Creating Value since 1928 C T Holdings PLC Annual Report 2015/16 CONTENTS 02 Our Business at a Glance 04 Milestones 06 Our Presence 08 Financial Highlights 10 Chairman’s Statement 12 Profile of Directors 14 Management Discussion and Analysis 20 Corporate Governance 22 Risk Management 24 Report of the Audit Committee 26 Report of the Remuneration Committee 27 Related Party Transactions Review Committee Report 28 Report of the Nominations Committee Financial Statements 30 Annual Report of the Board of Directors of the Company 32 Statement of Directors’ Responsibilities 33 Independent Auditors’ Report 34 Statement of Profit or Loss and other Comprehensive Income 35 Statement of Financial Position 36 Statement of Changes in Equity 38 Statement of Cash Flows 40 Notes to the Financial Statements 99 Five Year Review - Group 100 Group Directory 102 Information to Shareholders 104 Notice of Meeting 107 Form of Proxy Inner Back Cover Corporate Information We are... Professionals inspired by the ingrained family values inherited over generations Value creators driven by innovation and technology towards building strong brands Accountable firmly committed to transparency and good governance Dedicated to people as our most important asset Socially responsible pursuing trusted leadership C T Holdings PLC Annual Report 2015/16 01 Our Business at a Glance C T Holdings PLC then known as Ceylon Theatres Limited was incorporated in 1928 with its primary focus on the entertainment industry. The Company owned and operated a string of cinemas in various parts of the country including such well-known destinations as Regal Colombo, Empire and Majestic cinemas. C T Holdings is The Company also set up the first film production and processing facilities in the country with the establishment of Ceylon Studios Ltd in 1956, thus paving the way for now a diversified the development of the local film production expertise. Group with interest Despite the Company’s first production “Asokamala” being unsuccessful, the in Retail, Fast Company persevered to subsequently produce hit films such as “Golu Hadawatha”, “Akkara Paha”, “Sakman Maluwa” etc. The hit film “Nidhanaya” was adjudged the Moving Consumer best Sri Lankan film produced in the past 50 years. Goods, Distribution, Anticipating the effects of the changes within the film industry in the 1970s and 80s, the Company began to diversify into other areas of business, notably, consolidating Real Estate, its interest in Millers Limited and through it, Cargills (Ceylon) Ltd. Millers Ltd was subsequently merged with C T Holdings PLC. Entertainment, The Company also diversified into Financial Services and Real Estate. The subsidiary Banking and Cargills shed the Department Store concept to introduce and expand the Financial Services. Supermarket concept to Sri Lanka. This change was to be the most significant change to the Group and the backbone of future growth. Cargills also expanded into Food Processing, Dairy, Agri Business and Confectionery. A fully fledged Commercial Bank name ‘Cargills Bank’ has also been set up by the Group. All this while also staying true to the roots in the cinema business by developing the cinemas with digital sounds, 3D viewing and upgraded facilities for patrons. C T Holdings is now a diversified Group with interest in Retail, Fast Moving Consumer Goods, Distribution, Real Estate, Entertainment, Banking and Financial Services. 02 C T Holdings PLC Annual Report 2015/16 87 Years and counting 8,800+ Employees Rs. 52.16 Bn Assets 375+ Locations 8 18+ Businesses Processing Facilities Milestones 1928 1991 1996 2002 2008 Ceylon Theatres Completed the KFC franchise Cargills acquired the Ceylon Theatres merged Limited established, Majestic City awarded to Walls Ice Cream plant with Millers PLC to focusing primarily on shopping and Cargills. and CPC/Best foods create an investment the entertainment entertainment mall production facility holding Company. industry by Sir through C T Land of jams, cordials and Chittampalam A. Development PLC. sauces. Cinema exhibition Gardiner. operation transferred to a wholly owned subsidiary Ceylon Theatres (Private) Limited. 1981 1992 1999 2006 Acquired Millers and Entered the financial services sector Entered the Ceramic Cargills commissioned its Cargills and ventured through C T Smith Stockbrokers / Tiles, Plantation and new state of the art meat into retail and distribution (Member, Colombo Stock Packaging sectors. processing facility. under the leadership of Mr. Exchange) – now re named as C T Albert A Page. CLSA Securities (Private) Limited. Cargills diversified into food processing with the acquisition of the Goldi processed meat plant – now known as Cargills Quality Foods Ltd. 04 C T Holdings PLC Annual Report 2015/16 2009 2011 2013 2015 C T Properties Limited Cargills acquired controlling C T Properties Limited Retail sector comprising the completed its flag ship interest in Kotmale Holdings entered into a JV supermarkets spun off into a ‘Empire’ residential PLC. Cargills acquired Diana agreement with Edmonton separate company with new direct development project. Biscuits Manufactures (Private) Pte Ltd (subsidiary of equity injection into the Company. Limited (subsequently re Keppel Land Ltd Singapore) - named Cargills Quality to engage in property Two new cinema screens set up Confectioneries (Pvt) Ltd). development projects in Sri by Ceylon Theatres at Arcade Lanka. Independence Square, the Group’s Regal cinema was fully refurbished. Cargills set up the TGI Fridays Franchise Cargills exited the brewery sector. Restaurant in Colombo, Fort. 2010 2012 2014 2016 Name of Ceylon Theatres Cargills entered the Group received license to set up Cargills Bank network PLC changed to C T brewery sector. and operate a Commercial Bank. increased to 11 Holdings PLC. branches. Ceylon Theatres added Cargills Square Mall opened in three new screens to Jaffna CT Properties acquired the Majestic Cineplex Disposed of the shareholding in control of its project in including Sri Lanka’s first Lanka Ceramic PLC, exited the Kotahena due to the exit ever 3D cinema. Ceramic / Tiles, Plantation and of the JV partner. Packaging sectors. C T Holdings PLC Annual Report 2015/16 05 Our Presence Retail and Wholesale Distribution FMCG The retail sector of the Group functions under Cargills Foods The Group’s FMCG brands are some of the widest consumed Company (Pvt) Ltd. The modern trade arm covers 24 districts household brands in the Country which include, ‘Magic’ and of the island through Cargills Food City and Food City Express ‘Kotmale’ dairy products, ‘Kist’ range of jams, cordials, nectars, store formats. Cargills Food City has been rated the 10th juices and accompaniments, ‘Cargills Finest’, ‘Goldi’ and ‘Sams’ most valuable brand in Sri Lanka as per the Brand Finance processed meats and ‘Kist’ brand of confectioneries. The sector Index ratings of 2016 with a AA+ rating and is the only Retailer operates some of the most modern facilities with many ISO ranked in the top ten of national brands. This sector maintains International Standard certifications among them such as ISO a backward integration model with local fruit and vegetable 9001: 2000 Quality Management System certification, ISO collection centres in every district of the island. 22000: 2005 Food Safety Management System certification and ISO 14001: 2004 Environment Management System Millers Limited the marketing and distribution arm holds the certification. agency rights for leading international food brands such as ‘Bonlac’, ‘Kraft’, ‘Cadbury’, ’Toblerone’,‘Nabisco’, ‘Tang’ etc. reaching 40,000 groceries islandwide. The Company is also the distributor for the Group’s own brands. Restaurants Real Estate The restaurants sector includes the world renowned ‘KFC’ and C T Land Development is a long established name in the Real ‘TGIFridays’ franchises with 27 KFC restaurants and one flagship Estate and Property sector. The Company owns and operates TGIF Restaurant. ‘Majestic City’, the largest and most popular shopping and entertainment mall in the Country. The Group also owns and operates the Cargills Square Mall in Jaffna. Property development operations under C T Properties previously completed the ‘Empire’ luxury apartment complex in Colombo 2 and C T Gardens Township project in Piliyandala. 06 C T Holdings PLC Annual Report 2015/16 Entertainment Banking & Financial Services The Group has been associated with the national cinema Capital Market operations of the Group are carried out under industry for over 80 years with the making of the first national C T CLSA Holdings Ltd, which covers Stockbroking, advisory production and thereon producing landmark motion pictures services and capital market solutions. The Group is also that have won international acclaim. Ceylon Theatres (Private) the promoter shareholder of Cargills Bank, which presently Limited is engaged in operating eleven cinema screens in five operates eleven branches. locations. C T Holdings PLC Annual Report 2015/16 07 Financial Highlights Group Company 2016 2015 % Change 2016 2015 % Change Operations Revenue 72,399,182 62,452,231 15.93 - - - Results from operating activities 4,135,309 2,127,552 94.37 (91,445) (223,407) (59.07) Profit before taxation 3,662,324 1,421,691 157.60 592,191 395,666 49.67 Profit for the year from continuing operations 2,318,207 719,768 222.08 568,871 383,057 48.51 Profit for the year 2,318,207 1,140,203 103.32 568,871 383,057 48.51 Profit attributable to owners of the Company 1,626,228 816,846 99.09 568,871 383,057 48.51 Per