CONVENIENCE FOODS (LANKA) PLC INTERIM REPORT

Transcription

1 INTERIM REPORT For the 4th Quarter Ended 31 st March 2018

2 NAME OF THE COMPANY Convenience Foods (Lanka) PLC LEGAL FORM & LISTING A Public Limited Company listed on the Colombo Stock Exchange. DATE OF INCORPORATION 27 th March 1991 REGISTERED OFFICE Ceylon Biscuits Ltd, Makumbura, Pannipitiya, Sri Lanka. BUSINESS ACTIVITY Manufacture and Marketing of Textured Vegetable Protein (TVP) and other Food Products. DIRECTORS OF THE COMPANY Mr. R.S. Wickramasingha - Chairman Mr. E.T. De Zoysa - Managing Director Ms. D.S. Wickramasingha - Director Mr. N.A.Wickramage - Director Ms. N.K. Wickramasingha - Director Mr. M.U.S.G. Thilakawardana - Director Dr. D.M.A. Kulasooriya - Director Mr. M.S.Nanayakkara - Director AUDITORS Deloitte Sri Lanka, Chartered Accountants, No. 11, Castle Lane, Colombo 4, Sri Lanka. SECRETARIES & REGISTRARS P W Corporate Secretarial (Pvt) Ltd. No.3/17, Kynsey Road, Colombo 08. BANKERS Hatton National Bank PLC Peoples Bank DFCC Bank PLC

3 STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD ENDED 31st MARCH 2018 Company Variance Group Variance Revenue 1,915,822,410 1,546,475, ,346,469 1,915,822,410 1,546,475, ,346,469 Cost of sales (1,220,138,719) (1,048,051,459) (172,087,260) (1,220,138,719) (1,048,051,459) (172,087,260) Gross profit 695,683, ,424, ,259, ,683, ,424, ,259,209 Other income 57,386,996 44,916,987 12,470,009 57,038,049 44,916,987 12,121,062 Distribution expenses (393,091,335) (314,034,204) (79,057,131) (393,091,335) (314,034,204) (79,057,131) Administrative expenses (102,324,916) (89,093,823) (13,231,093) (102,324,916) (89,093,823) (13,231,093) Finance expenses (327,338) (1,943,100) 1,615,762 (327,338) (1,943,100) 1,615,762 Profit before tax 257,327, ,270, ,056, ,978, ,270, ,707,807 Income tax expenses (86,944,533) (51,155,944) (35,788,589) (86,944,533) (51,155,944) (35,788,589) Profit for the period 170,382,565 87,114,400 83,268, ,033,618 87,114,400 82,919,218 Items that will not be reclassified subsequently to profit or loss: Re-measurement gain/(loss) on defined benefit plan (6,099,190) 6,824,511 (12,923,701) (6,099,190) 6,824,511 (12,923,701) Deferred tax effect on re-measurement of defined benefit plan 1,707,773 (1,910,863) 3,618,636 1,707,773 (1,910,863) 3,618,636 for the period (4,391,417) 4,913,648 (9,305,065) (4,391,417) 4,913,648 (9,305,065) Total comprehensive income for the period 165,991,149 92,028,048 73,963, ,642,202 92,028,048 73,614,153 Profit attributable to: Owners of the company 170,382,565 87,114,400 83,268, ,033,618 87,114,400 82,919,218 Non-controlling interest 170,382,565 87,114,400 83,268, ,033,618 87,114,400 82,919,218 Total comprehensive income attributable to: Owners of the company 165,991,149 92,028,048 73,963, ,642,202 92,028,048 73,614,153 Non-controlling interest 165,991,149 92,028,048 73,963, ,642,202 92,028,048 73,614,153 Earnings per share - basic Note: The above figures are not audited.

4 STATEMENT OF COMPREHENSIVE INCOME FOR THE QUARTER ENDED 31st MARCH 2018 Company Group 03 months 03 months Variance 03 months 03 months Variance Revenue 529,394, ,703, ,691, ,394, ,703, ,691,560 Cost of sales (331,478,195) (243,752,862) (87,725,334) (331,478,195) (243,752,862) (87,725,334) Gross profit 197,916, ,950,300 71,966, ,916, ,950,300 71,966,226 Other income 16,059,927 12,212,219 3,847,708 15,710,980 12,212,219 3,498,761 Distribution expenses (105,366,722) (83,889,002) (21,477,719) (105,366,722) (83,889,002) (21,477,719) Administrative expenses (25,824,796) (18,531,979) (7,292,817) (25,824,796) (18,531,979) (7,292,817) Finance expenses (78,010) (166,280) 88,270 (78,010) (166,280) 88,270 Profit before tax 82,706,927 35,575,259 47,131,667 82,357,980 35,575,259 46,782,720 Income tax expenses (30,552,480) (15,187,293) (15,365,187) (30,552,480) (15,187,293) (15,365,187) Profit for the period 52,154,447 20,387,966 31,766,480 51,805,502 20,387,966 31,417,535 Items that will not be reclassified subsequently to profit or loss: Re-measurement gain/(loss) on defined benefit plan (6,099,190) 6,824,511 (12,923,701) (6,099,190) 6,824,511 (12,923,701) Deferred tax effect on re-measurement of defined benefit plan 1,707,773 (1,910,863) 3,618,636 1,707,773 (1,910,863) 3,618,636 for the period (4,391,417) 4,913,648 (9,305,065) (4,391,417) 4,913,648 (9,305,065) Total comprehensive income for the period 47,763,030 25,301,615 22,461,415 47,414,085 25,301,615 22,112,470 Profit attributable to: Owners of the company 52,154,447 20,387,966 31,766,480 51,805,502 20,387,966 31,417,535 Non-controlling interest 52,154,447 20,387,966 31,766,480 51,805,502 20,387,966 31,417,535 Total comprehensive income attributable to: Owners of the company 47,763,030 25,301,615 22,461,415 47,414,085 25,301,615 22,112,470 Non-controlling interest 47,763,030 25,301,615 22,461,415 47,414,085 25,301,615 22,112,470 Earnings per share - basic Note: The above figures are not audited.

5 STATEMENT OF FINANCIAL POSITION AS AT 31 st MARCH 2018 Company Group As at Assets Rs. Rs. Rs. Rs. Rs. Non current assets Restated Restated Property, plant and equipment 253,135, ,843, ,135, ,843, ,042,879 Leasehold land 5,086,170 5,155,766 5,086,170 5,155,766 5,289,275 Intangible Assets 9,070,692 8,915,549 9,070,692 8,915,549 9,472,995 Investment in subsidiary Total non current assets 267,292, ,915, ,292, ,915, ,805,150 Current assets Inventories 160,131, ,320, ,131, ,320, ,110,383 Trade & other receivables 308,646, ,266, ,646, ,266, ,176,562 Amounts due from related parties 4,527,627 1,845,035 4,527,627 1,845,035 4,147,669 Other financial assets 476,498, ,682, ,498, ,682, ,009,301 Cash in hand and at bank 31,420,727 17,896,018 31,420,727 17,896,018 1,058,381 Total current assets 981,225, ,010, ,225, ,010, ,502,296 Total assets 1,248,517, ,925,766 1,248,517, ,925, ,307,446 Equity and liabilities Equity attributable to equity - holders of the parent Stated capital 52,521,178 52,521,178 52,521,178 52,521,178 52,521,178 Employee share trust loan reserve 41,613,945 41,613,945 41,613,945 Retained earnings 845,361, ,370, ,179, ,537, ,509,045 Total equity 897,883, ,891, ,314, ,672, ,644,168 Liabilities Non current liabilities Deferred Tax Liabilities 18,646,416 20,385,817 18,646,416 20,385,817 15,984,924 Interest bearing borrowing 1,481,482 Retirement benefit obligations 54,188,772 41,269,953 54,188,772 41,269,953 45,425,885 Total non current liabilities 72,835,188 61,655,770 72,835,188 61,655,770 62,892,291 Current liabilities Trade & other payables 225,382, ,574, ,951, ,142, ,942,201 Interest bearing borrowing 17,777,756 Current tax liabilities 48,053,685 15,898,090 48,053,685 15,898,090 2,846,834 Amounts due to related parties 4,362,992 3,905,928 4,362,992 3,556,981 2,481,016 Bank overdraft 29,723,179 Total current liabilities 277,799, ,378, ,367, ,597, ,770,986 Total liabilities 350,634, ,033, ,202, ,253, ,663,277 Total equity and liabilities 1,248,517, ,925,766 1,248,517, ,925, ,307,446 (0) Net assets value per share I certify that these financial statements comply with the requirements of the Companies Act No. 07 of Signed Dasun Mendis Finance Manager The Board of Directors is responsible for the preparation and presentation of these financial statements. Signed for and on behalf of the Board. Signed E T De Zoysa Managing Director Signed R S Wickramasingha Chairman 25 th May th May 2018 Note: The above figures are not audited.

6 STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED 31 st MARCH 2018 Company Stated Retained Total Capital Earnings Rs. Rs. Rs. Balance as at 1 st April ,521, ,342, ,863,879 Profit for the period - 87,114,400 87,114,400 Re-measurement of defined benefit plan, net of tax - 4,913,648 4,913,648 Dividend paid for the year 2015/16 - (11,000,000) (11,000,000) Balance as at 31 st March ,521, ,370, ,891,927 Profit for the period - 170,382, ,382,565 Re-measurement of defined benefit plan, net of tax - (4,391,417) (4,391,417) Dividend paid for the year 2016/17 - (11,000,000) (11,000,000) Balance as at 31 st March ,521, ,361, ,883,076 Group Stated Employee share Retained Total Capital trust loan reserve Earnings Rs. Rs. Rs. Rs. Balance as at 1st April 2016 as previously reported 52,521, ,122, ,644,168 Adjustment for prior period error correction (note 4) - 41,613,945 (41,613,945) - Restated balance as at 1st April ,521,178 41,613, ,509, ,644,168 Profit for the period 87,114,400 87,114,400 Re-measurement of defined benefit plan, net of tax 4,913,648 4,913,648 Dividend paid for the year 2015/16 (11,000,000) (11,000,000) Restated balance as at 31st March ,521,178 41,613, ,537, ,672,216 Profit for the period 170,033, ,033,618 Re-measurement of defined benefit plan, net of tax (4,391,417) (4,391,417) Dividend paid for the year 2016/17 (11,000,000) (11,000,000) Balance as at 31 st March ,521,178 41,613, ,179, ,314,417 Note: The above figures are not audited.

7 STATEMENT OF CASH FLOWS FOR THE PERIOD ENDED 31 st MARCH 2018 Company Group Cash flows from/(used in) operating activities Profit before taxation 257,327, ,270, ,978, ,270, ,947 - Adjustments for: Depreciation 47,424,412 43,080,717 47,424,412 43,080,717 Amortization 1,229,955 1,119,860 1,229,955 1,119,860 Interest income (48,963,876) (32,916,502) (48,963,876) (32,916,502) Profits on disposal of assets - (4,724,174) - (4,724,174) Interest expense 26,170 1,284,285 26,170 1,284,285 Adjustment for leasehold asset - 63,913-63,913 Provision for gratuity 9,837,357 8,669,782 9,837,357 8,669,782 Operating profit before working capital changes 266,881, ,848, ,532, ,848,225 #REF! #REF! #REF! #REF! (Increase)/decrease in inventories (49,811,479) 13,790,024 (49,811,479) 13,790,024 - (Increase)/decrease in trade & other receivables (68,380,675) (44,089,728) (68,380,675) (44,089,728) (Increase)/decrease in amount due from related parties (2,682,592) 2,302,634 (2,682,592) 2,302,634 Increase/(decrease) in amount due to related parties 457,064 1,075, ,011 1,075,966 (348,947) - Increase/(decrease) in trade & other payables 81,808,331 (17,799,512) 81,808,331 (17,799,512) - Cash flow generated from/ (used in) operations 228,271, ,127, ,271, ,127, Retirement benefits paid (3,017,728) (6,001,202) (3,017,728) (6,001,202) - Tax paid (54,820,566) (35,614,660) (54,820,566) (35,614,660) Net cash flow generated from/ (used in) operations 170,433,471 68,511, ,433,471 68,511,746 Cash flows from investing activities Payments for property, plant & equipment (29,715,644) (23,023,151) (29,715,644) (23,023,151) Payments for intangible assets (1,315,502) (492,818) (1,315,502) (492,818) Proceeds from disposal of property plant and equipment - 4,865,548-4,865,548 Interest received 48,963,876 32,916,502 48,963,876 32,916,502 (Increase)/ decrease in short term investment (163,815,322) (4,673,489) (163,815,322) (4,673,489) Net cash flow from/ (used in) investing activities (145,882,592) 9,592,592 (145,882,592) 9,592,592 Cash flows from financing activities Repayments of borrowings - (19,259,238) - (19,259,238) Dividend Paid (11,000,000) (11,000,000) (11,000,000) (11,000,000) (10,973,830) (9,715,715) Interest paid (26,170) (1,284,285) (26,170) (1,284,285) 10,973,830 9,715,715 Net cash generated from /(used in) financing activities (11,026,170) (31,543,523) (11,026,170) (31,543,523) #REF! #REF! Net increase/ (decrease) in cash & cash equivalents 13,524,709 46,560,816 13,524,709 46,560,816 Cash & Cash Equivalents at the beginning of the period 17,896,018 (28,664,798) 17,896,018 (28,664,798) Cash & Cash Equivalents at the end of the period 31,420,727 17,896,018 31,420,727 17,896,018 Cash & Cash Equivalents at the end of the period Cash in hand and at bank 31,420,727 17,896,018 31,420,727 17,896,018 Bank overdraft 31,420,727 17,896,018 31,420,727 17,896,018 Note: The above figures are not audited.

8 NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS 1. Corporate information Convenience Foods (Lanka) PLC ('the Company') is engaged in the manufacture and marketing of Textured Vegetable Protein (TVP) and other food products. Convenience Foods (Lanka) PLC is a public limited company incorporated and domiciled in Sri Lanka and listed in the Colombo Stock Exchange Approval of financial statements The interim condensed financial statements of the group and the company for the period 31 st March 2018 were authorised for issues by the Board of Directors on 25 th May Basis of preparation The interim financial statements of the company and group for the period 31 st March 2018 have been prepared in accordance with the requirements of LKAS - 34 Interim Financial Reporting and have been prepared in accordance with the same accounting policies and methods set out in the Annual Audited Financial Statements for the year 31 st March Except for; Employee share trust loan In the consolidated financial statements of the group, the loan given by the Company to the Share Trust is recognised as a loan provided to buy back the Company s own shares. When the share held by the Trust, were disposed by the trust the amount received is recognised as an increase in equity, and the resulting surplus on the transaction is recognised in a separate reserve. These interim condensed financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group s Annual Audited Financial Statement for the period 31 st March The presentation and classification of the financial statements of the previous year have been am, where relevant, for better presentation and to be comparable with those of the current period. These interim condensed financial statements are presented in Sri Lankan Rupees (Rs.) and all values are rounded to the nearest rupee except when otherwise indicated. 4. Explanation on restatement of financial statements During the financial year, Securities and Exchange Commission of Sri Lanka has bought into the attention of the company that the accounting treatment adopted by the Company in the consolidated financial statements of the group in relation to the loan provided to the Employee Share Trust had not been properly interpreted in accordance with the requirements of Sri Lanka Accounting Standards as detailed below. As stated in the annual report for the year 31 st March 2015, on 25 th February 1992 and 25 th June 1993, a total of 168,004 (One Hundred and Sixty Eight Thousand and Four) shares of the company were purchased at a cost of Rs. 1,386,055/- for the Share Trust setup by the company. As per Sri Lanka Accounting Standards, the company determined to classify the loan provided to Share Trust as available for sale financial assets and measured at fair value at each reporting date. During the year 31 st March 2015, the shares held by the Trustees of the Share Trust were disposed of to be in compliance with Sec of the CSE Listing Rules and the group recognised a total gain on disposal of the shares held by the Trust amounting to Rs. 41,613,945/- and recognized the said gain in the Profit and Loss Account. The said gain of Rs. 41,613,945/- includes the transfer of Rs.33,030,758/- from Available For Sale Reserve to the Profit and Loss upon de-recognition (including the current year increase in fair value of Rs. 8,655,242/-) and the gain on disposal of Rs. 8,583,187/- recognized during the year. Due to this adjustment, the total profit for the year and total comprehensive income for the year 31 st March 2015 is overstated by Rs.41,613,945/- and Rs.17,238,429/ respectively. Further, this adjustment resulted in the reduction of basic earnings per share from Rs to Rs The accounting treatment followed is in compliance with the requirements of the Sri Lanka Accounting Standards under the Company s separate financial statements. However, in the consolidated financial statements of the group, the said accounting treatment is considered inappropriate since, the loan given by the Company to the Share Trust requires to be recognised as a loan provided to buy back the Company s own shares. In compliance with the Sri Lanka Accounting Standards, when these shares were disposed of by the Trust, the amount received were recognised as an increase in equity, and the resulting surplus from the transaction were transferred to an appropriate reserve without recognising any adjustments to the profit or total comprehensive income for the respective year. The said inaccuracy in accounting in the consolidated financial statements of the group, does not result in changes to the reported total equity of the group amounting to Rs.574,789,866/- as at 31 st March Instead, a reclassification adjustment equivalent to Rs.41,613,945/- was made from retained earnings to a separate reserve titled Employee Share Trust Reserve. These errors have been corrected retrospectively in accordance with Sri Lanka Accounting Standards, LKAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. The impact on the group statement of financial position and group statement of changes in equity as at 1 st April 2016 and 31 st March 2017 are given in note 4.1 and 4.2 respectively. 4.1 Consolidated statement of financial position and statement of changes in equity as at 1 st April 2016 Line item Balance as previously reported (Rs.) Adjustment for prior period error correction (Rs.) Restated balance (Rs.) Stated capital 52,521,178-52,521,178 Employee share trust loan reserve - 41,613,945 41,613,945 Retained earnings 609,122,990 (41,613,945) 567,509,045 Total equity 661,644, ,644,168

9 NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS 4.2 Consolidated statement of financial position and statement of changes in equity as at 31 st March 2017 Line item Balance as previously reported (Rs.) Adjustment for prior period error correction (Rs.) Restated balance (Rs.) Stated capital 52,521,178-52,521,178 Employee share trust loan reserve - 41,613,945 41,613,945 Retained earnings 690,151,038 (41,613,945) 648,537,093 Total equity 742,672, ,672, Segmental information Segmental information is not presented since the company does not have distinguishable components to be identified as a segment as all operations are treated as one segment. Change in ownership In accordance with the reorganisation of the CBL Group, CBL Investments Limited purchased 1,962,977 Ordinary Shares (constituting 71.38% of the issued shares) in Convenience Food (Lanka) PLC from Ceylon Biscuits Limited, through a transaction carried out on the Colombo Stock Exchange on 4 th September 2017 at a price of Rs. 315/- per share, for a total consideration of Rs. 618,337,755/- Significant unusual items affecting assets, liabilities, equity, net income or cash flows There were no unusual items affecting the assets, liabilities, equity, net income or cash flows due to their nature, size or incidence for the period 31 st March Events after the reporting period There were no significant events after the reporting period that would require adjustments to or disclosures in these interim financial statements for the period 31 st March Commitments and contingencies. Financial commitments Commitments on account of letter of credit as at 31 st March 2018 was Rs.114,692,755/- (31 st March 2017: Rs. 55,771,314/-). Shipping Guarantees as at 31 st March 2018 was Rs. 33,420,600/- (31 st March 2017: 65,948,400/-). Import Bills as at 31 st March 2018 was Rs. 16,765,397/- (31 st March 2017: Rs. 4,057,800/-). Capital Commitments There were no significant capital commitments as at reporting date. Contingencies - pending litigations There were no other significant contingent liabilities as at the reporting date, except for the following; The company had made an appeal to the court of Appeal on question of law arising from the determination of the Board of Review and is made under and in terms of Section 122 (1) of the Inland Revenue Act No. 28 of 1979 (as am). The income tax payable as per the Board of Review determination for the year of assessment 1991/1992 amounts to a sum of Rs. 8,871,886 and surcharge on income tax of Rs. 1,072,031 (plus any penalties payable thereon). Pending the final decision, no provision has been made in these financial statements.

10 Additional Notes 1 Share prices during the Quarter 03 Months 03 Months Ended Ended 2017/2018 4th Quater 2016/2017 4th Quater Rs. Rs. Highest Lowest Closing Names and the number of shares held by the 20 major shareholders As At 31 st March 2018 No of Shares % of holding 1.CBL INVESTMENTS LIMITED 1,962, % 2.DAWI INVESTMENT TRUST (PVT) LTD 184, % 3.PEOPLE'S LEASING & FINANCE PLC/C D KOHOMBANWICKRAMA 182, % 4.MR.H W M WOODWARD (DECEASED) 70, % 5.MR.A M D S JAYARATNE 18, % 6.MR.K C VIGNARAJAH 14, % 7.BANSEI SECURITIES CAPITAL PVT LTD/DAWI INVESTMENT PVT LTD 13, % 8.MR.E D K WEERASURIYA 10, % 9.MR. R J S JAYAMAHA 10, % 10.MR.L.H.S.PEIRIS 7, % 11.MRS.N A CHNDRASENA & MR.J U N CHANDRASENA 7, % 12.MR.U I SURIYABANDARA 6, % 13.MR.G W AMARATUNGA 6, % 14.MR.Z G CARIMJEE 6, % 15.MRS.S VIGNARAJAH 6, % 16.MR.A J RUMY 6, % 17.MRS.M M UDESHI 6, % 18.MR.D RATNAYAKE 5, % 19.NDB PLC/SAKUNI INVESTMENT TRUST (PVT) LTD 5, % 20.DR S YADDEHIGE 4, % Sub total 2,538, % Others 211, % Issued Capital 2,750, % 3 Director's shareholding as at 31 st March 2018 Mr. R S Wickramasingha Ms. D S Wickramasingha Mr. E T De Zoysa Mr. N A Wickramage Ms. N K Wickramasingha Mr. M U S G Thilakawardana Mr. D M A Kulasooriya Mr. M S Nanayakkara 4 Public Holding Percentage as at 31st March 2018 was 28.62% and comprised of approximately 1,546 Shareholders