Ceylon Investment : Interim Financials 31 December 2021

Ceylon

Investment PLC

A Carson Cumberbatch Company

Interim report for the nine months ended 31st December 2021

CEYLON INVESTMENT PLC

Managers' Review

For the period ended 31st December 2021

All Share Price Index (ASPI) recorded a gain of 71.68% for the 9 months of FY 2022 and the S&P SL20 increased by 48.52%. The index continues to show substantial increases on the back of selective high market capitalization stocks. The discretionary portfolio increased by 9.10% (dividend adjusted) for the 9 months ended FY 2022 which was largely due to the more liquid longer term fundamentally stronger share prices not keeping pace with the ASPI. Ceylon Investment's discretionary portfolio follows a strategy of investing in companies that display strong fundamentals with long term potential and we expect this strategy to deliver strong returns in the long term. The total portfolio which also includes strategic holdings increased by 12.29% (dividend adjusted). Ceylon Investment reported a consolidated profit after tax of Rs. 343.5 million for the nine months ended FY 2022.

Portfolio Performance

For the nine months ended 31st December 2021, we have been a net seller in the Colombo Stock Exchange with sales of Rs.663 million and purchases of Rs.657 million. Selling has largely been focused on financial institutions given the broader economic implications and diversified companies where prices have shown sharp increases. Going ahead, we maintain our longer term focused strategy but remain cautious as the economy wades deeper into its debt and forex crisis.

		As at							As at 31-			Dividend
								Dec-21
													adjusted
								Change			(Dividend
		31-Dec-21			31-Mar-21							performance
							adjusted) *
						%
Discretionary portfolio	3,958,967			3,690,953		7.26%		4,026,724		9.10%
(Rs. '000) *
Total Portfolio (Rs.'000)*	10,447,839			9,364,634		11.57%		10,515,596		12.29%
ASPI (Points)	12,226			7,121		71.68%					71.68%
S&P 20 (Points)	4,233			2,850		48.52%					48.52%

-Page 1-

Financial Performance

Ceylon Investment together with its share of associate company's profit reported a profit after tax of Rs. 343.5 million for the period ended 31st December 2021, compared to a profit after tax of Rs. 1,442.5 million in the previous year. The financial performance was influenced by the positive fair value movement of Rs. 79.5 million from fair value through profit or loss financial assets, recognized in profit or loss as per SLFRS 9. The profits 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.

Accordingly, the Companies net assets as at 31st December 2021, valued at market price, increased 10.81% from the previous year to Rs. 102.89 per share. The trading price of Rs. 53.60 per share still indicates a discount of 48% to the NAV.

As at	31-Dec-21	31-Mar-21	Change %
ASPI	12,226	7,121	71.68
NAV per share (Rs.)	102.89	92.86	10.81
Market price per share (Rs.)	53.6	63.7	-15.86
Discount of NAV to market price per share	48%	31%

Update on the market

Domestic investors still remain active in the CSE despite foreign investors continuing to be on sell side. However, economic concerns are increasing further with external debt repayment concerns and foreign exchange shortages affecting businesses. The positive run of the ASPI is largely attributable select stocks and not a broad-based movement. A positive for the country is its relatively successful vaccination drive which will help mitigate COVID-19 implications going forward. Market earnings growth is expected to be derived from companies that are indirectly benefitting from import restrictions and logistics demand. However, inflation affecting input costs and its tapering effects on consumption will affect some companies negatively.

Guardian Fund Management Limited

Investment Managers

09th February 2022

-Page 2-

CEYLON INVESTMENT PLC

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME (All figures are in Sri Lankan Rupees Thousands)

	Three months ended		Nine months ended
	31st December			31st December
	2021	2020	Change %		2021	2020	Change %
Revenue	67,701	174,025	(61)	204,131	321,445	(36)
Net change in fair value through profit or loss financial
assets	146,252	218,907	(33)	79,583	670,076	(88)
Profit on investment activities	213,953	392,932	(46)	283,714	991,521	(71)
Administrative and other operating expenses	(10,572)	(13,142)	(20)	(39,297)	(41,527)	(5)
Profit from operations	203,381	379,790	(46)	244,417	949,994	(74)
Finance expense	-	(5,429)	(100)	(101)	(21,172)	(100)
Profit from operations after finance expense	203,381	374,361	(46)	244,316	928,822	(74)
Share of profit of equity accounted investees, net of
tax	126,765	207,564	(39)	110,518	524,915	(79)
Profit before taxation	330,146	581,925	(43)	354,834	1,453,737	(76)
Income tax expense	(3,002)	(1,183)	154	(11,316)	(11,203)	1
Profit for the period	327,144	580,742	(44)	343,518	1,442,534	(76)
Other comprehensive income
Items that are or may be reclassified to profit or loss
Share of other comprehensive income / (expense) of
equity accounted investees, net of tax	942,220	(1,132,854)	183	744,232	1,721,005	(57)
Other comprehensive income/ (expense) for the
period	942,220	(1,132,854)	183	744,232	1,721,005	(57)
Total comprehensive income /(expense) for the
period	1,269,364	(552,112)	330	1,087,750	3,163,539	(66)
Earnings / (loss) per share (Rs.)	3.23	5.73		3.39	14.23
Dividend per share (Rs.)*	-	-		-	-

* Dividend per share is based on the proposed / interim dividends.

Figures in brackets indicate deductions.

Page 3

CEYLON INVESTMENT PLC

STATEMENT OF FINANCIAL POSITION

(All figures are in Sri Lankan Rupees Thousands)

	As at	As at
	31.12.2021	31.03.2021
	(Unaudited)	(Audited)
ASSETS
Non-current assets
Investment in equity accounted investees	6,488,872	5,673,681
Total non-current assets	6,488,872	5,673,681
Current assets
Trade and other receivables	3,128	77,527
Investment in equity and debt securities	3,137,075	2,872,413
Investment in unit trusts	97,871	105,462
Current tax assets	2,019	-
Investment in fixed deposits	357,912	256,580
Cash and cash equivalents	366,109	456,498
Total current assets	3,964,114	3,768,480
Total assets	10,452,986	9,442,161
EQUITY AND LIABILITIES	-
Equity
Stated capital	838,033	838,033
Capital reserves	187,141	187,141
Revenue reserves	9,401,553	8,384,740
Total equity	10,426,727	9,409,914
Current liabilities	-
Trade and other payables	26,259	30,541
Current tax payable	-	1,706
Total current liabilities	26,259	32,247
Total liabilities	26,259	32,247
Total equity and liabilities	10,452,986	9,442,161
	-	-
Net assets value per share (Rs.)	102.89	92.86

The Statement of Financial Position as at 31st December 2021 and the related Statements of Profit or Loss and Other Comprehensive Income, Changes in Equity and Cash Flows for the period then ended as disclosed in pages 3 to 6 have been drawn up from unaudited accounts.

I certify that these Financial Statements comply with the requirements of the Companies Act No. 07 of 2007.

(Sgd).

V.R. Wijesinghe

Director - Finance

Carsons Management Services (Private) Limited

The Board of Directors is responsible for the preparation and presentation of these financial statements.

Approved and Signed on behalf of the Investment Managers,	Approved and Signed on behalf of the Board,
(Sgd).	(Sgd).	(Sgd).
K. Selvanathan	M.A.R.C. Cooray (Mrs.)	D.C.R. Gunawardena
Director	Chairperson	Director
Guardian Fund Management Limited
09th February 2022
Colombo

Page 4