Creating Value since 1928 C T HOLDINGS PLC ANNUAL REPORT 2019 | 2020 CONTENTS Overview Our Business at a Glance 01 Milestones 02 Profile of Businesses 04 Financial Highlights 06 Operational Spotlight 07 Stewardship Chairman’s Message 08 Profile of Directors 10 Review of Operations 12 Corporate Governance 18 Risk Management 21 Report of the Remuneration Committee 23 Report of the Nominations Committee 24 Report of the Related Party Transactions Review Committee 25 Financial Statements 27 Financial Reports Annual Report of the Board of Directors of the Company 29 Report of the Audit Committee 32 Statement of Directors Responsibility 34 Independent Auditors’ Report 35 Statement of Profit or Loss and Other Comprehensive Income 42 Statement of Financial Position 43 Statement of Changes in Equity 44 Statement of Cash Flows 46 Notes to the Financial Statements 48 Supplementary Five Year Review - Group 134 Group Directory 135 Information of Shareholders 138 Notice of Meeting 141 Notes 142 Form of Proxy 143 Corporate Information Back Cover Inner OUR BUSINESS AT A GLANCE C T Holdings PLC then known as Ceylon Theatres Limited was incorporated in 1928 with its primary focus on the entertainment industry. The Company owned and operated a string of cinemas in various parts of the country including such well known destinations such as Regal Colombo, Empire and Majestic cinemas. The Company also set up the first film production and processing facilities in the country with the establishment of Ceylon Studios Ltd in 1956, thus paving the way for the development of the local film production expertise. Despite the Company’s first production “Asokamala” being unsuccessful, the Company persevered to subsequently produce hit films such as “Golu Hadawatha”, “Akkara Paha”, “Sakman Maluwa” etc. The hit film “Nidhanaya” was adjudged the best Sri Lankan film produced in the past 50 years. Anticipating the effects of the changes within the film industry in the 1970s and 80s, the Company began to diversify into other areas of business, notably, consolidating its interest in Millers Limited and through it, Cargills (Ceylon) Ltd. Millers Ltd was subsequently merged with C T Holdings PLC. The Company also diversified into Financial Services and Real Estate. The subsidiary Cargills shed the Department Store concept to introduce and expand the Supermarket concept to Sri Lanka. This change was to be the most significant change to the Group and the backbone of future growth. Cargills also expanded into Food Processing, Dairy, Agri Business and Confectionery. A fully fledged Commercial Bank under the name ‘Cargills Bank’ was also set up by the Group. All this while also staying true to its roots in cinema business by developing cinemas with digital sounds, 3D viewing and upgrading facilities for patrons. C T Holdings is now a diversified Group with interest in Retail, Fast Moving Consumer Goods, Distribution, Real Estate, Entertainment, Banking and Financial Services. C T HOLDINGS PLC 01 Annual Report 2019 | 2020 MILESTONES 2006 1928 Cargills commissioned its Ceylon Theatres new state-of-the art meat Limited established, processing facility. focusing primarily on the entertainment industry by Sir Chittampalam A. Gardiner. 2008 Ceylon Theatres merged with 1991 its subsidiary Millers PLC to create an investment holding Completed the Majestic City Company. shopping and entertainment Cinema exhibition operation mall through C T Land transferred to a wholly Development PLC. owned subsidiary, Ceylon Theatres (Private) Limited. 2010 Name of Ceylon Theatres PLC 1996 changed to C T KFC franchise Holdings PLC awarded to Cargills. 2002 Cargills acquired the Walls Ice Cream plant and CPC/ Best foods production facility of jams, cordials and sauces. 1981 Acquired Millers and Cargills 1999 and ventured into retail Entered the Ceramic / Tiles, and distribution under the Plantation and Packaging leadership of Mr. Albert A 2009 sectors. Page. C T Properties Limited 1992 completed its flagship ‘Empire’ residential Entered the financial services sector through development project. C T Smith Stockbrokers (Member, Colombo Stock Exchange) – now re named as C T CLSA Securities (Private) Limited. Cargills diversified into food processing with the acquisition of the Goldi processed meat plant – now known as Cargills Quality Foods Ltd. C T HOLDINGS PLC Annual Report 2019 | 2020 02 2017 Cargills commissioned the 2012 expanded dairy facility. Cargills entered the brewery Cargills Square mall sector. Gampaha opened with a Ceylon Theatres added three supermarket, KFC and two new screens to the Majestic cinema screens. Cineplex including Sri 2015 Lanka’s first ever 3D cinema. Retail sector comprising the supermarkets spun off into a 2019 separate Company with new CT Holdings completed 90 direct equity injection into the years of operations Company. Cargills opened Cargills Food Two new cinema screens Hall, bringing Sri Lanka’s set up by Ceylon Theatres first gourmet supermarket at Arcade Independence experience at the Colombo Square, the Group’s Regal City Centre Shopping Mall cinema was refurbished. Cargills exited the brewery sector. 2013 2016 2020 Cargills set up the Cargills Bank began expansion Cargills commenced its TGI Fridays Franchise of its network by opening 11 175th year of operations Restaurant in branches. Colombo, Fort. Cargills opened the 400th Cargills Food City supermarket in Wattala in 2014 early 2020 Group received license Launched the Kotmale 2011 to set up and operate a Cheese processing plant in Cargills acquired controlling Commercial Bank. Hatton interest in Kotmale Holdings Cargills Square Mall opened PLC. in Jaffna. 2018 Cargills also acquired Exited the Ceramic / Tiles, Diana Biscuits Plantation and Packaging Regal Cinema in Manufacturers (Private) sectors. Nuwara Eliya fully Limited (subsequently refurbished and re-named Cargills Quality re-opened. Confectioneries (Pvt) Ltd). C T HOLDINGS PLC 03 Annual Report 2019 | 2020 PROFILE OF BUSINESSES Retail and Wholesale Fast Moving Consumer Goods Real Estate Distribution (FMCG) C T Land Development is a long The retail sector of the Group The Group’s FMCG brands are established name in the Real Estate functions under Cargills Foods some of the widest consumed and Property sector. The Company Company (Pvt) Ltd. The modern household brands in the Country owns and operates ‘Majestic City’, trade arm covers all districts of which include, ‘Magic’ and the largest and most popular the island through Cargills Food ‘Kotmale’ dairy products, ‘Kist’ shopping and entertainment mall in City and Food City Express store range of jams, cordials, nectars, the Country. The Group also owns formats. This sector maintains a juices, culinary & confectionery, and and operates the Cargills Square backward integration model with ‘Cargills Finest’, ‘Goldi’ and ‘Sams’ Malls in Jaffna and Gampaha. local fruit and vegetable collection and ‘Island’s Finest’ Convenience Property development operations centres in every district of the island. Foods. The sector operates some under C T Properties previously of the most modern facilities with completed the ‘Empire’ luxury Millers Limited the marketing and many ISO International Standard apartment complex in Colombo 2 distribution arm holds the agency certifications among them such and C T Gardens Township project rights for leading international food as ISO 9001: 2000 Quality in Piliyandala. brands reaching 40,000 groceries Management System certification, islandwide. The Company is also ISO 22000: 2005 Food Safety the distributor for the Group’s own Management System certification brands. and ISO 14001: 2004 Environment Management System certification. C T HOLDINGS PLC Annual Report 2019 | 2020 04 Restaurants Banking and Financial Entertainment The restaurants’ sector includes Services The Group has been associated the world renowned ‘KFC’ and Cargills Bank which was with the national cinema industry for ‘TGI Fridays’ franchises with 40 promoted and launched by the over 90 years with the making of the KFC restaurants and one TGIF Group completed its fifth year first national production and thereon Restaurant. of operations. Capital Market producing landmark motion pictures operations of the Group are carried that have won international acclaim. out under C T CLSA Holdings Ceylon Theatres (Private) Limited is Ltd, which covers stockbroking, engaged in operating Fifteen cinema advisory services and capital market screens in Seven locations. solutions. C T HOLDINGS PLC 05 Annual Report 2019 | 2020 FINANCIAL HIGHLIGHTS Group Company In thousands of rupees 2020 2019 Change % 2020 2019 Change % Operations Revenue 107,817,065 95,547,360 12.84 - - - Results from operating activities 7,277,288 5,290,553 37.55 948,128 346,378 173.73 Profit before taxation 4,254,692 3,888,474 9.42 960,515 362,777 164.77 Profit for the year 2,721,877 2,384,237 14.16 942,608 354,874 165.62 Profit attributable to owners of the Parent 1,404,986 1,642,617 (14.47) 942,608 354,874 165.62 Per Share Data Earnings Per Share (Rs.) 6.98 8.16 (14.46) 4.68 1.76 165.91 Dividends Per Share (Rs.) 4.60 5.50 (16.36) 4.60 5.50 (16.36) Dividend Cover (Times) 1.52 1.48 2.70 1.02 0.32 318.75 Shareholders’ Interest Stated Capital 6,489,758 6,489,758 6,489,758 6,489,758 Total equity attributable to equity holders of the parent 21,189,846 21,448,353 7,440,910 7,623,748 Return on equity attributable to equity holders of the parent (%) 6.63 7.66 12.67 4.65 Total equity attributable to equity holders of the parent per Share (Rs.) 105.20 106.49 36.94 37.85 Leverage Net Finance Income/ (Costs) (2,680,731) (1,481,721) 12,387 16,399 Interest Cover (Times) 2.71 3.57 - - Borrowings (including overdrafts) 30,060,880 16,935,443 374 - Borrowing as a Percentage of total equity attributable to equity holders of the parent (%) 141.86 78.96 N/A N/A Note Earnings, dividends and shareholders’ funds per share have been calculated based on the number of issued shares presently in issue.