CT Holdings Completed 90 Set up by Ceylon Theatres Years of Operations at Arcade Independence Square, the Group’S Regal Cinema Was Refurbished

Creating Value since 1928

C T HOLDINGS PLC ANNUAL REPORT 2018 | 2019 Contents

Our Business at a Glance 01 Milestones 02 Profile of Businesses 04 Financial Highlights 06 Operational Spotlight 07 Chairman’s Message 08 Profile of Directors 10 Review of Operations 12 Corporate Governance 18 Risk Management 21 Report of the Remuneration Committee 23 Report of the Nominations Committee 24 Report of the Related Party Transactions Review Committee 25

Financial Statements Annual Report of the Board of Directors of the Company 29 Report of the Audit Committee 32 Statement of Directors Responsibility 34 Independent Auditors’ Reports 35 Statement of Profit or Loss and Other Comprehensive Income 40 Statement of Financial Position 41 Statement of Changes in Equity 42 Statement of Cash Flows 44 Notes to the Financial Statements 46 Five Year Review - Group 126 Group Directory 127 Information of Shareholders 130 Notice of Meeting 133 Form of Proxy 135 Corporate Information Inner Back Cover Our Business at a Glance

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

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

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

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

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

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

C T HOLDINGS PLC 01 Annual Report 2018 | 2019 Milestones

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

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

C T HOLDINGS PLC Annual Report 2018 | 2019 02 2017 2012 Cargills commissioned the Cargills entered the brewery expanded dairy facility. sector. Cargills Square mall Ceylon Theatres added three Gampaha opened with a new screens to the Majestic 2015 supermarket, KFC and two Cineplex including Sri cinema screens. Lanka’s first ever 3D cinema. Retail sector comprising the supermarkets spun off into a separate company with new direct equity injection into the Company. 2019 Two new cinema screens CT Holdings completed 90 set up by Ceylon Theatres years of operations at Arcade Independence Square, the Group’s Regal cinema was refurbished. Cargills exited the brewery sector.

2013 2016 Cargills set up the Cargills Bank began expansion TGI Fridays Franchise of its network by opening 11 Restaurant in branches. Colombo, Fort.

2014 2018 Group received license Regal Cinema in Nuwara 2011 to set up and operate a Eliya fully refurbished and Cargills acquired controlling Commercial Bank. re-opened. interest in Kotmale Holdings Cargills Square Mall opened PLC. in Jaffna. Cargills also acquired Exited the Ceramic / Tiles, Diana Biscuits Plantation and Packaging Manufacturers (Private) sectors. Limited (subsequently re-named Cargills Quality Confectioneries (Pvt) Ltd).

C T HOLDINGS PLC 03 Annual Report 2018 | 2019 Profile of Businesses

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

C T HOLDINGS PLC Annual Report 2018 | 2019 04 Restaurants Banking and Financial Services Entertainment The restaurants’ sector includes the Cargills Bank which was promoted and The Group has been associated world renowned ‘KFC’ and ‘TGI Fridays’ launched by the Group completed its with the national cinema industry for franchises with 39 KFC restaurants and third year of operations. Capital Market over 90 years with the making of the one flagship TGIF Restaurant. operations of the Group are carried out first national production and thereon under C T CLSA Holdings Ltd, which producing landmark motion pictures that covers stockbroking, advisory services have won international acclaim. Ceylon and capital market solutions. Theatres (Private) Limited is engaged in operating Fifteen cinema screens in Seven locations.

C T HOLDINGS PLC 05 Annual Report 2018 | 2019 Financial Highlights

Group Company In thousands of rupees 2019 2018 Change % 2019 2018 Change %

Operations Revenue 95,547,360 92,134,483 3.70 - - - Results from operating activities 5,233,973 6,802,234 (23.06) (75,591) 32,887 (329.85) Profit before taxation 3,888,474 5,791,257 (32.86) 362,777 1,138,168 (68.13) Profit for the year 2,384,237 3,739,465 (36.24) 354,874 1,119,572 (68.30) Profit attributable to owners of the Parent 1,642,624 2,597,342 (36.76) 354,874 1,119,572 (68.30)

Per Share Data Earnings Per Share (Rs.) 8.16 12.90 (36.78) 1.76 5.56 (68.31) Dividends Per Share (Rs.) 5.50 5.50 (67.27) 5.50 5.50 (67.27) Dividend Cover (Times) 1.48 2.35 (37.02) 0.32 1.01 (61.31)

Shareholders’ Interest Stated Capital 6,489,758 6,489,758 6,489,758 6,489,758 Total equity attributable to equity holders of the parent 21,448,353 20,657,466 7,623,748 7,700,164 Return on equity attributable to equity holders of the parent (%) 7.66 12.57 4.65 14.54 Total equity attributable to equity holders of the parent per Share (Rs.) 106.49 102.57 37.85 38.23

Leverage Net Finance Costs (1,425,141) (1,319,208) 438,368 1,105,281 Interest Cover (Times) 3.27 4.67 4,425.11 6,120.18 Borrowings (including overdrafts) 16,935,443 14,719,710 - - Borrowing as a Percentage of total equity attributable to equity holders of the parent (%) 95..7 86.21 N/A N/A

Note Earnings, dividends and shareholders’ funds per share have been calculated based on the number of issued shares presently in issue. 0.56% 0.55% 3.79% 0.37% 3.92% 0.37%

15.73% 15.16% Retail Retail Composition of Group FMCG Composition of Group FMCG Revenue 2019 Restaurant Revenue 2018 Restaurant Real Estate Real Estate Entertainment Entertainment

79.55% 80%

C T HOLDINGS PLC Annual Report 2018 | 2019 06 Operational Spotlight

Revenue - Group Profit for the Year Attributable - Group Profit for the year - Group (Rs. Bn) (Rs. Bn) (Rs. Bn)

120 3 4

100 3 80 2

60 2

40 1 1 20

0 0 0 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019

Borrowings - Group Dividends per share - Group Earnings Per Share - Group (Rs. Bn) (Rs. Mn) (Rs. Mn)

25 6 14

5 12 20 10 4 15 8 3 10 6 2 4 5 1 2

0 0 0 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019

Revenue Total Assets Profit for the year Rs.95,547Mn Rs.67,338 Mn Rs.2,384Mn

Dividend Per Share Earnings Per Share Total Equity Rs.5.50Mn Rs.8.16Mn Rs.26,214Mn

C T HOLDINGS PLC 07 Annual Report 2018 | 2019 Chairman’s Message

We are pleased to present the Annual which recorded revenue of Rs 75.8 Bn "As we look back Report of the CT Holdings Group for the which is above 2018 by Rs 2.1 Mn. year ended 31st March 2019. Same store growth has been sluggish over the past 90 for much of the year. The FMCG sector 90 and counting grew by 7.31% to reach Rs 1.02 Bn for years, the Group This year, C T Holdings completed 90 the year and the other sectors together years since incorporation. The company recorded a growth of Rs 0.3 Bn. faced and overcame was formed in 1929 to focus on the movie production and exhibition industry Although Group revenue was above last many challenges to and produced many hit movies in the year, Operating Profits did not maintain bygone era, which are enumerated the same trajectory during the year. reach the present elsewhere in this report. However, The drop was largely accounted for subsequent to the nationalization of by the performance of the Retail and position. The Group the import and distribution of movies in Wholesale Distribution Sector which Sri Lanka, the company ventured into was below the previous year by Rs 1.0 continues to focus other areas such as Retail and Modern Bn (37.2%), due to tough economic and Trade, Dairy, Beverages, Culinary, market conditions and rising costs. The on the core funda- Confectionaries, Convenience Foods, restaurant and entertainment sectors Restaurants, Properties, Banking and were also below the previous year. The mentals upon which Financial Services. Such expansion FMCG sector, however, bucked the and diversification produced stunning trend, with operating profits surging by the Group is built results to the Group, making it one of Rs 356 Mn (17.4%) over the previous the top 20 largest companies (by market year. The strong brand portfolio, in order to make capitalization) listed on the Colombo innovative product rage and expanding Stock Exchange. marketing and distribution coverage steady progress and contributed to this growth. The drop in As we look back over the past 90 years, the profitability of the Real Estate sector deliver sustainable the Group faced and overcame many was mainly to the one-off gains realized challenges to reach the present position. in the previous year from the disposal returns to all stake- The Group continues to focus on the of freehold property and investments. core fundamentals upon which the Overall Operating profits were below holders." Group is built in order to make steady last year by Rs 0.6 Bn (9.64%) after progress and deliver sustainable returns adjusting for one-off profits of the to all stakeholders. previous year.

Operations The Group profit for the year amounted The Group’s operations were impacted to Rs. 2.38 Bn compared to Rs. 3.74 by weak consumer sentiment fueled Bn for the previous year. by macro-economic considerations and political uncertainties. Although the Fixed Assets and Investments Group showed a topline growth of Rs The investment by the Group in 3.4 Bn (3.7%) this was largely driven property, plant and equipment by the opening of new outlets in the during the year amounted to Rs. 5.3 Retail and Wholesale Distribution sector Bn compared to Rs. 4.8 Bn in the

C T HOLDINGS PLC Annual Report 2018 | 2019 08 previous financial year. The investments Appropriations delivering new and innovative products have been funded through internally The Company declared an interim and experiences to our customers, generated funds and borrowings. dividend of Rs. 1.80 per share on while enhancing our commitment to 29-Nov-18 (2018 – Rs. 1.80). The the farmers' community, SMEs and all At the Company level there were no Directors are pleased to recommend a stakeholders to ensure equitable and investments in property, plant and final dividend of Rs. 3.70 per share. The sustainable returns across our value equipment either during the current or dividend is payable on 7th August 2019, chain. previous year. subject to shareholder approval. The proposed final dividend has not been Acknowledgments Movie Exhibition Industry reflected as a liability in the Financial I take this opportunity to express As we look back over the past, it Statements at the reporting date. my sincere thanks to all Customers, appears that the movie industry has Patrons, Bankers, Suppliers and turned a full cycle, with the proposal to Future Principals for their continued patronage effectively nationalize the distribution The events of 21st April caused massive and support. I also wish to thank all of movies in Sri Lanka. The previous senseless loss of life and left scores members of our staff and my fellow period of nationalization of the import wounded. Our heartfelt condolences Directors for their assistance and and distribution on movies from the go out to all those who lost their loved co-operation during this year. 1970s to 2000 was not a successful ones, the injured and those caring for one and we fear that a return to the them. distribution of movies by the National (Signed) Film Corporation would herald a similar The adverse impact on businesses has Louis Page period of instability and downturn. also been substantial, due to its effect Chairman We do appreciate some of the good on Tourism and the domestic economy. intentions of the policy makers in As such, restoring the confidence of 04 July 2019 proposing these changes. However, the people in the country both locally these should take account of not only and internationally would be one of the the present situation but also the future top priorities for the government of Sri as well. At a time when the digital and Lanka and the policy makers. The future online media platforms are making giant prospects for the C T Holdings Group strides, bringing restrictions of any sort would depend, to some extent, on how will only further cripple the industry, soon the situation could be normalized. obstruct new investments and cause its Based on the stable macro-economic eventual demise. fundamentals and the resilience showed by the country in the face of past We hope that this matter would be adversities, we are very confident that further discussed and the concerns of the country’s economy will bounce back all parties taken into consideration prior in the near future. to the same being implemented. As for our Group, we do not foresee any Directorate significant scale back in our plans for All Directors of the Company as at the any of our operating businesses in the Balance Sheet date were Directors near term. We will continue to focus on throughout the year ended 31st March 2019.

C T HOLDINGS PLC 09 Annual Report 2018 | 2019 Profile of Directors

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

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

C T HOLDINGS PLC Annual Report 2018 | 2019 10 Mr. Joseph Page Holland and has a MBA from the Mr. Imtiaz Abdul Wahid Non-Executive Director University of Sri Jayawardenapura, Non-Executive Director Sri Lanka. Mr. Talwatte has also Mr. Joseph C. Page is the Deputy participated in a Kellogg Executive Mr. M. Imtiaz Abdul Wahid is an Chairman/Managing Director of C T Programme at the Kellogg Graduate Associate Member of the Institute Land Development PLC. He is also a School of Management, Northwestern of Chartered Accountants of Sri Director of Cargills (Ceylon) PLC, Ceylon University, Evanston, Illinois. Lanka and a Fellow Member of the Theatres (Pvt.) Ltd. and C T Properties Chartered Institute of Management Limited. Mr. Talwatte worked at Ernst & Young in Accountants (UK). He has been involved Assurance, Business Risk and Advisory in the operations of the subsidiary Prior to joining C T Land Development Services for 37 years, including 10 company Cargills (Ceylon) PLC in an PLC, he was the Executive Director of years as Country Managing Partner. executive capacity at different intervals Millers Limited. He has over 35 years of He has worked with Ernst & Young in progressively at higher levels (appointed management experience in the private Cleveland, Ohio and also served on Director 1997 and Deputy Managing sector. Ernst & Young’s Far-East Area Executive Director in 2001) spanning a period of Committee, the Area Advisory Council over 30 years, leaving the services of Mr. R Selvaskandan and the ASEAN Leadership Committee. the company for employment abroad on Independent Non-Executive Director two occasions in between whereby he Mr. Talwatte was President of the CA also gained valuable exposure holding a Mr. R. Selvaskandan is an Attorney- Sri Lanka for a two year period in number of senior management positions at-Law (SL) and Solicitor (England& 2002/2003 and the CIMA in 1995/96. in overseas companies. He was Wales and Hong Kong) and was a He also served as the Chairman of appointed Managing Director/ Deputy senior partner of a leading law firm the Statutory Accounting Standards CEO of Cargills (Ceylon) PLC in May in Hong Kong prior to joining the Committee and the Auditing Standards 2010. property sector of the C T Holdings Committee, the Urgent Issues Task Group. He is the Chairman of C T Land Force and the Examinations Committee Mr. Sanjay Niles Development PLC, Deputy Chairman of of the ICASL. Executive Director C T Properties Limited and a Partner of Varners, a Law firm based in Sri Lanka. Mr. Talwatte has been closely Mr. Sanjay Chandrahasan Niles is an He has more than 35 years’ experience associated with the development of Associate Member of the Institute of in legal practice and management in Sri Corporate Governance in Sri Lanka Chartered Accountants of Sri Lanka and Lanka, UK, and Hong Kong. being actively involved with the Code the Chartered Institute of Management of Audit Committees in 2002 and the Accountants, UK. He is also a Director Mr. A D B Talwatte Code of Corporate Governance in of C T Land Development PLC, 2003. He co-chaired the Committees Independent Non-Executive Director Executive Director of Ceylon Theatres to structure the revised Codes of (Pvt) Ltd., and a Director of other Corporate Governance of 2008, 2012 Mr. A. D. B. Talwatte is a fellow member Companies within the CT Holdings and 2017 and the Listing Rules of 2008. of the Institute of Chartered Accountants Group. He currently chairs the International of Sri Lanka (ICASL) and the Chartered Integrated Reporting Council of Sri Institute of Management Accountants of Lanka (IIRSL) on behalf of CA Sri Lanka. the U.K. He also holds a Post-Graduate Diploma in Business and Financial Mr. Talwatte serves as an Independent Administration awarded by the ICASL Non-Executive Director on boards of and the University of Wageningen, several listed companies.

C T HOLDINGS PLC 11 Annual Report 2018 | 2019 Review of Operations

Business Environment Tourism and worker remittances, two key factors of the economy held strong in the The business environment in 2018/19 year 2018. Tourist arrivals and earnings from Tourism continued the strong growth was visibly tougher than the previous trend this year. Further, although lower than the previous year, worker remittances year, influenced by macroeconomic from overseas also contributed substantially during the year. These two sources performance. The flight of capital out of contribute direct to the income of the masses and helped sustain consumption, developing economies impacted many despite the drop in other areas such as the construction sector. countries including Sri Lanka, thus affecting the economy on many fronts. Interest rates during the year (averaged for the year) remained marginally higher than Political instability in the country no the previous year. doubt further exacerbated the situation. Parent Company The Sri Lankan economy grew during CT Holdings PLC, the parent of the Group does not carry out any day to day the year 2018 by 3.2% which is 0.2% operating activities other than management of the investments and properties lower than the previous year. The owned by the Company. As such the primary income sources are dividend and Agricultural sector performed better rental income. Fair value gain on investment property is also accounted for in profit than the previous year recording and loss. growth in all four quarters of the year on better weather conditions prevailing During the year, Group Companies declared one interim dividend, compared to two in the country. Overall the agricultural interim dividends paid in the previous year. As a result, the dividend income of the sector grew by 4.8% compared to a company was lower than the previous year. Rental income stayed at almost the contraction in the previous year. The same level as the previous year while change in fair value of investment property Services sector also grew during the was significantly lower in the current year when compared to the previous year. year – by 4.7% compared to 3.6% in Surplus funds of the Company are invested in interest bearing investments. The 2017. The Industrial sector, however, company earned Rs 16.5 Mn (2018 – Rs 17.8 Mn) from such investments during showed a lower growth of 0.9% the year. Accordingly, profit for the year at the company level amounted to Rs 354.8 compared the previous year’s growth of Mn compared to Rs 1.12 Bn in the previous year. The company did not have any 4.1%. borrowings during the year. As such, there was no borrowing costs during the year.

The growth in the agricultural sector and favourable weather patterns stabilized CT Holdings prices of local agricultural products 5% to some extent. Inflation for the year remained lower than the previous year. 0 However, upward pressure returned during January to March 2019 quarter, -5% ASPI mostly caused by non-food inflation. CTH While, imported food costs were also impacted by the sharp depreciation -10% of the Sri Lanka Rupee against the United States Dollar during the year, -15% the recovery in Agriculture production helped stabilize the prices of key basket -20% items, maintaining food inflation at negative to low single digit levels. Jul-18 Apr-18 Oct-18 Jun-18 Jan-19 Mar-19 Feb-19 Aug-18 Sep-18 Nov-18 Dec-18 May-18

C T HOLDINGS PLC Annual Report 2018 | 2019 12 The sector opened 27 new stores C T Holdings PLC in the three formats to take the total number to 380 stores at the end of the 800,000 185 reporting period. Many more are also in the pipeline. Food City and /or Express 700,000 180 stores are now found in every single 600,000 175 district as well as most major towns in 500,000 the Island. During the year, construction 170 commenced on a logistical centre which 400,000 165 would handle the distribution of goods 300,000 to all retail outlets in the Island. This 160 200,000 Share facility would be a major step in further Volume streamlining the distributions improving 155 100,000 efficiency and drive down related costs. Price (Rs.) 0 150 Engagement with the farming

Jul-18 community and primary producers Apr-18 Oct-18 Jun-18 Jan-19 Mar-19 Feb-19 Aug-18 Sep-18 Nov-18 Dec-18 May-18 forms an important cornerstone in the Details of the shareholdings of the company are given in pages 130 to 132 in this operations of the Retail operations. To report. The Company had 1,453 shareholders as at the reporting date. The shares of this end continuous interactions are the Company traded between the values of Rs 162.90 and 189.00 during the year, maintained with the farmers to assist with the share performance being better than the overall market performance. them to improve farming practices and improve yields. Modern farming Operating Results methods that rationalizes the use Group Revenue for the year amounted to Rs 95.5 Bn which was above the previous of fertilizers, pesticides and water year by 3.7%. All the sectors of the Group recorded growth in revenue. Profit for resources have also been introduced. the year amounted to Rs 2.38 Bn compared to Rs 3.74 Bn for the previous year. It Selected farmers were also sent for should be pointed out that the previous year’s profit included one-off profits of Rs overseas training to improve their skills. 1.01 Bn from the sale of freehold property by the subsidiary Cargills (Ceylon) PLC Such initiatives, along with the fair price and Rs 255 Mn included under profit of equity accounted investees on account of paid for farm produce enables the Retail disposal of investments by the associate Cargills Bank. Sector to maintain the tight balance in the price between the farmer and Retail eventual customers. Retail and Wholesale Distribution Sector accounted for the largest share of the Group’s total turnover with 79.3% share. Revenue of this sector was above the Although retail turnover was above the previous year by 2.84%. previous year, many stores returned stagnant or negative growth during the This sector operates supermarkets under the brand ‘Cargills Food City’ and ‘Cargills year. The Third quarter performance Food City Express’ and distribution of imported food products through Millers Ltd. was particularly affected and returned Further during the year, the sector also opened its first gourmet supermarket outlet weak sales during the festive period due – ‘Cargills Food Hall’ at the newly constructed ‘Colombo City Centre’ Mall with to the political situation during that time. expanded shopping and food offerings in a 12,000 Sq ft outlet. Innovative features The sector’s borrowing costs were also have been introduced including preparation of food ‘as you wait’ by in-store chefs. higher due to the borrowings to fund

C T HOLDINGS PLC 13 Annual Report 2018 | 2019 Review of Operations

store expansions. Due to this profitability FMCG Segmental Revenue - FMCG was adversely affected during the year The FMCG sector performed very (Rs. Mn) and the sector returned profits of Rs creditably during the year, despite the 20 571.7 Mn compared to Rs 1.76 Bn economic and political upheavals. The during the previous year. sector consists of Dairy, Beverages, Culinary, Confectionaries and 15 Segmental Revenue - Retail Convenience Foods. (Rs. Bn) 10 80 The Dairy sector comprising the ‘Magic’ and ‘Kotmale’ brands has set a benchmark for dairy products in the 5 60 country through its range of Ice Cream, Yoghurt, Liquid Milk, Butter and Cheese. Backed by innovative products, high 0 40 quality and attractive presentation, the

Dairy subsector continues to achieve 2015 2016 2017 2018 2019 substantial topline growth year on 20 year. During the current year, too, the sector introduced several new Segmental Profit - FMCG (Rs. Mn) 0 products including Magic Ice Cream Bar, Kotmale Low Fat Drinking Yoghurt, 1,500

2015 2016 2017 2018 2019 Butter and Cheddar Cheese. Work is also underway to expand the capacity of the Cheese plant in Hatton, which is Segmental Profit - Retail presently operating at full capacity. 1,000 (Rs. Mn)

2,000 Linkages have been made with the rural economy by directly collecting fresh 500 milk from farmers. The average milk 1,500 collection during the year amounted to about 115,000 litres per day covering about 15,000 smallholders. 0 1,000

The ‘Kist’ range of Beverages, Culinary 2015 2016 2017 2018 2019 and Confectionery subsectors also had 5 00 a successful year, despite achieving ‘Goldi’, ‘Sam’s’, ‘Finest’ and ‘Island’s limited growth over the past year. Finest’ ranges of products make up 0 Several new products have also been the Convenience Foods sub-sector. introduced to the existing range in order ‘Island’s Finest’ is a range of seafood

2015 2016 2017 2018 2019 to attract a wider customer base. The products introduced during the year. ‘Kizz’ range of sparkling fruit drinks This product range seeks to satisfy have been particularly successful with changing consumer preferences while the market response being well above the subsector has also focused on expectations. offering healthier alternatives including

C T HOLDINGS PLC Annual Report 2018 | 2019 14 lower salt content and avoidance of Segmental Revenue - Restaurants The Real Estate segment operations MSG in the food items. This sub-sector (Rs. Mn) consist of Properties developed by also achieved double digit growth during 5 the Company and leased as well as the year. properties held for capital appreciation.

4 Revenue of the FMCG sector amounted ‘Majestic City’ in Colombo 5 represents to Rs 14.99 Bn which is 7.31 % above the largest Mall owned and operated the previous year, with the Dairy sub- 3 by the Group. The mall contains over sector contributing much of the growth. 200 shops offering a range of fashion, Profit for the year was above the 2 consumer, electrical & electronic items previous year by 60%. We are confident as well as a super market, food outlets, that this sector would continue to grow 1 cinema and banks. The location has in volume and profitability. been a landmark in the shopping and 0 entertainment sphere in Colombo with Restaurants a loyal patronage for more than 25

The restaurants sector consists of 39 2015 2016 2017 2018 2019 years. The owning company has now KFC quick service restaurants as well as commenced a refurbishment program to a TGI Fridays outlet. upgrade the mall to effectively compete Segmental Profit - Restaurants with newer Malls in the city. KFC Franchise has been quickly (Rs. Mn) accepted around the country with 300 With a view to capitalize on the outlets being established in many economic growth outside the city of locations outside of the Colombo Colombo and to effectively leverage on 200 district. During the year 8 new the strength of the Retail, Restaurant restaurants were added including one and Cinema brands, the Group began 100 outlet in Batticaloa in the East of Sri setting up Mini Malls outside the Lanka. 39 KFC’s cover has reached 13 Colombo City. The first Cargills Square Districts of Sri Lanka. 0 Mini Mall was set up in Jaffna in 2011. This was followed by another Mini Mall Revenue of this sector for the year (100) in Gampaha. In each of these locations, was above last year by 7.16%, amidst the Group companies function as anchor tenants. The concept has been tight market conditions in the eat out (200) segment and profitability has reduced very successful. Presently construction from the previous year. However, the 2015 2016 2017 2018 2019 work is progressing on the next ‘Cargills core chicken product has proved to be Square’ in Dematagoda. Plans are also very popular in Sri Lanka and we are being drawn up for similar Mini Malls in confident that there is much room for Real Estate Kandy, Negombo and Katubedda, to further growth and profitability in this The Group owns a large portfolio of be implemented in the next two to three sector. freehold properties with a total value years. of Rs 8 Bn details of which are given in Pages 84 and 86 to the Financial Revenue of this sector was above last Statements. year by 5.08 %, which is largely on account of rental revisions at Majestic City Mall. Profit, however, was well

C T HOLDINGS PLC 15 Annual Report 2018 | 2019 Review of Operations

below last year, since the previous During this year the bank consolidated arm of this sector is a member of the year’s profit included a one off profit its operations showing steady progress Colombo Stock Exchange (CSE). on disposal of investment property by growing its total assets, total Although adversely impacted by the amounting to Rs 1.01 Bn. deposits and its loan book while net dampened conditions of the CSE, the operating income remained stable at company nevertheless maintained Segmental Revenue - Real Estate the same level as the previous year. The its status as, a strong player with (Rs. Mn) Bank presently operates 19 stand- a proven track record of attracting 800 alone branches offering complete foreign investments into the country’s banking services. Further, the bank Stock Exchange. This sector also also functions through access points operates four unit trusts - the Comtrust 600 being operated in 380+ Cargills Food Equity Fund, Comtrust Money Market City supermarkets. Such access points Fund, Comtrust Gilt Edged Fund and cover much of the major and tier 2 Comtrust Adl Mudarabah Fund in 400 towns and cities across the island and addition to managing private portfolios allow for longer working hours providing for corporates and high net worth customers the facility to carry out many individuals. 200 banking functions such as deposits, withdrawals and domestic cash This sector is accounted as an Equity remittances. During the year, the Bank Accounted Investee (Associate). Profits 0 also pioneered further technological of this sector for the year was lower

2015 2016 2017 2018 2019 advances through the establishment of than the previous year since the prior five Digi Zones, which offer customers year contained a profit on disposal of with digital access to the majority of a subsidiary of Cargills Bank. The total Segmental Profit - Real Estate the services available at the Bank’s gain from the disposal of the investment (Rs’Mn) stand-alone branches. The bank also in the previous year amounted to Rs 2,000 digitized and streamlined many back 255 Mn. end processes thus offering greater customer convenience. Segmental Revenue - Financial 1,500 Services (Rs. Mn) The Bank’s core strengths are the 3,000 widely dispersed and growing network 1,000 of branches and cash points and the focus on digital infrastructure. We are confident that this twin focus would 2,000 5 00 enable the bank to function efficiently and grow in the future.

0 The Financial Services sector of the 1,000

2015 2016 2017 2018 2019 group has been in operation for several Banking and Financial Services years and operates under C T CLSA umbrella organization. This sector The Banking sector of the Group 0 consists of the operations of Cargills includes Stock Broking, Investment

Bank which was promoted by the banking, Capital market solutions and 2015 2016 2017 2018 2019 Group. The bank is in its fifth year of asset management services. CT CLSA operations. Securities (Pvt) Ltd the stock broking

C T HOLDINGS PLC Annual Report 2018 | 2019 16 Segmental Profit - Financial Services Rs 336.2 Mn in the previous year, an Segmental Profit - Entertainment (Rs’mn) increase of 5.17%. However, due to the (Rs. Mn) 800 aforementioned reasons the loss for the 50 year deteriorated to Rs 75.5 Mn.

600 As pioneers in this sector in the country, the Group firmly believes in the 0 400 opportunities available in this sector due to increased demand for entertainment 200 fueled by economic development in the country. Further, the Group is also (50) 0 cognizant of the contribution that this sector makes to the development of local language art and culture in the (200) (100) country. Accordingly, the management

2015 2016 2017 2018 2019 continues to work towards a sustaining 2015 2016 2017 2018 2019 model for this sector, which would allow for further growth and expansion by Entertainment providing high quality entertainment to The Group has been associated with the the movie going public in the country. entertainment industry for the past 90 years. The subsidiary Ceylon Theatres Segmental Revenue - Entertainment (Pvt) Ltd presently handles the exhibition (Rs. Mn) sector while Cinema Entertainments 400 (Pvt) Ltd distributes movies to local cinemas. The Group presently operates 15 screens across 7 locations in 300 Colombo, Jaffna, Gampaha, Kandy & Nuwara Eliya. No new screens were added this year. However, work is in 200 progress to set up three new screens in the Cargills Square Mall in Dematagoda, 100 which should be operational by the end of the year 2019/20. 0 The performance of this sector during the year has been very disappointing. 2015 2016 2017 2018 2019 Performance was adversely affected by increased competition, difficulties experienced in sourcing content and cost escalations. This sector achieved Revenue of Rs 353.5 Mn compared to

C T HOLDINGS PLC 17 Annual Report 2018 | 2019 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 2019.

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

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

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

C T HOLDINGS PLC Annual Report 2018 | 2019 18 Compliance Principle Remarks Status In the event a Director does not qualify as Complied Messrs J B L De Silva, Priya Edirisinghe, Sunil Mendis ‘independent’ but if the Board, taking account of all and R Selvaskandan have served in the Company’s the circumstances, is of the opinion that the Director is Board for a continuous period exceeding nine (09) nevertheless ‘independent’, the Board shall specify the years. Further Messrs Priya Edirisinghe, Sunil Mendis criteria not met and the basis for its determination in and R Selvaskandan also serve as Directors of other the Annual Report. Group Companies of C T Holdings PLC. Nevertheless, the Board of Directors of the Company, having considered their credentials and integrity have resolved that Messrs J B L De Silva, Priya Edirisinghe, Sunil Mendis and R Selvaskandan be deemed Independent Directors of the Company. The Board shall publish in its Annual Report a brief Complied Disclosed in the Annual Report. résumé of each Director on its Board. Upon appointment of a new Director to its Board, the N / A There were no new Directors appointed to the Board Company shall forthwith provide to the Exchange a of the Company during the year. brief résumé of such Director for dissemination to the public. 5. Remuneration Committee A listed company shall have a Remuneration Complied The Remuneration Committee consisted of three Committee comprising a minimum of two independent Independent Directors and one Non-Executive Non-Executive Directors or exclusively by Non- Director. The Chairman of the Remuneration Executive Directors a majority of whom shall be Committee is a Non-Executive Director. independent, whichever shall be higher. One Non- Executive Director shall be appointed as Chairman of the Committee by the Board. The Remuneration Committee shall recommend to the Complied The functions of the Remuneration Committee Board of Directors, the remuneration payable to the are disclosed in the Report of the Remuneration Executive Directors and Chief Executive Officer. Committee. The Annual Report should set out the names of Complied The names of the members of the Remuneration Directors comprising the Remuneration Committee, Committee are disclosed in the Annual Report under contain a statement of the remuneration policy and set Corporate Information. Details of the Directors’ out the aggregate remuneration paid to Executive and emoluments are disclosed in Notes to the financial Non- Executive Directors. statements.

C T HOLDINGS PLC 19 Annual Report 2018 | 2019 Corporate Governance

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

C T HOLDINGS PLC Annual Report 2018 | 2019 20 Risk Management

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

C T HOLDINGS PLC 21 Annual Report 2018 | 2019 Risk Management

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

C T HOLDINGS PLC Annual Report 2018 | 2019 22 Report of the Remuneration Committee

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

The composition of the Remuneration Committee of C T Holdings PLC is as follows: MEETINGS Name Non-Executive Directors The Remuneration Committee shall meet on a needs basis and meets at Louis Page, Chairman Non-Executive least once a year. Priya Edirisinghe Independent Sunil Mendis Independent J B L De Silva Independent (Signed.) Louis Page The Composition of the Remuneration Committee satisfies the criteria as specified Chairman - Remuneration Committee in the standards of Corporate Governance for listed Companies. The Executive Director of C T Holdings PLC functions as the Secretary to the Committee. 04 July 2019

Scope • The Remuneration Committee shall recommend the remuneration payable to – - Chief Executive Officer and / or equivalent position - Executive Directors, and, - Senior Management/Executives, to the board of the company which will make the final determination upon consideration of such recommendations. • Detailed procedures are set out in the Group Policies in respect of all revisions in remuneration payable. • The Remuneration Committee shall also recommend the variable incentives/or bonuses within the parameters set out in the Group policies.

C T HOLDINGS PLC 23 Annual Report 2018 | 2019 Report of the Nominations Committee

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

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

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

The composition of the Nominations Committee during the year was as follows: Name Non-Executive Directors Louis Page, Chairman Non-Executive Priya Edirisinghe Independent Sunil Mendis Independent Ranjit Page Executive

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

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

No new appointments were made to the Board of Directors of CT Holdings PLC during the year. However, Directors’ appointments were studied and recommended to the subsidiaries Cargills (Ceylon) PLC and Cargills Foods Company (Pvt) Ltd. The appointments were subsequently made by the Boards of the respective companies.

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

(Signed.) Louis Page Chairman - Nominations Committee

04 July 2019

C T HOLDINGS PLC Annual Report 2018 | 2019 24 Report of the Related Party Transactions Review Committee

The Related Party Transactions Review (RPTR) Committee of C T Holdings PLC • Reviewing and updating the control is appointed by the Board of Directors of the Company. The RPTR Committee procedures in place to ensure that all functions within the overall governance process established by the Board of recurrent and non-recurrent related Directors of the Company and assists the Board in effectively discharging its party transactions are identified, responsibilities. The Committee reports directly to the Board. adequately captured and reported in a timely manner in accordance with POLICY FRAMEWORK the applicable rules. The policy framework for the functioning of the RPTR Committee of the Company • Establishing procedures to ensure and its subsidiaries is set out in the Group Policies adopted across the Group. In that related party transactions that addition to the RPTR Committee of the holding company, all listed subsidiaries have are captured within the system are separate RPTR Committees. The Chairman and one other member (or two members reviewed in systematic manner as appropriate) of the RPTR Committee of the parent company shall be members and certified by key management of each of such separate RPTR Committees. In the event a non-listed subsidiary personnel with appropriate level of company does not have a separate RPTR committee, the RPTR committee of the authority. immediate holding company will function as the RPTR committee for that subsidiary • Reviewing all related party company as well. transactions as reported by the management for compliance with the COMPOSITION RPT code. The Composition of the RPTR Committees must be in accordance with the code of • Ensuring that appropriate disclosures best practices on related party transactions (RPT code) of the Securities & Exchange are made as applicable to the CSE Commission of Sri Lanka (SEC), the listing rules of the Colombo Stock Exchange (where immediate market disclosures and the respective company’s Articles, as appropriate. are required) and the Annual Report.

The composition of the RPTR Committee of C T Holdings PLC is as follows: As per the applicable procedures of Name Non-Executive Directors the Group the RPTR Committee have Priya Edirisinghe, Chairman Independent obtained; A D B Talwatte Independent • Quarterly declarations of related party transactions from Directors & Senior Sunil Mendis Independent Management of all Group companies J B L De Silva Independent on recurrent & non-recurrent transactions undertaken by them or The Composition of the members of the RPTR Committee satisfies the criteria by their close family members. as specified in the RPT code of SEC and the listing rules of the Colombo Stock Exchange. The Deputy Chairman / Managing Director and Executive Director • Quarterly declarations of Directors attend RPTR Committee meetings as and when requested by the Committee. The & Senior Management of all Company Secretary functions as the Secretary to the Committee. Group companies who has a Significant Shareholding/ownership in a Company or partnership or SCOPE proprietorship which is outside The Functions of the RPTR Committee, as set out in the Group Policies, include the the Group companies and/or of following – the Subsidiaries and Associate • Developing and recommending for adoption by the Board of Directors of the Companies of Group companies. Company and its listed subsidiaries, a related party transactions policy consistent with that proposed by the RPT Code of the SEC.

C T HOLDINGS PLC 25 Annual Report 2018 | 2019 Report of the Related Party Transactions Review Committee

• Quarterly declarations of Group Financial Officer or equivalent Position in Group ordinary course of business, there companies on Recurrent and/or Non-Recurrent transactions within the Group were no changes to terms or practices Companies. followed over the previous year and general terms and conditions applicable Likewise, procedures are also in place for the assessment of the need to obtain to such transactions with Related shareholder approval for specified transactions and to inform the SEC/CSE on the Parties are similar to those entered applicable Non-Recurrent transactions. into with non-related parties taking into account, if any, due consideration of RELATED PARTY TRANSACTIONS factors such as volume, cost and any other special benefits which form part Companies within the Group regularly engage in transactions with other companies and parcel of such transactions. The within the Group. The RPTR Committee receives and reviews details of all related observations of the Committee have party transactions from the Chief Financial Officers of individual companies and been communicated to the Board of disposes of the same in accordance with the mandate set out above. Directors. With regard to non-recurrent transactions, if any, the Committee is empowered to The details of the recurrent transactions seek independent expert advice on valuation or any other related matter that the entered into with Related Parties are committee deems to be significant. disclosed in notes to the Financial Statements. MEETINGS In terms of the listing rules of the Colombo Stock Exchange, the RPTR Committees should meet at least four times a year. Unless otherwise determined by the RPTR Committee the Chief Executive Officer and the Chief Financial Officer of the listed Priya Edirisinghe company shall attend RPTR committee meetings. Chairman - RPTR Committee

The RPTR Committee of C T Holdings PLC met four times during the year. 04 July 2019

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

CONCLUSION Based on its work, the Related Party Transactions Review Committee confirms that there were no non-recurrent transactions with related parties during the year. It also noted that in respect of recurrent transactions, the transactions were in the

C T HOLDINGS PLC Annual Report 2018 | 2019 26 Financial Statements

Annual Report of the Board of Directors of the Company 29 Report of the Audit Committee 32 Statement of Directors Responsibility 34 Independent Auditors’ Report 35 Statement of Profit or Loss and Other Comprehensive Income 40 Statement of Financial Position 41 Statement of Changes in Equity 42 Statement of Cash Flows 44 Notes to the Financial Statements 46

C T HOLDINGS PLC 27 Annual Report 2018 | 2019 C T HOLDINGS PLC Annual Report 2018 | 2019 28 Annual Report of the Board of Directors of the Company

The Directors are pleased to present the Annual Report of C T Holdings PLC for the STATED CAPITAL Year ended 31st March 2019. The stated capital of the Company at the balance sheet date amounted ACTIVITIES to Rs. 6,489,758,332 (2018 - The Group’s Principal activities and important events during the year are discussed Rs. 6,489,758,332) comprising in detail in the Chairman’s Statement and Review of Operations set out on pages 8 201,406,978 ordinary (voting) shares to 9 and 12 to 17 respectively. There were no significant changes to the business (2018 – 201,406,978). activities of the Group during the year. In June 2017 the shareholders of RISK MANAGEMENT the subsidiary Cargills (Ceylon) PLC The overall approach to risk management within the Company and Group is set out approved a Share Ownership Scheme in pages 21 to 22. for its employees amounting to 3% of the issued share capital of the Company FINANCIAL STATEMENTS (please refer note 26.4 for further details). The Audited Financial Statements of the Company & Group for the year ended 31st March 2019 set out on pages 40 to 125 form an integral part of this Annual Report. Except for the above neither the Company nor any of the subsidiaries AUDITORS’ REPORT have any Employee Share Ownership or The Independent Auditors’ Report is set out on pages 35 to 39. Stock Option Schemes at present.

ACCOUNTING POLICIES SHAREHOLDERS The accounting policies adopted in the preparation of the financial statements are There were 1,453 registered given on notes 46 to 69. shareholders as at 31st March 2019 (2018 – 1,495 shareholders). An analysis RATIOS AND MARKET PRICE INFORMATION of shareholders according to size and Key ratios and market price information pertaining to the equity of the Group are holdings, public holdings and the names set out on page 126 along with the trend for the past four years. Company and of the twenty largest shareholders of the subsidiaries have not raised any capital through listed debt instruments during the Company at the reporting date are given year. on Pages 130 to 132.

PROPERTY, PLANT & EQUIPMENT DIRECTORATE The movement of property, plant and equipment during the year is given in note 13 All Directors of the Company have been to the Financial Statements. The Group’s outlay on property, plant and equipment Directors throughout the year under during the year amounted to Rs. 5.3 Bn (2018 – Rs 4.8 Bn) and capital outlay on review. Details of Directors of group property, plant and equipment during the year at the Company level during the companies as at the reporting date year amounted to Rs. 77,000 (2018 – Rs. Nil) The Directors are of the opinion that are given on pages 127 to 129 of this the carrying amount of properties stated in note 13 to the Financial Statements report. Brief profiles of the Directors of reasonably reflects their fair values. the Company are given on pages 10 to 11, including their determination as Extents, locations, valuations of the Group’s property holdings and investment independent and non-executive, as properties are disclosed in note 13.2 and 15.2 to the Financial Statements. appropriate.

C T HOLDINGS PLC 29 Annual Report 2018 | 2019 Annual Report of the Board of Directors of the Company

DETAILS OF ATTENDANCE The details of the Directors’ attendance at meetings is given below.

Board Meetings AGM Name Held Attended Held Attended Louis Page 5 5 1 1 Ranjit Page 5 5 1 1 J B L De Silva 5 4 1 1 Priya Edirisinghe 5 5 1 1 Sunil Mendis 5 5 1 1 C K Muttukumaru 5 5 1 1 S C Niles 5 5 1 1 Dr. A Aravinda Page 5 3 1 1 Joseph Page 5 2 1 1 R. Selvaskandan 5 4 1 - A D B Talwatte 5 5 1 1 Imtiaz Abdul Wahid 5 5 1 1

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

DIRECTORS’ INTEREST IN CONTRACTS The Directors’ interest in contracts and proposed contracts with the Company are disclosed under the related party transactions in note 30 to the Financial Statements. The Directors have declared their interests at meetings of the Board.

RELATED PARTY TRANSACTIONS Related party transactions are disclosed in note 30 to the Financial Statements. The Directors hereby confirm that to the best of their knowledge and information available to them, the Company has complied with the requirements of the rules relating to the related party transactions as contained in Section 9 of the listing Rules of the Colombo Stock Exchange.

C T HOLDINGS PLC Annual Report 2018 | 2019 30 DIRECTORS’ SHAREHOLDINGS M/s. KPMG, Chartered Accountants The Directors’ shareholdings in the Company as at the reporting date were as are deemed re-appointed in terms of follows: Section 158 of the Companies Act No.7 of 2007, as Auditors of the Company. Name As at 31-Mar-2019 As at 31-Mar-2018 A resolution authorising the Directors Louis Page 11,000 11,000 to determine their remuneration will Ranjit Page 13,931,102 12,933,350 be submitted at the Annual General J B L De Silva 234 234 Meeting. Priya Edirisinghe 33,040 33,040 By Order of the Board Sunil Mendis - - C K Muttukumaru 1,266,750 1,532,750 S C Niles 56,485 56,485 Dr. A Aravinda Page 210,068 46,365 Ranjit Page Deputy Chairman / Managing Director Joseph Page 7,069,172 7,069,172 R. Selvaskandan - - A D B Talwatte - - Imtiaz Abdul Wahid - - Priya Edirisinghe 22,577,851 21,682,396 Director

EVENTS AFTER THE REPORTING PERIOD Events occurring after the reporting date of the Company are given in note 34 to the S L W Dissanayake Financial Statements. Company Secretary

CORPORATE GOVERNANCE 04 July 2019 The corporate governance practices within the Group are set out in pages 18 to 20 and the report of the Audit Committee is set out on page 32 and 33.

DIVIDENDS The Company paid an interim dividend of Rs. 1.80 per share on 29th November 2018, out of profits for the year ended 31st March 2019 (2018 – Rs 1.80). In the previous year the Company paid a second interim dividend of Rs. 3.70 per share on 14th March 2018, out of profits for the year ended 31st March 2018.

The Directors propose a final dividend of Rs. 3.70 (2018 – Rs Nil) per share payable on 7th August 2019, subject to approval of the shareholders at the Annual General Meeting.

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

C T HOLDINGS PLC 31 Annual Report 2018 | 2019 Report of the Audit Committee

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

C T HOLDINGS PLC Annual Report 2018 | 2019 32 MEETINGS The Audit Committee obtains a In terms of the Group policy, the Audit Committees should meet at least four times statement from Messrs. KPMG a year of which the Company Auditors will attend two of such meetings. Unless confirming independence as required otherwise determined by the audit committee the chief executive officer and the chief by Section 163 (3) of the Companies Act No. 07 of 2007 on the audit of the financial officer of the listed company shall attend audit committee meetings. Statement of Financial Position and the related Statements of Income, Changes The Audit Committee of C T Holdings PLC met four times during the year one of in Equity, and Cash Flows of the which was with the participation of the Company’s auditors. Company and the Group.

Details of the participation of the members of the audit committee at such meeting is The Audit Committee has recommended set out below. to the Board of Directors that M/s. Name Meetings Held Meetings Attended KPMG be reappointed as Auditors of the Priya Edirisinghe 4 4 Company for the year ending 31st March 2020. A D B Talwatte 4 4 Sunil Mendis 4 4 J B L De Silva 4 4 Priya Edirisinghe FINANCIAL STATEMENTS Chairman - Audit Committee Four quarterly financial statements as well as the annual financial statements were circulated, reviewed and recommended to the Board for approval during the year. 04 July 2019 Conformity of such financial statements with the applicable Accounting Standards, Company Law and other Statutes including Corporate Governance Rules and consistency of the presentation of such financial statements with the previous quarter / year as the case may be was also confirmed. Departures, if any, requirements are appropriately disclosed.

CONCLUSION Based on its work, the Audit Committee is of the opinion that the control procedures and environment within the Group provide reasonable assurance regarding the monitoring of the operations, accuracy of the financial statements and safeguarding of assets of the Company.

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

C T HOLDINGS PLC 33 Annual Report 2018 | 2019 Statement of Directors Responsibility

MAINTENANCE OF ACCOUNTING DIVIDENDS COMPLIANCE RECORDS In the event of any distribution of Considering the present financial position Under the provisions of the Companies dividends the Board of Directors are of the Group and the forecasts for Act No. 07 of 2007 (‘the Act’), every required to satisfy themselves that the the foreseeable future, the Directors company is required to maintain Company will, immediately after the have adopted the going concern basis accounting records which correctly relevant distribution is made, satisfy for the preparation of these Financial record and explain the Company’s the solvency test, provided that such a Statements. transactions, and will at any time enable certificate is obtained from the auditors. the financial position of the Company to The Directors confirm that: be determined with reasonable accuracy, ANNUAL REPORT (a) The Company is in compliance enable the Directors to prepare Financial The Board of Directors are required to with the requirements of the Act as Statements in accordance with the Act prepare an Annual Report on the affairs aforementioned. and also enable the Financial Statements of the Company during the accounting (b These Financial Statements have of the Company to be readily and period ending on the reporting date in the been prepared in accordance with properly audited. prescribed format and circulate the same the requirements of the Companies to every shareholder of the Company Act No. 7 of 2007 and applicable PREPARATION OF FINANCIAL within the time frame prescribed in the Sri Lanka Accounting Standards, STATEMENTS OF THE COMPANY Act. which have been consistently applied AND GROUP and supported by reasonable and The Act places the responsibility on INDEPENDENT AUDIT prudent judgments and estimates. the Board of Directors to ensure that The Act required the Company to (c) The Company obtained the required Financial Statements are prepared appoint an Auditor to audit the Financial certificate of solvency for the within the prescribed time period in Statements of the Company / Group for dividends declared during the year. conformity with the Act. Such Financial the reporting period. Accordingly, M/s (d) All statutory payments have been Statements of a Company shall give a KPMG presently function as the Auditors made up to date. true and fair view of the state of affairs of the Company. Their responsibility with of the Company as at the reporting date regard to the Financial Statements as The Directors are satisfied that the and the profit or loss or income and auditors of the Company are set out in control procedures within the Company expenditure, as the case may be, of the Independent Auditors’ Report set out operated effectively during the year. the Company for the accounting period on pages 35 to 39. ending on that reporting date. By order of the Board MANAGEMENT Further the Act also requires that a The Directors are responsible for the Company with one or more subsidiaries proper management of the resources of at the reporting date to also prepare the Company. The internal control system Financial Statements in relation to S L W Dissanayake has been designed and implemented the Group including every subsidiary, Company Secretary to obtain reasonable but not absolute which give a true and fair view of the assurance that the Company is protected state of affairs of the Company and its 04 July 2019 from undue risks, frauds and other subsidiaries as at the reporting date irregularities. and the profit or loss or income and expenditure, as the case may be, of the Company and its subsidiaries for the accounting period ending on that reporting date.

C T HOLDINGS PLC Annual Report 2018 | 2019 34 Independent Auditors’ Report

TO THE SHAREHOLDERS OF C T HOLDINGS PLC

Report on the Audit of the Financial Statements

Opinion We have audited the financial statements of C T Holdings PLC (“the Company”) and the consolidated financial statements of the Company and its subsidiaries (“the Group”), which comprise the statement of financial position as at 31 March, 2019, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information as set out on pages 40 to 125 of the Annual Report.

In our opinion, the accompanying financial statements of the Company and the Group give a true and fair view of the financial position of the Company and the Group as at March 31, 2019, and of their financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

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

Emphasis of Matter We draw attention to Note 10.5.5 of the financial statements wherein the Group has considered all land held and used in business as Investment Assets. Based on our understanding of the Inland Revenue Act No. 24 of 2017 and legal advice provided by the expert, there is significant judgment involved in determining whether the lands held by the entity and used in business are to be considered as capital assets or investment assets due to the uncertainties that exist with respect to the interpretation of the application. In the event the Group’s position is not held by the Authorities, the impact on the Company and Group is disclosed in Note 10.5.5 to the financial statements. Our opinion is not modified in respect of this matter.

C T HOLDINGS PLC 35 Annual Report 2018 | 2019 Independent Auditors’ Report

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

01. Valuation of Land and Investment Properties - Company and Group As described in Notes 3.11 and 3.13 (Accounting policies), Note 13 (Property, Plant and Equipment) and Note 15 (Investment property), the fair value of land amounted to Rs. 11,908 Mn and investment properties amounted to Rs.7,975 Mn as at 31 March 2019.

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

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

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

02. Carrying amount of inventories - Group Risk Description The Group holds a significant level of inventory across a broad and diversified product range. At 31 March 2019, 14.5% of total assets of the Group consisted of inventory.

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

C T HOLDINGS PLC Annual Report 2018 | 2019 36 Our audit procedures included, • Testing the Design and implementation and operating effectiveness of the key controls over inventories. • Assessing whether the Company’s policies had been consistently applied in respect of the judgment and estimation made in respect of inventory provisioning. • We considered the principles of accounting for the inventory write downs and also carried out comparison of inventory levels, to sales data to corroborate whether slow moving and obsolete inventories had been appropriately identified and challenge the Company’s categorization as obsolete or slow moving. • Attending stock counts as at the year end at a sample of the Subsidiary’s supermarkets and warehouses. In addition to performing sample test counts, we assessed the effectiveness of the physical count controls in operation at each count locations to identify damaged stocks, expired stocks and stock shortages that are written off on a periodical basis. We also evaluated the results of the other cycle counts performed by management and third parties throughout the period to assess the level of count variances that are also adjusted periodically.

03. Impairment assessment of investment in subsidiaries - Company As described in Note 3.1 (Accounting policies) and Note 17 (Investment in subsidiaries), the Company’s investment in C T Properties (Private) Limited (CTP) amounted to Rs. 1,832 Mn as at 31 March 2019.

Risk Description • Indicators of Impairment exist in relation to the Company’s Investment in CTP group, given the negative retained earnings and lack of revenue and profit which could off-set the negative retained earnings. • The Method used by the management in calculating the recoverable amount is fair value less cost of disposal of the properties owned by the companies in the group. CTP’s main assets are invested in properties, fair value of which had been estimated by an external valuer and categorized under Level 03 based on the inputs to the valuation technique used. • A cumulative impairment loss of approximately Rs. 504 Mn was recorded as at 31 March 2019 (2018 - Rs. 478 Mn)

Our audit procedures included, • Assessing the appropriateness of the valuation techniques used by the external valuer, taking into account the profile of the properties. • Discussions with management and the external valuers and compare the key assumptions used against externally published market comparable where available or with other benchmark data and challenging the reasonableness of key assumptions based on our knowledge of the industry. • Assessing the adequacy of the disclosures in the financial statements, including the description and appropriateness of the inherent degree of subjectivity and key assumptions in the estimates used to calculate the recoverable amount.

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

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

C T HOLDINGS PLC 37 Annual Report 2018 | 2019 Independent Auditors’ Report

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

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

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

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

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

As part of an audit in accordance with SLAuSs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company and the Group’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

C T HOLDINGS PLC Annual Report 2018 | 2019 38 • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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

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

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

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

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

KPMG Colombo, Sri Lanka

04 July 2019

C T HOLDINGS PLC 39 Annual Report 2018 | 2019 Statement of Profit or Loss and Other Comprehensive Income

In thousands of rupees Group Company For the year ended 31st March Note 2019 2018 2019 2018

Revenue 6 95,547,360 92,134,483 - - Cost of sales (84,574,268) (81,070,103) - - Gross profit 10,973,092 11,064,380 - - Other income 7 2,621,051 3,488,284 47,052 136,574 Distribution expenses (2,964,968) (2,838,503) - - Administrative expenses (4,875,461) (4,383,795) (96,375) (90,332) Other expenses (519,741) (528,132) (26,268) (13,355) Results from operating activities 8 5,233,973 6,802,234 (75,591) 32,887

Finance income 9 289,293 260,406 438,450 1,105,467 Finance costs 9 (1,714,434) (1,579,614) (82) (186) Net finance income / (costs) (1,425,141) (1,319,208) 438,368 1,105,281

Share of profit of equity accounted investees, net of income tax 18.2 79,642 308,231 - - Profit before taxation 3,888,474 5,791,257 362,777 1,138,168 Income tax expense 10 (1,504,237) (2,051,792) (7,903) (18,596) Profit for the year 2,384,237 3,739,465 354,874 1,119,572

Other comprehensive income, net of tax Items that will not be re-classified subsequently to profit or loss: Revaluation of property, plant and equipment 13 - 653,499 - - Re-measurement of obligation on defined benefit plan (6,837) (48,292) (3,192) (2,111) Net change in fair value of investments at fair value through other comprehensive income (FVOCI) 9.2 (72,453) - (65,565) - Share of other comprehensive income of equity accounted investees 18.2 (1,965) 1,285 - - (81,255) 606,492 (68,757) (2,111)

Items that may be re-classified subsequently to profit or loss: Net change in fair value of available-for-sale financial assets 9.2 - 40,428 - 9,538 Share of other comprehensive income of equity accounted investees 18.2 (22,025) 14,166 - - (22,025) 54,594 - 9,538

Total other comprehensive income for the year, net of tax (103,280) 661,086 (68,757) 7,427 Total comprehensive income for the year 2,280,957 4,400,551 286,117 1,126,999

Profit for the year attributable to: Owners of the parent 1,642,624 2,597,342 354,874 1,119,572 Non-controlling interest 741,620 1,142,123 - - 2,384,244 3,739,465 354,874 1,119,572

Total comprehensive income for the year attributable to: Owners of the parent 1,541,261 3,100,836 286,117 1,126,999 Non-controlling interest 739,696 1,299,715 - - 2,280,957 4,400,551 286,117 1,126,999

Earnings per share (Rs.) 11 8.16 12.90 1.76 5.56 Dividend per share (Rs.) 12 5.50 5.50

The notes on pages 46 to 125 are an integral part of these Financial Statements

C T HOLDINGS PLC Annual Report 2018 | 2019 40 Statement of Financial Position

In thousands of rupees Group Company As at 31st March Note 2019 2018 2019 2018

Assets Non-current assets Property, plant and equipment 13 29,372,454 26,594,623 2,131 2,893 Prepaid lease rentals to acquire rights to use lands 14 218,175 174,199 - - Investment property 15 7,975,453 7,607,025 1,583,264 1,560,293 Intangible assets and goodwill 16 1,617,126 1,510,588 688,467 688,467 Investments in subsidiaries 17 - - 2,175,625 2,201,893 Investments in equity accounted investees 18 6,519,045 6,602,911 2,906,169 2,906,169 Other investments 19 604,709 522,162 243,868 309,433 Deferred tax assets 10.5 5,275 7,001 - - Total non-current assets 46,312,237 43,018,509 7,599,524 7,669,148

Current assets Inventories 20 9,766,448 9,549,147 - - Trade and other receivables 21 7,034,635 5,950,734 29,911 12,423 Other current investments 131,435 - 131,435 - Cash and cash equivalents 22 4,094,228 3,217,775 65,519 210,837 Total current assets 21,026,746 18,717,656 226,865 223,260 Total assets 67,338,983 61,736,165 7,826,389 7,892,408

Equity and liabilities Equity attributable to owners of the parent Stated capital 23 6,489,758 6,489,758 6,489,758 6,489,758 Reserves 24 1,819,885 1,890,244 54,950 120,515 Retained earnings 13,138,710 12,277,464 1,079,040 1,089,891 Total equity attributable to equity holders of the parent 21,448,353 20,657,466 7,623,748 7,700,164 Non-controlling interest 4,765,746 4,239,636 - - Total equity 26,214,099 24,897,102 7,623,748 7,700,164

Liabilities Non-current liabilities Borrowings 25 29,574 39,878 - - Employee benefits 26 1,142,816 1,007,911 26,051 20,113 Deferred revenue 27 50,420 61,901 - - Trade and other payables 28 3,705,863 3,297,520 - - Deferred tax liabilities 10.5 1,626,697 1,565,865 - - Total non-current liabilities 6,555,370 5,973,075 26,051 20,113

Current liabilities Trade and other payables 28 14,981,034 13,407,772 15,148 13,248 Current tax liabilities 2,521,169 2,620,772 - 1,271 Borrowings 25 16,905,869 14,679,832 - - Dividends payable 161,442 157,612 161,442 157,612 Total current liabilities 34,569,514 30,865,988 176,590 172,131 Total equity & liabilities 67,338,983 61,736,165 7,826,389 7,892,408

The notes on pages 46 to 125 are an integral part of these Financial I certify that these Financial Statements have been Statements. The Board of Directors is responsible for the preparation and prepared in accordance with the requirements of the presentation of these Financial Statements. The Financial Statements have Companies Act No 7 of 2007. been approved by the Board of Directors on 04 July 2019.

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

C T HOLDINGS PLC 41 Annual Report 2018 | 2019 Statement of Changes in Equity

Group <------Attributable to the owners of the parent ------> Stated Revaluation Fair value General Retained Total Non- Total capital reserve reserve reserve earnings reserve controlling In thousands of rupees Interest

For the year ended 31st March 2018 Balance at 1st April 2017 3,194,008 4,127,957 87,996 367,220 11,016,858 18,794,039 3,405,406 22,199,445

Total comprehensive income for the year Profit for the year - - - - 2,597,342 2,597,342 1,142,123 3,739,465 Other comprehensive income Revaluation of property, plant and equipment - 490,430 - - - 490,430 163,069 653,499 Net change in fair value of available-for-sale financial assets - - 31,198 - - 31,198 9,230 40,428 Re-measurements of defined benefit plan - - - - (33,585) (33,585) (14,707) (48,292) Share of other comprehensive income of associates - - - - 15,451 15,451 - 15,451 Total other comprehensive income for the year - 490,430 31,198 - (18,134) 503,494 157,592 661,086 Total comprehensive income for the year - 490,430 31,198 - 2,579,208 3,100,836 1,299,715 4,400,551

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

For the year ended 31st March 2019 Balance at 1st April 2018 6,489,758 1,771,050 119,194 - 12,277,464 20,657,466 4,239,636 24,897,102 Adjustment on initial application of SLFRS 09 from associcates, net of tax - - - - (130,984) (130,984) - (130,984) Adjusted Balance as at 1 April 2018 6,489,758 1,771,050 119,194 - 12,146,480 20,526,482 4,239,636 24,766,118

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

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

C T HOLDINGS PLC Annual Report 2018 | 2019 42 Company Stated Revaluation Fair value General Retained Total In thousands of rupees capital reserve reserve reserve earnings

For the year ended 31st March 2018 Balance at 1st April 2017 3,194,008 74,999 110,977 213,538 3,986,678 7,580,200 Total comprehensive income for the year Profit for the year - - - - 1,119,572 1,119,572

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

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

For the year ended 31st March 2019 Balance at 1st April 2018 6,489,758 - 120,515 - 1,089,891 7,700,164 Total comprehensive income for the year Profit for the year - - - - 354,874 354,874

Other comprehensive income Net change in fair value of investments at FVOCI - - (65,565) - - (65,565) Defined benefit plan actuarial gains / (losses) - - - - (3,192) (3,192) Total other comprehensive income for the year - - (65,565) - (3,192) (68,757) Total comprehensive income for the year - - (65,565) - 351,682 286,117

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

The notes on pages 46 to 125 are an integral part of these Financial Statements.

C T HOLDINGS PLC 43 Annual Report 2018 | 2019 Statement of Cash Flows

In thousands of rupees Note Group Company For the year ended 31st March 2019 2018 2019 2018

Cash flows from operating activities Profit for the year 3,888,474 5,791,257 362,777 1,138,168 Adjustments for: Depreciation of property, plant & equipment 13 2,517,323 2,248,973 839 2,681 Amortisation of leasehold right over land 14 6,049 6,046 - - Amortisation of intangible assets 16 96,721 109,796 - - Interest income 9 (232,713) (223,884) (16,481) (17,821) Gain on sale of property, plant and equipment 7 (43,531) (1,024,583) - - Dividend income 9 (52,440) (33,310) (421,969) (1,087,646) Finance costs 9 1,714,434 1,579,614 82 186 Share of profit of equity accounted investees 18.2 (79,642) (308,231) - - Reversal / (charge) for impairment of trade and other receivables 21.3 (48,318) 10,341 - - Amortisation of deferred income 27 (11,481) (11,481) - - Provision for slow moving and obsolete inventories 20 (6,428) 35,464 - - Change in fair value of investment properties 15 (368,101) (371,587) (22,971) (112,743) Impairment losses on property, plant and equipment - 45,350 - - Provision for obligation on defined benefit plan 26 203,535 188,773 2,746 2,498 Net change in fair value of available for sale investments - 31,023 - - Equity-settled share-based payment transactions 96,554 148,063 - - Impairment losses on investments in subsidiaries 17 - - 26,268 13,355 Cash generated from operating activities before working capital 7,680,436 8,221,624 (68,709) (61,322) Change in inventories (210,873) (1,244,483) - - Change in trade and other receivables (1,035,583) (1,272,400) (6,625) 1,724 Change in trade and other payables 1,614,472 1,105,978 1,897 3,421 Cash generated from operating activities 8,048,424 6,810,719 (73,437) (56,177) Interest paid (1,714,210) (1,579,288) (82) (186) Current tax paid (1,539,874) (1,255,901) (11,304) (19,130) Defined benefit plan payments 26 (76,875) (76,125) - - Net cash from / (used in) operating activities 4,717,465 3,899,405 (84,823) (75,493)

C T HOLDINGS PLC Annual Report 2018 | 2019 44 In thousands of rupees Note Group Company For the year ended 31st March 2019 2018 2019 2018

Cash flows from investing activities Proceeds from sale of property, plant and equipment 45,683 1,042,891 - - Interest received 9 231,278 223,884 15,046 17,821 Dividends received 9 60,974 39,650 413,239 1,079,512 Proceeds from sale of investments - (40,000) - - Acquisition of property, plant and equipment 13 (5,297,306) (4,801,821) (77) - Improvements to investment property 15 (327) - - Prepaid lease rentals to acquire rights to use lands 14 (50,025) - - - Proceeds from sale of investment property 15 - 3,144,580 - - Acquisition of intangible assets 16 (203,259) (92,704) - - Acquisition of other investments (285,000) - (130,000) - Net cash from / (used in) investing activities (5,497,982) (483,520) 298,208 1,097,333

Cash flows from financing activities Net short term borrowings 2,203,309 (567,973) - - Repayment of long term borrowings 25.1 (9,167) (199,967) - - Loans obtained during the year 25.1 - 50,000 - - Payment of finance lease liabilities 25.2 (1,247) (1,246) - - Dividends paid to owners (358,703) (1,081,713) (358,703) (1,081,713) Dividends paid to non controlling interest (199,836) (518,663) - - Net cash from / (used in) financing activities 1,634,356 (2,319,562) (358,703) (1,081,713) Net decrease in cash and cash equivalents 853,839 1,096,323 (145,318) (59,873)

Net decrease in cash and cash equivalents 853,839 1,096,323 (145,318) (59,873) Cash and cash equivalents at 1st April 362,004 (734,319) 210,837 270,710 Cash and cash equivalents at 31st March 1,215,843 362,004 65,519 210,837

Cash and cash equivalents at 31st March Cash and cash at bank 3,121,308 2,035,865 2,204 2,367 Short term deposits 972,920 1,181,910 63,315 208,470 4,094,228 3,217,775 65,519 210,837 Bank overdrafts (2,878,385) (2,855,771) - - Cash and cash equivalents at 31st March 22 1,215,843 362,004 65,519 210,837

The notes on pages 46 to 125 are an integral part of these Financial Statements.

C T HOLDINGS PLC 45 Annual Report 2018 | 2019 Notes to the Financial Statements

1. Presentation of the financial statements 1.1. Description of the reporting entity and business C T Holdings PLC (the ‘Company’) is a company incorporated in Sri Lanka and listed on the Colombo Stock Exchange. The address of the Company’s registered office is No. 8, Sir Chittampalam A Gardiner Mawatha, Colombo 2. The consolidated financial statements of the Company as at and for the year ended 31st March 2019 comprise the Company and its subsidiaries (together referred to as the ‘Group’ and individually as ‘Group entities’) and the Group’s interest in associates. The Financial Statements of all companies within the Group are prepared for a common financial year which ends on 31st March 2019, except as mentioned in note 18.5. The Principal Activities of the Group are described in note 2.1 to the Financial Statements.

1.2. Statement of compliance The Financial Statements which comprise the statement of financial position, statement of profit or loss and other comprehensive income, statement of changes in equity, statement of cash flows and notes thereto have been prepared in accordance with new Sri Lanka Accounting Standards (SLFRSs), and the requirements of the Companies Act, no 07 of 2007. The Board of Directors of the Company is responsible for the preparation and presentation of these Financial Statements. The Financial Statements were authorised for issue by the Board of Directors on 04th July 2019.

This is the first set of the Group’s annual financial statements in which SLFRS 15 Revenue from Contracts with Customers and SLFRS 9 Financial Instruments have been applied. Changes to significant accounting policies are described in Note 4.2.

1.3. Functional and presentation currency These Financial Statements are presented in Sri Lankan Rupees, which is the Group’s functional currency. All financial information presented in Sri Lankan Rupees has been rounded to the nearest thousands, except when otherwise indicated.

1.4. Key accounting judgements and estimates In preparing these consolidated financial statements, management has made judgements, estimates and assumptions that affect the application of the Group’s accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

1.4.1. Judgments Information about critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the Financial Statements is included in the following notes:

Reference Item Note 13 Property, plant and equipment Note 15 Investment properties Note 16 Goodwill and other intangible assets Note 17 Impairment of investments in subsidiaries Note 26 Employee benefits Note 10.5 Deferred taxation Note 3.1.2 Consolidation: whether the group has de-facto control over an investee Note 6 Revenue recognition: whether revenue is recognised over time or at a point in time;

C T HOLDINGS PLC Annual Report 2018 | 2019 46 1.4.2 Assumptions and estimation uncertainties Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the year ending 31st March 2019 is included in the following notes:

Reference Item Note 26 Measurement of defined benefit obligations: key actuarial assumptions; Note 10.5 Recognition of deferred tax assets: availability of future taxable profit against which carry forward tax losses can be used; Note 17 Impairment test of intangible assets and goodwill: key assumptions underlying recoverable amounts; Note 33 Recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an outflow of resources; Note 17 Acquisition of subsidiary: fair value of the consideration transferred(including contingent consideration) and fair value of the assets acquired and liabilities assumed, measured on a provisional basis; and

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

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

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

C T HOLDINGS PLC 47 Annual Report 2018 | 2019 Notes to the Financial Statements

1.8. Basis of measurement The Financial Statements have been prepared on the historical cost basis except for the following material items in the statement of financial position: Items Measurement bases Freehold land Fair value Financial instruments at fair value through profit or loss Fair value Non-derivative financial instruments at Fair Value Through Profit or Loss (FVTPL) Fair value Debt and equity securities at Fair Value Through Other Comprehensive Income (FVOCI) (2018: available-for- Fair value sale financial assets) Investment property Fair value Defined benefit obligations Present value Share based payment arrangements Fair value

The Management of the C T Holdings PLC has made an assessment of the Group’s ability to continue as a going concern and is satisfied that the Group has the resources to continue in business for a foreseeable future. Furthermore, management is not aware of any material uncertainties that may cast significant doubt upon the Group’s ability to continue as a going concern. Therefore, the Financial Statements continue to be prepared on the going concern basis.

1.9. Measurement of fair value A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial and non- financial assets and liabilities.

The Group has an established control framework with respect to the measurement of fair values.

Significant valuation issues are reported to the Group’s audit committee.

When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

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

If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

C T HOLDINGS PLC Annual Report 2018 | 2019 48 Further information about the assumptions made in measuring fair values is included in the following notes:

Reference Item Note 15 Investment property Note 29 Financial instruments Note 17 Acquisition of subsidiary Note 13 Freehold Land Note 26.4 Share based payment arrangements

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

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

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

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

3. Significant accounting policies Unless otherwise indicated, the accounting policies set out below have been applied consistently to all periods presented in these Financial Statements and have been applied consistently by Group entities.

Please refer Note 4.2 – change in accounting policy for restated, reclassified or re-presented comparative amounts in the statement of profit or loss and other comprehensive income.

C T HOLDINGS PLC 49 Annual Report 2018 | 2019 Notes to the Financial Statements

3.1. Basis of consolidation over the entity. The Financial Statements loss of control are accounted for 3.1.1. Business combinations of subsidiaries are included in the as transactions with owners in their The Group accounts for business consolidated financial statements from capacity as owners. Adjustments to combinations using the acquisition the date on which control commences non-controlling interests are based on a method when control is transferred until the date on which control ceases. proportionate amount of the net assets to the Group. The consideration of the subsidiary. No adjustments are transferred in the acquisition is generally The Company re-assesses whether or made to goodwill and no gain or loss is measured at fair value, as are the not it controls an investee if facts and recognised in profit or loss. identifiable net assets acquired. Any circumstances indicate that there are goodwill that arises is tested annually changes to one or more of the three 3.1.5. Interest in equity accounted for impairment. Any gain on a bargain elements of control listed above. Total investees purchase is recognised in profit or loss comprehensive income of subsidiary is The Group’s interests in equity immediately. Transaction costs are attached to the owners of the Company accounted investees comprise expensed as incurred, except if related and to the non-controlling interest, interests in associates. Associates are to the issue of debt or equity securities. even this result in the non-controlling those entities in which the Group has interest having a deficit balance. When significant influence, but not control The consideration transferred does necessary, adjustments are made to the or joint control, over the financial and not include amounts related to the financial statements of subsidiaries to operating policies. Significant influence settlement of pre-existing relationships. bring their accounting policies into line is presumed to exist when the Group Such amounts are generally recognized with the Group’s accounting policies. holds between 20% and 50% of the in profit or loss. voting power of another entity. 3.1.3. Loss of control Any contingent consideration is When the Group loses control over a Significant influence is the power to measured at fair value at the date subsidiary it de-recognises the assets participate in the financial and operating of acquisition. If an obligation to and liabilities of the subsidiary, any policy decisions of the investee, but is pay contingent consideration that related non-controlling interests and not control or joint control over those meets the definition of a financial the other components of equity. Any policies. The considerations made in instrument is classified as equity, then resulting gain or loss is recognised in determining significant influence or joint it is not remeasured and settlement is profit or loss. Any interest retained in control is similar to those necessary to accounted for within equity. Otherwise, the former subsidiary is measured at fair determine control over subsidiaries. other contingent consideration is value when control is lost. Subsequently remeasured at fair value at each that retained interest is accounted for Investments in associates are reporting date and subsequent changes as equity accounted investee or as accounted for under the equity method. in the fair value of the contingent an available-for-sale financial asset They are initially recognised at cost consideration are recognized in profit or depending on the level of influence which includes transaction costs. loss. retained. Subsequent to initial recognition, the consolidated financial statements 3.1.2. Subsidiaries 3.1.4. Non-controlling interests include the Group’s share of the profit or Subsidiaries are entities controlled by Non-controlling-interests are measured loss and other comprehensive income the Group. The Group controls an entity at their proportionate share of the of equity accounted investees, after when it is exposed to, or has right to, acquiree’s identifiable net assets at the adjustments to align the accounting variable returns from its involvement date of acquisition. policies with those of the Group, from with the entity and has the ability to the date that significant influence affect those returns through its power Changes in the Group’s interest in commences until the date that a subsidiary that do not result in a significant influence ceases.

C T HOLDINGS PLC Annual Report 2018 | 2019 50 When the Group’s share of losses rate at the date that the fair value was 3.4. Revenue from contracts with exceed its interest in an equity determined. Non-monetary items that customers accounted investee, the carrying are measured based on historical cost in Revenue from contracts with customers amount of the investment, including a foreign currency are translated using is recognised when control of the any long term interests that form the exchange rate at the date of the goods or services are transferred to the part thereof, is reduced to zero, and transaction. Foreign currency differences customer at an amount that reflects the recognition of further losses is are generally recognised in profit or loss. the consideration to which the Group discontinued except to the extent expects to be entitled in exchange that the Group has an obligation or 3.3. Discontinued Operations for those goods or services. Revenue has made payments on behalf of the A discontinued operation is a is recognised upon satisfaction of investee. component of the Group’s business, the performance obligation. The revenue operations and cash flows of which can recognition occurs at a point in time 3.1.6. Transactions eliminated on be clearly distinguished from the rest of when control of the asset is transferred consolidation the Group and which: to the customer, generally on delivery Intra-group balances and transactions, • represents a separate major line of of the goods. Group determines at and any unrealised income and business or geographical area of contract inception whether it satisfies expenses arising from intra-group operations; the performance obligation over time or transactions, are eliminated. Unrealised • is part of a single co-ordinated plan at a point in time. For each performance gains arising from transactions with to dispose of a separate major line obligation satisfied overtime, the equity accounted investees are of business or geographical area of Group recognises the revenue over eliminated against the investment operations; or time by measuring the progress to the extent of the Group’s interest towards complete satisfaction of that • is a subsidiary acquired exclusively in the investee. Unrealised losses performance obligation. with a view to re-sell. are eliminated in the same way as unrealised gains, but only to the extent The Group has initially applied SLFRS that there is no evidence of impairment. Classification as a discontinued 15 from 1 April 2018. The effect of operation occurs at the earlier of initially applying SLFRS 15 is described 3.2. Foreign Currency - Foreign disposal or when the operation meets in Note 4.2.2. currency transactions the criteria to be classified as held- Transactions in foreign currencies are forsale. translated into the respective functional currencies of Group entities at exchange When an operation is classified rates at the dates of the transactions. as discontinued operation, the comparative statement of profit or loss Monetary assets and liabilities and other comprehensive income is denominated in foreign currencies are represented as if the operation had translated to the functional currency at been discontinued from the start of the the exchange rate at the reporting date. comparative year. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated to the functional currency at the exchange

C T HOLDINGS PLC 51 Annual Report 2018 | 2019 Notes to the Financial Statements

3.4.1 Performance obligations and revenue recognition policies Type of Nature and timing of satisfaction Revenue recognition under SLFRS 15 product / of performance obligations, service including significant payment Applicable from 1 April 2018 Applicable before 1 April terms 2018 Retail and The Group operates a chain of Revenue is recognised when the goods Revenue is recognized when whole sale retail stores selling consumer are delivered and have been accepted significant risks and rewards distribution / goods and the Group by customers at their premises. For of ownership have been FMCG manufactures and sells a range contracts that permit the customer to transferred to the customer, of food products. In the case of return an item, revenue is recognised to recovery of the consideration retail, payment of the transaction the extent that it is highly probable that is probable, the associated price is due immediately when the a significant reversal in the amount of costs and possible return customer purchases the goods cumulative revenue recognised will not of goods can be estimated and takes delivery in store. In occur. reliably, there is no continuing the case of wholesale, when the management involvement products have been delivered to with the goods, and the the specific location, the risks of amount of revenue can be obsolescence and loss have been measured reliably. Revenue transferred to the customer, and is measured net of returns, either the customer has accepted trade discounts and volume the products in accordance with rebates. The timing of the the sales contract. transfer of risks and rewards varies depending on the individual terms of the sales agreement.

Customer The Group operates a loyalty Revenue is recognised when the points Revenue is allocated loyalty programme where retail customers are redeemed or when they expire after between the loyalty programme accumulate points for purchases the initial sale. A liability is recognised until programme and the other made which entitle them to the points are redeemed or expire. components of the sale. discount on future purchases. The amount allocated to A liability for the award points is the loyalty programme is recognised at the time of the sale. deferred, and is recognised as revenue when the Group has fulfilled its obligations to supply the discounted products under the terms of the programme or when it is no longer probable that the points under the programme will be redeemed.

C T HOLDINGS PLC Annual Report 2018 | 2019 52 Type of Nature and timing of satisfaction Revenue recognition under SLFRS 15 product / of performance obligations, service including significant payment Applicable from 1 April 2018 Applicable before 1 April terms 2018 Restaurants The Group operates chains Revenue from restaurant and shop sales Revenue from restaurant of restaurants for KFC and (food and beverages) is recognized upon and shop sales (food and TGIF brands through franchise rendering of service. Sales are net of beverages) is recognized arrangements. discounts. upon rendering of service. Sales are net of discounts.

Real Estate The Group develops and operates Rental income from operating leases is Rental income from - Rental commercial shopping malls to be recognised on a straight-line basis over investment property is income from rented out to third parties as well the lease term. When the Group provides recognised as revenue on operating as to be used by own. incentives to its tenants, the cost of a straight-line basis over leases the incentives is recognised over the the term of the lease. Lease lease term, on a straight-line basis, as a incentives granted are reduction of rental income. recognised as an integral part of the total rental income, over the term of the lease. Real Estate The Group provides services to Revenue from service and property The Group recognises - Revenue the tenants of the commercial management charges is recognised in revenue from rendering of from service shopping malls operated agreed the accounting period. In the case of services in proportion to and property upon the tenants agreements or fixed price contracts, the customer pays the stage of completion management otherwise. the fixed amount based on a payment of the transaction at the charges schedule. If the services rendered reporting date. The stage of exceed the payment, a contract asset is completion is assessed with recognised. If the payments exceed the reference to surveys of work services rendered, a contract liability is performed. recognised.

3.4.2 Finance and other income a. Financing components of retail and wholesales The Group does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Group does not adjust any of the transaction prices for the time value of money. b. Commissions When the Group is acting as an agent, the commission rather than gross income is recorded as revenue.

C T HOLDINGS PLC 53 Annual Report 2018 | 2019 Notes to the Financial Statements

c. Dividend income transferred to retained earnings. Other consolidated financial statements, the Dividends are received from financial income is recognized on an accrual subsidiary should in its own separate assets measured at fair value through basis. financial statements measure the profit or loss (FVPL) and at fair value services received from its employees through other comprehensive income 3.5. Employee benefits in accordance with the requirements of (FVOCI) (2018: from financial assets at 3.5.1. Short-term employee benefits SLFRS 2 applicable to equity-settled FVPL and available-for-sale financial Short-term employee benefits are share-based payment transactions and assets). Dividends are recognised as expensed as the related service is corresponding increase recognised in other income in profit or loss when the provided. A liability is recognised equity as a capital contribution from the right to receive payment is established. for the amount expected to be paid parent. This applies even if they are paid out if the Group has a present legal or of pre-acquisition profits, unless the constructive obligation to pay this 3.5.3. Defined contribution plans dividend clearly represents a recovery of amount as a result of past service Defined contribution plan is a post part of the cost of an investment. In this provided by the employee, and the employment benefit plan under which case, the dividend is recognised in OCI obligation can be estimated reliably. an entity pays fixed contributions into if it relates to an investment measured a separate entity and will have no at FVOCI. 3.5.2. Share-based payment legal or constructive obligation to pay arrangement any further amounts. Obligations for d. Interest income The grant-date fair value of equity contributions to Employees Provident Interest income from financial assets settled share-based payment Fund and Employees Trust Fund at FVPL is included in the net fair value arrangements granted to employees is covering all employees are recognised gains / (losses) on these assets. Interest generally recognised as an expense, as an expense in profit or loss, as income on financial assets at amortised with a corresponding increase in equity, incurred. cost and financial assets at FVOCI over the vesting period of the awards. (2018: available-for-sale securities, The amount recognised as an expense Types of contribution plans which are held-to-maturity investments and loans is adjusted to reflect the number of being contributed for by the Group; and receivables) calculated using the awards for which the related service effective interest method is recognised and non-market performance conditions (a) Employee Provident Fund (EPF) - The in the statement of profit or loss as part are expected to be met, such that Group and employees contribute 12% of other income. the amount ultimately recognised is and 8% respectively of the salary to based on the number of awards that EPF. Other income also includes rental meet the related service and non- income from investment properties. market performance conditions at the (b) Employees Trust Fund - All (Refer note 7). Gains and losses on vesting date. For share-based payment employees of the Group are members disposal of an item of property, plant awards with non-vesting conditions, of the Employees’ Trust Fund (ETF). The & equipment and investments are the grant-date fair value of the share- Group contributes 3% of the salary of accounted in profit or loss by comparing based payment is measured to reflect each employee to ETF. the net sales proceeds with the carrying such conditions and there is no true-up amounts of property, plant & equipment for differences between expected and 3.5.4. Defined benefit plans and investments concerned and are actual outcomes. Defined Benefit Plan is a post recognised net within “other income” employment benefit plan other than in profit or loss. When re-valued assets Where a parent grants rights to its Defined Contribution Plan. These plans are sold, the amounts included in equity instruments to employees of create an obligation on the entity to the revaluation surplus reserve are its subsidiary, and the arrangement is provide agreed benefits to current and accounted for as equity-settled in the past employees and effectively places

C T HOLDINGS PLC Annual Report 2018 | 2019 54 actuarial and investment risk on the months of the reporting date, then they 3.8. Income Tax entity. The liability recognised in the are discounted. Income tax expense comprises current statement of financial position in respect and deferred tax. Current tax and of Defined Benefit Plan is the present 3.6. Grants deferred tax is recognised in profit or value of the defined benefit obligation at Grants are recognised initially as loss except to the extent that it relates the reporting date. The defined benefit deferred income at fair value when there to a business combination, or items obligation is calculated annually by is reasonable assurance that they will recognised directly in equity or in other independent actuaries, using projected be received and the Group will comply comprehensive income. unit credit method, as recommended with the conditions associated with the by LKAS 19-Employee Benefit. The grant, and are then recognised in profit 3.8.1. Current tax present value of the defined benefit or loss as other income on a systematic Current tax comprises the expected obligation is determined by discounting basis over the useful life of the asset. tax payable or receivable on the the estimated future cash outflows Grants that compensate the Group taxable income or loss for the year and using interest rates that apply to the for expenses incurred are recognised any adjustment to the tax payable or currency in which the benefits will be in profit or loss as other income on a receivable in respect of previous years. paid, and that have terms to maturity systematic basis in the periods in which The amount of current tax payable or approximating to the terms of the the expenses are recognised. receivable is the best estimate of the related liability. tax amount expected to be paid or 3.7. Finance income and finance received that reflects uncertainty related The assumptions based on which the costs to income taxes, if any. It is measured results of the actuarial valuation were The Group’s finance income and finance using tax rates enacted or substantively determined are included in the note 26.3 costs would include: enacted at the reporting date. Current to the Financial Statements. 3.7.1. interest income; tax also includes any tax arising from 3.7.2. interest expense; dividends. This liability is not externally funded and 3.7.3. dividend income; the item is grouped under non-current 3.7.4. the net gain or loss on Current tax payable also includes any liabilities in the statement of financial the disposal of investments in debt tax arising from dividends. Current tax position. However, under the Payment securities measured at FVOCI; assets and liabilities are offset only if of Gratuity Act No. 12 of 1983 the 3.7.5. the net gain or loss on financial certain criteria are met. liability to an employee arises only on assets at fair value through profit or loss; completion of five years of continued 3.7.6. the foreign currency gain or 3.8.2. Deferred tax service. The company recognizes loss on financial assets and financial Deferred tax is recognised in respect all actuarial-gains and losses arising liabilities; of temporary differences between the from defined benefit plans in other 3.7.7. impairment losses (and carrying amounts of assets and liabilities comprehensive Income and expenses reversals) on investments in debt for financial reporting purposes and the related to defined benefit plans in staff securities carried at amortised cost or amounts used for taxation purposes. expenses in profit or loss. FVOCI (other than trade receivables); 3.7.8. the gain on the re- Deferred tax is not recognised for: 3.5.5. Termination benefits measurement to fair value of any • temporary differences on the initial Termination benefits are expensed at the pre-existing interest in an acquiree in a recognition of assets or liabilities in earlier of when the Group can no longer business combination; a transaction that is not a business withdraw the offer of those benefits 3.7.9. the reclassification of net combination and that affects neither and when the Group recognises costs gains previously recognised in other accounting nor taxable profit or loss; for a restructuring. If benefits are not comprehensive income. expected to be settled wholly within 12

C T HOLDINGS PLC 55 Annual Report 2018 | 2019 Notes to the Financial Statements

• temporary differences related substantively enacted at the reporting manufactured inventories and work in to investments in subsidiaries, date. progress, cost includes an appropriate associates and jointly controlled share of production overheads based entities to the extent that the Group The measurement of deferred tax on normal operating capacity. Net is able to control the timing of the reflects the tax consequences that realisable value is the estimated selling reversal of the temporary differences would follow the manner in which price in the ordinary course of business, and it is probable that they will not the Group expects, at the reporting less the estimated costs of completion reverse in the foreseeable future; and date, to recover or settle the carrying and estimated costs necessary to make • taxable temporary differences arising amount of its assets and liabilities. For the sale. on the initial recognition of goodwill. this purpose, the carrying amount of investment property that is measured at Property inventory fair value is presumed to be recovered The Group’s property inventories arise Deferred tax assets are recognised through sale. where there is a change in use of for unused tax losses, tax credits and investment properties evidenced by deductible temporary differences to Deferred tax assets and liabilities are the commencement of development the extent that it is probable that future offset if there is a legally enforceable with a view to sale, and the properties taxable profits will be available against right to offset current tax liabilities and are reclassified as inventories at their which they can be utilised. Future assets, and they relate to taxes levied deemed cost, which is the fair value taxable profits are determined based on by the same tax authority on the same at the date of re-classification. They business plans for individual subsidiaries taxable entity, or on different tax entities, are subsequently carried at the lower in the Group and the reversal of but they intend to settle current tax of cost and net realisable value. Net temporary differences. Deferred tax is liabilities and assets on a net basis or realisable value is the estimated selling not recognized for the undistributed their tax assets and liabilities will be price in the ordinary course of business profits of subsidiaries as the parent realized simultaneously. less costs to complete redevelopment company has control over the dividend and selling expenses. policy of its subsidiaries and distribution 3.9. Dividend distribution of those profits. Deferred tax assets are 3.11. Property, plant and equipment reviewed at each reporting date and are Dividend distribution to the Company’s reduced to the extent that it is no longer shareholders is recognized as a liability i. Recognition and measurement probable that the related tax benefit in the Group’s financial statements in Items of property, plant and equipment will be realised; such reductions are the period in which the dividends are are measured at cost less accumulated reversed when the probability of future proposed by directors or approved by depreciation and any accumulated taxable profits improves. the Company’s shareholders, as the impairment losses. Land is stated at its case may be. fair value. Cost includes expenditure Un-recognised deferred tax assets are that is directly attributable to the reassessed at each reporting date and 3.10. Inventories acquisition of the asset. The cost of recognised to the extent that it has Inventories are measured at the lower self-constructed assets includes the become probable that future taxable of cost and net realisable value. The following: profits will be available against which cost of inventories is based on the they can be used. first-in first-out principle, and includes • the cost of materials and direct expenditure incurred in acquiring the labour; Deferred tax is measured at the tax inventories, production or conversion • any other costs directly attributable rates that are expected to be applied costs, and other costs incurred to bringing the assets to a working to temporary differences when they in bringing them to their existing condition for their intended use; and reverse, using tax rates enacted or location and condition. In the case of • capitalised borrowing costs.

C T HOLDINGS PLC Annual Report 2018 | 2019 56 Purchased software that is integral are depreciated over the shorter of the lease term and their useful lives unless it is to the functionality of the related reasonably certain that the Group will obtain ownership by the end of the lease term. equipment is capitalised as part of that Land is not depreciated equipment. If significant parts of an item of property, plant and equipment The estimated useful lives for the current and comparative years of significant items have different useful lives, then they are of property, plant and equipment are as follows: accounted for as separate items (major components) of property, plant and Description No. of years equipment. Any gain or loss on disposal Freehold buildings 50 of an item of property, plant and equipment (calculated as the difference Improvements to leasehold buildings 4 to 10 years or period of between the net proceeds from disposal lease whichever is lower and the carrying amount of the item) is Plant & machinery 5 to 10 recognised in profit or loss. Motor vehicles 4 to 5 Furniture & fittings 5 ii. Subsequent expenditure Subsequent expenditure is capitalised Depreciation methods, useful lives and residual values are reviewed at each reporting only when it is probable that the future date and adjusted if appropriate. Fully depreciated property, plant and equipment are economic benefits associated with retained in the Financial Statements until such time when they are no longer in use. the expenditure will flow to the Group. On-going repairs and maintenance are iv. Constructions in progress expensed as incurred. All direct and indirect costs that are related to the construction of fixed assets and incurred before the assets are ready for their intended use are capitalised iii. Depreciation as construction in progress. Construction in progress is stated in the statement Items of property, plant and equipment of financial position at cost less impairment losses. Construction in progress is are depreciated from the date they transferred to fixed assets when it is ready for its intended use. No depreciation is are available for use or, in respect of provided against construction in progress. selfconstructed assets, from the date that the asset is completed and ready v. Reclassification to investment property for use. Depreciation is calculated to When the use of a property changes from owner-occupied to investment property, write off the cost of items of property, the property is re-measured to fair value and re-classified as investment property. plant and equipment less their Any gain arising on this re-measurement is recognised in profit or loss to the estimated residual values using the extent that it reverses a previous impairment loss on the specific property, with any straight-line basis over their estimated remaining gain recognised in other comprehensive income and presented in the useful lives. Depreciation is generally revaluation reserve in equity. Any loss is recognized immediately in profit or loss. recognised in profit or loss, unless the amount is included in the carrying amount of another asset. Leased assets

C T HOLDINGS PLC 57 Annual Report 2018 | 2019 Notes to the Financial Statements

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

C T HOLDINGS PLC Annual Report 2018 | 2019 58 measured at the lower of their carrying or issue. A trade receivable without • it is held within a business model amount and fair value less costs to sell. a significant financing component is whose objective is achieved by both initially measured at the transaction collecting contractual cash flows and Any impairment loss on a disposal group price. selling financial assets; and is allocated first to goodwill, and then • its contractual terms give rise on to the remaining assets and liabilities 3.15.1.2. Classification and subsequent specified dates to cash flows that on a pro-rata basis, except that no measurement are solely payments of principal and loss is allocated to inventories, financial i. Financial assets interest on the principal amount assets, deferred tax assets, employee On initial recognition, a financial asset outstanding. benefit assets, investment property is classified as measured at: amortised or biological assets, which continue cost; Financial assets at fair value On initial recognition of an equity to be measured in accordance with through other comprehensive income investment that is not held for trading, the Group’s other accounting policies. (FVOCI) – debt investment; Financial the Group may irrevocably elect to Impairment losses on initial classification assets at fair value through other present subsequent changes in the as held-for-sale or heldfor- distribution comprehensive income (FVOCI) – equity investment’s fair value in OCI. This and subsequent gains and losses on investment; or Financial assets at fair election is made on an investment-by- re-measurement are recognised in profit value through profit or loss (FVTPL). investment basis. or loss. Gains are not recognised in excess of any cumulative impairment Financial assets are not reclassified All financial assets not classified as loss. Once classified as held for- sale or subsequent to their initial recognition measured at amortised cost or FVOCI held for-distribution, intangible assets unless the Group changes its business as described above are measured and property, plant and equipment are model for managing financial assets, in at FVTPL. This includes all derivative no longer amortised or depreciated, and which case all affected financial assets financial assets. On initial recognition, any equity-accounted investee is no are reclassified on the first day of the the Group may irrevocably designate longer equity accounted. first reporting period following the a financial asset that otherwise meets change in the business model. the requirements to be measured at 3.15. Financial instruments amortised cost or at FVOCI as at FVTPL A financial asset is measured at 3.15.1 Policy applicable from 1 April if doing so eliminates or significantly amortised cost if it meets both of 2018 reduces an accounting mismatch that the following conditions and is not 3.15.1.1. Recognition and initial would otherwise arise. measurement designated as at FVTPL: Trade receivables and debt securities ii. Financial assets – Business model • it is held within a business model issued are initially recognised when assessment: whose objective is to hold assets to they are originated. All other financial The Group makes an assessment of collect contractual cash flows; and assets and financial liabilities are initially the objective of the business model recognised when the Group becomes a • its contractual terms give rise on in which a financial asset is held at a party to the contractual provisions of the specified dates to cash flows that portfolio level because this best reflects instrument. A financial asset (unless it is are solely payments of principal and the way the business is managed, and a trade receivable without a significant interest on the principal amount information is provided to management. financing component) or financial liability outstanding. is initially measured at fair value plus, for A debt investment is measured at an item not at fair value through profit FVOCI if it meets both of the following or loss (FVTPL), transaction costs that conditions and is not designated as at are directly attributable to its acquisition FVTPL:

C T HOLDINGS PLC 59 Annual Report 2018 | 2019 Notes to the Financial Statements

The information considered includes: iii. Financial assets – Assessment whether contractual cash flows are solely payments of principal and interest: • the stated policies and objectives for the portfolio and the operation For the purposes of this assessment, ‘principal’ is defined as the fair value of the of those policies in practice. These financial asset on initial recognition. ‘Interest’ is defined as consideration for the include whether management’s time value of money and for the credit risk associated with the principal amount strategy focuses on earning outstanding during a particular period of time and for other basic lending risks and contractual interest income, costs (e.g. liquidity risk and administrative costs), as well as a profit margin. maintaining a particular interest rate profile, matching the duration of In assessing whether the contractual cash flows are solely payments of principal and the financial assets to the duration interest, the Group considers the contractual terms of the instrument. This includes of any related liabilities or expected assessing whether the financial asset contains a contractual term that could change cash outflows or realising cash flows the timing or amount of contractual cash flows such that it would not meet this through the sale of the assets; condition. In making this assessment, the Group considers: • how the performance of the portfolio is evaluated and reported to the • contingent events that would change the amount or timing of cash flows; Group’s management; • terms that may adjust the contractual coupon rate, including variable-rate features; • the risks that affect the performance • prepayment and extension features; and of the business model (and the • terms that limit the Group’s claim to cash flows from specified assets (e.g. non- financial assets held within that recourse features). business model) and how those risks are managed; A prepayment feature is consistent with the solely payments of principal and interest • how managers of the business criterion if the prepayment amount substantially represents unpaid amounts of are compensated – e.g. whether principal and interest on the principal amount outstanding, which may include compensation is based on the fair reasonable additional compensation for early termination of the contract. Additionally, value of the assets managed or the for a financial asset acquired at a discount or premium to its contractual par amount, contractual cash flows collected; and a feature that permits or requires prepayment at an amount that substantially • the frequency, volume and timing represents the contractual par amount plus accrued (but unpaid) contractual interest of sales of financial assets in prior (which may also include reasonable additional compensation for early termination) is periods, the reasons for such sales treated as consistent with this criterion if the fair value of the prepayment feature is and expectations about future sales insignificant at initial recognition. activity.

Transfers of financial assets to third parties in transactions that do not qualify for de-recognition are not considered sales for this purpose, consistent with the Group’s continuing recognition of the assets. Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

C T HOLDINGS PLC Annual Report 2018 | 2019 60 iv. Financial assets – Subsequent measurement and gains and losses: Financial assets at These assets are subsequently measured at fair value. Net gains and losses, including any FVTPL interest or dividend income, are recognised in profit or loss. Financial assets at These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss. Debt investments at These assets are subsequently measured at fair value. Interest income calculated using the effective FVOCI interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss. Equity investments at These assets are subsequently measured at fair value. Dividends are recognised as income in profit FVOCI or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never reclassified to profit or loss.

3.15.2 Policy applicable before 1 April 2018 i. Non-derivative financial assets and liabilities The Group classifies non-derivative financial assets into the categories of financial assets at fair value through profit or loss, held-to-maturity financial assets, loans and receivables and available-for-sale financial assets. The Group classifies non-derivative financial liabilities into the other financial liabilities category. ii. Non-derivative financial assets and liabilities - Recognition and derecognition The Group initially recognises loans and receivables on the date when they are originated. All other financial assets (including assets designated as at fair value through profit or loss) are recognised initially on the trade date, when the Group becomes a party to the contractual provisions of the instrument. The Group de-recognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred, or it neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control over the transferred asset. Any interest in such transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability. The Group de-recognises a financial liability when its contractual obligations are discharged or cancelled, or expired. Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously. iii. Non-derivative financial assets – Measurement Asset Measurement Basis Financial assets at fair A financial asset is classified as at fair value through profit or loss if it is classified as held-for-trading value through profit or or is designated as such on initial recognition. Directly attributable transaction costs are recognised in loss profit or loss as incurred. Financial assets at fair value through profit or loss are measured at fair value and changes therein, including any interest or dividend income are recognised in profit or loss.

C T HOLDINGS PLC 61 Annual Report 2018 | 2019 Notes to the Financial Statements

Asset Measurement Basis Held-to-maturity If the Group has the positive intent and ability to hold debt securities to maturity, then such financial financial assets assets are classified as held-to-maturity. These assets are initially recognized at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, held to maturity financial assets are measured at amortized cost using the effective interest method, less any impairment losses. Loans and receivables Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses. Available-for-sale Available-for-sale financial assets are non-derivative financial assets that are designated as available- financial assets for-sale or are not classified in any of the above categories of financial assets. These assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses and foreign currency differences on availablefor- sale debt instruments, are recognised in other comprehensive income and accumulated in the fair value reserve in equity. When these assets are derecognised, the gain or loss accumulated in equity is reclassified to profit or loss. iv. Non-derivative financial liabilities - Measurement Non-derivative financial liabilities are initially recognised at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these liabilities are measured at amortised cost using the effective interest method. Other financial liabilities comprise loans and borrowings, debt securities issued, bank overdrafts, and trade and other payables. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the statement of cash flows.

3.15.3 Derivative financial instruments Derivatives are initially recognised at fair value; any directly attributable transaction costs are recognised in profit or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognised in profit or loss. i. Financial liability on put options written over non-controlling interest The financial liability is recognised at the present value of the redemption amount and accreted through finance charges in the profit or loss over the contract period up to the final redemption amount. Any adjustments to the redemption amount are recognised in equity in accordance with LKAS 39 - Financial Instruments Recognition and Measurement (before 1 April 2018) or SLFRS 9 - Financial Instruments (after 1 April 2018).

The initial redemption liability is a reduction of parent’s equity if the risks and rewards of ownership remain with the non-controlling interest or a reduction of non-controlling interest equity if the risks and rewards of ownership transfer to the parent. If the present value of the redemption amount exceeds the carrying value of the non-controlling interest, any excess is recorded against parent’s equity. If the contract is exercised, any noncontrolling interest equity is allocated to parent equity. No adjustments are made to goodwill upon settlement of the contract. The redemption liability is offset by the cash payment. If the contract lapses un-exercised where the risks and rewards of ownership have transferred to the parent, a non-controlling interest equity is

C T HOLDINGS PLC Annual Report 2018 | 2019 62 reinstated. In substance, the parent has ii. Financial liabilities SLFRS 9, which requires expected sold those shares back to the non- The Group de-recognises a financial lifetime losses to be recognised from controlling interest and it is a transaction liability when its contractual obligations initial recognition of the receivables. with a non-controlling interest. The are discharged or cancelled, or expire. The Group has established a provision non-controlling interest equity amount The Group also de-recognises a matrix that is based on its historical is reinstated at an amount equal to financial liability when its terms are credit loss experience, adjusted for its share of the carrying values of the modified and the cash flows of the forward-looking factors specific to the subsidiary’s net assets at the date modified liability are substantially debtors and the economic environment. of lapse plus the goodwill from the different, in which case a new financial subsidiary’s initial acquisition. Any liability based on the modified terms is At each reporting date the Group difference between the redemption recognised at fair value. assesses whether there is objective liability and the non-controlling interest evidence that financial assets not carried equity adjustment is recognised against On de-recognition of a financial at fair value through profit or loss are the parent’s equity. No adjustments liability, the difference between the impaired. If there is objective evidence are made to goodwill. If the contract carrying amount extinguished and (such as significant financial difficulty lapses unexercised where the risks the consideration paid (including any of the obligor, breach of contract, or it and rewards of ownership remain with non-cash assets transferred or liabilities becomes probable that the debtor will the non-controlling interest, then no assumed) is recognised in profit or loss. enter bankruptcy), the asset is tested for adjustment is made to the carrying value impairment. of the non-controlling interest and the iii. Offsetting redemption liability is de-recognised Financial assets and financial liabilities The amount of the loss is measured against the parent’s equity. are offset and the net amount presented as the difference between the asset’s in the statement of financial position carrying amount and the present 3.15.4 De-recognition when, and only when, the Group value of estimated future cash flows i. Financial assets currently has a legally enforceable right (excluding future expected credit losses The Group de-recognises a financial to set off the amounts and it intends that have not been incurred) discounted asset when the contractual rights to either to settle them on a net basis or to at the financial asset’s original effective the cash flows from the financial asset realise the asset and settle the liability interest rate (that is, the effective interest expire, or it transfers the rights to simultaneously. rate computed at initial recognition). receive the contractual cash flows in a An impairment loss is calculated as the transaction in which substantially all of 3.16 Impairment difference between an asset’s carrying the risks and rewards of ownership of 3.16.1 Non-derivative financial amount and the present value of the the financial asset are transferred or in assets estimated future cash flows discounted which the Group neither transfers nor i. Policy applicable after 1 April 2018 at the asset’s original effective interest retains substantially all of the risks and The group assesses on a forward rate. Losses are recognised in profit rewards of ownership and it does not looking basis the expected credit losses or loss and reflected in a provision retain control of the financial asset. associated with its debt instruments account. carried at amortised cost and FVOCI. The Group enters into transactions The impairment methodology applied In relation to trade receivables, a whereby it transfers assets recognised depends on whether there has been a provision for impairment is made when in its statement of financial position, but significant increase in credit risk. there is objective evidence (such as the retains either all or substantially all of probability of insolvency or significant the risks and rewards of the transferred For trade receivables, the Group applies financial difficulties of the debtor) that assets. In these cases, the transferred the simplified approach permitted by the Group will not be able to collect all assets are not de-recognised. of the amounts due under the original

C T HOLDINGS PLC 63 Annual Report 2018 | 2019 Notes to the Financial Statements

terms of the invoice. Impaired debts are • adverse changes in the payment status of borrowers or issuers, economic derecognised when they are assessed conditions that correlate with defaults or as uncollectible. • the disappearance of an active market for a security. • observable data indicating that there is a measurable decrease in the expected If in a subsequent period the amount cash flows from a group of financial assets. of the impairment loss decreases and the decrease can be related In addition, for an investment in an equity security, a significant or prolonged decline objectively to an event occurring after in its fair value below its cost is objective evidence of impairment. the impairment was recognised, the previously recognised impairment loss is Category Measurement Basis reversed, to the extent that the carrying Financial assets The Group considers evidence of impairment for these value of the asset does not exceed its measured at assets measured at amortised cost (loans and receivables amortised cost at the reversal date. Any amortised cost and held-to-maturity financial assets) at both a specific subsequent reversal of an impairment asset and collective level. All individually significant assets loss is recognised in profit or loss. are individually assessed for impairment. Those found not to be specifically impaired are then collectively assessed for ii. Policy applicable before 1 April any impairment that has been incurred but not yet identified. 2018 Assets that are not individually significant are collectively A financial asset not classified as at fair assessed for impairment by grouping together assets with value through profit or loss, including an similar risk characteristics. interest in an equity-accounted investee, is assessed at each reporting date to In assessing collective impairment, the Group uses historical determine whether there is objective information on the timing of recoveries and the amount of evidence that it is impaired. loss incurred, and makes an adjustment if current economic and credit conditions are such that the actual losses are A financial asset is impaired if there likely to be greater or lesser than suggested by historical is objective evidence of impairment trends. as a result of one or more events that An impairment loss is calculated as the difference between occurred after the initial recognition of its carrying amount and the present value of the estimated the asset, and that loss event(s) had future cash flows discounted at the asset’s original effective an impact on the estimated future interest rate. Losses are recognised in profit or loss cash flows of that asset that can be and reflected in a provisions account against loans and estimated reliably. receivables or held-to-maturity investment securities. Interest on the impaired asset continues to be recognised. When Objective evidence that financial assets the Group considers that there are no realistic prospects of are impaired includes; recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and • default or delinquency by a debtor, the decrease can be related objectively to an event occurring • restructuring of an amount due to after the impairment was recognised, then the previously the Group on terms that the Group recognised impairment loss is reversed through profit or loss. would not consider otherwise, • indications that a debtor or issuer will enter bankruptcy,

C T HOLDINGS PLC Annual Report 2018 | 2019 64 Category Measurement Basis to the CGU, and then to reduce the carrying amounts of the other assets Available-for-sale Impairment losses on available-for sale financial assets are in the CGU on a pro rata basis. An financial assets recognised by reclassifying the losses accumulated in the impairment loss in respect of goodwill fair value (available for sale) reserve in equity to profit or loss. is not reversed. For other assets, an The cumulative loss that is reclassified from equity to profit impairment loss is reversed only to the or loss is the difference between the acquisition cost (net of extent that the asset’s carrying amount any principal repayment and amortization) and the current does not exceed the carrying amount fair value, less any impairment loss recognised previously that would have been determined, net in profit or loss. If, in a subsequent period, the fair value of depreciation or amortisation, if no of an impaired available-for-sale debt security increases impairment loss had been recognised. and the increase can be related objectively to an event occurring after the impairment loss was recognised, then the 3.17 Stated capital - Ordinary shares impairment loss is reversed, with the amount of the reversal Ordinary shares are classified as equity. recognised in profit or loss. However, any subsequent Incremental costs directly attributable recovery in the fair value of an impaired available for-sale to the issue of ordinary shares are equity security is recognized in other comprehensive income. recognised as a deduction from equity, Equity-accounted An impairment loss in respect of an equity-accounted net of any tax effects. Investees investee is measured by comparing the recoverable amount of the investment with its carrying amount. An impairment 3.18 Provisions loss is recognised in profit or loss. An impairment loss A provision is recognised if, as a result is reversed if there has been a favourable change in the of a past event, the Group has a estimates used to determine the recoverable amount. present legal or constructive obligation that can be estimated reliably, and it is 3.16.2 Non-financial assets probable that an outflow of economic At each reporting date, the Group reviews the carrying amounts of its non-financial benefits will be required to settle the assets (other than biological assets, investment property, inventories and deferred obligation. Provisions are determined tax assets) to determine whether there is any indication of impairment. If any such by discounting the expected future indication exists, then the asset’s recoverable amount is estimated. Goodwill is cash flows at a pre-tax rate that reflects tested annually for impairment. For impairment testing, assets are grouped together current market assessments of the time into the smallest group of assets that generates cash inflows from continuing use value of money and the risks specific to that are largely independent of the cash inflows of other assets or CGUs. Goodwill the liability. arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination. The recoverable 3.19 Leases amount of an asset or CGU is the greater of its value in use and its fair value less 3.19.1 Determining whether an costs to sell. Value in use is based on the estimated future cash flows, discounted arrangement contains a lease to their present value using a pre-tax discount rate that reflects current market At inception of an arrangement, assessments of the time value of money and the risks specific to the asset or the Group determines whether the CGU. An impairment loss is recognised if the carrying amount of an asset or CGU arrangement is or contains a lease. exceeds its recoverable amount. Impairment losses are recognised in profit or loss. At inception or on reassessment of They are allocated first to reduce the carrying amount of any goodwill allocated

C T HOLDINGS PLC 65 Annual Report 2018 | 2019 Notes to the Financial Statements

an arrangement that contains a lease, between the finance expense and the there is no quoted price in an active the Group separates payments and reduction of the outstanding liability. market, then the Group uses valuation other consideration required by the The finance expense is allocated to techniques that maximise the use of arrangement into those for the lease and each period during the lease term so as relevant observable inputs and minimise those for other elements on the basis to produce a constant periodic rate of the use of unobservable inputs. The of their relative fair values. If the Group interest on the remaining balance of the chosen valuation technique incorporates concludes for a finance lease that it is liability. all of the factors that market participants impracticable to separate the payments would take into account in pricing a reliably, then an asset and a liability 3.20 Operating profit transaction. If an asset or a liability are recognised at an amount equal to Operating profit is the result generated measured at fair value has a bid price the fair value of the underlying asset; from the continuing principal revenue and an ask price, then the Group subsequently, the liability is reduced as producing activities of the Group as well measures assets and long positions payments are made and an imputed as other income and expenses related at a bid price and liabilities and short finance cost on the liability is recognised to operating activities. Operating profit positions at an ask price. using the Group’s incremental borrowing excludes net finance costs, share of rate. profit of equity accounted investees and The best evidence of the fair value of a income taxes. financial instrument on initial recognition 3.19.2 Leased assets is normally the transaction price – i.e. Assets held by the Group under leases 3.21 Fair value measurement the fair value of the consideration given which transfer to the Group substantially ‘Fair value’ is the price that would or received. If the Group determines that all of the risks and rewards of ownership be received to sell an asset or paid the fair value on initial recognition differs are classified as finance leases. On to transfer a liability in an orderly from the transaction price and the fair initial recognition, the leased asset is transaction between market participants value is evidenced neither by a quoted measured at an amount equal to the at the measurement date in the price in an active market for an identical lower of its fair value and the present principal or, in its absence, the most asset or liability nor based on a valuation value of the minimum lease payments. advantageous market to which the technique for which any unobservable Subsequent to initial recognition, the Group has access at that date. inputs are judged to be insignificant asset is accounted for in accordance The fair value of a liability reflects its in relation to the measurement, then with the accounting policy applicable nonperformance risk. the financial instrument is initially to that asset. Assets held under other measured at fair value, adjusted to leases are classified as operating leases A number of Group’s accounting defer the difference between the fair and are not recognised in the Group’s policies and disclosures require the value on initial recognition and the statement of financial position. measurement of fair values, for both transaction price. Subsequently, that financial and non-financial assets and difference is recognised in profit or 3.19.3 Lease payments liabilities. The Group measures the loss on an appropriate basis over the Payments made under operating leases fair value of an instrument using the life of the instrument but no later than are recognised in profit or loss on a quoted price in an active market for when the valuation is wholly supported straight-line basis over the term of the that instrument. A market is regarded by observable market data or the lease. Lease incentives received are as active if transactions for the asset transaction is closed out. recognised as an integral part of the or liability take place with sufficient total lease expense, over the term of the frequency and volume to provide pricing lease. Minimum lease payments made information on an ongoing basis. If under finance leases are apportioned

C T HOLDINGS PLC Annual Report 2018 | 2019 66 4. New accounting standards 4.2. Changes in significant application date of 1 April 2018. The issued but not effective as at accounting policies Group has taken an exception not to reporting date and Changes in This note explains the impact of the restate comparative information for prior significant accounting policies adoption of Financial Instruments periods with respect to classification 4.1 New accounting standards (SLFRS 9) and Revenue from Contracts and measurement requirements. issued but not effective as at reporting with Customers (SLFRS 15) on the date Group’s financial statements. The 4.2.2. SLFRS 15 – Revenue from The Institute of Chartered Accountants Group has initially applied SLFRS 15 Contracts with Customers of Sri Lanka has issued new Sri Lanka (Refer 4.2.1) and SLFRS 9 (Refer 4.2.2) SLFRS 15 supersedes LKAS 11 Accounting Standard 16 – Leases from 1 April 2018. A number of other Construction Contracts, LKAS 18 which has been effective after the period new standards are also effective from Revenue and related interpretations and end of 31 March 2019. Accordingly 1 April 2018 but they do not have a it applies, with limited exceptions, to it has not been applied in preparing material effect on the Group’s financial all revenue arising from contracts with these Financial Statements. The extent statements. its customers. SLFRS 15 establishes a of the impact of this standard to the five-step model to account for revenue Financial Statements has not been fully Due to the transition methods chosen arising from contracts with customers. determined as at 31 March 2019. by the Group in applying these The standard requires entities to standards, comparative information exercise judgement, taking into SLFRS 16 – Leases throughout these Financial Statements consideration all of the relevant facts SLFRS 16 eliminates the current dual has not been restated to reflect the and circumstances when applying each accounting model for lessees which requirements of the new standards step of the model to contracts with their distinguishes between On-Balance and separately presenting impairment customers. The standard also specifies Sheet finance leases and Off-Balance loss on trade receivables and contract the accounting for the incremental Sheet operating leases. Instead there assets. costs of obtaining a contract and will be a single On-Balance Sheet the costs directly related to fulfilling a accounting model that is similar to 4.2.1. SLFRS 9 – Financial contract. The Group adopted SLFRS current finance lease accounting. Instruments 15 using the full retrospective method SLFRS 9 Financial Instruments replaces of adoption. Based on the assessment SLFRS 16 will be applicable for the LKAS 39 Financial Instruments: performed the Group concluded that financial periods beginning on or after1 Recognition and Measurement, bringing SLFRS 15 does not have a material January 2019. The Company is in the together all three aspects of the impact on Group’s consolidated financial process of assessing the impact on the accounting for financial instruments: statements. adoption of the standard. classification and measurement; impairment; and hedge accounting. With the exception of hedge accounting, which the Group applied prospectively, The Group has applied SLFRS 9 retrospectively, with the initial

C T HOLDINGS PLC 67 Annual Report 2018 | 2019 Notes to the Financial Statements

5. Financial risk management 5.1. Credit risk risk management is to manage and The Group has exposure to the Credit risk is the risk of financial loss to control market risk exposures within following risks from its use of financial the Group if a customer or counter party acceptable parameters, while optimizing instruments: to a financial instrument fails to meet the return. its contractual obligations and arises • Credit risk principally from the Group’s receivables 5.4. Currency risk • Liquidity risk from customers. The Group is exposed Currency risk is the risk that the value of to credit risk on trade receivables and a financial instrument will fluctuate due • Market risk other receivables, due from related party to a change in foreign exchange rates. • Operational risk and bank balances. 5.5. Operational risk This note presents information about a. Trade and other receivables Operational risk is the risk of direct or the Group’s exposure to each of the The creditworthiness of each customer indirect loss arising from a wide variety above risks, the Group’s objectives, is evaluated prior to sanctioning credit of causes associated with the Group’s policies and processes for measuring facilities. Appropriate procedures for processes, personnel, technology and managing risk, and the Group’s follow-up and recovery are in place to and infrastructure, and from external management of capital. Risk monitor credit risk. factors other than credit, market and management framework The Board liquidity risks such as those arising of Directors has overall responsibility 5.2. Liquidity risk from legal and regulatory requirements for the establishment and oversight Liquidity risk is the risk that the Group and generally accepted standards of of the Company’s risk management will encounter difficulty in meeting the corporate behaviour. Operational risks framework. The Group’s risk obligations associated with its financial arise from all of the Group’s operations. management policies are established liabilities that are settled by delivering The Group’s objective is to manage to identify and analyze the risks faced cash or another financial asset. The operational risk so as to balance the by the Group, to set appropriate risk Group’s approach to managing liquidity avoidance of financial losses and limits and controls, and to monitor is to ensure, as far as possible, that it damage to the Group’s reputation with risks and adherence to limits. Risk will always have sufficient liquidity to overall cost effectiveness and to avoid management policies and systems are meet its liabilities when due, under both control procedures that restrict initiative reviewed regularly to reflect changes normal and stressed conditions without and creativity. The primary responsibility in market conditions and the Group’s incurring unacceptable losses or risking for the development and implementation activities. The Group, through its damage to the Group’s reputation. of controls to address operational training and management standards risk is assigned to management. This and procedures, aims to develop a 5.3. Market risk responsibility is supported by the disciplined and constructive control Market risk is the risk that changes in development of overall Group standards environment in which all employees market prices, such as foreign exchange for the management of operational risk understand their roles and obligations. rates and interest rates will affect the in the following areas: Group’s income. The objective of market

C T HOLDINGS PLC Annual Report 2018 | 2019 68 • Requirements for appropriate segregation of duties, including the independent authorisation of transactions; • Requirements for the reconciliation and monitoring of transactions; • Compliance with regulatory and other legal requirements; • Documentation of controls and procedures; • Development of contingency plans; • Training and professional development; • Ethical and business standards; • Risk mitigation, including insurance where this is effective. a. Cash and cash equivalents Cash and cash equivalents comprise cash balances and call deposits with maturities of three months or less from the acquisition date that are subject to an insignificant risk of changes in their fair value, and are used by the Group in the management of its short-term commitments.

The Cash Flow Statement has been prepared using the “Indirect method” of preparing cash flows in accordance with the LKAS 07 - Statement of Cash Flows.

C T HOLDINGS PLC 69 Annual Report 2018 | 2019 Notes to the Financial Statements

6. Revenue Accounting policy: Please refer note 3.4. In thousands of rupees Group Company For the year ended 31st March 2019 2018 2019 2018

In thousands of rupees The following is an analysis of the Group’s revenue Sales of goods 94,662,990 91,293,127 - - Rendering of services 353,531 336,159 - - Investment property rentals 530,839 505,197 - - 95,547,360 92,134,483 - -

7. Other income In thousands of rupees Group Company For the year ended 31st March 2019 2018 2019 2018

In thousands of rupees Gain on sale of property, plant and equipment 43,531 1,024,583 - - Amortisation of deferred income 11,481 23,447 - - Merchandising income 1,808,454 1,796,825 - - Change in fair value of investment property (refer note 15) 368,101 371,587 22,971 112,743 Rental income 191,721 94,292 24,081 23,831 Sundry Income 197,763 177,550 - - 2,621,051 3,488,284 47,052 136,574

8. Results from operating activities In thousands of rupees Group Company For the year ended 31st March 2019 2018 2019 2018

8.1 Expenses by nature The following items have been included in results from operating activities: Employee costs (refer note 8.2) 6,832,693 6,112,489 61,767 48,050 Depreciation of property, plant and equipment 2,517,323 2,248,973 839 2,681 Amortisation of intangible assets 96,721 109,796 - - Directors’ emoluments 453,082 324,556 32,484 30,283 Fees payable to the company’s auditor (refer note 8.3) 13,362 26,178 961 1,039 Impairment loss on investments in subsidiary - - 26,268 13,355 Impairment of trade and other receivables 48,318 (10,341) - - Impairment of inventories (6,428) 35,464 - -

C T HOLDINGS PLC Annual Report 2018 | 2019 70 In thousands of rupees Group Company For the year ended 31st March 2019 2018 2019 2018

8.2 Employee costs Salaries, wages and other related expenses 5,996,552 5,248,949 49,036 38,017 Equity-settled share-based payments 94,691 148,063 2,062 3,225 Defined benefit plan cost - retirement benefit obligation 203,536 188,773 4,731 2,498 Defined contribution plan costs - EPF & ETF 537,914 526,704 5,938 4,310 6,832,693 6,112,489 61,767 48,050

8.3 Fees payable to the company’s auditor Audit and audit related expenses 12,270 20,594 620 560 Non-audit services 1,092 5,584 341 479 13,362 26,178 961 1,039

9. Net finance income / (cost) Accounting policy: Please refer note 3.2, 3.7 and 3.15. In thousands of rupees Group Company For the year ended 31st March 2019 2018 2019 2018

9.1 Recognised in profit or loss 9.1.1 Finance income Interest income 232,713 223,884 16,481 17,821 Net foreign exchange gain 4,140 3,212 - - Dividends from equity investments 52,440 33,310 421,969 1,087,646 Total finance income 289,293 260,406 438,450 1,105,467

9.1.2 Finance costs Finance cost on bank loans (1,521,982) (1,358,409) - - Finance cost on overdraft facilities (192,452) (221,205) (82) (186) Total finance costs (1,714,434) (1,579,614) (82) (186) Net finance income / (costs) recognised in profit or loss (1,425,141) (1,319,208) 438,368 1,105,281

9.2 Recognised in other comprehensive income Net change in fair value of investments at fair value through other comprehensive income (FVOCI) (72,453) - (65,565) - Net change in fair value of available-for-sale financial assets - 10,686 - 9,538 Net change in fair value of available-for-sale financial assets reclassified to profit or loss - 29,742 - - (72,453) 40,428 (65,565) 9,538

C T HOLDINGS PLC 71 Annual Report 2018 | 2019 Notes to the Financial Statements

10. Income tax expense Accounting policy: Please refer accounting policies in note 3.8. In thousands of rupees Group Company For the year ended 31st March 2019 2018 2019 2018

10.1. Amounts recognised in profit or loss Current tax expenses Current tax on profits for the year 1,542,411 1,783,589 5,669 18,596 Current tax on profits in respect of prior years (102,143) (70,755) 2,234 - 1,440,268 1,712,834 7,903 18,596

Deferred tax expenses Deferred tax on profits for the year 65,424 340,243 - - Deferred tax on profits in respect of prior years (1,455) (1,285) - - 63,969 338,958 - - Total income tax expense recognised in profit or loss 1,504,237 2,051,792 7,903 18,596

10.2. Amounts recognised in other comprehensive income Re-measurement of obligation on defined benefit plan 1,408 (17,945) - - Share of other comprehensive income of equity accounted investee - 6,009 - - Total income tax expense recognised in other comprehensive income 1,408 (11,936) - -

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

(b) Companies liable to income tax other than at standard rate (i) Part of the profits of Cargills (Ceylon) PLC is taxed at 40%. (ii) In accordance with the Inland revenue Act No. 10 of 2006 and subsequent amendments thereto, the income of Cargills Quality Confectioneries (Private) Limited is exempt from Income Tax until the year of assessment 2017/18. (iii) Under the Inland Revenue Act No. 10 of 2006 and subsequent amendments thereto, Cargills Quality Dairies (Private) Limited, Cargills Quality Foods Limited, Cargills Agrifoods Limited and Kotmale Dairy Products (Private) Limited are subject to a concessionary tax rate of 10%. However, as the Department of Inland revenue is contesting the income tax exemptions claimed, provisions have been made for income tax at the normal rate for the financial years ended 31st March 2012 to 31st March 2019, although tax returns continue to be filed based on concessionary tax rate.

C T HOLDINGS PLC Annual Report 2018 | 2019 72 10.4. Reconciliation of effective tax In thousands of rupees Group Company For the year ended 31st March 2019 2018 2019 2018

10.4.1. Reconciliation of effective tax - In thousands of rupees Profit before tax 3,888,474 5,791,257 362,777 1,138,168 Income tax using the Company’s standard tax rate 1,088,773 1,621,552 101,578 318,687 Effect of different tax rate [Refer 10.4.1(a)] 22,899 (3,472) - - Inter-company entries 402,089 314,811 - - Non-deductible expenses 1,133,720 1,234,480 646 765 Deductible expenses (962,372) (1,335,327) (11,052) (4,991) Tax-exempt income (203,292) (423,105) (86,283) (308,796) Other sources of income 60,196 106,728 4,615 4,990 Allowable deductions out of un-recognised tax losses (20,815) (4,010) (9,504) (3,729) Current year losses 15,544 9,727 - - Tax on dividend received 5,669 262,210 5,669 11,670 1,542,411 1,783,594 5,669 18,596 Change in un-recognised temporary differences 63,969 340,243 - - Income tax on profit in respect of prior years (102,143) (72,045) 2,234 - Income tax expense recognised in profit or loss 1,504,237 2,051,792 7,903 18,596

(a) Effect of different tax rate Income tax @ 40% 22,899 263 - - Income tax @ 12% - 2,495 - - Income tax @ 10% - 714 - - 22,899 3,472 - -

C T HOLDINGS PLC 73 Annual Report 2018 | 2019 Notes to the Financial Statements

In thousands of rupees Group Company For the year ended 31st March 2019 2018 2019 2018

10.4.2. Reconciliation of effective tax - In percentages Income tax using the Company’s standard tax rate 28.00 28.00 28.00 28.00 Effect of different tax rate [Refer 10.4.2(a)] 0.59 (0.06) - - Inter-company entries 10.34 5.44 - - Non-deductible expenses 29.16 21.32 0.18 0.07 Deductible expenses (24.75) (23.06) (3.05) (0.44) Tax-exempt income (5.23) (7.31) (23.78) (27.13) Other sources of income 1.55 1.84 1.27 0.44 Allowable deductions out of un-recognised tax losses (0.54) (0.07) (2.62) (0.33) Current year losses 0.40 0.17 - - Tax on dividend received 0.15 - 1.56 - 39.67 4.53 1.56 1.03 Change in un-recognised temporary differences 1.65 5.88 - - Income tax on profit in respect of prior years (2.63) (1.24) 0.62 - Income tax expense recognised in profit or loss 38.69 9.17 2.18 1.03

(a) Effect of different tax rates Income tax @ 40% 0.59 0.01 - - Income tax @ 12% - 0.04 - - Income tax @ 10% - 0.01 - - 0.59 0.06 - -

10.5. Deferred tax (assets) / liabilities - Group 10.5.1. Movement in deferred tax (assets) / liabilities Movement in net balance Classified as Recognised in As at 1st profit or loss Other As at 31st Deferred Deferred April 2018 comprehensive March 2019 tax liabilities tax assets

For the year ended 31st March 2018 Accelerated tax depreciation [refer note 10.5.1(i)] 1,950,257 330,583 - 2,280,840 2,280,840 - Fair value gains 71,194 - - 71,194 71,194 - Retirement benefit obligation (236,644) (32,280) (17,945) (286,869) - (286,869) Tax losses [refer note 10.5.1(ii)] (304,436) 93,988 - (210,448) - (210,448) Decrease in future tax rates (3,874) - - (3,874) - (3,874) Provisions (176,504) (194,123) - (370,627) - (370,627) Other (62,142) 140,790 - 78,648 78,648 - Tax assets / (liabilities) before set-off 1,237,851 338,958 (17,945) 1,558,864 2,430,682 (871,818) Set-off of tax - - - - (864,817) 864,817 Net tax assets / (liabilities) 1,237,851 338,958 (17,945) 1,558,864 1,565,865 (7,001)

C T HOLDINGS PLC Annual Report 2018 | 2019 74 Movement in net balance Classified as Recognised in As at 1st profit or loss Other As at 31st Deferred Deferred April 2018 comprehensive March 2019 tax liabilities tax assets

For the year ended 31st March 2019 Accelerated tax depreciation [refer note 10.5.1(i)] 2,280,840 175,305 - 2,456,145 2,456,145 - Fair value gains 71,194 - - 71,194 71,194 - Retirement benefit obligation (286,869) (34,530) (1,411) (322,810) - (322,810) Tax losses [refer note 10.5.1(ii)] (210,448) (24,648) - (235,096) - (235,096) Decrease in future tax rates (3,874) - - (3,874) - (3,874) Provisions (370,627) (63,555) - (434,182) - (434,182) Other 78,648 11,397 - 90,045 90,045 - Tax assets / (liabilities) before set-off 1,558,864 63,969 (1,411) 1,621,422 2,617,384 (995,962) Set-off of tax - - - - (990,687) 990,687 Net tax assets / (liabilities) 1,558,864 63,969 (1,411) 1,621,422 1,626,697 (5,275)

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

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

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

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

The break down of the tax effect of un-accounted deferred tax assets is given below; In thousands of rupees Group Company For the year ended 31st March 2019 2018 2019 2018

Deductible temporary differences (12,909) (6,309) 3,384 5,038 Tax losses 642,055 596,943 106,971 116,475 629,146 590,634 110,355 121,513

C T HOLDINGS PLC 75 Annual Report 2018 | 2019 Notes to the Financial Statements

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

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

Statement of profit or loss and other comprehensive income Group Company For the year ended 31st March 2019 2018 2019 2018

Unrecognised through profit or loss 74 1,063 5 358 Unrecognised through other comprehensive income - 987 - - 74 2,050 5 358

Statement of financial position Group Company As at 31st March 2019 2018 2019 2018

Unrecognised through profit or loss 1,137 1,063 363 358 Unrecognised through other comprehensive income 987 987 - - 2,124 2,050 363 358

10.5.6 Current tax treatments "The income tax exemption claimed under the Inland Revenue Act No. 10 of 2006 is being contested by the Department of Inland Revenue. The contingent liability on potential income tax payments is as follows:

Cargills Agrifoods Limited - Rs. 16.6 Mn (2018: Rs. 34.8 Mn), Cargills Quality Dairies (Private) Limited - Rs. 40.3 Mn (2018: Rs. 208.8 Mn), Cargills Quality Foods Limited - Rs. 139.5 Mn (2018: Rs. 122.6 Mn) and Kotmale Dairy Products (Private) Limited - Rs. 43.81 Mn (2018: Rs. 76.94 Mn). Having sought professional advice, the Management is confident that the tax exemptions are applicable and as such no liabilities would arise.

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

C T HOLDINGS PLC Annual Report 2018 | 2019 76 11. Earnings per share 11.1 Basic earnings per share Earnings per share is calculated by dividing the profit attributable to equity holders of the Company by weighted average number of ordinary shares outstanding during the year.

Group Company For the year ended 31st March 2019 2018 2019 2018

Basic earning per share in rupees 8.16 12.90 1.76 5.56

In thousands of rupees Profit for the year attributable to owners of the Company 1,642,624 2,597,342 354,874 1,119,572

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

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

12. Dividends per share For the year ended 31st March 2019 For the year ended 31st March 2018 Date of Dividend Dividend Date Dividend Dividend payment per share (In thousands payment per share (In thousands Rs. of rupees) Rs. of rupees)

First interim 29-Nov-18 1.80 362,533 29-Sep-17 1.80 329,575 Second interim - - - 14-Mar-18 3.70 677,460 Final (proposed) 7-Aug-19 3.70 745,206 - - - 5.50 1,107,739 5.50 1,007,035

C T HOLDINGS PLC 77 Annual Report 2018 | 2019 Notes to the Financial Statements

13. Property, plant & equipment Accounting policy: Please refer note 3.11, 3.16.2 and 3.19.2.

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

Cost / Valuation As at 1st April 2017 10,407,063 2,255,251 5,271,545 15,148,861 1,251,635 258,262 2,141,986 36,734,603 Additions 249,598 250,743 2,111,956 2,770,468 108,299 9,985 (699,228) 4,801,821 Revaluation 608,149 ------608,149 Disposals - - - (25,617) (43,842) - - (69,459) Transfers 144,568 (680,888) 1,274,532 (146,091) (15,645) (174,216) (57,546) 344,714 As at 31st March 2018 11,409,378 1,825,106 8,658,033 17,747,621 1,300,447 94,031 1,385,212 42,419,828

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

Accumulated depreciation and impairment losses As at 1st April 2017 - 702,986 3,265,488 8,420,256 870,056 168,410 - 13,427,196 Charge for the year - 78,173 615,906 1,405,291 139,261 10,342 - 2,248,973 Disposals - - - (7,638) (43,513) - - (51,151) Transfers - 10,052 77,094 217,089 30,310 (134,358) - 200,187 As at 31st March 2018 - 791,211 3,958,488 10,034,998 996,114 44,394 - 15,825,205

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

Carrying Value As at 31st March 2018 11,409,378 1,033,895 4,699,545 7,712,623 304,333 49,637 1,385,212 26,594,623 As at 31st March 2019 11,908,467 1,051,162 5,561,849 8,078,528 344,662 39,252 2,388,534 29,372,454

C T HOLDINGS PLC Annual Report 2018 | 2019 78 Company Improvements Plant & Motor Furniture Total to leasehold machinery vehicles & fittings In thousands of rupees buildings

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

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

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

As at 1st April 2018 2,735 2,412 40,255 - 45,402 Charge for the year 73 - 766 3 839 As at 31st March 2019 2,808 2,412 41,021 3 46,241

Carrying Value As at 31st March 2018 2,119 5 769 - 2,893 As at 31st March 2019 2,046 5 3 74 2,131

C T HOLDINGS PLC 79 Annual Report 2018 | 2019 Notes to the Financial Statements

13.2 Details of lands as at 31st March

Location Valuation Land extent Building No. of In thousands of rupees technique area (Sq. buildings Fair value Change in fair value ft.) 2019 2018 2019 2018 Company: C T Holdings PLC Kandy Technique (1) 170 Perches 9,650 4 537,000 537,000 - 101,500 Negombo Technique (1) 91 Perches 17,500 1 271,125 271,125 - 30,875 Bandarawela Technique (2) 2.8 Acres 30,600 4 607,600 607,600 - (20,400) Nuwara Eliya Technique (1) 60 Perches 6,500 3 144,568 144,568 - - Company: Cargills (Ceylon) PLC Colombo 01 Technique (1) 141 Perches 124,215 1 2,266,075 2,266,075 - 14,075 Colombo 02 Technique (1) 81.5 Perches 20,970 2 774,630 774,630 - 53,030 Canal Row, Colombo 01. Technique (2) 15 Perches 12,300 1 284,897 284,897 - 44,397 Dematagoda Technique (1) 84 Perches 37,967 1 288,792 288,792 - 13,000 Company: Cargills Foods Company (Private) Limited Kandy Technique (2) 88 Perches 25,174 1 1,311,204 1,311,204 - 22,028 Maharagama Technique (1) 145 Perches 15,827 1 508,550 508,550 - 29,050 Nuwara Eliya Technique (1) 57 Perches 9,617 1 212,501 212,501 - 14,619 Mattakuliya (111) Technique (2) 330 Perches 80,967 2 719,033 719,033 - 8,662 Kohuwala Technique (1) 29 Perches 6,225 1 104,600 104,600 - 4,600 Mattakuliya (141) Technique (1) 288 Perches 44,469 4 446,000 446,000 - 6,800 Gampaha Technique (1) 82.6 Perches 39,565 1 123,900 123,900 - 51,725 Moratuwa Technique (1) 78.6 Perches - - 250,103 250,103 - 503 Ingiriya (A,C,D,B1) Technique (1) 26 Acres - - 243,000 243,000 - (6,598) Negombo Cost 28.8 Acres - - 495,685 - - - Company: Cargills Quality Foods Limited Mattakuliya Technique (1) 1.3 Acres 16,517 - 363,400 363,400 - 21,400 Ja - Ela Technique (1) 5.1 Acres 38,381 - 319,575 319,575 - 28,105 Ja - Ela Technique (1) 4 Acres 28,976 - 93,050 93,050 - 20,650 Company: Cargills Agrifoods Limited Katana Technique (1) 11.3 Acres 66,624 4 314,280 314,280 - 45,280 Company: Millers Limited Kelaniya Technique (1) 1.5 Acres 55,770 2 214,500 214,500 - 29,250 Company: C P C Lanka Limited Katoolaya Estate, Technique (1) 4 Acres 16,706 1 14,350 14,350 - 2,250 Thawalantenne.

C T HOLDINGS PLC Annual Report 2018 | 2019 80 Location Valuation Land extent Building No. of In thousands of rupees technique area (Sq. buildings Fair value Change in fair value ft.) 2019 2018 2019 2018 Company: Kotmale Dairy Products (Private) Limited Mulleriyawa Technique (1) 1.7 Acres 28,862 3 124,430 124,430 - 45,930 Bogahawatta Technique (1) 1 Acres 8,764 6 21,600 21,600 - 1,600 Kuduoya Estate, Technique (1) 17.4 Acres 12,479 4 56,000 56,000 - 4,601 Ruwanpura, Hatton. Company: Cargills Quality Dairies (Private) Limited Mirigama, Baduragoda. Technique (1) 49.8 Perches - - 7,000 7,000 - 1,000 Mirigama, Baduragoda Cost 38.5 Perches - - 3,404 - - - Company: The Empire Investments Company (Private) Limited Bandarawela Technique (1) 85 Perches 6,345 1 341,865 341,865 - (5,135) Katubedda Technique (1) 1.15 Acres 3,500 - 445,750 445,750 - 45,352 Total 11,908,467 11,409,378 - 608,149

Change in fair value is made up as follows Amounts recognised in other comprehensive income - 653,499 Amounts recognised in profit or loss - (45,350) Total - 608,149

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

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

C T HOLDINGS PLC 81 Annual Report 2018 | 2019 Notes to the Financial Statements

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

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

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

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

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

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

13.4 If revalued freehold land recorded under property, plant and equipment were stated on the historical cost basis, the carrying amounts would be as follows: In thousands of rupees Group As at 31st March 2019 2018

Freehold land 6,812,288 6,313,199

13.5 Leased assets capitalised in property, plant and equipment In thousands of rupees Group Company As at 31st March 2019 2018 2019 2018

Improvements to leasehold buildings Capitalised 10,080,880 8,658,033 - - Accumulated Amortisation (4,519,031) (3,958,488) - - Carrying value 5,561,849 4,699,545 - -

13.6 Security The details of assets mortgaged for banking facilities obtained have been given in the note 25.4 to the Financial Statements.

C T HOLDINGS PLC Annual Report 2018 | 2019 82 13.7 Details on classes of assets (a) Land & buildings consist of freehold land, road ways & buildings. (b) Improvements to leasehold buildings include the cost of civil work incurred in setting up new outlets on leasehold premises. (c) Furniture & fittings consist of tools, implements, furniture & fittings, office & other equipment. (e) Property, plant and equipment under construction consists of expenditure incurred on projects where operations had not commenced as at the reporting date.

13.8 Other information Property, plant and equipment of the Group and the Company included: In millions of rupees Group Company As at 31st March 2019 2018 2019 2018

Fully depreciated assets 4,111 3,210 33 33

On assessment of the fair value of the Company's assets, it has been identified that there is no permanent impairment of property, plant and equipment which requires provision in the Financial Statements.

14. Prepaid lease rentals to acquire rights to use lands Accounting policy: Please refer Note 3.19.3.

14.1 Reconciliation of carrying amount In thousands of rupees Group Company As at 31st March 2019 2018 2019 2018

Cost As at 1st April 201,572 201,572 - - Additions 50,025 - - - As at 31st March 251,597 201,572 - -

Accumulated amortisation As at 1st April 21,341 15,295 - - Change for the year 6,049 6,046 - - As at 31st March 27,390 21,341 - - 224,207 180,231 - -

Carrying value Current portion 6,032 6,032 - - Non-current portion 218,175 174,199 - - 224,207 180,231 - -

C T HOLDINGS PLC 83 Annual Report 2018 | 2019 Notes to the Financial Statements

15. Investment Property Accounting policy: Please refer note 3.13.

15.1 Reconciliation of carrying amount In thousands of rupees Group Company As at 31st March 2019 2018 2019 2018

As at 1st April 7,607,025 10,524,586 1,560,293 1,447,550 Improvements during the year 327 - - - Re-classification from / (to) property, plant and equipment - (144,568) - - Transfer to profit or loss - - - - Change in fair value 368,101 371,587 22,971 112,743 Disposal - (3,144,580) - - At 31st March 7,975,453 7,607,025 1,583,264 1,560,293

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

15.2 Measurement of fair values (a) Valuation process The valuations of investment properties for the reporting period were performed by Mr. Tissa Weeratne, Chartered Valuation Surveyor, UK & Fellow, Institute of Valuers of Sri Lanka, an accredited independent valuer with a recognised and relevant professional qualification and with recent experience in the locations and categories of the investment property being valued. The valuation models applied are in accordance with those recommended by the International Valuation Standards Committee and are consistent with the principles in SLFRS 13. For all investment properties, their current use equates to the highest and best use and changes in Level 2 and 3 fair values are reviewed annually at each reporting date.

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

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

C T HOLDINGS PLC Annual Report 2018 | 2019 84 (c) Fair value hierarchy The fair value measurement for all the investment properties are categorised as a Level 3 fair value based on the inputs to the valuation technique used. A significant increase in the market value per perch, capitalisation rate and market rent used in arriving at fair value would result in a significant increase in fair value, and vice versa. There has been no change to the valuation technique during the year.

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

Group Description of the Valuation Land extent Building No. of In thousands of rupees property technique area buildings Fair value Change in fair value (Sq. ft.) 2019 2018 2019 2018 Company: C T Holdings PLC Land - Nuwara Eliya Technique (1) 60 Perches 6,500 3 - - - 5,268 Company: Cargills (Ceylon) PLC Land - Colombo 02 Technique (1) 78 Perches 5,146 1 690,216 666,855 23,361 41,912 Commercial property - Jaffna Technique (2) Leasehold 99,164 1 196,244 188,646 7,271 (7,522) Company: Millers Limited Bare land - Nittambuwa Technique (1) 112 Perches - - 134,775 128,450 6,325 9,575 Company: C T Land Development PLC Commercial property - Technique (2) 257 Perches 277,514 - 3,702,128 3,505,446 196,682 198,683 Colombo 04 Company: C T Real Estate (Private) Limited Bare land Piliyandala Technique (1) 114 Perches - - 102,600 79,800 22,800 8,600 Commercial property - Technique (2) 154.9 23,985 2 117,710 114,418 3,292 (1,639) Piliyandala Perches Company: C T Properties Lakeside (Private) Limited Bare land - Boralesgamuwa Technique (1) 43 Acres 11,400 1 1,200,000 1,200,000 - - Company: C T Properties G S (Private) Limited Bare land - Kotahena Technique (1) 199.6 Acres - - 1,468,530 1,398,600 69,930 99,900 Company: Frederick North Hotel Company (Private) Limited Bare land - Boralasgamuwa Technique (1) 2.5 Acres 23,168 4 363,250 324,810 38,440 16,810 Total 7,975,453 7,607,025 368,101 371,587

C T HOLDINGS PLC 85 Annual Report 2018 | 2019 Notes to the Financial Statements

Company Description of the Valuation Land extent Building No. of In thousands of rupees property technique area (Sq. ft.) buildings Fair value Change in fair value 2019 2018 2019 2018 Land - Kandy Technique (1) 170 Perches 9,650 4 558,900 537,000 21,900 90,000 Land - Negombo Technique (1) 91.0 Perches 17,500 1 277,300 271,125 6,175 30,875 Commercial property Technique (2) 2.8 Acres 30,600 4 597,240 607,600 (10,360) (13,400) - Bandarawela Land - Nuwara Eliya Technique (1) 60 Perches 6,500 3 149,824 144,568 5,256 5,268 Total 1,583,264 1,560,293 22,971 112,743

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

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

(f) Income and expense During the year ended 31st March 2019 Rs. 40.83 Mn (2018: 41.78 Mn) rental and ancillary income from investment properties was recognised in the Group profit or loss. Direct operating expenses, including repairs and maintenance, arising from investment property that generated rental income amounted to Rs. 36.99 Mn (2018: Rs. 44.68 Mn). The Group did not incur any direct operating expenses arising from investment properties that did not generate rental income (2018: Nil).

(g) Restrictions and obligations As at 31st March 2019, there were no restrictions on the realisability of investment property or the remittance of income and proceeds of disposal (2018: Rs. nil) except for the restriction mentioned as note (i) below. There are no obligations to construct or develop the Group’s residential or development land investment property or has no obligation to complete any construction of any property as at the reporting date. i. Restrictions on realisability of bare land located at Boralesgamuwa Sri Lanka Land Reclamation and Development Corporation (SLRDC) has issued an acquisition notice for this land under the Weras Reservoir Project on 29th March 2013. Due to impracticability of estimating the compensation to be received from SLRDC or fair value of the land as at 31st March 2019, the said land is stated at its previous revalued amount in the Financial Statements.

C T HOLDINGS PLC Annual Report 2018 | 2019 86 16. Intangible assets and goodwill Accounting policy: Please refer note 3.12 and 3.16.2.

16.1 Reconciliation of carrying amount Group Company In thousands of rupees Goodwill Trademarks Computer Total Goodwill Total

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

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

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

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

Net carrying value As at 31st March 2018 1,251,481 109,450 149,657 1,510,588 688,467 688,467 As at 31st March 2019 1,251,481 140,603 225,042 1,617,126 688,467 688,467

C T HOLDINGS PLC 87 Annual Report 2018 | 2019 Notes to the Financial Statements

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

In thousands of rupees Group As at 31st March 2019 2018

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

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

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

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

C T HOLDINGS PLC Annual Report 2018 | 2019 88 17 . Investments in subsidiaries Accounting policy: Please refer note 3.1.

17.1 Reconciliation of carrying amount In thousands of rupees Group Company As at 31st March 2019 2018 2019 2018

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

Less: Provision for impairment As at 1st April - - (478,065) (464,710) Impairment recognised - - (26,268) (13,355) As at 31st March - - (504,333) (478,065) Net carrying amount - - 2,175,625 2,201,893

17.2 Breakdown of the cost by investment Group Company Principal Name of the investee activity Ownership interest Total cost of investment Ownership interest Total cost of investment and voting power (In thousands of rupees) and voting power (In thousands of rupees) As at 31st March 2019 2018 2019 2018 2019 2018 2019 2018 Quoted Intermediary Cargills (Ceylon) PLC investment 70.20% 70.20% 168,763 168,763 70.20% 70.20% 168,763 168,763 holding C T Land Development Real estate 67.86% 67.86% 513,913 513,913 67.86% 67.86% 513,913 513,913 PLC Kotmale Holdings PLC FMCG 69.86% 69.86% 1,964,833 1,964,833 - - - - 2,647,509 2,647,509 682,676 682,676 Un-quoted C T Properties Limited Real estate 92.03% 92.03% 2,488,925 2,488,925 73.61% 73.61% 1,831,850 1,831,850 Ceylon Theatres Entertainment 85.54% 85.54% 300,432 300,432 55.00% 55.00% 165,432 165,432 (Private) Limited Cargills Quality Foods FMCG 70.20% 70.20% 1,193,453 1,193,453 - - - - Limited Cargills Agrifoods FMCG 70.20% 70.20% 45,630 45,630 - - - - Limited C P C Lanka Limited FMCG 70.20% 70.20% 14,200 14,200 - - - - Cargills Quality Diaries FMCG 70.20% 70.20% 75,000 75,000 - - - - (Private) Limited Cargills Distributors FMCG 70.20% 70.20% 50,261 50,261 - - - (Private) Limited -

C T HOLDINGS PLC 89 Annual Report 2018 | 2019 Notes to the Financial Statements

Group Company Principal Name of the investee activity Ownership interest Total cost of investment Ownership interest Total cost of investment and voting power (In thousands of rupees) and voting power (In thousands of rupees) As at 31st March 2019 2018 2019 2018 2019 2018 2019 2018 Cargills Food

Processors (Private) Restaurants 70.20% 70.20% 221,500 221,500 - - - - Limited Cargills Food Services Restaurants 70.20% 70.20% 213,500 213,500 - - - - (Private) Limited Millers Limited R & WD 70.20% 70.20% 300,000 300,000 - - - - Cargills Foods Company (Private) R & WD 64.58% 64.58% 475,000 475,000 - - - - Limited Cargills Quality

Confectioneries FMCG 70.20% 70.20% - - - - 1,535,547 1,445,547 (Private) Limited Dawson Office Complex (Private) Real estate 70.20% 70.20% 101 101 - - - - Limited Cargills Frozen FMCG 70.20% 70.20% - - Products (Pvt) Limited 50,250 50,250 - - Ceylon Agro

Development FMCG 70.20% 70.20% - - 160,019 160,019 - - Company(Pvt) Ltd C T Property Management Real estate 92.03% 92.03% - - - - - Company(Private) - Limited C T Real Estate Real estate 92.03% 92.03% - - - (Private) Limited - - - C T Properties

Lakeside (Private) Real estate 92.03% 92.03% ------Limited C T Properties GS (Pvt) Real estate 92.03% 92.03% - - Ltd 615,446 615,446 - - Kotmale Products FMCG 69.86% 69.86% - - Limited 185,400 185,400 - - Kotmale Milk Foods FMCG 69.86% 69.86% - - - Limited - - - Kotmale Dairy Products FMCG 69.86% 69.86% 13,030 13,030 - - (Private) Limited - - Kotmale Milk Products FMCG 69.86% 69.86% - - Limited - - - - Frederick North Hotel Real estate 70.20% 70.20% 311,000 311,000 - - Company Limited - - The Empire Investments Real estate 70.20% 70.20% 776,000 776,000 - - - - Company(Private) Limited 9,024,694 8,934,694 1,997,282 1,997,282

11,672,203 11,582,203 2,679,958 2,679,958

C T HOLDINGS PLC Annual Report 2018 | 2019 90 17.2.1 Composition of the Group Information about the composition of the Group at the end of the reporting period is as follows: Number of wholly Number of non wholly owned subsidiaries owned subsidiaries In thousands of rupees 2019 2018 2019 2018

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

17.3. Non-controlling interest 17.3.1 Details of non-wholly owned subsidiaries that have material non-controlling interests (a) Summarised financial information The summarised financial information below represents amounts before intra-group eliminations. In thousands of rupees Cargills C T Land (Ceylon) PLC Development PLC As at 31st March 2019 2018 2019 2018

Assets Current assets 21,486,371 19,115,574 490,567 326,668 Non-current assets 36,642,556 33,676,707 4,249,510 4,027,301 Total assets 58,128,927 52,792,281 4,740,077 4,353,969

Liabilities Current liabilities 34,219,401 30,523,915 52,602 64,155 Non-current liabilities 5,966,625 5,448,055 742,161 679,764 Equity 17,942,901 16,820,311 3,945,314 3,610,048 Total liabilities 58,128,927 52,792,281 4,740,077 4,353,967

Equity attributable to: Owners of the Company 12,595,917 11,807,858 2,677,290 2,449,779 Non-controlling interests 5,346,984 5,012,453 1,268,024 1,160,269 17,942,901 16,820,311 3,945,314 3,610,048

C T HOLDINGS PLC 91 Annual Report 2018 | 2019 Notes to the Financial Statements

In thousands of rupees Cargills C T Land (Ceylon) PLC Development PLC For the year ended 31st March 2019 2018 2019 2018

Revenue (Including other income) 96,842,665 94,407,480 840,895 803,350 Expenses (94,808,852) (91,076,559) (428,667) (393,339) Profit for the year 2,033,813 3,330,921 412,229 410,011 Other comprehensive income (32,334) 703,402 4,287 (3,813) Total comprehensive income 2,001,479 4,034,323 416,516 406,198

Profit for the year attributable to: Owners of the Company 1,427,737 2,338,307 282,647 278,233 Non-controlling interests 606,076 992,614 129,582 131,778 Profit for the year 2,033,813 3,330,921 412,229 410,011

Other comprehensive income attributable to : Owners of the Company (22,698) 493,788 2,909 (2,588) Non-controlling interests (9,636) 209,614 1,378 (1,225) Other comprehensive income (32,334) 703,402 4,287 (3,813)

Total comprehensive income attributable to: Owners of the Company 1,405,039 2,832,095 285,556 275,645 Non-controlling interests 596,440 1,202,228 130,960 130,553 Total comprehensive income for the year 2,001,479 4,034,323 416,516 406,198

Dividends paid to non-controlling interests - 400,512 55,136 54,839

Details of net cash inflows / (outflows) Net cash inflow from operating activities (1,426,869) 3,694,478 - 227,838 Net cash inflow / (outflow) from investing activities - (681,155) - (32,186) Net cash inflow / (outflow) from financing activities (1,137) (2,177,113) - (168,031) Net cash inflow / (outflow) (1,428,006) 836,210 - 27,621

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

C T HOLDINGS PLC Annual Report 2018 | 2019 92 18. Investments in equity accounted investees Accounting policy: Please refer note 3.15.1 and 3.16.1.

18.1 Breakdown of investments in equity accounted investees Name of the investee Principal Group Company activity Ownership interest Total cost of investment Ownership interest Total cost of investment and voting power (in thousands of rupees) and voting power (in thousands of rupees) % %

As at 31st March 2019 2018 2019 2018 2019 2018 2019 2018 In thousands of rupees C T CLSA Holdings Financial 25.81% 25.81% 141,326 134,133 25.81% 25.81% 33,342 33,342 Limited services Cinema Entertainments Entertainment 30.92% 30.65% 10,854 11,334 16.67% 16.67% 1,375 1,375 (Private) Limited Cargills Bank Limited Banking 53.17% 53.17% 6,366,865 6,457,444 25.29% 25.29% 2,871,452 2,871,452 6,519,045 6,602,911 2,906,169 2,906,169

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

C T CLSA Holdings Cinema Entertainments Cargills Bank Limited Total Limited (Private) Limited As at 31st March 2019 2018 2019 2018 2019 2018 2019 2018 In thousands of rupees Profit / (loss) and other comprehensive income Revenue 333,652 477,010 25,633 33,882 2,349,209 1,616,150 2,708,494 2,127,042 Other income 56,517 3,999 2,784 889 166,830 580,176 226,131 585,064 Total Expenses (338,306) (365,339) (25,597) (15,630) (2,393,234) (1,683,467) (2,757,137) (2,064,436) Profit / (loss) for the year 51,863 115,670 2,820 19,141 122,805 512,859 177,488 647,670 Other comprehensive income for the year 3,477 1,583 - - (46,809) 28,293 (43,332) 29,876 Total comprehensive income for the year 55,340 117,253 2,820 19,141 75,996 541,152 134,156 677,546 Directly adusted to equity* Impact on adopting new SLFRSs - - - - (246,365) - (246,365) - Transactions with owners Dividend paid (27,473) 53,846 (4,694) 1,809 - - (32,167) 55,655 Dividends received during the year 7,091 13,918 555 555 770 600 8,416 15,072 Balance sheet Total assets 964,069 3,703,073 87,698 61,441 33,803,120 32,512,711 34,854,887 36,277,226 Total liabilities (416,507) (3,183,379) (52,593) (24,462) (22,779,158) (21,318,380) (23,248,258) (24,526,221) Net assets 547,562 519,695 35,105 36,979 11,023,962 11,194,331 11,606,629 11,751,005 Percentage of ownership interest as at 31st 25.81% 25.81% 30.92% 30.65% 53.17% 53.17% March

C T HOLDINGS PLC 93 Annual Report 2018 | 2019 Notes to the Financial Statements

C T CLSA Holdings Cinema Entertainments Cargills Bank Limited Total Limited (Private) Limited As at 31st March 2019 2018 2019 2018 2019 2018 2019 2018 In thousands of rupees Reconciliation of carrying amount of interests in associates Group’s of share of net assets of associates 141,326 134,133 10,854 11,334 5,861,067 5,951,646 6,013,247 6,097,113 Goodwill - - - - 505,798 505,798 505,798 505,798 Carrying amount of interest in associates 141,326 134,133 10,854 11,334 6,366,865 6,457,444 6,519,045 6,602,911 Share of:- Profit / (loss) 13,379 29,854 972 5,867 65,291 272,510 79,642 308,231 Share of other comprehensive income Items that will not be re-classified - - - - (1,965) 1,285 (1,965) 1,285 subsequently to profit or loss: Items that may be re-classified 897 409 - - (22,922) 13,757 (22,025) 14,166 subsequently to profit or loss: 897 409 - - (24,887) 15,042 (23,990) 15,451 Share of Impact on adopting new SLFRSs - - - - (130,984) - (130,984) -

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

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

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

18.5. The financial year end date of Cargills Bank Limited is 31st December due to the industry requirement and financial statements for the year ended 31st December 2018 have been used for the purposes of applying the equity method. Further, there are no significant transactions between the dates of the financial statements of the said companies and 31st March 2019 which require any adjustments.

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

C T HOLDINGS PLC Annual Report 2018 | 2019 94 19. Other investments Accounting policy: Please refer note 3.15.1 and 3.16.1.

19.1 Breakdown of other non-current investments Group Company Shares / Units Carrying Value Shares / Units Carrying Value (Numbers) (In thousands of Rs.) (Numbers) (In thousands of Rs.) In thousands of rupees 2019 2018 2019 2018 2019 2018 2019 2018

Investments in quoted companies Ceylon Printers PLC 118,830 118,830 5,942 8,187 118,830 118,830 5,942 8,187 Office Equipment PLC 163,700 163,700 11,495 9,004 163,700 163,700 11,458 9,004 Paragon (Ceylon) PLC 213,060 213,060 9,225 13,423 213,060 213,060 9,225 13,423 Overseas Realty (Ceylon) PLC 4,500 4,500 74 81 4,500 4,500 74 81 Lanka IOC PLC 525,000 525,000 6,344 15,803 325,000 325,000 5,688 9,783 Hotel Developers (Lanka) PLC 27,700 27,700 - - 27,700 27,700 - - The HDFC Bank of Sri Lanka 70,000 70,000 1,820 2,345 70,000 70,000 1,820 2,345 Lanka Walltiles PLC 1,499,628 1,499,628 89,978 147,563 1,499,628 1,499,628 89,978 147,563 Sierra Cables PLC 49,500 49,500 336 140 - - - - Aitken Spence PLC 267,500 267,500 13,536 13,535 - - - - 138,750 210,081 124,185 190,386

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) 42,696,600 25,683,000 465,859 311,981 11,639,590 11,639,590 119,583 118,947 604,709 522,162 243,868 309,433

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

C T HOLDINGS PLC 95 Annual Report 2018 | 2019 Notes to the Financial Statements

20. Inventories Accounting policy: Please refer note 3.10. In thousands of rupees Group Company As at 31st March 2019 2018 2019 2018

Raw material and consumables 1,113,027 1,293,681 - - Work-in-progress 60,949 50,426 - - Finished goods 8,311,892 8,146,129 - - Goods in transit 261,821 80,430 - - Food and beverages - restaurant operations 106,169 72,319 - - 9,853,858 9,642,985 - -

Less - provision for obsolete and slow moving items (87,410) (93,838) - - 9,766,448 9,549,147 - -

21. Trade and other receivables Accounting policy: Please refer note 3.15.1 and 3.16.1. In thousands of rupees Group Company As at 31st March 2019 2018 2019 2018

Trade receivables (other than from related parties) 3,804,732 2,995,982 2 287 Dues from related parties (Refer note 30.3) 31,284 31,055 13,764 11,973 Current tax asset 898,189 860,157 2,130 - Advances and other receivables 633,343 830,996 13,410 163 Loans given to employees (Refer note 21.1) 64,874 41,305 - - Prepayments and accrued income 1,749,884 1,387,228 605 - 7,182,306 6,146,723 29,911 12,423 Less : provision for impaired / doubtful debts (Refer note 21.3) (147,671) (195,989) - - 7,034,635 5,950,734 29,911 12,423

21.1 Loans given to employees As at 1st April 41,305 26,860 - - Loans granted during the year 60,220 53,131 - - Less: recoveries (36,651) (38,686) - - As at 31st March 64,874 41,305 - -

C T HOLDINGS PLC Annual Report 2018 | 2019 96 21.2 Credit and market risks, and impairment losses Information about the Group’s exposure to credit, and impairment losses for trade and other receivables, excluding construction contracts in progress, is included in note 29.5.

In thousands of rupees Group Company As at 31st March 2019 2018 2019 2018

21.3 Movement in the provision for impaired / doubtful debts As at 1st April 195,989 185,648 - - Impairment losses recognised / (reversed) (48,318) 10,341 - - As at 31st March 147,671 195,989 - -

22. Cash and cash equivalents Accounting policy: Please refer note 3.15.1 and 3.16.1. As In thousands of rupees Group Company 31st March 2019 2018 2019 2018

Cash and bank balances 3,121,308 2,035,865 2,204 2,367 Short term deposits with banks (Refer note 22.1) 972,920 1,181,910 63,315 208,470 Cash and cash equivalents in the statement of financial position 4,094,228 3,217,775 65,519 210,837 Bank overdrafts (Refer note 25) (2,878,385) (2,855,771) - - Cash and cash equivalents in the statement of cash flows 1,215,843 362,004 65,519 210,837

22.1 Short term deposits with bank Re-purchase agreements 786,377 169,181 - - Fixed & other deposits 186,543 1,012,729 63,315 208,470 972,920 1,181,910 63,315 208,470

C T HOLDINGS PLC 97 Annual Report 2018 | 2019 Notes to the Financial Statements

23. Stated capital - ordinary shares Accounting policy: Please refer note 3.17. In thousands of rupees Group Company As at 31st March 2019 2018 2019 2018

Issued and fully paid shares Issued ordinary shares as at 1st April 6,489,758 3,194,008 6,489,758 3,194,008 Issued during the year - 3,295,750 - 3,295,750 Issued ordinary shares as at 31st March 6,489,758 6,489,758 6,489,758 6,489,758

No. of shares in issue Issued ordinary shares as at 1st April 201,407 183,097 201,407 183,097 Issued during the year - 18,310 - 18,310 Issued ordinary shares as at 31st March 201,407 201,407 201,407 201,407

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

24. Reserves In thousands of rupees Group Company As at 31st March 2019 2018 2019 2018

Revaluation reserve (Refer note 24.1) 1,771,050 1,771,050 - - Fair value reserve (Refer note 24.2) 48,835 119,194 54,950 120,515 1,819,885 1,890,244 54,950 120,515

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

24.2. Fair value reserve The fair value reserve represents the cumulative net change in the fair value of equity securities designated at Fair Value through Other Comprehensive Income (FVOCI) (2018: available-for-sale financial assets); and the cumulative net change in fair value of debt securities at FVOCI (2018: available-for-sale financial assets) until the assets are derecognised or reclassified. This amount is reduced by the amount of loss allowance.

C T HOLDINGS PLC Annual Report 2018 | 2019 98 25. Borrowings Accounting policy: Please refer note 3.15 and 3.19.

Group In thousands of rupees Unsecured borrowings Secured borrowings Total As at 31st March 2019 2018 2019 2018 2019 2018

Non-current liabilities Loans from banks - - 29,165 38,332 29,165 38,332 Finance lease liabilities - - 409 1,546 409 1,546 - - 29,574 39,878 29,574 39,878

Current liabilities Current portion of secured bank loans - 10,001 10,001 10,001 10,001 Current portion of finance lease liabilities - 1,138 1,024 1,138 1,024 Other short term loans from banks 10,836,345 9,678,036 3,180,000 2,135,000 14,016,345 11,813,036 Bank overdrafts 2,604,354 1,230,001 274,031 1,625,770 2,878,385 2,855,771 13,440,699 10,908,037 3,465,170 3,771,795 16,905,869 14,679,832

Total liabilities Secured bank loans (Refer note 25.1 & 25-4-a) - - 39,166 48,333 39,166 48,333 Finance lease liabilities (Refer note 25.2) - - 1,547 2,570 1,547 2,570 Other short term bank loans (Refer note 25.4-b) 10,836,345 9,678,036 3,180,000 2,135,000 14,016,345 11,813,036 Bank overdrafts (Refer note 25.4-c) 2,604,354 1,230,001 274,031 1,625,770 2,878,385 2,855,771 13,440,699 10,908,037 3,494,744 3,811,673 16,935,443 14,719,710

25.1 Secured bank loans In thousands of rupees Group Company As at 31st March 2019 2018 2019 2018

As at 1st April 48,333 198,300 - - Loans obtained during the year - 50,000 - - Repayments during the year (9,167) (199,967) - - As at 31st March 39,166 48,333 - -

Non-current portion of secured bank loans 29,165 38,332 - - Current portion of secured bank loans 10,001 10,001 - - 39,166 48,333 - -

C T HOLDINGS PLC 99 Annual Report 2018 | 2019 Notes to the Financial Statements

25.2 Finance lease liabilities In thousands of rupees Group Company As at 31st March 2019 2018 2019 2018

As at 1st April 2,912 4,158 - - Repayments during the year (1,247) (1,246) - - As at 31st March 1,665 2,912 - - Less: Finance charges allocated to future periods (118) (342) - - Net liability 1,547 2,570 - -

Non-current portion of finance lease liabilities 409 1,546 - - Current portion of finance lease liabilities 1,138 1,024 - - Net liability 1,547 2,570 - -

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

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

25.4 (a) Secured bank loans In thousands of rupees Financial Institution Security Repayment Terms Nominal Interest Currency Principal Amount and Maturity Rate Value outstanding Ceylon Theatres (Private) Limited Commercial Bank PLC Corporate 59 equal monthly AWPLR+2% LKR 50,000 39,166 guarantee of Rs instalments of Rs 50 Mn from C T 833,400 each Holdings PLC. and Rs 829,400/- together with interest after grace period of 3 months. Company total - Ceylon Theatres (Private) Limited 39,166 Total - Secured bank loans 39,166

C T HOLDINGS PLC Annual Report 2018 | 2019 100 25.4 (b) Other short term loans from banks In thousands of rupees Financial Institution Security Repayment Terms Nominal Interest Currency Principal Amount and Maturity Rate Value outstanding Cargills (Ceylon) PLC Commercial Bank of Corporate Payable on demand 1-12 months, LKR 1,600,000 1,165,000 Ceylon PLC guarantee for Rs based on the 50 Mn from C T prevailing market Holdings PLC. rates Hatton National Bank No security Payable on demand 1-4 months, LKR 250,000 250,000 PLC provided based on weekly AWPLR+0.75% Nations Trust Bank PLC No security Payable on demand 1-3 months, LKR 2,800,000 2,025,000 provided based on the prevailing market rates Company total - Cargills (Ceylon) PLC 3,440,000 Cargills Foods Company (Private) Limited Standard Chartered No security Payable on demand 1-4 months, LKR 2,600,000 2,058,300 Bank provided based on the prevailing market rates Hatton National Bank No security Payable on demand 1-4 months, LKR 2,500,000 2,500,000 PLC provided based on weekly AWPLR+0.75% Commercial Bank of Corporate Payable on demand 1-12 months, LKR 1,950,000 1,950,000 Ceylon PLC guarantee of Rs based on the 250 Mn from prevailing market Cargills (Ceylon) rates PLC ICICI Bank Limited No security Payable on demand 1-3 months, LKR 800,000 800,000 provided based on monthly SLIBOR+0.95% p. a. Company total - Cargills Foods Company (Private) Limited 7,308,300

C T HOLDINGS PLC 101 Annual Report 2018 | 2019 Notes to the Financial Statements

Financial Institution Security Repayment Terms Nominal Interest Currency Principal Amount and Maturity Rate Value outstanding Cargills Food Processors (Private) Limited Commercial Bank PLC No security Payable on demand 1-12 months, LKR 250,000 100,000 provided based on the prevailing market rates Company total - Cargills Food Processors (Private) Limited 100,000 Cargills Quality Confectioneries (Private) Limited Hatton National Bank Corporate Payable on demand 1-4 months, LKR 65,000 PLC guarantee for based on weekly 200,000 Rs. 200 Mn from AWPLR+0.75% Cargills (Ceylon) PLC Company total - Cargills Quality Confectioneries (Private) Limited 65,000 Cargills Quality Dairies (Private) Limited Standard Chartered No security Payable on demand 1-12 months, LKR 1,200,000 880,000 Bank provided based on the prevailing market rates Hatton National Bank No security Payable on demand 1-4 months, LKR 1,500,000 430,000 PLC provided based on weekly AWPLR+0.75% Commercial Bank PLC No security Payable on demand 1-12 months, LKR 750,000 750,000 provided based on the prevailing market rates Company total - Cargills Quality Dairies (Private) Limited 2,060,000 Cargills Quality Foods Limited Standard Chartered No security Payable on demand 1-6 months, LKR 600,000 500,000 Bank provided based on the prevailing market rates Hatton National Bank No security Payable on demand 1-4 months, LKR 750,000 459,045 PLC provided based on weekly AWPLR+0.75% Company total - Cargills Quality Foods Limited 959,045

C T HOLDINGS PLC Annual Report 2018 | 2019 102 Financial Institution Security Repayment Terms Nominal Interest Currency Principal Amount and Maturity Rate Value outstanding Ceylon Agro Development Company (Private) Limited Hatton National Bank No security Payable on demand 1-4 months, LKR 84,000 PLC provided based on weekly - AWPLR+0.75% Company total - Ceylon Agro Development Company (Private) Limited 84,000 Millers Limited Standard Chartered Corporate Payable on demand 1-4 months, LKR 250,000 - Bank guarantee of Rs. based on the 250 Mn from prevailing market Cargills (Ceylon) rates PLC Commercial Bank of Corporate Payable on demand 1-12 months, LKR 200,000 - Ceylon PLC Guarantee for based on the Rs. 215 Mn from prevailing market Cargills (Ceylon) rates PLC Company total - Millers Limited - Total - Other short term bank loans 14,016,345

25.4 (c) Bank overdrafts In thousands of rupees Financial Institution Security Repayment Terms Nominal Interest Currency Principal Amount and Maturity Rate Value outstanding Cargills Ceylon PLC Commercial Bank PLC Corporate Payable on demand Based on LKR 100,000 11,571 guarantee from C monthly T Holdings PLC AWPLR+1.0% p. a. Seylan Bank PLC No security Payable on demand Based on weekly LKR 100,000 - provided AWPLR+1.25% p.a. Nations Trust Bank PLC No security Payable on demand Based on weekly LKR 200,000 - provided AWPLR+1.0% p. a. Deutsche Bank No security Payable on demand Based on the LKR 45,000 19,077 provided prevailing market rates

C T HOLDINGS PLC 103 Annual Report 2018 | 2019 Notes to the Financial Statements

Financial Institution Security Repayment Terms Nominal Interest Currency Principal Amount and Maturity Rate Value outstanding Muslim Commercial No security Payable on demand Based on the LKR 500,000 - Bank Limited provided prevailing market rates Sampath Bank PLC No security Payable on demand Based on LKR 100,000 - provided monthly AWPLR+1.0% p. a. Company total - Cargills Ceylon PLC 30,648 Cargills Foods Company (Private) Limited Cargills Bank Limited No security Payable on demand Based on the LKR - provided* prevailing market 464,499 rates Deutsche Bank No security Payable on demand Based on the LKR 500,000 566,127 provided prevailing market rates Commercial Bank PLC Corporate Payable on demand Based on LKR 50,000 195,717 guarantee from monthly Cargills (Ceylon) AWPLR+0.1% PLC p.a. Bank of Ceylon No security Payable on demand Based on LKR 100,750 provided monthly 115,000 AWPLR+0.5% p.a. Company total - Cargills Foods Company (Private) Limited 1,327,093 Cargills Agrifoods Limited Commercial Bank PLC Corporate Payable on demand AWPLR+1% LKR 150,000 38,430 guarantee for Rs. 155 Mn from Cargills (Ceylon) PLC Cargills Bank Limited No security Payable on demand Based on the LKR - 25,991 provided* prevailing market interset rates Company total - Cargills Agrifoods Limited 64,421 Cargills Food Processors (Private) Limited Cargills Bank Limited No security Payable on demand Based on the LKR - 72,529 provided* prevailing market interset rates

C T HOLDINGS PLC Annual Report 2018 | 2019 104 Financial Institution Security Repayment Terms Nominal Interest Currency Principal Amount and Maturity Rate Value outstanding Deutsche Bank No security Payable on demand Based on the LKR 100,000 97,757 provided prevailing market interset rates Commercial Bank PLC Corporate Payable on demand Based on LKR 100,000 14,629 guarantee for monthly Rs. 50 Mn from AWPLR+1% Cargills (Ceylon) PLC Company total - Cargills Food Processors (Private) Limited 184,915 Cargills Food Services (Private) Limited Deutsche Bank No security Payable on demand Based on the LKR 5,000 3,981 provided prevailing market rates Hatton National Bank No security Payable on demand Based on weekly LKR - 37,021 PLC provided AWPLR+0.75% p. a. Commercial Bank PLC No security Payable on demand 1 month,based LKR - 6,828 provided on the prevailing market rates Company total - Cargills Food Services (Private) Limited 47,830 C P C (Lanka) Limited Cargills Bank Limited No security Payable on demand Based on the LKR - 3,556 provided* prevailing market rates Company total - C P C (Lanka) Limited 3,556 Cargills Quality Confectioneries (Private) Limited Commercial Bank PLC Corporate Payable on demand Based on LKR 90,000 41,601 guarantee for monthly Rs. 150 Mn from AWPLR+1% p. a. Cargills (Ceylon) PLC” Company total - Cargills Quality Confectioneries (Private) Limited 41,601 Cargills Quality Dairies (Private) Limited Commercial Bank PLC Corporate Payable on demand Based on LKR 250,000 - guarantee for monthly Rs. 70 Mn from AWPLR+1% p. a. Cargills (Ceylon) PLC

C T HOLDINGS PLC 105 Annual Report 2018 | 2019 Notes to the Financial Statements

Financial Institution Security Repayment Terms Nominal Interest Currency Principal Amount and Maturity Rate Value outstanding Seylan Bank PLC No security Payable on demand Based on LKR - provided monthly 200,000 AWPLR+2.5% p. a. Cargills Bank Limited No security Payable on demand Based on the LKR - 244,340 provided* prevailing market rates Deutsche Bank No security Payable on demand Based on the LKR 100,000 98,346 provided prevailing market rates Company total - Cargills Quality Dairies (Private) Limited 342,686 Cargills Quality Foods Limited Commercial Bank of Corporate Payable on demand Based on LKR 150,000 131,738 Ceylon PLC guarantee for Rs. monthly 125 Mn From AWPLR+1% p. a. Cargills (Ceylon) PLC Deutsche Bank No security Payable on demand Based on the LKR 350,000 349,207 provided prevailing market rates Company total - Cargills Quality Foods Limited 480,945 Millers Limited Cargills Bank Limited No security Payable on demand Based on the LKR - 17,806 provided* prevailing market rates Deutsche Bank No security Payable on demand Based on the LKR 200,000 193,136 provided prevailing market rates Hatton National Bank Corporate Payable on demand 1-4 months, LKR 200,000 36,062 PLC Guarantee for based on weekly Rs. 335 Mn from AWPLR+0.75% Cargills (Ceylon) PLC Company total - Millers Limited 247,004 Ceylon Agro Development Company (Private) Limited Seylan Bank PLC No security Payable on demand Based on the LKR - 2 provided prevailing market rates

C T HOLDINGS PLC Annual Report 2018 | 2019 106 Financial Institution Security Repayment Terms Nominal Interest Currency Principal Amount and Maturity Rate Value outstanding Bank of Ceylon No security Payable on demand Based on the LKR - 10 provided prevailing market rates Company total - Ceylon Agro Development Company (Private) Limited 10 Kotmale Dairy Products (Private) Limited Bank of Ceylon Corporate Payable on demand Based on the LKR 10,000 - guarantee from prevailing market Kotmale Holdings rates PLC. Mortgage over stocks and book debtors. Seylan Bank PLC No security Payable on demand Based on the LKR - 49,122 provided prevailing market rates Company total - Kotmale Dairy Products (Private) Limited 49,122 C T Land Development PLC Commercial Bank of Negative Pledge Payable on demand Market rate LKR 100,000 47 Ceylon PLC to be executed over the “Majestic city” property at No 10 Station Road Colombo 04. Company total - C T Land Development PLC 47 Ceylon Theatres (Private) Limited Commercial Bank of Corporate Payable on demand AWPLR+1% LKR 25,000 58,507 Ceylon PLC guarantee of Rs. 25 Mn from C T Land Development PLC. Company total - Ceylon Theatres (Private) Limited 58,507 Total - Bank overdrafts 2,878,385

* These overdrawn balances represent un-presented cheques. Bank balance is in credit. ** Average Weighted Prime Lending Rate (AWPR) weekly as at 31st March 2019 was 12.23% (2018: 11.55%) *** Sri Lanka Inter Bank Offer Rate (SLIBOR) as at 31st March 2019 was 10.24% (2018: 9.28%)

C T HOLDINGS PLC 107 Annual Report 2018 | 2019 Notes to the Financial Statements

26. Employee benefits Accounting policy: Please refer note 3.5.

26.1 Reconciliation of carrying amount In thousands of rupees Group Company As at 31st March 2019 2018 2019 2018

Balance as at 1st April 1,007,911 828,996 20,113 15,504 Current service cost 43,544 94,404 1,161 952 Interest cost 159,991 94,369 1,585 1,546 Other benefit paid (76,875) (76,125) - - Actuarial loss 8,245 66,267 3,192 2,111 Balance as at 31st March 1,142,816 1,007,911 26,051 20,113

(a) Amounts recognised in profit or loss Current service cost 43,544 94,404 1,161 952 Interest cost 159,991 94,369 1,585 1,546 203,535 188,773 2,746 2,498

(b) Amounts recognised in other comprehensive income Actuarial loss 8,245 66,267 3,192 2,111 8,245 66,267 3,192 2,111

26.2 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.

26.3 Actuarial assumptions & sensitivity analysis (a) Actuarial assumptions The following were the principal actuarial assumptions at the reporting date: Group Company As at 31st March 2019 2018 2019 2018

Discount rate 11% 10% - 11% 11% 10% Future salary growth 7.5% - 10% 7.5% - 12.5% 7.5% 7.5%

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

C T HOLDINGS PLC Annual Report 2018 | 2019 108 (b) Sensitivity analysis Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below. In thousands of rupees Group Company As at 31st March 2019 2018 2019 2018

Increase Discount rate (1% movement) (53,380) (49,272) (764) (814) Future salary growth (1% movement) 63,744 59,792 824 1,006

Decrease Discount rate (1% movement) 59,679 54,688 805 166 Future salary growth (1% movement) (57,961) (54,197) (795) (957)

26.4 Share-based payment arrangements of subsidiaries (a) Description of share-based payment arrangements An Employee Share Option Scheme (ESOS) proposed by the Directors of the subsidiary Cargills (Ceylon) PLC (CCP) was approved by the shareholders of CCP at an Extra Ordinary General Meeting held on 29th June 2017.

Under the terms of the ESOS, which are in compliance with the Listing Rules of the Colombo Stock Exchange, a maximum number of six million seven hundred and twenty thousand (6,720,000) ordinary voting shares could be issued which is equivalent to 3.0% of the issued capital of CCP. The share options would be granted in three tranches which would constitute –

(a) a first tranche of 3,360,000 options constituting 1.50% of the issued shares of the Company; (b) a second tranche of 1,680,000 options constituting 0.75% of the issued shares of the Company; (c) a third tranche of 1,680,000 options constituting 0.75% of the issued shares of the Company;

Each of the aforesaid tranches would be subdivided in to sub tranches with different vesting periods and exercise periods. Share options would be issued to employees who are eligible for the award of the share options for a consideration that is equivalent to the volume weighted average price during the period of thirty (30) market days immediately prior to the respective grant dates for each tranche. The first tranche would be issued in three equal sub tranches commencing from 30th September 2017 at a value of Rs. 211.40 per share. The second tranche would be issued in three equal sub tranches commencing from 31st July 2019 at a value of Rs. 196.95 per share.

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

C T HOLDINGS PLC 109 Annual Report 2018 | 2019 Notes to the Financial Statements

Consequent to this share issue, the number of options granted and the exercise price has changed as follows: (a) Total number of options to be issued – 7,679,997 options constituting 3% of the issued shares of the Company; (b) First tranche – 3,839,999 options constituting 1.50% of the issued shares of the Company at an exercise price of Rs. 184.98 (c) Second tranche – 1,919,999 options constituting 0.75% of the issued shares of the Company at an exercise price of Rs. 179.33; (d) Third tranche – 1,919,999 options constituting 0.75% of the issued shares of the Company;

Each of the aforesaid tranches would be subdivided in to sub tranches with different vesting periods and exercise periods. The key terms and conditions related to the grants under these tranches are as follows; all options are to be settled by the physical delivery of shares.

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

C T HOLDINGS PLC Annual Report 2018 | 2019 110 Grant Date As per “SLFRS 2 - Share-based Payments” the entity should recognise the value/cost of the share options granted to employees through the ESOS scheme based on the Grant Date of the share options. The date of obtaining the shareholder approval for ESOS is recognized as the Grant date for all 3 tranches of the ESOS scheme which is 29th June 2017.

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

(b) Measurement of fair values As required by SLFRS 2 on “Share-based Payment”, the fair value of the ESOS was estimated at the grant date using the Binomial Valuation Model taking into consideration various terms and conditions upon which the share options are granted.

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

Expected dividend yield rate (%) 1.5 1.5 1.5 Risk free rate (%) 10.73 10.73 10.73 Probability of share price increase (%) 80 80 80 Probability of share price decrease (%) 20 20 20 Size of annual increase of share price (%) 18 18 18 Size of annual reduction in share price (%) 10 10 10 Exercise price (Rs.) 184.98 172.33 211.40

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

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

C T HOLDINGS PLC 111 Annual Report 2018 | 2019 Notes to the Financial Statements

iii Reconciliation of outstanding share options The number and weighted-average exercise prices of share options under the ESOS scheme was as follows: In thousands of options Number of options *WAEP (Rs.) 2019 2018 2019 2018

Outstanding as at 1 April 3,840 - 184.98 - Forfeited during the year 76 - 184.98 - Exercised during the year 1,221 - 184.98 - Granted during the year - 3,840 - 184.98 Outstanding as at 31 March 2,543 3,840 184.98 184.98 Exercisable as at 31 March 2,560 1,280 184.98 184.98

*WAEP - Weighted Average Exercise Price

Pursuant to the Employee Share Option Scheme of the company approved by the Shareholders on 29 June 2017, 1,221,116 options were exercised by employees during the period 1st to 31st March 2019 and shares in respect of such exercised options were issued on 29 April 2019. Further, 75,694 options were cancelled at the expiry of the period allowed for exercise of such options and options allocated and not yet exercised as at the reporting date amounted to 2,543,189 options. iv Expense recognised in profit or loss For details of the related employee benefit expenses, please refer Note 8.

27. Deferred revenue Accounting policy: Please refer note 3.6.

27.1 Reconciliation of carrying amount In thousands of rupees Grants received As at 31st March 2019 2018

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

Accumulated Amortisation As at 1st April 55,006 43,525 Amortised during the year 11,481 11,481 As at 31st March 66,487 55,006

Net carrying value As at 31st March 50,420 61,901

C T HOLDINGS PLC Annual Report 2018 | 2019 112 27.2 Grants received Granted By Purpose of the grant Basis of amortisation In thousands of rupees Amount Balance Amortised Balance received as at during the as at 01-Apr-18 year 31-Mar-19 United States Agency Kilinochchi project Based on the 86,664 48,258 (9,074) 39,184 for International corresponding Development (USAID) expenditure being and Connecting Regional incurred Economies (USAID/ Dehiattakandiya Based on depreciation 23,612 13,643 (2,407) 11,236 CORE) project applicable corresponding to the plant & machinery acquired from the grant. Total 110,276 61,901 (11,481) 50,420

28. Trade and other payables Accounting policy: Please refer note 3.15.1.2 (iii). In thousands of rupees Group Company As at 31st March 2019 2018 2019 2018

Current Trade creditors (other than from related parties) 9,898,808 9,145,431 - 249 Dues to related parties (Refer note 30.3) 10,001 9,165 5,287 3,225 Accruals, other accounts payable & provisions 5,072,225 4,253,176 9,861 9,774 14,981,034 13,407,772 15,148 13,248

Non current Security deposits (Refer note 28.1) 249,370 208,195 - - Put options written on non-controlling interest (Refer note 28.2) 3,456,493 3,089,325 - - 3,705,863 3,297,520 - - 18,686,897 16,705,292 15,148 13,248

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

C T HOLDINGS PLC 113 Annual Report 2018 | 2019 Notes to the Financial Statements

28.2 Put options written on non-controlling interest The put option over non-controlling interest relates to the Put Option agreement entered into between Cargills Foods Company (Private) Limited (CFC), International Finance Corporation (IFC), and Cargills Ceylon PLC (CCP). IFC has subscribed for 4,130,424 shares of CFC (representing 8% shares of the Company) for an aggregate subscription price of Rs. 2,550 Mn on 25th February 2015. Therefore, IFC is considered the investor of CFC and non-controlling interest to the Group and CCP acts as the grantor / sponsor to the contract. CCP has granted IFC an option (The Put Option) to sell their shares to CCP during the put period on up to three occasions at the Put Price. As per the Put Option agreement the Put price means in relation to any given exercise of the Put Option, the price (calculated as of the date of settlement of purchase of the relevant Put shares by the granter) that provides IFC an IRR of 9% in local currency terms; provided that the Put price, shall be suitably adjusted to account for any dividends received by IFC on the Put shares and there shall not be any discount for liquidity or minority stake.

The assumptions on which the above present value of the exercise price has been determined are as follows: • Conditions of the Shareholder Agreement will not be breached by either party until the Put period arrives. • In the event of non-listing of the Company by CCP, IFC will wait until the end of the Put period to exercise the Put Option. • Weighted average cost of capital of CCP is 11.9%. • Pricing date is 31st March 2019. • A year is assumed to have 365 days.

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

In thousands of rupees Group Company As at 31st March 2019 2018 2019 2018

Put liability will be recognised directly in retained earnings 3,456,493 3,089,325 - -

C T HOLDINGS PLC Annual Report 2018 | 2019 114 29. Financial instruments – Fair values and risk management 29.1 Accounting classifications and fair values The following table shows the carrying amounts and fair values of financial assets and financial liabilities. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.

In thousands of rupees Group Company As at 31st March 2019 2018 2019 2018

Financial assets Financial assets measured at amortised cost Trade receivables and dues from related companies 21 3,836,016 3,027,037 13,766 12,260 Other receivables 21 698,217 872,301 13,410 163 Cash and cash equivalents 22 4,094,228 3,217,775 65,519 210,837 Other investments 19 604,709 522,162 243,868 309,433 Total financial assets 9,233,170 7,639,275 336,563 532,693

Financial liabilities Financial liabilities measured at amortised cost Borrowings 25 16,935,443 14,719,710 - - Security deposits 28 249,370 208,195 - - Trade creditors 28 9,908,809 9,154,596 5,287 3,474 Total financial liabilities 27,093,622 24,082,501 5,287 3,474

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

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

Available-for-sale financial assets (other investments) are classified as Level 1 and there have been no transfers between level 1 and 2 during the current or prior year.

C T HOLDINGS PLC 115 Annual Report 2018 | 2019 Notes to the Financial Statements

29.3 Capital management The Group manages its capital to ensure that entities in the Group will be able to continue as going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The Group’s overall strategy remains unchanged from 2018.

The capital structure of the Group consists of below: In thousands of rupees Group Company As at 31st March 2019 2018 2019 2018

Debt (long and short term borrowings, excluding derivatives) Borrowings 16,935,443 14,719,710 - - Non-current trade creditors 3,456,493 3,089,325 - - Net debt 20,391,936 17,809,035 - -

Equity (all capital and reserves of the Group that are managed as capital) Stated capital 6,489,758 6,489,758 6,489,758 6,489,758 Reserves 1,819,885 1,890,244 54,950 120,515 Retained earnings 13,138,710 12,277,464 1,079,040 1,089,891 Non-controlling interest 4,765,746 4,239,636 - - Total equity 26,214,099 24,897,102 7,623,748 7,700,164 Total debt and equity 46,606,035 42,706,137 7,623,748 7,700,164

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

29.4 Financial risk management Please refer accounting policies in note 5.

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

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

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

C T HOLDINGS PLC Annual Report 2018 | 2019 116 29.5 Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers and investments in debt securities.

The carrying amount of financial assets represents the maximum credit exposure.

In thousands of rupees Group Company As at 31st March 2019 2018 2019 2018

Trade receivables and dues from related companies 3,836,016 3,027,037 13,766 12,260 Other receivables 698,217 872,301 13,410 163 Cash and cash equivalents 4,094,228 3,217,775 65,519 210,837 Other investments 604,709 522,162 243,868 309,433 9,233,170 7,639,275 336,563 532,693

29.5.1 Trade receivables Trade receivables before provisions for impairments were at the ageing set out below. Neither past due nor impaired 32,300 54,326 13,764 12,259 1 - 30 days 2,480,537 1,920,050 2 1 31 - 60 days 581,617 560,913 - - 61 - 90 days 343,752 204,453 - - More than 90 days 397,810 287,295 - - 3,836,016 3,027,037 13,766 12,260

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

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

The movement in the provision for impairment in respect of trade and other receivables during the year is given in note 21.3.

29.5.2 Cash and cash equivalents The Group held cash and cash equivalents of Rs. 4.09 Bn at 31st March 2019 (2018: Rs. 3.22 Bn). The cash and cash equivalents are held with bank and financial institution counter-parties, with high credit ratings.

29.5.3 Corporate guarantees The Group’s policy is to provide financial guarantees only to subsidiaries. As at 31st March 2019, the Company had issued guarantees to certain banks in respect of credit facilities granted to subsidiaries (refer note 33.1)

C T HOLDINGS PLC 117 Annual Report 2018 | 2019 Notes to the Financial Statements

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

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

As at 31st March 2018 Bank overdrafts 2,855,771 - - - - 2,855,771 Secured bank loans 48,333 - - - - 48,333 Other short term bank loans 11,813,036 - - - - 11,813,036 Trade and other payables 13,407,772 208,195 3,089,325 - - 16,705,292 28,124,912 208,195 3,089,325 - - 31,422,432

As at 31st March 2019 Bank overdrafts 2,878,385 - - - - 2,878,385 Secured bank loans 39,166 - - - - 39,166 Other short term bank loans 14,016,345 - - - - 14,016,345 Trade and other payables 14,981,034 249,370 3,456,493 - - 18,686,897 31,914,930 249,370 3,456,493 - - 35,620,793

30. Related parties 30.1 Transactions with key management personnel The C T Holdings Group and the company carries out transactions in the ordinary course of the business with parties who are defined as related parties as per Sri Lanka Accounting Standard – LKAS 24 Related Party Disclosures. Transactions and outstanding balances between the companies within the Group and related parties are given in note no. 30.2A and 30.2B.

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 of the Company have been classified as Key Management Personnel of the entity. The Board of Directors of the subsidiary companies are considered as Key Management Personnel of such companies.

(a) Mrs. R Page, wife of Mr. Ranjit Page , is a Director of the Double Yummm (Private) Limited with which Cargills Foods Company (Private) Limited had regular transactions in the ordinary course of business and the amount outstanding as at 31st March 2019 was Rs. 10.73 Mn (2018 - Rs. 8.36 Mn). Purchases for re-sale in the ordinary course of business for the year amounted to Rs. 114.20 Mn (2018 - Rs. 79.98 Mn) and rental income earned for the year amounted to Rs. 0.84 Mn (2018 - Rs. 0.98 Mn).

(b) Short term employment benefits paid to key management personnel have been disclosed in the Note 8.1 to these Financial Statements. There are no post employment benefits paid during the year.

C T HOLDINGS PLC Annual Report 2018 | 2019 118 30.2 Other related party transactions Transactions that are carried out in the ordinary course of business between the Company and other Group companies as well as between Group companies who are defined as related parties in Sri Lanka Accounting Standards (LKAS - 24 ‘Related party Disclosures’) are disclosed below.

A. Transactions between the Company and other Group companies In thousands of rupees Related Company Common Directors Transaction 2019 2018 C T Properties Limited Ranjit Page Recovery of (1,670) (1,513) R. Selvaskandan expenditure Louis Page Settlement 1,183 - Joseph Page Ms. Cecilia Muttukumaru S C Niles Ceylon Theatres (Private) Limited Louis Page Rent income 4,224 3,520 R. Selvaskandan Settlement (3,462) (4,712) Joseph Page Ms. Cecilia Muttukumaru S C Niles M I Abdul Wahid Millers Limited M I Abdul Wahid Rent income 22,883 21,122 Settlement (17,602) (19,362) Cinema Entertainments (Private) Limited R. Selvaskandan Rent income 2,611 2,611 Settlement (1,305) (2,821) Cargills (Ceylon) PLC L R Page Recovery of (2,062) (3,225) V R Page expenditure M I Abdul Wahid

C T HOLDINGS PLC 119 Annual Report 2018 | 2019 Notes to the Financial Statements

B. Transactions between Group companies In thousands of rupees Balance as Net Amount Balance as Purchase Receipt / Interest Dividend at 1-Apr-18 Received / at 31-Mar- / Sale of Rendering Received / Received / (Paid) 19 Goods of Services Paid Paid Subsidiary

Cargills (Ceylon) PLC (888,559) (129,918) (1,018,477) √ √ √ √

Cargills Foods Company (Private) Limited 310,271 25,583 335,854 √ √ √ √

Cargills Quality Foods Limited (67,193) 4,754 (62,439) √ √ √ √

Cargills Distributors (Private) Limited 41 (41) - - - - - Cargills Quality Diaries (Private) Limited (48,461) (95,438) (143,899) √ √ √ √ Cargills Frozen Products (Private) Limited 688 (688) - - - - - The Empire Investments Company (Private) Limited - 21,989 21,989 - √ - - Kotmale Holdings PLC 78,801 43,768 122,569 - √ - - Kotmale Products Limited 116,859 20,921 137,780 - - - - Kotmale Milk Foods Limited 137,371 (133,132) 4,239 - - - - Kotmale Dairy Products (Private) Limited (355,894) (54,239) (410,133) √ √ √ - Kotmale Milk Products Limited 16,677 120,121 136,798 - - - - Cargills Quality Confectioneries (Private) Limited 1,940 (27,702) (25,762) √ √ - - Cargills Agrifoods Limited (85,074) 79,414 (5,660) √ √ √ √ C P C Lanka Limited (16,102) (3,211) (19,313) √ √ √ √ Cargills Food Processors (Private) Limited (7,207) 22,234 15,027 √ √ √ √ Cargills Food Services (Private) Limited (511) 2,860 2,349 √ √ √ - Millers Limited (18,159) (8,870) (27,029) √ √ √ √ Dawson Office Complex (Private) Limited 28,834 37,187 66,021 - - - - Ceylon Agro Development Company (Private) Limited (1) 335 334 √ - - - C T Land Development PLC 349 (7,674) (7,325) √ √ - √ Ceylon Theatres (Private) Limited 23,504 2,398 25,902 √ √ - - C T Properties Limited 1,911,048 59,886 1,970,934 - - - - C T Property Management Company (Private) Limited (1,539) (197) (1,737) - - - - C T Real Estate (Private) Limited (347,300) 5,209 (342,091) - - - - C T Properties Lakeside (Private) Limited (87,971) (302) (88,273) - - - - C T Properties G S (Private) Limited (684,860) (2,023) (686,883) - - - - Equity accounted investees C T CLSA Holdings Limited (250) 250 - √ - - √ Cinema Entertainments (Private) Limited (8,915) (1,086) (10,001) - - - √ Cargills Bank Limited 28,170 (1,570) 26,600 - - - -

C T HOLDINGS PLC Annual Report 2018 | 2019 120 30.3 Related party balances In thousands of rupees Group Company As at 31st March 2019 2018 2019 2018

(a) Amount due from subsidiary companies Ceylon Theatres (Private) Limited - - 6,960 9,508 C T Properties Limited - - - 487 Millers Limited - - 5,281 1,760 - - 12,241 11,755

(b) Amount due from other related companies United Hotels Co. Limited 1,103 451 - - Cargills Bank Limited 26,600 28,170 - - Ceylon Hotels Corporation PLC 518 450 - - Galle Face Hotel Company Limited 2,026 890 - - Kandy Hotels Company (1938) PLC 1,037 1,094 - - Cinema Entertainments (Private) Limited - - 1,523 218 31,284 31,055 1,523 218 Total amounts due from related companies 31,284 31,055 13,764 11,973

(d) Amount due to other related companies CT CLSA Securities (Pvt) Ltd - - - - CT CLSA Capital (Pvt) Ltd - - - - Comtrust Asset Management (Pvt) Ltd - - - - CT CLSA Holdings Ltd - - - - Ceylon Printers PLC - 250 - - Cinema Entertainments (Private) Limited 10,001 8,915 - - 10,001 9,165 - - Total amounts due to related companies 10,001 9,165 5,287 3,225

30.4 Parent Company and ultimate controlling entity Odeon Holdings (Ceylon) (Private) Limited holds 41.85% (2018 – 41.81%) of the ordinary share capital of the Company.

31. Operating segments The Group has six reportable segments, as described in Note 2.1, which are the Group’s strategic business units. The strategic business units offer different products and services, and are managed separately because they require different management strategies. For each of the strategic business units, the Group’s chief decision maker reviews internal management reports at least on a quarterly basis.

C T HOLDINGS PLC 121 Annual Report 2018 | 2019 Notes to the Financial Statements

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

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

For the purposes of monitoring segment performance and allocating resources between segments:

(a) All assets are allocated to reportable segments other than interests in associates and assets used by the head office. Goodwill is allocated to reportable segments as described in note 16.2. Assets used jointly by reportable segments are allocated on the basis of the revenues earned by individual reportable segments.

(b) All liabilities are allocated to reportable segments other than liabilities of the head office, if there are any.

Retail & Wholesale In thousands of rupees FMCG Restaurants Real Estate Entertainment Group Distribution For the year ended 31st 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 March Revenue Gross revenue 77,087,853 75,165,585 21,102,808 19,629,448 3,873,329 3,614,482 594,634 565,115 353,531 336,159 103,012,155 99,310,789 Eliminations of inter (1,288,836) (1,456,714) (6,112,160) (5,659,674) - - (63,799) (59,918) - - (7,464,795) (7,176,306) segment revenue External revenue 75,799,017 73,708,871 14,990,648 13,969,774 3,873,329 3,614,482 530,835 505,197 353,531 336,159 95,547,360 92,134,483 Segment results Results from operating 1,718,202 2,734,731 2,402,906 2,047,225 318,582 379,343 717,954 1,697,836 (61,629) (42,394) 5,096,015 6,816,741 activities Corporate and other un-allocated operating profit 137,958 (14,507) Results from operating activities 5,233,973 6,802,234 Reportable segment profit after tax 571,672 1,763,494 1,323,326 825,664 239,026 239,080 489,102 1,629,290 (75,559) (38,639) 2,547,567 4,418,889

Corporate and other un-allocated operating profit (163,330) (679,424) Profit for the year 2,384,237 3,739,465 Reportable segment profit for the year attributable to owners of the parent Corporate and other un- 377,225 1,145,468 928,448 579,621 167,798 167,836 338,384 1,143,345 (64,632) (33,051) 1,747,223 3,003,219 allocated operating profit (104,599) (405,877) 1,642,624 2,597,342 Net finance costs (652,248) (306,538) (413,761) (371,592) (14,083) (9,888) (25,620) 96,555 (8,627) (159) (1,114,339) (591,622)

Corporate and other nu-allocated operating profit (310,802) (727,586) (1,425,141) (1,319,208) Depreciation 1,487,314 1,219,838 785,926 720,143 178,773 174,685 27,034 7,275 68,592 60,177 2,547,639 2,182,118 Corporate and other un-allocated operating profit (30,316) 66,855 2,517,323 2,248,973

C T HOLDINGS PLC Annual Report 2018 | 2019 122 Retail & Wholesale In thousands of rupees FMCG Restaurants Real Estate Entertainment Group Distribution For the year ended 31st 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 March As at 31 March

Segment assets

Non-current assets Property, plant and 14,752,061 13,008,531 5,722,384 5,359,250 1,199,828 895,078 712,120 613,996 277,443 328,391 22,663,836 20,205,246 equipment Prepaid lease rentals to acquire rights to use 50,025 - 21,875 22,750 - - - - 6,065 7,388 77,965 30,138 lands Investment properties 118,254 128,450 31,260 - - - 6,993,357 6,623,074 - - 7,142,871 6,751,524 Goodwill and other 144,316 50,017 43,670 38,170 149,870 115,999 5,620 - - 111 343,476 204,297 intangible assets Other investments - - 32 60 32 59 346,277 193,034 - - 346,341 193,153 Deferred tax assets - - 5,274 2,296 - - - - - 4,705 5,274 7,001 Total segment non- 15,064,656 13,186,998 5,824,495 5,422,526 1,349,730 1,011,136 8,057,374 7,430,104 283,508 340,595 30,579,763 27,391,359 current assets Current assets Inventories 7,841,497 7,582,334 1,800,030 1,883,665 108,384 74,235 - - 4,412 3,363 9,754,323 9,543,597 Trade and other 3,649,329 3,164,425 1,192,986 1,840,873 207,590 140,220 226,368 119,183 44,578 49,154 5,320,851 5,313,855 receivables Cash and cash 2,584,336 1,844,774 1,030,972 897,815 113,655 97,158 67,301 154,080 2,148 518 3,798,412 2,994,345 equivalents Total segment current 14,075,162 12,591,533 4,023,988 4,622,353 429,629 311,613 293,669 273,263 51,138 53,035 18,873,586 17,851,797 assets Total segment assets 29,139,818 25,778,531 9,848,483 10,044,879 1,779,359 1,322,749 8,351,043 7,703,367 334,646 393,630 49,453,349 45,243,156 Investments in equity accounted investees 6,519,045 6,602,911 Corporate and other un-allocated assets 11,366,589 9,890,098 Total assets 67,338,983 61,736,165 Segment liabilities

Non-current liabilities Borrowings - - 409 1,546 - - - - 29,165 38,332 29,574 39,878 Employee benefits 548,363 480,722 78,379 64,761 - - 38,819 40,189 5,270 4,980 670,831 590,652 Deferred income - - 50,418 61,900 - - - 16,764 - - 50,418 78,664 Trade and other payables ------249,371 191,431 - - 249,371 191,431 Deferred tax liabilities 350,223 391,920 562,606 512,715 92,569 86,264 460,272 427,600 541 - 1,466,211 1,418,499 Total segment non- 898,586 872,642 691,812 640,922 92,569 86,264 748,462 675,984 34,976 43,312 2,466,405 2,319,124 current liabilities

C T HOLDINGS PLC 123 Annual Report 2018 | 2019 Notes to the Financial Statements

Retail & Wholesale In thousands of rupees FMCG Restaurants Real Estate Entertainment Group Distribution For the year ended 31st 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 March Current liabilities Trade and other payables 11,534,512 10,627,152 1,966,679 1,642,999 684,839 527,359 33,401 38,431 44,026 59,426 14,263,457 12,895,367 Current tax liabilities 416,003 721,327 1,619,490 1,355,528 368,736 305,990 25,234 63,607 837 4,263 2,430,300 2,450,715 Borrowings 8,882,397 6,572,624 4,151,526 4,744,524 332,745 277,653 47 2,268 68,505 39,976 13,435,220 11,637,045 Total segment current 20,832,912 17,921,103 7,737,695 7,743,051 1,386,320 1,111,002 58,682 104,306 113,368 103,665 30,128,977 26,983,127 liabilities Total segment liabilities 21,731,498 18,793,745 8,429,507 8,383,973 1,478,889 1,197,266 807,144 780,290 148,344 146,977 32,595,382 29,302,251 Corporate and other un-allocated liabilities 8,529,502 7,536,812 Total liabilities 41,124,884 36,839,063

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

32.1. Capital commitments In thousands of rupees Group Company As at 31st March 2019 2018 2019 2018

(a) Subsidiary company Cargills (Ceylon) PLC Approved and contracted 1,473,460 2,026,543 - -

(b) The subsidiary company C T Land Development PLC has awarded contracts amounting to Rs. 196.6 Mn for Air-conditioning and Electrical works as a part of its refurbishment program subsequent the reporting date. Contingencies are possible assets or obligations that arise from a past event and would be confirmed only on the occurrence or non-occurance of uncertain future events, which are beyond the company's control.

32.2. Financial commitments In thousands of rupees Group Company As at 31st March 2019 2018 2019 2018

(a) Settlement of letter of credits and import bills 207,093 112,157 - - (b) Operating lease commitments where the Group is the lessee; within 1 year 2,095,122 1,115,657 - - between 1 - 5 years 9,274,663 6,849,979 - - more than 5 years 14,656,878 12,142,942 - - 26,026,663 20,108,578 - -

C T HOLDINGS PLC Annual Report 2018 | 2019 124 33. Contingencies 33.1. Letters of Guarantee The Company and subsidiaries Cargills (Ceylon) PLC and Kotmale holdings PLC have given letters of gurantee to Commercial Banks on behalf of subsidiary companies totalling to Rs. 1.875 Bn (2018: Rs. 2.175 Bn). The Directors do not expect any claim on these guarantees. Accordingly, no provision has been made in the Financial Statements for any possible losses.

Cargills (Ceylon) PLC has provided bank guarantees to Lion Brewery (Ceylon) PLC and its subsidiary Pearl Springs (Private) Limited to the value of Rs. 150 Mn to cover contingent tax liabilities in connection with the disposal of the investment in Millers Brewery Limited. The Directors do not expect any claim on these guarantees. Accordingly, no provision has been made in the Financial Statements for any possible losses there from.

33.2. Income tax Income tax exemptions claimed are being contested by the Department of Inland Revenue. This is further explained in note 10.5.6.

34. Events after the reporting period 34.1 Issue of shares The subsidiary Cargills (Ceylon) PLC has issued 1,221,116 shares on 29 April 2019.

34.2 Proposed Dividends The Company and following subsidiaries have declared the following final dividends out of the profits for the year ended 31st March 2019 (a) Company – final dividend of Rs 3.70 per share (on 201,406,978 shares now in issue) (b) Subsidiary, Cargills (Ceylon) PLC – final dividend of Rs 4.10 per share (on 256,000,000 shares now in issue) (c) Subsidiary, C T Land Development PLC – final dividend of Rs 1.25 per share (on 812,500,000 shares now in issue)

The above final dividends are to be submitted for approval by the shareholders at the respective Annual General Meetings of the companies concerned. As required by the Section 56 (2) of the Companies Act No. 7 of 2007, the Boards of Directors of the respective companies have confirmed that the Companies concerned satisfy the ‘Solvency Test’. In accordance with LKAS 10 - “Events after the reporting period”, the proposed dividends have not been recognised as a liability in the Financial Statements.

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

35. Going Concern The subsidiary C T Properties Ltd Group recorded accumulated losses of Rs. 1,559,311,844/- as at 31st March 2019 (2018: Rs. 1,583,626,348/-). This indicates the existence of a material uncertainty which may cast significant doubt about the Company’s ability to continue as a going concern. Note 15.2(g) indicates a potential restriction on the realisability of a land owned by the subsidiary. However, the net realisable values of the property assets and investments exceed the value at which such assets are stated in the statement of financial position. Further, the related party dues would not be demanded for repayment in a manner that would affect the Company’s ability to function as going concern due to the investments and borrowings for the same operations. Having taken into consideration the financial position and future prospects, the Directors have a reasonable expectation that the Company has adequate resources to continue to be in operation in the foreseeable future. Accordingly, the Directors have adopted a Going Concern method of accounting of the subsidiary concerned as at the reporting date.

C T HOLDINGS PLC 125 Annual Report 2018 | 2019 Five Year Review - Group

As at / for the year ended 31st March 2019 2018 2017 2016 2015 In thousands of rupees

Financial Results Revenue 95,547,360 92,134,483 85,037,781 72,399,182 62,452,231 Results from operations 5,233,973 6,802,234 5,798,305 4,135,309 2,127,552 Net finance costs (1,425,141) (1,319,208) (1,131,121) (393,626) (667,970) Profit before taxation 3,888,474 5,791,257 4,690,108 3,662,324 1,421,691 Tax expenses (1,504,237) (2,051,792) (2,023,094) (1,344,117) (701,923) Profit after tax for the year from discontinued operations - - - - 420,435 Profit for the year 2,384,237 3,739,465 2,667,014 2,318,207 1,140,203

Attributable to - Owners of the parent 1,642,624 2,597,342 1,747,876 1,626,228 816,846 Non-controlling Interest 741,620 1,142,123 919,138 691,979 323,357 2,384,244 3,739,465 2,667,014 2,318,207 1,140,203 Financial Position Stated capital 6,489,758 6,489,758 3,194,008 3,194,008 3,194,008 Reserves 14,958,595 14,167,708 15,600,031 15,665,674 14,156,800 Total equity attributable to equity holders of the parent 21,448,353 20,657,466 18,794,039 18,859,682 17,350,808 Non-controlling interest 4,765,746 4,239,636 3,405,406 4,662,872 4,195,112 Total equity 26,214,099 24,897,102 22,199,445 23,522,554 21,545,920

Borrowings Borrowings 16,935,443 14,719,710 15,817,948 11,508,553 12,384,754 Non-current payables 3,456,493 3,089,325 2,761,159 2,251,743 1,974,311 20,391,936 17,809,035 18,579,107 13,760,296 14,359,065 Net Assets Current assets 21,026,746 18,717,656 15,514,916 14,418,707 12,618,347 Current liabilities (34,569,514) (30,865,988) (30,499,922) (24,212,544) (20,887,330) Net current liabilities (13,542,768) (12,148,332) (14,970,525) (9,793,837) (8,268,983) Non-current liabilities (6,555,370) (5,973,075) (5,163,367) (4,428,623) (4,330,326) Non-current assets 46,312,237 43,018,509 42,347,818 37,745,014 34,145,229 Total net assets 26,214,099 24,897,102 22,199,445 23,522,554 21,545,920

Ratios & Statistics Growth in annual turnover (%) 3.70 8.35 17.46 15.93 10.01 Earnings per share (Rs.) 8.16 12.90 8.68 8.07 4.06 Growth in earnings (%) (36.76) 48.60 7.48 99.09 (36.18) Shareholders’ funds per share (Rs.) 106.49 102.57 93.31 93.64 86.15 Growth in shareholders’ funds (%) 3.83 9.91 (0.35) 8.70 2.37 Return on shareholders’ funds (%) 7.66 12.58 9.30 8.62 4.71 Non-current assets to shareholders’ funds (%) 215.92 208.25 225.25 200.14 196.79 Current ratio (times) 0.61 0.61 0.51 0.60 0.60 Debt equity ratio (times) 0.78 0.72 0.84 0.58 0.67 Dividend per share (Rs.) 5.50 5.50 5.20 3.80 3.40 Dividend cover (times) 1.48 2.35 1.67 2.12 1.19 Market price per share (Rs.) 162.90 175.00 148.90 129.90 128.00 Price earnings ratio (times) 19.97 13.57 17.16 16.09 31.56 Net asset value per share 130.15 123.62 110.22 116.79 106.98

Note All per share details have been calculated, for all periods, based on the number of shares in issue as at 31st March 2019.

C T HOLDINGS PLC Annual Report 2018 | 2019 126 Group Directory

PARENT COMPANY Millers Limited CPC (Lanka) Limited C T Holdings PLC Address: 40 York Street, Colombo 1 Address: 40, York Street, Colombo 01. Address: No 8, Sir Chittampalam A Phone: +94112427777 Phone: +94112427777 Gardiner Mawatha, Colombo 02. Fax: +94112338704 Fax: +94112338704 Phone: +94112431243 Directors: Imtiaz Abdul Wahid, Directors: Imtiaz Abdul Wahid, Fax: +94112447956 P S Mathavan (up to 31st January Sidath Kodikara Email: [email protected] 2019), D G O Dias Chairman Emeritus: Mr. Anthony A Page Ceylon Agro Development Company Directors: Louis Page (Chairman), FMCG (Private) Limited Ranjit Page, Priya Edirisinghe, Cargills Quality Foods Limited Address: 40, York Street, Colombo 01. Sunil Mendis, J B L De Silva, Address: 40, York Street, Colombo 01. Phone: +94112427777 Mrs. Cecilia Muttukumaru, Phone: +94112427777 Fax: +94112338704 Dr. A Aravinda Page, Joseph Page, Fax: +94112338704 Directors: Imtiaz Abdul Wahid, R Selvaskandan, A D B Talwatte, Directors: Ranjit Page (Chairman), Haridas Fernando, Keerthi Gunasekara, Imtiaz Abdul Wahid, S C Niles Imtiaz Abdul Wahid, Sidath Kodikara, Talaal Maruzook, Saranga Wijesundara P S Mathavan (up to 31st January RETAIL AND WHOLESALE 2019), J C M Victoria, Kotmale Holdings PLC DISTRIBUTION S L W Dissanayake Address: 40, York Street, Colombo 01. Phone: +94112427777 Cargills (Ceylon) PLC Fax: +94112338704 Address: 40, York Street, Colombo 01. Cargills Distributors (Private) Limited Directors: Ranjit Page (Chairman), Phone: +94112427777 Address: 40, York Street, Colombo 01. Imtiaz Abdul Wahid, P S Mathavan (up Fax: +94112338704 Phone: +94112427777 to 31st January 2019), Priya Edirisinghe, Email: [email protected] Fax: +94112338704 Sunil Mendis, Joseph Page Directors: Louis Page (Chairman), Directors: Imtiaz Abdul Wahid, Ranjit Page, Imtiaz Abdul Wahid, Sidath Kodikara Kotmale Products Limited Sidath Kodikara (up to 31st January Address: 40, York Street, Colombo 01. 2019), Priya Edirisinghe, Y Kanagasabai Cargills Quality Dairies (Private) Phone: +94112427777 (w.e.f 25th February 2019), Limited Fax: +94112338704 P S Mathavan (up to 31st January Address: 40, York Street, Colombo 01. Directors: Imtiaz Abdul Wahid, 2019), Sanjeev Gardiner, Sunil Mendis, Phone: +94112427777 S L W Dissanayake Anthony A Page (up to 27th August Fax: +94112338704 2018), Joseph Page, Errol Perera, Directors: Imtiaz Abdul Wahid, Kotmale Milk Foods Limited Asoka Pieris (w.e.f 25th February 2019), Sidath Kodikara, P S Mathavan (up to Address: 40, York Street, Colombo Deva Rodrigo 31st January 2019), D G O Dias, S L W Dissanayake 01. Phone: +94112427777 Fax: +94112338704 Cargills Foods Company (Private) Directors: Imtiaz Abdul Wahid, Limited Cargills Agrifoods Limited S L W Dissanayake Address: 40, York Street, Colombo 01 Address: 40, York Street, Colombo 01. Phone: +94112427777 Phone: +94112427777 Kotmale Dairy Products (Private) Fax: +94112338704 Fax: +94112338704 Limited Directors: Ranjit Page (Chairman), Directors: Imtiaz Abdul Wahid, Address: 40, York Street, Colombo Sidath Kodikara, Imtiaz Abdul Wahid, Sidath Kodikara, P S Mathavan (up to 01. Phone: +94112427777 Priya Edirisinghe, Y Kanagasabai, 31st January 2019) Fax: +94112338704 Ms. Farida Khambata, Sunil Mendis, Directors: Imtiaz Abdul Wahid, Asoka Pieris (w.e.f 25th February 2019) S L W Dissanayake

C T HOLDINGS PLC 127 Annual Report 2018 | 2019 Group Directory

Kotmale Milk Products Limited Cargills Foods Services (Private) C T Real Estate (Private) Limited Address: 40, York Street, Colombo 01. Limited Address: 28th Floor, West Tower, World Phone: +94112427777 Address: 40, York Street, Colombo 01. Trade Centre, Colombo 01. Fax: +94112338704 Phone: +94112427777 Phone: +94112005700 Directors: Imtiaz Abdul Wahid, Fax: +94112338704 Fax: +94112336727 S L W Dissanayake Directors: Imtiaz Abdul Wahid, Directors: R Selvaskandan (Chairman), Sidath Kodikara, P S Mathavan (up to Joseph Page, Mrs. Cecilia Muttukumaru, Cargills Frozen Products (Pvt) Limited 31st January 2019) S C Niles, Louis Page, Errol Perera, Address: 40, York Street, Colombo 01. Jayantha Perera Phone: +94112427777 REAL ESTATE Fax: +94112338704 C T Land Development PLC C T Properties Lakeside (Private) Directors: Imtiaz Abdul Wahid, Address: 4th Floor, Majestic City, 10 Limited Sidath Kodikara, D G O Dias, Station Road, Colombo 04. Address: 28th Floor, West Tower, World S L W Dissanayake [email protected] Trade Centre, Colombo 01. Phone: +94112508673-4 Phone: +94112005700 Cargills Quality Confectionaries Fax: +94112592427 Fax: +94112336727 (Private) Limited Email: [email protected] Directors: R Selvaskandan (Chairman), Address: 40, York Street, Colombo 01. Directors: R Selvaskandan (Chairman), Joseph Page, Mrs. Cecilia Muttukumaru, Phone: +94112427777 Joseph Page, Mrs. M G Perera, S C Niles, Louis Page, Errol Perera, Fax: +94112338704 Priya Edirisinghe, Sunil Mendis, Jayantha Perera Directors: Imtiaz Abdul Wahid, S C Niles, Louis Page, Ranjit Page, Dr. T Sidath Kodikara Senthilverl C T Properties G S (Private) Ltd Address: 28th Floor, West Tower, World Cargills Enterprise Solutions (Private) C T Properties Limited Trade Centre, Colombo 01. Limited Address: 28th Floor, West Tower, World Phone: +117468500 Address: 40, York Street, Colombo 01. Trade Centre, Colombo 01. Fax: +117468502 Phone: +94112427777 Phone: +94112005700 Directors: Louis Page (alternate - R Fax: +94112338704 Fax: +94112336727 Email: Selvaskandan), Ranjit Page (alternate - Directors: R Theagarajah (Chairman), [email protected] S C Niles) Rohan Muttiah, S C Niles, Ranjit Page, Directors: Ranjit Page (Chairman), Imtiaz Abdul Wahid R Selvaskandan, Joseph Page, Dawson Office Complex (Private) Mrs. Cecilia Muttukumaru, S C Niles, Limited RESTAURANTS Louis Page, Errol Perera, Address: 40 York Street, Colombo 01. Cargills Food Processors (Private) Jayantha Perera Phone: +94112427777 Limited Fax: +94112338704 Address: 40, York Street, Colombo 01. C T Property Management Company Director: Imtiaz Abdul Wahid Phone: +94112427777 (Private) Limited Fax: +94112338704 Address: 28th Floor, West Tower, World Frederick North Hotel Company Directors: Imtiaz Abdul Wahid, Trade Centre, Colombo 01. (Private) Limited Sidath Kodikara, P S Mathavan (up to Phone:+94112005700 Address: 40 York Street, Colombo 01. 31st January 2019), J C M Victoria Fax: +94112336727 Phone: +94112427777 Directors: R Selvaskandan (Chairman), Fax: +94112338704 Joseph Page, S C Niles, Louis Page, Directors: Imtiaz Abdul Wahid, S C Niles Errol Perera, Jayantha Perera

C T HOLDINGS PLC Annual Report 2018 | 2019 128 The Empire Investment Company BANKING & FINANCIAL SERVICES C T CLSA Capital (Private) Limited (Private) Limited Cargills Bank Limited Address: 4-15 A, Majestic City, 10 Address: 40 York Street, Colombo 01. Address: 696 Galle Road, Colombo 04. Station Road, Colombo 04. Phone: +94112427777 Phone: +94117640000 Phone: +94112584843, +94112503523 Fax: +94112338704 Fax: +94112055575 Fax: +94112580181 Directors: Ranjit Page, S C Niles, Email: [email protected], Email: [email protected] Anthony A Page Directors: Louis Page (Chairman), Directors: Mrs. Cecilia Muttukumaru Ranjit Page, Rajendra Theagarajah, (Chairperson), Donald Skinner, ENTERTAINMENT P S Mathavan, Mangala Boyagoda, S C Niles, Zakir Mohamedally Ceylon Theatres (Private) Limited Faizal Salieh, Richard Ebell, Address: No 8, Sir Chittampalam A Dr. Dushni Weerakoon Comtrust Asset Management Limited Gardiner Mawatha, P O Box 2042, (w.e.f. 1st August 2018) Address: 4-07, Majestic City, 10 Station Colombo 02. Mrs. Ruvini Fernando, Road, Colombo 04. Phone: +94112431243, +94112555565 (w.e.f. 1st August 2018) Phone: +94112506347, +94112506204 Fax: +94112447956 Fax: +94112506347 Chairman Emeritus: Mr. Anthony A Page C T CLSA Holdings Limited Email: [email protected] Directors: Louis Page (Chairman w.e.f Address: 4-15, Majestic City, 10 Station Directors: Mrs. Cecilia Muttukumaru 30th January 2019), R Selvaskandan, Road, Colombo 04. (Chairperson), Donald Skinner, Joseph Page, Mrs. Cecilia Muttukumaru, Phone: +94112552290 Joseph Page S C Niles, Anthony A Page (up to 30th Fax: +94112552289 January 2019), Errol Perera (w.e.f 30th Directors: Priya Edirisinghe (Chairman), January 2019), Mrs. M G Perera, Mrs. Cecilia Muttukumaru, Louis Page, Imtiaz Abdul Wahid Donald Skinner, Zakir Mohamedally (w.e.f 1st January 2019) Cinema Entertainments (Private) Limited C T CLSA Securities (Private) Limited Address: No 8, Sir Chittampalam A Address: 4-14, Majestic City, 10 Station Gardiner Mawatha, Colombo 02. Road, Colombo 04. Phone: +94112478752, +94112478753 Phone: +94112552290 Fax: +94112478754 Fax: +94112552289 Directors: Errol Perera (Chairman – Email: [email protected] w.e.f 1st January 2019), M I J A Cader Directors: Mrs. Cecilia Muttukumaru (Chairman – up to 31st December (Chairperson), Priya Edirisinghe, 2018), G R Pathmaraj, R Selvaskandan Donald Skinner, Kanishka Hewage

C T HOLDINGS PLC 129 Annual Report 2018 | 2019 Information of Shareholders

1. DISTRIBUTION OF SHAREHOLDERS 31st March 2019 31st March 2018 Size of Shareholdings Shareholders Holdings Shareholders Holdings Numbers % Numbers % Numbers % Numbers % 1 - 1,000 Shares 678 46.66 132,174 0.07 682 45.62 135,055 0.07 1,001 - 10,000 Shares 452 31.11 1,709,825 0.84 479 32.04 1,812,074 0.90 10,001 - 100,00 Shares 255 17.55 7,670,978 3.81 272 18.19 8,129,415 4.03 100,001 - 1,000,000 Shares 50 3.44 13,167,895 6.54 43 2.88 11,513,763 5.72 Over 1,000,000 Shares 18 1.24 178,726,106 88.74 19 1.27 179,816,671 89.28 Total 1,453 100.00 201,406,978 100.00 1,495 100.00 201,406,978 100.00

2. ANALYSIS OF SHAREHOLDERS 31st March 2019 31st March 2018 Size of Shareholdings Shareholders Holdings Shareholders Holdings Numbers % Numbers % Numbers % Numbers % Institutions 111 7.64 79,317,694 39.38 119 7.96 122,796,787 60.97 Individuals 1,342 92.36 122,089,284 60.62 1,376 92.04 78,610,191 39.03 Total 1,453 100.00 201,406,978 100.00 1,495 100.00 201,406,978 100.00

Residents 1,318 90.71 168,615,635 83.72 1,363 91.17 167,779,362 83.30 Non-Residents 135 9.29 32,791,343 16.28 132 8.83 33,627,616 16.70 Total 1,453 100.00 201,406,978 100.00 1,495 100.00 201,406,978 100.00

C T HOLDINGS PLC Annual Report 2018 | 2019 130 3. MAJOR SHAREHOLDERS Name of Shareholder 31st March 2019 31st March 2018 Number of % Number of % Shares Shares Odeon Holdings (Ceylon) (Pvt) Ltd 84,281,323 41.85 84,210,323 41.81 Mr. Anthony A. Page 17,501,287 8.69 17,501,287 8.69 Mr. Ranjit Page 13,931,102 6.92 12,933,350 6.42 Ms. M.M. Page 10,325,134 5.13 9,930,855 4.93 Sir Chittampalam A Gardiner Trust 10,120,004 5.02 10,120,004 5.02 Employees Provident Fund 7,686,987 3.82 7,686,987 3.82 Mr. Joseph Page 7,069,172 3.51 7,069,172 3.51 Mrs. T. Selvaratnam 5,667,250 2.81 5,667,250 2.81 BNYMSANV Re-CF Ruffer Total Return Fund 4,730,000 2.35 4,730,000 2.35 BNYMSANV Re-CF Ruffer Absolute Return Fund 3,686,188 1.83 3,686,188 1.83 Mrs. Tanya Selvaratnam 2,821,500 1.40 2,821,500 1.40 Mr. T Selvaratnam 2,821,500 1.40 2,821,500 1.40 Northern Trust Company S/A Hosking Global Fund PLC 2,240,200 1.11 - - BNYMSANV Re-First State Investments ICVC - - - 2,303,051 1.14 Stewart Investors Indian Subcontinent Fund BNYMSANV Re-CF Ruffer Investment Funds : CF Ruffer Pacific Fund 2,200,000 1.09 2,200,000 1.09 HSBC Intl Nom Ltd - JPMCB - Pacific Assets Trust PLC - - 1,966,745 0.98 Melstacorp PLC 1,623,050 0.81 1,623,050 0.81 Mrs. Cecilia Muttukumaru 1,266,750 0.63 1,532,750 0.76 Ms. A.M. Basnayake 1,049,659 0.52 1,012,659 0.50 The Galle Face Hotel Co. Ltd 915,503 0.45 915,503 0.45 GF Capital Global Limited 737,450 0.37 - - Mr. P.E. Muttukumaru 700,000 0.35 943,787 0.47 Others 20,032,919 9.94 19,731,017 9.80 Total 201,406,978 100.00 201,406,978 100.00

C T HOLDINGS PLC 131 Annual Report 2018 | 2019 Information of Shareholders

4. SHARE VALUATION The market value of ordinary shares of the Company on 31st March 2019 was Rs 162.90 (2018 - Rs 175.00). The highest and lowest values recorded during the year ended 31st March 2019 were Rs 189.00 (2018 - Rs 195.00) and Rs 162.90 (2018 – Rs 140.00) respectively.

5. PUBLIC SHAREHOLDING Description 2019 2018 Shareholders (No’s) 1,438 1,480 Shareholding (%) 37.92% 38.33% Float adjusted market capitalisation (Rs.’000) 12,441,247 13,509,877

C T HOLDINGS PLC Annual Report 2018 | 2019 132 Notice of Meeting

Notice is hereby given that the Eighty Eighth Annual General Meeting of C T Holdings PLC will be held at the Sri Lanka Foundation, 100, Sri Lanka Padanama Mw, Independence Square, Colombo 7 on Monday, 29th July 2019 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 2019 with the report of the Auditors thereon. 2) To declare a dividend as recommended by the Directors. 3) To re-elect Directors a. Mrs. C K Muttukumaru b. Dr. A Aravindakumar Page, and c. Mr. A D B Talwatte who retire by rotation, and d. Mr. J B L De Silva, e. Mr. A T P Edirisinghe and f. Mr. Sunil Mendis, who retire in terms of Section 210 (2) (b) of the Companies Act No. 07 of 2007 having surpassed seventy years of age and offer themselves for re-election in terms of Section 211 (1) and (2) of the Companies Act No, 07 of 2007.

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

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

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

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 04 July 2019

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

C T HOLDINGS PLC 133 Annual Report 2018 | 2019 Notes

C T HOLDINGS PLC Annual Report 2018 | 2019 134 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 Eighth Annual General Meeting of the Company to be held on 29th July 2019 and at any adjournment thereof.

No. Resolution For Against 1. To adopt the Financial Statements for the year ended 31st March 2019

2. To declare a dividend as recommended by the Directors

3a. To re-elect Mrs C K Muttukumaru as a Director

3b. To re-elect Dr. A Aravindakumar Page as a Director

3c. To re-elect Mr. A D B Talwatte as a Director

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

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

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

4. To authorise the Directors to determine contribution to charities

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

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

Dated this ...... day of ...... 2019

...... Signature of the Shareholder Witnesses

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

C T HOLDINGS PLC 135 Annual Report 2018 | 2019 INSTRUCTIONS AS TO COMPLETION To be valid, this Proxy form should be completed, signed and deposited at the Registered Office of the Company at No. 8, Sir Chittampalam A Gardiner Mawatha, Colombo 2, not less than 48 hours before the time appointed for holding the meeting. In perfecting the Form of Proxy, please ensure that all details are legible.

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

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

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

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

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

C T HOLDINGS PLC Annual Report 2018 | 2019 136 Corporate Information

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

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

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