CEYLON INVESTMENT PLC

Managers' Review

For the period ended 30th September 2022

The economic crisis continues to maintain a challenging operating environment for most companies across sectors of the economy. During this difficult period, the discretionary portfolio grew by 1.43% (dividend adjusted) compared to the All Share Price Index growth of 11.54%. For the discretionary portfolio, we remain committed in following our equity strategy of investing in companies that display strong fundamentals and lead to long-term potential for value creation. The total portfolio, which includes the strategic holdings, recorded a decline for the quarter of 3.14% (dividend adjusted). Ceylon Investment PLC reported a consolidated profit after tax of Rs.

308.4 million for the first half of FY 2023, largely resulting from a fair value gain of Rs.144.8 million from fair value through profit or loss financial assets which is influenced by movements in the share price.

Portfolio Performance

With the escalation of the crisis, the share market has showed much volatility during the first half of FY 2023. We have been a net seller in the equity market for the reporting period with sales amounting to Rs. 279 million and purchases of Rs. 220 million for the reporting period. The selling was largely concentrated in financial institutions, which have a greater implication from the crisis leading to impairments and expected deterioration in asset quality. Meanwhile buying was largely focused on fundamentally strong companies that had weakened with the overall market. We will continue to deeply monitor our investee companies and the economic direction going forward and take investment decisions accordingly.

As at

As at

Dividend

30-Sep-22

31-Mar-22

adjusted

30-Sep-22

Change %

(Dividend

performance

adjusted) *

Discretionary portfolio (Rs.'000)*

3,365,971

3,389,227

-0.69%

3,437,860

1.43%

Total Portfolio (Rs.'000)*

9,006,385

9,372,163

-3.90%

9,078,274

-3.14%

ASPI (Points)

9,931

8,904

11.54%

11.54%

S&P 20 (Points)

3,165

3,031

4.43%

4.43%

Financial Performance

Ceylon Investment PLC together with its share of associate companies reported a profit after tax of Rs. 308.4 million for the period ended 30th September 2022, compared to a profit after tax of Rs. 16.4 million in the previous year. The financial performance was influenced by the positive fair value movement of Rs. 144.8 million from fair value through profit or loss financial assets, recognized in profit or loss as per SLFRS 9. The profits/loss recorded on a quarterly basis are volatile due to the accounting standards requiring change in fair value, which largely reflects the change in share prices of investee companies, to be recognized in the income statement.

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Accordingly, the Company's net assets as at 30th September 2022, valued at market price, decreased 1.69 % from the previous year to Rs. 90.00 per share. The trading price of Rs. 43.80 per share still indicates a discount of 51% to the NAV.

As at

30/09/2022

31/03/2022

Change %

ASPI

9,931

8,904

11.53

NAV per share (Rs.)

90.00

91.55

(1.69)

Market price per share (Rs.)

43.80

37.10

18.06

Discount of NAV to market price per share

51%

59%

Update on the market

Economic concerns have created significant anxiety amongst the investment community, which has led to volatility and fluctuating turnover levels in the overall market. Hardships experienced by the Sri Lankan population have come in the form of rampant inflation, high interest rates, shortages in essential items and significant reductions in real income. These factors, in the short term, are expected to seep into the listed companies financial cost structures and revenue and have implications on respective share prices. Overall market earnings expectations going forward will be largely linked to the economic trajectory. A comprehensive macro-economic framework will be essential to bring the country and CSE back to a stable footing.

Guardian Fund Management Limited

Investment Managers

11th November 2022

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Ceylon Investment plc published this content on 14 November 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 November 2022 11:33:13 UTC.