GUARDIAN CAPITAL PARTNERS PLC

Transcription

1 INTERIM REPORT FOR THE THREE MONTHS ENDED 30TH JUNE 2018 A CARSON CUMBERBATCH COMPANY.

2 Managers Review For the period ended 30th June 2018 Activity in the private equity and venture capital market was subdued, continuing from the trend seen last year. We have received a few deals and are in the process of evaluating them. For the 3 months ended 30th June 2018, Guardian Capital Partners PLC (GCP) recorded a loss of Rs.13.6 Mn. This is an improvement over last year, as results of the June quarter last year included an impairment charge of Rs Mn. Revenues increased due to higher interest income and dividend income. Adoption of SLFRS 9 and impacts to the financial statements During the quarter under review the Company adopted the new Accounting Standard on Financial Instruments SLFRS 9 effective for the annual periods beginning on or after 1st January As per the SLFRS 9, an entity has the option to classify its equity investments either as financial assets held for fair value through profit or loss or financial assets held for fair value through other comprehensive income (latter previously recorded as Available for Sale Financial Assets ). On financial assets measured at fair value through other comprehensive income, SLFRS 9 requires all gains or losses, both realized or unrealized, to be recognized in the other comprehensive income. This is in contrast to the previous accounting treatment of this category, where cumulative realized gains and losses were routed through the statement of Profit or Loss at the point of disposal. Therefore, taking the said guidelines of the new Accounting Standard in to consideration the Company has classified its equity investments, as Financial assets measured at fair value through profit or loss, the most prudent classification for an Investment Entity. Accordingly, this classification requires recognizing all gains/ (losses) arising from changes in fair values due to market prices fluctuations and valuations in the Statement of Profit or Loss. However, as a result, going forward, the net profit of the Company will be more vulnerable to short-term stock market fluctuations with the recognition of fair values of the entire listed equity portfolio in the profit or loss which may distort the performance of the fund at times. As per the previous Accounting Standard, the Company had classified its listed equity investments as available for sale financial assets category recognizing fair value changes in other comprehensive income except the impairment losses and only upon disposals the net gains were recognized in Profit or Loss Guardian Fund Management Limited Investment Managers 07 th August Page 1-

3 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME (All figures are in Sri Lankan Rupees '000) Three months ended 30th June Change % Audited Revenue 8, ,944 42,383 Impairment loss on available for sale financial assets - (42,118) (100) (52,374) Net fair value change in financial assets measured at fair value through profit or loss (18,572) 9,193 (302) 1,381 Loss on investment activities (9,836) (32,638) (70) (8,610) Administrative and other operating expenses (2,722) (4,235) (36) (13,737) Loss from operations (12,558) (36,873) (66) (22,347) Income tax expense (1,014) (299) Loss for the period (13,572) (36,873) (63) (22,646) Other comprehensive income Items that are or may be reclassified to profit or loss Net change in fair value of available for sale financial assets - 9,877 (100) (16,203) Other comprehensive income / (expense) for the period - 9,877 (100) (16,203) Total comprehensive expense for the period (13,572) (26,996) (50) (38,849) Loss per share (Rs.) (0.53) (1.43) (0.88) Change % represent the percentage change in current period's results compared to comparative period of previous year. Figures in brackets indicate deductions/negative changes. Page 2

4 STATEMENT OF FINANCIAL POSITION (All figures are in Sri Lankan Rupees '000) As at 30th June (Audited ) ASSETS Non-current assets Available for sale financial assets - 334, ,114 Total non-current assets - 334, ,114 Current assets Other receivables 863 2,760 4,293 Current tax recoverable 4,028 2,475 3,117 Financial assets measured at fair value through profit or loss 514, , ,056 Investment in fixed deposits 153, Cash and cash equivalents 7,940 5,752 14,436 Total current assets 680, , ,902 Total assets 680, , ,016 EQUITY AND LIABILITIES Equity Stated capital 513, , ,656 Revenue reserves 163, , ,467 Total equity 677, , ,123 - Current liabilities Other payables 1,782 6,037 2,839 Bank overdraft 1,584 2, Total current liabilities 3,366 8,909 2,893 Total equity and liabilities 680, , , Net assets per share (Rs.) The Statement of Financial Position as at 30th June 2018 and the related Statements of Profit or Loss and Other Comprehensive Income, Changes in Equity and Cash Flow for the period then ended as disclosed in pages 2 to 4 have been drawn up from unaudited accounts. I certify that these Financial Statements comply with the requirements of the Companies Act No. 7 of (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 & signed on behalf of the Investment Managers, Approved & signed on behalf of the Board, (Sgd). (Sgd). (Sgd). K. Selvanathan M.A.R.C. Cooray (Mrs.) S. Mahendrarajah Director Director Director Guardian Fund Management Limited Colombo 07th August 2018 Page 3

5 STATEMENT OF CHANGES IN EQUITY (All figures are in Sri Lankan Rupees '000) Balance as at 1st April ,656 60, , ,529 Loss for the period (22,646) (22,646) Other comprehensive expense for the period - (16,203) (16,203) Total comprehensive expense for the period - (16,203) - - (22,646) (38,849) Forfeiture of unclaimed dividends ,901 2,901 Transfers (543) - Dividend 2016/ (6,458) (6,458) Balance as at 31st March 2018 (Audited) (under LKAS 39) 513,656 44,666 1, , ,123 Stated capital Available for sale financial assets reserve Revenue reserves Fair value through profit or loss financial assets reserve General reserve Retained earning Total equity Balance as at 31st March 2018 (under LKAS 39) 513,656 44,666 1, , ,123 Impact of adopting SLFRS 9 as at 1st April 2018 (Note 1.1) - (44,666) ,666 - Adjusted balance as at 1st April 2018 ( under SLFRS 9) 513,656-1, , ,123 Loss for the period (13,572) (13,572) Other comprehensive income for the period Total comprehensive expense for the period (13,572) (13,572) Balance as at 30th June 2018 (Unaudited) 513,656-1, , ,551 Balance as at 1st April ,656 60, , ,529 Loss for the period (36,873) (36,873) Other comprehensive income for the period - 9, ,877 Total comprehensive expense for the period - 9, (36,873) (26,996) Dividend (6,458) (6,458) Balance as at 30th June 2017 (Unaudited) 513,656 70, , ,075 GUARDIAN CAPITAL PARTNERS PLC STATEMENT OF CASH FLOWS (All figures are in Sri Lankan Rupees '000.) For the three months ended 30th June (Audited) Cash flows from operating activities Loss from operations (12,558) (36,873) (22,347) Impairment loss on available for sale financial assets - 42,118 52,374 Net fair value change in financial assets measured at fair value through profit or loss 18,572 (9,193) (1,381) Operating profit before changes in working capital 6,014 (3,948) 28,646 Decrease / (increase) in investments 139,506 6,485 (11,836) (Increase) / decrease in trade and other receivables 3,430 (2,672) (4,205) Net increase in investment in fixed deposits (153,994) - - Increase / (decrease) in other payables (1,057) Cash generated from / (used in) operating activities (6,101) ,943 Income tax paid (1,925) (1,839) (2,780) Net cash generated from / (used in) operating activities (8,026) (1,617) 10,163 Cash flows from financing activities Dividend paid - (6,120) (6,398) Net cash used in financing activities - (6,120) (6,398) Net increase / (decrease) in cash & cash equivalents during the period (8,026) (7,737) 3,765 Cash & cash equivalents at the beginning of the period 14,382 10,617 10,617 Cash & cash equivalents at the end of the period 6,356 2,880 14, Statement of cash and cash equivalents Short-term deposits 7,398 4,794 13,805 Cash at bank Total cash and cash equivalents 7,940 5,752 14,436 Bank overdraft (1,584) (2,872) (54) Net cash and cash equivalents for the cash flow statement purpose 6,356 2,880 14, Figures in brackets indicate deductions/negative changes. Page 4

6 NOTES TO THE INTERIM FINANCIAL STATEMENTS (All figures are in Sri Lankan Rupees '000 unless otherwise stated). 1 Basis of Preparation of Interim Financial Statements The Interim Financial Statements of the Company have been prepared in consistence with the accounting policies and methods applied for the year ended 31st March 2018 except as disclosed in note "adoption of SLFRS 09 - Financial Instruments". These Interim Financial Statements are in compliance with Sri Lanka Accounting Standard - "Interim Financial Reporting" ( LKAS 34 ). Further, the provision of the Companies Act No. 7 of 2007 have been considered in preparing the Interim Financial Statements of the Company. 1.1 Adoption of SLFRS 09 - Financial Instruments The Company has initially adopted SLFRS 9 Financial Instruments with effect from 1st April 2018 in preperation of its financial statements. The effect of applying this standard is described below. Classification and measurement of financial assets and financial liabilities SLFRS 9 largely retains the existing requirements in LKAS 39 for the classification and measurement of financial liabilities. However, it eliminates the previous LKAS 39 categories for financial assets, held to maturity, loans and receivables and available for sale. The impact of SLFRS 9 on the classification and measurement of financial assets is set out below. Under SLFRS 9, on initial recognition, a financial asset is classified as measured at amortised cost (AC), fair value through other comprehensive income (FVOCI), or fair value through profit or loss (FVTPL). The classification of financial assets under SLFRS 9 is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. The following table is the reconciliation of original measurement categories and carrying value in accordance with LKAS 39 and the new measurement categories under SLFRS 9 for the Company s financial assets as at 1st April Note Original classification under LKAS 39 New classification under SLFRS 9 Original carrying amount under LKAS 39 New carrying amount under SLFRS 9 Financial assets Investment in equity securities - quoted 1.1 Available-for-sale FVTPL 183, ,105 Investment in equity securities - private equity 1.1 Available-for-sale FVTPL 115, ,009 Trade and other receivables 1.2 Loans and receivables Amortised cost 4,250 4,250 Investment in unit trust - unquoted 1.3 FVTPL FVTPL 374, ,056 Cash at bank and cash in hand 1.2 Loans and receivables Amortised cost Securities purchased under resale agreements 1.2 Loans and receivables Amortised cost 13,805 13,805 Total financial assets 690, , The non-derivative financial assets that were designated as available-for-sale under the LKAS 39, have been classified as FVTPL, because they are managed and the performance is monitored on a fair value basis. Trade and other receivables that were classified as loans and receivables under LKAS 39 are now classified as financial assets measured at amortised cost. Under LKAS 39, these investments were designated as FVTPL because they were managed on a fair value basis and their performance was monitored on that basis. These assets have been classified as measured at FVTPL under SLFRS 9. Impairment of financial assets SLFRS 9 replaces the incurred loss model in LKAS 39 with a forward looking expected credit loss (ECL) model. This will require considerable judgement about how changes in economic factors affect ECL, which will be determined on a probability weighted basis. The new impairment model will apply to financial assets measured at amortised cost or FVOCI, except for investments in equity instruments, and to contract assets. Under SLFRS 9, loss allowances will be measured on either of the following bases, - 12 month ECL: these are ECL that result from possible default events within the 12 months after the reporting date; and - lifetime ECL: these are ECL that result from all possible default events over the expected life of a financial instrument. 1.2 Transition Changes in accounting policies resulting from the adoption of SLFRS 9 have been applied retrospectively, except as described below. Comparative periods have been not been restated. Any differences in the carrying amounts of financial assets and financial liabilities resulting from the adoption of SLFRS 9 are recognised in retained earnings and reserves as at 1st April Accordingly, the information presented for comparative periods do not reflect the requirements of SLFRS 9 but rather those of LKAS The determination of the business model within which a financial asset is held. - The designation of certain investments in equity instruments not held for trading as at FVOCI. Page 5

7 NOTES TO THE INTERIM FINANCIAL STATEMENTS (All figures are in Sri Lankan Rupees thousands, unless otherwise stated). 2 Revenue For the three months ended 30th June Interest income 4, Dividend income 4,125 - Net gain from disposal of financial assets measured at fair value through profit or loss , Summary of Investment Portfolio Fair value Fair value Fair value as at as at as at Available for sale financial assets (3.1) - 334, ,114 Financial assets measured at fair value through profit or loss (3.2) 514, , , , , , Available for sale financial assets (a) Investments in equity securities - Quoted Access Engineering PLC - 59,512 47,470 Expolanka Holdings PLC - 46,548 33,541 LVL Energy Fund Limited , , ,105 (b) Investments in equity securities (Private equity) - unquoted hsenid Business Solutions (Pvt) Ltd. - 70,008 70,009 Kashmi Singapore PTE. LTD * - 10,256 - LVL Energy Fund Limited - 103,125 - Findmyfare Private Limited - 45,000 45, , , , , Financial assets measured at fair value through profit or loss (a) Investments in equity securities - Quoted Access Engineering PLC 36, Expolanka Holdings PLC 27, LVL Energy Fund Limited 93, , (b) (c) Investments in equity securities (Private equity) - unquoted hsenid Business Solutions (Pvt) Ltd. 70, Findmyfare Private Limited 45, , Investments in unit trusts - unquoted Guardian Acuity Money Market Gilt Fund - 157, ,406 Guardian Acuity Money Market Fund 241, , , , , , , , ,056 4 Events after the reporting period Subsequent to the reporting period, no circumstances have arisen which would require adjustments to or disclosures in the financial statements. 5 Contingent Liabilities and Capital Commitments There were no material contingent liabilities and capital commitments since the last reporting date. 6 Liabilities for expenditure There were no liabilities for management fees or any other similar expenditure not provided for in the Interim Financial Statements. 7 Comparative figures Previous period's figures and phrases have been rearranged wherever necessary to conform to the current period's presentation, except what is disclosed in note Stated capital Stated capital of the Company amounted to Rs mn comprise of 25,833,808 fully paid ordinary shares. Page 6

8 NOTES TO THE INTERIM FINANCIAL STATEMENTS (CONTINUED) (All figures are in Sri Lankan Rupees thousands, unless otherwise stated). 9 Related party transactions Transactions with the parent company Dividend paid - 5,423 Transactions with affiliate companies Receiving of services 1,497 1, Twenty major shareholders as at 30th June 2018 Name of the Shareholder No. of Shares % 1 Ceylon Guardian Investment Trust PLC A/C No 3 21,692, Carson Cumberbatch PLC A/C No.2 581, Union Investments Private Ltd 111, Mr. V. Nataraj 99, Mrs. V. Nataraj 99, Bansei Securities Capital (Pvt) Ltd/S.M.T.B.Samarakoon 93, Mr. J.P. Paul 85, Natwest Nominees ( Pvt) Limited. 84, Wardley Investments ( Pvt ) Limited 84, Goodhope Holdings(Pvt) Limited. 76, Mr. M.P.D.D. Fernando 69, Mr. M. Selvanathan 63, Skan Investments (Pvt) Limited. 51, First Capital Markets Limited/Mr.S.P.Jayakumar 50, Mr. M.W. De Silva 49, Mr. B.S. Goonesekera 49, Mr. M.S. Hiripitiya 42, Dr. S.M.T.B. Samarakoon 37, Mr. H.A. Van Starrex 36, Mr. K.S.H. Mawellage 35, Public holding The Company is in compliance with the Minimum Public Holding requirements for Companies listed on the Diri Savi Board as per Rule (b) of the Listing Rules of Colombo Stock Exchange, under Option 2, i.e. Float-Adjusted Market Capitalization less than Rs. 1.0 Billion with 200 Public Shareholders and a Public Holding percentage of 10%. The Company's Public Holding as at 30th June 2018; Ordinary Shares of the Company held by the public as at 30th June 2018 were as follows : Market Capitalization of the Public Holding Rs Million Percentage of public holding 12.91% Number of public shareholders 2, Investor information For the three months ended Share valuation 30th June 2018 Market value per share (Rs.) Highest price per share for the period (Rs.) Lowest price per share for the period (Rs.) Market capitalization (Rs. thousands) 529, Directors shareholdings No. of shares held as at 30th June 2018 Mr. I. Paulraj 200 Mr. D. C. R. Gunawardena 25 Mr. S. Mahendrarajah 25 Mrs. M.A.R.C. Cooray - Mr. K. Selvanathan - Page 7

9 CORPORATE INFORMATION Name of Company Company Registration No. PQ 49 Legal Form Guardian Capital Partners PLC (A Carson Cumberbatch Company) A Public Quoted Company with limited liability, incorporated in Sri Lanka in 1920 Principal activity and nature of operation The principal activity of the company is to hold and manage a portfolio of private equity investments. Parent and Ultimate Parent Entities Ceylon Guardian Investment Trust PLC is the immediate Parent Company of Guardian Capital Partners PLC. In the opinion of the Directors, Carson Cumberbatch PLC is the Parent Company of Ceylon Guardian Investment Trust PLC and Bukit Darah PLC is the Ultimate Parent and Controlling Entity of Ceylon Guardian Investment Trust PLC. Directors Bankers Auditors Managers Investment Managers Registered Office Corporate Website I. Paulraj (Chairman) D. C. R. Gunawardena S. Mahendrarajah (Director and Alternate to Mr. I. Paulraj) Mrs. M.A.R.C. Cooray Mr. K. Selvanathan Standard Chartered Bank Commercial Bank of Ceylon PLC Deutsche Bank AG Messrs. KPMG Chartered Accountants 32A, Sir Mohamed Macan Markar Mawatha, Colombo 03 Sri Lanka. Carsons Management Services (Private) Limited 61, Janadhipathi Mawatha, Colombo 01 Sri Lanka. Telephone No: Fax No: Guardian Fund Management Limited 61, Janadhipathi Mawatha, Colombo 01 Sri Lanka Telephone No: Fax No: , Janadhipathi Mawatha, Colombo 01 Sri Lanka Telephone No: Fax No: Page 8