Ceylon Tobacco : Annual Report 2023

C E Y L O N T O B A C C O C O M P A N Y P L C

A N N U A L R E P O R T 2 0 2 3

AB VE &

BEY ND

AB BEY

Online references: http://www.ceylontobaccocompany.com

Scan the QR Code with your smart device to view this report online.

VE &

ND

ABOVE & BEYOND

At Ceylon Tobacco Company PLC, our strategic focus is on fostering Environmental, Social and Governance initiatives. Our focus also goes beyond meeting sustainability expectations and has ensured consistent performance over the years.

Our commitment to the Company's ESG values sets us apart, driving superior performance and impact. This commitment initiates a ripple effect extending beyond our organisational boundaries - positively influencing livelihoods, cultivating robust partnerships, and significantly contributing to the national economy. This Report stands as a testament to our continuous commitment to go above and beyond for our stakeholders. It reflects our steadfast ambition to not just meet, but to also surpass expectations, setting elevated standards for sustainable value across our extensive stakeholder network.

CONTENTS

OVERVIEW

06		08		09		10		12
About Our		Our Growth	Where We		How We	Board of
Report		Journey	are Today		Create Value	Directors

EXE CUTIVE

REVIEW

CHAIRMAN'S

REVIEWMANAGING

DIRECTOR&

CEO'S

REVIEW

CRAFTING OUR STRATEGY

18		20
Leadership	Year in
Team	Numbers

FINANCE

DIRECTOR'S

REVIEW

40		42		44
Understanding Our	Connecting with	Identifying Our Material
Operating Environment	Stakeholders	Matters

OUR BUSINESS IMPERATIVES

48		52		56		60		64
Leveraging	Stronger	Tackling Illicit	Achieving	Ensuring a
Our Brands	Distribution	Cigarettes and	Manufacturing	Secure Supply
		Channels	Beedi	Excellence	Chain

ESG IN FOCUS

70		71		72		78		90		93
BAT Group ESG	ESG Roadmap	Excellence in	Delivering a Positive	CTC Trade Union	Robust Corporate
Agenda			Environmental	Social Impact			Governance
				Management

RISK MANAGEMENT & GOVERNANCE

102		106		119		120		121
Risk	Corporate	Assessment of	Statement of	Report of the Board of
Management	Governance	Going Concern	Internal Controls	Directors
124		125		127		128		129
Statement of Directors'	Report of the Audit	Report of the Related	Report of the	Report of the Nomination
Responsibilities for	Committee	Party Transactions	Remuneration	and Governance
Financial Statements			Review Committee	Committee	Committee
FINANCIAL STATEMENTS
132		135		136		137
Independent Auditor's	Financial Reporting	Statement of Profit	Statement of
Report	Calendar	or Loss & Other	Financial Position
				Comprehensive Income
138		139		140
Statement of	Statement of Cash	Notes to the Financial
Changes in Equity	Flows	Statements
SUPPLEMENTARY INFORMATION
178		179		182		183		185
Statement of	Share	Notice of	AGM 2023 Instructions	Form of Proxy
Value Added	Information	Meeting	to Shareholders
187		191		IBC

Appendices

GRI Content Index

Corporate Information

1. 
   C

CUSED& MPETENT

Our commitment lies in implementing a focused and competent value creation model that optimises our brands and products - extending to sustain our stakeholders, planet and communities.

OVERVIEW

06		08		09		10		12
About Our		Our Growth	Where We are	How We Create	Board of
Report		Journey	Today	Value	Directors

18		20
Leadership	Year in
Team	Numbers

Overview

Executive

Review

Crafting Our

Strategy

Our Business

Imperatives

ESG in

Focus

Governance	Risk Management
	&
Statements	Financial
Information	Supplementary

ABOUT OUR REPORT

WE PRESENT HEREWITH OUR ANNUAL REPORT OF 2023, A BALANCED AND CONCISE ASSESSMENT OF HOW WE CREATED VALUE DURING THE YEAR, OUR STRATEGIC IMPERATIVES AND OUR PERFORMANCE AGAINST FINANCIAL AND NON-FINANCIAL OBJECTIVES.

We are pleased to present herewith our Integrated Annual Report for 2023, which provides a balanced and concise assessment of our operations and performance during the year. In identifying matters to be reported, we have applied the concept of materiality, which focuses on aspects that are deemed to have the greatest impact on the economy, environment and our people. The process for determining materiality is described further on page 44 of this Report.

SCOPE AND

BOUNDARY

This Report covers the operations of Ceylon Tobacco Company PLC (referred to as "CTC", "the Company", "we" or "our") for the period from 1 January 2023 to 31 December 2023, including material developments until the sign off date of 19 April 2024. The Company adopts an annual reporting cycle, and this Report builds on the Company's previous Report for the year ending 31 December 2022. There is no material restatement of information given in last year's Report nor any significant changes to the Company's organisational structure, operations and/or supply chain during the year.

REPORTING

FRAMEWORKS

The Report has adopted the following statutory and voluntary reporting frameworks

• Integrated Reporting Framework of the International Integrated Reporting Council
• Sri Lanka Financial Reporting Standards
• Companies Act No. 7 of 2007
• Listing Rules of the Colombo Stock Exchange (CSE)
• Global Reporting Initiative (GRI) Standards
• United Nations Sustainable Development Goals (SDG)
• Sustainability Guide on ESG Reporting issued by the CSE
• Code of Best Practice on Corporate Governance issued by CA Sri Lanka (2023)

ASSURANCE

We adopt a combined assurance model to ensure the integrity of the information provided in this Report. Assurance on the Company's financial statements has been provided by Messrs. KPMG. Non- financial information is reported in line with Board-approved policies and procedures. All processes are monitored by the Internal Audit team.

CTC's Greenhouse Gas Emission was verified through BAT Group level assurance, while the 'Verification of Compliance of the Greenhouse Gas Compensation Process' was carried out by

the Totum Institute of Business Development and Management LTDA, based on the requirements of the PAS 2060:2014 standard.

6				Ceylon Tobacco Company PLC

Signed by the

Audit Committee

Chairman, on behalf

of the Board

Navigating Our Report

The Report has been structured to reflect the Company's key strategic priorities and the progress made in each strategic pillar. In order to depict connectivity between our strategic priorities and the capitals used for value creation, the following icons have been used throughout the Report.

Overview

Executive

Review

Crafting Our

Strategy

Our Business

Imperatives

STRATEGIC PRIORITIES	STAKEHOLDERS
		Leveraging Our	Shareholders
		Brands
		Stronger Distribution	Employees
		Channels
		Tackling Illicit Trade	Adult Consumers
		and Beedi
		Achieving Manufacturing	Suppliers
		Excellence
		Ensuring a Secure	Government
		Supply Chain
		ESG in Focus	Community

DIRECTORS' RESPONSIBILITY

The Board hereby confirms that CTC's Integrated Annual Report of 2023 addresses all material issues and fairly reflects the Company's integrated performance and value creation. The Board also confirms that this Report has been prepared in accordance with the Integrated Reporting Framework. The Board approves this Report and its publication on 19 April 2024.

For enquiries on this Report, please contact the Assistant Company Secretary:

Telephone No : [phone]

E-mail : [e-mail]

ESG in Focus

Governance	Risk Management
	&
Statements	Financial

Financial

Capital

Manufactured

Capital

CAPITALS

Human	Social and
Capital	Relationship
	Capital

Intellectual

Capital

Natural Capital

Information

Supplementary

	Annual Report 2023	7

OUR GROWTH JOURNEY

OUR LONG-STANDING HISTORY IS SHAPED BY OUR ETHOS OF CREATING SHARED VALUE FOR ALL OF OUR STAKEHOLDERS.

1906

British American Tobacco p.l.c. (BAT) opened its office in Ceylon (Sri Lanka)

1940

CTC relocated its manufacturing plant to its Head Office at Korteboam Street, Kotahena

1927			1932				1937

BAT set up its first cigarette	Incorporation of Ceylon	CTC launched its first scheme
factory in Bloemendhal	Tobacco Company (CTC)	to cultivate cured Virginia
		Tobacco in collaboration with
		the Department of Agriculture

1954			2002				2006

CTC became a Public Limited	Adoption of Statement	Launch of the Sustainable
Liability Company, listed on the	of Business Principles	Agriculture Development
Colombo Stock Exchange	developed by BAT	Programme (SADP) - our
		flagship sustainability project

20202021

Unveiled new corporate logo in March 2020, aligned with BAT's new brand identity

Became the 1st end market within the BAT Group to achieve carbon neutrality in Scopes 1 & 2 GHG emissions, across its Depots, Green Leaf Threshing Plant, Colombo Factory and Commercial sectors

8				Ceylon Tobacco Company PLC