Cargills (Ceylon) PLC Condensed Interim Financial Statements for the three months ended 30 June 2018.
Contents Management Review 01 Statement of Profit or Loss and Other Comprehensive Income 02 Statement of Financial Position 03 Statement of Changes in Equity - Group 04 Statement of Changes in Equity - Company 05 Statement of Cash Flows 06 Segment Information 08 Explanatory Notes 09 Investor Relations Supplement 10 Notes 12 Corporate Information Inner Back Cover
Management Review The overall consumer environment remained subdued during the period under review amidst continuing economic headwinds in terms of currency pressure and inflation tracking upward following the implementation of the Fuel Pricing mechanism. The Group was nevertheless able to consolidate its market position across sectors, with strong performance being reported from the FMCG sector. The Cargills Group reported a consolidated profit after tax of Rs. 785 Mn for 1Q 2018/19, marginally below the corresponding period of last year. Revenue grew 7% YoY to Rs. 24,465 Mn, though increased pressure on margins resulted in a marginal growth in Gross Profit to Rs. 2,785 Mn. Operating Profit declined by 7% YoY to Rs. 1,483 Mn, while profit before tax declined by 6% YoY to Rs. 1,169 Mn. The Retail sector recorded a revenue of Rs. 19,486 Mn for the period under review, up 7% YoY, with the soft consumer environment exerting pressure on consumer spending power. Overall, basket growth was minimal vis-à-vis the corresponding quarter, and transactions growth was the primary factor driving top line growth in the quarter. Meanwhile, operating profit declined 25% YoY to Rs. 631 Mn. As at 30th June 2018, the Group had 357 retail stores. The FMCG sector recorded revenue of Rs. 4,060 Mn for 1Q 2018/19, a growth of 7% on account of the Dairy, Processed Meat, Confectionaries businesses. Meanwhile, operating profit rose 7% YoY to Rs. 663 Mn with sector margins unchanged from the corresponding period. The Restaurants sector reported a growth in Revenue of 5.5% to Rs. 919 Mn, while Operating Profit rose 29.5% YoY to Rs. 108 Mn. Cargills is focused and committed to creating markets across the country, being a conduit for trade and commerce throughout Sri Lanka. The Group will continue to focus on its customers, expanding its footprint, improving efficiency and productivity, broadening its portfolio of quality products, and building on its strong Sri Lankan brands, components that embed long term sustainable growth. 01
Statement of Profit or Loss and Other Comprehensive Income Group Company For the 3 months ended 30 June For the 3 months ended 30 June 2018 2017 Variance 2018 2017 Variance Rs. 000 Rs. 000 % Rs. 000 Rs. 000 % Revenue 24,464,979 22,881,369 6.92 2,519 2,426 3.83 Cost of sales (21,680,268) (20,101,586) (7.85) (3,083) (2,498) (23.42) Gross profit 2,784,711 2,779,783 0.18 (564) (72) (683.33) Other income 488,130 460,667 5.96 240,965 206,237 16.84 Distribution expenses (625,410) (595,656) (5.00) (3,972) (4,348) 8.65 Administrative expenses (1,046,767) (928,576) (12.73) (152,699) (136,867) (11.57) Other expenses (117,880) (120,627) 2.28 (20,683) (30,265) 31.66 Results from operating activities 1,482,784 1,595,591 (7.07) 63,047 34,685 81.77 Net finance costs (317,664) (367,082) 13.46 (73,679) (206,589) 64.34 Share of profit of equity accounted investees, net of tax 3,802 14,104 (73.04) - - - Profit before taxation 1,168,922 1,242,613 (5.93) (10,632) (171,904) 93.82 Income tax expense (383,881) (447,728) 14.26 (32,184) (17,590) (82.97) Profit/(Loss) for the period 785,041 794,885 (1.24) (42,816) (189,494) 77.41 Other comprehensive income (OCI) Net gain/(loss) on available -for-sale investments 799 3,340 799 3,332 Share of other comprehensive income in equity accounted investee, net of tax (9,530) (3,137) - - Other comprehensive income for the period, net of tax (8,731) 203 799 3,332 Total comprehensive income for the period 776,310 795,088 (42,017) (186,162) Profit attributable to : Equity shareholders of the parent 755,963 751,026 (42,816) (189,494) Non controlling interest 29,078 43,859 - - Profit for the period 785,041 794,885 (42,816) (189,494) Total comprehensive income attributable to: Equity shareholders of the parent 747,232 751,229 (42,017) (186,162) Non controlling interest 29,078 43,859 - - Total comprehensive income for the period 776,310 795,088 (42,017) (186,162) Earnings per share (Rs.) 3.26 3.35 (0.18) (0.85) Diluted Earnings per share (Rs.) 3.25 3.30 (0.18) (0.83) Explanatory notes are given on page 9. 02
Statement of Financial Position Group Company 30 June 31 March 30 June 31 March As at 2018 2018 2018 2018 Rs. 000 Rs. 000 Rs. 000 Rs. 000 (Audited) (Audited) Assets Non-current assets Property, plant and equipment 25,831,169 25,076,817 2,786,511 2,772,004 Investment property 1,726,552 1,726,552 3,215,008 3,207,009 Intangible assets 1,298,879 1,311,686 46,223 54,845 Investment in subsidiaries - - 2,921,725 2,907,772 Investment in equity accounted investees 5,361,033 5,366,761 5,121,439 5,121,439 Available for sale investments 20,468 19,668 20,377 19,577 Prepayment on leasehold land and buildings 165,628 166,810 143,097 144,060 Deferred tax assets 8,607 8,413 - - Total non-current assets 34,412,336 33,676,707 14,254,380 14,226,706 Current assets Inventories 8,996,079 9,545,785 2,465 5,369 Trade and other receivables 5,824,771 5,752,193 653,717 635,515 Amount due from related companies 864,760 843,869 1,718,687 924,502 Other financial assets 1,021,195 973,439 - - Cash and cash equivalents 1,809,781 2,000,288 7,347 12,594 Total current assets 18,516,586 19,115,574 2,382,216 1,577,980 Total assets 52,928,922 52,792,281 16,636,596 15,804,686 Equity Stated capital 6,530,709 6,530,709 6,530,709 6,530,709 Other equity (3,177,044) (3,089,325) - - Reserves 5,068,761 5,043,825 190,345 165,409 Retained earnings 8,589,616 7,843,183 4,771,444 4,814,260 Total equity attributable to equity holders of the company 17,012,042 16,328,392 11,492,498 11,510,378 Non-controlling interest 520,997 491,919 - - Total equity 17,533,039 16,820,311 11,492,498 11,510,378 Liabilities Non-current liabilities Interest bearing loans and borrowings 1,273 1,546 - - Deferred tax liabilities 1,331,315 1,352,650 180,967 180,324 Capital Grants 59,030 61,901 - - Employee benefit liabilities 988,820 942,633 408,648 397,146 Put liability 3,177,044 3,089,325 - - Total non-current liabilities 5,557,482 5,448,055 589,615 577,470 Current liabilities Trade and other payables 10,793,683 13,220,686 329,293 420,186 Current tax liabilities 2,743,625 2,594,237 75,673 168,787 Amount due to related companies 6,298 3,175 14,424 21,242 Dividend payable 60,571 68,229 60,571 63,836 Interest bearing loans and borrowings 16,234,224 14,637,588 4,074,522 3,042,787 Total current liabilities 29,838,401 30,523,915 4,554,483 3,716,838 Total liabilities 35,395,883 35,971,970 5,144,098 4,294,308 Total equity and liabilities 52,928,922 52,792,281 16,636,596 15,804,686 Net Assets value per share (Rs.) 66.45 63.78 44.89 44.96 Explanatory notes are given on page 9. I certify that the financial statements have been prepared in accordance with the requirements of the Companies Act No. 7 of 2007. (Signed.) Dilantha Jayawardhana (Group Chief Financial Officer) The Board of Directors is responsible for the preparation and presentation of these financial statements. Signed on behalf of the Board (Signed.) Imtiaz Abdul Wahid (Managing Director / Deputy CEO) 14th August 2018 Colombo (Signed.) Sidath Kodikara (Executive Director) 03
Statement of Changes in Equity - Group Stated Capital Revaluation General Available for Other Employee share Retained Non controlling Total Group capital reserve reserve reserve sale reserve equity option reserve earnings interest Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Balance as at 1 April 2017 130,723 7,928 7,908,678 485,500 (29,742) (2,761,159) - 8,214,904 415,091 14,371,923 Profit for the period - - - - - - - 751,026 43,859 794,885 Other comprehensive income - - - - 3,340 - - (3,137) - 203 Total comprehensive income - - - - 3,340 - - 747,889 43,859 795,088 Transactions with owners of the company, recognized directly in equity Put option over Non-controlling interests - - - - - (78,401) - - - (78,401) Balance as at 30 June 2017 130,723 7,928 7,908,678 485,500 (26,402) (2,839,560) - 8,962,793 458,950 15,088,610 Balance as at 1 April 2018 6,530,709 7,928 4,884,927 - - (3,089,325) 150,970 7,843,183 491,919 16,820,311 Profit for the period - - - - - - - 755,963 29,078 785,041 Other comprehensive income - - - - 799 - - (9,530) - (8,731) Total comprehensive income - - - - 799 - - 746,433 29,078 776,310 Transactions with owners of the company, recognized directly in equity Put option over Non-controlling interests - - - - - (87,719) - - - (87,719) Equity-settled share-based payment - - - - - - 24,137 - - 24,137 Balance as at 30 June 2018 6,530,709 7,928 4,884,927-799 (3,177,044) 175,107 8,589,616 520,997 17,533,039 04
Statement of Changes in Equity - Company Stated Revaluation General Available for Employee share Retained Total Company capital reserve reserve sale reserve option reserve earnings Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Balance as at 1 April 2017 130,723 3,204,729 485,500 (29,737) - 5,714,490 9,505,705 Profit for the period - - - - - (189,494) (189,494) Other comprehensive income - - - 3,332 - - 3,332 Total comprehensive income - - - 3,332 - (189,494) (186,162) Transactions with owners of the company, recognized directly in equity Dividends to shareholders - - - - - - - Balance as at 30 June 2017 130,723 3,204,729 485,500 (26,405) - 5,524,996 9,319,543 Balance as at 1 April 2018 6,530,709 14,439 - - 150,970 4,814,260 11,510,378 Profit for the period - - - - - (42,816) (42,816) Other comprehensive income - - - 799 - - 799 Total comprehensive income - - - 799 - (42,816) (42,017) Transactions with owners of the company, recognized directly in equity Equity-settled share-based payment - - - - 24,137-24,137 Balance as at 30 June 2018 6,530,709 14,439-799 175,107 4,771,444 11,492,498 Explanatory notes are given on page 9. 05
Statement of Cash Flows Group Company For the three months ended 30 June 2018 2017 2018 2017 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Cash flows from operating activities Profit before taxation 1,168,922 1,242,613 (10,632) (171,904) Adjustments for: Depreciation on property, plant and equipment 597,001 517,266 12,060 9,928 Employee benefits 81,075 67,063 23,232 31,932 Amortisation of intangible assets 19,135 31,151 8,622 20,427 Amortisation of prepayment on leasehold land and building 1,182 1,181 963 962 Amortisation of deferred income (2,871) (2,870) - - Gain on disposal of property, plant and equipment (4,732) (357) - - Dividend income - (334) - (334) Provision for impairment of inventories 4,500 4,799 - - Impairment of / (reversal of impairment ) for trade receivables 4,352 3,879 - - Net finance costs 317,664 367,082 73,679 206,589 Equity-settled share based payment transactions 23,156-9,202 - Share of (profit) / loss on equity accounted investees, net of tax (3,802) (14,104) - - Operating profit before working capital changes 2,205,582 2,217,369 117,126 97,600 Changes in working capital - (Increase) / decrease in inventories 545,206 1,074,284 2,904 2,249 - (Increase) / decrease in trade and other receivables (76,930) 368,124 (18,202) 149,622 - (Increase) / decrease in related company receivables (19,910) (22,869) (793,203) (157,321) - Increase / (decrease) in trade and other payables (2,427,004) (1,756,091) (90,893) 770 - Increase / (decrease) in related company payables 3,123 129 (6,818) (10,637) Cash generated from operations 230,067 1,880,946 (789,086) 82,283 Taxes paid (256,021) (9,221) (124,655) - Interest paid (377,838) (430,202) (108,208) (226,415) Retiring gratuity paid (34,888) (15,546) (11,731) (11,732) Net cash generated from/(used in) operating activities (438,680) 1,425,977 (1,033,680) (155,864) 06
Statement of Cash Flows contd. Group Company For the three months ended 30 June 2018 2017 2018 2017 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Cash flows from investing activities Acquisition and construction of property, plant and equipment (1,351,356) (936,548) (26,567) (7,488) Acquisition and construction of investment property - - (7,999) (8,040) Acquisition of intangible assets (6,328) (3,437) - - Interest income received 60,174 63,120 34,529 19,826 Dividend received - 334-334 Proceeds from disposal of property, plant and equipment 4,735 357 - - (Addition) / disposal to other financial assets (47,757) (102,258) - 4,691 Net cash generated from/(used in) investing activities (1,340,532) (978,432) (37) 9,323 Cash flows from financing activities Net proceeds from/(repayment of ) short term borrowings (2,212,575) 27,022 932,000 171,800 Net proceeds from/(repayment of ) long term borrowings (273) (445) - - Dividends paid to shareholders (7,658) (23,224) (3,265) (21,340) Net cash generated from/(used in) financing activities (2,220,506) 3,353 928,735 150,460 Increase / (decrease) in cash and cash equivalents (3,999,718) 450,898 (104,982) 3,919 Movement in cash and cash equivalents At the beginning of the period (769,240) (1,659,450) (35,193) (755,482) Movement during the period (3,999,718) 450,898 (104,982) 3,919 At the end of the period (4,768,958) (1,208,552) (140,175) (751,563) Explanatory notes are given on page 9. 07
Segment Information For the three months ended 30 June Retail Fast Moving Consumer Restaurant Others Group Goods 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Revenue 19,533,581 18,306,591 5,835,814 5,414,002 918,691 871,092 2,519 2,426 26,288,086 24,594,111 Intra segment revenue - - (56,994) (54,141) - - - - (56,994) (54,141) Inter segment revenue (47,672) (73,683) (1,718,441) (1,582,492) - - (2,519) (2,426) (1,766,113) (1,658,601) 19,485,909 18,232,908 4,060,379 3,777,369 918,691 871,092 - - 24,464,979 22,881,369 Segment operating profit 630,820 842,846 662,715 616,481 108,058 83,444 81,191 52,820 1,482,784 1,595,591 Explanatory notes are given on page 9. 08
Explanatory Notes 1. The result for the three months ended 30 June 2018 and the Statement of Financial Position as at 30 June 2018 are provisional and subject to audit. 2. The Condensed Interim Financial Statements of the Group and the Company have been prepared in accordance with Sri Lanka Accounting Standard LKAS 34 - Interim Financial Reporting. These Condensed Interim Financial Statements should be read in conjunction with the annual financial statements for the year ended 31 March 2018. 3. The cost of Share Based Payments accounted in the Group s Financial Statements for the period amounted to Rs.23Mn. 4. Where appropriate, the previous year s figures have been reclassified to conform to the current classification. 5. There have been no significant change in the nature and the value of the contingencies and commitments which were disclosed in the annual report for the year ended 31 March 2018. 09
Investor Relations Supplement 1. General Stated capital Rs. 6,530,708,400 Issued shares 255,999,927 Class of shares Ordinary shares Voting rights One vote per ordinary share 2. Stock Exchange Listing The issued ordinary shares of Cargills (Ceylon) PLC are listed in the Colombo Stock Exchange. 3. Share Valuation The market price per share recorded during the quarter ended 30 June 2018 2017 Rs Rs Highest 204.00 220.50 Lowest 190.00 183.00 Last traded price 199.60 201.00 4. Top 20 Shareholders The holdings of the top 20 shareholders as at 30 June 2018 30 June 2017 Number of Number of Shares % Shares % C T Holdings PLC 179,713,417 70.20 157,249,240 70.20 Mr. V R Page 17,142,964 6.70 15,000,093 6.70 Employees Provident Fund 8,407,333 3.28 7,356,416 3.28 Odeon Holdings (Ceylon) (Private) Limited 5,511,909 2.15 4,822,920 2.15 Ms. M M Page 5,158,946 2.02 4,318,803 1.93 Ceylon Guardian Investment Trust PLC - A/C No.1 4,772,229 1.86 4,175,700 1.86 BNYMSANV RE-CF Ruffer Investment Funds : CF Ruffer Pacific Fund 3,970,920 1.55 3,474,555 1.55 Seb Ab - Tundra Frontier Opportunities Fund 2,609,579 1.02 - - BNYMSANV- First State Investments ICVC - Stewart Investors Indian Subcontinent Fund 1,705,829 0.67 3,927,600 1.75 BNYMSANV RE-Butterfield Trust (Bermuda) Limited 1,551,429 0.61 1,297,500 0.58 Mellon Bank N.A. - Florida Retirement System 1,487,771 0.58 1,301,800 0.58 Bank of Ceylon - A/C No. 1 1,484,129 0.58 1,298,613 0.58 Deutsche Bank AG as Trustee for JB Vantage Value Equity Fund 1,031,737 0.40 902,770 0.40 GF Capital Global Limited 1,016,000 0.40 889,000 0.40 CITI Bank New York S/A A/C No. 2 997,352 0.39 - - 10
Investor Relations Supplement contd. 4. Top 20 Shareholders (Contd.) The holdings of the top 20 shareholders as at 30 June 2018 30 June 2017 Number of Number of Shares % Shares % The Associated Newspapers of Ceylon Limited 914,103 0.36 799,840 0.36 Ceylon Investment PLC A/C No.2 720,502 0.28 350,250 0.16 Sir Chittampalam A Gardiner Trust 643,474 0.25 563,040 0.25 Ceylon Guardian Investment Trust PLC - A/C No.2 521,771 0.20 456,550 0.20 Mr. J C Page 520,000 0.20 455,000 0.20 239,881,394 93.70 208,639,690 93.13 5. Public Holding The percentage of shares held by the public and number of public shareholders as at 30 June 2018 is 20.35%. (30 June 2017-20.29%) and 1,842 (30 June 2017-1,830) respectively. 6. Directors Shareholdings The Directors shareholdings in the Company were as follows as at 30 June: 2018 2017 Mr. Louis Page 42,011 36,760 Mr. Ranjit Page 17,142,964 15,000,093 Mr. Imtiaz Abdul Wahid 4,571 4,000 Mr. Sidath Kodikara 141,714 124,000 Mr. Prabhu Mathavan 571 500 Mr. Priya Edirisinghe 57,143 50,000 Mr. Sanjeev Gardiner 22,857 20,000 Mr. Sunil Mendis 22,857 20,000 Mr. Anthony A Page 315,608 276,157 Mr. Joseph Page 520,000 455,000 Mr. Errol Perera 11,429 10,000 Mr. Deva Rodrigo - - 11
Notes 12
Corporate Information Name of Company Cargills (Ceylon) PLC Company Registration No. PQ 130 Legal Form Quoted public company with limited liability, incorporated in Sri Lanka on 1 March 1946. Board of Directors Louis Page (Chairman) Ranjit Page (Deputy Chairman/CEO) Imtiaz Abdul Wahid (Managing Director/Deputy CEO) Sidath Kodikara Prabhu Mathavan Priya Edirisinghe Sanjeev Gardiner Sunil Mendis Anthony A Page Joseph Page Errol Perera Deva Rodrigo Company Secretary Sarath Dissanayake Remuneration Committee Sunil Mendis (Chairman) Priya Edirisinghe Deva Rodrigo Audit Committee Priya Edirisinghe (Chairman) Sunil Mendis Errol Perera Deva Rodrigo Related Party Transactions Review Committee Priya Edirisinghe (Chairman) Sunil Mendis Errol Perera Deva Rodrigo Stock Exchange Listing Colombo Stock Exchange Registered Office 40, York Street, Colombo 1, Sri Lanka Telephone : +94 (0) 11 242 7777 Facsimile : +94 (0) 11 233 8704 E-mail : ccl@cargillsceylon.com Postal Address P.O. Box 23, Colombo 1 Auditors KPMG Chartered Accountants Bankers Bank of Ceylon Cargills Bank Commercial Bank of Ceylon Deutsche Bank DFCC Bank Habib Bank HNB Bank HSBC Bank ICICI Bank MCB Bank NDB Bank Nations Trust Bank Pan Asia Bank People s Bank Sampath Bank Seylan Bank Standard Chartered Bank State Bank of India Subsidiary Companies Cargills Agrifoods Limited Cargills Distributors (Private) Limited Cargills Food Processors (Private) Limited Cargills Food Services (Private) Limited Cargills Foods Company (Private) Limited Cargills Frozen Products (Private) Limited Cargills Quality Confectioneries (Private) Limited Cargills Quality Dairies (Private) Limited Cargills Quality Foods Limited Cargills Enterprise Solutions (Private) Limited Ceylon Agro Development Company (Private) Limited C P C Lanka Limited Dawson Office Complex (Private) Limited Frederick North Hotel Company Limited Kotmale Dairy Products (Private) Limited Kotmale Holdings PLC Kotmale Milk Foods Limited Kotmale Milk Products Limited Kotmale Products Limited Millers Limited The Empire Investments Company (Private) Limited Associate Companies C T Properties Limited Cargills Bank Limited
www.cargillsceylon.com Cargills (Ceylon) PLC No. 40, York Street, Colombo 1