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.