Ceylon Beverage : Quarterly Financial Report as of 31 03 2024

Ceylon Beverage Holdings PLC

Interim Condensed Financial Statements for the Year ended

31 st March 2024

CEYLON BEVERAGE HOLDINGS PLC

Review

The economic pressures continued during the quarter under review, with excise taxes increasing by 14% in January 24, which was on top of a 20% duty hike in July 2023 for the 23/24 financial year. VAT was also higher by 3% vs prior year quarter. The escalation in price of alcoholic beverages has brought further pressure to consumers who have seen a rapid deterioration of their disposable income which has led to the widespread availability of illicit products. Consequently, LION volumes declined for the full year.

The Government and regulator must take this into consideration and provide price stability for the industry to recover, if this level of excise increases continue, Government revenue will be impacted due to lower volumes. In order to support consumer affordability, the launch of the 500ml returnable bottles from Lion Strong and Carlsberg Special Brew at lower price threshold was an attempt to minimize consumers downtrading to illicit product.

Cost saving initiatives were a central focus to offset the adverse impacts of tax hikes on the Group's profitability. However, there is a limit to cost reduction before quality and other critical elements are impacted. The outlook for 24/25 is in keeping with 23/24 - volume and margin pressure. In addition to an excise duty hike in January 2025, we expect there to be a margin headwind in the event of a Rupee depreciation in the second half of the financial year. Furthermore, national elections in the second half of the year will also increase uncertainty. Total taxes paid to the Government during the fiscal year amounted to Rs. 75.1 Bn.

CEYLON BEVERAGE HOLDINGS PLC

BOARD OF DIRECTORS AS AT 31ST MARCH 2024

Mr. D. A. Cabraal (Chairman)

Mr. H. Selvanathan (Deputy Chairman)

Mr. M. Selvanathan

Mr. R. H. Meewakkala (CEO/Director)

Mr. D. C. R. Gunawardena

Mr. S. Clini

Mrs. S. J. F. Evans

CEYLON BEVERAGE HOLDINGS PLC

CONDENSED STATEMENT OF FINANCIAL POSITION

	Company	Group
As at	31st March 2024	31st March 2023	31st March 2024	31st March 2023
In Rs.'000s		(Audited)		(Audited)
ASSETS
Non-current assets
Property, plant and equipment	-	-	28,316,768	22,996,451
Investment properties	815,200	810,200	815,200	810,200
Right of use assets	-	-	223,969	209,947
Intangible assets	-	-	768,925	458,843
Deferred tax assets	-	-	46,716	26,378
Investment in subsidiaries	2,128,583	2,060,084	-	-
Total non-current assets	2,943,783	2,870,284	30,171,578	24,501,819
Current assets
Inventories	-	-	9,123,121	7,451,345
Trade and other receivables	31,147	7,614	6,022,460	5,530,902
Amounts due from related companies	121,669	175,000	-	-
Current tax assets	-	-	-	639
Cash and cash equivalents	42,877	20,368	12,571,174	11,348,046
Total current assets	195,693	202,982	27,716,755	24,330,932
Total assets	3,139,476	3,073,266	57,888,333	48,832,751
EQUITY AND LIABILITIES
Equity
Stated capital	533,384	533,384	533,384	533,384
Capital reserves	19,924	19,924	1,854,263	1,103,358
Revenue reserves	1,742,907	1,352,682	12,591,143	10,345,024
Translation reserve	-	-	(3,660)	-
Equity attributable to equity holders of the Company	2,296,215	1,905,990	14,975,130	11,981,766
Non controlling interest	-	-	13,509,901	11,090,491
Total equity	2,296,215	1,905,990	28,485,031	23,072,257
Non-current liabilities
Loans and borrowings	-	-	1,373,569	1,924,442
Lease liabilities (Note 5)	-	-	233,800	216,501
Employee benefits	-	-	293,935	257,730
Deferred tax liabilities	145,182	143,682	7,044,076	5,687,986
Total non- current liabilities	145,182	143,682	8,945,380	8,086,659
Current liabilities
Trade and other payables	36,383	27,968	4,567,905	4,829,899
Amounts due to related companies	438,811	372,791	123,606	76,041
Refundable deposits	-	-	2,996,694	2,742,490
Current tax liabilities	30,930	75,051	6,918,504	2,855,295
Loans and borrowings	-	400,000	3,219,699	5,080,158
Lease liabilities (Note 5)	-	-	44,166	45,054
Bank overdraft	191,955	147,784	2,587,348	2,044,898
Total current liabilities	698,079	1,023,594	20,457,922	17,673,835
Total liabilities	843,261	1,167,276	29,403,302	25,760,494
Total equity and liabilities	3,139,476	3,073,266	57,888,333	48,832,751
Net assets per ordinary share (Rs.)	109.41	90.81	713.51	570.89

The above figures are provisional and subject to audit.

These financial statements are in compliance with the requirements of the Companies Act No. 07 of 2007.

(Sgd.)

J.N. Goonaratne Chief Financial Officer

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

Approved and signed on behalf of the Managers	Approved and signed on behalf of the Board
(Sgd.)	(Sgd.)	(Sgd.)
V. R. Wijesinghe	M.Selvanathan	R.H. Meewakkala
Director	Director	Director
Carsons Management Services (Private) Ltd.
15th May 2024

CEYLON BEVERAGE HOLDINGS PLC

CONDENSED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME - COMPANY

		Quarter Ended			Year Ended
As at	31-Mar-24	31-Mar-23	Change %	31-Mar-24	31-Mar-23	Change %
In Rs.'000s					(Audited)
Revenue	47,531	47,357	0	2,291,762	1,491,410	54
Cost of sales	-	-	-	-	-	-
Gross profit	47,531	47,357	0	2,291,762	1,491,410	54
Net gains arising from changes in fair value of investment properties	5,000	163,100	-	5,000	163,100	-
	52,531	210,457	(75)	2,296,762	1,654,510	39
Administrative expenses	(7,101)	(17,577)	(60)	(34,637)	(34,363)	1
Reversal/(provision) of impairment for intercompany receivable	-	(44,403)	-	44,403	(44,403)	-
Provision of impairment for investments in subsidiaries	(22,047)	(175,000)	-	(66,450)	(175,000)	-
Profit Before Finance Cost	23,383	(26,523)	(188)	2,240,078	1,400,744	60
Finance income	3,695	12,599	(71)	33,173	39,833	(17)
Finance costs	(19,487)	(29,087)	(33)	(115,050)	(97,124)	18
Net finance costs	(15,792)	(16,488)	(4)	(81,877)	(57,291)	43
Profit before taxation	7,591	(43,011)	(118)	2,158,201	1,343,453	61
Income tax expenses	(13,702)	(8,782)	56	(61,553)	(228,781)	(73)
Deferred taxation	(1,500)	(48,930)	-	(1,500)	(112,098)	-
Profit after taxation	(7,611)	(100,723)	(92)	2,095,148	1,002,574	109
Earnings per ordinary share (Rs.)	(0.36)	(4.80)		99.83	47.77

The above figures are provisional and subject to audit.

Figures in brackets indicate deductions.

CEYLON BEVERAGE HOLDINGS PLC

CONDENSED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME - GROUP

	Quarter Ended			Year Ended
As at	31-Mar-24	31-Mar-23	Change %	31-Mar-24	31-Mar-23	Change %
In Rs.'000s					(Audited)
Revenue	31,353,304	25,244,610	24	111,930,270	96,938,522	15
Cost of sales	(23,695,937)	(19,210,882)	23	(84,863,456)	(73,755,671)	15
Gross profit	7,657,367	6,033,728	27	27,066,814	23,182,851	17
Net gains arising from changes in fair value of investment properties	5,000	163,100	-	5,000	163,100	-
Other income	110,248	76,956	43	530,383	304,414	74
	7,772,615	6,273,784	24	27,602,197	23,650,365	17
Distribution expenses	(2,353,988)	(1,887,549)	25	(7,513,637)	(6,017,299)	25
Administrative expenses	(1,298,026)	(987,761)	31	(4,159,701)	(3,099,889)	34
Other expenses	(248,195)	(18,166)	1,266	(562,631)	(717,869)	(22)
Reversal/(provision) of impairment for intangible assets	-	-	-	291,063	(350,485)	-
Profit before finance cost	3,872,406	3,380,308	15	15,657,291	13,464,823	16
Finance income	237,319	397,597	(40)	1,152,128	1,411,521
Finance costs	(804,729)	(1,576,684)	(49)	(2,786,126)	(3,615,441)	(23)
Net finance income/(costs)	(567,410)	(1,179,087)	(52)	(1,633,998)	(2,203,920)	(26)
Profit before taxation	3,304,996	2,201,221	50	14,023,293	11,260,903	25
Income tax expenses	(1,444,695)	(537,652)	169	(5,654,421)	(4,091,422)	38
Deferred taxation	52,233	(482,841)	(111)	(393,263)	(423,377)	(7)
Profit after taxation	1,912,534	1,180,728	62	7,975,609	6,746,104	18
Other comprehensive income
Items that will never be reclassified to profit or loss	-	-	-
Re-measurement of employee benefit obligation	(38,146)	(50,899)	(25)	(38,146)	(50,899)	(25)
Deferred tax adjustment on employee benefit obliga on	15,258	20,360	(25)	15,258	20,360	(25)
Change in revaluation of property plant and equipment	2,395,232	-	-	2,395,232	-	-
Deferred tax adjustment on revaluation of lands & buildings	(958,093)	-	-	(958,093)	-	-
Items that are or may be reclassified subsequently to profit or loss
Foreign currency translation gain/(loss) from foreign operation	(7,327)	-	-	(7,005)	-	-
Total other comprehensive income for the period net of tax	1,406,924	(30,539)	(4,707)	1,407,246	(30,539)	-
Total comprehensive income for the period	3,319,458	1,150,189	189	9,382,855	6,715,565	40
Profit attributable to
- Equity holders of the company	993,726	659,748	51	3,962,948	3,407,614	16
- Non - controlling interest	918,808	520,980	76	4,012,661	3,338,490	20
Profit available for appropriation	1,912,534	1,180,728	62	7,975,609	6,746,104	18
Total comprehensive income attributable to
- Equity holders of the company	1,728,844	643,791	169	4,698,234	3,391,657	39
- Non - controlling interest	1,590,614	506,398	214	4,684,621	3,323,908	41
Profit available for appropriation	3,319,458	1,150,189	189	9,382,855	6,715,565	40
Earnings per ordinary share (Rs.)	47.35	31.43		188.82	162.36

The above figures are provisional and subject to audit.

Figures in brackets indicate deductions.

CEYLON BEVERAGE HOLDINGS PLC

CONDENSED STATEMENTS OF CHANGES IN EQUITY
In Rs.'000s	Attributable to equity holders of the parent			Non-	Total equity
Stated capital Revaluation	General capital	Revenue reserves	Revenue reserves	Translation	Total	controlling
reserve	reserve	fair value	retained earnings	Reserve		interests

COMPANY
Balance as at 1st April 2022	533,384	-	19,924
Total comprehensive income for the period
Profit for the period	-	-	-
Total comprehensive income for the period	-	-	-
Transactions with owners, recorded directly in equity
contribution by and distribution to owners
Forfeiture of unclaimed Dividend Paid	-	-	-
Dividend Paid	-	-	-
Balance as at 31st March 2023	533,384	-	19,924
Balance as at 1st April 2023	533,384	-	19,924
Total comprehensive income for the period
Profit for the period	-	-	-
Total comprehensive income for the period	-	-	-
Transactions with owners, recorded directly in equity
contribution by and distribution to owners
Forfeiture of unclaimed Dividend Paid	-	-	-
Dividend Paid	-	-	-
Balance as at 31st March 2024	533,384	-	19,924
GROUP
Balance as at 1st April 2022	533,384	1,083,434	19,924
Total comprehensive income for the period
Profit for the period	-	-	-
Other comprehensive loss for the period	-	-	-
Total comprehensive income for the period	-	-	-
Transactions with owners, recorded directly in equity
contribution by and distribution to owners
Forfeiture of unclaimed Dividend Paid	-	-	-
Dividend Paid	-	-	-
Balance as at 31st March 2023	533,384	1,083,434	19,924
Balance as at 1st April 2023	533,384	1,083,434	19,924
Total comprehensive income for the period
Profit for the period	-	-	-
Other comprehensive profit/ (loss) for the period	-	750,905	-
Transfers	-	-	-
Total comprehensive income/ (expense) for the period	-	750,905	-
Transactions with owners, recorded directly in equity
contribution by and distribution to owners
Forfeiture of unclaimed Dividend Paid	-	-	-
Dividend Paid	-	-	-
Balance as at 31st March 2024	533,384	1,834,339	19,924

The above figures are provisional and subject to audit.

Figures in brackets indicate deductions.

601,227	855,584	-	2,010,119	-	2,010,119
51,002	951,572	-	1,002,574	-	1,002,574
51,002	951,572	-	1,002,574	-	1,002,574
-	419	-	419	-	419
-	(1,107,122)	-	(1,107,122)	-	(1,107,122)
652,229	700,453	-	1,905,990	-	1,905,990
652,229	700,453	-	1,905,990	-	1,905,990
3,500	2,091,648	-	2,095,148	-	2,095,148
3,500	2,091,648	-	2,095,148	-	2,095,148
-	150	-	150	-	150
-	(1,705,073)	-	(1,705,073)	-	(1,705,073)
655,729	1,087,178	-	2,296,215	-	2,296,215
601,227	7,458,843	-	9,696,812	8,945,053	18,641,865
51,002	3,356,612	-	3,407,614	3,338,490	6,746,104
-	(15,957)	-	(15,957)	(14,582)	(30,539)
51,002	3,340,655	-	3,391,657	3,323,908	6,715,565
-	419	-	419	-	419
-	(1,107,122)	-	(1,107,122)	(1,178,470)	(2,285,592)
652,229	9,692,795	-	11,981,766	11,090,491	23,072,257
652,229	9,692,795	-	11,981,766	11,090,491	23,072,257
3,500	3,959,448	-	3,962,948	4,012,661	7,975,609
-	(11,959)	(7,005)	731,941	675,305	1,407,246
-	-	3,345	3,345	(3,345)	-
3,500	3,947,489	(3,660)	4,698,234	4,684,621	9,382,855
-	203	-	203	49	252
-	(1,705,073)	-	(1,705,073)	(2,265,260)	(3,970,333)
655,729	11,935,414	(3,660)	14,975,130	13,509,901	28,485,031

CEYLON BEVERAGE HOLDINGS PLC

CONDENSED STATEMENT OF CASH FLOWS

	Company	Group
For the period ended	31-Mar-24	31-Mar-23	31-Mar-24	31-Mar-23
In Rs.'000s
Cash flows from operating activities
Profit before taxation	2,158,201	1,343,453	14,023,293	11,260,903
Adjustments for:
Finance costs (excluding exchange gain)	115,050	97,124	2,603,295	3,606,900
Depreciation on right of use assets	-	-	63,515	65,766
Gain on de-recognition of right of use assets	-	-	(14,330)	(1,841)
Depreciation on property, plant and equipment	-	-	2,359,678	1,796,690
Amortization of intangible assets	-	-	13,463	12,101
Net inventory provision/(reversal)	-	-	(63,221)	49,009
Provision for retirement benefit obligation	-	-	71,786	41,659
Impairment of property, plant and equipment	-	-	84,889	38,460
Provision/(Reversal) of impairment for intangible assets	-	-	(291,063)	353,229
Provision/(Reversal) of Impairment provision for intercompany receivable	(44,403)	44,403	-
Impairment provision for investments in subsidiary	66,450	175,000	-	-
Finance income	(33,173)	(39,833)	(1,152,128)	(1,411,521)
Net gain arising from changes in fair value of investment properties	(5,000)	(163,100)	(5,000)	(163,100)
Loss on disposal of property, plant and equipment	-	-	(168,417)	36,372
Loss on disposal of intangible asset	-		8,740	5,600
Disposal gain on deposits liability write back	-	-	-	-
Lease interest expense	-	-	45,105	43,670
Unrealised foreign exchange gain	-	-	(7,694)	(459,624)
Operating cash flow before working capital changes	2,257,125	1,457,047	17,571,911	15,274,273
(Increase)/decrease in inventories	-	-	(1,608,555)	(2,963,243)
(Increase)/decrease in trade and other receivables	(23,533)	(7,043)	(478,377)	(3,191,702)
(Increase)/decrease in amounts due from related companies	(4,043)	(45,479)	-	-
Increase/(decrease) in amounts due to related companies	(737)	(27,887)	47,565	(79,716)
Increase/(decrease) in tax payable/receivable	1,726	1,405	3,087,004	(363,065)
Increase/(decrease) in trade and other payables	(953)	1,087	(266,623)	1,478,820
Cash (used in)/generated from operations	2,229,585	1,379,130	18,352,925	10,155,367
Finance expenses paid	(48,293)	(34,187)	(2,772,962)	(3,462,910)
Tax paid	(107,399)	(193,026)	(4,308,380)	(4,037,060)
Surcharge tax paid	-	(35,754)	-	(1,230,756)
Retirement benefits paid	-	-	(73,727)	(17,824)
Net cash (used in)/generated from operating activities	2,073,893	1,116,163	11,197,856	1,406,817
Cash flows from investing activities
Purchase and construction of property, plant and equipment	-	-	(5,398,282)	(4,295,928)
Purchase of intangible assets	-	-	(41,222)	(7,814)
Agent deposits received	-	-	451,252	441,309
Interest received	-	-	1,152,128	1,411,521
Investment in subsidiaries	-	(400,000)	-	-
Net cash (used in)/generated from investing activities	-	(400,000)	(3,836,124)	(2,450,912)
Cash flows from financing activities
Proceeds from loans and borrowings	-	400,000	1,900,000	2,400,000
Repayment of loans and borrowings	(400,000)	-	(4,141,667)	(1,187,400)
Repayment of lease rentals	-	-	(91,902)	(102,316)
Forfeiture of unclaimed dividends	150	419	252	419
Dividends paid net of tax	(1,695,705)	(1,100,766)	(4,326,807)	(2,278,002)
Net cash (used in)/generated from financing activities	(2,095,555)	(700,347)	(6,660,124)	(1,167,299)
Net increase/(decrease) in cash and cash equivalents	(21,662)	15,816	701,608	(2,211,394)
Cash and cash equivalents at the beginning of the year	(127,416)	(143,232)	9,303,148	11,137,550
Effect of movements in exchange rate on translation reserve			(7,005)	-
Effect of exchange rate changes on cash and cash equivalents	-	-	(13,925)	376,992
Cash and cash equivalents at the end of the period	(149,078)	(127,416)	9,983,826	9,303,148
Analysis of cash and cash equivalents
Cash and cash equivalents	42,877	20,368	12,571,174	11,348,046
Bank overdraft	(191,955)	(147,784)	(2,587,348)	(2,044,898)
	(149,078)	(127,416)	9,983,826	9,303,148

The above figures are provisional and subject to audit.

Figures in brackets indicate deductions.

CEYLON BEVERAGE HOLDINGS PLC

NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS

• CORPORATE INFORMATION
  Ceylon Beverage Holdings PLC is a public limited liability Company incorporated and domiciled in Sri Lanka and listed on the Colombo Stock Exchange. The parent company of Ceylon Beverage Holdings PLC is Carson Cumberbatch PLC "(CCPLC)" and the ultimate parent company is Bukit Darah PLC. The registered office of the Company is situated at No 61, Janadhipathi Mawatha, Colombo 01 and the principal place of business is situated at No 254, Colombo Road, Biyagama.
  The interim condensed financial statements comprise of the Company and its subsidiaries (together referred to as the "Group" and individually Group entities). The Subsidiaries of the Company are set out below.

Subsidiary	Controlling interest
Lion Brewery (Ceylon) PLC	52.25%
Lion Beer (Ceylon) Pte Ltd, Singapore	52.25%
Millers Brewery Limited	52.25%
Pubs 'N Places (Private) Limited	99.9%
Retail Spaces (Private) Limited	100%
Luxury Brands (Private) Limited	100%

"LBCPLC"

wholly owned Subsidiary of ''LBCPLC'' wholly owned Subsidiary of ''LBCPLC''

The principal activities of the Group is brewing and marketing of high quality beers for both local & export markets and retailing of beer & alcohol products locally through its owned/managed wine shops & pubs.The Group is also engaged in the import & marketing of globally renowned high quality beer and spirits brands.

• BASIS OF PREPARATION

1. Statement of Compliance
   The interim condensed financial statements of the Company and Group have been prepared in accordance with Sri Lanka Accounting Standard - LKAS 34 (Interim Financial Reporting). These interim condensed financial statements should be read in conjunction with the last annual audited financial statements for the year ended 31st March 2023, as the same accounting policies have been applied consistently.
   The presentation and classification of the financial statements of the previous period have been amended, where relevant, for better presentation and to be comparable with those of the current period.
2. Going Concern
   Based on currently available information the management is satisfied that Company and its subsidiaries would continue its operations in the foreseeable future.
3. Basis of measurement

2.3.1 Interim condensed Financial Statements have been prepared on historical cost basis and applied consistently with no adjustments being made for inflationary factors affecting the financial statements, except for the following;

• Freehold Land and buildings are measured at cost at the time of acquisition and construction and subsequently at revalued amounts, which are the fair values at the date of revaluation less accumulated depreciation and impairment losses, if any.
• Employee benefits are measured at present value of the obligation.
• Investment properties are measured at fair value.

2.4 Functional Currency and Presentation Currency

All values presented in the Financial Statements are in Sri Lankan Rupees Thousands (Rs.'000s) which is the Group's functional currency, unless otherwise indicated.

CEYLON BEVERAGE HOLDINGS PLC

NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS

3 FINANCIAL COMMITMENTS AND CONTINGENT LIABILITIES

1. Financial Commitments Lion Brewery (Ceylon) PLC
   Document credits established for foreign purchases of the Company as at 31st March 2024 amounts to Rs.1,308 Mn (2023 - Rs.1,657 Mn).
2. Capital Commitments Lion Brewery (Ceylon) PLC

Capital expenditure committed by the Company for which a provision has not been made in the Financial Statements amounts to Rs. 1,249 Mn as at 31st March 2024 (2023 - Rs.

700 Mn).

3.3 Contingencies

Following legal matters are outstanding against the Group and no provision has been made in the Financial Statements in this regard.

(i) Company

In 2008 the Customs Department instituted a prosecution in the Fort Magistrate's Court (MC) in Case No. S/65898/07/B against the Company and its Directors for the recovery of Rs. 48,121,634/29 comprising of Rs.23,062,080/43 being the amount of Excise (Special Provision) Duty (the 'duty') purportedly in arrears during the period 1998 to 2001 and Rs.25,059,553/86 as its penalty. The Company and the Directors filed a Writ an application in the Court of Appeal (CA) to quash the Certificate of Excise Duty in Default issued to the Company and obtained a Stay Order in respect of the proceedings of the Fort MC Case. A sum of Rs. 23,062,080/43 being the duty amount in dispute was paid to Sri Lanka Customs by the Company as required before submitting its appeal. No provision has been made for the payment of penalty amounting to Rs.25,059,553/86.

Subsequently the CA Application was dismissed and the Company appealed against the Order to the Supreme Court. The Supreme Court also ordered the staying of all further proceedings in the MC Case until final hearing and determination of the Appeal. Supreme Court Judgment was delivered in December 2022 where the Company's Appeal was upheld and Certificate of Excise Duty in default issued by the Director General of Customs and Excise Duty in the Magistrates' Court of Fort was quashed.

The Director General of Excise was directed to consider the representations made by the Company and make a determination under section 9(2) of the said Act, pursuant to an inquiry which was to be concluded within six months from the date of the judgment. Despite the lapse of six months, inquiry is still pending.

The Customs Department instituted a prosecution in the Magistrate's Court of Kaduwela in Case No. 11303/Customs against the company and its directors to recover Excise Duty amounting (ii) Lion Brewery (Ceylon) PLC

Contingent liabilities as at 31st March 2024 amounts to Rs. 781 Mn (2023 - Rs.78 Mn), being bank guarantees given to Government bodies and foreign suppliers for operational purposes. Apart from the above there were no other material contingent liabilities which would require adjustments to or disclosure in the Financial Statements.

• STATED CAPITAL
  The Company's stated capital consists of 20,988,090 ordinary shares.