CFT - Cover Front · CEYLON AND FOREIGN TRADES PLC 9 ANNUAL REPORT 2016 / 2017 NOTICE IS HEREBY GIVEN that the Annual General Meeting of Ceylon and Foreign Trades PLC will be held

ANNUAL REPORT

2016/2017

CEYLON AND

FOREIGN TRADES PLC

DR. SHABBIR ABBAS GULAMHUSEIN

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2 CEYLON AND FOREIGN TRADES PLC ANNUAL REPORT 2016 / 2017

TABLE OF CONTENT

3CEYLON AND FOREIGN TRADES PLCANNUAL REPORT 2016 / 2017

CORPORATE INFORMATION

OUR VISION & OUR MISSION

NOTICE OF MEETING

CHAIRMAN’S REVIEW

DIRECTOR’S PROFILE

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

ANNUAL REPORT OF THE BOARD OF DIRECTORS

CORPORATE GOVERNANCE

REPORT OF THE AUDIT COMMITTEE

REPORT OF REMUNERATION COMMITTEE

REPORT OF THE RELATED PARTY TRANSACTION REVIEW COMMITTEE

FINANCIAL INFORMATION

SHAREHOLDER INFORMATION

FORM OF PROXY

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CORPORATE INFORMATION


LEGAL FORM A Public Company with Limited LiabilityRegistered under the Companies Act No. 17 of 1982/No. 07 of 2007 and quoted on the Colombo Stock Exchange.

DATE OF INCORPORATION 28th April 1949

REGISTRATION UNMBER PQ 163 (New)

DIRECTORS Dr. Ali Asger Shabbir GulamhuseinMr. M. Jeyapragash

REGISTERED ADDRESS No. 414/18, K Cyril C Perera Mawatha, Colombo 13.TELEPHONE (94-11) 7608500TELEFAX (94-11) 2447886E-MAIL [email protected]

SUBSIDIARY COMPANIES Colombo Freight & Transport Ltd West Coast Lanka (Pvt) Ltd

BANKERS

SAMPATH BANK PLC110, Sir James Peiris Mawatha, Colombo 2.NATIONAL DEVELOPMENT BANK PLC40, Nawam Mawatha, Colombo 2.COMMERCIAL BANK OF CEYLON PLC21, Sir Razik Fareed Mawatha, Colombo 1.UNION BANK OF COLOMBO PLC15A, Alfred Place, Colombo 03.HABIB BANK LIMITED140-142, 2nd Cross Street, P.O.Box 1077, Colombo 11.BANK OF CEYLONHead office, Bank of Ceylon Mawatha, Colombo 01.

AUDITORS

A. I. Macan Markar & Co.Chartered Accountants46-2/1, 2nd Floor, Lauries Road,Colombo 04.

SECRETARIESAdam Corporate Secretarial (Pvt) Ltd.264, Grandpass Road, Colombo 14.(94-11) 7608500


OUR VISION & OUR MISSION


OUR VISIONTo be the best in products, services, customer care, worker satisfaction and shareholder value.

OUR MISSIONContinue diversification, improve performance and return to shareholders.


NOTICE OF MEETING


NOTICE IS HEREBY GIVEN that the Annual General Meeting of Ceylon and Foreign Trades PLC will be held at the Auditorium,3rd Floor, “Olympic House”, 100/9F, Independence Avenue, Colombo 07 on 30th May 2018 at 12.45p.m. for the following purposes:

1. To receive and consider the Report of the Directors and the Statement of Accounts for the year ended 31st March 2017 with the Report of the Auditors thereon.

2. To re-elect Mr. M. Jeyapragash in terms of Article 98 of the Articles of Association of the Company as a Director.

3. To re-appoint Messrs. A I Macan Markar & Co, Chartered Accountants as the Auditors of the Company, for the ensuing year and to authorize the Directors to determine their remuneration.

4. To authorize the Directors to determine donations as they think fit for the ensuing year and up to the next Annual General Meeting.

By Order of the BoardCEYLON AND FOREIGN TRADES PLC

ADAM CORPORATE SECRETARIAL (PVT) LTDDirector/Secretaries29th March 2018

Colombo

Notes: A member is entitled to appoint a Proxy to attend and vote instead of himself and a Proxy need not be a member of the Company. A Form of Proxy is enclosed for this purpose. The completed form of Proxy should be deposited at the Company secretaries, Adam Corporate Secretarial (Pvt) Ltd, 264, Grandpass Road. Colombo 14 not less than 48 hours before the time fixed for the commencement of the Meeting.


CHAIRMAN’SREVIEW


CHAIRMAN’S REVIEW

It gives me great pleasure to welcome you to the presentation of the Annual Report and Audited Financial Statements of Ceylon and Foreign Trades PLC for the year ending 31st March 2017.

After the demise of my beloved father, the late Dr. Shabbir Abbas Gulamhusein I was appointed as the chairman of your company on 30th June 2017. I have accepted the challenge with a heavy heart and am determined to continue my father’s legacy to the best of my abilities.

I wish to state that on 27th July 2017, I purchased 85,450,669 ordinary shares of Ceylon and Foreign Trades PLC at the price of LKR 5.00/- per share. As a result of this transaction my total shareholding in CFT increased up to 87,503,847 shares representing a percentage shareholding of 62.42%. Therefore, as set out in Rule 31(1)(a) of the Code it had become obligatory for me to make a mandatory offer to the shareholders of CFT in accordance with the provisions of the Code to purchase, all the remaining ordinary shares of CFT not already owned by me. Accordingly, I have made a Mandatory Offer with the Offer document dated 23rd August 2017 and the Offer was closed on 28th September 2017.

Your company has performed satisfactorily during the period ended 31st March 2017, working tirelessly to deliver value to all shareholders despite challenging economic conditions. Your company is an asset rich company holding real estate properties. Our strategy is to enable your company to harness its full potential in the real estate industry and to improve the overall performance of the company to enhance value to the shareholders. The large asset base of the Company will deliver a long term value potential to the shareholders of the company.

We are positive about the prospects and potentially favorable conditions towards business development in the country. We are confident about the country’s economic environment and we consider Sri Lanka as a country with great opportunities. As per the Central Bank of Sri Lanka the growth in economic activity of the country continued, with the Sri Lankan economy growing at the moderate rate of 3.9 per cent in real terms during the first half of 2016 following the annual growth of 4.8 per cent registered in 2015. Consumer price inflation increased during the first half of 2016 and stabilized to around mid-single digits thereafter while core inflation also indicated some stabilization following an increasing trend.

I would like to take this opportunity to express my sincere gratitude towards our shareholders for their continuous confidence and faith in us, to the directors for their wisdom and strategic directions, to our staff for their enthusiasm and determination and to our financial partners and all the other stakeholders for their unwavering guidance and support.

My beloved father, the late Dr. Shabbir Abbas Gulamhusein, the former chairman of the Company passed away on 9th

June 2017. The board of directors and I will surely miss the guidance and wisdom provided by him. The knowledge and experiences I have gained from my late father and the strength he has given will enable us to strive to the utmost to enable your company to achieve its great potential.

Dr. Ali Asger Shabbir GulamhuseinChairman29th March 2018.


DIRECTORS PROFILE


DR. ALI ASGER SHABBIR GULAMHUSEINDirector/Chairman

Deshabandhu Dr. Ali Asger Shabbir Gulamhusein holds a PhD from Japan and a Degree from King’s College London, UK. Dr. Gulamhusein has been bestowed with the prestigious title of “Deshabandhu Manawahithawadhi, Lankaputhra” and also serves as a director of the Insurance Board of Sri Lanka and The Sri Lanka Institute of Textile and Apparel and as a Justice of Peace (all island).

Dr. Gulamhusein serves as the Chairman of Adam Expo Limited and Business Chamber of Commerce. He also serves as a director of, Adam Capital PLC, Adam Carbons Limited, People’s Leasing and Finance PLC, Spice of Life (Pvt) Ltd, Network Communications (Pvt) Ltd, Adam Metals (Pvt) Ltd, Adam Air conditioners (Pvt) Ltd, Adam Automobiles (Pvt) Ltd, Colombo Apothecaries Company Ltd, Hamilton Resorts (Pvt) Ltd, Ceylon & Foreign Trade Surgi-Tech (Pvt) Ltd, Colombo Freight and Transport Ltd, and Dodwell & Company Ltd.

DESHAMANYA MALAYANDI JEYAPRAGASHExecutive Director

Mr. Malayandi Jeyapragash accounts for over 20 years’ experience in Financial Management, Treasury Management, Fund Management and Administration.

Mr. Jeyapragash has been bestowed with the prestigious title of “Deshamanya Manawahithawadhi, Lankaputhra” and also a Justice of Peace (all island). He holds a bachelor’s degree in business management in administration and finance (USA) and has gained four years’ experience in External and Internal Audit. He accounts for over 10 years of top management experience in leading Industries and has gained excellent knowledge in system development and implementation to improve business efficiencies using the latest technology. He is specialized in financial system development and implementation.


STATEMENT OF DIRECTORS’ RESPONSIBILITIES


The Companies Act 07 of 2007 stipulates that Directors are responsible for the preparation of financial statements for each financial year and place before a general meeting financial statements, comprising a Statement of Comprehensive Income and a Statement of Financial Position which presents a true and fair view of the state of affairs of the Company as at the end of the financial year and which comply with the requirements of the above Act.

The financial statements have been prepared and presented in accordance with Sri Lanka Accounting Standards. In preparing the financial statements, appropriate accounting policies have been selected and applied consistently, whilst reasonable and prudent judgments and estimates have been made.

As per Section 148 of the Act, the Directors are required to maintain sufficient accounting records to disclose with reasonable accuracy the financial position of the Company and to ensure that the financial statements presented comply with the requirements of the Companies Act.

The Directors are also responsible for devising proper internal controls for safeguarding the assets of the Company against unauthorized use or disposition, prevention and detection of fraud and for reliability of financial information used within the business or publication.

The Directors continue to adopt the going concern basis in preparing accounts and after making inquiries and following a review of the Company’s budget for the financial year 2016/2017, including cash flows and borrowing facilities, considering that the Company has adequate resources to continue in operation.

The Board of Directors is of the opinion that Board has discharged its responsibilities as set out above.

By order of the BoardCEYLON AND FOREIGN TRADES PLC

Dr. Ali Asger Shabbir GulamhuseinChairman29th March 2018


ANNUAL REPORT OF THE BOARD OF DIRECTORS


The Directors of Ceylon and Foreign Trades PLC have pleasure in presenting to the Shareholders their Report together with the Annual Audited Accounts of the Company and its subsidiaries for the year ended 31st March 2017.

PRINCIPAL ACTIVITIES OF THE COMPANY AND ITS SUBSIDIARIES

Ceylon and Foreign Trades PLCThe principal activities of the Company are exporters of Ceylon produce, manufactured goods, Importers, distribution of FMCG product and investor.

West Coast Lanka (Pvt) LtdNo operation during the year

Colombo Freight & Transport LimitedThe principal activities of the Company are functioning as container storage and conversion.

FINANCIAL PERFORMANCE

The Company’s financial performance in the year 2016/2017 is set out in the Statement of Comprehensive Income in this report. The Company’s profit/ (loss) after tax in the year under review was Rs (61,362,956).

STATE OF AFFAIRS

The State of Affairs of the Company as at 31st March 2017 are set out in the Statement of Financial Position, in this report.

AUDITORS REPORT

The Report of the Auditors on the financial statements of the Company is given in this report.

ACCOUNTING POLICIES

The financial statements of the Company have been prepared in accordance with the revised Sri Lanka Accounting Standards and the policies adopted thereof are given in this report. STATEMENT OF DIRECTORS’ RESPONSIBILITY

The Directors are responsible for preparing and presenting the financial statements of the Company and Group to reflect a true and fair view of the state of its affairs. The Directors are of the view that these Financial Statements have been prepared in conformity with the requirements of the Sri Lanka Accounting Standards, the Companies Act No. 7 of 2007 and the Listing Rules of the Colombo Stock Exchange.

DIRECTORS

The names of the Directors who held office as at the end of the accounting period are given below:

Executive DirectorsDr. S A Gulamhusein – Chairman (Demised on 9th June 2017)Mr. L W W Priyankara – (Resigned with effect from 29th March 2018)

For the year ended 31.03.2017 31.03.2016 Rs. Rs.

Revenue 338,561,139 357,819,957Net profit/ (loss) before Taxation 6,937,451 77,537,278 Net Profit/ (loss) after Taxation 14,213,979 42,138,045


Non-Executive DirectorsMr. T A Gulamhusein (Resigned with effect from 27th July 2017)Mr. I Shabbir (Resigned with effect from 21st August 2017)Dr. Ali Asger Shabbir Gulamhusein

Independent Non-Executive DirectorsDr. D C Gunasekera (Retired with effect from 14th October 2016)Mr. A Y Tyebkhan (Resigned with effect from 27th July 2017)Mr. I Zahir (Resigned with effect from 27th July 2017)

INTERESTS REGISTER

The Company maintains an Interests Register in terms of the Companies Act, No.7 of 2007, and the names of Directors who were directly or indirectly interested in a contract or a related party transaction with the Company during the accounting period under review are given under Notes to the Financial Statements.

REMUNERATION TO DIRECTORS

The total emoluments of the Directors during the year under review amounted to Rs.1,344,000/-

AUDITORS

Messrs. A I Macan Markar & Co, Chartered Accountants, served as the auditors during the year under review. Based on the written representation made by the auditors, they do not have any interest in the Company other than as auditors and tax consultants.

The audit fee payable by the company to the auditors for the year under review is Rs.220,000/- (Group - Rs.265,000)The auditors have expressed their willingness to continue in office. A resolution to re-appoint the auditors and to authorize the Directors to determine donations will be proposed at the Annual General Meeting.

STATED CAPITAL

The Stated Capital of the Company is Rs. 14,119,600/- divided into 140,196,000 Ordinary Shares as at 31st March 2017.

DIRECTORS’ SHAREHOLDINGS

The number of shares of the Company held by each of the Directors is set out in the table below:

Director’s Name No. of Shares held as at 31.03.2017

No. of Shares heldas at 31.03.2016

Dr.S A Gulamhusein(Demised on 9th June 2017)

29,182,130 29,139,704

Mr.T A Gulamhusein(Resigned with effect from 27th July 2017)

260,000 260,000

Mr. I Shabbir(Resigned with effect from 21st August 2017)

44,209,200 44,209,200

Dr. A.A Shabbir 2,053,178 2,053,178Mr. A Y Tyebkhan(Resigned with effect from 27th July 2017)

10,000 10,000

Dr. D C Gunasekera (Retired with effect from 14th October 2016)

NIL 10,000

Mr. L W W Priyankara(Resigned with effect from 29th March 2018)

NIL NIL

Mr. I Zahir(Resigned with effect from 27th July 2017)

NIL NIL

Mr. M. Jeyapragash(Appointed on 29th March 2018)

N/A N/A


MAJOR SHAREHOLDERS, DISTRIBUTION SCHEDULE AND OTHER INFORMATION

Information on the twenty largest shareholders of the Company, distribution schedule of the number of shareholders, percentage of shares held by the public, market values per share as per the Listing Rules of the Colombo Stock Exchange are given under investor information.

RESERVES

The movements of reserves during the year are given under the statement of changes in equity in this report.

CAPITAL EXPENDITURE

The total capital expenditure during the year including the capitalization of borrowing cost amounted to Rs.115,267,025/- compared to Rs. 78,221,262/- incurred in the previous year. Details of movements in property, plant and equipment are given under notes to the Financial Statements.

PUBLIC HOLDINGS AND SHAREHOLDERS

16.4715% of the issued shares of the Company is held by the public comprising of 1689 shareholders.

DONATIONS

The Company has not made any donations during the period under review.

POST BALANCE SHEET EVENTS

Following changes took place in the Board of Directors of the Company after the balance sheet date.

Dr. S A Gulamhusein – Chairman (Demised on 9th June 2017)Mr. T A Gulamhusein (Resigned with effect from 27th July 2017)Mr. I Shabbir (Resigned with effect from 21st August 2017)Dr. D C Gunasekera (Retired with effect from 14th October 2016)Mr. A Y Tyebkhan (Resigned with effect from 27th July 2017)Mr. I Zahir (Resigned with effect from 27th July 2017)Mr. L W Priyankara (Resigned with effect from 29th March 2018)Mr. G. Ramanan (Appointed with effect from 18th November 2016 and resigned with effect from 24th July 2017)Mr. M. Jeyapragash (Appointed on 29th March 2018)

On 27th July 2017, Dr. Ali Asger Shabbir Gulamhusein (“the Offeror”) purchased 85,450,669 ordinary shares of Ceylon and Foreign Trades PLC (“CFT / the Offeree”) at a price of LKR 5.00/- per share. As results of this transaction Dr. Ali Asger Shabbir Gulmhusein’s total shareholding in CFT increased up to 87,503,847 shares representing a percentage shareholding of 62.42%. Therefore, as set out in Rule 31(1)(a) of the Code it has become obligatory on the part of Dr. Ali Asger Shabbir Gulamhusein to make a mandatory offer to the shareholders of CFT in accordance with the provisions of the Code to purchase all the remaining ordinary shares of CFT not already owned by Dr. Ali Asger Shabbir Gulamhusein. Accordingly Dr. Ali Asger Shabbir Gulamhusein made a Mandatory Offer with the Offer document dated 23rd August 2017 and the Offer was closed on 28th September 2017 increasing his shareholding up to 90,755,900 Ordinary shares of Ceylon and Foreign Trades PLC representing 64.74% (Approx.) of the issued shares of Ceylon and Foreign Trades PLC.

There are no other events have occurred since the Balance Sheet date, which would require adjustments to, or disclosure in the Financial Statements.


The Directors confirm that the company complies with the Listing Rules of the Colombo Stock Exchange on Corporate Governance as of 31st March 2017.

An Audit Committee and a Remuneration Committee functioned as Board Sub-Committees with Directors who possess the requisite qualifications and experience in the reporting period and composition of the said Committees as of 31st March 2017 are as follows;


Audit CommitteeMr. A Y Tyebkhan – Chairman (Resigned with effect from 27th July 2017)Mr. I Shabbir (Resigned with effect from 21st August 2017)Dr. D C Gunasekera (Retired with effect from 14th October 2016)Mr. I Zahir (Resigned with effect from 27th July 2017)

Remuneration CommitteeMr. A Y Tyebkhan – Chairman (Resigned with effect from 27th July 2017)Mr. T A Gulamhusein (Resigned with effect from 27th July 2017)Dr. D C Gunasekera (Retired with effect from 14th October 2016)Dr. Ali Asger Shabbir GulamhuseinMr. I Zahir (Resigned with effect from 27th July 2017)

Related Party Review CommitteeMr. A.Y.Tyebkhan. – Chairman (Resigned with effect from 27th July 2017)Mr. I. Shabbir (Resigned with effect from 21st August 2017)Mr. L W W Priyankara (Resigned with effect from 29th March 2018)

STATUTORY PAYMENTS

All statutory payments due to the Government of Sri Lanka and on behalf of the employees have been made or accrued for at the balance sheet date.

GOING CONCERN

The financial statements are prepared based on the going concern concept. The Board of Directors are satisfied that the Company has adequate resources to continue its operations in the foreseeable future.

ANNUAL GENERAL MEETING

The Annual General Meeting of the Company will be held at the Auditorium,3rd Floor, “Olympic House”, 100/9F, Independence Avenue, Colombo 07 on 30th May 2018 at 12.45p.m. The Notice of the Annual General Meeting appears on page 09.

BY ORDER OF THE BOARDCEYLON AND FOREIGN TRADES PLC

Dr. Ali Asger Shabbir GulamhuseinChairman

Mr. M. JeyapragashDirector

ADAM CORPORATE SECRETARIAL (PVT) LTDDirector/Secretaries

29th March 2018.Colombo




Being a Quoted Public Company, the Board of Directors are committed to adopt the accepted practices in every sphere of activity and guided by the regulations issued by relevant Governing Authorities.

Composition of the Board of DirectorsThe Board consists of two directors, comprising of One Executive Director and One Non-executive Director. The names and the profile of the members of the Board of Directors are given under ‘Profile of Directors’ section of this Annual Report.

However the Board does not include Independent Directors as of the date of this report and the Board of Directors will take necessary action to appoint independent directors to the board and ensure compliance in due course.

Duties of the BoardThe Board is responsible for the formulation and implementation of the Company’s short term, medium term and long term strategies. The Board also ensures that the Senior Management team has the requisite skills, expertise and the knowledge to implement these strategies.

The Board has the ultimate responsibility to ensure that controls are in place and ensures that all Company decisions are in compliance with laws and regulations of the Country and that each decision meets the ethical standards. The Board through the Audit Committee ensures that the Company follows accounting standards as set by the Sri Lanka Financial Reporting Standards (SLFRS) and all financial statements are in compliance with financial regulations.

The Board, in addition to keeping all shareholder interests a priority when considering corporate decisions, also keeps the CSE and the public informed of all significant decisions.

Delegation of AuthorityThe Board has delegated the authority to the chairman for the day to day management of the Company and is responsible for delivering services according to the strategic plan, within the policies and budgets approved by the Board. A team of Senior Management oversees the day to day management of the Company under the direction of the chairman.

Delegation to Board MembersThe Board has delegated certain functions and duties to sub committees that comprise of Board Members the duties of each subcommittee namely, the Audit Committee and the Remuneration Committee are detailed in the respective reports. Meeting of the Board of DirectorsAt present the Board meets whenever necessary and during the year they met on 4 occasions, to discuss and approve the quarterly financial statements. Further, approvals relating to key appointments, capital expenditure and enhancement of facilities are approved at the Board Meetings.

Going ConcernThe Directors believe, having reviewed the Financial Statements and all other related information, the Company has adequate resources to continue in operation in the foreseeable future.

Disclosure of Information and ComplianceThe Board of Directors endeavor to ensure that the business practices of the Company comply with laws and regulations of the country. Additionally, checks and controls are in place to ensure that the Policies of the Board are complied with.

Non-Executive and Independent DirectorsIn the period under review, out of the 06 Non-Executive Directors, 03 Directors are Independent Directors, complying with the requirements of Corporate Governance. Each of the Directors has declared their independence and submitted signed confirmation to that effect.

However 04 out of the 06 Non-Executive Directors have resigned after the balance sheet date, 01 Non-Executive Director have retired and the Other Non-Executive Director have been appointed as the Executive Chairman with effect from 30th June 2017. Audit CommitteeThe Audit Committee as of 31st March 2017 consists of 04 Non-Executive Directors, namely Mr A Y Tyebkhan, Dr. D C Gunasekera, Mr. I. Zahir and Mr I Shabbir of which the first three are Independent Directors. The Audit Committee was chaired by Mr. A Y Tyebkhan.

However the Audit Committee is not in place as of the date of this report and the board will take action in due course to reconstitute the committee to be in compliant.


Remuneration CommitteeThe Remuneration Committee as of 31st March 2017 consists of 05 Non-Executive Directors, namely Mr. A Y Tyebkhan, Mr. T A Gulamhusein, Dr. D C Gunasekera, Mr. A A Shabbir and Mr. I Zahir of which Mr. A Y Tyebkhan, Dr. D C Gunasekera and Mr. I Zahir are Independent. The Remuneration Committee is chaired by Mr. A Y Tyebkhan.

However the Remuneration Committee is not in place as of the date of this report and the board will take action in due course to reconstitute the committee to be in compliant.

Related Party Transaction Review committeeThe related party Committee as of 31st March 2017 consists of 01 independent Director, namely Mr. A Y Tyebkhan, non-executive director Mr. I Shabbir and executive director Mr. L.W.W. Priyankara. The related party Committee Committee is chaired by Mr. A Y Tyebkhan.

However the Related Party Transaction Review Committee is not in place as of the date of this report and the board will take action in due course to reconstitute the committee to be in compliant.

Financial StatementsThe Board of Directors requires that the Financial Statements of the Company are prepared in accordance with both the Sri Lanka Accounting Standards and the requirements of the Colombo Stock Exchange. Adequate information is provided to shareholders and disclosed fully subject only to any sensitive information, which affect directly on the business of the Company.

Internal ControlFunctions relating to various operations are clearly defined and officers are assigned to undertake such functions in such a manner that no operation is carried out fully by a single officer. Procurement of major inputs and capital items and disposal of redundant and sundry items are handled by two or more senior officers under the guidance of the Directors.

Major TransactionsThe Board of Directors, is required by the Company’s Act to disclose to shareholders all proposed corporate transactions that are of material value to the Company. Details of major transaction entered in to are given under notes of the Financial Statements.

Whistle blowing PolicyThis policy addresses the commitment of Ceylon and Foreign Trades PLC to uphold the integrity and ethical behavior by helping to foster and maintain an environment where an employee can act appropriately without fear of retaliation. To maintain the standards of business conduct and ethics, the Company encourages its employees to have concerns about suspected serious misconduct or any breach or suspected breach of law or regulation that may adversely affect the Company, to come forward and express these concerns without fear of punishment or unfair treatment.

Secretaries to the BoardAdam Corporate Secretarial (Pvt) Ltd are the Secretaries to the Company and they are qualified to act as Secretaries as per the provision of the Companies Act No: 07 of 2007.

By order of the Board

CEYLON AND FOREIGN TRADES PLC

Dr. Ali Asger Shabbir GulamhuseinChairman29th March 2018


CODE OF BEST PRACTICE ON CORPORATE GOVERNANCE AS OF 31ST MARCH 2017

CODE REF. ITEM REQUIREMENT COMPLIANCE

STATUSPAGE IN

ANNUAL REP.

A.1.1 Frequency of Board Meetings

• Board should meet regularly, at least once every quarter √

Corporate Governance/ Annual Report of the Board of Directors

A.1.2 Responsibilities of the Board

Formulation and implementation of strategy, • Skill adequacy of management and

succession • Integrity of information, internal

controls and risk management • Compliance with laws, regulations and

ethical standards • Code of conduct • Adoption of appropriate accounting

policies

√ Corporate Governance

A.1.3 Access to Professional Advice

Procedures to obtain independent professional advice √ Corporate

Governance

A.1.4 Company Secretary

• Ensure adherence to board procedures and applicable rules and regulations

• Procedure for Directors to access services of Company Secretary


A.1.5 Independent Judgment

Directors should exercise independent judgment on issues of strategy, resources, performance and standards of business judgment


A.1.6Dedication of adequate time and effort by Directors

Directors should devote adequate time and effort to discharge their responsibilities to the Company satisfactorily.


A.1.7 Training for DirectorsDirectors should receive appropriate training on skills and expand knowledge to more effectively perform duties


A.2 DIRECTORS – CHAIRMAN & CHIEF EXECUTIVE OFFICER

A.2

Old

Division of responsibilities to ensure no individual has unfettered powers of decision

A balance of power and authority to be maintained by separating responsibility for conducting Board business from that of executive decision making


A.3 DIRECTORS – ROLE OF CHAIRMAN

A.3 Ensure good corporate governance

Chairman to preserve order and facilitate effective discharge of Board functions by proper conduct of Board meetings.




STATUSPAGE IN

ANNUAL REP.

A.4 DIRECTORS – FINANCIAL ACUMENA.4 Possession of

adequate financial acumen

Board to ensure adequacy of financial acumen and knowledge √ Corporate

Governance

A.5 DIRECTORS – BOARD BALANCE A.5.1

Composition of BoardThe Board should include a sufficient number of Non-Executive Independent Directors


A.5.2 Proportion of independent directors

Two or one third of the Non-Executive Directors should be independent √ Corporate

Governance

A.5.3 Test of Independence

Independent Directors should be independent of management and free of any business or other relationship that could materially interfere with the exercise of unfettered and independent judgment


A.5.4 Declaration of Independence

Non-Executive Directors should submit a signed and dated declaration of their independence/ non-independence


A.5.5

Annual determination of criteria of independence and declaration of same by Board

The Board should annually determine and disclose the names of Directors deemed to be ‘independent’.


A.5.6Appointment of Senior Independent Director (SID)

If the roles of Chairman/CEO are combined, a Non-Executive Director should be appointed as a Senior Independent Director (SID)

N/A

A.5.7

Availability of Senior Independent Director (SID) to other Directors

If warranted, the SID should be available to the other directors for confidential discussions

N/A

A.5.8

Interaction between Chairman and Non-Executive, Independent Directors

The Chairman should meet the Non-Executive Independent Directors at least once a year.


A.5.9 Directors concerns to be recorded

When matters are not unanimously resolved, Directors to ensure their concerns are recorded in Board minutes.

N/A

A.6 SUPPLY OF INFORMATION

A.6.1 Provision of adequate information to Board

Management to ensure the board is provided with timely and appropriate information


A.6.2

Adequacy of Notice and formal agenda to be discussed at Board meetings

Board minutes, agenda and papers should be circulated at least seven days before the Board meeting.




STATUSPAGE IN

ANNUAL REP.

A.7 APPOINTMENT TO THE BOARD

A.7.1 Nomination Committee

Nomination Committee of parent may function as such for the Company and make recommendations to the Board on new Board appointments.


A.7.2 Annual assessment of Board composition

Nomination Committee or Board should annually assess the composition of the Board


A.7.3 Disclosure of new Board appointments

Profiles of new Board appointments to be communicated to Shareholders √

Corporate Governance/Notice of Meeting

A.8 DIRECTORS – RE-ELECTIONPrinciple A.8 – ALL Directors should be required to submit themselves for re-election at regular intervals and at least once in every three years.

A.8.1 Appointment of Non-Executive Directors

Appointment of Non-Executive Directors should be for specified terms and re-election should not be automatic.

√Corporate Governance/ Annual Report of the Board of Directors

A.8.2Shareholder approval of appointment of all Directors

The appointment of all Directors should be subject to election by shareholders at the first opportunity

√Corporate Governance/ Annual Report of the Board of Directors

A.9 DIRECTORS – APPRAISAL OF BOARD PERFORMANCE

A.9.1 Annual appraisal of Board performance

The Board should annually appraise how effectively it has discharged its key responsibilities.


A.9.2Self-evaluation of Board and Board Committee

The Board should evaluate its performance and that of its committee annually √ Corporate

Governance

A.9.3 Declaration of basis of performance

The Board should disclose in the Annual Report how performance evaluation have been carried out


A.10 DIRECTORS – DISCLOSURE OF INFORMATION IN RESPECT OF DIRECTORS

A.10.1

Biographical profiles and relevant details of Directors to be disclosed.

Annual Report should disclose the biographical details of Directors and attendance at board/committee meetings

√Board of Directors/ Corporate Governance/ Audit Committee Report

A.11 DIRECTORS – APPRAISAL OF CHIEF EXECUTIVE OFFICER (CEO)

A.11.1

Short, medium, long-term objectives with financial and non-financial objectives to be set

The Board should set out the short, medium and long-term objectives, financial and non-financial objectives at the commencement of each year

N/A Corporate Governance

A.11.2Evaluation of CEO’s performance evaluation

The performance of the CEO should be evaluated by the Board at the end of the year.




STATUSPAGE IN

ANNUAL REP.

B.1 REMUNERATION PROCEDURE

B.1.1Appointment of Remuneration Committee

Remuneration Committee of parent may function as such for the Company to make recommendations on Directors remuneration


B.1.2Composition of Remuneration Committee

Board to appoint only Non-Executive Directors to serve on Remuneration Committee


B.1.3

Disclosure of members of Remuneration Committee

The Annual Report should disclose the Chairman and Directors who serve on the Remuneration Committee


B.1.4Remuneration of Non-Executive Directors

Board to determine the level of remuneration of Non-Executive Directors √ Corporate

Governance

B.1.5 Access to professional advice

Remuneration Committee should have access to professional advice in order to determine appropriate remuneration for Executive Directors


B.2 DIRECTORS REMUNERATION – LEVEL AND MAKE UP OF REMUNERATION

B.2.1Remuneration Packages for Executive Directors

Packages should be structured to attract, retain and motivate Executive Directors √ Corporate

Governance

B.2.2

Remuneration Packages to be appropriately positioned

Packages to comparable and relative to that of other companies as well as the relative performance of the company


B.2.3

Appropriateness of remuneration and conditions in relation to other Group Companies

When determining annual increases, Remuneration Committee should be sensitive to that of other Group companies


B.2.4Performance related elements of remuneration

Performance related elements of remuneration should be aligned with interests of Company


B.2.5 Share options Executive share options should not be offered at a discount √ Corporate

Governance

B.2.6Remuneration packages for Non-Executive Directors

Should reflect time commitment and responsibilities of role and in line with existing market practice


B.3 DIRECTORS REMUNERATION – DISCLOSURE OF REMUNERATION

B.3.1 Disclosure of details of remuneration

The Annual Report should disclose the remuneration paid to Directors √ Corporate

GovernanceC.1 RELATIONS WITH SHAREHOLDERS - CONSTRUCTIVE USE AND CONDUCT OF ANNUAL GENER-

AL MEETING (AGM)

C.1.1 Proxy Votes to be counted

The Company should count and indicate the level of proxies lodged for and against in respect of each resolution


C.1.2 Separate resolution Separate resolutions should be proposed for substantially separate issues √ Corporate

Governance



STATUSPAGE IN

ANNUAL REP.

C.1.3Availability of Committee Chairmen @ AGM

The Chairmen of Board Committees should be available to answer any queries at AGM √ Corporate

Governance

C.1.4 Notice of AGM 15 calendar days notice to be given to shareholders √ Corporate

Governance

C.1.5 Procedure for voting at meetings

Company to circulate the procedure for voting with Notice of Meeting √ Corporate

GovernanceC.2 MAJOR TRANSACTIONS

C.2.1 Disclosure of Major Transactions

Transactions that have a value which are greater than half of the net assets of the Company should be disclosed


D.1 ACCOUNTABILITY AND AUDIT - FINANCIAL REPORTING

D.1.1 Presentation of Public Reports

Should be balanced, understandable and comply with statutory and regulatory requirements

√

Management Discussion and Analysis, Corporate Governance, Risk Management, Financial Statements

D.1.2 Directors’ Report

The Director’s Report should be included in the Annual Report and confirm that :

• the Company has not contravened laws or regulations in concluding its activities

• Material interests in contracts have been declared by Directors

• the Company has endeavoured to ensure equitable treatment of shareholders

• that the business is a “going concern”

• that there is reasonable assurance of the effectiveness of the existing business systems following a review of the internal controls covering financial, operational and compliance

√

Annual Report of the Board of Directors

Audit Committee Report

Annual Report of the Board of Directors/Financial Statements/ Corporate Governance

Annaul Report of the Board of Directors/Audit Committee Report/ Risk Management

D.1.3

Respective responsibilities of Directors and Auditors

The Annual Report should contain separate statements setting out the responsibilities of the Directors for the preparation and presentation of the Financial Statements and the reporting responsibilities of the Auditors.

√Respective responsibilities of Directors and Auditors

D.1.4Management Discussion and Analysis

Annual Report to include section on Management Discussion and Analysis √

Management Discussion and Analysis

D.1.5 Going ConcernDirectors to substantiate and report that the business is a going concern or qualify accordingly.

√Annual Report of the Board of Directors



STATUSPAGE IN

ANNUAL REP.

D.1.6 Serious Loss of Capital

Directors to summon an Extraordinary General Meeting in the event that the net assets of the Company false below 50% of the value of Shareholder Funds.

N/A

D.2 ACCOUNTABILITY AND AUDIT – INTERNAL CONTROL

D.2.1Effectiveness of system of Internal Controls

Directors to annually conduct a review of the effectiveness of the system of internal controls. This responsibility may be delegated to the Audit Committee

√Audit Committee Report

Risk ManagementD.3 AUDIT COMMITTEE

D.3.1Chairman and Composition of Audit Committee

• Should comprise of a minimum of two Independent, Non-Executive Directors

• Audit Committee Chairman should be appointed by the Board

√Audit Committee

Report

D.3.2 Duties of Audit Committee

Should include

• Review of scope and results of audit and its effectiveness

• Independence and objectivity of the Auditors


D.3.3 Terms of Reference/Charter

• The Audit Committee should have a written Term of Reference, which define the purpose of the Committee and its duties and responsibilities


D.3.4 Disclosures

• The Annual Report should disclose the names of Directors serving on the Audit Committee

• The Audit Committee should determine the independence of the Auditors and disclose the basis of such determination

• The Annual Report should contain a report by the Audit Committee setting out the manner of the compliance of the Company during the period to which the Report relates

√Corporate Governance/Audit Committee Report

D.4 CODE OF BUSINESS CONDUCT AND ETHICS

D.4.1

Adoption of Code of Business Conduct and Ethics and Disclosure in Annual Report

The Company must adopt a Code of Business Conduct and Ethics for directors and members of the senior management team and promptly disclose any violation of the Code


D.4.2 Chairman’s affirmation

The Annual Report must include an affirmation by the Chairman that he is not aware of any violation of the Code of Business Conduct and Ethics

√Chairman’s Statement /Director’s Report



STATUSPAGE IN

ANNUAL REP.

D.5 CORPORATE GOVERNANCE DISCLOSURES

D.5.1 Corporate Governance Report

The Annual Report should include a report setting out the manner and extent to which the Company has adopted the principles and provisions of the Code of Best Practice on Corporate Governance


E. INSTITUTIONAL INVESTORS – STRUCTURED DIALOGUE

E.1.1

Structured Dialogue with Shareholders

A regular and structured dialogue should be conducted with shareholders and the outcome of such dialogue should be communicated to the Board by the Chairman.

√Corporate Governance

E.2

Evaluation of Governance Disclosures by Institutional Investors

Institutional investors should be encouraged to consider the relevant factors drawn to their attention with regard to Board structure and composition


F. OTHER INVESTORS – INVESTING/DIVESTING DECISION

F.1

Individual Investors Individual shareholders should be encouraged to carry out adequate analysis and seek professional advice when making their investment/ divestment decisions


F.2Shareholder Voting Individual shareholders should be

encouraged to participate and exercise their voting rights



REPORT OF AUDIT COMMITTEEThe Audit Committee of the Company comprised of 04 Non-Executive Directors as of 31st March 2017 as given below.

Committee Members

Status & Position

Mr A Y Tyebkhan Non-Executive & Independent Chairman - (Resigned with effect from 27th July 2017)Mr I Shabbir Non-Executive Member - (Resigned with effect from 21st August 2017) Dr D C Gunasekera Non-Executive & Independent Member (Retired with effect from 14th October 2016)Mr. I. Zahir Non-Executive & Independent Member - (Resigned with effect from 27th July 2017)

1. TASKS

The committee reviews the reporting system adopted by the Company in preparation and presentation and adequacy of disclosures in the interim and Annual Financial Statements to ensure reliability, consistency of the accounting policies and methods followed to their compliance with the Sri Lanka Accounting Standards, Companies Act and Colombo Stock Exchange listing rules.

The Committee also reviews the adequacy of the internal controls currently practiced and recommends improvements.

2. INTERNAL CONTROLS

The Internal Audit Unit periodically reviews the methods and effectiveness of financial controls that are currently in place to provide reasonable assurance to the Board of Directors.

3. EXTERNAL AUDIT

The Audit Committee, upon reviewing the independence and performance of the External Auditors, recommends to the Board that M/S A I Macan Markar & Co, Chartered Accountants be re-appointed as the External Auditors for the year ending 31st March 2018.

4. COMPLIANCE WITH LAW AND REGULATION

The committee reviews the quarterly compliance reports to ensure that the Company has complied with the all statutory requirements.

5. MEETINGS

The audit committee met four times during the year.

CONCLUSION

The Audit Committee meet periodically with the representatives of the Management to ensure that the affairs of the company are managed in accordance with its policies and that the Company’s assets are properly accounted and adequately safeguarded.

Dr. Ali Asger Shabbir GulamhuseinFor Chairman of Audit Committee29th March 2018Colombo


REPORT OF REMMUNERATION COMMITTEE

The Remuneration Committee of the Company comprised of 05 Non-Executive Directors as of 31st March 2017 as given below.

Mr A Y Tyebkhan Non-Executive Independent Director –Chairman (Resigned with effect from 27th July 2017)

Mr T A Gulamhusein Non-Executive Director (Resigned with effect from 27th July 2017)Dr D C Gunasekera Non-Executive Independent Director (Retired with effect from 14th October 2016)Dr A.A. Shabbir Gulamhusein

Non-Executive Director

Mr. I. Zahir Non-Executive Independent Director (Resigned with effect from 27th July 2017)

The Committee lay down guidelines and parameters for determining the compensation package of Directors and Senior Executive staff. The primary objective of the committee is to attract and retain qualified, experienced and dedicated staff and reward performance. The Chairman assists this committee in its deliberations.

The committee met two times during the year.

Dr. Ali Asger Shabbir GulamhuseinFor Chairman of Remuneration Committee29th March 2018Colombo


REPORT OF THE RELATED PARTY TRANSACTION REVIEW

COMMITTEE

The Related Party Transactions Review Committee comprised of One Independent Non-Executive Director, One Non-executive director and one Executive Director as of 31st March 2017 as given below.

Mr. A.Y.Tyebkhan Non-Executive Independent Director –Chairman (Resigned with effect from 27th July 2017)

Mr. I. Shabbir Non-Executive Member - (Resigned with effect from 21st August 2017)Mr. Waruna Priyankara Executive Director (Resigned with effect from 29th March 2018.)

The duties of the Committee

• To review in advance all proposed related party transactions of the group either prior to the transaction being entered into or, if the transaction is expressed to be Conditional on such review, prior to the completion of the transaction.

• Seek any information the Committee requires from management, employees or external parties with regard to any transaction entered into with a related party.

• Obtain knowledge or expertise to assess all aspects of proposed related party transactions where necessary including obtaining appropriate professional and expert advice from suitably qualified persons.

• To recommend, where necessary, to the Board and obtain their approval prior to the execution of any related party transaction.

• To monitor that all related party transactions of the entity are transacted on normal commercial terms and are not prejudicial to the interests of the entity and its minority shareholders.

• Meet with the management, Internal Auditors/External Auditors as necessary to carry out the assigned duties.

• To review the transfer of resources, services or obligations between related parties regardless of whether a price is charged.

• To review the economic and commercial substance of both recurrent/ non recurrent related party transactions.

• To monitor and recommend the acquisition or disposal of substantial assets between related parties, including obtaining ‘competent independent advice’ from independent professional experts with regard to the value of the substantial asset of the related party transaction.

The Committee met 2 times during the year

Mr. M. JeyapragashFor Chairman of Related party Committee29th March 2018


FINANCIALINFORMATION


A. I. MACAN MARKAR & CO. CHARTERED ACCOUNTANTS“Inspiring All Stakeholders to Reach the Impossible”

(A Member Firm of The International Accounting Group, USA)

Partners - Rajan Niles FCA, FCMA E. Annalingam FCA, FSCMA Arjuna U. Dangalla ACA

46-2/1, 2nd Floor, Lauries Road,COLOMBO 4.

Phone : 2594205,2594192 Fax : 2594285e-mail – [email protected] Site : www.aimm.lk

Report on the Financial StatementsWe have audited the accompanying financial statements of CEYLON AND FOREIGN TRADES PLC, (the company) and the consolidation financial statements of the company and its subsidiaries (the Group), which comprise statement of financial position as at 31st March 2017, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes.

Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance with Sri Lanka Accounting Standards (LKAS) & Sri Lanka Financial Reporting Standards (SLFRS). This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s ResponsibilityOur responsibility is to express an opinion on this financial statements based on our audit. We conducted our audit in accordance with Sri Lanka Auditing Standards. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtained reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amount and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risk of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to entity’s presentation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of

accounting estimates made by board, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and

Opinion - GroupIn our opinion, the Consolidated Financial Statements, give a true and fair view of the financial position of the company and its subsidiaries as at 31st March 2017 and of its financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

Report on Other Legal and Regulatory Requirements As required by the Section 163(2) of the Companies Act No. 07 of 2007, we state the following.

1. The basis of opinion and scope of limitation of the audit are stated above.

2. In our opinion

• We have obtained all the information and explanation that were required for the audit and, as far as appears from our examination, proper accounting records have been kept by the company.

• The financial statements of the company give a true and fair view of its financial position as at 31st March, 2017 and of its financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

• The financial statements of the company and Group comply with the requirements of Section 151 and 153 of the Companies Act No. 07 of 2007.

CHARTERED ACCOUNTANTS.COLOMBO.DATE: 29.03.2018

INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF CEYLON AND FOREIGN TRADES PLC


NOTE

GROUP COMPANY

31 MAR 2017 31 MAR 2016 31 MAR 2017 31 MAR 2016

Rs Rs Rs Rs

CONTINUING OPERATION

Revenue 01 338,561,139 357,819,957 338,561,139 357,819,957

Cost of Sales (296,177,699) (293,794,002) (296,177,699) (293,794,002)

GROSS PROFIT 42,383,440 64,025,955 42,383,440 64,025,955

Other Income 02 49,985,382 15,382,126 62,481,786 25,461,202

Selling and Distribution Expenses (43,970,081) (23,658,459) (60,585,576) (23,590,724)

Administrative Expenses (50,694,100) (41,700,245) (50,559,645) (41,514,791)

RESULT FROM OPERATING ACTIVITIES 03 (2,295,358) 14,049,377 (6,279,995) 24,381,642

Finance and Other Charges 04 (54,865,952) (51,972,409) (54,856,852) (51,956,559)

NET FINANCE COST (54,865,952) (51,972,409) (54,856,852) (51,956,559)

PROFIT AFTER FINANCE COST (57,161,310) (37,923,032) (61,136,847) (27,574,917)

Share of Associate Company's Profit 64,098,762 115,460,310 - -

PROFIT/( LOSS) BEFORE TAX 6,937,451 77,537,278 (61,136,847) (27,574,917)

Tax Expense 05 7,276,528 (35,399,233) (226,109) 865,769

PROFIT/(LOSS) FROM CONTINUING OPERATION 14,213,979 42,138,045 (61,362,956) (26,709,148)

DISCONTINUING OPERATION - - - -

Profit (loss) from discontinuing operation (net of tax) - - - -

PROFIT /(LOSS) FOR THE YEAR 14,213,979 42,138,045 (61,362,956) (26,709,148)

OTHER COMPREHENSIVE INCOME

Defined Benefit changes in the assumption gain / (losses) (994,972) (20,051) (994,972) (20,051)

Share of Associate Defined Benefit Acturial gain / (losses) 2,417 566,732 - -

Share of Associate Deferred Tax (70,777) - - -

Share of Associate Revaluation gain on property plant & equipment 521,157 3,281,328 - -

Revaluation gain on property plant & equipment - 108,156,652 - 108,156,652

OTHER COMPREHENSIVE INCOME FOR THE YEAR (NET OF TAX) (542,174) 111,984,661 (994,972) 108,136,602

TOTAL COMPREHENSIVE INCOME FOR THE YEAR 13,671,805 154,122,706 (62,357,928) 81,427,453

Total profit/(loss) attributable to:

Equity Holders of the Parent 14,299,138 41,847,385 - -

Non Controlling Interest (85,159) 290,659 - -

Profit for the year 14,213,979 42,138,045 - -

Total comprehensive income attributable to:

Equity Holders of the Parent 13,756,963 153,832,047 - -

Non Controlling Interest (85,159) 290,659 - -

Total comprehensive income for the year: 13,671,805 154,122,706 - -

Earnings per share - basic 06 0.10 0.30 (0.44) (0.19)

Earnings per Share - basic (Exclusive of fair value gain) 06 0.10 (0.11) (0.44) (0.19)

CEYLON & FOREIGN TRADES PLCSTATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31st MARCH 2017

A. I. MACAN MARKAR & CO. CHARTERED ACCOUNTANTS

The notes from page 41 to 84 form an intergal part of these Financial Statements. Figures in brackets indicate deductions.



NOTE

GROUP COMPANY

31 MAR 2017 31 MAR 2016 31 MAR 2017 31 MAR 2016

Rs Rs Rs Rs

ASSETS

Property, Plant & Equipment 07 11,733,008 15,326,960 10,902,475 14,354,991

Intangible Assets 08 864,726 1,227,226 864,726 1,227,226

Investment Properties 09 2,037,833,549 1,922,632,024 2,037,833,549 1,922,632,024

Other Investments 10 26,853,478 26,853,478 26,853,478 26,853,478

Investments in Subsidiaries 11 - - 1,614,500 1,614,500

Investment in Associate Company 12 425,318,633 388,573,732 48,273,662 51,253,720

NON CURRENT ASSETS 2,502,603,393 2,354,613,420 2,126,342,390 2,017,935,939

Inventories 14 48,412,054 49,134,667 48,412,054 49,134,667

Trade & Other Receivables 15 103,799,752 133,138,334 97,454,789 126,793,370

Amount Due from Related Companies 16 5,505,306 11,439,855 5,409,998 28,012,026

Non Current Asset Held for Sale 17 650,000,000 650,000,000 650,000,000 650,000,000

Income Tax Refund Due 18 3,480,662 3,480,662 5,363,888 5,363,888

Short Term Investments 13 34,691,764 44,069,652 34,616,364 43,985,152

Cash & Cash Equivalents 19 27,106,687 13,102,756 26,969,040 12,965,106

CURRENT ASSETS 872,996,225 904,365,926 868,226,133 916,254,210

TOTAL ASSETS 3,375,599,618 3,258,979,346 2,994,568,522 2,934,190,148

EQUITY

Stated Capital 20 14,119,600 14,119,600 14,119,600 14,119,600

Revaluation Reserve 21 656,145,151 655,908,109 650,252,287 650,252,287

Revenue Reserve 22 1,236,701 1,236,701 1,077,447 1,077,447

Retained Profits 1,058,027,203 1,064,325,865 679,187,696 741,545,624

TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT 1,729,528,655 1,735,590,275 1,344,637,030 1,406,994,958

Non Controlling Interest (7,375,493) (7,290,334) - -

TOTAL EQUITY 1,722,153,162 1,728,299,941 1,344,637,030 1,406,994,958

LIABILITIES

Interest Bearing Borrowings 23 1,082,163,760 1,099,214,490 1,082,163,760 1,099,214,490

Deferred Tax Liabilities 24 1,278,626 1,094,156 1,146,168 947,449

Defined Benefit Plans 25 3,260,271 1,356,839 3,040,990 1,137,558

NON CURRENT LIABILITIES 1,086,702,658 1,101,665,486 1,086,350,918 1,101,299,497

Trade & Other Payables 26 165,599,045 147,327,052 164,167,809 145,940,815

Interest Bearing Borrowings 23 259,094,736 140,420,041 259,094,736 140,420,041

Amounts Due to Related Companies 27 68,954,329 68,578,478 67,419,810 67,043,959

Bank Overdrafts 19 72,848,601 72,468,649 72,848,601 72,468,649

Income Tax Payable 247,087 219,698 49,617 22,228

CURRENT LIABILITIES 566,743,798 429,013,918 563,580,573 425,895,693

TOTAL LIABILITIES 1,653,446,456 1,530,679,404 1,649,931,492 1,527,195,190

TOTAL EQUITY & LIABILITIES 3,375,599,618 3,258,979,346 2,994,568,522 2,934,190,148

I certify that these financial statements have been prepared in compliance with the requirements of the Company act No. 07 of 2007. …………………………………………. Mr. M. Jeyapragash Group Accountant The Board of Directors is responsible for the preparation and presentation of these financial statements. ……………………………………..... …………………………………… Dr. Ali Asger Shabbir Gulamhusein Mr. M. Jeyapragash Director Director 29th March 2018 Colombo.

CEYLON & FOREIGN TRADES PLC STATEMENT OF FINANCIAL POSITION

AS AT 31st MARCH 2017


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GROUP COMPANY31 MAR 2017 31 MAR 2016 31 MAR 2017 31 MAR 2016

Rs Rs Rs RsCash Flow from Operating Activities

Profit / (Loss) Before Tax 6,937,451 77,537,278 (61,136,847) (27,574,917)

Adjustments for:-

Provision for Gratuity / (Over provision) 996,959 391,082 996,959 391,082

Dividend Income (85,324) (775,640) (12,581,728) (11,939,716)

Share of Associates Company Profits (64,098,762) (115,460,310) - -

Unrealized (gain) /loss from share investments 8,767,004 4,051,730 8,757,904 4,036,130

Lease Interest 138,908 - 138,908 -

Loan Interest Charges 30,872,090 30,006,861 30,872,090 30,006,861

Software amortization 362,500 122,774 362,500 122,774

FD interest (395,761) (770,137) (395,761) (770,137)

Depreciation of Property, Plant & Equipment 1,604,930 4,190,458 1,463,491 4,049,019

Disposal Profit of Motor vehicle (1,185,475) (1,085,000) (1,185,475) -

Operating Profit before Working Capital Changes (16,085,479) (1,790,903) (32,707,958) (1,678,903)

(Increase)/Decrease in Inventories 722,613 (7,214,869) 722,613 (7,214,869)

(Increase)/Decrease in Trade & Other Receivables 29,338,581 17,674,295 29,338,582 17,674,293

(Increase)/Decrease in Amount Due from Related Parties 5,934,549 2,602,615 22,602,028 3,959,615

Increase/(Decrease) in Trade & Other Payables 18,271,994 54,599,523 18,226,994 54,566,527

Increase/(decrease) in investments in associate companies 2,980,058 - 2,980,058 -

Increase/(Decrease) in Amount Due to Related Parties 375,851 1,950,000 375,851 1,950,000

41,538,168 67,820,660 41,538,169 69,256,663

Gratuity Payments (88,500) - (88,500) -

With holding tax & Income Tax Payments - (28,668) - (28,668)

Interest paid (30,872,090) (30,006,861) (30,872,090) (30,006,861)

Net Cash Flow from Operating Activities 10,577,577 37,785,130 10,577,578 39,221,134

Cash Flow from Investment Activities

Interest Received 395,761 770,137 395,761 770,137

Dividend Received 12,581,728 11,939,716 12,581,728 11,939,716

(Increase)/Decrease in Investment - (24,454) - (24,454)

Investment in fixed deposits 610,885 (20,258,014) 610,885 (20,258,014)

Acquisition of Investment Properties (115,201,525) (73,982,001) (115,201,525) (73,982,001)

Sales proceeds of disposal 3,240,000 1,085,000 3,240,000 -

Acquisition of Intangible asset - (1,250,000) - (1,250,000)

Acquisition of Property, Plant & Equipment (65,500) (4,239,261) (65,500) (4,239,261)

Cash Flow from Investment Activities (98,438,652) (85,958,877) (98,438,652) (87,043,877)

Cash Flow from Financing Activities

Lease Instalment Paid (533,450) (1,509,274) (533,450) (1,509,274)

Loans Received (Net) 427,136,179 336,517,167 427,136,179 336,517,167

Loan/ Prepayments/other movement net (325,117,674) (301,630,741) (325,117,674) (301,630,741)

Cash Flow from Financing Activities 101,485,055 33,377,152 101,485,055 33,377,152

Net Change in Cash & Cash Equivalents (59,365,893) (44,569,298) 13,623,980 (14,445,592)

Cash & Cash Equivalents at the Beginning of the year 13,623,980 (14,796,595) (59,503,542) (45,057,950)

Cash & Cash Equivalents at end of the year (Note 19) (45,741,914) (59,365,893) (45,879,561) (59,503,542)

CEYLON & FOREIGN TRADES PLCSTATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31ST MARCH 2017



1. General Information

a. Corporate Information

Ceylon & Foreign Trades PLC is incorporated on April 28, 1949 and domiciled in Sri Lanka. The registered office is at No. 414/18, K.Cyril C. Perera Mawatha, Colombo 13. The shares of the company have a primary listing on the Colombo Stock Exchange.

The Consolidated Financial Statements of the Company for the year ended March 31, 2017 comprises the Company (Parent Company) and its subsidiaries (together referred to as the “group”) and the group interest in its Associates.

Ceylon Foreign & Trades PLC does not have an identifiable parent of its own.

The Consolidated Financial Statements have been approved for issue by the Board of Directors on 29th March, 2018.

b. Principal Activities and Nature of Operations

Company

The principal activities of the company are exporting the Sri Lankan produce, manufacturing local goods, and import & indent agent of fast moving consumer goods. There were no significant changes in the nature of the operation of the company during the financial year under review.

Subsidiaries

Colombo Freight & Transport Limited

No operations during the year.

West Cost Lanka (Private) Limited

No operations during the year.

Associate Company

On’ ally Holdings PLC

Owners of Unity Plaza, specializing in renting out prime office and shop space. It is an associate company of Ceylon & Foreign Trades PLC.

2. Basis of preparationa. Statement of compliance

The Consolidated Financial Statements are prepared in accordance and comply with Sri Lanka Accounting Standards (SLFRS/LKAS) laid down by the Institute of Chartered Accountants of Sri Lanka (ICASL) and in compliance with the Companies Act No. 07 of 2007.

Use of Estimates and Judgement

The preparation of the financial statements in conformity with SLFRSs/LKASs which requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results which form the basis of making the judgments about the carrying amount of assets and liabilities that are not readily apparent from other sources. Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Information about critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are included in the following notes to these financial statements.

CEYLON & FOREIGN TRADES PLCSTATEMENT OF ACCOUNTING POLICIES


Critical Accounting Estimates/ Judgements Note

Revaluation of Land & Building 07

Retirement Benefit Obligation 25

Deferred Tax Liabilities 24Useful lives of PPE 06 – Accounting

policiesUseful lives of Intangible Assets

08 – Accounting policies


b. Basis of Measurement

The financial statements of the Group have been prepared on the historical cost basis with no adjustments being made for inflationary factors affecting the financial statements, except for the following material items in the statement of financial position.

• Available-for-sale financial assets are measured at fair value

• The liability for defined benefit obligations is measured at the present value of the defined benefit obligation

• Lands and buildings are stated at revalued amount

c. Functional and presentation currency

The functional currency is the currency of the primary economic environment in which the group operates. The financial statements are presented in Sri Lankan Rupee (LKR), which is the functional currency and the group’s presentation currency. All financial information presented in Rupees has been rounded to the nearest Rupee unless stated otherwise.

d. Comparative Information

Previous year financial statement figures and notes have been restated and reclassified wherever necessary to conform to the current year’s presentation. The group has applied the exception given by the Institute of Chartered Accountants of Sri Lanka in applying comparative figures for SLFRS 7 - Financial Instruments Disclosures. Accordingly the comparative disclosure required by paragraph 31-42 (Nature and extent of risk arising from financial instruments) will not be disclosed for comparative period due to difficulty of gathering such information.

3. Basis of Consolidationa. Subsidiaries

Subsidiaries are all entities (Including special purpose entities) over which a company has the power to govern the financial and operating policies that is generally accompanied by a share

holding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assassin whether the company controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred. They are de-consolidated from the date that control ceases.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Company. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, and costs directly attributable to the acquisition. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.

The inter Company transaction, balances and unrealised gains on transactions between Group Companies are eliminated. The unrealised losses are also eliminated but considered as an impairment of the asset transferred.

The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group. If a member of the group uses accounting policies other than those adopted in the consolidated financial statements for like transactions and events in similar circumstances, appropriate adjustments are made to its financial statements in preparing the consolidated financial statements.

b. Associates - Equity accounted Investees

Associates are those entities in which the Company has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the group holds between 20 and 50 percent of the voting power of another entity.

Associates are accounted for using the equity method (equity accounted investees) and are initially recognized at cost.



The consolidated financial statements include the group’s share of the income and expenses and equity movements of equity accounted investees, after adjustments to align the accounting policies with those of the group, from the date that significant influence commences until the date that significant influence ceases.

When the group’s share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest (including any long-term investments) is reduced to nil and the recognition of further losses is discontinued except to the extent that the company has an obligation or has made payments on behalf of the investee.

An investment in an associate is accounted for in investor’s separate financial statements at cost.

The gain of control of an existing associate accounted for as if any investment in the acquiree that was held before obtaining control was sold and subsequently repurchase at the acquisition date.

4. Financial instruments

4.1. Financial AssetsFinancial assets are within the scope of LKAS 39 are classified appropriately as fair value through profit or loss (FVTPL), loans and receivables (L&R), held to maturity (HTM) and available-for-sale (AFS) at its initial recognition. All the financial assets are recognized at fair value at its initial recognition.

4.2. Fair value through profit & Loss The Group’s investments in equity securities are classified as fair value through profit & loss.

Subsequent to initial recognition, these are measured at fair value and changes therein recognized in the profit & loss. When an investment is derecognized, the cumulative gain or loss in other comprehensive income is transferred to profit or loss.

4.3. Loans and receivablesLoans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition loans and receivables are measured at amortised cost

using the effective interest method, less any impairment losses.

5. Foreign currency translationsTransactions in foreign currency are translated to rupees at the foreign exchange rate ruling at the date of transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to rupees at the exchange rate ruling at that date. Non-monetary items are accounted for using the exchange rate at the date of transaction. Foreign currency differences arising on retranslation are recognized in statement of comprehensive income.

6. Property, plant & equipmenta. Basis of Measurement

Items of Property, plant & equipment are stated at cost of purchase less accumulated depreciation and any accumulated impairment loss. Where an item of Property, plant & equipment comprises major components having different useful lives, they are accounted for as separate items of property, plant & equipment.

The cost of replacing part of an item of property plant & equipment is recognised in the carrying amount of the item if it is probable that the future economics benefits embodied within the part will flow to the company and its cost can be measured reliably. The cost of day to day servicing of property, plant & equipment are charged to the income statement as incurred.

When replacement cost are recognised in the carrying amount of an item of property, plant & equipment, the remaining carrying amount of the replace part is derecognised.

b. Cost Model

The Company applies the cost model to all property, plant and equipment except freehold land and buildings; which records at cost of purchase together with any incidental expenses thereon less any accumulated depreciation and accumulated impairment losses.

c. Revaluation Model

The group revalue its land and buildings which are measured at its fair value



at the date of revaluation less any subsequent accumulated depreciation and accumulated impairment losses. Revaluations are made with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the Financial Position date. The company policy is to revalue its property, plant and equipment once in three years. On revaluation of lands and buildings, any increase in the revaluation amount is credited to the revaluation reserve in shareholder’s equity unless it off sets a previous decrease in value of the same asset that was recognized in the statement of comprehensive income. A decrease in value is recognized in the statement of comprehensive income where it exceeds the increase previously recognized in the revaluation reserve. Upon disposal, any related revaluation reserve is transferred from the revaluation reserve to retained earnings and is not taken into account in arriving at the gain or loss on disposal.

d. Depreciation

The freehold land is not depreciated. The depreciation on other assets is calculated using the reducing balance method to allocate their cost or re valued amounts to there residual values over the estimated useful lives, as follows:

e. Disposal

An item of property, plant and equipment is de-recognized upon disposal or when no future economic benefits are expected from its use or disposal.

The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of the property, plant and equipment, and is recognized net within other income/ other expenses in the statement of comprehensive income. When revalued

assets are sold, the amounts included in the revaluation surplus reserve are transferred to retained earnings.

7. Investment property

Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Investment property is initially measured at cost and subsequently at fair value with any change therein recognised in profit or loss.

Cost includes expenditure that is directly attributable to the acquisition of the investment property. The cost of self-constructed investment property includes the cost of materials and direct labour, any other costs directly attributable to bringing the investment property to a working condition for their intended use and capitalised borrowing costs. Any gain or loss on disposal of an investment property (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognised in profit or loss.

When an investment property that was previously classified as property, plant and equipment is sold, any related amount included in the revaluation reserve is transferred to retained earnings. When the use of a property changes such that it is reclassified as property, plant and equipment, its fair value at the date of reclassification becomes its cost for subsequent accounting.

7.1. Non-current assets held for salesThe group determines the policies and procedures for the fair value measurement for Non-current assets held for sale. External valuers are involved for valuation of significant assets, such as land and building, and significant liabilities. Selection criteria for external valuers include market knowledge, reputation, independence and whether professional standards are maintained. The group decides, after discussions with the external valuers, which valuation techniques and inputs to use for individual assets and liabilities. Assets classified as non-current assets held for sale are neither amortised nor depreciated. Non-current assets held for sale are presented separately on the statement of financial position at the fair value.


Buildings 50 yearsPlant & machinery 08 years

Office fixtures 10 yearsFurniture & fittings 10 yearsStores equipment 10 yearsComputer equipment 05 yearsLeased motor vehicle 08 yearsMotor vehicles & bicycles 08 & 04 years


8. Intangible Assetsa. Software

All computer software licensed for use by the company, not constituting an integral part of related hardware are included in the balance sheet under the category intangible assets and carried at cost less accumulated amortization and any impairment losses.

The initial acquisition cost comprises of license fee paid at the inception, import duties, such other costs applicable, cost of customizing the software to meet the specific requirements of the company and other directly attributable expenditure in preparing the assets for its intended use. The cost is amortized using the reducing balance method at a rate 25% per annum commencing from the date the application software is available for use. The amortization cost is recognized as an expense.

b. Subsequent Expenditure

Subsequent expenditure on intangible assets is capitalized only when it increases the future economic benefits embodied these assets. All other expenditure is expensed when incurred.

c. De-recognition

Intangible assets are de-recognized on disposal or when no future economic benefits are expected from its use. The gain or loss arising from de-recognition of intangible assets are measured as difference between the net disposal proceeds and the carrying amount of the asset.

d. Amortization

Amortization is recognized in the statement of comprehensive income on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use. The estimated useful life of intangible asset is as follows;

Computer Software 4 Years

9. Impairment a. Financial assets

Financial assets are assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset, and that loss event(s) had an impact on the estimated future cash flows of that asset that can be estimated reliably.

Objective evidence that financial assets are impaired includes default or delinquency by a debtor, restructuring of an amount due to the Group on terms that the Group would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, adverse changes in the payment status of borrowers or issuers, economic conditions that correlate with defaults or the disappearance of an active market for a security.

The group considers evidence of impairment for financial assets measured at amortized cost (loans and receivables) at specific asset level. All individually significant assets are assessed for specific impairment.

An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account against loans and receivables or held- to-maturity investment securities. Interest on the impaired asset continues to be recognised. When an event occurring after the impairment was recognised causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

b. Non-financial assets

The carrying amounts of the Group’s Non-Financial Assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the assets’ recoverable amount is estimated. An impairment loss is recognized if the carrying amount of an asset or its related Cash-Generating Unit (CGU) exceeds its estimated recoverable amount.



The Group’s corporate assets do not generate separate cash inflow and are utilized by more than one CGU. Corporate assets are allocated to CGUs on a reasonable and consistent basis and tested for impairment as part of the testing of the CGU to which the corporate asset is allocated. Impairment losses are recognized in profit or loss.

Impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation, if no impairment loss had been recognized

10. Inventories Inventories have been valued at the lower of cost and net realisable value after making due allowance for slow moving and obsolete items, on a basis consistently applied from year to year. The cost incurred in bringing inventories to its present location and conditions are accounted as follows:

Trading inventories - At weighted average method

Other inventories - packing materials are at cost.

11. Trade ReceivablesThe trade receivables are recognised initially at cost and subsequently carried at cost less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original items of the receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows. The Carrying amount of the asset is reduced through the use of an allowance account. Once decided as irrecoverable after due recovery procedures, the amount of the loss is recognised as an operating cost in the income statement. When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against operating costs’ in the income statement.

12. Cash and cash equivalentsCash and cash equivalents comprise cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, net of bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet. For the purpose of the statement of the cash flows, cash & cash equivalents are presented net of bank overdraft.

13. Stated CapitalThe ordinary shares are classified as equity.

14. Trade PayablesThe trade payables are recognised at fair value.

15. BorrowingsThe borrowings are recognised initially at fair value, net of transaction costs incurred. The borrowings are subsequently stated at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.

The borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

16. Income Tax

a. Current and Deferred Income Tax

Income tax comprises current and deferred tax. Income tax is recognized in the statement of income except to the extent that it relates to items recognized directly in other comprehensive income or directly in equity, in which case the income tax is also recognized directly in other comprehensive income or equity, respectively.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted, at the end of the reporting period, and any adjustment to tax payable in respect of previous years.

In general, deferred tax is recognized in



respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax is not recognized if it arises from the initial recognition of goodwill or the initial recognition of an asset or liability in a transaction other than a business combination that, at the time of the transaction, affects neither accounting nor taxable profit nor loss. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except, in the case of subsidiaries, where the timing of the reversal of the temporary difference is controlled by the company and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax is determined on a non-discounted basis using tax rates and laws that have been enacted or substantively enacted at the balance sheet date and are expected to apply when the deferred tax asset is realized or liability is settled. Deferred tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilized. Deferred income tax assets and liabilities are presented as non-current.

b. Withholding Tax on Dividends

Dividend distributed out of taxable profit of the local companies attracts a 10% deduction at source and is not available for set off against the tax liability of the Company. Withholding tax that arises from the distribution of dividends by the Company is recognized at the same time as the liability to pay the related dividend is recognized.

c. Economic Service Charge (ESC)

As per the provisions of Economic Service Charge Act No. 13 of 2006 amendments thereto, ESC is payable on the liable turnover at specified rates. ESC is deductible from the income tax liability. Any unclaimed amount can be carried forward and set off against the income tax payable in the four subsequent years as per the relevant provision in the Act.

d. Nation Building Tax (NBT)

As per the provisions of the Nation Building Tax Act, No. 9 of 2009 and the subsequent amendments thereto, Nation

Building Tax should be payable at the rate of 2% with effect from 1 January 2011 on the liable turnover as per the relevant provisions of the Act.

e. Sales Taxes (Value Added Tax)

Revenues, expenses and assets are recognized net of the amount of sales tax except for the following;

• Sales tax incurred on a purchase of a assets or services is not recoverable from the taxation authority, in which case the sales tax is recognized as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

• Receivables and payables that are stated with the amount of sales tax included.

The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of tax receivables or tax payables in the Financial Position.

17. Borrowing CostsBorrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets that take a substantial period of time to get ready for its intended use or sale, are capitalized as part of the assets. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognized in profit or loss using the effective interest method.

18. Other non-financial liabilities and Provisions

Liabilities are recognized in the Financial Position when there is a present obligation as a result of a past event, the settlement of which is expected to result in an outflow of resources embodying economic benefits. Obligations payable at the demand of the creditor within one year of the Financial Position date are treated as current liabilities. Liabilities payable after one year from the Financial Position date are treated as non-current liabilities.

a. Finance Leases

Property and Equipment on finance leases, which effectively transfer to the group substantially the entire risk and rewards incidental to ownership of the



leased items, are disclosed as finance leases at their cash price and depreciated over the period the Company is expected to benefit from the use of the leased assets.

The corresponding principal amount payable to the lessor is shown as a liability. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the outstanding balance of the liability. The interest payable over the period of the lease is transferred to an interest in suspense account. The interest element of the rental obligations pertaining to each financial year is charged to the statement of comprehensive income over the period of lease.

19. Employee benefitsThe group has both defined benefit and defined contribution plans.

a. Defined contribution plan

Eligible employees of the company are members of Company Provident Fund and Employees Trust Fund to which the company contributes 12% and 03% respectively of such employees’ basis wage or salary. The company contribution is recognised as an expense in the income statement as incurred.

b. Defined benefit plan

Provision has been made in the financial statements for retirement gratuities from the first year of service for all employees in conformity with Sri Lanka Accounting Standard (LKAS) 19– Retirement Benefits obligation.

The cost of defined contribution pension plans is charged to expense as the contributions become payable. The cost of defined benefit plans is determined using the projected unit credit method. The related pension liability recognized in the statement of financial position is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. Actuarial valuations for defined benefit plans are carried out annually. The discount rate applied in arriving at the present value of the pension liability represents the yield on high quality corporate bonds denominated in the currency in which the benefits will be paid, and that have terms to maturity

approximating the terms of the related pension liability.

Actuarial gains and losses are recognized in full in the period in which they occur, in other comprehensive income without recycling to the statement of income in subsequent periods. Amounts recognized in other comprehensive income are recognized immediately in retained earnings. Current service cost, the recognized element of any past service cost, the expected return on plan assets and the interest expense arising on the pension liability are included in the same line items in the statement of income as the related compensation cost.

20. ProvisionsA provision is recognised when the group has a present legal or constructive obligation as a result of past events, it is more likely than not, that an outflow of resources will be required to settle the obligation and the amount has been reliable estimated. Provisions are not recognised for future operating loses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of the obligation as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligation may be small.

The provision is measured at the present value of the expenditures expected to be required to settle the obligation.

21. Revenue Recognitiona. Goods sold and services rendered

Revenue from sale of goods is recognised in the income statement when the significant risks and rewards of ownership have been transferred to the buyer. Revenue for services rendered is recognised in the income statements in the period to which they relate. No revenue is recognised if there are significant uncertainties regarding recovery of consideration due, associated cost or the possible return of goods.

b. Interest income

Interest income is derived from short-term investments and is treated on an accrual basis.



c. Dividend

Dividend income is recognised when the shareholders’ right to receive dividend is established and management income is recognised on accrual basis.

d. Other income

Other income is recognised on an accrual basis.

Net gains and losses of a revenue nature on the disposal property, plant & equipment and other non current assets including investments have been accounted for in the income statement, having deducted from proceeds on disposal, the carrying amount of the assets and related selling expenses.

Gains & losses arising from incidental activities to main revenue generating activities and those arising from a group of similar transactions, which are not material, are aggregated, reported and presented on a net basis.

22. ExpenditureExpenses are recognized in the statement of comprehensive income on the basis of a direct association between the cost incurred and the earning of specific items of income. All expenditure incurred in running of the business and in maintaining the property, plant & equipment in a state of efficiency has been charged to income in arriving at the profit for the year.

For the presentation of the statement of comprehensive income the directors are of the opinion that the nature of the expenses method present fairly the element of the Group’s performance, and hence such presentation method is adopted.

Preliminary and pre operational expenditure is recognized in the statement of comprehensive income. Repairs and renewals are charged to the statement of comprehensive income in the year in which the expenditure is incurred.

23. Finance costFinance costs comprise interest expense on borrowings and impairment losses recognized on financial assets (other than trade receivables), are recognized in the statement of comprehensive income.

The company profits are stated after,

• Providing for all impairment losses and depreciation of property, plant and equipment.

• Charging all expenses incurred in the day-to-day operations of the business and in maintaining the property, plant and equipment in a state of efficiency

24. Earnings per ShareThe group presents basic and diluted earnings per share data for its ordinary shares. Basic earnings per share is calculated by dividing the profit or loss attributable to ordinary shareholders of the company by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, for the effects of all dilutive potential ordinary shares.

25. Statement of Cash flowsCash flow statement has been prepared using the indirect method.

Interest paid are classified as operating cash flows, interest and dividend received are classified as investing cash flows while dividend paid are classified as financing cash flows for the purpose of presenting of cash flow statement

26. Commitments and ContingenciesAll discernible risks are accounted for in determining the amount of all known liabilities. Contingent Liabilities are possible obligations whose existence will be confirmed only by uncertain future events or present obligations where the transfer of economic benefit is not probable or cannot be reliably measured. Contingent Liabilities are not recognized in the Financial Position but are disclosed unless they are remote.

27. Risk Management FrameworkThe board of directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Board has established the audit committee, which is responsible for developing and monitoring Company risk management policies in their specified areas.



All Board committees have both executive and non-executive members and report regularly to the board of directors on their activities.

28. Standards issued but not yet effective

The Following SLFRS have been issued by the Institute of Chartered Accountants of Sri Lanka but not yet effective as at the reporting date and have not been applied in preparing these consolidated financial statements. Those SLFRS will have an effect on the accounting policies currently adopted by the group and may have an impact on the future financial statements.

28.1. SLFRS 09

Financial Instruments Classification and Measurement

Effective from 1st January 2018

28.2. SLFRS 15

Revenue from Contracts with Customers


28.3. SLFRS 16

Leases




CEYLON & FOREIGN TRADES PLCNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31ST MARCH 2017


01. REVENUEGROUP COMPANY

31 MAR 2017 31 MAR 2016 31 MAR 2017 31 MAR 2016Rs Rs Rs Rs

Net Revenue (Note 1.1) 338,561,139 357,819,957 338,561,139 357,819,957

01.1 GEOGRAPHICAL SEGMENT OF REVENUEGROUP COMPANY


Export turnover 54,641,693 44,703,028 54,641,693 44,703,028 Local sales 283,103,423 312,187,279 283,103,423 312,187,279 Total 337,745,116 356,890,307 337,745,116 356,890,307 Rent income 816,024 929,650 816,024 929,650 Total revenue 338,561,139 357,819,957 338,561,139 357,819,957 Less: Sales return - - - - Net revenue 338,561,139 357,819,957 338,561,139 357,819,957

01.2 DIVISIONAL SEGMENT OF REVENUETRADING DIVISION FMCG DIVISION


Export turnover 54,641,693 44,703,028 - - Local sales 144,902,029 161,439,529 138,201,394 150,747,751 Total 199,543,722 206,142,556 138,201,394 150,747,751 Rent income 816,024 929,650 - - Total revenue 200,359,746 207,072,206 138,201,394 150,747,751 Less: Sales return - - - - Net revenue 200,359,746 207,072,206 138,201,394 150,747,751

02. OTHER OPERATING INCOMEGROUP COMPANY


Dividend income 85,324 775,640 12,581,728 11,939,716 Interest Income 44,614 323,988 44,614 323,988 Profit on disposal of assets 1,185,475 1,085,000 1,185,475 - Insurance Claim 15,000 113,776 15,000 113,776 Advertising Recover 32,023,636 8,363,208 32,023,636 8,363,208 Disposal of investment 14,228,774 716,601 14,228,774 716,601 Interest on Debenture 351,146 446,149 351,146 446,149 Utilities income 624,971 652,225 624,971 652,225 Other scrap sale income 1,358,292 2,261,239 1,358,292 2,261,239 Transport recover 68,150 465,300 68,150 465,300 Container painting income - 179,000 - 179,000

49,985,382 15,382,126 62,481,786 25,461,202




03. OPERATING PROFIT/(LOSS)Profit from the operations is stated after charging all expenses including the following :


Rs Rs Rs RsSalaries, wages, allowances etc. 30,051,520 21,248,190 30,051,520 21,248,190 EPF & ETF 3,435,028 2,029,903 3,435,028 2,029,903 Provision for retiring gratuities (Note 25) 996,959 391,082 996,959 391,082

Directors emoluments 1,344,000 1,342,000 1,344,000 1,342,000

Audit fee & expenses 215,000 183,000 170,000 150,000 Depreciation of property, plant & equipment 1,604,930 4,190,458 1,463,491 4,049,019 Donations 127,350 35,800 127,350 35,800 Secretarial fee & expenses 248,984 278,050 233,234 278,050 Professional fees 262,500 505,905 262,500 505,905 Consolidation fee 50,000 40,000 50,000 40,000

04. FINANCE AND OTHER CHARGESGROUP COMPANY


Term loan & short term loan interest 13,517,243 7,973,002 13,517,243 7,973,002 Import Loan interest & commission 1,298,569 7,650,574 1,298,569 7,650,574 Margin Trading-Interest 15,247,541 8,873,171 15,247,541 8,873,171 Factoring interest 808,737 5,242,956 808,737 5,242,956 Overdraft interest 8,915,499 6,296,528 8,915,499 6,296,528 Bank charges 2,788,309 2,770,621 2,788,309 2,770,371 Exchange loss 3,335,276 6,907,416 3,335,276 6,907,416 Lease interest 141,381 267,158 141,381 267,158 Other lease expenses 6,277 227,495 6,277 227,495 Impairment of trade debtors 14,463 81,078 14,463 81,078 Surcharges 24,388 17,464 24,388 17,464 Fair value loss on financial asset 8,767,004 4,051,730 8,757,904 4,036,130 Loss from damaged stock disposal - 34,104 - 34,104 ESC written off - 1,579,113 - 1,579,113 WHT Interest 1,265 - 1,265 -

54,865,952 51,972,409 54,856,852 51,956,559




05. INCOME TAX EXPENSEIncome tax has been provided on the taxable income of the company at 28% and 12% on profit arising from domestic sales and export sales respectively.


Rs Rs Rs RsTax on profit for the period 27,389 257,215 27,389 59,745 Share of income tax of the associate 9,451,391 2,659,892 - -

9,478,780 2,917,108 27,389 59,745 Deferred tax charge/ (reversal) of the - - provision of deferred tax liability 184,470 (920,119) 198,720 (925,514)Share of deferred tax of the associates (16,939,778) 33,402,244 - -

(7,276,528) 35,399,233 226,109 (865,769)

Reconciliation of accounting profits and current tax on ordinary activities are as follows:-

Profit/(loss) before taxation 6,937,451 77,537,278 (61,136,847) (27,574,917)Consolidation adjustment - - - - Accounting profit of the company and its subsidiaries 6,937,451 77,537,278 (61,136,847) (27,574,917)

Income not liable for tax (26,810,502) (13,591,354) (26,810,502) (12,656,317)Expenses disallowed for tax 34,729,887 14,891,947 34,729,887 13,956,910 Capital allowance (1,617,652) (2,962,404) (1,617,652) (2,853,752)Other allowable tax - - - - Adjusted business profit / (loss) for the year 13,239,184 75,875,467 (54,835,114) (29,128,075)Tax losses brought forward (104,497,073) (76,167,437) (86,834,014) (57,974,026)Tax loss claim during the year (122,901) (647,838) (122,901) (268,088)Taxable Income from Other Sources 351,146 1,850,966 351,146 765,966 Tax losses carry forward 141,546,227 (104,497,073) 141,546,227 (86,834,014)Taxable income 228,245 1,203,128 228,245 497,878 Income tax 27,389 257,215 27,389 59,745

Provision for the year 27,389 257,215 27,389 59,745 Dividend tax - - - - Income Tax payable 27,389 257,215 27,389 59,745




06. EARNINGS PER SHAREBasic earning /(loss) per share is calculated by dividing the net profit/(loss) for the year attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year, as per the Sri Lanka Accounting Standard - LKAS 33 - Earnings per Share.


Profit attributable to Ordinary shareholders (Rs.) 14,213,979 42,138,045 (61,362,956) (26,709,148)Weighted average number of ordinary shares (Qty) 140,196,000 140,196,000 140,196,000 140,196,000

Earnings / (deficit) per ordinary share (Rs) 0.10 0.30 (0.44) (0.19)

06.1 EARNING PER SHARE( EXCLUSIVE OF FAIR VALUE GAIN)GROUP COMPANY

31 MAR 2017 31 MAR 2016 31 MAR 2017 31 MAR 2016Profit attributable to Ordinary shareholders (Exclusive of fair value gain) (Rs.) 14,213,979 (15,614,496) (61,362,956) (26,709,148)

Weighted average number of ordinary shares (Qty) 140,196,000 140,196,000 140,196,000 140,196,000

Earnings/(deficit) per ordinary share (Rs- Exclusive of fair value gain) 0.10 (0.11) (0.44) (0.19)

Movement of Number of Shares during the year 31 MAR 2017

Number of shares held as at 1st April 2016 140,196,000

Movement during the year -

Number of shares held as at 31st March 2017 140,196,000


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Cost/Valuation on 26 March 2016 includes assets at valuation as follows:-

VALUED ON VALUED AMOUNT

ADDITIONS AT COST

SINCE THE DATE OF

VALUATION

AS AT 31 MAR 2017

Propert, Plant & Equipments/Non current Assets Held For Sale

Land 26.03.2016 593,000,000 - 593,000,000 Building 26.03.2016 57,000,000 - 57,000,000

650,000,000 - 650,000,000

THE ABOVE ASSETS HAVE BEEN TRANSFERRED TO NON CURRENT ASSETS HELD FOR SALE DURING THE FINANCIAL YEAR 2015/16.

VALUED ON VALUED AMOUNT

ADDITIONS AT COST

SINCE THE DATE OF

VALUATION

AS AT 31 MAR 2017

Investment Property

Land - Sedawatta 31.03.2013 48,547,288 - 48,547,288 Land & building - Grandpass 31.03.2015 1,800,102,735 189,183,526 1,989,286,261 Total 1,848,650,023 189,183,526 2,037,833,549

The book value of the land area of 296.5 perches, purchased in 1977/78, owned by the company which is located in no 414/18, K. Cyril C. Perera Mawatha, Colombo 13 has been revalued by M.C.Abdul Malick Int.Sc.(Land).,D.I.V,(S.L).,F.IV.(S.L), retired state valuer on 26th March 2016. The surplus of Rs. 148,000,000 has been credited to revaluation reserve. The book value of the building of 52,523 Square feet, constructed in 1982/83, owned by the company which is situated in no 414/18 K Cyril C. Perera Mawatha, Colombo 13 has been revalued by M.C.Abdul Malick Int.Sc.(Land)., D.I.V,(S.L).,F.IV.(S.L),retired state valuer on 26th March 2016. The deficit of Rs. 39,843,347.57 has been debited to revaluation reserve during the financial year 2015/16. During the financial year 2015/2016, the land and the building was reclassified as non current assets held for sale as per SLFRS 5. The directors intended to sell the property. Sale of property was approved by the shareholders at the Extraordinary General Meeting held on 16th January 2015




The carrying amount of revalued land & buildings as at 31 March 2017, if they were carried at cost is as follows:-

Depreciation on Buildings was provided at 2% on reducing balance method from 1 April 1995. Details of Property, Plant and Equipment pledged as security if any, to obtain the term loans, are disclosed.

REVALUATION RESERVE

VALUATION PERIOD FREEHOLD LAND & BUILDING

Previous Revalued Date 31.03.2010 304,600,835 Revaluation surplus 2011/2012 237,494,800 Revaluation Surplus 2015/2016 108,156,652 Balance as at 31.03.2017 650,252,287

DISCIPTIONCOST

CUMULATIVE DEPRECIATION IF ASSETS WERE CARRIED AT COST

NET CARRYING AMOUNT

2017 2016RS. RS. RS. RS.

Land 310,271 - 310,271 310,271 Buildings 13,132,321 5,778,221 7,354,100 7,616,746

08. INTANGIBLE ASSETGROUP COMPANY


Balance as at 1 Apr 2016 1,227,226 100,000 1,227,226 100,000 Addition : Sales automation Software - 1,250,000 - 1,250,000 Amortization (25%) (362,500) (122,774) (362,500) (122,774)Balance as at 31 Mar 2017 864,726 1,227,226 864,726 1,227,226




09.1. LAND - SEDAWATTAGROUP COMPANY


Balance as at 1 Apr 2016 48,547,288 48,547,288 48,547,288 48,547,288

Addition - - - - Changes in fair value during the year - - - -

48,547,288 48,547,288 48,547,288 48,547,288

09. INVESTMENT PROPERTIESGROUP COMPANY


Land - Sedawatta 09.1 48,547,288 48,547,288 48,547,288 48,547,288

Land & Building - Grandpass 09.2 1,989,286,261 1,874,084,736 1,989,286,261 1,874,084,736

2,037,833,549 1,922,632,024 2,037,833,549 1,922,632,024

09.2. LAND & BUILDING - GRANDPASSGROUP COMPANY


Balance as at 1 Apr 2016 1,874,084,736 1,800,102,735 1,874,084,736 1,800,102,735

Addition 115,201,525 73,982,001 115,201,525 73,982,001 Changes in fair value during the year - - - - Balance as at 31 Mar 2017 1,989,286,261 1,874,084,736 1,989,286,261 1,874,084,736

Total as at 31.03.2017 2,037,833,549 1,922,632,024 2,037,833,549 1,922,632,024

As per Sri Lanka Accounting Standards LKAS 40 - Investment property, the directors have adopted the fair value model for accounting for investment property. THE PROPERTY SITUATED AT SEDAWATTAThe Land of 95.28 perches, is located at Kottahawatta, Gothami Road, Kotuwila village at Sedawatta has been revalued by the independent professionally qualified valuer Mr. M.C. Abdul Malick Int.Sc. (Lond). D.I.V, (S.L.), retired state valuer on 31st March 2013. the surplus of Rs. 8,600,000 has been recognised fair value gain on investment property in financial year 2013. As per Sri lanka Accounting Standard LKAS 40 - Investment Property, the directors have adopted the fair value model for accounting for investment property, based on active market price adjusted, if necessary for any difference in the nature location or condition of the specific assets. As per the directors assessment, except for current year net upgrading adjustment no significant changes to the valuation of investment property compare to the last valuation carried out by Mr. M.C. Abdul Malik an independent professional qualified valuer as of 31st March 2015. THE PROPERTY SITUATED AT NO. 260, GRANDPASS ROAD, COLOMBO 14.The property situated at No. 260, Grandpass Road, Colombo 14, commonly known as ‘Unilever land’ in extent of Four Acres, Three Roods and Eight perches (A4:R3:P08.60) with a building are of 150,000 square purchases during the year 2014/15 has been revalued by Mr. K.T.D. Tissera J.P.U.M., Diploma in valuation (SL), Charted valuation surveyor UK, F.I.V.(SL), F.R.I.C.S.(Eng), as at 31st March 2015. The surplus of Rs. 714,254,666 has been recognized as fair value gain on investment property in Financial year 2014/2015.




GROUP31 MAR 2017 31 MAR 2016

Rs RsAddition

Land preparation (Land filling) 11,756,667 3,193,122 Borrowing cost 103,444,858 70,788,880 Total addition 115,201,525 73,982,001

10. OTHER INVESTMENTSGROUP COMPANY


Fixed Deposits

Union Bank PLC - Kotahena Branch A/C No. - 4784705016 4,353,478 4,353,478 4,353,478 4,353,478

Siyapatha Finance PLC 20,000,000 20,000,000 20,000,000 20,000,000 Debenture Investment 2,500,000 2,500,000 2,500,000 2,500,000

26,853,478 26,853,478 26,853,478 26,853,478

11. INVESTMENTS IN SUBSIDIARIESHOLDING NO OF

SHARES31 MAR 2017 31 MAR 2016

% RS RSUnquoted

Colombo Freight & Transport Ltd 78.38 145 14,500 14,500 West Coast Lanka (Pvt) Ltd 53.34 160,000 1,600,000 1,600,000 TOTAL 1,614,500 1,614,500

INCOME EARNED FROM THE INVESTMENT PROPERTY Total income earned by the company from the investment property by selling scraps during the year 2016/2017 was Rs. 157,506/- EXPENSES INCURRED ON INVESTMENT PROPERTY Total labour expenses incurred for cleaning and repairing of the investment property during the year 2016/2017 was Rs. 2,719,907/-




12. INVESTMENT IN ASSOCIATE COMPANY12.1 INVESTMENT AT COST ON’ ALLY HOLDINGS PLC

GROUP31 MAR 2017 31 MAR 2016

Rs RsBalance as at 1st April 2016 388,573,732 317,305,340

Disposal of Associates shares (2,980,058) - Reversal overprovision Fair value (19,818,584) (813,766)

365,775,090 316,491,574 Share of associate profits 64,098,762 115,460,310 Share of other comprehencive income 2,417 566,732 Share of tax (9,451,391) (2,659,892)Share of revaluation 521,157 3,281,328 Share of associate deffered tax 16,869,001 (33,402,244)Transferred to Retained earnings - - Share of profits of associate after tax 437,815,036 399,737,808 Dividend received from associate (12,496,403) (11,164,076)Balance as at 31st March 2017 425,318,633 388,573,732

GROUP31 MAR 2017 31 MAR 2016

Rs RsNon current assets 1,893,283,680 1,728,779,750

Current assets 340,400,733 280,231,096 Total assets 2,233,684,413 2,009,010,846

Capital & reserves 1,882,606,768 1,617,232,438 Total liabilities 351,077,645 391,778,408 Total equity & liabilities 2,233,684,413 2,009,010,846

Total income for the year 160,895,852 147,296,537

Profit/(loss) for the year 316,869,378 330,452,861

COMPANY

NO OF SHARES

MARKET VALUE AS AT 31.03.2017

COST

31-MAR-17 31-MAR-16PER SHARE

VALUE RS RS RS

QuotedOn 'ally Holdings PLC 3,953,775 45.70 180,687,518 48,273,662 51,253,720




13. SHORT TERM INVESTMENTS - CURRENTGROUP

DESCRIPTIONNO OF MARKET

VALUE 31-MAR-17 31-MAR-16

SHARES @ RS RSPortfolio - 01Lanka IOC PLC 20,400 29.00 591,600 663,000 Protfolio - 01 (Margin Trading)Asia Capital PLC 660 7.30 4,818 3,828 COCO Lanka PLC - Non Voting 2,466 19.50 48,087 49,073 Equity Two PLC 100 65.00 6,500 6,500 First Capital PLC 600 20.10 12,060 11,460 Hemas Holding Ltd 3,750 108.70 407,625 2,894,830 Maskeliya Plantations PLC 1,200 7.70 9,240 33,118 Raigam Wayamba Salterns PLC 50,300 2.00 100,600 90,600 Royal Ceramics Lanka PLC 20 119.00 2,380 2,002

Protfolio - 02 (Margin Trading)Access Engineering Limited 8,500 23.80 202,300 187,200 ACME Printing & Packing PLC 16,200 4.80 77,760 85,860 Adam Investment plc 5,560,000 0.60 3,336,000 6,394,000 Aitken Spence Hotel 7,800 35.20 274,560 463,050 Aitken Spense 32,971 56.20 1,852,970 2,070,569 Amana Takaful 48,000 0.80 38,400 216,000 Asia Asset Finance Ltd 2,000 1.30 2,600 2,600 Blue Diamond 2,000 0.90 1,800 2,000 Bogawanthalawa Tea Estate 6,000 7.90 47,400 57,600 Brown Investment PLC 128,444 1.40 179,822 166,977 Browns & Co Ltd 11,285 71.00 801,235 820,264 C T Land Development Ltd 1,550 44.00 68,200 136,200 Cargills (Ceylon) Ltd 500 187.70 93,850 75,000 Ceylon Glass Company Limited - - - 86,700 Ceylon Hotel Corporation 500 19.20 9,600 12,000 Ceylon Investment Company 706 40.00 28,240 37,206 Ceylon Leather Products (Warrants 2014) 1,000 54.00 54,000 62,500 Ceylon Theatres Ltd 2,341 148.90 348,575 290,284 Chemanex Ltd 2,100 55.00 115,500 132,300 Chemical IND Ltd (Non Voting) 1,800 62.40 112,320 128,700 Chemical IND Ltd (Voting) 380 80.10 30,438 36,290 Colombo Dockyard Limited 1,375 76.00 104,500 127,018 Dankotuwa Porcelain 6,975 6.00 41,850 47,430 DFCC Bank 5,800 114.00 661,200 794,600 Dialog Axiata PLC 287,842 11.30 3,252,615 3,045,557 Dipped Products Ltd 6,004 76.00 456,304 379,892 Distilleries Company of Sri Lanka Limited - - - 103,100 East west properties 2,500 14.10 35,250 33,750







SHARES @ RS RSEastern Merchants PLC 1,451 5.00 7,255 9,286 Expo Lanka Holdings PLC 19,500 6.00 117,000 136,500 Free Lanka Capital Holding 436,900 1.50 655,350 512,280 Hatton National Bank (Voting) 7,374 225.30 1,661,362 1,444,143 Haycrab Ltd 300 151.00 45,300 48,000 Hayleys Ltd 4,301 265.00 1,139,765 983,046 Hayleys MGT Knitting Mills Limited 1,818 13.60 24,725 32,724 Horana Plantation 1,700 16.50 28,050 28,730 Hotel Reefcomber (Voting) - - - 15,410 Hydro Power Free Lanka 12,600 4.80 60,480 65,520 John Keells Holding Ltd 7,258 137.90 1,000,878 810,004 John Keells Holding Ltd(Warrant 22) - - 1,841 John Keells Hotels Limited 98,975 10.00 989,750 1,150,500 Lanka IOC 236,385 29.00 6,855,165 9,175,149 Lanka Orix Leasing 200 61.00 12,200 - Lankem Developments PLC 7,000 2.60 18,200 24,000 Laugfs Gas Ltd ( Voting) 5,800 28.10 162,980 193,450 Laugfs Gas Ltd (Non Voting) 186,673 24.80 4,629,490 6,608,224 Marawila Resorts Limited 3,750 2.10 7,875 8,250 Maskeliya Plantation Ltd 3,101 7.70 23,878 33,118 Merchant Bank 7,580 10.80 81,864 67,116 Nation Trust Bank 600 74.00 44,400 44,520 National Development Bank 1,700 139.60 237,320 286,960 Nawaloka Hospitals Limited 53,000 4.70 249,100 185,500 ODEL PLC 500 25.00 12,500 10,850 Overseas Realty (Ceylon) Ltd 12,397 20.20 250,419 238,891 P C House 9,400 0.10 940 - Pan Asia Bank 1,500 15.40 23,100 23,000 Pan Asia Power 17,000 3.00 51,000 32,000 People's Merchant Bank 300 13.90 4,170 3,060 Richard Pieris Co. Ltd 46,000 8.30 381,800 316,800 Seylan Bank (Non Voting) 4,389 54.70 240,078 276,507 Seylan Merchant Bank Limited (Non Voting) 630,720 0.20 126,144 189,216 Seylan Merchant Bank Limited (Voting) 60,714 0.50 30,357 42,500 Shaw Wallace & Hedges Ltd - - - 75,120 Sierra Cables Ltd 38,415 3.00 115,245 96,904 Singer Finance 499 17.10 8,533 9,032 Singer Sri lanka PLC 500 139.90 69,950 58,850 Softlogic Holding PLC 6,500 11.90 77,350 86,450







SHARES @ RS RSTess Agro 9,554 1.00 9,554 10,509 Tess Agro Ltd 85,776 1.00 85,776 94,354 Tokyo Cement Lanka (Non Voting) 7,840 53.00 415,520 398,582 Tokyo cement Lanka (Voting) 1,100 61.00 67,100 40,700 Touchwood Investment 30,400 2.60 79,040 - Unions Chemicals Lanka PLC 20 550.10 11,002 11,800 Vallibel One PLC 16,000 17.50 280,000 284,800 Watawala Plantation 7,100 24.40 173,240 137,030 York Arcade ok 1,490 12.50 18,625 19,370 Piramal Glass Ceylon PLC 22,000 5.60 123,200 - Lanka Century Investments PLC 19,200 10.50 201,600 - Citrus Leisure PLC 2,300 7.00 16,100 - Commercial bank 612 130.40 79,805 - Cargo Boat Development Co. 500 82.30 41,150 - Lucky Lanka Milk Processing 106,800 1.10 117,480 - Mesltacorp Ltd 2,000 59.20 118,400 -

34,691,764 44,069,652




13. SHORT TERM INVESTMENTS - CURRENTCOMPANY



SHARES @ RS RSProtfolio - 01 (Margin Trading)Asia Capital PLC 660 7.30 4,818 3,828 COCO Lanka PLC - Non Voting 2,466 20 48,087 49,073 Equity Two PLC 100 65.00 6,500 6,500 First Capital PLC 600 20.10 12,060 11,460 Hemas Holding Ltd 3,750 108.70 407,625 2,894,830 Lanka IOC ltd 17,800 29.00 516,200 578,500 Maskeliya Plantations PLC 1,200 7.70 9,240 33,118 Raigam Wayamba Salterns PLC 50,300 2.00 100,600 90,600 Royal Ceramics Lanka PLC 20 119.00 2,380 2,002

Protfolio - 02(Margin Trading)Access Engineering Limited 8,500 23.80 202,300 187,200 ACL Cables Ltd - - - - ACME Printing & Packing PLC 16,200 4.80 77,760 85,860 Adam Investment plc 5,560,000 0.60 3,336,000 6,394,000 Aitken Spence Hotel 7,800 35.20 274,560 463,050 Aitken Spense 32,971 56.20 1,852,970 2,070,569 Amana Takaful 48,000 0.80 38,400 216,000 Asia Asset Finance Ltd 2,000 1.30 2,600 2,600 Blue Diamond 2,000 0.90 1,800 2,000 Bogawanthalawa Tea Estate 6,000 7.90 47,400 57,600 Brown Investment PLC 128,444 1.40 179,822 166,977 Browns & Co Ltd 11,285 71.00 801,235 820,264 C T Land Development Ltd 1,550 44.00 68,200 136,200 Cargills (Ceylon) Ltd 500 187.70 93,850 75,000 Ceylon Glass Company Limited - - - 86,700 Ceylon Hotel Corporation 500 19.20 9,600 12,000 Ceylon Investment Company 706 40.00 28,240 37,206 Ceylon Leather Products (Warrants 2014) 1,000 54.00 54,000 62,500 Ceylon Theatres Ltd 2,341 148.90 348,575 290,284 Chemanex Ltd 2,100 55.00 115,500 132,300 Chemical IND Ltd (Non Voting) 1,800 62.40 112,320 128,700 Chemical IND Ltd (Voting) 380 80.10 30,438 36,290 Colombo Dockyard Limited 1,375 76.00 104,500 127,018 Commercial bank - - - Dankotuwa Porcelain 6,975 6.00 41,850 47,430 DFCC Bank 5,800 114.00 661,200 794,600 Dialog Axiata PLC 287,842 11.30 3,252,615 3,045,557







SHARES @ RS RS

Dipped Products Ltd 6,004 76.00 456,304 379,892 Distilleries Company of Sri Lanka Limited - - - 103,100 East west properties 2,500 14.10 35,250 33,750 Eastern Merchants PLC 1,451 5.00 7,255 9,286 Expo Lanka Holdings PLC 19,500 6.00 117,000 136,500 Free Lanka Capital Holding 436,900 1.50 655,350 512,280 Hatton National Bank (Voting) 7,374 225.30 1,661,362 1,444,143 Haycrab Ltd 300 151.00 45,300 48,000 Hayleys Ltd 4,301 265.00 1,139,765 983,046 Hayleys MGT Knitting Mills Limited 1,818 13.60 24,725 32,724 Horana Plantation 1,700 16.50 28,050 28,730 Hotel Reefcomber (Voting) - - - 15,410 Hydro Power Free Lanka 12,600 4.80 60,480 65,520 John Keells Holding Ltd 7,258 137.90 1,000,878 810,004 John Keells Holding Ltd(Warrant 22) - - - 1,841 John Keells Hotels Limited 98,975 10.00 989,750 1,150,500 Lanka IOC 236,385 29.00 6,855,165 9,175,149 Lanka Orix Leasing 200 61.00 12,200 - Lankem Developments PLC 7,000 2.60 18,200 24,000 Laugfs Gas Ltd ( Voting) 5,800 28.10 162,980 193,450 Laugfs Gas Ltd (Non Voting) 186,673 24.80 4,629,490 6,608,224 Marawila Resorts Limited 3,750 2.10 7,875 8,250 Maskeliya Plantation Ltd 3,101 7.70 23,878 33,118 Merchant Bank 7,580 10.80 81,864 67,116 Nation Trust Bank 600 74.00 44,400 44,520 National Development Bank 1,700 139.60 237,320 286,960 Nawaloka Hospitals Limited 53,000 4.70 249,100 185,500 ODEL PLC 500 25.00 12,500 10,850 Overseas Realty (Ceylon) Ltd 12,397 20.20 250,419 238,891 P C House 9,400 0.10 940 - Pan Asia Bank 1,500 15.40 23,100 23,000 Pan Asia Power 17,000 3.00 51,000 32,000 Pelwatte Suga 2,400 - - - People's Merchant Bank 300 13.90 4,170 3,060 Richard Pieris Co. Ltd 46,000 8.30 381,800 316,800 Seylan Bank (Non Voting) 4,389 54.70 240,078 276,507 Seylan Merchant Bank Limited (Non Voting) 630,720 0.20 126,144 189,216 Seylan Merchant Bank Limited (Voting) 60,714 0.50 30,357 42,500 Shaw Wallace & Hedges Ltd - - - 75,120 Sierra Cables Ltd 38,415 3.00 115,245 96,904





SHARES @ RS RS

Singer Finance 499 17.10 8,533 9,032 Singer Sri lanka PLC 500 139.90 69,950 58,850 Softlogic Holding PLC 6,500 11.90 77,350 86,450 Tess Agro 9,554 1.00 9,554 10,509 Tess Agro Ltd 85,776 1.00 85,776 94,354 Tokyo Cement Lanka (Non Voting) 7,840 53.00 415,520 398,582 Tokyo cement Lanka (Voting) 1,100 61.00 67,100 40,700 Touchwood Investment 30,400 2.60 79,040 - Unions Chemicals Lanka PLC 20 550.10 11,002 11,800 Vallibel One PLC 16,000 17.50 280,000 284,800 Watawala Plantation 7,100 24.40 173,240 137,030 York Arcade ok 1,490 12.50 18,625 19,370 Piramal Glass Ceylon PLC 22,000 5.60 123,200 - Lanka Century Investments PLC 19,200 10.50 201,600 - Citrus Leisure PLC 2,300 7.00 16,100 - Commercial bank 612 130.40 79,805 - Cargo Boat Development Co. 500 82.30 41,150 - Lucky Lanka Milk Processing 106,800 1.10 117,480 - Mesltacorp Ltd 2,000 59.20 118,400 -

34,616,364 43,985,152



14. INVENTORIESGROUP COMPANY


Trading items 33,089,809 28,440,307 33,089,809 28,440,307

Raw materials FMCG 8,417,000 7,982,319 8,417,000 7,982,319 Work In Progress - 13,486 - 13,486 Cement 4,355,510 6,691,459 4,355,510 6,691,459 Packing materials 959,189 649,651 959,189 649,651 Garden Items 1,590,546 2,582,581 1,590,546 2,582,581 Hot Roll Sheet - 1,960,000 - 1,960,000 Binding Wire - 814,865 - 814,865

48,412,054 49,134,667 48,412,054 49,134,667




15. TRADE & OTHER RECEIVABLESGROUP COMPANY


Trade receivables 53,581,665 80,129,385 53,581,665 80,129,386

GST receivable 242,294 24,107 242,294 24,107 Staff loans & advances 73,118 419,947 73,118 419,947 Rent Receivable 53,216 53,216 53,216 53,216 VAT Receivable 1,826,643 1,826,643 57,765 57,765 Utilities Receivable 2,131,299 2,131,299 2,131,299 2,131,299 Festival Advance 44,750 42,100 44,750 42,100 Salary advance (500) 4,500 (500) 4,500 Sampath Factoring & Leasing (Pvt) Ltd 16,273,509 23,256,721 16,273,509 23,256,721 Advertisement reimbursement receivable 1,778,702 - 1,778,702 - Shipping Guarantee Margin 8,325,712 8,306,505 8,325,712 8,306,505 Amounts due from director 15.1 4,576,086 4,576,086 - - Deposits & prepayments 8,270,937 7,456,917 8,270,937 7,456,917 FMCG other receivable 6,447,839 4,819,759 6,447,839 4,819,759 Debenture interest receivable - 91,149 - 91,149 Other Loan 87,188 - 87,188 -

103,799,752 133,138,334 97,454,789 126,793,370

15.1 AMOUNTS DUE FROM DIRECTOR- MR. S.A LUKMANJEEGROUP COMPANY


Balance as at 1 Apr 2016 4,576,086 4,576,086 - - Loans granted during the year - - - - Balance as at 31 Mar 2017 4,576,086 4,576,086 - -

Board of Directors of West Coast Lanka (Pvt) Ltd resolved that the business of West Coast Lanka (Pvt) Ltd to be transferred and to be operated by Messrs Ceylon & Foreign Trades PLC. West Coast Lanka (Pvt) Ltd’s operation has been ceased. Directors of West Coast Lanka (Pvt) Ltd have planned to take necessary steps for the winding up of the affairs of the company and distributing its assets. But, it has been delayed due to demise of the Chairman, Dr. Shabbir Gulamhusein. Based on the impairment test performed by the management, the carrying value of the assets exceed its recoverable amount. As the directors believe that the amount receivable from West Coast Lanka (Pvt) Ltd of Rs. 16,683,229 to the company is doubtful, relevant provisions have been made in the financial statements. Further Colombo Freight and Transport Limited, also a subsidiary has ceased a substantial part of its core operating activities and as a result of this situation company has suffered continued operating losses. However, the company management has given a representation on the company’s ability of function as a going concern entity indicating that it will continue in normal course of business in the foreseeable future.


16. AMOUNT DUE FROM RELATED COMPANIESGROUP COMPANY


West Coast Lanka (Pvt) Ltd - - 16,683,229 16,667,479

Colombo Freight & Transport Ltd - - 2,371,779 2,371,779 Network communication (Pvt) Ltd 3,200,000 6,067,087 732,913 3,600,000 TL- Adamexpo - 2,687,972 - 2,687,972 Adam Apparel (Pvt) Ltd 2,564,244 2,943,734 2,564,244 2,943,734

5,764,244 11,698,793 22,352,165 28,270,964

Less: Provision for irrecoverable balances (258,937) (258,937) (16,942,167) (258,937)Total 5,505,306 11,439,855 5,409,998 28,012,026

17. NON CURRENT ASSET HELD FOR SALEGROUP COMPANY


Land 593,000,000 593,000,000 593,000,000 593,000,000

Building 57,000,000 57,000,000 57,000,000 57,000,000 650,000,000 650,000,000 650,000,000 650,000,000

18. INCOME TAX REFUND DUEGROUP COMPANY


Balance as at 1 Apr 2016 3,480,662 3,489,511 5,363,888 5,372,737

Transferred to WHT - (8,849) - (8,849) 3,480,662 3,480,662 5,363,888 5,363,888

Withholding tax paid - - - - Balance as at 31 Mar 2017 3,480,662 3,480,662 5,363,888 5,363,888



The company has received an offer from a prospective buyer to sell the above land & building on 17th October 2017 and the company is presently in the process of negotiating with the said buyer.


20. STATED CAPITALGROUP COMPANY


140,196,000 ordinary shares 14,119,600 14,119,600 14,119,600 14,119,600

19. CASH & CASH EQUIVALENTSGROUP COMPANY


Cash at bank 13,610,306 2,058,052 13,572,453 2,020,198

Cheques in hand 12,748,044 9,174,755 12,748,044 9,174,755 Cash in hand - FMCG 406,341 109,711 406,341 109,711 Cash in hand 341,997 1,711,649 242,203 1,611,853 Undeposited Funds - (Cheques in hand) - 48,589 - 48,589

27,106,687 13,102,756 26,969,040 12,965,106 Less : Bank overdrafts (72,848,601) (72,468,649) (72,848,601) (72,468,649)Cash & cash equivalents for the purpose of statement of cash flows (45,741,914) (59,365,893) (45,879,561) (59,503,544)

Bank Overdraft as at 31.03.2017Union Bank - Head Office - 4784700017 4,781,893 5,239,007 4,781,893 5,239,007 Bank of Ceylon - Corporate Branch - A/C No : 0000 000 226 116,813 - 116,813 -

National Development Bank - US$ - A/C No : 106480002221 - 2,368,705 - 2,368,705

Union Bank - Head Office - 4784700025 21,525,089 22,656,926 21,525,089 22,656,926 Habib Bank 19,793,112 20,161,703 19,793,112 20,161,703 Sampath Bank - Head Office- A/C No : 002930006044 26,620,257 10,132,179 26,620,257 10,132,179

Sampath Bank - Head Office 599900003225 11,438 838,045 11,438 838,045 National Development Bank- A/C No : 101000052028 - 11,072,083 - 11,072,083

72,848,601 72,468,649 72,848,601 72,468,649



Rights, Preferences and Restrictions of Classes of Capital The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares rank equally with regard to the company’s residual assets.


21. REVALUATION RESERVEGROUP COMPANY


Balance on 01 Apr 2016 655,908,109 544,643,455 650,252,287 542,095,635

Surplus on revaluation of land & buildings During the year - 108,156,652 - 108,156,652

Share of associate revaluation 521,157 3,281,328 - - Depriciation Transfer of Associates (284,115) (173,326) - - Balance on 31 Mar 2017 656,145,151 655,908,109 650,252,287 650,252,287

22. REVENUE RESERVEGROUP COMPANY


General Reserve 1,236,701 1,236,701 1,077,447 1,077,477

23. INTEREST BEARING BORROWINGGROUP COMPANY


Long TermBalance on 1 Apr 2016 1,098,327,136 1,094,435,105 1,098,327,136 1,094,435,105 Loan received during the year 54,176,529 33,915,329 54,176,529 33,915,329

1,152,503,665 1,128,350,434 1,152,503,665 1,128,350,434 Repayments made during the year (71,335,285) (30,023,298) (71,335,285) (30,023,298)Balance on 31 Mar 2017 1,081,168,381 1,098,327,136 1,081,168,381 1,098,327,136 Lease Liability (Note 23.1) 995,380 887,354 995,380 887,354 Payable in the ensuing year - - - - Balance due after one year 1,082,163,760 1,099,214,490 1,082,163,760 1,099,214,490

Short TermBalance on 1 Apr 2016 139,917,475 108,923,081 139,917,475 108,923,081 Loan received during the year 372,959,650 307,146,264 372,959,650 307,146,264

512,877,125 416,069,345 512,877,125 416,069,345 Repayments made during the year (253,782,390) (276,151,870) (253,782,390) (276,151,870)Balance on 31 Mar 2017 259,094,736 139,917,475 259,094,736 139,917,475 Lease instalments payable - 502,566 - 502,566

259,094,736 140,420,041 259,094,736 140,420,041



Surplus on revaluation of Property, Plant & Equipment is a Capital Reserve arising from revaluation of Land & Buildings. The unrealized surplus cannot be directly distributed to shareholders and can only be utilized for purposes specified under the Companies Act.

General Reserve represents the amounts set a side by the directors for general application.




LENDERGRANTED RATE OF 2011/2012 REPAYMENT SECURITY

DATE INTEREST (P.A) RS. MN

Pan Asia Banking Corporation PLC 14-07-10 12% 65 On Demand

On' ally Holdings PLC 2,798,850 No of shares

Commercial Bank of Ceylon PLC 28-02-11 AWPLR+3% 60 On Demand

On' ally Holdings PLC 1,399,375 No of shares

BANK FACILITY AMOUNT SECURITY

Union Bank of Colombo PLC

Overdraft,Documentary CreditPacking CreditImport/Short term Loans

Rs. 100 (Mn) Mortgage over stocks and assignment over book debts of Rs.100.0Mn together with enhanced insurance covering all risks assigned in favour of Union Bank

Mortgage Bond Nos. 165 for Rs.20Mn & additional Mortgage Bond for Rs.60Mn

Leasing Assets leased and indemnity of the company along with comprehensive insurance and J & S Personal Guarantee of Directors.

AWPLR + 2.5% Join and several guarantee of three Directors of the company S.A. Gulamhusein, T.A. Gulamhusein, and Ali Asger shabbir for Rs.100 mn

Sampath Bank PLC

Overdraft Primary Mortgage Bond for Rs.55.0M over land & building(Office & Warehouse Complex) situated at No.414/18,K.Cyril C. Perera Mawatha Colombo 13.

Packing Credit loan Rs. 55 (Mn)Import LoanAWPLR + 1.5%

Acceptance USD 250,000/= Additional Mortgage Bond for US $ 250,000/- over the land and building

Export bill purchaseLIBOR + 4.5%

LoanA/C No.302970000073

Rs.1,015,501,066.51cts i). Loan agreement for Rs.1,015,501,066.51cts

AWPLR + 1.00% ii).Primary mortgage Bond for Rs.1,015,501,066.51cts over property at Lukmanjee square, Colombo - 14 in extent of 4A:3R:8.06P together with the buildings thereoniii). Irrevocable letter of understanding from Adamexpo to settle any shortfall on interest and installments of the proposed Term Loan




BANK FACILITY AMOUNT SECURITY

Habib Bank OverdraftPacking Credit Loan

Rs.100 (Mn) Registered Mortgage on stocks in trade and receivables for Rs. 100.00Mn

Import LoanAWPLR + 2.5%

Shipping GuaranteeForeign Documentary Bills PurchasedLetter of Credit

NDB Bank PCL USD 300,000/- Registered Mortgage on stocks in trade and receivables for USD 300,000/-

Export bill purchaseAWPLR + 1.5%




23.1 LEASE LIABILITYGROUP COMPANY


Balance on 01 Apr 2016 1,666,777 3,443,209 1,666,777 3,443,209

Lease facilities received during the year - - - - Lease instalments paid during the year (533,448) (1,776,432) (533,448) (1,776,432)

1,133,329 1,666,777 1,133,329 1,666,777 Less : Interest In suspense as at 31 Mar 2017 (137,949) (276,857) (137,949) (276,857)

995,380 1,389,920 995,380 1,389,920 Payable in the ensuing within one year 995,380 502,566 995,380 502,566 Balance due after one year - 887,354 - 887,354 Balance on 31 Mar 2017 995,380 1,389,920 995,380 1,389,920

24. DEFERRED TAX LIABILITIESGROUP COMPANY


Balance as at 1 Apr 2016 1,094,156 2,014,275 947,449 1,872,963

Transferred from/(to) income statement 184,470 (920,119) 198,720 (925,514)Under provision - - Balance as at 31 Mar 2017 1,278,626 1,094,156 1,146,168 947,449

24.1 DEFERRED TAX COMPUTATIONGROUP COMPANY


Book WDV of PPE as at 31 Mar 2017 11,680,475 10,758,269 10,902,475 9,845,907

Tax WDV of PPE as at 31 Mar 2016 (3,853,681) (5,493,728) (3,768,029) (5,324,605)

Timing Difference 7,826,794 5,264,541 7,134,447 4,521,302

Less: Provision for Gratuity (3,260,271) (1,356,839) (3,040,990) (1,137,558)Total 4,566,523 3,907,702 4,093,457 3,383,744

Income Tax at 28% 1,278,626 1,094,157 1,146,168 947,448




25. DEFINED BENEFIT PLANSGROUP COMPANY


Balance as at 1 Apr 2016 1,356,839 945,706 1,137,558 726,425

(Gain) / Loss arising from changes in the assumption or due to (Over)/ Under provision in the previos year

994,972 20,051 994,972 20,051

Provision during the year 860,582 318,440 860,582 318,440 Interest charge 136,378 72,643 136,378 72,643 Total 3,348,771 1,356,839 3,129,490 1,137,558 Payments during the year (88,500) - (88,500) - Balance as at 31 Mar 2017 3,260,271 1,356,839 3,040,990 1,137,558

26. TRADE & OTHER PAYABLESGROUP COMPANY


Trade creditors 101,160,021 117,725,588 101,160,021 117,725,588

Accrued expenses 45,713,628 26,721,600 44,803,104 25,856,076 Amount Due to director - Mr. S.S Lukmanjee 57,105 57,105 - - Amount Due to director - Mr. A.A Shabir 463,607 463,607 - - Sampath Bank loan Interest Payable 13,685,533 - 13,685,533 - Dividend payable 2,219,151 2,359,151 2,219,151 2,359,151 Cash Margin on Bank Guarantee 2,300,000 - 2,300,000 -

165,599,045 147,327,052 164,167,809 145,940,815

27. AMOUNTS DUE TO RELATED COMPANIESGROUP COMPANY


Adamexpo 6,060,000 6,060,000 6,060,000 6,060,000 Director Current Account - Late Dr. Shabbir Gulamhusein 44,950,000 44,950,000 44,950,000 44,950,000

Adam Carbons (Pvt) Ltd 375,851 - 375,851 - Term Loan - Adamexpo 1,534,519 1,534,519 - - Term Loan - Spice of Life (Pvt) Ltd 16,033,959 16,033,959 16,033,959 16,033,959

68,954,329 68,578,478 67,419,810 67,043,959

The Retirement Benefit Liability of the company is based on Projected Unit Credit Method, and the principle assumption used in determining the cost of employee benefits were,

2016/2017Discount Rate 13.00%Salary Increment Rate 10%Retirement Age 55 Years




28. CAPITAL COMMITMENTSThere are no material capital commitments as at the reporting date.

29. CONTINGENT LIABILITIESThere are no material Contingent Liabilities as at the reporting date which require adjustment to or disclosure in the Financial Statement.

31. DIRECTORS’ RESPONSIBILITIESThe Board of Directors is responsible for the preparation and presentation of theses financial Statement according to the Sri Lanka Accounting Standards (LKAS/SLFRS) and Company Act No 07 of 2007.

30.EVENTS OCCURRING AFTER THE REPORTING PERIODExcept for the following, no events have arisen subsequent to the statement of financial position date, which would require adjust-ments to or disclosure in the Financial Statements.

Demise of the ChairmanDr. Shabbir Gulamhusein (Former Chairman) expired on 09th June 2017.

Mandotory OfferDr. Ali Asger Shabbir Gulamhusein purchased 85,450,669 ordinary shares of Ceylon and Foreign Trades PLC at a price LKR 5 per share on 27th July 2017. As result of this transaction Dr. Ali Asger Shabbir Gulamhusein’s total share holding in CFT increased up to 87,503,847 shares representing a percentage shareholding of 62.42%.Therefore as per the company takeover and merger code of 1995, Dr. Ali Asger Shabbir Gulamhusein made a mandatory offer to the shareholders of CFT on 16th August 2017.

Director’s ResignationThe following directors of the company resigned from the company.

Director’s AppintmentMr. Malayandi Jeyapragash has been appointed as a director of the company with effective from 29th March 2018.

Disposal of Associate - On’ally Holdings PLC The company has sold entire shareholding of On’ally holdings PLC on 25th September 2017. The company owned 4,034,783 number of shares on the selling date and the average selling price was Rs. 43 per share.

NAME DATEMr. T.A. Gulamhusein 27th July 2017Mr. A.Y. Tyebkhan 27th July 2017Mr. Govindaswami Ramanan 24th July 2017Mr. Imran Zahir 27th July 2017Mr. G.H.I Shabbir 21st August 2017Mr. L.W.W. Priyankara 29th March 2018




32. RELATED PARTY TRANSACTIONSThe Company carries out transactions in the ordinary course of its business with parties who are defined as related parties in Sri Lanka Accounting Standard 24 “Related Party disclosures”, the details of which are reported below. The pricing applicable to such transactions is based on the assessment of risk and pricing model of the company and is comparable with what is applied to transactions between the company and its unrelated customers.

32.1 THE DIRECTORS OF CEYLON & FOREIGN TRADES PLC ARE ALSO THE DIRECTORS OF THE FOLLOWING RELATED COMPANIES.Name of the Director WCL CF & T ONAL ADAM SOL NETCOM AAP BCC OGL AINVLate Dr.S.A. Gulamhusein x x x x - - x x - -Late Mr.T.A. Gulamhusein - x - - x - - - - xMr.I. Shabbir - - - - x - - - x xDr.A.A. Shabbir x - - - x x x - x xMr.A.Y Tyebkhan - - - - - - - - - -Dr. D.C. Gunesekera - - - - - - - - - -Mr.L.W.W. Priyankara - - - - - - - - - xMr.I. Zahir - - x - - - - - x x

NAME OF THE COMPANY NATURE OF THE RELATIONSHIP

West Coast Lanka (Pvt) Ltd (WCL) SubsidiaryColombo Freight & Transport Ltd (CF&T) SubsidiaryOn'ally Holdings PLC (ONAL) AssociateAdamexpo (ADAM) Other Related PartySpice of Life (Pvt) Ltd (SOL) Other Related PartyNetwork Communications (Pvt) Ltd (NETCOM) Other Related PartyAdam Apparels (Pvt) Ltd (AAP) Other Related PartyBusiness Chamber of Commerce (BCC) Other Related PartyAdam Investment PLC (AINV) Other Related PartyAdam Carbons (Pvt) Ltd (AC) Other Related Party




32.2 TRANSACTIONS OF CEYLON & FOREIGN TRADES PLC WITH RELATED PARTIESNAME OF THE COMPANY NATURE OF NAME OF NATURE OF TRANSACTIONS

RELATIONSHIP DIRECTORS

West Coast Lanka (Pvt) ltd Subsidiary Late

Dr.S.A.Gulamhusain There were transactions during the year.

Dr. A. A. Shabbir

Colombo Freight & Transport Ltd Subsidiary Late Dr S.A.

Gulamhusein There were no transactions during the year.

Late Mr T.A. Gulamhusein

On'ally Holdings PLC Associate Late Dr.S.A.Gulamhusain

CFT received Interim dividend from On'ally Holdings during the year.

Company (Chairman)

Adamexpo Other Related Late Dr.S.A.Gulamhusain

CFT has purchased DC & packing material from Adam Expo.

Party (Proprietor)

CFT obtained financing facilities from Adam Expo

Adam Expo occupied a portion of the CFT building during the year

CFT recovers the utilities expenses from Adam Expo.

CFT charges a fee for processing of Ceylon Black Tea from Adamexpo

Spice of Life (Pvt) Ltd Other Related Late Mr.T. A Gulamhusain CFT obtained financing facilities from Spice of Life

Party Mr. I. ShabbirDr. A. A. Shabbir

Network Communica-tions (Pvt) Ltd Other Related Dr. A. A. Shabbir CFT purchased computer items from Network

Communication(Pvt) LtdParty

CFT granted financing facilities to Network Communication(Pvt) Ltd

Adam Apparels (Pvt) Ltd Other Related Late

Dr.S.A.Gulamhusain CFT granted financing facilities to Adam Apparels(Pvt) Ltd

Party Dr. A. Shabbir




32.2 TRANSACTIONS OF CEYLON & FOREIGN TRADES PLC WITH RELATED PARTIESNAME OF THE COMPANY NATURE OF NAME OF NATURE OF TRANSACTIONS

RELATIONSHIP DIRECTORS

Adam Carbons Ltd Other Related party Dr. A. A. Shabbir CFT received a temporary loan from Adam Carbons (Pvt)

Ltd.

Business Chamber of Commerce Other Related Late Dr S.A.

GulamhuseinBusiness Chamber of Commerce has occupied a portion of the building free of charge during the year.

Party (Chairman)

CFT pays one half of the salary of the employees of Business Chamber of Commerce

NAME OF THE COMPANY NATURE OF RELATIONSHIP

NAME OF NATURE OF AMOUNT RS.DIRECTORS TRANSACTIONS 31-MAR-17 31-MAR-16

Ceylon & Foreign Trades PLC Parent Mr. L.W.W. Priyankara Salary 1,344,000 1,342,000

DIRECTORS’ INTEREST IN CONTRACTS / KEY MANAGEMENT COMPENSATIONNo Transactions have occurred during the financial period between the company and its Directors which would require disclosure in the financial statements, other than the following.




DESCRIPTION 31 MAR 2017 31 MAR 2016

RS RS Other IncomeAdam Expo 624,971 616,225 On'ally Holdings PLC(Dividend) 12,759,003 12,404,528

Purchase of GoodsAdam Expo ( DC for Export) 50,619,993 39,511,041

Expenses incurred on behalf of related partiesBusiness Chamber of Commerce 180,000 180,000

Receivables

West Coast Lanka (Pvt) Ltd (Utilities) 16,683,229 16,667,479

Network Communication(Pvt)Ltd 3,200,000 3,600,000

Colombo Freight & Transport Ltd 2,371,779 2,371,779

PayablesAdam Expo - 66,346,762

Finance Facilities Obtained by CFTAdam Expo 6,060,000 6,060,000 Adam Carbons Ltd 375,851 - Spice of Life (Pvt)Ltd 16,033,959 16,033,959 Chairman - Late Mr.S.A. Gulamhusein 44,950,000 44,950,000 TL Adam Expo 1,534,519 1,534,519

Finance Facilities Granted by CFTAdam Expo - 2,687,972 Adam Apperals (Pvt) Ltd 2,564,244 2,943,734 Network Communication(Pvt)Ltd 3,200,000 6,067,087


33. GOING CONCERNBoard of Directors of West Coast Lanka (Pvt) Ltd resolved that the business of West Coast Lanka (Pvt) Ltd to be transferred and to be operated by Messrs Ceylon & Foreign Trades PLC. West Coast Lanka (Pvt) Ltd’s operation has been ceased. Directors of West Coast Lanka (Pvt) Ltd have planned to take necessary steps for the winding up of the affairs of the company and distributing its assets. But, it has been delayed due to demise of the Chairman, Dr. Shabbir Gulamhusein.

These matters indicate the existence of an uncertainty which may cast significant doubt about the subsidiary company, West Coast Lanka (Pvt) Ltd’s ability to continue as a going concern entity.

Further Colombo Freight and Transport Limited, also a subsidiary has ceased a substantial part of its core operating activities and as a result of this situation, the company has suffered continued operating losses.

However, the company management is confident that the company will continue as a going concern in the normal course of business in the foreseeable future.




34. FINANCIAL INSTRUMENTSFINANCIAL RISK MANAGEMENT

The Company has exposure to the following risks from financial instruments:1. Credit risk2. Liquidity risk3. Market riskThis note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risk and the Group’s management of capital. Further quantitative disclosures are included throughout these Consolidated Financial Statements.

RISK MANAGEMENT FRAMEWORKThe Board of Directors have the overall responsibility for the establishment and oversight of the Group’s risk management framework, which includes developing and monitoring the Group’s risk management policies.

CREDIT RISK Exposed to credit risk from its operating activities (primarily from trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.

Trade & Other receivable The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer.The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables.

Investments Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. The limits are set to minimise the concentration of risks and therefore, mitigate financial loss through potential counterparty’s failure.

Cash and Cash Equivalents The Group and Company held cash and cash equivalents of Rs. 27,106,689.29 and Rs. 26,969,040.25 respectively as at March 31, 2017 (Rs. 13,102,755 and Rs. 12,965,105.91 respectively in 2016) which represents its maximum credit exposure on these assets. Bank overdraft is Rs. 72,848,600.84 in both the Group and company as at 31.03.2017 (Rs. 72,468,649.48 in 2016.)

LIQUIDITY RISK Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans, and finance leases. Access to sources of funding is sufficiently available and debt maturing within 12 months can be rolled over with existing lenders. The liquidity requirements of business units and subsidiaries are met through short term loans to cover any short term fluctuations and longer term funding to address any structural liquidity requirements. The Group monitors the cash flows of its group companies and obtains adequate bank facilities to meet the funding requirements. The Group does not concentrate on a single financial institution, thereby minimising the expose to liquidity risk. The Group aims to fund investment activities of its group companies by funding the long term investment with long term financial sources. Short term investments are funded using short term loans.




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SHAREHOLDER INFORMATION


NAME31ST MARCH 2017 31ST MARCH 2016

NO OF SHARES (%) NO OF

SHARES (%)

1 MR.G H I SHABBIR 44,209,200 31.534 44,209,200 31.534

2 COMMERCIAL BANK OF CEYLON PLC/SPICE OF LIFE (PRIVATE) LIMITED 10,000,000

28,832,000 20.565

10,000,000

28,832,000 20.565SEYLAN BANK PLC/SPICE OF LIFE (PRIVATE) LIMITED 9,980,000 9,980,000

SPICE OF LIFE (PRIVATE) LIMITED 8,852,000 8,852,000

3 DR. S H A GULAMHUSEIN 9,800,000

29,182,130 20.815

9,800,000

29,139,704 20.785

UNION BANK OF COLOMBO PLC/ DR. SHABIR HUSSEIN ABBAS GULAMHUSEIN 15,200,000 15,200,000

ASSETLINE LEASING COMPANY LTD/ S A GULAMHUSEIN 400,000 400,000

SAMPATH BANK PLC / DR. SHABIR HUSSEIN ABBAS GULAMHUSEIN 2,864,346 2,851,147

WALDOCK MACKENZIE LTD/ S A GULAMHUSEIN 289,235 289,235

COMMERCIAL BANK OF CEYLON PLC/ S A GULAMHUSEIN 628,549 599,322

4 PAN ASIA BANKING CORPORATION PLC/ADAM INVESTMENTS LIMITED 12,515,822 8.927 12,515,822 8.927

5 PAN ASIA BANKING CORPORATION PLC/ DR. G H A A SHABBIR 2,053,178 1.465 2,053,178 1.465

6 MR. COLVIN REGINALD DE SILVA (DECEASED) 1,200,000 0.856 1,200,000 0.856

7 BANK OF CEYLON NO 1 ACCOUNT 830,100 0.592 830,100 0.592

8 MR.K C THANGARAJAH (DECEASED) 800,000 0.571 800,000 0.571

9 MR.V RATNAVALE 800,000 0.571 800,000 0.571

10 MR.A W PRATHALINGAM 800,000 0.571 800,000 0.571

11 DR.L K AMARASURIYA 800,000 0.571 800,000 0.571

12 MS.R C WIJESEKERA 533,200 0.380 533,200 0.380

13 MRS. K V ABEYSEKERA 466,668 0.333 - -

14 MRS. H L DE ZOYSA 466,666 0.333 - -

15 DR. G D HETHUMUNI 466,666 0.333 - -

16 MR.D W WICKRAMARATNE (DECEASED) 450,000 0.321 450,000 0.321

17 MR.P S JAYARATNE 419,800 0.299 419,800 0.299

18 MRS.C C GUNAWARDANA 400,000 0.285 400,000 0.285

19 MR.S R DE SILVA (DECEASED) 400,000 0.285 400,000 0.285

20 BIMPUTH FINANCE PLC 271,486 0.194 - -

125,896,916 89.801 124,183,004 88.578

OTHERS 14,299,084 10.199 16,012,996 11.422

TOTAL 140,196,000 100.000 140,196,000 100.000

20 MAJOR SHAREHOLDERS OF THE COMPANY


SHARE DISTRIBUTION OF SHAREHOLDING AS AT 31ST MARCH 2017

CATEGORIES OF SHAREHOLDERS AS AT 31ST MARCH 2017

DIRECTORS’ SHAREHOLDING AS AT 31ST MARCH 2017

From To No of Holders No of Shares %1 1,000 894 306,542 0.22

1,001 10,000 534 2,337,539 1.6710,001 100,000 228 7,944,112 5.67

100,001 1,000,000 38 12,933,261 9.22Over 1,000,000 10 116,674,546 83.22

1,704 140,196,000 100.00

Local Individuals 1,603 72,007,286 51.36Local Institutions 76 66,806,464 47.65Foreign Individuals 25 1,382,250 0.99Foreign Institutions 0 0 0.00

1,704 140,196,000 100.00

DIRECTORS' NAME NO. OF SHARES %

1

DR. S H A GULAMHUSEIN 9,800,000

29,182,130 20.815

UNION BANK OF COLOMBO PLC/ DR. SHABIR HUSSEIN ABBAS GULAMHUSEIN 15,200,000

ASSETLINE LEASING COMPANY LTD/ S A GULAMHUSEIN 400,000SAMPATH BANK PLC / DR. SHABIR HUSSEIN ABBAS GULAMHUSEIN 2,864,346WALDOCK MACKENZIE LTD/ S A GULAMHUSEIN 289,235COMMERCIAL BANK OF CEYLON PLC/ S A GULAMHUSEIN 628,549

2 MR. T A GULAMHUSEIN 260,000 0.1853 MR. G H I SHABBIR 44,209,200 31.534

4DR. A A S GULAMHUSEIN Nil

2,053,178 2,053,178 1.465PAN ASIA BANKING CORPORATION PLC/ DR. G H A A SHABBIR

5 MR. A Y TYEBKHAN 10,000 0.0076 DR. D C GUNESEKERA Nil Nil7 MR. L W W PRIYANKARA Nil Nil8 MR. IMRAN ZAHIR Nil Nil


PUBLIC HOLDING AS AT 31ST MARCH 2017

THE PUBLIC HOLDING PERCENTAGE 16.4715% COMPRISING OF 1689 SHAREHOLDERS.

MARKET PRICE PER SHARE

As at As at 31/03/2017 31/03/2016

Market price per shareHighest during the year - Rs. 7.00 (02-09-2016) Rs. 9.00 (04-06-2015)Lowest during the year - Rs. 4.00 (16-03-2017) Rs. 4.20 (09-03-2016)As at end of the year - Rs. 4.60 Rs.5.00

Number of Transactions during the year - 2,816Number of Shares traded during the year - 8,428,098Value of shares traded during the year (Rs.) - 52,232,034.20


FORM OF PROXYANNUAL GENERAL MEETING

I/We the undersigned ...................................................................................................................... of ...................................................................................................................................................... being a member / members of Ceylon and Foreign Trades PLC hereby appoint .............................……………………………………………………………………………………………………………………………………………….. of …………………………………………………………………………………………………………………………………………………….. or failing him/her

Dr. Ali Asger Shabbir Gulamhusein of Colombo or failing him*Mr. M. Jeyapragash of Colombo

As my/our proxy to represent me/us and to vote for me/us and on my/our behalf at the Annual General Meeting of the Company to be held at the Auditorium,3rd Floor, “Olympic House”, 100/9F, Independence Avenue, Colombo 07 on 30th May 2018 at 12.45 p.m. and at any adjournment thereof and at every poll which may be taken in consequence thereof.

i) To receive and consider the Report of the Directors and the Statement of Accounts for the year ended 31st

March 2017 with the Report of the Auditors thereon.

ii) To re-elect Mr. M. Jeyapragash who retires by rotation in terms of Article No. 91 of the Articles of Association of the Company, as a Director.

iii) To re-appoint Messrs. A.I Macan Markar & Co Chartered Accountants as the auditors of the Company, for the ensuing year and to authorize the Directors to determine their remuneration.

iv) To authorise Directors to determine donations as they think fit for the ensuing year and up to the next Annual General Meeting.

In witness my/our hands this .................. day of .......................... Two Thousand & Eighteen

..............................................Signature of Shareholder/s

NOTICE *

FOR AGAINST

1. A proxy need not be a member of the Company2. Instructions as to completion of Proxy appear overleaf.• Please delete wherever inappropriate.

INSTRUCTIONS AS TO COMPLETION 1. This Form of Proxy must be deposited at The Secretaries’ Office (i.e. Adam Corporate Secretarial (Pvt) Ltd., 264,

Grandapass Road, Colombo 14), not less than 48 hours before the time fixed for the Meeting.

2. In perfecting the Form of Proxy please ensure that all details are legible.

3. If you wish to appoint a person other than the Chairman (or failing him, one of the Directors) as your proxy, please insert the relevant details.

4. Please indicate with an ‘X’ in the space provided how your proxy is to vote on the Resolution. If no indication is given, the proxy in his discretion will vote as he thinks fit.

5. In the case of a Company/Corporation, the proxy must be under its Common Seal which should be affixed and attested in the manner prescribed by its Articles of Association.

6. In the case of a proxy signed by an Attorney, the Power of Attorney must be deposited at The Secretaries’ Office (i.e. Adam Corporate Secretarial (Pvt) Ltd., 264, Grandapass Road, Colombo 14) for registration.


Notes


CEYLON AND FOREIGN TRADES PLC264, Grandpass Road,

Colombo 14.

Documents

CFT - Cover Front · CEYLON AND FOREIGN TRADES PLC 9 ANNUAL REPORT 2016 / 2017 NOTICE IS HEREBY GIVEN that the Annual General Meeting of Ceylon and Foreign Trades PLC will be held