Ceylon Beverage : Interim Financials 30 June 2022

Ceylon Beverage Holdings PLC

Interim Condensed Financial Statements for the First Quarter ended

30th June 2022

CEYLON BEVERAGE HOLDINGS PLC

Review

The quarter under review witnessed soaring inflation driving up prices of all essential commodities, supply chain disruptions due to fuel shortages and civil unrest disrupting the marketplace. The free float of the US Dollar in March resulted in an unprecedented devaluation of the SLR which impacted the cost of imports. Most FMCG businesses took sharp price increases to negate the impact of rising cost of inputs resulting in volumes being impacted whilst also suffering from supply chain disruptions due to fuel shortages.

The Group too experienced sharp cost increases across all inputs resulting in price adjustments to reduce margin contraction. It should be noted that the impact of the rising cost base was not fully recovered through pricing as it was important to balance volume due to reducing consumer income. In terms of overall performance, the prior year quarter was heavily impacted by Covid related lockdowns during which sale of beer was prohibited. Volumes were weaker compared to the March quarter as the economy deteriorated. Nonetheless, International Business continued to grow volumes in the high double digits.

Volume trends required the carrying value of the Miller brands to be re-examined resulting in a further impairment amounting to Rs. 353 million. This is in addition to the Rs. 464 million impairment taken in March 2022.

During the quarter, the Group paid Rs. 15 billion in taxes to Government compared to Rs. 8bn in the prior year. This included the VAT increase midway during the quarter. The Group did not benefit from the 2019 VAT reduction and, as such, this represents entirely incremental revenue to Government.

Given the prevailing environment, tax evasion and consumer trade down to illicit/illegal products will increase. We have requested Government to urgently further its efforts in connection with the tax stamp implementation to address critical gaps, including continuing operational hurdles.

We wish to acknowledge the Government policy directive to grant approval to sell wine & beer in establishments registered with the Sri Lanka Tourism Development Authority. It will support these businesses, mostly SME in nature, to provide a broader value proposition to their customers as the tourism industry recovers. This step will have a secondary benefit of curtailing space for illegal products and tax evasion.

CEYLON BEVERAGE HOLDINGS PLC

BOARD OF DIRECTORS AS AT 30TH JUNE 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	30th June 2022		31st March 2022	30th June 2022		31st March 2022
In Rs.'000s			(Adjusted)			(Adjusted)
ASSETS
Non-current assets
Property, plant and equipment	-		-	20,224,472		20,574,458
Investment properties	647,100		647,100	647,100		647,100
Right of use assets	-		-	191,008		207,281
Intangible assets	-		-	464,749		819,545
Deferred tax assets	-		-	1,486		1,548
Investment in subsidiaries	1,835,083		1,835,083	-		-
Total non-current assets	2,482,183		2,482,183	21,528,815		22,249,932
Current assets
Inventories	-		-	6,450,399		4,537,111
Trade and other receivables	447		571	4,735,122		2,406,133
Amounts due from related companies	134,091		134,091	-		-
Current tax assets	-		-	-		-
Cash and cash equivalents	97,707		28,375	5,877,932		13,114,311
Total current assets	232,245		163,037	17,063,453		20,057,555
Total assets	2,714,428		2,645,220	38,592,268		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	1,479,314		1,456,811	8,254,238		8,060,070
Equity attributable to equity holders of the Company	2,032,622		2,010,119	9,890,980		9,696,812
Non controlling interest	-		-	9,077,088		8,945,053
Total equity	2,032,622		2,010,119	18,968,068		18,641,865
Non-current liabilities
Loans and borrowings	-		-	2,121,830		2,300,311
Lease liabilities	-		-	181,726		196,109
Employee benefits	-		-	189,534		182,996
Deferred tax liabilities	31,584		31,584	5,000,738		5,260,140
Total non- current liabilities	31,584		31,584	7,493,828		7,939,556
Current liabilities
Trade and other payables	23,328		20,524	4,206,689		3,492,710
Amounts due to related companies	356,801		337,741	153,298		155,757
Refundable deposits	-		-	2,318,408		2,301,181
Current tax liabilities	128,875		73,645	3,347,747		4,394,462
Loans and borrowings	-		-	1,252,709		3,347,696
Lease liabilities	-		-	57,110		57,499
Bank overdraft	141,218		171,607	794,411		1,976,761
Total current liabilities	650,222		603,517	12,130,372		15,726,066
Total liabilities	681,806		635,101	19,624,200		23,665,622
Total equity and liabilities	2,714,428		2,645,220	38,592,268		42,307,487
Net assets per ordinary share (Rs.)	96.85		95.77	471.27		462.02
	-			-

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 August 2022

CEYLON BEVERAGE HOLDINGS PLC

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

		Quarter Ended			Year Ended
As at	30-Jun-22	30-Jun-21		Change %		31-Mar-22
In Rs.'000s						(Audited)
Revenue	773,721	36,347		2,029		935,862
Cost of sales	-	-		-		-
Gross profit	773,721	36,347		2,029		935,862
Net gains arising from changes in fair value of investment properties	-	-		-		160,230
	773,721	36,347		2,029		1,096,092
Administrative expenses	(3,937)	(3,160)		25		(27,561)
Impairment of investments in subsidiaries	-	-		-		(83,989)
Profit before finance cost	769,784	33,187		2,220		984,542
Finance income	7,067	1,577		348		8,220
Finance costs	(17,584)	(7,907)		122		(34,554)
Net finance costs	(10,517)	(6,330)		66		(26,334)
Profit before taxation	759,267	26,857		2,727		958,208
Income tax expenses	(112,368)	(6,784)		1,556		(144,561)
Deferred taxation	-	-		-		(16,023)
Profit after taxation	646,899	20,073		3,123		797,624
Earnings per ordinary share (Rs.)	30.82	0.96		0.15		38.00

The above figures are provisional and subject to audit.

Figures in brackets indicate deductions.