may be. Further, any departures controls and risk management are from such reporting and statutory The Deputy Chairman / Managing adequate, to meet the requirements requirements and Group policies are Director and Director – Group Corporate of the Sri Lanka Auditing Standards. also disclosed to the Committee for discussion and approval. Affairs attend Audit Committee yy Assessment of the independence meetings as and when requested by the and performance of the Company’s Committee. The Company Secretary external auditors. Conclusion acts as the Secretary to the Committee. yy To make recommendations to the Based on its work, the Audit Committee Board pertaining to appointment, is of the opinion that the control re-appointment and removal of procedures and environment within the external auditors and to approve Group provide reasonable assurance the remuneration and terms of regarding the monitoring of the engagement of the external auditors. operations, accuracy of the financial statements and safeguarding of assets of the Company.
24 C T Holdings PLC Annual Report 2015/16 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.
The Audit Committee obtains an ‘Auditor’s Statement‘ from Messrs. KPMG confirming independence as required by Section 163 (3) of the Companies Act No. 07 of 2007 on the audit of the statement of financial position and the related statements of income, changes in equity, and cash flows of the Company and the Group.
The Audit Committee has recommended to the Board of Directors that M/s. KPMG be re-appointed as Auditors of the Company for the year ending 31st March 2017.
Priya Edirisinghe Chairman - Audit Committee
10th June 2016
C T Holdings PLC Annual Report 2015/16 25 Report of the Remuneration Committee
The Remuneration Committee of C T Holdings PLC is appointed by the Board of Directors of the Company and reports directly to the Board. The remuneration Committee of the parent Company may also function as the Remuneration Committee of certain subsidiaries unless such subsidiaries have separate Remuneration Committees. The Remuneration Committee of the Parent Company is represented in the Remuneration Committees of subsidiaries, where such Committees have been separately constituted.
Composition The Committee comprises four Non-Executive Directors, three of whom are independent as follows
Name Non-Executive Directors Louis Page Chairman Non-Executive A T P Edirisinghe FCA, FCMA (UK) Independent Sunil Mendis Independent J B L De Silva Independent
The Composition of the members of the Remuneration Committee satisfies the criteria as specified in the standards of Corporate Governance for listed Companies.
Scope The Remuneration Committee recommends the remuneration payable to the Executive Directors, Chief Executive Officer and/or equivalent position thereof and Senior Management/Executives, to the Board of the Company concerned which will make the final determination upon consideration of such recommendations. The Remuneration Committee shall also recommend the variable incentives/or bonuses.
The Group commissions an independent study every 1 to 3 years for the remuneration packages of the Directors, CEOs and Senior Management to ensure that the remuneration / compensation of the Group is on par with the industries in which the group Companies operate.
Meetings The committee meets once each year or more regularly if required.
(Signed) Louis Page Chairman - Remuneration Committee
10th June 2016
26 C T Holdings PLC Annual Report 2015/16 Related Party Transactions Review Committee Report
The Related Party Transactions Review yy Making immediate market disclosures yy identifying & reporting on recurrent Committee (RPTRC) was appointed by on applicable RPT, as required by & non-recurrent transactions to be in the Board of Directors of the Company Section 9 of the Continuing Listing line with the applicable CSE Rules. on 28th March 2016 and reports directly Requirements of the CSE. to the Board. yy Making appropriate disclosures on The Committee noted that there were RPT in the Annual Report, as required no changes to practices followed Composition by Section 9 of the Continuing Listing over the years and general Terms and The Committee comprises three Requirements of the CSE. Conditions applicable to all trading members who are independent as transactions and Lease Agreements follows: entered into with Related Parties are similar to those entered into with non- Name Non-Executive related parties taking to account, if any, Directors due consideration of factors such as A T P Edirisinghe FCA, FCMA (UK) Chairman Independent trading volumes, the long term nature of the Leases and the extent of the area Sunil Mendis Independent occupied, anchor tenancies etc. J B L De Silva Independent The Committee agreed that all The Chairman is a Fellow of the Institute During 2015/16, a comprehensive RPT transactions with Related Parties of Chartered Accountants of Sri Lanka. Policy was developed and disseminated will hereafter be reviewed by it The composition of the members of among relevant stakeholders. and supporting documents and/or the Related Party Transactions Review justification of such terms will be called Committee satisfies the criteria as The Committee will schedule quarterly for. Its comments/observations will specified in the Standards on Corporate meetings to review and report to the thereafter be communicated to the Governance for listed companies. Board, on matters involving RPT falling Board of Directors. under its terms of Reference. Scope The RPTRC was formed by the Board to Meetings assist the Board in reviewing all Related The Related Party Transactions Review Priya Edirisinghe Party Transactions (RPT) carried out by Committee met once during the year. Chairman - Related Party Transactions the Company. The meeting was also attended by the Review Committee Deputy Chairman / Managing Director The mandate of the Committee includes of the Company and Director – Group 10th June 2016 inter-alia the assurance of the following: Corporate Affairs. yy Developing and recommending for The Committee adopted policies and adoption by the Board of Directors procedures for of the Company and its listed subsidiaries,a RPT Policy consistent yy reviewing the Related Party with that proposed by the CSE. Transactions at each quarterly meeting,
C T Holdings PLC Annual Report 2015/16 27 Report of the Nominations Committee
The Nominations Committee of C T Holdings PLC is appointed by the Board of Directors of the Company and reports directly to the Board. The Nominations Committee of the parent Company functions as the Nominations Committee of all subsidiaries within the Group.
Composition The Committee comprises one Executive and three Non-Executive Directors, two of whom are independent as follows -
Name Non-Executive Directors Louis Page Chairman Non-Executive A T P Edirisinghe FCA, FCMA (UK) Independent Sunil Mendis Independent Ranjit Page
The Composition of the members of the Remuneration 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 all Group Companies and recommend to the respective Board of Directors of the relevant company for appointment.
During the year one appointment was made to the Board of Directors of the parent Company.
Meetings The Committee meets once each year or as required.
(Signed) Louis Page Chairman - Nominations Committee
10th June 2016
28 C T Holdings PLC Annual Report 2015/16 Financial Statements 30 Annual Report of the Board of Directors of the Company 32 Statement of Directors’ Responsibilities 33 Independent Auditors’ Report 34 Statement of Profit or Loss and other Comprehensive Income 35 Statement of Financial Position 36 Statement of Changes in Equity 38 Statement of Cash Flows 40 Notes to the Financial Statements
C T Holdings PLC Annual Report 2015/16 29 Annual Report of the Board of Directors of the Company
The Directors are pleased to present the The Group’s outlay on Property, Plant and Equipment during the year amounted Annual Report of C T Holdings PLC for to Rs 1.87 (2015 Rs 2.0 Bn) while there was no capital outlay on Property,Plant and the Year ended 31st March 2016. Equipment during the year at the Company level (2015 - 10.4 Mn). The Directors are of the opinion that the carrying amount of properties stated in Note 18 to the financial Activities statements reasonably reflects their fair values. The Group’s Principal activities and important events during the year are Extents, locations, valuations of the Group’s land holdings and investment properties discussed in detail in the Chairman’s are disclosed in Note 18 and 20 to the financial statements. Statement and Operations Review set out on pages 10 to 11 and 14 to 19 Stated Capital respectively. The stated capital of the Company at the balance sheet date amounted to Rs. 3,194,007,832 comprising 183,097,253 Ordinary (voting) Shares. There were no significant changes to the business activities of the Group during The Company and subsidiaries do not have any Employee Share Ownership or Stock the year. Option Schemes.
Risk Management Shareholders The overall approach to risk There were 1,567 registered shareholders as at 31st March 2016 (2015 -1,603 management within the Company and shareholders). An analysis of shareholders according to size and holdings, public Group is set out in page 22 to 23. holdings and the names of the twenty largest shareholders of the Company at the reporting date are given on Pages 102 and 103. Financial Statements The audited Financial Statements of the Directorate Company & Group for the year ended Mr. A D B Talwatte was appointed a Director on 28th March 2016. All other Directors 31st March 2016 given on pages 34 to of the Company have been Directors throughout the year under review. Details of 98 form an integral part of this Annual Directors of Group Companies as at the reporting date are given on pages 100 to 101 Report. of this report.
Auditors’ Report Brief profiles of the Directors of the Company are given on pages 12 and 13, including The auditors’ report is set out on page their determination as independent and non executive, as appropriate. 33. Details of Attendance at Meetings Accounting Policies Name of Director Board Meetings AGM The Accounting Policies adopted in the Held Attended Held Attended preparation of the Financial Statements are given on Notes 01 to 09. Louis Page 5 5 1 1 Ranjit Page 5 5 1 1 Ratios and market price Information J B L De Silva 5 3 1 1 Key ratios and market price information Priya Edirisinghe 5 5 1 1 pertaining to the equity of the Group are Sunil Mendis 5 3 1 1 set out on page 99, along with the trend Mrs. Cecilia Muttukumaru 5 5 1 1 for the past five years. Company and subsidiaries have not raised any capital Joseph Page 5 2 1 0 through listed debt instruments during R Selvaskandan 5 4 1 1 the year. Dr. A Aravinda Page 5 3 1 1 Property, Plant & Equipment A D B Talwatte 0 0 0 0 The movement of Property, Plant and Equipment during the year is given in Note 18 to the Financial Statements.
30 C T Holdings PLC Annual Report 2015/16 Directors’ Remuneration Auditors The remuneration of the Directors is given in Note 12 to the Financial Statements. The remuneration paid to the Auditors is given in Note 12 to the Financial Directors’ Interest in Contracts Statements. The Directors’ interest in contracts and proposed contracts with the Company are as disclosed under the related party transactions in Note 35 to the financial statements. As far as the Directors are aware, the Auditors do not have any relationship The Directors have declared their interests at meetings of the Board. (other than that of an auditor) with the Company. M/s. KPMG, Chartered Directors’ Shareholdings Accountants are deemed re- appointed in terms of Section 158 of The Directors’ Shareholdings in the Company were as follows: the Companies Act No.7 of 2007, as Auditors of the Company. A resolution As at As at 31-Mar- 2016 31-Mar-2015 authorising the Directors to determine their remuneration will be submitted at Louis Page 10,000 10,000 the Annual General Meeting. Ranjit Page 10,927,338 10,927,338 By Order of the Board J B L De Silva 213 213 Priya Edirisinghe 30,036 30,036 Sunil Mendis - - Mrs. Cecilia Muttukumaru 1,155,000 1,105,985 Priya Edirisinghe Sunil Mendis Director Director Joseph Page 6,426,520 6,426,520 R Selvaskandan - - Dr. A Aravinda Page 1,750 1,750 A D B Talwatte - - S L W Dissanayake 18,550,857 18,501,842 Company Secretary 10th June 2016 Events After the Reporting Period Events occurring after the reporting date of the Company are given in Note 39 to the financial statements.
Corporate Governance The Corporate Governance Practices within the Group are set out in pages 20 to 21 and the report of the Audit Committee is set out on page 24 and 25.
Dividends During the year, the Company paid the following dividends (a) Final dividend of Rs. 2.60 per share on 12th August 2015, out of profits for the year ended 31st March 2015. (b) Interim dividend of Rs. 1.00 per share on 18th January 2016, out of profits for the year ending 31st March 2016.
The Directors propose a final dividend of Rs. 2.80 per share payable on 14th July 2016, subject to approval of the shareholders at the Annual General Meeting.
Donations Donations made by the Group for the year amounted to Rs. 3,585,000 (2015 - 336,466). Donations made by the Company for the year amounted to Rs. 101,000 (2015 - Rs 151,000).
C T Holdings PLC Annual Report 2015/16 31 Statement of Directors’ Responsibilities
Maintenance of Accounting Records reasonable but not absolute assurance that the Company is protected Under the provisions of the Companies Act No. 07 of 2007 (‘the Act’), every company from undue risks, frauds and other is required to maintain accounting records which correctly record and explain the irregularities. Company’s transactions, and will at any time enable the financial position of the Company to be determined with reasonable accuracy, enable the Directors to Compliance prepare financial statements in accordance with the Act and also enable the financial statements of the Company to be readily and properly audited. Considering the present financial position of the Group the forecasts for Preparation of Financial Statements of the Company & Group the foreseeable future, the Directors have adopted the going concern basis The Act places the responsibility on the Board of Directors to ensure that financial for the preparation of these financial statements are prepared within the prescribed time period in conformity with the Act. statements. Such financial statements of a Company shall give a true and fair view of the state of affairs of the Company as at the reporting date and the profit or loss or income and The Directors confirm that: expenditure, as the case may be, of the Company for the accounting period ending (a) The Company is in compliance on that reporting date. with the requirements of the Act as aforementioned. Further the Act also requires that a Company with one or more subsidiaries at (b) These financial statements have the reporting date to also prepare financial statements in relation to the Group been prepared in accordance with including every subsidiary, which give a true and fair view of the state of affairs of the the requirements of the Companies Company and its subsidiaries as at the reporting date and the profit or loss or income Act No. 7 of 2007 and applicable Sri and expenditure, as the case may be, of the Company and its subsidiaries for the Lanka Accounting Standards, which accounting period ending on that reporting date. have been consistently applied and supported by reasonable and Dividends prudent judgments and estimates. In the event of any distribution of dividends the Board of Directors are required to (c) The Company obtained the required satisfy themselves that the Company will, immediately after the relevant distribution certificate of solvency for the is made, satisfy the solvency test, provided that such a certificate is obtained from the dividends declared during the year. auditors. (d) All statutory payments have been made up to date. Annual Report The Board of Directors are required to prepare an Annual Report on the affairs of The Directors are satisfied that the the Company during the accounting period ending on the reporting date in the control procedures within the Company prescribed format and circulate the same to every shareholder of the Company within operated effectively during the year. the time frame prescribed in the Act. By order of the Board Independent Audit The Act required the Company to appoint an Auditor to audit the financial statements of the Company / Group for the reporting period. Accordingly, M/s KPMG presently S L W Dissanayake function as the Auditors of the Company. Their responsibility with regard to the Company Secretary financial statements as auditors of the Company are set out in the Independent Auditor‘s Report set out on Page 33. 10th June 2016 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
32 C T Holdings PLC Annual Report 2015/16 Independent Auditors’ Report
TO THE SHAREHOLDERS OF audit to obtain reasonable assurance Report on Other Legal and C T HOLDINGS PLC about whether the financial statements Regulatory Requirements are free from material misstatement. As required by section 163 (2) of the Report on the Financial Statements Companies Act No. 07 of 2007, we state An audit involves performing procedures We have audited the accompanying the following: financial statements of C T Holdings to obtain audit evidence about the amounts and disclosures in the financial PLC, (“the Company”), and the a) The basis of opinion and scope and statements. The procedures selected consolidated financial statements of the limitations of the audit are as stated depend on the auditors’ judgment, Company and its subsidiaries (“Group”), above including the assessment of the risks of which comprise the statement of b) In our opinion: material misstatement of the financial financial position as at March 31, 2016, yy we have obtained all the statements, whether due to fraud or and the statements of profit or loss and information and explanations error. In making those risk assessments, other comprehensive income, changes that were required for the audit the auditor considers internal control in equity and cash flows for the year and, as far as appears from our relevant to the entity’s preparation of then ended, and notes, comprising examination, proper accounting the financial statements that give a a summary of significant accounting records have been kept by the true and fair view in order to design policies and other explanatory Company, information set out on pages 34 to 99 of audit procedures that are appropriate the annual report. in the circumstances, but not for the yy The financial statements of the purpose of expressing an opinion on Company give a true and fair Board’s Responsibility for the the effectiveness of the entity’s internal view of its financial position as at Financial Statements control. An audit also includes evaluating March 31, 2016, and of its financial The Board of Directors (“Board”) is the appropriateness of accounting performance and cash flows for responsible for the preparation of these policies used and the reasonableness the year then ended in accordance financial statements that give a true and of accounting estimates made by with Sri Lanka Accounting fair view in accordance with Sri Lanka Board, as well as evaluating the overall Standards. Accounting Standards, and for such presentation of the financial statements. yy The financial statements of the internal control as Board determines is Company, and the Group comply necessary to enable the preparation of We believe that the audit evidence with the requirements of sections financial statements that are free from we have obtained is sufficient and 151 and 153 of the Companies Act material misstatement, whether due to appropriate to provide a basis for our No. 07 of 2007. fraud or error. audit opinion.
Auditors’ Responsibility Opinion Our responsibility is to express an In our opinion, the consolidated financial opinion on these financial statements statements give a true and fair view of CHARTERED ACCOUNTANTS based on our audit. We conducted the financial position of the Group as Colombo our audit in accordance with Sri Lanka at March 31, 2016, and of its financial Auditing Standards. Those standards performance and cash flows for the year 10 June 2016 require that we comply with ethical then ended in accordance with Sri Lanka requirements and plan and perform the Accounting Standards.
C T Holdings PLC Annual Report 2015/16 33 Statement of Profit or Loss and other Comprehensive Income
Group Company For the year ended 31st March 2016 2015 2016 2015 In thousands of rupees
Continuing operations Revenue 10 72,399,182 62,452,231 - - Cost of sales (63,669,926) (56,253,604) - - Gross profit 8,729,256 6,198,627 - - Other income 11 1,991,540 1,712,038 169,814 28,925 Distribution expenses (2,312,232) (2,050,350) - - Administrative expenses (3,739,374) (3,185,716) (81,062) (70,864) Other expenses (533,881) (547,047) (180,197) (181,468) Operating profit / (loss) 12 4,135,309 2,127,552 (91,445) (223,407) Finance income 477,155 399,983 683,714 619,165 Finance cost (870,781) (1,067,953) (78) (92) Net finance costs 13.1 (393,626) (667,970) 683,636 619,073 Share of profit of equity accounted investees, net of income tax 23.1 (79,359) (37,891) - - Profit before taxation 3,662,324 1,421,691 592,191 395,666 Tax expenses 14.1 (1,344,117) (701,923) (23,320) (12,609) Profit for the year from continuing operations 2,318,207 719,768 568,871 383,057
Discontinued operations Profit for the year from discontinued operations, net of income tax 15 - 420,435 - - Profit for the year 2,318,207 1,140,203 568,871 383,057
Other comprehensive income, net of income tax Items that will not be reclassified subsequently to profit or loss: Revaluation of property, plant and equipment 1,148,526 - - - Remeasurement of obligation on defined benefit plan (30,094) (28,575) (5,007) 565 Share of other comprehensive income of equity accounted investees (277) - - - 1,118,155 (28,575) (5,007) 565 Items that may be reclassified subsequently to profit or loss: Net change in fair value of available-for-sale financial assets 13.2 (65,557) 75,117 (41,613) 73,430 Share of other comprehensive income of equity accounted investees 23.1 (3,259) 592 - - (68,816) 75,709 (41,613) 73,430 Other comprehensive income for the year, net of income tax 1,049,339 47,134 (46,620) 73,995 Total comprehensive for the year 3,367,546 1,187,337 522,251 457,052
Profit for the year attributable to: Owners of the parent 1,626,228 816,846 568,871 383,057 Non-controlling interest 691,979 323,357 - - 2,318,207 1,140,203 568,871 383,057 Total comprehensive income for the year attributable to: Owners of the parent 2,487,381 873,057 522,251 457,052 Non-controlling interest 880,165 314,280 - - 3,367,546 1,187,337 522,251 457,052
Earnings per share (Rs.) Basic earning per share 16 8.88 4.46 3.11 2.09 Basic earning per share from continuing operations 8.88 2.17 3.11 2.09
Dividends per share (Rs.) 17 3.80 3.40 3.80 3.40
The notes on pages 40 to 98 are an integral part of these financial statements
34 C T Holdings PLC Annual Report 2015/16 Statement of Financial Position
Group Company As at 31st March 2016 2015 2016 2015 In thousands of rupees
Assets Non-current assets Property, plant and equipment 18 20,948,826 19,353,525 8,298 13,389 Prepaid lease rentals to acquire rights to use lands 19 34,532 36,729 - - Investment properties 20 9,828,265 8,388,972 1,443,250 1,294,750 Goodwill and other intangible assets 21 1,320,109 1,278,342 688,467 688,467 Investments in subsidiaries 22 - - 1,430,177 1,530,395 Investments in equity accounted investees 23 4,195,236 1,674,581 2,219,653 943,653 Other investments 24 1,363,416 3,343,885 1,178,448 3,305,041 Deferred tax assets 14.7 54,630 68,744 - - Total non-current assets 37,745,014 34,144,778 6,968,293 7,775,695
Current assets Inventories 25 7,198,122 6,256,396 - - Trade and other receivables 26 3,768,320 3,551,822 806,277 178,706 Other short term financial assets 24 50,976 26,814 - - Cash and cash equivalents 27 3,401,289 2,783,766 237,505 172,179 Total current assets 14,418,707 12,618,798 1,043,782 350,885 Total assets 52,163,721 46,763,576 8,012,075 8,126,580
Equity and liabilities Equity attributable to owners of the parent Stated capital 28 3,194,008 3,194,008 3,194,008 3,194,008 Reserves 29 4,618,260 3,732,285 428,807 470,420 Retained earnings 11,047,414 10,424,515 4,151,826 4,254,553 Total equity attributable to equity holders of the parent 18,859,682 17,350,808 7,774,641 7,918,981 Non-controlling interest 4,662,872 4,195,112 - - Total equity 23,522,554 21,545,920 7,774,641 7,918,981
Liabilities Non-current liabilities Loans and borrowings 30 198,300 730,971 - - Trade and other payables 33 2,459,296 2,172,070 - - Employee benefits 31 694,345 554,219 14,410 7,874 Deferred income 32 84,863 96,344 - - Deferred tax liabilities 14.7 991,819 776,722 - - Total non-current liabilities 4,428,623 4,330,326 14,410 7,874
Current liabilities Trade and other payables 33 11,173,225 8,123,176 12,370 31,727 Income tax payable 14.4 1,522,171 942,373 3,759 - Dividends payable 206,895 167,998 206,895 167,998 Loans and borrowings 30 8,047,972 7,609,682 - - Bank overdrafts 27 3,262,281 4,044,101 - - Total current liabilities 24,212,544 20,887,330 223,024 199,725 Total equity & liabilities 52,163,721 46,763,576 8,012,075 8,126,580 The notes on pages 40 to 98 are an integral part of these financial statements. I certify that these Financial Statements have been The Board of Directors is responsible for the preparation and presentation of prepared in accordance with the requirements of the these Financial statements. The Financial Statements have been approved by Companies Act No 7 of 2007. the Board of Directors on 10th June 2016.
Priya Edirisinghe Sunil Mendis S C Niles Director Director Director, Group Corporate Affairs
C T Holdings PLC Annual Report 2015/16 35 Statement of Changes in Equity
Group <------Attributable to the owners of the parent ------> Non- Total Stated Revaluation AFS General Retained Total controlling In thousands of rupees Capital Reserve Reserve Reserve Earnings Interest
For the year ended 31st March 2015 Balance at 1st April 2014 3,194,008 3,200,461 106,888 367,220 10,079,754 16,948,331 3,824,693 20,773,024 Total comprehensive income for the year Profit for the year - - - - 816,846 816,846 323,357 1,140,203 Other comprehensive income Net change in fair value of available-for-sale financial assets - - 74,565 - - 74,565 552 75,117 Re-measurements of defined benefit - - - - (18,946) (18,946) (9,629) (28,575) Share of other comprehensive income of associates - - - - 592 592 - 592 Total other comprehensive income for the year - - 74,565 - (18,354) 56,211 (9,077) 47,134 Total comprehensive income for the year - - 74,565 - 798,492 873,057 314,280 1,187,337
Transactions with owners directly recorded in equity Dividends paid - - - - (604,221) (604,221) (182,394) (786,615) Put options written on non-controlling - - - - (1,382,011) (1,382,011) (592,300) (1,974,311) Total contributions by & distributions to owners - - - - (1,986,232) (1,986,232) (774,694) (2,760,926)
Changes in ownership interest Disposal of ownership interest - (16,849) - - 16,849 - - - Disposal of ownership interest without a change in control - - - - 1,561,483 1,561,483 975,767 2,537,250 Acquisition of equity accounted investees ------(74,622) (74,622) Acquisition of non controlling interest - - - - (45,831) (45,831) (70,312) (116,143) Total changes in ownership - (16,849) - - 1,532,501 1,515,652 830,833 2,346,485 Balance as at 31st March 2015 3,194,008 3,183,612 181,453 367,220 10,424,515 17,350,808 4,195,112 21,545,920
For the year ended 31st March 2016 Balance at 1st April 2015 3,194,008 3,183,612 181,453 367,220 10,424,515 17,350,808 4,195,112 21,545,920 Super gain tax (Refer Note A) - - - - (84,948) (84,948) (38,249) (123,197) Balance at 1st April 2015 - Restated 3,194,008 3,183,612 181,453 367,220 10,339,567 17,265,860 4,156,863 21,422,723 Total comprehensive income for the year Profit for the year - - - - 1,626,228 1,626,228 691,979 2,318,207 Other comprehensive income Revaluation of property, plant and equipment - 944,345 - - - 944,345 204,179 1,148,524 Net change in fair value of available-for-sale financial assets - - (58,370) - - (58,370) (7,187) (65,557) Re-measurements of defined benefit - - - - (21,288) (21,288) (8,806) (30,094) Share of other comprehensive income of associates - - - - (3,536) (3,536) - (3,536) Total other comprehensive income for the year - 944,345 (58,370) - (24,824) 861,151 188,186 1,049,337 Total comprehensive income for the year - 944,345 (58,370) - 1,601,404 2,487,379 880,165 3,367,544
Transactions with owners directly recorded in equity Dividends paid - - - - (659,150) (659,150) (255,374) (914,524) Put options written on non-controlling - - - - (194,759) (194,759) (82,673) (277,432) Total contributions by & distributions to owners - - - - (853,909) (853,909) (338,047) (1,191,956)
Changes in ownership interest Acquisition of non controlling interest - - - - (39,648) (39,648) (37,935) (77,583) Acquisition of equity accounted investees ------1,826 1,826 Total changes in ownership - - - - (39,648) (39,648) (36,109) (75,757) Balance as at 31st March 2016 3,194,008 4,127,957 123,083 367,220 11,047,414 18,859,682 4,662,872 23,522,554
36 C T Holdings PLC Annual Report 2015/16 Company Stated Revaluation AFS General Retained Total In thousands of rupees Capital Reserve Reserve Reserve Earnings
For the year ended 31st March 2015 Balance at 1st April 2014 3,194,008 74,999 108,453 213,538 4,475,152 8,066,150 Total comprehensive income for the year Profit for the year - - - - 383,057 383,057 Other comprehensive income Net change in fair value of available-for-sale financial assets - - 73,430 - - 73,430 Defined benefit plan actuarial gains / (losses) - - - - 565 565 Total other comprehensive income for the year - - 73,430 - 565 73,995 Total comprehensive income for the year - - 73,430 - 383,622 457,052
Transactions with owners directly recorded in equity Contributions by & distributions to owners Dividends Paid - 2013/14 (Final) - - - - (457,743) (457,743) Dividends Paid - 2014/15 (Interim) - - - - (146,478) (146,478) Total contributions by & distributions to owners - - - - (604,221) (604,221) Balance as at 31st March 2015 3,194,008 74,999 181,883 213,538 4,254,553 7,918,981
For the year ended 31st March 2016 Balance at 1st April 2015 3,194,008 74,999 181,883 213,538 4,254,553 7,918,981 Super gain tax (Refer Note A) - - - - (7,441) (7,441) Balance at 1st April 2015 - Restated 3,194,008 74,999 181,883 213,538 4,247,112 7,911,540 Total comprehensive income for the year Profit for the year - - - - 568,871 568,871 Other comprehensive income Net change in fair value of available-for-sale financial assets - - (41,613) - - (41,613) Defined benefit plan actuarial gains / (losses) - - - - (5,007) (5,007) Total other comprehensive income for the year - - (41,613) - (5,007) (46,620) Total comprehensive income for the year - - (41,613) - 563,864 522,251
Transactions with owners directly recorded in equity Contributions by & distributions to owners Dividends Paid - 2014/15 (Final) - - - - (476,053) (476,053) Dividends Paid - 2015/16 (Interim) - - - - (183,097) (183,097) Total contributions by & distributions to owners - - - - (659,150) (659,150) Balance as at 31st March 2016 3,194,008 74,999 140,270 213,538 4,151,826 7,774,641
Note - A As per the provisions of Part III of the Finance Act, No. 10 of 2015, which was certified on 30th October 2015, the Group and Company are liable for Super Gain Tax of Rs. 123.197 Mn and Rs. 7.441 Mn respectively. According to the Act, the Super Gain Tax was deemed to be an expenditure in the Financial Statements relating to the year of assessment which commenced on 1st April 2013. The Act supersedes the requirements of the Sri Lanka Accounting Standards; hence the expense of Super Gain Tax is accounted in accordance with the requirements of the said Act as recommended by the Statement of Alternative Treatment (SoAT) on Accounting for Super Gain Tax issued by the Institute of Chartered Accountants of Sri Lanka, dated 24th November 2015.
The notes on pages 40 to 98 are an integral part of these financial statements.
C T Holdings PLC Annual Report 2015/16 37 Statement of Cash Flows
In thousands of rupees Group Company For the year ended 31st March 2016 2015 2016 2015
Cash flows from operating activities Profit for the year Continuing operations 3,662,324 1,421,691 592,191 395,666 Discontinued operations - 420,435 - -
Adjustments for: Depreciation of property, plant & equipment 18 1,766,001 1,718,635 5,091 8,093 Amortisation of leasehold right over land 19 1,650 1,422 - - Amortisation of intangible assets 21 36,613 20,689 - - Interest income 13.1 (204,102) (173,956) (8,835) (7,113) Profit on deemed disposal of equity accounted investees 23.6 (55,651) (17,176) - - (Profit) / loss on discontinued operation, net of income tax 15 - 2,045,452 - - Profit on sale of property, plant & equipment 11 (24,846) (17,010) - - Dividend income 13.1 (133,422) (188,222) (621,154) (594,060) Finance cost 13.1 870,781 1,067,953 28 92 Share of loss of equity accounted investees 49,837 37,891 - - Reversal / (charge) for impairment of trade and other receivables 26.2 35,232 (9,218) - - Amortisation of capital grants 32 (11,481) (12,180) - - Provision for slow moving and obsolete inventories (44,711) (23,519) - 19 Change in fair value of investment properties 20 (190,583) (228,914) (148,500) (6,002) Impairment losses on property, plant and equipment 18 97,166 98,108 - - Provision for obligation on defined benefit plan 31.1 124,770 108,219 1,528 1,166 Gain on disposal of available for sale investments (53,725) (17,992) (53,725) (17,992) (Gain) / loss on de-recognition of subsidiaries (257) - 50 - Impairment loss of assets classified as available for sale - - - - Impairment losses on investments - - 180,197 181,468 Cash generated from operating activities before working capital 5,925,596 6,252,308 (53,129) (38,663) Change in inventories (897,015) 54,800 - - Change in trade and other receivables (783,165) 347,677 2,267 10,867 Change in amounts due from related parties (123,771) (187,481) (629,838) (166,142) Change in trade and other payables 2,975,982 (248,346) (1,906) 2,409 Change in amounts due to related parties (1,423) 3,062 (17,454) - Cash generated from operating activities 7,096,204 6,222,020 (700,060) (191,529) Interest paid (870,739) (1,067,584) (28) (92) Income tax paid (648,986) (298,925) (27,002) (9,471) Defined benefit plan payments 31.1 (24,286) (39,861) - - Net cash from / (used in) operating activities 5,552,193 4,815,650 (727,090) (201,092)
38 C T Holdings PLC Annual Report 2015/16 In thousands of rupees Group Company For the year ended 31st March 2016 2015 2016 2015
Cash flows from investing activities Proceeds from sale of property, plant and equipment 18 117,432 769,029 - - Interest received 13.1 204,102 173,956 8,835 7,113 Dividends received 13.1 139,348 195,406 505,932 594,060 Capital grant received 32 - 2,391 - - Proceeds from sale of investments 2,277,008 729,813 2,277,008 729,813 Disposal of discontinued operation, net of cash disposed of 15.2 - 1,131,434 - - Cash lost on de-recognition of subsidiaries (251) - - Acquisition of property, plant and equipment (2,390,759) (2,000,976) - (10,397) Prepaid lease rentals to acquire rights to use lands 19 - (13,223) - Improvements to investment property 20 (6,747) (25,951) - - Acquisition of non-controlling interests (80,029) (116,143) - (80,432) Acquisition of intangible assets (77,945) (19,057) - - Acquisition of subsidiary, net of cash acquired 22.5(b)(iv) (494,980) - - Acquisition of investment in equity accounted investees (2,552,000) (497,674) (1,276,000) (248,936) Acquisition of other investments (318,029) (209,299) (103,106) (179,299) Issue of shares to non controlling interest - 2,537,250 - Net cash from / (used in) investing activities (3,182,850) 2,656,956 1,412,669 811,922
Cash flows from financing activities Net short term borrowings 460,443 (6,335,000) - - Repayment of long term borrowings 30.1 (553,489) (672,119) - - Payment of finance lease liabilities 30.2 (1,327) (3,185) - - Dividends paid to owners (620,253) (544,328) (620,253) (544,328) Dividends paid to non controlling interest (255,374) (182,394) - - Net cash from / (used in) financing activities (970,000) (7,737,026) (620,253) (544,328) Net decrease in cash and cash equivalents 1,399,343 (264,420) 65,326 66,502
Cash and cash equivalents at 1st April (1,260,335) (995,915) 172,179 105,677 Net decrease in cash and cash equivalents 1,399,343 (264,420) 65,326 66,502 Cash and cash equivalents at 31st March 139,008 (1,260,335) 237,505 172,179
Cash and cash equivalents at 31st March Cash and cash at bank 1,694,751 1,723,155 3,224 172,179 Short term deposits 1,706,538 1,060,611 234,281 - 3,401,289 2,783,766 237,505 172,179 Bank overdrafts (3,262,281) (4,044,101) - - 27 139,008 (1,260,335) 237,505 172,179
The notes on pages 40 to 98 are an integral part of these financial statements
C T Holdings PLC Annual Report 2015/16 39 Notes to the Financial Statements
1. Reporting entity to the nearest thousand, except when March 2016 is included in the following otherwise indicated. notes: C T Holdings PLC (the ‘Company’) is a company incorporated in Sri (B) Use of judgments and estimates yy Note 31 – measurement of defined Lanka and listed on the Colombo The preparation of the financial benefit obligations: key actuarial Stock Exchange. The address of the statements in conformity with SLFRS’s assumptions; Company’s registered office is No. 8, requires management to make Sir Chittampalam A Gardiner Mawatha, yy Note 14.7 – recognition of judgments, estimates and assumptions Colombo 2. The consolidated financial deferred tax assets: availability of that affect the application of accounting statements of the Company as at future taxable profit against which policies and the reported amounts of and for the year ended 31st March carry forward tax losses can be assets, liabilities, income and expenses. 2016 comprise the Company and its used; Actual results may differ from these subsidiaries (together referred to as estimates. the ‘Group’ and individually as ‘Group (C) Materiality and Aggregation entities’) and the Group’s interest in Each material class of similar items is Estimates and underlying assumptions associates. The financial statements presented separately in the financial are reviewed on an on-going basis. of all companies within the Group statements. Items of a dissimilar nature Revisions to accounting estimates are are prepared for a common financial or function are presented separately recognised in the period in which the year which ends on 31st March 2016 unless they are immaterial. estimates are revised and in any future except for the companies stated in the periods affected. note 23.4. The principal Activities of the Group are given in ‘Our Presence’ 4. Basis of measurement i. Judgements set out on pages 6 to 7 of the Annual Information about critical judgments The financial statements have been Report. in applying accounting policies that prepared on the historical cost basis have the most significant effect on the except for the following material items in amounts recognised in the financial the statement of financial position: 2. Statement of compliance statements is included in the following The financial statements have been notes: yy Freehold land prepared in accordance with new Sri yy non-derivative financial instruments Lanka Accounting Standards (SLFRSs), yy Note 18 – Property, plant and at fair value through profit or loss and the requirements of the Companies equipment are measured at fair value; Act, no 07 of 2007. The Board of yy Note 20 – Investment properties yy available-for-sale financial assets Directors of the Company is responsible are measured at fair value; for the preparation and presentation of yy Note 21 – Intangible Assets these financial statements. The financial yy Note 22.6 – Impairment of yy investment property is measured statements were authorised for issue investments at fair value; by the Board of Directors on 10th June yy Note 31 – Employee benefits yy liability for defined benefit 2016. obligations is recognised as the yy Note 14.7 – Deferred taxation present value of the defined benefit obligation; 3. Basis of preparations ii. Assumptions and estimation uncertainties The Management of the C T Holdings (A) Functional and presentation Information about assumptions and PLC has made an assessment of the currency estimation uncertainties that have a Group’s ability to continue as a going These financial statements are significant risk of resulting in a material concern and is satisfied that the group presented in Sri Lankan Rupees, which adjustment in the year ending 31st is the Company’s functional currency. has the resources to continue in business All financial information presented in for a foreseeable future. Furthermore, Sri Lankan Rupees has been rounded management is not aware of any
40 C T Holdings PLC Annual Report 2015/16 material uncertainties that may cast or at its proportionate share of the income of subsidiary is attached to the significant doubt upon the Group’s recognised amount of the identifiable owners of the Company and to the non- ability to continue as a going concern. net assets, at the acquisition date. controlling interest, even this result in the Therefore, the financial statements Transaction costs, other than those non-controlling interest having a deficit continue to be prepared on the going associated with the issue of debtor balance. When necessary, adjustments concern basis. equity securities, that the Group incurs in are made to the financial statements of connection with a business combination subsidiaries to bring their accounting are expensed as incurred, except policies into line with the Group’s 5. Significant accounting policies if related to issue of debt or equity accounting policies. Unless otherwise indicated, the securities. accounting policies set out below have III. Loss of control been applied consistently to all periods The consideration transferred does On the loss of control, the Group presented in these financial statements not include amounts related to the de-recognises the assets and liabilities and have been applied consistently by settlement of pre-existing relationships. of the subsidiary, any non-controlling Group entities. Such amounts are generally recognized interests and the other components of in profit or loss. equity related to the subsidiary. Any surplus or deficit arising on the loss (A) Basis of consolidation I. Business combinations Any contingent consideration is of control is recognised in profit or Business combinations are accounted measured at fair value at the date of loss. If the Group retains any interest for using the acquisition method as at acquisition. If an obligation to pay in the previous subsidiary, then such the acquisition date – i.e. when control is contingent consideration that meets interest is measured at fair value at the transferred to the Group. the definition of a financial instrument date that control is lost. Subsequently is classified as equity, then it is not re- that retained interest is accounted The Group measures goodwill at the measured and settlement is accounted for as equity accounted investee or acquisition date as: for within equity. Otherwise, subsequent as an available-for-sale financial asset yy the fair value of the consideration changes in the fair value of the depending on the level of influence transferred; plus contingent consideration are recognized retained. in profit or loss. yy the recognised amount of any IV. Non-controlling interests non-controlling interests in the II. Subsidiaries For each business combination, the acquiree; plus Subsidiaries are entities controlled by Group elects to measure any non- yy if the business combination is the Group. The Group controls an entity controlling interests in the acquiree achieved in stages, the fair value of when it is exposed to, or has right to, at their proportionate share of the the pre-existing equity interest in variable returns from its involvement acquiree’s identifiable net assets, which the acquiree; less with the entity and has the ability to are generally at fair value. yy the net recognised amount affect those returns through its power (generally fair value) of the over the entity. Income and expenses Changes in the Group’s interest in a identifiable assets acquired and acquired or disposed of during the year subsidiary that do not result in a loss of liabilities assumed. are included in the consolidated and control are accounted for as transactions yy Any goodwill that arises is tested separate statement of profit or loss and with owners in their capacity as owners. annually for impairment other comprehensive income from the Adjustments to non-controlling interests date the Company gains control until are based on a proportionate amount yy Any gain on a bargain purchase the date when the Company ceases to of the net assets of the subsidiary. No is recognised in profit or loss control the subsidiary. The Company adjustments are made to goodwill and immediately re-assesses whether or not it controls no gain or loss is recognised in profit or an investee if facts and circumstances loss. The Group elects on a transaction-by indicate that there are changes to one transaction basis whether to measure or more of the three elements of control non-controlling interest at its fair value, listed above. Total comprehensive
C T Holdings PLC Annual Report 2015/16 41 Notes to the Financial Statements Contd.
V. Interest in equity accounted investment to the extent of the Group’s the functional currency at the beginning investees interest in the investee. Unrealised of the year, adjusted for effective interest The Group’s interests in equity- losses are eliminated in the same way as and payments during the year, and accounted investees comprise unrealised gains, but only to the extent the amortised cost in foreign currency interests in associates. Associates are that there is no evidence of impairment. translated at the exchange rate at the those entities in which the Group has end of the year. significant influence, but not control (B) Discontinued Operations or joint control, over the financial and A discontinued operation is a Non-monetary assets and liabilities operating policies. Significant influence component of the Group’s business, the that are measured at fair value in a is presumed to exist when the Group operations and cash flows of which can foreign currency are retranslated to the holds between 20% and 50% of the be clearly distinguished from the rest of functional currency at the exchange voting power of another entity. the Group and which: rate at the date that the fair value was determined. Non-monetary items that Investments in associates and jointly yy represents a separate major line of are measured based on historical cost in controlled entities are accounted business or geographical area of a foreign currency are translated using for under the equity method in the operations; the exchange rate at the date of the consolidated financial statements yy is part of a single co-ordinated transaction. and are recognised initially at cost. plan to dispose of a separate major The cost of the investment includes line of business or geographical (D) Financial instruments transaction costs. The consolidated area of operations; or The Group classifies non-derivative financial statements include the Group’s financial assets into the categories of yy is a subsidiary acquired exclusively share of the profit or loss and other financial assets at fair value through with a view to re-sell. comprehensive income of equity- profit or loss, held-to-maturity financial accounted investees, after adjustments assets, loans and receivables and to align the accounting policies with Classification as a discontinued available-for-sale financial assets. The those of the Group, from the date operation occurs at the earlier of Group classifies non-derivative financial that significant influence commences disposal or when the operation meets liabilities into the other financial liabilities until the date that significant influence the criteria to be classified as held-for- category. ceases. When the Group’s share of sale. When an operation is classified as losses exceeds its interest in an equity- discontinued operation, the comparative I. Non-derivative financial assets – accounted investee, the carrying amount statement of profit or loss and other Recognition and of the investment, including any long- comprehensive income is represented as de-recognition term interests that form part thereof, is if the operation had been discontinued The Group initially recognises loans reduced to zero, and the recognition from the start of the comparative year. and receivables on the date when of further losses is discontinued except they are originated. All other financial to the extent that the Group has an (C) Foreign Currency assets (including assets designated obligation or has made payments on Foreign currency transactions as at fair value through profit or loss) behalf of the investee. Transactions in foreign currencies are are recognised initially on the trade translated into the respective functional date, which is the date that the Group VI. Transactions eliminated on currencies of Group entities at exchange becomes a party to the contractual consolidation rates at the dates of the transactions. provisions of the instrument. Intra-group balances and transactions, and any unrealised income and Monetary assets and liabilities The Group de-recognises a financial expenses arising from intra-group denominated in foreign currencies at asset when the contractual rights to transactions, are eliminated in the reporting date are re-translated to the cash flows from the asset expire,or preparing the consolidated financial the functional currency at the exchange it transfers the rights to receive the statements. Unrealised gains arising rate at that date. The foreign currency contractual cash flows in a transaction from transactions with equity accounted gain or loss on monetary items is the in which substantially all the risks and investees are eliminated against the difference between amortised cost in rewards of ownership of the financial
42 C T Holdings PLC Annual Report 2015/16 asset are transferred, or it neither as at fair value through profit or loss income and accumulated in the fair transfers nor retain substantially all of the comprise equity securities that otherwise value reserve in equity. When these risks and rewards of ownership and does would have been classified as available- assets are derecognised, the gain or loss not retain control over the transferred for sale. accumulated in equity is reclassified to asset. Any interest in such transferred profit or loss. Available-for-sale financial financial assets that is created or (b) Held-to-maturity financial assets assets comprise equity securities and retained by the Group is recognised as a If the Group has the positive intent and debt securities. separate asset or liability. ability to hold debt securities to maturity, then such financial assets are classified (e) Cash and cash equivalents Financial assets and liabilities are offset as held-to-maturity. Held-to-maturity Cash and cash equivalents comprise and the net amount presented in the financial assets are recognised initially at cash balances and call deposits with statement of financial position when,and fair value plus any directly attributable maturities of three months or less from only when, the Group has a legal right transaction costs. Subsequent to initial the acquisition date that are subject to offset the amounts and intends recognition, held-to-maturity financial to an insignificant risk of changes in either to settle them on a net basis or to assets are measured at amortised cost their fair value,and are used by the realise the asset and settle the liability using the effective interest method, less Group in the management of its short- simultaneously. any impairment losses. Held-to-maturity term commitments. The Cash Flow financial assets comprise debt securities. Statement has been prepared using The Group classifies non-derivative the “Indirect method” of preparing financial assets into the following (c) Loans and receivables Cash Flows in accordance with the Sri categories: financial assets at fair value Loans and receivables are financial Lanka Accounting Standard (LKAS 07) - through profit or loss, held-to-maturity assets with fixed or determinable Statement of Cash Flows. financial assets, loans and receivables payments that are not quoted in and available-for-sale financial assets. an active market. Such assets are III. Non-derivative financial recognised initially at fair value plus liabilities– Measurement II. Non-derivative financial assets – any directly attributable transaction Non-derivative financial liabilities are Measurement costs. Subsequent to initial recognition, initially recognised at fair value less any (a) Financial assets at fair value loans and receivables are measured directly attributable transaction costs. through profit or loss at amortised cost using the effective Subsequent to initial recognition, these A financial asset is classified as at fair interest method, less any impairment liabilities are measured at amortised cost value through profit or loss profit is losses. Loans and receivables comprise using the effective interest method. classified as held-for-trading or is cash and cash equivalents, and trade designated as such on initial recognition. and other receivables. Other financial liabilities comprise Directly attributable transaction costs are loans and borrowings, debt securities recognised in profit or loss as incurred. (d) Available-for-sale financial assets issued, bank overdrafts, and trade Financial assets are designated as at fair Available-for-sale financial assets are and other payables. Bank overdrafts value through profit or loss if the Group non-derivative financial assets that that are repayable on demand and manages such investments and makes are designated as available-for-sale form an integral part of the Group’ s purchase and sale decisions based on or are not classified in any of the cash management are included as a their fair value in accordance with the above categories of financial assets. component of cash and cash equivalents Group’s documented risk management Available for-sale financial assets are for the statement of cash flows. or investment strategy. Attributable recognised initially at fair value plus any transaction costs are recognised in directly attributable transaction costs. IV. Derivative financial instruments profit or loss as incurred. Financial Subsequent to initial recognition, they Derivatives are initially recognised assets at fair value through profit or are measured at fair value and changes at fair value; any directly attributable loss are measured at fair value and therein, other than impairment losses transaction costs are recognised in profit changes therein, including any interest and foreign currency differences on or loss as incurred. Subsequent to initial or dividend income, are recognised in available-for-sale debt instruments, are recognition, derivatives are measured profit or loss. Financial assets designated recognised in other comprehensive at fair value, and changes therein are
C T Holdings PLC Annual Report 2015/16 43 Notes to the Financial Statements Contd.
generally recognised in profit or loss. liability and the non-controlling interest using the assumptions that market Embedded derivatives are separated equity adjustment is recognised against participants would use when pricing the from the host contract and accounted the parent’s equity. No adjustments are asset or liability, including assumptions for separately if certain criteria are met. made to goodwill. about risk. As a result, an entity’s intention to hold an asset or to settle or (a) Financial liability on put options If the contract lapses unexercised where otherwise fulfill a liability is not relevant written over non-controlling-interest the risks and rewards of ownership when measuring fair value. The financial liability is recognised at the remain with the non-controlling interest, present value of the redemption amount then no adjustment is made to the The objective of a fair value and accreted through finance charges in carrying value of the non-controlling measurement is to estimate the price the profit or loss over the contract period interest and the redemption liability at which an orderly transaction to sell up to the final redemption amount. Any is de-recognised against the parent’s the asset or to transfer the liability adjustments to the redemption amount equity. would take place between market are recognised in equity in accordance participants at the measurement date with LKAS 39. (E) Fair value Measurement under current market conditions. A fair Fair value is the price that would be value measurement requires an entity to The initial redemption liability is a received to sell and asset or paid determine all the following; reduction of parent’s equity if the risks to transfer a liability in an orderly and rewards of ownership remain transaction between market participants (a) the particular asset or liability that with the non-controlling interest or a at the measurement date. is the subject of the measurement reduction of non-controlling interest (consistently with its unit of account). equity if the risks and rewards of Fair value is a market-based (b) for a non-financial asset, the ownership transfer to the parent. If measurement, not an entity-specific valuation premise that is appropriate the present value of the redemption measurement. For some assets and for the measurement (consistently amount exceeds the carrying value of liabilities, observable market transactions with its highest and best use). or market information might be the non-controlling interest, any excess (c) the principal (or most advantageous) available. For other assets and liabilities, is recorded against parent’s equity. market for the asset or liability. the observable market transactions and valuation technique(s) appropriate market information might not be If the contract is exercised, any non- for the measurement, considering available. However, the objective of a controlling interest equity is allocated the availability of data with which to fair value measurement in both cases is to parent equity. No adjustments are develop inputs that represent the the same to estimate the price at which made to goodwill upon settlement of assumptions that market participants an orderly transaction to sell the asset the contract. The redemption liability is would use when pricing the asset or or to transfer the liability would take offset by the cash payment. liability and the level of the fair value place between market participants at hierarchy within which the inputs are the measurement date under current If the contract lapses un-exercised where categorised. the risks and rewards of ownership market conditions (ie an exit price at the have transferred to the parent, a non- measurement date from the perspective When an asset is acquired or a liability controlling interest equity is reinstated. of a market participant that holds the is assumed in an exchange transaction In substance, the parent has sold those asset or owes the liability) for that asset or liability, the transaction shares back to the non-controlling price is the price paid to acquire the interest and it is a transaction with a non- When a price for an identical asset asset or received to assume the liability controlling interest. The non-controlling or liability is not observable, an entity (an entry price). In contrast, the fair value interest equity amount is reinstated at an measures fair value using another of the asset or liability is the price that amount equal to its share of the carrying valuation technique that maximises would be received to sell the asset or values of the subsidiary’s net assets at the use of relevant observable inputs paid to transfer the liability (an exit price). the date of lapse plus the goodwill from and minimises the use of unobservable the subsidiary’s initial acquisition. Any inputs. Because fair value is a market- difference between the redemption based measurement, it is measured
44 C T Holdings PLC Annual Report 2015/16 When transaction price provides the If the inputs used to measure the fair consider otherwise, indications that a best evidence of fair value at initial value of an asset or a liability fall into debtor or issuer will enter bankruptcy, recognition, the financial instrument different levels of the fair value hierarchy, adverse changes in the payment status is initially measured at the transaction then the fair value measurement is of borrowers or issuers, economic price and any difference between this categorised in its entirety in the same conditions that correlate with defaults price and the value initially obtained level of the fair value hierarchy as the or the disappearance of an active from a valuation model is subsequently lowest level input that is significant to the market for a security. In addition, for recognised in profit or loss on an entire measurement. an investment in an equity security, a appropriate basis over the life of the significant or prolonged decline in its fair instrument but not later than when The Group recognises transfers between value below its cost is objective evidence the valuation is supported wholly levels of the fair value hierarchy at the of impairment. The Group considers a by observable market data or the end of the reporting period during which decline of 20% to be significant and a transaction is closed out. the change has occurred. period of 9 months to be prolonged.
Determination of fair values Amortised cost measurement Financial assets measured at A number of the Group’s accounting The amortised cost of a financial asset amortised cost policies and disclosures require the or financial liability is the amount at The Group considers evidence of determination of fair value, for both which the financial asset or financial impairment for financial assets measured financial and non-financial assets liability is measured at initial recognition at amortised cost (loans and receivables and liabilities. Fair values have been minus principal repayments, plus or and held-to-maturity financial assets) determined for measurement and/ minus the cumulative amortisation using at both a specific asset and collective or disclosure purposes based on the the effective interest method of any level. All individually significant assets following methods. Where applicable, difference between that initial amount are assessed for specific impairment. further information about the and the maturity amount, and minus any Those found not to be specifically assumptions made in determining fair reduction (directly or through the use of impaired are then collectively assessed values is disclosed in the notes specific an allowance account) for impairment or for any impairment that has been to that asset or liability. uncollectibility. incurred but not yet identified. Assets that are not individually significant are When measuring the fair value of an (F) Impairment collectively assessed for impairment by asset or a liability, the Group uses i. Non-derivative financial assets grouping together assets with similar risk observable market data as far as A financial asset not classified as at fair characteristics. possible. Fair values are categorised into value through profit or loss, including an different levels in a fair value hierarchy interest in an equity-accounted investee, An impairment loss in respect of a based on the inputs used in the is assessed at each reporting date to financial asset measured at amortised valuation techniques as follows. determine whether there is objective cost is calculated as the difference evidence that it is impaired. A financial between its carrying amount and the Level 1: quoted prices (unadjusted) in asset is impaired if there is objective present value of the estimated future active markets for identical assets or evidence of impairment as a result of cash flows discounted at the asset’s liabilities. one or more events that occurred after original effective interest rate. Losses the initial recognition of the asset, and are recognised in profit or loss and Level 2: inputs other than quoted prices that loss event(s) had an impact on the reflected in an allowance account included in Level 1 that are observable estimated future cash flows of that asset against loans and receivables or held-to- for the asset or liability, either directly that can be estimated reliably. maturity investment securities. Interest (i.e. as prices) or indirectly (i.e. derived on the impaired asset continues to be from prices). Objective evidence that financial recognised. When an event occurring assets are impaired includes default or after the impairment was recognised Level 3: inputs for the asset or liability delinquency by a debtor, restructuring causes the amount of impairment loss that are not based on observable market of an amount due to the Group on to decrease, the decrease in impairment data (unobservable inputs). terms that the Group would not loss is reversed through profit or loss.
C T Holdings PLC Annual Report 2015/16 45 Notes to the Financial Statements Contd.
Available-for-sale financial assets Goodwill and indefinite-lived amortisation, if no impairment loss had Impairment losses on available-for- intangible assets are tested annually for been recognised. sale financial assets are recognised by impairment. reclassifying the losses accumulated (G) Share capital in the fair value reserve in equity to An impairment loss is recognised if I. Ordinary shares profit or loss. The cumulative loss that the carrying amount of an asset or Ordinary shares are classified as equity. is reclassified from equity to profit cash-generating unit (CGU) exceeds its Incremental costs directly attributable or loss is the difference between the recoverable amount. The recoverable to the issue of ordinary shares are acquisition cost, net of any principal amount of an asset or CGU is the greater recognised as a deduction from equity, repayment and amortisation, and the of its value in use and its fair value less net of any tax effects. current fair value, less any impairment costs to sell. In assessing value in use, loss recognised previously in profit or the estimated future cash flows are (H) Property, plant and equipment loss. Changes in cumulative impairment discounted to their present value using i. Recognition and measurement losses attributable to application of the a pre-tax discount rate that reflects Items of property, plant and equipment effective interest method are reflected current market assessments of the time are measured at cost less accumulated as a component of interest income. If, value of money and the risks specific depreciation and any accumulated in a subsequent period, the fair value to the asset or CGU. For impairment impairment losses. Land is stated at its of an impaired available-for-sale debt testing, assets are grouped together fair value. Cost includes expenditure that security increases and the increase into the smallest group of assets that is directly attributable to the acquisition can be related objectively to an event generates cash inflows from continuing of the asset. The cost of self-constructed occurring after the impairment loss was use that are largely independent of the assets includes the following: recognised, then the impairment loss is cash inflows of other assets or CGUs. reversed, with the amount of the reversal Subject to an operating segment ceiling yy the cost of materials and direct recognised in profit or loss. However, test, CGUs to which goodwill has been labour; any subsequent recovery in the fair allocated are aggregated so that the yy any other costs directly attributable value of an impaired available for-sale level at which impairment testing is to bringing the assets to a working equity security is recognized in other performed reflects the lowest level at condition for their intended use; comprehensive income. which goodwill is monitored for internal yy when the Group has an obligation reporting purposes. Goodwill acquired to remove the asset or restore An impairment loss in respect of an in a business combination is allocated the site, an estimate of the costs equity-accounted investee is measured to groups of CGUs that are expected of dismantling and removing the by comparing the recoverable amount of to benefit from the synergies of the items and restoring the site on the investment with its carrying amount. combination. which they are located; and An impairment loss is recognised in profit or loss. An impairment loss is Impairment losses are recognised yy capitalised borrowing costs. reversed if there has been a favourable in profit or loss. Impairment losses change in the estimates used to recognised in respect of CGUs are Purchased software that is integral to the determine the recoverable amount. allocated first to reduce the carrying functionality of the related equipment amount of any goodwill allocated to is capitalised as part of that equipment. ii. Non-financial assets the CGU (group of CGUs), and then When parts of an item of property, The carrying amounts of the to reduce the carrying amounts of the plant and equipment have different Group’s non-financial assets, other other assets in the CGU (group of CGUs) useful lives, they are accounted for as than biological assets, investment on a pro-rata basis. An impairment loss separate items(major components) of property,inventories and deferred tax in respect of goodwill is not reversed. property,plant and equipment. assets,are reviewed at each reporting For other assets, an impairment loss date to determine whether there is is reversed only to the extent that the Any gain or loss on disposal of any indication of impairment. If any asset’s carrying amount does not exceed an item of property, plant and such indication exists, then the asset’s the carrying amount that would have equipment(calculated as the difference recoverable amount is estimated. been determined, net of depreciation or between the net proceeds from disposal
46 C T Holdings PLC Annual Report 2015/16 and the carrying amount of the item) is significant items of property, plant and less impairment losses. Construction in recognised in profit or loss. equipment are as follows: progress is transferred to fixed assets when it is ready for its intended use. ii. Reclassification to investment Description No of No depreciation is provided against property years construction in progress. When the use of a property changes Freehold buildings 50 from owner-occupied to investment Leasehold buildings 50 or (J) Intangible assets and goodwill property, the property is re-measured to period i. Goodwill fair value and reclassified as investment of lease Goodwill that arises on the acquisition of property. Any gain arising on this re- whichever subsidiaries is presented with intangible measurement is recognised in profit is lower assets. In respect of acquisitions prior or loss to the extent that it reverses a to 1 April 2011, goodwill is included Improvements to 4 to 10 previous impairment loss on the specific on the basis of its deemed cost, which leasehold buildings property, with any remaining gain represents the amount recorded under recognised in other comprehensive Plant & machinery 5 to 20 previous GAAP (SLAS), adjusted for the income and presented in the revaluation Transport and 4 to 20 reclassification of certain. reserve in equity. Any loss is recognized communication immediately in profit or loss. equipment including Subsequent measurement motor vehicles Goodwill is measured at cost less iii. Subsequent expenditure accumulated impairment losses. In Water supply and 2 to 15 Subsequent expenditure is capitalised respect of equity accounted investees, electrical distribution only when it is probable that the future the carrying amount of goodwill is systems economic benefits associated with included in the carrying amount of the the expenditure will flowto the Group. Furniture & fittings 4 to 20 investment, and any impairment loss is On-going repairs and maintenance are allocated to the carrying amount of the expensed as incurred. Depreciation methods, useful lives equity accounted investee as a whole. and residual values are reviewed at iv. Depreciation each reporting date and adjusted if ii. Other intangible assets Items of property, plant and equipment appropriate. Fully depreciated property, Other intangible assets, including are depreciated from the date they are plant and equipment are retained in the customer relationships, patents and available for use or, in respect of self- financial statements until such time when trademarks that are acquired by the constructed assets, from the date that they are no longer in use. Group and that have finite useful lives the asset is completed and ready for use. are measured at cost less accumulated Depreciation is calculated to write off v. Amortisation amortisation and any accumulated the cost of items of property, plant and impairment losses. Description No of equipment less their estimated residual years values using the straight-line basis over Subsequent expenditure Trade marks and licenses 10 years their estimated useful lives. Depreciation Subsequent expenditure is capitalised is generally recognised in profit or Computer software 4 years only when it increases the future loss,unless the amount is included in economic benefits embodied in the the carrying amount of another asset. (I) Construction contracts in specific asset to which it relates. All Leased assets are depreciated over progress other expenditure,including expenditure the shorter of the lease term and their All direct and indirect costs that are on internally generated goodwill and useful lives unless it is reasonably certain related to the construction of fixed brands, is recognised in profit or loss as that the Group will obtain ownership by assets and incurred before the assets incurred. the end of the lease term. Land is not are ready for their intended use are depreciated. The estimated useful lives capitalised as construction in progress. (K) Investment property for the current and comparative years of Construction in progress is stated in the Investment property is property held Statement of Financial Position at cost either to earn rental income or for capital
C T Holdings PLC Annual Report 2015/16 47 Notes to the Financial Statements Contd.
appreciation or for both, but not for sale and work in progress, cost includes iii. Defined benefit plans in the ordinary course of business, use an appropriate share of production Defined Benefit Plan is a post in the production or supply of goods or overheads based on normal operating employment benefit plan other services or for administrative purposes. capacity. than Defined Contribution Plan. The Investment property is initially measured liability recognised in the statement of at cost and subsequently at fair value Net realisable value is the estimated financial position in respect of Defined with any change therein recognised in selling price in the ordinary course Benefit Plan is the present value of profit or loss. of business, less the estimated costs the defined benefit obligation at the of completion and estimated costs reporting date. The defined benefit Cost includes expenditure that is necessary to make the sale. obligation is calculated annually by directly attributable to the acquisition independent actuaries,using projected of the investment property. The cost of (M) Employee benefits unit credit method, as recommended self-constructed investment property i. Short-term employee benefits by LKAS 19 Employee Benefit. The includes the cost of materials and Short-term employee benefit obligations present value of the defined benefit direct labour, any other costs directly are measured on an undiscounted basis obligation is determined by discounting attributable to bringing the investment and are expensed as the related service the estimated future cash outflows property to a working condition for their is provided. A liability is recognised for using interest rates that apply to the intended use and capitalised borrowing the amount expected to be paid under currency in which the benefits will be costs. short-term cash bonus or profit-sharing paid, and that have terms to maturity plans if the Group has a present legal approximating to the terms of the Any gain or loss on disposal of an or constructive obligation to pay this related liability. investment property (calculated as the amount as a result of past service difference between the net proceeds provided by the employee, and the The assumptions based on which the from disposal and the carrying amount obligation can be estimated reliably. results of the actuarial valuation were of the item) is recognised in profit or determined are included in the note 31 loss. When an investment property that ii. Defined contribution plans to the Financial Statements. was previously classified as property, Defined contribution plan is a post plant and equipment is sold, any related employment benefit plan under which This liability is not externally funded and amount included in the revaluation an entity pays fixed contributions into the item is grouped under non-current reserve is transferred to retained a separate entity and will have no liabilities in the statement of financial earnings. legal or constructive obligation to pay position. However, under the Payment of any further amounts. Obligations for Gratuity Act No. 12 of 1983 the liability to When the use of a property contributions to Employees Provident an employee arises only on completion changes such that it is reclassified as Fund and Employees Trust Fund of five years of continued service. The property,plant and equipment, its fair covering all employees are recognised company recognizes all actuarial-gains value at the date of reclassification as an expense in the in profit or loss, as and losses arising from defined benefit becomes its cost for subsequent incurred. plans in other comprehensive Income accounting. and expenses related to defined benefit Employee Provident Fund (EPF) plans in staff expenses in profit or loss. (L) Inventories The Group and employees contribute Inventories are measured at the lower of 12% and 8% respectively of the salary to (N) Provisions cost and net realisable value. The cost of EPF. A provision is recognised if, as a result inventories is based on the first-in first- of a past event, the Group has a present out principle, and includes expenditure Employees Trust Fund legal or constructive obligation that can incurred in acquiring the inventories, All employees of the Group are be estimated reliably, and it is probable production or conversion costs, and members of the Employees’ Trust Fund that an outflow of economic benefits will other costs incurred in bringing them (ETF). The Group contributes 3% of the be required to settle the obligation. to their existing location and condition. salary of each employee to ETF. In the case of manufactured inventories
48 C T Holdings PLC Annual Report 2015/16 (O) Leases possible return of goods can be value as per the agreement has been i. Leased assets estimated reliably,there is no continuing received by the Company. Assets held by the Group under leases management involvement with the which transfer to the Group substantially goods, and the amount of revenue can vii. Dividend Income all of the risks and rewards of ownership be measured reliably. If it is probable Dividend income is recognised when the are classified as finance leases. On that discounts will be granted and the Company’s right to receive the payment initial recognition,the leased asset is amount can be measured reliably, then is established. measured at an amount equal to the the discount recognised as a reduction lower of its fair value and the present of revenue as the sales are recognised. viii. Others value of the minimum lease payments. The timing of the transfer of risks and Gains or losses on the disposal of Subsequent to initial recognition, the rewards varies depending on the Property, Plant & Equipment have been asset is accounted for in accordance with individual terms of the sales agreement. accounted for in the profit or loss. Other the accounting policy applicable to that income is recognised on an accrual asset. ii. Rendering of services basis. Revenue from rendering of services is Assets held under other leases are recognised in profit or loss in proportion (Q) Grants classified as operating leases and to the stage of completion of the Grants are recognised initially as are not recognised in the Group’s transaction at the reporting date. The deferred income at fair value when there statement of financial position. stage of completion is assessed with is reasonable assurance that they will reference to surveys of work performed. be received and the Group will comply ii. Lease payments with the conditions associated with the Payments made under operating leases iii. Commissions grant,and are then recognised in profit are recognised in profit or loss on a When the Group acts in the capacity of or loss as other income on a systematic straight-line basis over the term of the an agent rather than as the principal in basis over the useful life of the asset. lease. Lease incentives received are a transaction, the revenue recognised is Grants that compensate the Group recognised as an integral part of the the net amount of commission made by for expenses incurred are recognised total lease expense, over the term of the the Group. in profit or loss as other income on a lease. Minimum lease payments made systematic basis in the periods in which under finance leases are apportioned iv. Rental income the expenses are recognised. between the finance expense and the Rental income from investment property reduction of the outstanding liability. is recognised as revenue on a straight- (R) Finance income and finance The finance expense is allocated to line basis over the term of the lease. costs each period during the lease term so as Lease incentives granted are recognised Finance income comprises interest to produce a constant periodic rate of as an integral part of the total rental income on funds invested (including interest on the remaining balance of the income, over the term of the lease. available-for-sale financial assets), liability. Rental income from other property is dividend income, gains on the disposal recognised as other income. of available-for-sale financial assets, fair (P) Revenue value gains on financial assets at fair i. Sale of goods v. Cinema Operations value through profit or loss. Interest Revenue from the sale of goods in the Revenue from cinema operations is income is recognised as it accrues in course of ordinary activities is measured recognised at the point of issuance of profit or loss, using the effective interest at the fair value of the consideration tickets. method. received or receivable,net of returns, trade discounts and volume rebates. vi. Apartment Sale Finance costs comprise interest Revenue recognized when significant Revenue is recognised based on sale expense on borrowings, losses on risks and rewards of ownership have agreements when completion is certified disposal of available-for-sale financial been transferred to the customer, by the project Architect/ Engineer and assets, dividends on preference recovery of the consideration is substantial amount from the total sale shares classified as liabilities, fair value probable, the associated costs and losses on financial assets at fair value
C T Holdings PLC Annual Report 2015/16 49 Notes to the Financial Statements Contd.
through profit or loss and contingent yy temporary differences related policy of its subsidiaries and distribution consideration, impairment losses to investments in subsidiaries, of those profits. recognised on financial assets (other associates and jointly controlled than trade receivables). Borrowing costs entities to the extent that the Deferred tax assets are reviewed at each that are not directly attributable to the Group is able to control the timing reporting date and are reduced to the acquisition, construction or production of the reversal of the temporary extent that it is no longer probable that of a qualifying asset are recognised in differences and it is probable the related tax benefit will be realised. profit or loss using the effective interest that they will not reverse in the method. Foreign currency gains and foreseeable future; and (T) Assets held for sale or held losses on financial assets and financial yy taxable temporary differences for distribution, and discontinued liabilities are reported on a net basis as arising on the initial recognition of operations either finance income or finance cost goodwill. Assets held for sale or held for depending on whether foreign currency distribution Non-current assets, or movements are in a net gain or net loss disposal groups comprising assets and The measurement of deferred tax position. liabilities, are classified as held-for-sale reflects the tax consequences that would or held-for distribution if it is highly follow the manner in which the Group (S) Tax probable that they will be recovered expects, at the end of there porting Tax expense comprises current and primarily through sale or distribution period, to recover or settle the carrying deferred tax. Current tax and deferred rather than through continuing use. amount of its assets and liabilities. For tax is recognised in profit or loss Immediately before classification as investment property that is measured except to the extent that it relates held-for-sale or held-for-distribution,the at fair value, the presumption that the to a business combination, or items assets, or components of a disposal carrying amount of the investment recognised directly in equity or in other group, are re-measured in accordance property will be recovered through comprehensive income. with the Group’s other accounting sale has not been realised. Deferred policies. Thereafter, generally the assets, tax is measured at the tax rates that are i. Current tax or disposal group, are measured at the expected to be applied to temporary Current tax is the expected tax payable lower of their carrying amount and fair differences when they reverse, using tax or receivable on the taxable income or value less costs to sell. rates enacted or substantively enacted loss for the year, using tax rates enacted at the reporting date. Deferred tax or substantively enacted at the reporting Any impairment loss on a disposal group assets and liabilities are offset if there date, and any adjustment to tax payable is allocated first to goodwill, and then is a legally enforceable right to offset in respect of previous years. Current tax to the remaining assets and liabilities on current tax liabilities and assets, and they payable also includes any tax liability a pro- rata basis, except that no loss is relate to taxes levied by the same tax arising from the declaration of dividends. allocated to inventories,financial assets, authority on the same taxable entity, or deferred tax assets,employee benefit on different tax entities, but they intend ii. Deferred tax assets, investment property or biological to settle current tax liabilities and assets Deferred tax is recognised in respect assets, which continue to be measured on a net basis or their tax assets and of temporary differences between the in accordance with the Group’s other liabilities will be realized simultaneously. carrying amounts of assets and liabilities accounting policies. Impairment losses for financial reporting purposes and the on initial classification as held-for-sale A deferred tax asset is recognised amounts used for taxation purposes. or held-for-distribution and subsequent for unused tax losses, tax credits and Deferred tax is not recognised for: gains and losses on re-measurement are deductible temporary differences to recognised in profit or loss. Gains are not the extent that it is probable that future yy temporary differences on the initial recognised in excess of any cumulative taxable profits will be available against recognition of assets or liabilities in impairment loss. Once classified as which they can be utilised. Deferred tax a transaction that is not a business held-for-sale or held for-distribution, is not recognized for the undistributed combination and that affects intangible assets and property, plant and profits of subsidiaries as the parent neither accounting nor taxable equipment are no longer amortised or company has control over the dividend profit or loss;
50 C T Holdings PLC Annual Report 2015/16 depreciated, and any equity-accounted during the period to acquire property, This note presents information about investee is no longer equity accounted. plant and equipment,and intangible the Group’s exposure to each of the assets other than goodwill. The Group above risks, the Group’s objectives, (U) Dividend distribution comprises the following main business policies and processes for measuring Dividend distribution to the Company’s segments; and managing risk, and the Group’s shareholders is recognized as a liability management of capital. in the Group’s financial statements (A) Retail and Wholesale in the period in which the dividends Distribution Risk management framework are approved by the Company’s Operation of a chain of supermarkets The Board of Directors has overall shareholders. and convenient stores. responsibility for the establishment Local distributor for world renown and oversight of the Company’s (V) Comparative Information brands of food and beverages. risk management framework. The Comparative information has been Group’s risk management policies are reclassified to conform to the current (B) FMCG established to identify and analyze year’s presentation, where necessary. Manufacturer / distributor of processed the risks faced by the Group, to set Except when a standard permits meats, dairy, jams, cordials, sauces and appropriate risk limits and controls,and or requires otherwise, comparative confectionery. to monitor risks and adherence to limits. information is disclosed in respect of the Risk management policies and systems previous period. Where the presentation (C) Restaurants are reviewed regularly to reflect changes or classification of items in the financial Franchisee / Operator for ‘Kentucky in market conditions and the Group’s statements are amended, comparative Fried Chicken’ (KFC) and ‘TGI Fridays’ activities. The Company, through its amounts are reclassified unless it is Restaurants in Sri Lanka. training and management standards impracticable. and procedures,aims to develop a (D) Real Estate disciplined and constructive control (W) Events after the reporting Owner / operator of the ‘Majestic City’ environment in which all employees period and ‘Jaffna Square’ shopping and understand their roles and obligations. All material events after the reporting entertainment malls. Development and date have been considered and where sale / rental of residential condominiums 7.1 Credit risk appropriate, adjustments or disclosures and commercial development. Credit risk is the risk of financial loss to have been made in respective notes to the Group if a customer or counter party the financial statements. (E) Entertainment to a financial instrument fails to meet Operation of cinema halls. its contractual obligations and arises principally from the Group’s receivables 6. Segment reporting (F) Financial Services from customers. The Group is exposed Segment results that are reported to Stock brokering, capital market solutions to credit risk on trade receivables and the Group’s chief operating decision and fund management and Commercial other receivables, due from related party maker include items directly attributable Banking. and bank balances. to a segment as well as those that can be allocated on a reasonable Trade and other receivables basis. Unallocated items comprise 7. Financial risk management The creditworthiness of each customer mainly corporate assets, head office The Group has exposure to the following is evaluated prior to sanctioning credit expenses, and tax assets and liabilities. risks from its use of financial instruments: facilities. Appropriate procedures for follow-up and recovery are in place to Inter-segment transfers are based on yy Credit risk monitor credit risk. fair market prices. Segment results, yy Liquidity risk assets and liabilities include items yy Market risk directly attributable to a segment as 7.2 Liquidity risk yy Operational risk well as those that can be allocated on Liquidity risk is the risk that the Group a reasonable basis. Segment capital will encounter difficulty in meeting the expenditure is the total cost incurred obligations associated with its financial
C T Holdings PLC Annual Report 2015/16 51 Notes to the Financial Statements Contd.
liabilities that are settled by delivering to management. This responsibility SLFRS 9, as issued, reflects the first cash or another financial asset. The is supported by the development phase of work on replacement of Group’s approach to managing liquidity of overall Group standards for the LKAS 39 and applies to classification is to ensure, as far as possible, that it management of operational risk in the and measurement of financial assets will always have sufficient liquidity to following areas: & liabilities, depending on the meet its liabilities when due, under both yy Requirements for appropriate entity’s business model for managing normal and stressed conditions without segregation of duties, including contractual cash flows characteristics of incurring unacceptable losses or risking the independent authorisation of the financial asset. damage to the Group’s reputation. transactions; SLFRS 9 will be effective for financial yy Requirements for the reconciliation 7.3 Market risk periods beginning on or after 1 January and monitoring of transactions; Market risk is the risk that changes in 2018. market prices, such as foreign exchange yy Compliance with regulatory and rates and interest rates will affect the other legal requirements; SLFRS 15 – Revenue from contract with Group’s income. The objective of market yy Documentation of controls and customers risk management is to manage and procedures; control market risk exposures within yy Development of contingency plans; SLFRS 15 establishes a comprehensive acceptable parameters, while optimizing framework for determining revenue yy Training and professional the return. recognition by a 5 step model and will development; replace the existing LKAS 18 & LKAS 11. y 7.4 Currency risk y Ethical and business standards; Currency risk is the risk that the value of a yy Risk mitigation, including insurance SLFRS 15, will be applicable for the financial instrument will fluctuate due to where this is effective. financial periods beginning on or after 1 a change in foreign exchange rates. January 2018
7.5 Operational risk 8. New accounting standards 9. Statement of Alternative Operational risk is the risk of direct or issued but not effective as at Treatment (SoAT) on Accounting indirect loss arising from a wide variety reporting date for Super Gain Tax of causes associated with the Group’s The Institute of Chartered Accountants Super Gain Tax was imposed during processes, personnel,technology of Sri Lanka has issued the following new the year as per the Provisions of Part and infrastructure, and from external Sri Lanka Accounting Standards which III of the Finance Act No. 10 of 2015 factors other than credit, market and are effective after the period end of 31 (certified on 30th October 2015). Liability liquidity risks such as those arising from March 2016. However these standards to Super Gain Tax was deemed to be an legal and regulatory requirements have not been applied in preparing expenditure in the financial statements and generally accepted standards of these financial statements. relating to the year of assessment which corporate behaviour. Operational risks commenced on 1st April 2013. The Act arise from all of the Group’s operations. The extent of the impact of these supersedes the requirements of the Sri The Group’s objective is to manage Standards to the Financial Statements Lanka Accounting Standards, hence the operational risk so as to balance the has not been determined as at 31 March expense of Super Gain Tax is accounted avoidance of financial losses and 2016. None of these are expected in accordance with the requirements of damage to the Group’s reputation to have a significant impact on the the said Act as recommended by the with overall cost effectiveness and to Company’s financial statements. Statement of Alternative Treatment avoid control procedures that restrict (SoAT) on Accounting for Super Gain initiative and creativity. The primary SLFRS 9 – Financial Instruments: Tax issued by The Institute of Chartered responsibility for the development Classification & Measurement Accountants in Sri Lanka, dated 24th and implementation of controls to November 2015. address operational risk is assigned
52 C T Holdings PLC Annual Report 2015/16 10 Revenue The following is an analysis of the Group’s revenue for the year from continuing operations
In thousands of rupees Group Company 2016 2015 2016 2015
Sales of goods 71,826,257 62,007,407 - - Rentals of investment property 572,925 444,824 - - 72,399,182 62,452,231 - -
In thousands of rupees Group Company 2016 2015 2016 2015
11 Other income Gain on sale of property, plant and equipment 24,846 17,010 - - Amortisation of grants 11,481 12,258 - - Merchandising income 1,398,080 1,176,946 - - Change in fair value of investment property 190,583 228,914 148,500 6,002 Rental income 32,743 88,796 21,314 22,923 Gain on deemed disposal of equity accounted investees 55,650 17,176 - - Sundry Income 278,157 170,940 - - 1,991,540 1,712,038 169,814 28,925
In thousands of rupees Group Company 2016 2015 2016 2015
12 Results from operating activities The following items have been included in results from operating activities: Depreciation of property, plant and equipment 1,766,001 1,718,634 5,091 8,093 Directors’ emoluments 259,393 230,255 24,026 20,495
Fees payable to auditors: Audit and audit related expenses 8,241 7,703 460 400 Non-audit services 2,017 628 298 -
Provision for / (reversal of) impairment of trade and other receivables 35,232 (9,218) - - Impairment loss on investments in subsidiary - - 180,196 181,468 Impairment losses recognised for the year in respect of property, plant and equipment 97,166 44,365 - - Provision for slow moving and obsolete inventories 44,711 23,519 - - Employee costs (refer note 12.1 ) 5,003,326 4,032,903 34,757 29,874
12.1 Employee costs Salaries, wages and other related expenses 4,486,643 3,573,462 29,121 13,605 Defined benefit plan cost - retirement benefit obligation 124,770 108,219 1,528 1,166 Defined contribution plan costs - EPF & ETF 391,913 351,222 4,108 15,103 5,003,326 4,032,903 34,757 29,874
C T Holdings PLC Annual Report 2015/16 53 Notes to the Financial Statements Contd.
In thousands of rupees Group Company 2016 2015 2016 2015
13 Net finance income / (expense) 13.1 Recognised in profit or loss Finance income Interest income 204,102 173,956 8,835 7,113 Net foreign exchange gain 56,383 19,813 - - Dividends from equity investments 133,422 188,222 621,154 594,060 Gain on disposal of available sale investments 53,725 17,992 53,725 17,992 Re-measurement to fair value of pre-existing interest in acquiree 29,523 - - - Total finance income 477,155 399,983 683,714 619,165
Finance expense Finance cost on bank loans (690,856) (849,760) - - Finance cost on finance lease (42) (369) - - Finance cost on overdraft facilities (180,140) (217,824) (28) (92) Impairment loss on assets classified as available-for-sale 257 - (50) - Total finance expense (870,781) (1,067,953) (78) (92)
Net finance income / (expenses) recognised in profit or loss (393,626) (667,970) 683,636 619,073
13.2 Recognised in other comprehensive income, net of tax Net change in fair value of available-for-sale financial assets, net of tax 103,390 272,407 127,334 270,720 Cumulative (gain) / loss re-classified to profit or loss on sale of available-for-sale financial assets (168,947) (197,290) (168,947) (197,290) (65,557) 75,117 (41,613) 73,430
14 Income taxes relating to continuing operations 14.1 Income tax recognised in profit or loss
Current tax Current tax on profits for the year 1,096,790 847,128 13,925 12,609 Current tax on profits in respect of prior years 8,564 69,154 9,395 - 1,105,354 916,282 23,320 12,609
Deferred tax Deferred tax on profits for the year 238,763 (214,103) - - Deferred tax on profits in respect of prior years - (256) - - 238,763 (214,359) - - Income tax expense recognised in profit or loss (relating to continuing operations) 1,344,117 701,923 23,320 12,609
14.2 Income tax recognised in other comprehensive income Re-measurement of obligation on defined benefit plan 9,548 10,898 - - Share of other comprehensive income of equity accounted investee (1,396) 244 - - 8,152 11,142 - -
Liability of the Group Companies to income tax has been computed in accordance with the provisions of Inland Revenue Act No. 10 of 2006 and subsequent amendments thereto.
54 C T Holdings PLC Annual Report 2015/16 14.3 Reconciliation of effective tax In percentages In thousands of rupees Group Company Group Company 2016 2015 2016 2015 2016 2015 2016 2015
Profit before tax from continuing operations 3,662,324 1,421,691 592,191 395,666
Income tax using the Company’s standard tax rate 28.00 28.00 28.00 28.00 1,025,451 398,073 165,813 110,786 Effect of higher tax rate 0.20 2.30 - - 7,398 32,603 - - Inter-company entries 14.58 15.80 - - 533,964 224,005 - - Non-deductible expenses 22.92 85.50 8.87 13.50 839,452 1,215,497 52,529 53,457 Deductible expenses (19.94) (66.40) (0.01) (0.10) (730,412) (944,043) (82) (529) Income exempt or excluded from income tax (23.65) (15.20) (36.07) (38.90) (866,013) (243,684) (213,591) (159,783) Other sources of income 1.64 - 0.42 - 60,239 27,547 2,474 5,923 Allowable deductions out of un-recognised tax losses (1.47) (1.40) (0.42) (0.50) (53,784) (20,336) (2,500) (2,074) Current year losses 4.04 6.50 - (1.00) 147,805 91,866 - (3,931) Irrecoverable economic service charges (ESC) (0.03) (0.10) - - (1,223) (824) - - Tax on dividend received 3.66 4.70 1.57 2.20 133,913 66,424 9,282 8,760 29.95 59.70 2.36 3.20 1,096,790 847,128 13,925 12,609 Change in un-recognised temporary differences 6.52 (15.10) - - 238,763 (214,103) - - Income tax on profit in respect of prior years 0.23 4.80 1.59 - 8,564 68,898 9,395 - Income tax expense recognised in profit or loss (relating to continuing operations) 36.70 49.40 3.95 3.20 1,344,117 701,923 23,320 12,609
In thousands of rupees Group Company 2016 2015 2016 2015
14.4 Current tax assets and liabilities a. Current tax assets Tax refund receivable 276,844 175,013 - 1,673 276,844 175,013 - 1,673 b. Current tax liabilities Income tax payable 1,522,171 942,373 3,759 - 1,522,171 942,373 3,759 -
14.5 Tax rate applicable for Group companies – standard rate The standard corporate tax rate is 28% for all companies other than as disclosed below.
14.6 Companies liable to income tax other than at standard rate (a) Part of the profits of Cargills Foods Company (Pvt) Limited and Ceylon Theatres (Private) Limited are taxed at 40%. (b) In accordance with the Inland revenue Act No 10 of 2006 and subsequent amendments thereto, the income of Cargills Confectionery (Pvt) Ltd is exempt from Income Tax until the year of assessment 2017/18 . (d) 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 2016 although tax returns continue to be filed based on concessionary tax rate.
C T Holdings PLC Annual Report 2015/16 55 Notes to the Financial Statements Contd.
14.7 Deferred tax (assets) / liabilities (a) The movement on the deferred income tax account is as follows:
In thousands of rupees Group Company 2016 2015 2016 2015
Deferred tax liabilities As at 1st April 776,722 1,006,704 - - Transferred between deferred tax assets & liabilities (39,286) (10,619) - - Directly charged to reserves (14,700) (15,611) - - Charge / (release) for the year 269,083 (203,752) - - As at 31st March 991,819 776,722 - -
Deferred tax assets As at 1st April (68,744) (73,469) - - De-recognised on disposal of subsidiaries - (22,369) - - Transferred between deferred tax assets & liabilities 39,286 10,619 - - Directly charged to reserves 5,201 4,713 - - Charge / (release) for the year (30,373) (10,607) - - As at 31st March (54,630) (68,744) - -
Net deferred tax liabilities 937,189 707,978 - -
(b) The deferred income tax assets and liabilities during the year was calculated after setting off balances within the same tax jurisdiction. (c) Breakdown of deferred tax before off-setting balances of the same tax jurisdiction is as follows:
Deferred tax liabilities Accelerated Fair value Total In thousands of rupees tax gains depreciation**
As at 1st April 2014 1,339,053 71,194 1,410,247 Charged / (credited) to profit or loss (121,697) - (121,697) As at 31st March 2015 1,217,356 71,194 1,288,550
As at 1st April 2015 1,217,356 71,194 1,288,550 Charged / (credited) to profit or loss 367,555 - 367,555 As at 31st March 2016 1,584,911 71,194 1,656,105
56 C T Holdings PLC Annual Report 2015/16 14.7 Deferred tax (assets) / liabilities Contd.
Deferred tax assets Retirement Tax Decrease in Provisions Other Total In thousands of rupees benefit losses* future tax obligation rates
As at 1st April 2014 132,306 269,795 3,874 43,137 27,900 477,012 Charged / (credited) to other comprehensive income 10,898 - - - - 10,898 Charged / (credited) to profit or loss 18,559 23,374 (62,129) 116,077 (3,219) 92,662 As at 31st March 2015 161,763 293,169 (58,255) 159,214 24,682 580,572
As at 1st April 2015 161,763 293,169 (58,255) 159,214 24,682 580,572 Charged / (credited) to other comprehensive income (9,548) - - - - (9,548) Charged / (credited) to profit or loss 46,570 20,182 62,129 21,749 (2,738) 147,892 As at 31st March 2016 198,785 313,351 3,874 180,963 21,944 718,916
Net as at 31st March 2016 937,189 Net as at 31st March 2015 707,978
* Tax losses are available for deduction against future taxable income. ** Accelerated tax depreciation on property, plant and equipment
(d) 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 14.6. (e) 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. (f) 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 un-accounted deferred tax assets is given below;
In thousands of rupees Group Company 2016 2015 2016 2015
On accelerated tax depreciation on property, plant and equipment 29,531 (23,102) (1,675) (578) On obligation on defined benefit plan 4,035 3,033 4,035 2,205 On tax losses 124,539 233,150 124,539 139,813 On provisions - 2,303 - - 158,105 215,384 126,899 141,440
C T Holdings PLC Annual Report 2015/16 57 Notes to the Financial Statements Contd.
15 Discontinued operations Details of discontinued operations - 2014/15 Millers Brewery Limited On 30th October 2014, the subsidiary Cargills (Ceylon) PLC disposed of its shareholdings and trademarks of Millers Brewery Limited (MBL) for a total consideration of Rs. 5.15 Bn. Consequently, the interest of the Group in MBL ceased on the date of disposal. This investment was not previously classified as held for sale or discontinued operation.
16 Earnings per share 16.1 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. The following reflects the income and share data used in the basic earnings per share computation.
Group Company 2016 2015 2016 2015
In thousands Present number of ordinary shares in issue 183,097 183,097 183,097 183,097 Weighted average number of ordinary shares in issue 183,097 183,097 183,097 183,097
In thousands of rupees Profit for the year attributable to owners of the Company 1,626,228 816,846 568,871 383,057
Profit for the year attributable to owners of the Company from continuing operations Profit for the year attributable to owners of the Company 1,626,228 816,846 568,871 383,057 Profit for the year from discontinued operations used in the calculation of basic earnings per share from discontinued operations - (420,435) - - 1,626,228 396,411 568,871 383,057
Basic earning per share In rupees - From continuing operations 8.88 2.17 3.11 2.09 - From discontinued operations - 2.30 - - Total basic earnings per share 8.88 4.46 3.11 2.09
16.2 Diluted earnings per share Diluted earnings per share computation is the same as in the note 16.1.
58 C T Holdings PLC Annual Report 2015/16 Group Company 2016 2015 2016 2015
17 Dividends 17.1 Dividend Per Share Interim dividend paid 183,097 146,478 183,097 146,478 Final dividend proposed 512,672 476,053 512,672 476,053 695,769 622,531 695,769 622,531
Dividend per share 3.80 3.40 3.80 3.40
17.2 Dividend Per Share paid-out Final dividend (previous year) 476,053 457,743 476,053 457,743 Interim dividend (current year) 183,097 146,478 183,097 146,478 659,150 604,221 659,150 604,221
Dividend Per Share 3.60 3.30 3.60 3.30
17.3 Proposed final dividend The following dividends were proposed by the Directors, subsequent to the respective reporting dates. The dividends have not been provided for as a liability in the financial statements. There are also no income tax implications due to such proposed dividends not being provided in the financial statements for the year.
Group Company 2016 2015 2016 2015
Final dividend for the year 512,672 476,053 512,672 476,053 512,672 476,053 512,672 476,053
C T Holdings PLC Annual Report 2015/16 59 Notes to the Financial Statements Contd.
18 Property, plant & equipment Reconciliation of carrying amount Group Freehold Freehold Improvements Plant & Motor Furniture & Capital Total In thousands of rupees land buildings to leasehold machinery vehicles fittings work-in buildings -progress
Cost / Valuation As at 1st April 2014 8,789,241 2,026,132 4,004,595 12,052,431 957,100 223,226 3,077,484 31,130,209 Additions 189,839 162,688 79,753 1,483,691 143,176 31,953 (91,097) 2,000,003 Other de-recognitions - - (15,500) (4,863) (208) (56) - (20,627) Losses recognised in profit or loss ------(33,110) (33,110) De-recognised on disposal of subsidiaries (393,000) (64,421) - (1,017,733) (25,994) (10,884) (1,985,146) (3,497,178) Disposals (68,440) - - (109,200) (56,271) (1,122) - (235,033) Transfers - (9,453) (632) (192) - 824 - (9,453) As at 31st March 2015 8,517,640 2,114,946 4,068,216 12,404,134 1,017,803 243,941 968,131 29,334,811
As at 1st April 2015 8,517,640 2,114,946 4,068,216 12,404,134 1,017,803 243,941 968,131 29,334,811 Additions - 131,689 412,106 1,001,531 148,923 16,406 155,034 1,865,689 Revaluation 1,148,526 ------1,148,526 Losses recognised in profit or loss - - (775) (13,365) (431) (2,065) (96,147) (112,783) On Acquisition of Subsidiaries - - 1,135 5,228 4,557 2,887 - 13,807 De-recognised on disposal of subsidiaries - - - - - (268) - (268) Disposals - - - (13,133) (21,857) - (86,303) (121,293) Transfers 525,392 (2,134) - 36,403 - - (36,403) 523,258 As at 31st March 2016 10,191,558 2,244,501 4,480,682 13,420,798 1,148,995 260,901 904,312 32,651,747
Accumulated depreciation and Impairment losses As at 1st April 2014 - 448,323 1,804,412 5,729,230 599,060 120,330 - 8,701,355 Charge for the year - 89,583 470,131 979,376 156,187 23,357 - 1,718,634 Other de-recognitions - (200) (4,650) 14,283 (169) (9) - 9,255 De-recognised on disposal of subsidiaries - (11,412) - (295,837) (18,860) (1,890) - (327,999) Disposals - - - (90,806) (27,152) (938) - (118,896) Transfers - (1,063) (230) 760 - (530) - (1,063) As at 31st March 2015 - 525,231 2,269,663 6,337,006 709,066 140,320 - 9,981,286
As at 1st April 2015 - 525,231 2,269,663 6,337,006 709,066 140,320 - 9,981,286 Charge for the year - 88,809 524,769 995,080 134,825 22,518 - 1,766,001 Losses recognised in profit or loss - - (677) (12,644) (397) (1,899) - (15,617) De-recognised on disposal of subsidiaries - - - - - (193) - (193) Disposals - - - (7,688) (20,697) - - (28,385) Transfers - (171) - - - - - (171) As at 31st March 2016 - 613,869 2,793,755 7,311,754 822,797 160,746 - 11,702,921
Carrying Value As at 31st March 2016 10,191,558 1,630,632 1,686,927 6,109,044 326,198 100,155 904,312 20,948,826 As at 1st April 2015 8,517,640 1,589,715 1,798,553 6,067,128 308,737 103,621 968,131 19,353,525
60 C T Holdings PLC Annual Report 2015/16 Company In thousands of rupees Improvements Plant & Motor Total to leasehold machinery vehicles buildings
Cost / valuation As at 1st April 2014 4,854 2,707 30,627 38,188 Additions - - 10,397 10,397 As at 31st March 2015 4,854 2,707 41,024 48,585
As at 1st April 2015 4,854 2,707 41,024 48,585 Additions - - - - As at 31st March 2016 4,854 2,707 41,024 48,585
Accumulated depreciation and impairment As at 1st April 2014 2,443 2,534 22,126 27,103 Charge for the year 73 55 7,965 8,093 As at 31st March 2015 2,516 2,589 30,091 35,196
As at 1st April 2015 2,516 2,589 30,091 35,196 Charge for the year 73 58 4,960 5,091 As at 31st March 2016 2,589 2,647 35,051 40,287
Carrying Value As at 31st March 2016 2,265 60 5,973 8,298 As at 1st April 2015 2,338 118 10,933 13,389
18.1 Fair value measurement of the freehold land Group 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 2016. The value measurements were carried out in conformity with the requirements of the Sri Lanka Accounting Standards by Mr. T Weeratne (FIV), a member of the 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.
The fair value of the freehold land was determined based on the market comparable approach that reflects recent transaction prices for similar properties. The fair value measurement for all the lands has been 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 used in arriving at fair value would result in a significant increase in fair value, and vice versa.
C T Holdings PLC Annual Report 2015/16 61 Notes to the Financial Statements Contd.
Details of the real estate portfolio as at 31st March 2016 are as follows:
Group As at 31st March Land extent Building area No. of Fair value Fair value In Millions of rupees (Sq. ft.) buildings 2016 2015 C T Holdings PLC Kandy 170 Perches 9,650 4 435,500 245,000 Negombo 91 Perches 17,500 1 240,250 124,000 Bandarawela 2.8 Acres 30,600 4 628,000 428,000 Cargills (Ceylon) PLC Colombo 01 141 Perches 124,215 1 2,252,000 2,192,000 Colombo 02 82 Perches 20,970 2 721,600 652,300 Boralasgamuwa 2.5 Acres 23,168 4 236,292 224,000 Canal Row, Colombo 01 15 Perches 12,300 1 240,500 191,000 Cargills Foods Company (Private) Limited Kandy 94 Perches 25,174 1 1,289,176 1,262,559 Maharagama 145 Perches 15,827 1 479,500 430,559 Nuwara Eliya 57 Perches 9,617 1 197,882 145,599 Mattakuliya 2 Acres 80,967 2 710,371 646,879 Kohuwala 29 Perches 6,225 1 100,000 84,759 Mattakuliya 1.8 Acres 44,469 4 439,200 434,199 Gampaha 82.6 Perches - - 72,175 68,440 Moratuwa 78.6 Perches - - 249,600 - Dematagoda 84 Perches - - 275,792 - Cargills Quality Foods Limited Mattakuliya 1.3 Acres 16,409 342,000 289,000 Ja - Ela 5.1 Acres 38,381 281,470 277,000 Ja - Ela 4 Acres 29,246 82,400 76,000 Cargills Agrifoods Limited Katana 11.3 Acres 66,184 269,000 231,000 Millers Limited Bandarawela 85 Perches 6,345 1 347,000 292,000 Kelaniya 1.5 Acres 55,770 2 185,250 136,500 C P C Lanka Limited Katoolaya Estate, Thawalantenne 4 Acres 695 1 12,100 4,000 Kotmale Dairy Products (Private) Limited Mulleriyawa 1.7 Acres 28,862 3 20,000 16,000 Bogahawatta 1.7 Acres 15,980 6 78,500 61,000 Cargills Quality Dairies (Private) Limited Mirigama, Baduragoda 100 Perches - - 6,000 5,845 Total 10,191,558 8,517,640
62 C T Holdings PLC Annual Report 2015/16 “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 2016 2015
Freehold land 6,063,601 5,334,028
Company All freehold land owned by the Company has been classified as Investment properties.
18.2 Leased assets capitalised in property, plant and equipment Group In thousands of rupees Capitalised Accumulated Carrying value Amount Amortisation 2016 2015
Improvements to leased hold buildings 4,480,682 (2,793,755) 1,686,927 1,798,552 Plant & machinery - - - 665 4,480,682 (2,793,755) 1,686,927 1,799,217
18.3 The details of assets mortgaged for banking facilities obtained have been given in the note 30.4 to the financial statements.
18.4 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) Construction work in progress consists of expenditure incurred on projects where operations had not commenced as at the reporting date.
18.5 Property, plant and equipment consist of fully depreciated assets with a value of Rs. 2,487.72 Mn (2015 - Rs. 2,100.41 Mn) and 33.033 mn (2015 - Rs. 33.033 Mn) as at the end of the reporting date for the Group & the Company respectively.
C T Holdings PLC Annual Report 2015/16 63 Notes to the Financial Statements Contd.
19 Prepaid lease rentals to acquire rights to use lands
Group Company In thousands of rupees 2016 2015 2016 2015
Cost As at 1st April 48,223 35,000 - - Additions - 13,223 - - As at 31st March 48,223 48,223 - -
Accumulated amortisation As at 1st April 9,297 7,875 - - Additions 1,650 1,422 - - As at 31st March 10,947 9,297 - -
Carrying value 37,276 38,926 - -
Current portion 2,744 2,197 - - Non-current portion 34,532 36,729 - - 37,276 38,926 - -
20 Investment properties Reconciliation of carrying amount
Group Company In thousands of rupees Land Building Total Land Building Total
As at 1st April 2014 6,704,100 1,295,317 7,999,417 1,223,750 64,998 1,288,748 Improvements during the year - 25,951 25,951 - - - Reclassification from property, plant and equipment - 8,390 8,390 - - - Reclassification from land development cost 106,174 20,126 126,300 - - - Change in fair value 157,641 71,273 228,914 17,452 (11,450) 6,002 At 31st March 2015 6,967,915 1,421,057 8,388,972 1,241,202 53,548 1,294,750
As at 1st April 2015 6,967,915 1,421,057 8,388,972 1,241,202 53,548 1,294,750 Improvements during the year - 6,747 6,747 - - - On acquisition of subsidiaries 1,240,000 - 1,240,000 - - - Reclassification from property, plant and equipment - 1,963 1,963 - - - Change in fair value 68,199 122,384 190,583 194,050 (45,550) 148,500 At 31st March 2016 8,276,114 1,552,151 9,828,265 1,435,252 7,998 1,443,250
20.1 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.
64 C T Holdings PLC Annual Report 2015/16 20.2 Fair value measurement of the investment properties Fair value of investment properties as at 31st March 2016 and 31st March 2015 have been based on valuations carried out on the respective dates by Mr. T Weeratne (FIV), a member of the 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 Group has revalued all of its investment properties in the reporting period ending 31st March 2016 except the property of C T Properties Lakeside (Private) Limited located in Boralesgamuwa. Please refer note 38.4 for further details.
In estimating the fair value of the properties, the highest and best use of the properties is their current use. 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. Details of the investment properties and information about the fair value hierarchy as at 31st March 2015 and 2016 are as follows:
Group In thousands of rupees As at 31st March Land Building No. of Valuation Significant Fair Fair extent area (Sq. ft.) buildings techniques unobservable value value input(s) 2016 2015 C T Holdings PLC Commercial property located in 60 6500 3 Open market Market value per 132,998 106,498 Nuwara Eliya Perches value perch Cargills (Ceylon) PLC Bare land located in Colombo 02 1.5 Acres 21070 2 Open market Market value per 2,253,800 2,207,000 value perch Bare land located in Colombo 02 78 Perches 4846 1 Open market Market value per 627,800 616,400 value perch Commercial units located in Leasehold 98525 1 Income Capitalisation rate 175,088 180,405 Jaffna Capitalisation Monthly market Approach rent Millers Limited Bare land located in Nittambuwa 112 - - Open market Market value per 102,250 94,300 Perches value perch Dawson Office Complex (Private) Limited Bare land located in Colombo 02 94 Perches - - Open market Market value per 772,200 844,000 value perch C T Land Development PLC Commercial property located in 257 - - Income Capitalisation rate 3,117,949 2,935,235 Colombo 4 Perches Capitalisation Monthly market Approach rent C T Real Estate (Private) Limited Piliyandala 529.8 - 2 Open market Market value per 206,180 205,134 Perches value perch
C T Holdings PLC Annual Report 2015/16 65 Notes to the Financial Statements Contd.
As at 31st March Land Building No. of Valuation Significant Fair Fair extent area (Sq. ft.) buildings techniques unobservable value value input(s) 2016 2015 C T Properties Lakeside (Private) Limited Bare land located in 43 Acres - 1 Open market Market value per 1,200,000 1,200,000 Boralesgamuwa value perch C T Properties GS (Private) Limited (Previously Keppel C T Developments (Private) Limited) Bare land located in Kotahena 199.6 - - Open market Market value per 1,240,000 - Acres value perch Total 9,828,265 8,388,972
Company In thousands of rupees As at 31st March Land Building No. of Valuation Significant Fair Fair extent area (Sq. ft.) buildings techniques unobservable value value input(s) 2016 2015 Commercial units located in 170 9650 4 Open market Market value per 438,500 386,500 Kandy Perches value perch Commercial units located in 91.0 17500 1 Open market Market value per 243,750 201,750 Negombo Perches value perch Commercial units located in 2.8 Acres 30600 4 Income Capitalisation rate 628,000 600,000 Bandarawela Capitalisation Monthly market Approach rent Commercial units located in 60 Perches 6500 3 Open market Market value per 133,000 106,500 Nuwara Eliya value perch Total 1,443,250 1,294,750
21 Goodwill and other intangible assets Group Company In thousands of rupees Goodwill Trademarks Capitalised Total Goodwill and development Licenses (Computer Software)
Cost As at 1st April 2014 1,229,723 854,242 19,965 2,103,930 688,467 Additions - 9,565 9,492 19,057 - De-recognised on disposal of subsidiaries - (670,000) - (670,000) - As at 31st March 2015 1,229,723 193,807 29,457 1,452,987 688,467
As at 1st April 2015 1,229,723 193,807 29,457 1,452,987 688,467 On acquisition of subsidiaries - - 435 435 - Additions - 3,503 74,442 77,945 - As at 31st March 2016 1,229,723 197,310 104,334 1,531,367 688,467
66 C T Holdings PLC Annual Report 2015/16 21 Goodwill and other intangible assets Contd. Group Company In thousands of rupees Goodwill Trademarks Capitalised Total Goodwill and development Licenses (Computer Software)
Accumulated amortisation and impairment As at 1st April 2014 71,746 66,147 16,063 153,956 - Amortisation / impairment loss recognised during the year - 17,014 3,675 20,689 - As at 31st March 2015 71,746 83,161 19,738 174,645 -
As at 1st April 2015 71,746 83,161 19,738 174,645 - Amortisation / impairment loss recognised during the year - 15,336 21,277 36,613 - As at 31st March 2016 71,746 98,497 41,015 211,258 -
Net carrying value As at 31st March 2016 1,157,977 98,813 63,319 1,320,109 688,467 As at 1st April 2015 1,157,977 110,646 9,719 1,278,342 688,467
21.1 Impairment loss and subsequent reversal of goodwill (a) Consolidation goodwill Goodwill on acquisition as at the reporting date has been tested for impairment and no impairment was found in carrying value except as disclosed. Recoverable values have been estimated based on the fair value less cost to sell and value in use for the purpose of the above test.
Impairment testing for cash-generating units (CGU) containing goodwill - For the purposes of impairment testing, goodwill has been allocated to the Group’s CGUs (operating divisions) as follows.
In thousands of rupees Group Company
Retail & Wholesale Distribution 688,467 688,467 FMCG 541,256 - 1,229,723 688,467
There has been no permanent impairment of intangible assets that require a provision during the year. Recoverable value of goodwill has been estimated based on the expected future cash flows. When testing for impairment for goodwill, the recoverable amount is determined on the basis of value-in-use calculations. These calculations use cash flow projections based on financial budgets which are approved by management and are discounted at an appropriate pre-tax discount rate equivalent to the average treasury bond rate. The key assumptions used are given below; yy Business Growth - Based on the long term average growth for each division. The weighted average growth rate used is consistent with the forecast included in industry reports yy Inflation - Based on current inflation rates yy Margin - Based on past performance and budgeted expectations yy Discount rate - Risk free adjusted for the specific risk relating to the industry
C T Holdings PLC Annual Report 2015/16 67 Notes to the Financial Statements Contd.
(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.
22 Investments in subsidiaries Group Name of the investee Principal activity Ownership interest Total cost of and voting power investment (in thousands of rupees) 2016 2015 2016 2015
Quoted Subsidiaries Cargills (Ceylon) PLC R & WD 70.20% 70.00% 168,763 88,734 C T Land Development PLC Real estate 64.20% 64.20% 409,797 409,797 578,560 498,531
Sub - subsidiaries Kotmale Holdings PLC FMCG 70.20% 70.00% 1,362,878 1,361,535 1,362,878 1,361,535
Un-quoted Subsidiaries C T Properties Limited Real estate 92.35% 92.32% 1,378,925 1,378,925 Ceylon Theatres (Private) Limited Entertainment 83.89% 83.89% 300,432 300,432 Alliance Tours Limited Other - 100.00% - 50 1,679,357 1,679,407
Sub - subsidiaries Alliance Tours & Travels (Private) Limited Other - 100.00% - 500 Cargills Quality Foods Limited FMCG 70.20% 70.00% 1,193,453 1,193,453 Cargills Agrifoods Limited FMCG 70.20% 70.00% 45,630 45,630 C P C Lanka Limited FMCG 70.20% 70.00% 14,200 14,200 Cargills Quality Diaries (Private) Limited FMCG 70.20% 70.00% 75,000 75,000 Cargills Distributors (Private) Limited FMCG 70.20% 70.00% 50,261 50,261 Cargills Food Processors (Private) Limited Restaurants 70.20% 70.00% 61,500 61,500 Cargills Food Services (Private) Limited Restaurants 70.20% 70.00% 160,000 100,000 Millers Limited R & WD 70.20% 70.00% 300,000 300,000 Cargills Foods Company (Private) Limited R & WD 64.58% 64.40% 475,000 475,000 Cargills Quality Confectionery (Private) Limited FMCG 70.20% 70.00% 1,445,547 1,445,547 Dawson Office Complex (Private) Limited Real estate 70.20% 70.00% 101 101 Cargills Frozen Products (Pvt) Limited FMCG 70.20% 70.00% 50,250 50,250 C T Property Management Company (Private) Limited Real estate 92.35% 92.32% - - C T Real Estate (Private) Limited Real estate 92.35% 92.32% - -
68 C T Holdings PLC Annual Report 2015/16 22 Investments in subsidiaries Contd. Group Name of the investee Principal activity Ownership interest Total cost of and voting power investment (in thousands of rupees) 2016 2015 2016 2015
C T Properties Lakeside (Private) Limited Real estate 92.35% 92.32% - - C T Properties GS (Pvt) Ltd (Previously Keppel C T Development (Private) Limited) Real estate 92.35% 34.40% 615,446 - Kotmale Products Limited FMCG 70.20% 70.00% 185,400 185,400 Kotmale Milk Foods Limited FMCG 70.20% 70.00% - Kotmale Dairy Products (Private) Limited FMCG 70.20% 70.00% 13,030 13,030 Kotmale Milk Products Limited FMCG 70.20% 70.00% - Kotmale Kiri (Private) Limited FMCG - 70.00% - - Kotmale Marketing (Private) Limited FMCG 70.20% 70.00% - 4,684,818 4,009,872 8,305,613 7,549,345
R & WD - Retail & Wholesale Distribution FMCG - Fast Moving Consumer Goods
Company Name of the investee Principal activity Ownership interest Total cost of and voting power investment (in thousands of rupees) 2016 2015 2016 2015
Quoted subsidiary companies Cargills (Ceylon) PLC 70.20% 70.00% 168,763 88,734 C T Land Development PLC 64.20% 64.20% 409,797 409,797 578,560 498,531
Un-quoted subsidiary companies C T Properties Ltd 76.01% 76.01% 1,047,850 1,047,850 Ceylon Theatres (Private) Limited 55.00% 55.00% 165,432 165,432 Alliance Tours Limited - 100.00% - 50 1,213,282 1,213,332
Less: Provision for impairment As at 1st April (181,468) - Impairment recognised during the year (180,197) (181,468) As at 31st March (refer note 22.6) (361,665) (181,468) Total 1,430,177 1,530,395
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.
C T Holdings PLC Annual Report 2015/16 69 Notes to the Financial Statements Contd.
22.1 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 2016 2015 2016 2015
Retail & wholesale distribution - - 3 3 Real estate - - 7 6 FMCG - - 15 16 Restaurants - - 2 2 Entertainment - - 1 1 Other - 1 - 1 - 1 28 29
22.2 Details of non-wholly owned subsidiaries that have material non-controlling interests The table below shows details of non-wholly owned subsidiaries of the Group that have material non-controlling interests:
Name of the investee Principal activity Proportion of ownership interest and voting power held by non-controlling-interest 2016 2015
Cargills (Ceylon) PLC Retail, Wholesale Distribution, Restaurants & FMCG 29.80% 30.00% C T Land Development PLC Real estate 35.80% 35.80%
Summarised financial information in respect of each of the Group’s subsidiaries that has material non-controlling interests is set out below. 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 2016 2015 2016 2015
Assets Current assets 14,931,269 12,609,562 235,449 150,672 Non-current assets 27,279,866 24,553,989 3,554,412 3,398,134 Total assets 42,211,135 37,163,551 3,789,861 3,548,806
Liabilities Current liabilities 23,755,857 20,392,074 75,782 58,572 Non-current liabilities 3,950,460 3,892,330 603,525 551,062 Equity 14,504,818 12,879,147 3,110,554 2,939,172 Total liabilities 42,211,135 37,163,551 3,789,861 3,548,806
70 C T Holdings PLC Annual Report 2015/16 In thousands of rupees Cargills C T Land (Ceylon) PLC Development PLC As at 31st March 2016 2015 2016 2015
Equity attributable to : Owners of the Company 10,182,463 9,015,359 2,433,161 1,886,948 Non-controlling interests 4,322,355 3,863,788 1,356,700 1,052,224 14,504,818 12,879,147 3,789,861 2,939,172
Revenue (Including other income) 73,184,563 63,123,392 763,745 579,256 Expenses (71,493,982) (62,876,175) (385,767) (316,959) Profit for the year from continuing operations 1,690,581 247,217 377,978 262,297 Profit from discontinued operations, net of tax - 352,761 - - Profit for the year 1,690,581 599,978 377,978 262,297
Other comprehensive income 876,706 (28,872) (8,544) (536)
Profit for the year attributable to: Owners of the Company 1,186,797 419,983 242,669 168,395 Non-controlling interests 503,784 179,995 135,309 93,902 Profit for the year 1,690,581 599,978 377,978 262,297
Other comprehensive income attributable to : Owners of the Company 615,452 (20,210) (5,485) (344) Non-controlling interests 261,254 (8,662) (3,059) (192) Other comprehensive income 876,706 (28,872) (8,544) (536)
Total comprehensive income attributable to: Owners of the Company 1,802,250 399,773 237,184 168,051 Non-controlling interests 765,037 171,333 132,250 93,710 Total comprehensive income for the year 2,567,287 571,106 369,434 261,761
Dividends paid to non-controlling interests 715,247 134,402 51,482 47,992
Details of net cash inflows / (outflows) Net cash inflow from operating activities 5,334,187 507,327 223,405 211,341 Net cash inflow / (outflow) from investing activities (3,418,140) 2,889,824 (85,364) (86,174) Net cash outflow from financing activities (694,501) (4,147,052) (141,497) (134,063) Net cash inflow / (outflow) 1,221,546 (749,901) (3,456) (8,896)
22.3 Disposal of subsidiary and controlling interests Details of disposal of subsidiaries & controlling interests are given in the note 15 to the financial statements.
22.4 De-recognition of subsidiaries wound-up. The following subsidiaries have been de-recognised during the year due to voluntarily winding up.
Net assets de-recognised on disposal Alliance Tours Limited (598) Alliance Tours & Travels (Private) Limited 841 Kotmale Kiri (Private) Limited - 243
C T Holdings PLC Annual Report 2015/16 71 Notes to the Financial Statements Contd.
22.5 Acquisitions of non-controlling interests & Subsidaries (a) Acquisition of non-controlling interests
Investee Company Investor Company Investment Increase in Number of holding shares (%) acquired
In thousands of rupees Cargills (Ceylon) PLC C T Holdings PLC 80,029 0.20% 450,000
The respective effect of changes in the Company’s ownership interest in respective the investee and its subsidiaries are as follows:
Company’s ownership interest at 1st April 2015 9,015,359 Effect of increase in Company’s ownership interest 40,381 Share of comprehensive income 1,761,869 Other adjustment directly to equity (235,326) Dividends issued (399,820) Company’s ownership interest at 31st March 2016 10,182,463
(b) Acquisition of subsidiaries During the year the subsidiary C T Properties Ltd (CTP) acquired a 60% controlling stake in the Associate C T Properties GS (Pvt) Ltd (CTPGS – previously Keppel CT Developments (Pvt) Ltd). Prior to this acquisition, CTP held a 40% stake in CTPGS. Accordingly, CTPGS is now accounted as a Group subsidiary. Details of the acquisition are given below:
Investee Company - C T Properties G S (Private) Limited Principal activity - Real estate Date of acquisition - 25th February 2016
(b) (i) Proportion of voting equity interests acquired Previous equity interests 34.40% Equity interests acquired 57.95% 92.35%
Consideration transferred In thousands of rupees Share of Owners of the Company 507,927 Share of NCI 42,073 Total 550,000
72 C T Holdings PLC Annual Report 2015/16 (b) (ii) Assets acquired and liabilities recognised at the date of acquisition 2016
Current assets Cash and & cash equivalents 55,020 Trade and other receivables 47,707 Non-current assets Property, Plant and equipment 13,807 Investment properties 1,240,000 Intangible assets 435 Current liabilities Trade and other payables (775,000) Net assets acquired 581,968
Share of Owners of the Company 537,449 Share of NCI 44,519 Total 581,968
(b) (iii) Measurement of fair value The investment property owned by the acquiree - Valuation technique Market comparison technique and cost technique: The valuation model considers quoted market prices for similar items when they are available, and depreciated replacement cost when appropriate. Depreciated replacement cost reflects adjustments for physical deterioration as well as functional and economic obsolescence.
(b) (iv) Net cash outflow on acquisition of subsidiaries 2016
Consideration paid in cash 550,000 Less: cash and cash equivalent balances acquired (55,020) 494,980
(b) (v) Settlement of pre-existing relationships A shareholder loans amounting to Rs. 973,864,700 due to Edmonton Pte Ltd was converted to equity by issuing 97,386,470 no. of shares prior to the execution of the sale & purchase.
22.6 Impairment of the investment in C T Properties Ltd - Company 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 2016 2015
Carrying amount 1,045,700 1,045,700 Less: Recoverable amount (684,036) (864,232) Impairment loss for the Company 361,664 181,468
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.
C T Holdings PLC Annual Report 2015/16 73 Notes to the Financial Statements Contd.
23 Investments in equity accounted investees Ownership interest Total cost of investment and voting power (in thousands of rupees) 2016 2015 2016 2015
Group C T CLSA Holdings Limited 25.81% 25.81% 110,036 97,341 Cinema Entertainments (Private) Limited 30.65% 30.65% 6,159 6,077 Cargills Bank Limited (Refer note 23.5) 31.01% 34.00% 4,079,041 1,571,163 4,195,236 1,674,581
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 (Refer note 23.5) 18.22% 20.00% 2,184,936 908,936 2,219,653 943,653
23.1 Summarised financial information as included in the own financial statements of Equity Accounted Investees. In thousands of rupees C T CLSA Cinema C T Properties Cargills Total Holdings Entertainments G S Bank Limited (Private) (Private) Limited Limited Limited
2016 Revenue 348,340 18,039 - 451,228 817,607 Other income 34,737 839 110 34,191 69,877 Expenses (312,407) (18,197) (226,400) (801,244) (1,358,248) Profit / (loss) for the year 70,670 681 (226,290) (315,825) (470,764) Other comprehensive income for the year 494 - - (11,813) (11,319) Total comprehensive income for the year 71,164 681 (226,290) (327,638) (482,083) Dividend issued 21,978 412 - - 22,390 Dividends received during the year 5,673 126 - - 5,799 Total assets 1,068,261 71,029 - 14,253,284 15,392,574 Total liabilities (641,929) (50,936) - (9,413,768) (10,106,633) Net assets (100%) 426,332 20,093 - 4,839,516 5,285,941 Percentage of ownership interest as at 31st March 25.81% 30.65% - 31.01%
Reconciliation of carrying amount of interests in associates Group’s of share of net assets of associates 110,036 6,159 - 1,500,717 1,616,912 Goodwill - - - 26,324 26,324 Advance on share issue (Refer note 23.5) - - - 2,552,000 2,552,000 Carrying amount of interest in associates 110,036 6,159 - 4,079,041 4,195,236
Share of: - Profit / (loss) 18,240 336 - (97,935) (79,359) - Other comprehensive income 128 - - (3,663) (3,536) 18,368 336 - (101,598) (82,895)
74 C T Holdings PLC Annual Report 2015/16 In thousands of rupees C T CLSA Cinema C T Properties Cargills Total Holdings Entertainments G S Bank Limited (Private) (Private) Limited Limited Limited
2015 Revenue 353,994 14,080 - 370,157 738,231 Other income 11,288 881 - - 12,169 Expenses (289,218) (13,173) (133,674) (485,243) (921,308) Profit / (loss) for the year 73,110 1,788 (133,674) (114,584) (173,360) Other comprehensive income for the year 2,955 - - (502) 2,453 Total comprehensive income for the year 76,064 1,788 (133,674) (115,086) (170,908) Dividend issued (26,374) (825) - - (27,199) Dividends received during the year (6,807) (376) - - (7,183) Total assets 616,715 42,303 1,426,503 7,503,029 9,588,550 Total liabilities (239,569) (22,480) (1,515,331) (2,959,375) (4,736,755) Net assets (100%) 377,146 19,823 (88,828) 4,543,654 4,851,795 Percentage of ownership interest as at 31st March 25.81% 30.65% 34.40% 34.00%
Reconciliation of carrying amount of interests in associates Group’s of share of net assets of associates 97,341 6,077 (30,557) 1,544,839 1,617,700 Goodwill - - - 26,324 26,324 Losses in excess of investment - - 30,557 - 30,557 Carrying amount of interest in associates 97,341 6,077 - 1,571,163 1,674,581
Share of: - Profit / (loss) 18,870 565 (15,427) (41,899) (37,891) - Other comprehensive income 763 - - (171) 592 19,632 565 (15,427) (42,070) (37,299)
23.2 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.
23.3 None of the Group equity accounted investees are publicly listed entities and consequentially do not have published price quotations.
23.4 The financial year end date of Cargills Bank Limited is as at 31 December due to the industry requirement and financial statements for the year ended 31 December 2015 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 31 March 2016 which require any adjustments.
23.5 Group and company invested Rs. 2,552 Mn & 1,276 Mn respectively in subscribing for a rights issue ( Group – 176 Mn Shares & Company – 88 Mn Shares) offered by Cargills Bank Limited and such shares from rights issue were not allocated as at 31st March 2016.
C T Holdings PLC Annual Report 2015/16 75 Notes to the Financial Statements Contd.
23.6 Change in the Group’s ownership interest in an associate (a) Deemed disposal of the ownership interest in Cargills Bank Limited During the year Cargills Bank Limited issued a 43mn no. of shares with an effect of 8.9% of shareholding to third party. Consequent to the subscription in new shares, the shareholding of the Group reduced from 34.00% to 31.01%. The gain recognised in profit or loss (recorded under other income) arose as a result in the deemed disposal of shareholding, is as follows -
Loss of share of new equity, not issued to owners 193,345 Less: Change in equity as at date of issue (135,869) 57,476 Less: Share of investment NCI of subsidiary (1,826) 55,650
(b) Purchase of the ownership interest in C T Properties G S (Private) Limited (Previously Keppel C T Developments (Private) Limited) On 25th February 2016, the C T Properties Limited acquired 100% of the shares and voting interests in C T Properties G S Limited. As a result, the Group’s equity interest increased from 34.40% to 92.35%, obtaining control of the Company and became a subsidiary from that date. The investment was discontinued being recorded under equity method on 25th February 2016 and an amount Rs. 108.4 Mn had not been recorded as losses in excess of investment at the date of acquisition.
24 Other investments Group Company Shares / Units Carrying Value Shares / Units Carrying Value 2016 2015 2016 2015 2016 2015 2016 2015
24.1 Other non-current investments Investments in quoted companies Ceylon Printers PLC 118,830 6,932 18,882 12,824 118,830 6,932 18,882 12,824 Kalamazoo Systems PLC - 9,761 - 9,761 - 9,761 - 9,761 Office Equipment PLC 163,700 16,370 18,171 36,014 163,700 16,370 18,171 36,014 Paragon (Ceylon) PLC 213,060 20,424 12,336 14,807 213,060 20,424 12,336 14,807 Overseas Realty (Ceylon) PLC 4,500 4,500 105 106 4,500 4,500 105 106 Lanka IOC PLC 525,000 525,000 70,619 21,158 325,000 325,000 10,563 13,098 Hotel Developers (Lanka) PLC 27,700 27,700 - - 27,700 27,700 - - The Housing & Development Finance Corporation Bank of Sri Lanka 70,000 70,000 3,465 4,200 70,000 70,000 3,465 4,200 Lanka Walltiles PLC 1,499,628 1,499,628 148,163 143,664 1,499,628 1,499,628 148,163 143,664 Swisstek (Ceylon) PLC - 299,500 - 12,549 - 299,500 - 12,549 Hemas Holdings PLC 220,000 - 17,732 - 220,000 - 17,732 289,473 255,083 229,417 247,023
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) 94,936,747 308,312,175 1,073,843 3,088,702 94,936,747 305,239,337 948,931 3,057,918 1,073,843 3,088,702 948,931 3,057,918 1,363,416 3,343,885 1,178,448 3,305,041
76 C T Holdings PLC Annual Report 2015/16 Group Company Shares / Units Carrying Value Shares / Units Carrying Value 2016 2015 2016 2015 2016 2015 2016 2015
24.2 Other current investments Sierra Cables PLC 49,500 49,500 144 198 - - - - Aitken Spence PLC 267,500 267,500 19,661 26,616 - - - - Capital Alliance Finance PLC - - 31,171 - - - - - 50,976 26,814 - -
24.3 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.
25 Inventories In thousands of rupees Group Company 2016 2015 2016 2015
Raw material and consumables 886,258 776,435 - - Work-in-progress 57,362 34,039 - - Finished goods 6,056,614 5,258,340 - - Goods in transit 209,400 125,316 - - Food and beverages - restaurant operations 63,611 58,270 - - Real estate property held for sale and under development (Refer note 25.1 ) - 34,408 - - 7,273,245 6,286,808 - - Less - provision for obsolete and slow moving items (75,123) (30,412) - - 7,198,122 6,256,396 - -
25.1 Real estate property held for sale and under development In thousands of rupees Group Company 2016 2015 2016 2015
As at 1st April 34,408 324,011 - - Expenditure incurred during the year - 763 - - Recognised in profit / (loss) (34,408) (164,066) - - Transferred to investment properties - (126,300) - - As at 31st March - 34,408 - -
25.2 The above consist of property development projects carried out by the subsidiary company C T Real Estates (Private) Limited.
C T Holdings PLC Annual Report 2015/16 77 Notes to the Financial Statements Contd.
26 Trade and other receivables In thousands of rupees Group Company 2016 2015 2016 2015
Trade receivables (other than from related parties) 1,945,848 1,337,623 228 227 Dues from related parties (Refer note 35.3) 22,406 597,523 806,016 176,178 Current tax asset 276,844 175,013 - 1,673 Advances and other receivables 496,203 329,078 33 174 Loans given to employees (Refer note 26.1) 19,694 16,941 - - Prepayments and accrued income 1,161,969 1,215,056 - 454 3,922,964 3,671,234 806,277 178,706 Less : provision for impaired / doubtful debts (Refer note 26.2) (154,644) (119,412) - - 3,768,320 3,551,822 806,277 178,706
26.1 Loans given to employees In thousands of rupees Group Company 2016 2015 2016 2015
As at 1st April 16,941 21,935 - - Adjustment / transfers - (24) - - Loans granted during the year 34,124 28,297 - - Less: recoveries (31,371) (33,267) - - As at 31st March 19,694 16,941 - -
26.2 Movement in the provision for impaired / doubtful debts In thousands of rupees Group Company 2016 2015 2016 2015
As at 1st April 119,412 128,630 - - Impairment losses recognised / (reversed) 35,232 - - - Impairment losses reversed - (9,218) - - As at 31st March 154,644 119,412 - -
27 Cash and cash equivalents In thousands of rupees Group Company 2016 2015 2016 2015
Cash and bank balances 1,694,751 1,723,155 3,224 521 Short term deposits with banks (Refer note 27.1) 1,706,538 1,060,611 234,281 171,658 Cash and short term deposits with banks 3,401,289 2,783,766 237,505 172,179 Bank overdrafts (3,262,281) (4,044,101) - - Cash and cash Equivalents 139,008 (1,260,335) 237,505 172,179
78 C T Holdings PLC Annual Report 2015/16 27.1 Short term deposits with bank In thousands of rupees Group Company 2016 2015 2016 2015
Re-purchase agreements 130,172 82,359 - - Fixed & other deposits 1,576,366 978,252 234,281 171,658 1,706,538 1,060,611 234,281 171,658
28 Stated capital - ordinary shares In thousands of rupees Group Company 2016 2015 2016 2015
Issued and fully paid In issue as at 31st March 3,194,008 3,194,008 3,194,008 3,194,008 3,194,008 3,194,008 3,194,008 3,194,008
No. of shares in issue 183,097 183,097 183,097 183,097
Fully paid ordinary shares carry one vote per share and carry a right to dividends.
29 Reserves, net of income tax In thousands of rupees Group Company 2016 2015 2016 2015
Revaluation reserve (Refer note 29.1) 4,127,957 3,183,612 74,999 74,999 AFS reserve (Refer note 29.2) 123,083 181,453 140,270 181,883 General reserve (Refer note 29.3) 367,220 367,220 213,538 213,538 4,618,260 3,732,285 428,807 470,420
29.1 Revaluation reserve The revaluation reserve arises on the revaluation of land as described in note 18.1. 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 statues. The Directors do not currently intend to make any distribution from the properties revaluation reserve.
29.2 AFS reserve The AFS 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 reclassified to profit or loss when those assets have been disposed of or are determined to be impaired.
29.3 General reserve General reserve represents the amounts set aside by the Directors for general application.
C T Holdings PLC Annual Report 2015/16 79 Notes to the Financial Statements Contd.
30 Loans and borrowings In thousands of rupees Group Company 2016 2015 2016 2015
Non-current liabilities Secured bank loans 198,300 730,921 - - Finance lease liabilities - 50 - - 198,300 730,971 - - Current liabilities Current portion of secured bank loans 537,529 558,397 - - Current portion of finance lease liabilities - 1,285 - - Other short term bank loans 7,510,443 7,050,000 - - 8,047,972 7,609,682 - -
Total liabilities Secured bank loans (Refer note 30.1) 735,829 1,289,318 - - Finance lease liabilities (Refer note 30.2) - 1,335 - - Other short term bank loans (Refer note 30.4) 7,510,443 7,050,000 - - 8,246,272 8,340,653 - -
30.1 Secured bank loans In thousands of rupees Group Company 2016 2015 2016 2015
As at 1st April 1,289,318 1,961,437 - - Repayments during the year (553,489) (672,119) - - As at 31st March 735,829 1,289,318 - -
Non-current portion of secured bank loans 198,300 730,921 - - Current portion of secured bank loans 537,529 558,397 - - 735,829 1,289,318 - -
30.2 Finance lease liabilities In thousands of rupees Group Company 2016 2015 2016 2015
As at 1st April 1,377 4,562 - - De-recognised on disposal of subsidiaries (50) - - - Repayments (1,327) (3,185) - - As at 31st March - 1,377 - -
Gross liability - 1,377 - - Finance charges allocated to future periods - (42) - - Net liability - 1,335 - -
Non-current portion of finance lease liabilities - 50 - - Current portion of finance lease liabilities - 1,285 - - - 1,335 - -
80 C T Holdings PLC Annual Report 2015/16 30.3 Information about the Group’s exposure to risks is covered in Note 34. 30.4 Terms and repayment schedule Terms and conditions of outstanding loans are as follows:
30.4 (a) Secured bank loans In thousands of rupees Financial Security Repayment Nominal Currency Principle Amount Institution Terms and Interest Value outstanding Maturity Rate Cargills Foods Company (Private) Limited Commercial Deed of Assignment No. 496 dated 48 equal AWPLR Plus LKR 589,000 336,500 Bank PLC 30.09.2014 Additional Mortgage monthly 0.8% p.a. Bond No. 497 dated 30.09.2014 installments for Rs. 1,502,300,000/- over credit after a grace and debit card receivables and period of 12 ESCROW Account. months.
Habib Bank AWPLR Plus LKR 306,200 181,600 Limited 0.8% p.a. State Bank of AWPLR Plus LKR 306,200 181,600 India 0.8% p.a. Company total - Cargills Foods Company (Private) Limited 699,700 Cargills Quality Confectioneries (Private) Limited Bank of Ceylon Corporate guarantee from Cargills 54 equal 6.00% LKR 11,115 1,039 (Ceylon) PLC for Rs. 11.12 Mn. monthly Mortgage over leasehold right of installments the land, buildings and plant and of Rs. 205,835 machinery fixed in the premises. commencing from July 2011 (after a grace period of 6 months). Bank of Ceylon Corporate guarantee from Cargills 64 equal 7.67% LKR 282,560 35,090 (Ceylon) PLC for Rs. 282.56 Mn. monthly installments of Rs. 4,415,000 commencing from July 2011 (after a grace period of 6 months). Company total - Cargills Quality Confectioneries (Private) Limited 36,129 Total - Secured bank loans 735,829
C T Holdings PLC Annual Report 2015/16 81 Notes to the Financial Statements Contd.
30.4(b) Other short term bank loans
Financial Security Repayment Nominal Currency Principle Amount Institution Terms and Interest Value outstanding Maturity Rate Cargills (Ceylon) PLC Commercial Corporate guarantee for Rs.50 Mn. 1 month, Based on the LKR 830,000 830,000 Bank of Ceylon dated 05/05/1998 executed by C T commencing prevailing PLC Holdings PLC from 16.03.15 market rates to 16.04.15 (maximum 12 months). Hongkong No security provided Overnight, Overnight LKR 300,000 300,000 and Shanghai commencing Cost of Banking from 31.03.16 Funds+1.0% Corporation to 01.04.16 p.a. (maximum 06 months) Sampath Bank No security provided 4 months, Based on the LKR 1,800,000 300,000 PLC commencing prevailing from 18.12.15 money to 18.04.16 market rates (maximum 06 months) Nations Trust No security provided 1 month, negotiated LKR 100,000 100,000 Bank PLC commencing at the time from 08.03.16 of granting to 08.04.16 each loan (maximum 03 months) Nations Trust No security provided 1 month, negotiated LKR 75,000 75,000 Bank PLC commencing at the time from 31.03.16 of granting to 30.04.16 each loan (maximum 03 months) Bank of Ceylon No security provided 2 weeks, On case by LKR 1,500,000 1,035,700 commencing case basis from 28.03.16 decided by to 12.04.16 Treasury (maximum 12 department months) Company total - Cargills (Ceylon) PLC 2,640,700
82 C T Holdings PLC Annual Report 2015/16 Financial Security Repayment Nominal Currency Principle Amount Institution Terms and Interest Value outstanding Maturity Rate Cargills Foods Company (Private) Limited Standard No security provided 1 month Based on LKR 572,008 572,008 Chartered Bank commencing money from market rate, 02.03.2016 average to 02.04.2016 interest rate (maximum 06 of 7.11% months) Standard No security provided 1 month Based on LKR 527,992 207,735 Chartered Bank commencing money from market rate, 30.03.2016 average to 30.04.2016 interest rate (maximum 06 of 7.11% months) Bank of Ceylon No security provided 1 month Quoted by LKR 350,000 350,000 commencing Treasury from Department 01.03.2016 on case by to 01.04.2016 case basis, (maximum 12 average months) interest rate of 7.75% Bank of Ceylon No security provided 1 month Quoted by LKR 150,000 150,000 commencing Treasury from Department 02.03.2016 on case by to 02.04.2016 case basis, (maximum 12 average months) interest rate of 7.75% Company total - Cargills Foods Company (Private) Limited 1,279,743
C T Holdings PLC Annual Report 2015/16 83 Notes to the Financial Statements Contd.
Financial Security Repayment Nominal Currency Principle Amount Institution Terms and Interest Value outstanding Maturity Rate Cargills Quality Foods Limited Standard No security provided Payable on Average LKR 600,000 400,000 Chartered Bank demand interest rate of 7.34% Hatton National No security provided Payable on Average LKR 750,000 1,937,000 Bank PLC demand interest rate of 7.48% (AWPLR +0.5%) Commercial No security provided Payable on Average LKR 575,000 575,000 Bank of Ceylon demand interest rate PLC of 7.5% Company total - Cargills Quality Foods Limited 2,912,000 Cargills Quality Confectioneries (Private) Limited Hatton National Corporate guarantee from Cargills Payable on Average LKR 200,000 115,000 Bank PLC (Ceylon) PLC for Rs. 200 Mn demand interest rate of 7.48% Company total - Cargills Quality Confectioneries (Private) Limited 115,000 Millers Limited Standard Corporate guarantee from Cargills Payable on Average LKR 250,000 100,000 Chartered Bank (Ceylon) PLC for Rs. 250 Mn demand interest rate of 7.39% Commercial Corporate guarantee from Cargills Payable on Average LKR 165,000 100,000 Bank of Ceylon (Ceylon) PLC for Rs. 215 Mn demand interest rate PLC of 7.43% Hatton National Corporate Guarantee from Cargills Payable on Average LKR 175,000 363,000 Bank PLC (Ceylon) PLC for Rs 335 Mn demand interest rate of 7.48% Company total - Millers Limited 563,000 Total - Other short term bank loans 7,510,443
84 C T Holdings PLC Annual Report 2015/16 31 Employee benefits 31.1 Employee benefit liabilities In thousands of rupees Group Company 2016 2015 2016 2015
As at 1st April 554,219 446,094 7,874 7,273 Current service cost 96,760 61,928 741 440 Interest cost 28,010 46,291 787 726 Benefit paid (24,286) (39,861) - - Actuarial (gain)/loss 39,642 39,767 5,008 (565) Liability for defined benefit obligations as at 31st March 694,345 554,219 14,410 7,874
Amount recognised in profit or loss Current service cost 96,760 61,928 741 440 Interest cost 28,010 46,291 787 726 124,770 108,219 1,528 1,166
Amount recognised in other comprehensive income Actuarial (gain) / loss 39,642 39,767 5,008 (565) 39,642 39,767 5,008 (565)
31.2 Actuaries The Group engaged the actuaries, Messrs. Actuarial and Management Consultants (Private) Limited to carry out the actuarial valuation of different companies within the Group
31.3 Actuarial assumptions The following were the principal actuarial assumptions at the reporting date
In thousands of rupees Group Company 2016 2015 2016 2015
Discount rate 10% - 10.50% 10% 10% 10% (The rate of interest used to discount the future cash flows in order to determine the present value) Future salary increase 7.50% - 15% 5% - 9.5% 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.
C T Holdings PLC Annual Report 2015/16 85 Notes to the Financial Statements Contd.
31.3 Actuarial assumptions Contd. Sensitivity analysis Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below.
In thousands of rupees Group Company 2016 2015 2016 2015
Increase Discount rate (1% movement) (33,399) (31,622) (796) (502) Future salary growth (1% movement) 38,015 38,548 856 610
Decrease Discount rate (1% movement) 34,801 36,081 868 545 Future salary growth (1% movement) (31,055) (34,287) (821) (567)
32 Deferred income In thousands of rupees Group Company 2016 2015 2016 2015
Grants received As at 1st April 119,531 117,140 - - Received during the year - 2,391 - - As at 31st March 119,531 119,531 - -
Amortisation As at 1st April 23,187 11,007 - - Amortised during the year 11,481 12,180 - - As at 31st March 34,668 23,187 - -
Net amount As at 31st March 84,863 96,344 - -
32.1 The grants were received by the subsidiary Cargills Agrifoods Ltd details are as follows: Granted By Purpose of the Basis of amortisation Amount Balance Received Amortised Balance grant received as at during during the as at 1-Apr-15 the year year 31-Mar-16 United States Agency Dehiattakandiya Based on the 24,905 20,865 - (2,512) 18,353 for International project corresponding Development (USAID) expenditure being and Connecting incurred Regional Economies Kilinochchi Based on depreciation 92,002 75,479 - (8,969) 66,510 (USAID / CORE) project applicable corresponding to the plant & machinery acquired from the grant. Total 116,907 96,344 - (11,481) 84,863
86 C T Holdings PLC Annual Report 2015/16 33 Trade and other payables In thousands of rupees Group Company 2016 2015 2016 2015
Trade creditors (other than from related parties) 7,705,006 5,576,100 500 1,169 Amount due to related parties (Refer note 35.3) 1,639 3,062 556 18,010 Security deposits (Refer note 33.1) 207,553 197,759 - - Accruals, other accounts payable & provisions 3,466,580 2,544,014 11,314 12,548 Put options written on non-controlling interest (Refer note 33.2) 2,251,743 1,974,311 - - 13,632,521 10,295,246 12,370 31,727
Current 11,173,225 8,123,176 12,370 31,727 Non current 2,459,296 2,172,070 - - 13,632,521 10,295,246 12,370 31,727
33.1 Security deposits This represents deposits which are repayable at the termination of tenancy agreements.
33.2 Put options written on non-controlling interest 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: yy Conditions of the Shareholder Agreement will not be breached by either party until the Put period arrives. yy 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. yy Weighted average cost of capital of CCP is 14%. yy Pricing date as 31st March 2016. yy A year is assumed to have 365 days.
According to the terms of the agreement, the aforesaid put option written over non-controlling interest will have no effect of transferring ownership risks and rewards of the shares to the parent. Therefore the total value of non-controlling-interest of Rs. 2.550 Bn will continue to be recognised as non-controlling-interest and will be allocated its share of profit and losses without any change. The future dividend payable also will continue to be deducted from the non-controlling-interest.
The financial liability is recognised at the present value of the redemption amount. 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).
C T Holdings PLC Annual Report 2015/16 87 Notes to the Financial Statements Contd.
------Total
------Level 3
------Level 2
------Levels in the fair value hierarchy Level 1 1,414,392 1,414,392 3,370,699 3,370,699
Total 1,335 1,414,392 1,414,392 1,968,254 1,800,066 3,401,289 7,169,609 3,262,281 8,246,272 3,370,699 3,370,699 1,935,146 1,616,676 2,783,766 6,335,588 4,044,101 8,339,318 7,751,232 10,165,941 21,674,494 20,135,986
------1,335 Other financial liabilities 3,262,281 8,246,272 4,044,101 8,339,318 7,751,232 10,165,941 21,674,494 20,135,986
------
for-sale Available 1,414,392 1,414,392 3,370,699 3,370,699
------Carrying amount 1,968,254 1,800,066 3,401,289 7,169,609 1,935,146 1,616,676 2,783,766 6,335,588 Loans and receivables
------Held-to maturity
------through Fair value profit or loss 26 26 27 27 30 33 26 26 27 27 33 24 24
30.1 30.2
Accounting classifications and fair values Financial instruments – Fair values and risk management risk and values Fair – instruments Financial
at fair value at fair value 34 34.1 The following table shows the carrying amounts and fair values of financial assets liabilities, including their lev els in value hierarchy. It does not include fair value information for financial assets and liabilities measured at if the carry ing amount is a reasonable approximation of fair value. Group In thousands of rupees (a)) equivalents securities As at 31 March 2016 (34.1 Financial assets measured cash Equity payables receivables receivables Financial assets not measured and loans other Trade Other overdrafts Cash bank and Financial liabilities Bank Secured Trade equivalents securities As at 31 March 2015 cash Financial assets measured at fair value Equity receivables receivables payables and Financial assets not measured at fair value loans Trade liabilities Other other Cash overdrafts bank lease Financial liabilities and Bank Secured Finance Trade
88 C T Holdings PLC Annual Report 2015/16
------Total
------Level 3
------Level 2
------Levels in the fair value hierarchy Level 1 1,178,448 1,178,448 3,305,041 3,305,041
Total 1,056 1,056 19,179 19,179 806,277 237,505 178,706 172,179 350,885 1,178,448 1,178,448 1,043,782 3,305,041 3,305,041
------1,056 1,056 Other 19,179 19,179 financial liabilities
------
for-sale Available 1,178,448 1,178,448 3,305,041 3,305,041
------Carrying amount 806,277 237,505 178,706 172,179 350,885 1,043,782 Loans and receivables
------Held-to maturity
------through Fair value profit or loss 26 27 33 26 27 33 24 24
Accrued expenses which are not financial liabilities of Rs. 3,466 Bn (2015: 2,544 Bn) and 11.314 Mn 12.548 ) included for Group and Company respectively measured at fair value Trade and other payables (34.1 (a)) Company receivables In thousands of rupees equivalents (34.1 securities other As at 31 March 2016 cash payables Financial assets measured at fair value Equity and and other Financial assets not measured at fair value Trade Cash and Financial liabilities receivables Trade equivalents securities As at 31 March 2015 other payables* Financial assets cash Equity and other and Financial assets not measured at fair value Trade and Cash Financial liabilities Trade 34.1 (a)
C T Holdings PLC Annual Report 2015/16 89 Notes to the Financial Statements Contd.
34 Financial instruments – Fair values and risk management (contd.) 34.2 Capital management The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising the return to stakeholders through the optimisation of the debt and equity balance. The Group’s overall strategy remains unchanged from 2015.
The capital structure of the Group consists of below; In thousands of rupees Group Company 2016 2015 2016 2015
Debt Loans and borrowings 8,246,272 8,340,653 - - Bank overdrafts 3,262,281 4,044,101 - - Non-current Trade creditors 2,251,743 1,974,311 - - Net debt 13,760,296 14,359,065 - -
Debt is defined as long- and short-term borrowings (excluding derivatives)
Equity Stated capital 3,194,008 3,194,008 3,194,008 3,194,008 Reserves 4,618,260 3,732,285 428,807 470,420 Retained earnings 11,047,414 10,424,515 4,151,826 4,254,553 Non-controlling interest 4,662,872 4,195,112 - - Total Equity 23,522,554 21,545,920 7,774,641 7,918,981 Total debt 37,282,850 35,904,985 7,774,641 7,746,802
Equity includes all capital and reserves of the Group that are managed as capital.
Gearing ratio Net debt to equity ratio 58.50% 66.64% N/A N/A
The Group is not subject to any externally imposed capital requirements.
34.3 Financial risk management objectives The Group has exposure to the following risks arising from financial instruments.
34.3(a) Credit risk Exposure to credit - The maximum credit exposure arising from financial assets is listed below.
In thousands of rupees Group Company 2016 2015 2016 2015
Unquoted equity - available-for-sale 100 100 100 100 Trade receivables 1,968,254 1,935,146 806,244 176,405 Cash and cash equivalents 3,401,289 2,783,766 237,505 172,179 5,369,643 4,719,012 1,043,849 348,684
90 C T Holdings PLC Annual Report 2015/16 (i) Trade and other receivables Impairment Trade receivables before provisions for impairments were at the ageing set out below.
In thousands of rupees Group Company 2016 2015 2016 2015
Neither past due nor impaired 18,165 595,152 784,727 160,000 1 - 30 days 1,383,444 831,429 492 3,215 31 - 60 days 279,478 201,884 281 698 61 - 90 days 97,100 100,593 226 - 91 - 120 days 82,009 98,137 312 366 More than 120 days 108,058 107,951 20,205 12,126 1,968,254 1,935,146 806,244 176,405
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.
The movement in the provision for impairment in respect of trade and other receivables during the year is given in note 26.2.
(ii) Cash and cash equivalents The Group held cash and cash equivalents of Rs. 3.401 Bn at 31st March 2016 (2015: Rs. 2.783 Bn). The cash and cash equivalents are held with bank and financial institution counter-parties, with high credit ratings.
(iii) Corporate guarantees The Group’s policy is to provide financial guarantees only to subsidiaries. As at 31st March 2016, the Company had issued guarantees to certain banks in respect of credit facilities granted to subsidiaries (Refer Note 30.4)
34.3(b) 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 31 March 2016 Bank overdrafts 3,262,281 - - - - 3,262,281 Secured bank loans 537,529 198,300 - - - 735,829 Other short term bank loans 7,510,443 - - - - 7,510,443 Trade and other payables 11,173,225 207,553 - - 2,251,743 13,632,521 22,483,478 405,853 - - 2,251,743 25,141,074
As at 31 March 2015 Bank overdrafts 4,044,101 - - - - 4,044,101 Secured bank loans 558,397 532,621 198,300 - - 1,289,318 Other short term bank loans 3,850,000 - - - - 3,850,000 Commercial papers 3,200,000 - - - - 3,200,000 Finance lease liabilities 1,285 50 - - - 1,335 Trade and other payables 8,123,176 197,759 - - 1,974,311 10,295,246 19,776,959 730,430 198,300 - 1,974,311 22,680,000
C T Holdings PLC Annual Report 2015/16 91 Notes to the Financial Statements Contd.
35 Related parties 35.1 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) The subsidiaries C T Land Development PLC and Cargills (Ceylon) PLC provide an apartment each to the Mr. Joseph Page and Mr. Ranjit Page respectively for the due performance of their respective office. (b) Mrs. R Page, wife of Mr. Ranjit Page , is a Director of the Double Yummm (Private) Limited with which Cargills (Ceylon) PLC and its subsidiaries have regular transactions in the ordinary course of business and the amount outstanding as at 31st March 2016 was Rs. 4.89 Mn (2015 - Rs. 4.51 Mn). Purchases for re-sale in the ordinary course of business for the year amounted to Rs. 55.49 Mn (2015 - Rs. 45.81 Mn) Rental income of Rs. 1.08 Mn (2015 - Rs. 1.08 Mn). (c) Short term employment benefits paid to key management personnel have been disclosed in the Note 12 to these Financial Statements. There are no post employment benefits paid during the year. (d) No unsecured loans to Directors have been granted during the year.
35.2 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 In thousands of rupees
Related Company Common Directors Transaction 2016 2015 C T Properties Limited Ranjit Page Capital contribution 626,000 160,000 R. Selvaskandan Louis Page Joseph Page Ms. Cecilia Muttukumaru Ceylon Theatres (Private) Limited R. Selvaskandan Rent income 3,596 3,763 Joseph Page Recovery of expenditure 1,089 2,252 Ms. Cecilia Muttukumaru Share issue/purchase - (80,000) Settlement - 80,000 Millers Limited - Rent income 18,018 21,243 Settlement (18,018) (21,243) Cinema Entertainments (Private) Limited R. Selvaskandan Rent income 2,520 1,093 Settlement (2,179) (804)
92 C T Holdings PLC Annual Report 2015/16 B. Transactions between between Group companies In thousands of rupees Net Amount Balance Purchase / Receipt / Interest Dividend Received / as at Sale of Rendering of Received / Received / (Paid) 31-Mar-16 Goods Services Paid Paid
Subsidiary Cargills (Ceylon) PLC 1,562,915 (1,213,966) - √ √ √ Cargills Foods Company (Private) Limited (1,626,324) 128,539 √ √ √ √ Cargills Quality Foods Limited (148,662) (51,573) √ - √ √ Cargills Distributors (Private) Limited 3,710 24,041 - - √ √ Cargills Quality Diaries (Private) Limited 17,246 (463) √ - √ √ Cargills Frozen Products (Private) Limited (11) (9) - - √ - Kotmale Holdings PLC (1,922) (26,731) - - √ √ Kotmale Products Limited 46,394 (41,207) - - - √ Kotmale Milk Foods Limited (8,329) (122,149) - - - - Kotmale Dairy Products (Private) Limited (34,818) 93,049 √ - √ √ Kotmale Milk Products Limited (16,739) 45,119 - - - - Cargills Quality Confectioneries (Private) Limited 19,682 2,117 √ - - - Cargills Agrifoods Limited 26,939 (41,837) √ - √ √ CPC Lanka Limited 20,607 2,275 √ - √ √ Cargills Food Processors (Private) Limited 103,190 (1,690) √ √ √ √ Cargills Food Services (Private) Limited (10,944) 162 √ √ √ - Millers Limited 23,951 (13,870) √ √ √ √ Dawson Office Complex (Private) Limited 257,897 257,897 - - - - C T Land Development PLC 17,473 5,276 - - - √ Ceylon Theatres (Private) Limited (2,413) 52,761 - √ - - C T Properties Limited 6,687 591,721 - - - - C T Property Management Company (Private) Limited 1 1,203 - - - - C T Real Estate (Private) Limited (15,632) 359,329 - - - - C T Properties Lakeside (Private) Limited 178 86,879 - - - - C T Properties GS (Private) Limited (Previously Keppel C T Development (Private) Limited) 123,047 698,848 - √ - -
Associates C T CLSA Holdings Limited - - √ - - - Cinema Entertainments (Private) Limited 2,240 (323) √ √ - √ Cargills Bank Limited (395) 18,955 - - √ -
C T Holdings PLC Annual Report 2015/16 93 Notes to the Financial Statements Contd.
35.3 Related party balances In thousands of rupees Group Company 2016 2015 2016 2015
(a) Amount due from subsidiary companies Ceylon Theatres (Private) Limited - - 20,364 15,679 C T Properties Limited - - 784,727 160,000 - - 805,091 175,679
(b) Amount due from other related companies Odeon Holdings (Ceylon) (Private) Limited - 40 - - United Hotels Co. Limited 1,159 583 - - Cargills Bank Limited 18,955 19,350 - - C T Properties GS (Pvt) Ltd (Previously Keppel C T Development (Private) Limited) - 575,801 - - Ceylon Hotels Corporation PLC 228 154 - - Galle Face Hotel Company Limited 65 67 - - Kandy Hotels Company (1938) PLC 1,074 1,029 - - Cinema Entertainments (Private) Limited 925 499 925 499 22,406 597,523 925 499 Total amounts due from related companies 22,406 597,523 806,016 176,178
(c) Amounts due to subsidiary companies Cargills (Ceylon) PLC - - - 17,454 Millers Limited - - 556 556 - - 556 18,010
(d) Amount due to other related companies Kalamazoo System Limited 391 - - - Cinema Entertainments (Private) Limited 1,248 3,062 - 1,639 3,062 - - Total amounts due to related companies 1,639 3,062 556 18,010
35.4 Parent Company and ultimate controlling entity Odeon Holdings (Ceylon) (Private) Limited holds 41.75% (2015 – 41.70%) of the ordinary share capital of the Company.
94 C T Holdings PLC Annual Report 2015/16 36 Operating segments The Group has five reportable segments, as described in Note 6, 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.
36.1 Reconciliation of reportable segment revenues, profit or loss, assets and liabilities, and other material items
In thousands of rupees 2016 2015
Revenues Total revenue for reportable segments 72,399,182 62,452,231
Profit or loss Total profit or loss for reportable segments 2,073,833 582,744 Unallocated amounts: – Corporate net income 323,733 174,915 – Share of profit of equity accounted investees (79,359) (37,891) Consolidated profit from continuing operations 2,318,207 719,768
Assets Total assets for reportable segments 56,616,037 51,447,948 Discontinued operation - (4,824,920) Other unallocated amounts (4,452,316) (4,684,372) Consolidated total assets 52,163,721 46,763,576
Liabilities Total liabilities for reportable segments 30,063,090 27,449,275 Discontinued operation - - Other unallocated amounts (1,421,923) (2,231,619) Consolidated total liabilities 28,641,167 25,217,656
Other material items Reportable segment total Unallocated amounts Consolidated totals 2016 2015 2016 2015 2016 2015
Finance income 262,460 346,359 185,172 53,624 447,632 399,983 Finance expense (871,011) (452,780) 230 (615,173) (870,781) (1,067,953) Depreciation 1,759,659 1,638,928 6,342 9,343 1,766,001 1,648,271
C T Holdings PLC Annual Report 2015/16 95 Notes to the Financial Statements Contd.
36.2 Information about reportable segments In thousands of rupees Retail & Real estate FMCG Restaurants Entertainment Total wholesale distribution
2016 Revenues External revenues 58,293,081 626,803 15,505,707 2,812,098 330,529 77,568,218 Inter-segment revenue (789,187) - (4,379,849) - - (5,169,036) Reportable segment revenue 57,503,894 626,803 11,125,858 2,812,098 330,529 72,399,182
Profit or loss & other material items Reportable segment profit after tax 979,639 301,919 707,548 62,314 22,413 2,073,833 Finance income 11,133 57,067 192,426 - 1,834 262,460 Finance expense (449,610) (73,179) (327,885) (20,104) (233) (871,011) Depreciation 987,858 11,301 536,355 167,204 56,941 1,759,659
Assets & Liabilities Reportable segment assets 33,226,056 9,135,275 12,762,347 1,207,517 284,842 56,616,037 Reportable segment liabilities 18,295,056 3,934,124 6,903,275 889,621 41,014 30,063,090
2015 Revenues External revenues 51,404,360 675,460 12,475,094 2,301,253 199,092 67,055,259 Inter-segment revenue (792,778) (53,607) (3,756,643) - - (4,603,028) Reportable segment revenue 50,611,582 621,853 8,718,451 2,301,253 199,092 62,452,231
Profit or loss & other material items Reportable segment profit after tax 102,166 271,801 387,801 (128,210) (50,814) 582,744 Finance income 296,969 35,411 13,652 - 327 346,359 Finance expense (254,406) (48,449) (146,488) (2,236) (1,201) (452,780) Depreciation 930,909 39,998 462,782 162,119 43,120 1,638,928
Assets & Liabilities Reportable segment assets 31,067,223 6,790,396 11,835,975 1,424,671 329,683 51,447,948 Reportable segment liabilities 17,086,089 2,433,631 6,671,733 1,149,550 108,272 27,449,275
36.3 Geographical information The Group does not distinguish its turnover into significant geographical segments.
36.4 The accounting policies of the reportable segments are the same as the Group’s accounting policies described in note 6. 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.
96 C T Holdings PLC Annual Report 2015/16 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, ‘other financial assets’, and current and deferred tax assets. Goodwill is allocated to reportable segments as described in note 21.1. Assets used jointly by reportable segments are allocated on the basis of the revenues earned by individual reportable segments; and
(b) All liabilities are allocated to reportable segments other than borrowings, ‘other financial liabilities’, current and deferred tax liabilities. Liabilities for which reportable segments are jointly liable are allocated in proportion to segment assets.
37 Commitments The capital expenditure commitments of the Company and Group approved by the Directors as at 31st March 2016 were as follows:
In thousands of rupees Group Company 2016 2015 2016 2015
37.1 Capital commitments Approved and contracted 912,495 641,668 - -
37.2 Financial commitments (a) Operating lease commitments where C T Holdings PLC and its subsidiaries are the lessees; - within 1 year 912,495 735,664 - - - between 1 - 5 years 4,008,943 3,636,978 - - - more than 5 years 6,824,167 4,131,670 - - 11,745,605 8,504,312 - -
(b) Settlement of letter of credits and import bills 333,371 205,898 - -
38 Contingencies 38.1 Letters of Guarantees 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. 1.53 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 there from.
Cargills (Ceylon) PLC has provided bank guarantees to Lion Brewery (Ceylon) PLC and its subsidiary Pearl Springs (Private) Limited to the value of Rs. 695 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.
38.2 Income tax Cargills Agrifoods Limited 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. 119.45 Mn, Cargills Quality Dairies (Private) Limited - Rs. 249.81 Mn, Cargills Quality Foods Limited - Rs.173.65 Mn and Kotmale Dairy Products (Private) Limited Rs. 61.39 Mn. Having sought professional advice, the Management is confident that the tax exemptions are applicable and as such no liabilities would arise.
C T Holdings PLC Annual Report 2015/16 97 Notes to the Financial Statements Contd.
Accordingly, no provision has been made in the financial statements. Where necessary, interim stay orders have been obtained on any recovery actions.
38.3 Litigations Kotmale Dairy Products (Pvt) Ltd. Plaintiff filed action against the Company claiming damages of Rs. 50 Mn for loss of revenue as dispute over the equipment take off. The Directors do not expect any claim on this litigation. Accordingly, no provision has been made in the financial statements for any possible losses there from.
38.4 Acquisition of property C T Properties Lakeside (Private) Limited Sri Lanka Land Reclamation and Development Corporation (SLRDC) has issued an acquisition notice for the acquisition of the property owned by the Company located in Boralesgamuwa under the “Weras Reservoir Project” on 29th March 2013. Due to impracticality of estimating the compensation to be received from SLRDC or fair value of the land as at 31st March 2016, the said land is stated at its previous revalued amount (note 20.2) in the financial statements. Effect to the financial statement due to the acquisition of the land is Rs. 86 Mn, and directors are confident on the recoverability of the compensation.
There are no other material contingent liabilities that could have a material impact on the financial position of the Group, or which would lead to a disclosure in the Financial Statements as at the reporting date of 31st March 2016.
39 Events after the reporting period The Board of Directors have proposed a final dividend of Rs. 2.80 per share (on the 183,097,253 shares now in issue) for the year ended 31st March 2016 which is to be submitted for approval by the shareholders at the Annual General Meeting. As required by the Section 56 (2) of the Companies Act No. 7 of 2007, the Board of Directors has confirmed that the Company satisfies the ‘Solvency Test. In accordance with LKAS 10 - “Events after the reporting period”, the proposed dividend has not been recognised as a liability in the financial statements.
Other than the foregoing, no other events have occurred since the reporting date which would require adjustment to or disclosure in the financial statements.
40 Going Concern The subsidiary C T Properties Ltd recorded accumulated losses of Rs. 1,722,888,788/- as at 31 March 2016. This indicates the existence of a material uncertainty which may cast significant doubt about the Company’s ability to continue as a going concern. 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.
98 C T Holdings PLC Annual Report 2015/16 Five Year Review - Group
Year Ended 31st March 2016 2015 2014 2013 2012
Financial Results In thousands of Rupees Revenue 72,399,182 62,452,231 56,768,293 67,820,126 59,316,164 Results from operations 4,135,309 2,127,552 3,002,800 5,958,327 4,035,339 Net finance costs (393,626) (667,970) (933,975) (1,748,290) (924,544) Profit before taxation 3,662,324 1,421,691 2,010,411 4,210,782 3,122,041 Tax expenses (1,344,117) (701,923) (578,931) (865,599) (814,848) Profit after tax for the year from discontinued operations 2,318,207 420,435 152,504 - (4,102) Profit for the year 2,318,207 1,140,203 1,583,984 3,345,183 2,303,091
Attributable to - Owners of the Company 1,626,228 816,846 1,279,841 1,977,280 1,136,755 Non-controlling Interest 691,979 323,357 304,143 1,367,903 1,166,336 2,318,207 1,140,203 1,583,984 3,345,183 2,303,091
Financial Position Stated capital 3,194,008 3,194,008 3,194,008 3,194,008 3,194,008 Reserves 15,665,674 14,156,800 13,754,323 13,777,893 8,924,847 Total equity attributable to equity holders of the parent 18,859,682 17,350,808 16,948,331 16,971,901 12,118,855 Non-controlling interest 4,662,872 4,195,112 3,824,693 9,825,801 7,664,610 Total equity 23,522,554 21,545,920 20,773,024 26,797,702 19,783,465
Borrowings Loans and borrowings 8,246,272 8,340,653 15,350,588 14,821,823 7,082,039 Non-current payables 2,251,743 1,974,311 - - - Bank overdrafts 3,262,281 4,044,101 2,254,467 5,552,093 5,076,723 13,760,296 14,359,065 17,605,055 20,373,916 12,158,762
Net Assets Current assets 14,418,707 12,618,347 11,584,180 18,849,338 14,300,354 Current liabilities (24,212,544) (20,887,330) (25,349,345) (26,271,404) (19,033,171) Net current liabilities (9,793,837) (8,268,983) (13,765,165) (7,422,150) (4,732,817) Non-current liabilities (4,428,623) (4,330,326) (3,003,203) (6,981,794) (4,640,178) Non-current assets 37,745,014 34,145,229 37,541,392 41,201,562 29,156,460 Total net assets 23,522,554 21,545,920 20,773,024 26,797,702 19,783,465
Ratios & Statistics Growth in annual turnover (%) 15.93 10.01 (16.30) 14.34 26.09 Earnings per share (Rs.) 8.88 4.46 6.99 10.80 6.21 Growth in earnings (%) 99.09 (36.18) (40.00) 73.94 31.56 Shareholders’ funds per share (Rs.) 103.00 94.76 92.56 92.89 66.19 Growth in shareholders’ funds (%) 8.70 2.37 (7.09) 40.05 37.97 Return on shareholders’ funds (%) 8.62 4.71 7.55 11.65 9.38 Non-current assets to shareholders’ funds (%) 200.14 196.79 221.50 242.76 240.59 Current ratio (times) 0.60 0.60 0.46 0.72 0.75 Debt equity ratio (times) 0.73 0.83 1.04 1.20 1.00 Dividend per share (Rs.) 3.80 3.40 8.30 2.31 2.06 Dividend cover (times) 2.34 1.31 0.84 5.02 3.24 Market price per share (Rs.) 129.90 128.00 135.00 126.20 150.10 Price earnings ratio (times) 14.63 28.69 19.31 10.87 22.49 Net asset value per share 128.47 117.67 113.45 146.36 105.05
C T Holdings PLC Annual Report 2015/16 99 Group Directory
Parent Company FMCG Kotmale Products Limited Address: 40, York Street, Colombo 01. C T Holdings PLC Cargills Quality Foods Limited Phone: +94112427777 Address: No 8, Sir Chittampalam Address: 40, York Street, Colombo 01. Fax: +94112338704 A Gardiner Mawatha, Colombo 02. Phone: +94112427777 Directors: Imtiaz Abdul Wahid, Phone: +94112431243 Fax: +94112338704 S L W Dissanayake Fax: +94112447956 Directors: Ranjit Page (Chairman), Email: [email protected] Imtiaz Abdul Wahid, Sidath Kodikara, Kotmale Milk Foods Limited Chairman Emeritus: P S Mathavan, J C M Victoria, Address: 40, York Street, Colombo 01. Mr. Anthony A Page S L W Dissanayake Phone: +94112427777 Directors: Louis Page (Chairman), Fax: +94112338704 Ranjit Page, Priya Edirisinghe, Cargills Distributors (Private) Limited Directors: Imtiaz Abdul Wahid, Sunil Mendis, J B L De Silva, Address: 40, York Street, Colombo 01. S L W Dissanayake Mrs. Cecilia Muttukumaru, Phone: +94112427777 Dr. A Aravinda Page, Joseph Page Fax: +94112338704 Kotmale Dairy Products (Private) R Selvaskandan, A D B Talwatte (w e f Directors: Imtiaz Abdul Wahid, Limited 28th March 2016) Sidath Kodikara Address: 40, York Street, Colombo 01. Phone: +94112427777 Retail and Wholesale Distribution Cargills Quality Dairies (Private) Fax: +94112338704 Limited Cargills (Ceylon) PLC Directors: Imtiaz Abdul Wahid, Address: 40, York Street, Colombo 01. Address: 40, York Street, Colombo 01. S L W Dissanayake Phone: +94112427777 Phone: +94112427777 Fax: +94112338704 Fax: +94112338704 Kotmale Milk Products Limited Directors: Imtiaz Abdul Wahid, Email: [email protected] Address: 40, York Street, Colombo 01. Sidath Kodikara, P S Mathavan, Directors: Louis Page (Chairman), Phone: +94112427777 D G O Dias, S L W Dissanayake, Ranjit Page, Imtiaz Abdul Wahid, Fax: +94112338704 Sidath Kodikara, Priya Edirisinghe, Directors: Imtiaz Abdul Wahid, Cargills Agrifoods Limited P S Mathavan, Sanjeev Gardiner, S L W Dissanayake Sunil Mendis, Anthony A Page, Address: 40, York Street, Colombo 01. Phone: +94112427777 Joseph Page, Errol Perera Cargills Frozen Products (Pvt) Limited Fax: +94112338704 Address: 40, York Street, Colombo 01. Directors: Imtiaz Abdul Wahid, Cargills Foods Company (Private) Phone: +94112427777 Sidath Kodikara, P S Mathavan, Limited Fax: +94112338704 Ms. M G Perera Address: 40, York Street, Colombo 01 Directors: Imtiaz Abdul Wahid, Phone: +94112427777 Sidath Kodikara, D G O Dias, CPC (Lanka) Limited Fax: +94112338704 S L W Dissanayake Directors: Ranjit Page (Chairman), Address: 40, York Street, Colombo 01. Phone: +94112427777 Sidath Kodikara, Imtiaz Abdul Wahid, Cargills Quality Confectionaries Fax: +94112338704 Priya Edirisinghe, Sunil Mendis (Private) Limited Directors: Imtiaz Abdul Wahid, Address: 40, York Street, Colombo 01. Sidath Kodikara Millers Limited Phone: +94112427777 Address: 40 York Street, Colombo 1 Fax: +94112338704 Kotmale Holdings PLC Phone: +94112427777 Directors: Imtiaz Abdul Wahid, Address: 40, York Street, Colombo 01. Fax: +94112338704 Sidath Kodikara Directors: Imtiaz Abdul Wahid, Phone: +94112427777 P S Mathavan, D G O Dias, Fax: +94112338704 Ms. M G Perera Directors: Ranjit Page (Chairman), Imtiaz Abdul Wahid, P S Mathavan, Priya Edirisinghe, Sunil Mendis, Joseph Page
100 C T Holdings PLC Annual Report 2015/16 Restaurants C T Real Estate (Private) Limited Entertainment Address: 28th Floor, West Tower, World Cargills Food Processors (Private) Ceylon Theatres (Private) Limited Trade Centre, Colombo 01. Limited Address: 8 Sir Chittampalam A Gardiner Phone: +94112005700 Address: 40, York Street, Colombo 01. Mawatha, P O Box 2042, Colombo 02. Fax: +94112336727 Phone: +94112427777 Phone: +94112431243, +94112555565 Directors: R Selvaskandan (Chairman), Fax: +94112338704 Fax: +94112447956 Joseph Page, Mrs. Cecilia Muttukumaru, Directors: Imtiaz Abdul Wahid, Directors: R Selvaskandan (Chairman), Louis Page, Jayantha Perera, Sidath Kodikara, P S Mathavan, Joseph Page, Mrs. M G Perera, S C Niles, Errol Perera J C M Victoria Anthony A Page, Mrs. Cecilia Muttukumaru, S C Niles C T Properties Lakeside (Private) Cargills Foods Services (Private) Limited Limited Financial Services Address: 28th Floor, West Tower, World Address: 40, York Street, Colombo 01. Trade Centre, Colombo 01. C T CLSA Holdings Limited Phone: +94112427777 Phone: +94112005700 Address: 4-14, Majestic City, 10 Station Fax: +94112338704 Fax: +94112336727 Road, Colombo 04. Directors: Imtiaz Abdul Wahid, Directors: R Selvaskandan (Chairman), Phone: +94112552290 Sidath Kodikara, P S Mathavan Joseph Page, Mrs. Cecilia Muttukumaru, Fax: +94112552289 Louis Page, Jayantha Perera, Directors: Priya Edirisinghe (Chairman), Real Estate S C Niles, Errol Perera Mrs. Cecilia Muttukumaru, Louis Page, C T Land Development PLC Donald Skinner Address: 4th Floor, Majestic City, 10, C T Properties G S (Private) Ltd Station Road, Colombo 04. (formerly Keppel C T Developments C T CLSA Securities (Private) Limited Phone: +94112508673-4 (Pvt) Limited) Address: 4-14, Majestic City, 10 Station Fax: +94112592427 Address: 28th Floor, West Tower, World Road, Colombo 04. Email: [email protected] Trade Centre, Colombo 01. Phone: +94112552290 Directors: R Selvaskandan (Chairman), Phone: +117468500 Fax: +94112552289 Joseph Page, Mrs. M G Perera, Fax: +117468502 Email: [email protected] Anthony A Page, Louis Page, Directors: Louis Page Directors: Mrs. Cecilia Muttukumaru Priya Edirisinghe, Sunil Mendis, (alternate - R Selvaskandan), (Chairperson), Priya Edirisinghe, S C Niles, Dr. T Senthilverl, Ranjit Page (alternate - S C Niles), Donald Skinner, KanishkaHewage A D M De Alwis Ng Ooi Hooi (Chairman - up to 25th February 2016), Lim Kei Hin - up to 25th C T CLSA Capital (Private) Limited C T Properties Limited February 2016 Address: 4-15 A, Majestic City, 10 Station Address: 28th Floor, West Tower, World (alternate - Ms. Tan Siew Ngok - up to Road, Colombo 04. Trade Centre, Colombo 01. 25th February 2016), Phone: +94112584843, +94112503523 Phone: +94112005700 Pannir Chelvam Ramaya - up to 25th Fax: +94112580181 Fax: +94112336727 February 2016 Email: [email protected] Email: [email protected] Directors: Mrs. Cecilia Muttukumaru Directors: Ranjit Page (Chairman), Dawson Office Complex (Private) (Chairperson), Donald Skinner, R Selvaskandan, Joseph Page, Limited S C Niles, Zakir Mohamedally Mrs. Cecilia Muttukumaru, Louis Page, Address: 40 York Street, Colombo 01. Jayantha Perera, S C Niles, Errol Perera Phone: +94112427777 Comtrust Asset Management Limited Fax: +94112338704 Address: 4-02, Majestic City, 10 Station C T Property Management Company Directors: Imtiaz Abdul Wahid Road, Colombo 04. (Private) Limited Phone: +94115759571,+94112506347,+9 Address: 28th Floor, West Tower, World 4112506204 Trade Centre, Colombo 01. Fax: +94112506347 Phone: +94112005700 Email: [email protected] Fax: +94112336727 Directors: Mrs. Cecilia Muttukumaru Directors: R Selvaskandan (Chairman), (Chairperson), Donald Skinner, Joseph Page, Louis Page, Joseph Page, P Asokan (up to 31st Jayantha Perera, S C Niles, Errol Perera March 2016)
C T Holdings PLC Annual Report 2015/16 101 Information to Shareholders
1. Distribution of Shareholders Size of Shareholdings 31st March 2016 31st March 2015 Shareholders Holdings Shareholders Holdings Numbers % Numbers % Numbers % Numbers % 1 - 1,000 Shares 806 51.44 208,035 0.11 826 51.53 227,078 0.12 1,001 - 10,000 Shares 452 28.84 2,042,514 1.12 461 28.76 2,080,676 1.14 10,001 - 100,000 Shares 247 15.76 7,653,597 4.18 258 16.09 7,826,490 4.28 100,001 - 1,000,000 Shares 44 2.81 12,442,055 6.79 40 2.50 11,650,388 6.36 Over 1,000,000 Shares 18 1.15 160,751,052 87.80 18 1.12 161,312,621 88.10 Total 1,567 100.00 183,097,253 100.00 1,603 100.00 183,097,253 100.00
2. Analysis of Shareholders Size of Shareholdings 31st March 2016 31st March 2015 Shareholders Holdings Shareholders Holdings Numbers % Numbers % Numbers % Numbers % Institutions 123 7.85 112,400,344 61.39 125 7.80 112,349,100 61.36 Individuals 1,444 92.15 70,696,909 38.61 1,478 92.20 70,748,153 38.64 Total 1,567 100.00 183,097,253 100.00 1,603 100.00 183,097,253 100.00
Residents 1,433 91.45 152,382,567 83.22 1,468 91.58 152,351,734 83.21 Non-Residents 134 8.55 30,714,686 16.78 135 8.42 30,745,519 16.79 Total 1,567 100.00 183,097,253 100.00 1,603 100.00 183,097,253 100.00
102 C T Holdings PLC Annual Report 2015/16 3. Major Shareholders 31st March 2016 31st March 2015 Number of % Number of % Shares Shares Odeon Holdings (Ceylon) (Pvt) Ltd 76,442,848 41.75 76,356,544 41.70 Mr. Anthony A. Page 15,910,261 8.69 15,910,261 8.69 Mr. Ranjit Page 10,927,338 5.97 10,927,338 5.97 Sir Chittampalam A Gardiner Trust 9,200,004 5.03 9,200,004 5.03 Ms. M. M. Page 8,630,877 4.71 8,288,234 4.53 Employees Provident Fund 6,988,170 3.82 6,988,170 3.82 Mr. Joseph Page 6,426,520 3.51 6,426,520 3.51 Mrs. T. Selvaratnam 5,152,045 2.81 5,152,045 2.81 The Bank of New York Mellon SA/NV–CF Ruffer Total 4,300,000 2.35 4,300,000 2.35 Return Fund The Bank of New York Mellon SA/NV–CF Ruffer Absolute 3,351,080 1.83 3,351,080 1.83 Return Fund Mrs. Tanya Selvaratnam 2,565,000 1.40 2,565,000 1.40 Mr. T Selvaratnam 2,565,000 1.40 2,565,000 1.40 BNY- CF RufferInvestment Funds: CF Ruffer Pacific Fund 2,000,000 1.09 2,000,000 1.09 HSBC Intl Nom Ltd - SSBT- National Westminster Bank PLC 1,974,964 1.08 - - as Depository of First State Indian Subcontinent HSBC Intl Nom Ltd - JPMCB - Pacific Assets Trust PLC 1,686,445 0.92 - - Melstacorp Ltd 1,475,500 0.81 1,475,500 0.81 Mrs. Cecilia Muttukumaru 1,155,000 0.63 1,105,985 0.60 Ms. A. M. Muttukumaru 864,080 0.47 863,000 0.47 Mr. P. E. Muttukumaru 845,000 0.46 840,000 0.46 The Galle Face Hotel Co. Ltd 832,275 0.45 832,275 0.45 HSBC Intl Nominees Ltd–JPMCB- Scottish ORL SML TR GTI - - 3,661,409 2.00 6018 Mr. J. A. Aloysius - - 1,039,531 0.57 Others 19,804,846 10.82 19,249,357 10.51 Total 183,097,253 100.00 183,097,253 100.00
4 Share Valuation The market value of ordinary shares of the Company on 31st March 2016 was Rs 129.90 (2015 - Rs 128.00). The highest and lowest values recorded during the year ended 31st March 2016 were Rs 164.00 and Rs 117.00 respectively.
5 Public Holding The number of public shareholders as at 31st March 2016 was 1,553. The percentage of shares held by the public as at 31st March 2016 was 39.22% (2015 - 39.29%).
C T Holdings PLC Annual Report 2015/16 103 Notice of Meeting
Notice is hereby given that the Eighty Fifth Annual General Meeting of C T Holdings PLC will be held at the Auditorium of Sri Lanka Foundation, 100, Sri Lanka Padanam Mawatha, Independence Square, Colombo 07 on Monday, 4th July 2016 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 2016 with the report of the Auditors thereon. 2) To declare a dividend as recommended by the Directors. 3) To re-elect Directors a. Mr. L R Page and b. Mr. J C Page, who retire by rotation, and c. Mr. A D B Talwatte (appointed a Director on 28th March 2016) who retires in terms of the Articles of Association at the Annual General Meeting, and, d. Mr. A T P Edirisinghe and e. Mr. Sunil Mendis, who retire in terms of Section 210 (2) (a) and (b) of the Companies Act No. 07 of 2007 having attained the age of seventy and seventy one years respectively 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. A T P Edirisinghe, a retiring Director, who has attained the age of seventy 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. Sunil Mendis, a retiring Director, who has attained the age of seventy one years be and is hereby reappointed a Director of the Company and it is hereby declared that the age limit of seventy years referred to in Section 210 of the Companies Act No. 07 of 2007 shall not apply to the appointment of the said Director”
4) To authorise the Directors to determine contributions to charities 5) To authorise the Directors to determine the remuneration of the Auditors, Messrs. KPMG, who are deemed re-appointed as auditors at the Annual General Meeting 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 10th June 2016
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.
104 C T Holdings PLC Annual Report 2015/16 Notes
C T Holdings PLC Annual Report 2015/16 105 Notes
106 C T Holdings PLC Annual Report 2015/16 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 Fifth Annual General Meeting of the Company to be held on 4th July 2016 and at any adjournment thereof.
Resolution For Against
To adopt the Financial Statements for the year ended 31st March 2016
To declare a dividend as recommended by the Directors
To re-elect Mr L R Page as a Director
To re-elect Mr. J C Page as a Director
To re-elect Mr A D B Talwatte as a Director
To re-elect Mr A T P Edirisinghe as a Director
To re-elect Mr Sunil Mendis as a Director
To authorise the Directors to determine contribution to charities
To authorise the Directors to determine the remuneration of the Auditors, Messrs. KPMG, who are deemed re-appointed as Auditors at the Annual General Meeting.
The proxy may vote as he/she thinks fit on any other resolution brought before the meeting.
Dated this ...... day of ...... 2016
Witnesses:......
...... Signature of the Shareholder
Note: (a) A proxy need not be a member of the Company. (b) Instructions as to completion appear on the reverse hereof
C T Holdings PLC Annual Report 2015/16 107 Form of Proxy Contd.
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.
108 C T Holdings PLC Annual Report 2015/16 Corporate Information
Name of Company Executive Committee C T Holdings PLC Priya Edirisinghe (Chairman) Ranjit Page Registration No Sunil Mendis PQ 210 Joseph Page R Selvaskandan Legal Form Imtiaz Abdul Wahid Quoted Public Company with limited Audit Committee liability Incorporated in Sri Lanka on 29th September 1928 and re-registered under Priya Edirisinghe (Chairman) the Companies Act No. 7 of 2007. J B L De Silva Sunil Mendis Chairman Emeritus Remuneration Committee Anthony A Page Louis Page (Chairman) Board of Directors J B L De Silva Priya Edirisinghe Louis Page (Chairman) Sunil Mendis Ranjit Page (Deputy Chairman / Managing Director) Nominations Committee J B L De Silva Priya Edirisinghe Louis Page (Chairman) Sunil Mendis Priya Edirisinghe Mrs. Cecilia Muttukumaru Sunil Mendis A Aravinda Page Ranjit Page Joseph Page R Selvaskandan Related Party Transactions Review A D B Talwatte (w e f 28th March 2016) Committee Priya Edirisinghe (Chairman) Company Secretary J B L De Silva Sarath Dissanayake Sunil Mendis
Director Group Corporate Affairs Auditors S C Niles KPMG, Chartered Accountants
Registered Office Tax Consultants No 8, Sir Chittampalam A Gardiner PricewaterhouseCoopers, Mawatha, Colombo 2, Sri Lanka Chartered Accountants Telephone: +94 11 2431243 Email: info@ ctholdings.lk Bankers Fax: +94 11 2447956 Cargills Bank Postal Address: PO Box 327, Colombo Commercial Bank of Ceylon PLC People’s Bank Exchange Listing Hatton National Bank PLC Colombo Stock Exchange NDB Investment Bank Ltd Sampath Bank PLC Standard Chartered Bank Nations Trust Bank PLC
Produced by Copyline (Pvt) Ltd Creating Value since 1928 C T Holdings PLC No 08, Sir Chittampalam A Gardiner Mawatha, Colombo 02.