Ceylon Beverage : Interim Accounts 31 Dec 2022

Ceylon Beverage Holdings PLC

Interim Condensed Financial Statements for the Third Quarter ended

31st December 2022

CEYLON BEVERAGE HOLDINGS PLC

Review

The quarter under review saw the first glimpses of the slowing down of inflation, but the high prices had an overall impact on purchasing power of consumers which resulted in the overall FMCG volumes in Sri Lanka being impacted. The beer industry witnessed a 77% increase in prices driven by Excise Duty, VAT and SSL taxes during the period leading up to January resulting in volumes declining for the quarter compared to the previous year.

The situation has deteriorated in January following the 20% increase in excise taxes. We are witnessing an exponential growth of 'Kasippu" (moonshine), illicit arrack and illicit toddy as the prices of legal alcoholic beverages are out of consumers' reach.

Early signs are that the January excise tax increase is struggling. January excise tax collection has declined in excess of 10% year- on-year. The situation looks worse in February. Six weeks into the year, the full year excise tax target seems difficult to achieve. Indeed, at the current run-rate, the jury is out on whether 2023 taxes will even reach the 2022 amount.

Policy makers should be cognizant of the fact that tax hikes on the Alcohol industry, an industry with a large illicit component, will be counterproductive in the current depressed conditions as volume declines offset duty increases, thereby impacting this steady source of revenue to Government. If there is a decline in excise taxes year-on-year of over 10%, even after a 20% increase in tax rates, then it would appear that we are past the point of optimal taxation.

In the face of this, we strongly advocate for sensible taxation and allow time for consumer earnings power to recover.

With the domestic business under pressure for the foreseeable future, the Group is increasing its already high focus on international business. Spend behind product, brand, distribution and people is increasing. Returns on this spend are not only uncertain but will take time to materialize.

Despite efforts to manage costs, given continuing cost inflation and declining domestic volumes, profitability will be subdued.

CEYLON BEVERAGE HOLDINGS PLC

BOARD OF DIRECTORS AS AT 31ST DECEMBER 2022

Mr. D. A. Cabraal (Chairman)

Mr. H. Selvanathan (Deputy Chairman)

Mr. M. Selvanathan (Director / Alternate Director to Mr. H. Selvanathan) Mr. R. H. Meewakkala (Chief Executive Officer)

Mr. D. C. R. Gunawardena

Mr. S. Clini

Mrs. S. J. F. Evans

CEYLON BEVERAGE HOLDINGS PLC

CONDENSED STATEMENT OF FINANCIAL POSITION

	Company		Group
As at	31st December 2022		31st March 2022	31st December 2022		31st March 2022
In Rs.'000s			(Audited)			(Audited)
ASSETS
Non-current assets
Property, plant and equipment	-		-	21,111,364		20,574,458
Investment properties	647,100		647,100	647,100		647,100
Right of use assets	-		-	191,881		207,281
Intangible assets	-		-	457,431		819,545
Deferred tax assets	-		-	1,095		1,548
Investment in subsidiaries	1,835,083		1,835,083	-		-
Total non-current assets	2,482,183		2,482,183	22,408,871		22,249,932
Current assets
Inventories	-		-	7,537,377		4,537,111
Trade and other receivables	508		571	12,052,924		2,406,133
Amounts due from related companies	192,041		134,091	-		-
Current tax assets	-		-	-		-
Cash and cash equivalents	438,289		28,375	12,824,882		13,114,311
Total current assets	630,838		163,037	32,415,183		20,057,555
Total assets	3,113,021		2,645,220	54,824,054		42,307,487
EQUITY AND LIABILITIES
Equity
Stated capital	533,384		533,384	533,384		533,384
Capital reserves	19,924		19,924	1,103,358		1,103,358
Revenue reserves	1,935,712		1,492,565	10,183,540		8,720,708
Equity attributable to equity holders of the Company	2,489,020		2,045,873	11,820,282		10,357,450
Non controlling interest	-		-	10,584,093		9,515,171
Total equity	2,489,020		2,045,873	22,404,375		19,872,621
Non-current liabilities
Loans and borrowings	-		-	1,949,094		2,300,311
Lease liabilities	-		-	197,959		196,109
Employee benefits	-		-	196,301		182,996
Deferred tax liabilities	94,752		31,584	5,200,223		5,260,140
Total non- current liabilities	94,752		31,584	7,543,577		7,939,556
Current liabilities
Trade and other payables	20,020		20,524	7,006,039		3,492,710
Amounts due to related companies	360,878		337,741	44,998		155,757
Refundable deposits	-		-	2,677,762		2,301,181
Current tax liabilities	144,968		37,891	3,991,945		3,163,706
Loans and borrowings	-		-	7,062,503		3,347,696
Lease liabilities	-		-	42,367		57,499
Bank overdraft	3,383		171,607	4,050,488		1,976,761
Total current liabilities	529,249		567,763	24,876,102		14,495,310
Total liabilities	624,001		599,347	32,419,679		22,434,866
Total equity and liabilities	3,113,021		2,645,220	54,824,054		42,307,487
Net assets per ordinary share (Rs.)	118.59		97.48	563.19		493.49
	-			-

The above figures are provisional and subject to audit.

These financial statements are in compliance with the requirements of the Companies Act No. 07 of 2007.

(Sgd.)

D.R.P. Goonetilleke

Head of Finance

The Board of Directors are responsible for the preparation and presentation of these Financial Statements.

Approved and signed on behalf of the Managers	Approved and signed on behalf of the Board
(Sgd.)	(Sgd.)	(Sgd.)
V. R. Wijesinghe	M.Selvanathan	R.H. Meewakkala
Director	Director	Director
Carsons Management Services (Private) Ltd.
10th February 2023

CEYLON BEVERAGE HOLDINGS PLC

CONDENSED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME - COMPANY

		Quarter Ended			Nine Months Ended		Year Ended
As at	31-Dec-22	31-Dec-21		Change %		31-Dec-22	31-Dec-21	Change %		31-Mar-22
In Rs.'000s										(Audited)
Revenue	615,315	208,321		195		1,444,053	881,130	64		935,862
Cost of sales	-	-		-		-	-	-		-
Gross profit	615,315	208,321		195		1,444,053	881,130	64		935,862
Net gains arising from changes in fair value of investment properties	-	-		-		-	-	-		160,230
	615,315	208,321		195		1,444,053	881,130	64		1,096,092
Administrative expenses	(8,105)	(3,036)		167		(16,786)	(11,671)	44		(27,561)
Impairment of investments in subsidiaries	-	-		-		-	-	-		(83,989)
Profit before finance cost	607,210	205,285		196		1,427,267	869,459	64		984,542
Finance income	11,155	2,265		392		27,234	5,626	384		8,220
Finance costs	(26,527)	(9,152)		190		(68,037)	(25,080)	171		(34,554)
Net finance costs	(15,372)	(6,887)		123		(40,803)	(19,454)	110		(26,334)
Profit before taxation	591,838	198,398		198		1,386,464	850,005	63		958,208
Income tax expenses	(96,319)	(33,410)		188		(219,999)	(132,718)	66		(144,561)
Deferred taxation	(63,168)	-		-		(63,168)	-	-		(16,023)
Profit after taxation	432,351	164,988		162		1,103,297	717,287	54		797,624
Earnings per ordinary share (Rs.)	20.60	7.86				52.57	34.18	0.00		38.00
The above figures are provisional and subject to audit.
Figures in brackets indicate deductions.