Ceylon Beverage : Annual Report 2021/22

2021/22ANNUAL REPORT

CEYLON BEVERAGE HOLDINGS PLC

CONTENTS

Financial Highlights		1
Chairman's Statement		2
Chief Executive's Review		4
Profile of Directors		8
Senior Management Team		11
Annual Report of the Board of Directors on the Affairs of the Company	12
Audit Committee Report		25
Report of the Related Party Transactions Review Committee		27
Financial Calendar		29
Independent Auditor's Report		30
Statement of Financial Position		36
Statement of Profit or Loss and Other Comprehensive Income		38
Statement of Changes in Equity		40
Statement of Cash Flows		42
Notes to the Financial Statements		44
Value Added Statement		103
Five Year Summary		105
Statement of Profit or Loss and Other Comprehensive Income - USD	108
Statement of Financial Position - USD		110
Notes to the Financial Statements - USD		112
Five Year Summary - USD		113
Information to Shareholders and Investors		115
Glossary of Financial Terms		117
Notes		118
Notice of Meeting		121
Form of Proxy		123
Corporate Information	Inner Back Cover

The report can be accessed online at http://www.carsoncumberbatch.com

FINANCIAL HIGHLIGHTS

In Rs.'000s	2022	2021	Change %
Revenue	60,211,220	51,172,154	17.7%
Profit from operation	5,712,300	4,872,718	17.2%
Profit before taxation	5,885,176	4,284,507	37.4%
Profit after taxation	3,821,798	2,434,497	57.0%
Dividends per share (Rs.)	31.23	13.70	128.0%
Shareholders' funds	19,872,621	16,664,230	19.3%
Total assets	42,307,487	36,130,753	17.1%
Earnings per ordinary share (Rs.)	98.64	59.77	65.0%
Net assets per ordinary share (Rs.)	493.49	407.82	21.0%
Market capitalisation	14,833,333	16,365,463	(9.4%)

Annual Report 2021/2022

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CHAIRMAN'S STATEMENT

Dear Shareholder,

I am pleased to present the Annual Report for the year ended 31st March 2022. The Chief Executive's review presents a detailed analysis of your Group's operations, and therefore my statement is confined to an overview.

During the first half of the year under review, sales were disrupted due to the 3rd wave of the Covid pandemic. In order to curb its spread, a 52 day island wide lockdown was enforced over two separate periods. Whilst some retail shops were open during this lock down period, outlets licensed to sell beer were closed, resulting in the loss of sales and cash collections. However, in the second half of the year, with increasing vaccinations and the pandemic coming under control, the Group's operations returned to normal levels.

The rapid diminution of the country's foreign currency reserves due to a multitude of factors and the dwindling in-flow of dollars created an acute scarcity of foreign currency. This led to severe operational challenges affecting every aspect of business. Whilst its intensity was less severe in the first half of the year, its impact reached extreme proportions in the second half. Banks were compelled to prioritise the allocation of its limited foreign exchange to meet urgent and essential imports such as fuel, gas and medicines. We are extremely grateful to our suppliers for the unstinted support extended to the Group during this challenging period and in turn our commitments to them have been met in a timely manner.

The forthcoming year will be one of even greater challenges. As the country gears itself to overcome the economic, political and social crisis, consumers and businesses will have to brace themselves to steer through a period of severe turbulence.

The free float of the LKR in mid-March 2022 resulted in the sharp devaluation of the Rupee, with the US$ appreciating to Rs. 370/- by April 2022. This steep depreciation combined with other economic factors has led to very high head line and core inflation, resulting in significant price increases across all inputs. In parallel, various geopolitical events have led to a considerable rise in global commodity prices. Aluminum which is a key ingredient in the manufacture of cans is one such commodity that experienced a steep rise in prices. The surge in global freight rates too caused the cost of imported inputs to increase significantly. In spite of increases in the price of the Group's product range to counter rising costs, gross margins suffered.

In this challenging and demanding backdrop the Group delivered a profit before tax of Rs. 5.9 billion compared to Rs. 4.3 billion last year, on a turnover of Rs. 60.2 billion versus Rs. 51.2 billion in the previous year. It must be noted that the sharp appreciation of the US$ in March 2022 resulted in a substantial exchange gain; without this benefit, the profit before tax for the year would be Rs. 5.3 billion. For the financial year 2021/22, the Group paid Rs. 48 billion as Government taxes compared to Rs. 38 billion last year.

2 Ceylon Beverage Holdings PLC

Exports performed well recording a growth of

45% over the previous year despite the many operational challenges. The income received from exports greatly helped overcome the foreign exchange challenges faced during the year. If not for the numerous impediments, growth in exports would have been much higher. The lack of ships calling at the port of Colombo compounded by the scarcity of containers, hampered shipments and significantly increased freight costs. Export profitability was also challenged by rising costs of raw materials. The international business arm of the Group now exporting to around 26 countries, offers further promise and potential for growth in the years to come and will receive due focus.

The forthcoming year will be one of even greater challenges. As the country gears itself to overcome the economic, political and social crisis, consumers and businesses will have to brace themselves to steer through a period of severe turbulence.

The significant changes in monetary policy already in motion will lead to significantly higher interest costs and liquidity issues, while increasing inflation will lead to higher prices that will impact demand. It is expected that the ongoing shortage in foreign exchange, the scarcity of fuel, interruptions to power supply, disruptions to global supply chains hampering supplies and rising commodity prices will continue to impede business in the forthcoming year. In addition, the expected revisions to fiscal policies will result in the increase of VAT and other taxes, adding to the challenges. Nevertheless,

as proven in the past, guided by the Board, your Group's capable Management assisted by the diligent team of employees is committed towards overcoming the challenges to ensure business success.

Despite having to face numerous personal hardships and a multitude of business challenges, our dedicated team of employees across all levels has ensured that the Group's operations continued uninterrupted. The Group is deeply appreciative of the commitment and contribution of every employee and extends its grateful thanks to all team members.

A special thank you and a note of appreciation to our partners Carlsberg, our bankers, consignment agents and suppliers for the unstinted help and assistance provided. Also, a big thank-you to all our loyal consumers for the continued trust and confidence placed in the Group's brands.

In conclusion, I wish to express my appreciation and thanks to the Audit Committee, Remuneration Committee, Related Party Committee and Nominations Committee and to my colleagues on the Board for their invaluable advice and guidance provided to steer the Group. As always, I look forward to working closely with all in taking the Group further and forward.

(Sgd.)

D. A. Cabraal

Chairman

Colombo

08th July 2022

Annual Report 2021/2022

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