Commercial Development : Interim Financial Statement as of 31.12.2022

INTERIM FINANCIAL STATEMENTS

For the year ended December 31, 2022

COMMERCIAL DEVELOPMENT COMPANY PLC

STATEMENT OF COMPREHENSIVE INCOME						02
		For the Year Ended			For the Quarter Ended
		December 31,		December 31,		Change	December 31,		December 31,	Change
		2022	2021		2022	2021
	Note	Rs. 000		Rs. 000	%	Rs. 000		Rs. 000	%
Revenue	3	631,128	632,287	(0.2)	164,981	146,884	12.3
Cost of Sales	4	(324,607)		(292,384)	11.0	(86,711)		(797)	10,779.7
Gross Profit		306,521	339,903	(9.8)	78,270	146,087	(46.4)
Other Income		2,040	78	2,515.4	39	42	(7.1)
		308,561	339,981	(9.2)	78,309	146,129	(46.4)
Administrative Expenses		(36,730)	(32,824)	11.9	(9,383)	(8,089)	16.0
Fair Value Gain/(Loss) on Investment Property		64,503	89,132	(27.6)	64,503	89,132
Operating Profit		336,334	396,289	(15.1)	133,429	227,172	(41.3)
Net Finance Income		64,955		30,976	109.7	25,273		8,665	191.7
Profit before Tax		401,289	427,265	(6.1)	158,702	235,837	(32.7)
Income Tax Expense	5	(176,912)	(25,759)	586.8	(118,414)	(31,903)	271.2
Profit for the period attributable to Owners of the Company		224,377	401,506	(44.1)	40,288	203,934	(80.2)
Other Comprehensive Income, Net of Tax
Actuarial Gain / (Loss) on Defined Benefit Plans		(402)	3,449	(111.7)	(402)	3,449	(111.7)
Related Tax		108		(828)	(113.0)	108		(828)	(113.0)
Net Actuarial Gain / (Loss) on Defined Benefit Plans		(294)	2,621	(111.2)	(294)	2,621	(111.2)
Change in fair value of Debt investments at FVOCI		243	(243)	(200.0)	1,971	(243)	(911.1)
Related Tax		(58)		58	(200.0)	(473)		58	(915.5)
Net change in fair value of Debt investments at FVOCI		185		(185)	(200.0)	1,498		(185)	(909.7)
Other Comprehensive Income/(Expense) for the year Net of Tax	(109)	2,436	(104.5)	1,204	2,436	(50.6)
Total Comprehensive Income for the year, Net of Tax		224,268	403,942	(44.5)	41,492	206,370	(79.9)
Earnings per Share (Rs.)		18.70	33.46	(44.1)	3.36	16.99	(80.2)

The above figures are provisional and subject to audit unless indicated as audited.

Explanatory Notes

1. Financial Statements of the Company have been prepared in accordance with the Sri Lanka Accounting Standards (SLFRSs/LKASs) issued by The Institute of Chartered Accountants of Sri Lanka. There were no changes in the Accounting Policies and methods of computation since the publication of the Annual Report for the year ended December 31, 2021.
2. These Interim Financial Statements are presented in accordance with the requirements of the Sri Lanka Accounting Standard - LKAS - 34 on ''Interim Financial Reporting'' and provide the information as required in terms of Rule 7.4 of the Colombo Stock Exchange.
3. The drop in revenue compared to the last year was due to discontinuation of sanitization business. The income from sanitization business for the year ended December 31, 2021 amounted to Rs.57.8 Mn.
4. The significant increase in the cost of sales for the quarter ended December 31, 2022 was mainly due to a reversal of a provision made during the quarter ended December 31, 2021 on account of renovation of Commercial House building amounting to Rs.60 Mn. However, the expected renovations could not be carried out due to the pandemic.
5. The significant increase in the income tax expense was due to the effect of increase in the income tax rate from 24% to 30% with effect from 2nd half of the current year as opposed to a reduction in income tax rate from 28% to 24% with effect from January 01, 2021. Accordingly, deferred tax provision for the current year increased to Rs 83.6 Mn. as opposed to a deferred tax reversal amounting to Rs.49.2 Mn during the previous year.
6. During the quarter, there were no material changes in the composition of assets and liabilities except that Investment Properties have been stated at the revalued amounts as at December 31, 2022 as per the requirements of the Sri Lanka Accounting Standard - LKAS 40 on ''Investment Property''.
7. Related Party Transactions
   ( a ) Mr.S.C.U.Manatunge, Managing Director of the Company is also the Managing Director of Commercial Bank of Ceylon PLC, the sole tenant and the parent of the
   Company. Mr.U.I.S.Tillakawardana, Director of the Company functions as the Deputy General Manager - Human Resources Management of the Commercial Bank of Ceylon PLC. During the quarter ended December 31, 2022, the Company received Rs. 163.5 Mn. as rental, income from outsourcing services, vehicle hiring charges and other utility services from Commercial Bank of Ceylon PLC (Rs.143.4 Mn during the quarter ended December 31, 2021).

The Company also has invested Rs.122.2 Mn.(inclusive of interest) in Fixed Deposits at at market interest rates at Commercial Bank of Ceylon PLC.

STATEMENT OF COMPREHENSIVE INCOME	03

( b ) As at the reporting date, the Company has invested Rs.549.3 Mn. in Fixed Deposits (inclusive of interest) at market interest rates at CBC Finance Limited, which

1. All known expenses have been provided for in these Interim Financial Statements.
2. There were no material events that took place since December 31, 2022, that require disclosure in these Interim Financial Statements, except that the Company has deferred the planned repairs to the Commercial House Building. The renovation project did not materialize due to the excessive quotes submitted by the prospective contractors. However, the Company is keen to start the project as soon as possible by exploring alternative ways to minimize the cost.

1. The Government of Sri Lanka in its Budget for 2022 proposed a one-time tax, referred to as a Surcharge Tax, at the rate of 25% to be imposed on any individual, partnership, company or each company of a group of companies (holding and subsidiaries) that have earned a taxable income in excess of Rs.2,000 million for the year of assessment 2020/2021.
   Being part of the Commercial Bank of Ceylon PLC Group, the Company was liable for Surcharge Tax of Rs. 50.6 Mn. According to the provisions of Surcharge Tax Act No. 14 of 2022, the Surcharge tax shall be deemed to be an expenditure in the financial statements relating to the year of assessment which commenced on April 01,2020. The Act supersedes the requirements of the Sri Lanka Accounting Standards and hence the expense of Surcharge tax is accounted in accordance with the requirements of the said Act as recommended by the Statement of Alternative Treatment (SoAT) on Accounting for Surcharge Tax issued by the Institute of Chartered Accountants of Sri Lanka, in April 2022.
   The Company paid Rs.50.6 Mn. as Surcharge Tax in two equal installments in April and July 2022.
2. There were no contingent assets, contingent liabilities or capital commitments outstanding as at the Reporting date except that a case was filed against the Company by a former employee at the Labour Tribunal, Negombo. The Labour Tribunal ordered that the said employee be compensated with Rs. 2. 0 Mn. The Company has appealed against this order to the High Court.
   No provision is made in these Interim Financial Statements in respect of the above claim as the lawyers are of the opinion that the outcome of the appeal to the High Court is more likely to be favorable to the Company and the likelihood of the payment is remote.

STATEMENT OF FINANCIAL POSITION			04
	As at		As at	Change
	December 31,		December 31,
	2022	2021
			(Audited)
ASSETS	Rs.'000		Rs.'000	%
Non-Current Assets
Property, Plant & Equipment	131,768	90,897	44.96
Intangible Assets	2,132	2,762	(22.81)
Investment Property	3,031,217	2,966,713	2.17
Deposits Receivable	10,980		10,857	1.13
	3,176,097	3,071,229	3.41
Current Assets
Trade and Other Receivables	53,042	43,011	23.32
Financial Investments	671,482	565,585	18.72
Cash and Cash Equivalents	154,462		105,524	46.38
	878,986	714,120	23.09
Total Assets	4,055,083	3,785,349	7.13
EQUITY AND LIABILITIES
Equity
Stated Capital	120,000	120,000	-
Other Reserves	2,406,680	2,418,164	(0.47)
Retained Earnings	890,744		789,199	12.87
Total Equity	3,417,424	3,327,363	2.71
Non-Current Liabilities
Deposits Payables	56,761	54,492	4.16
Employee Benefits	61,078	50,966	19.84
Lease Creditors	69,138	14,374	380.99
Deferred Tax	346,815		263,159	31.79
	533,792	382,991	39.37
Current Liabilities
Trade and Other Payables	26,894	16,958	58.59
Lease Creditors	15,963	5,080	214.23
Deferred Revenue	8,515	10,566	(19.41)
Current Tax	52,495		42,391	23.84
	103,867		74,995	38.50
Total Equity and Liabilities	4,055,083	3,785,349	7.13
Net Assets Value Per Ordinary Share (Rs.)	284.79	277.28	2.71

The above figures are provisional and subject to audit unless indicated as audited.

I certify that these Financial Statements have been prepared in accordance with the requirements of the Companies Act No.07 of 2007 and amendments thereto.

(Sgd.)

W.H. Wijesekara

Accountant

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

(Sgd.)	(Sgd.)
B.R.L. FERNANDO	S.C.U.MANATUNGE
CHAIRMAN	MANAGING DIRECTOR
February 22, 2023

STATEMENT OF CHANGES IN EQUITY

05

Balance as at January 1, 2021

Total Comprehensive Income for the year ended December 31, 2021 Profit for the year ened December 31, 2021

Other Comprehensive Income for the year ended December 31, 2021

Transaction with equity holders, recognized directly in equity Final Dividend for 2020

Interim Dividend for 2021

Write back of Unclaimed Dividends

Transfer of Fair Value Gain on Investment Property

Balance as at December 31, 2021 - Audited

Balance as at January 01, 2022

Surcharge Tax for the year 2020

Adjusted Balance as at January 01, 2022

Total Comprehensive Income for the year ended December 31, 2022

Profit for the year ened December 31, 2022

Other Comprehensive Income for the year ended December 31, 2022

Transaction with equity holders, recognized directly in equity Final Dividend for 2021

Interim Dividend for 2022

Write back of Unclaimed Dividends

Transfer of Fair Value Losses on Investment Property

Balance as at December 31, 2022

Stated	Other Reserves		Retained	Total
Capital	Fair Value	Fair Value	Earnings	Equity
	Reserve -	Reserve -
	Investment	Financial
	Property	Assets
Rs.'000	Rs.'000	Rs.'000	Rs.'000	Rs.'000
120,000	2,287,444	-		587,661	2,995,105
-	-	-		401,506	401,506
-	-	(185)	2,621	2,436
-	-	(185.00)	404,127	403,942
-	-	-		(42,000)	(42,000)
-	-	-		(30,000)	(30,000)
-	-	-		316	316
-	130,905	-		(130,905)	-
120,000	2,418,349	(185)	789,199	3,327,363
120,000	2,418,349	(185)	789,199	3,327,363
-	-	-		(50,556)	(50,556)
120,000	2,418,349	(185)	738,643	3,276,807
-	-	-		224,377	224,377
-	-	185		(294)	(109)
-	-	185		224,083	224,268
-	-	-		(48,000)	(48,000)
-	-	-		(36,000)	(36,000)
-	-	-		349	349
-	(11,669)	-		11,669	-
120,000	2,406,680	-		890,744	3,417,424

The above figures are provisional and subject to audit unless indicated as audited.