Commercial Development : Interim Financial Statement as of 30.06.2022

INTERIM FINANCIAL STATEMENTS

For the six months ended June 30, 2022

COMMERCIAL DEVELOPMENT COMPANY PLC

STATEMENT OF COMPREHENSIVE INCOME					02
		For the Six Months Ended		For the Quarter Ended
		June 30,		June 30,	Change	June 30,		June 30,	Change
		2022	2021	2022	2021
	Note	Rs. 000		Rs. 000	%	Rs. 000		Rs. 000	%
Revenue	4	302,288	320,188	(5.6)	157,424	166,633	(5.5)
Cost of Sales	8	(158,154)		(216,838)	(27.1)	(81,613)		(138,052)	(40.9)
Gross Profit		144,134	103,350	39.5	75,811	28,581	165.2
Other Income		1,937	11	17,509.1	1,932	6	32,100.0
		146,071	103,361	41.3	77,743	28,587	172.0
Administrative Expenses		(19,219)	(17,258)	11.4	(9,493)	(8,594)	10.5
Operating Profit		126,852	86,103	47.3	68,250	19,993	241.4
Net Finance Income		20,483		14,050	45.8	10,683		7,540	41.7
Profit before Tax		147,335	100,153	47.1	78,933	27,533	186.7
Income Tax (Expense)/Reversal	5	(35,649)	28,172	(226.5)	(19,135)	(6,761)	183.0
Profit for the period attributable to Owners of the Company		111,686	128,325	(13.0)	59,798	20,772	187.9
Other Comprehensive Income, Net of Tax
Net change in fair value of Debt investments at FVOCI		(2,412)	-	-	(2,181)	-	-
Related Tax		579	-	-	523	-	-
Other Comprehensive Income/(Expense) for the period Net of Tax	(1,833)		-	-	(1,658)		-	-
Total Comprehensive Income for the period, Net of Tax		109,853	128,325	(14.4)	58,140	20,772	179.9
Earnings per Share (Rs.)		9.31	10.69	(13.0)	4.98	1.73	187.9

The above figures are provisional and subject to audit unless indicated as audited.

Explanatory Notes

1. Financial Statements of the Company have been prepared in accordance with the Sri Lanka Accounting Standards (SLFRSs/LKASs) issued by The Institute of Chartered Accountants of Sri Lanka. There were no changes in the Accounting Policies and methods of computation since the publication of the Annual Report for the year ended December 31, 2021.
2. These Interim Financial Statements are presented in accordance with the requirements of the Sri Lanka Accounting Standard - LKAS - 34 on ''Interim Financial Reporting'' and provide the information as required in terms of Rule 7.4 of the Colombo Stock Exchange.
3. During the quarter, there were no material changes in the composition of assets and liabilities.
4. The drop in revenue compared to the corresponding period of the last year was due to discontinuation of sanitization business. The income from sanitization business for the quarter/six months ended June 30, 2021 amounted to Rs.18.5 Mn and Rs.31.5 Mn. respectively.
5. The credit balance in the income tax expense reported for the six months ended June 30, 2021, was due to the reversal of income tax provision as at December 31, 2020, consequent to the reduction in the income tax rate from 28% to 24% as announced in the Government Budget Proposals for 2021. Accordingly, current tax reversal for the year ended December 31, 2020, amounting to Rs.7,921,015/- and deferred tax reversal as at December 31, 2020, amounting to Rs. 44,547,695/- had been recognized in the income tax expense for the six months ended June 30, 2021.
6. Related Party Transactions
   ( a ) Mr.S.C.U.Manatunge, Managing Director of the Company is also the Managing Director of Commercial Bank of Ceylon PLC, the major tenant and the parent of the Company. Mr.U.I.S.Tillakawardana, Director of the Company functions as the Deputy General Manager - Human Resources Management of the Commercial Bank of Ceylon PLC. During the quarter ended June 30, 2022, the Company received Rs. 155,934,933/- as rental, income from outsourcing services, vehicle hiring charges and other utility services from Commercial Bank of Ceylon PLC (Rs.163,329,906/- during the quarter ended June 30, 2021).
   ( b ) Mr.U.I.S.Tillakawardana, a Director of the Company is also a Director of Commercial Insurance Brokers (Pvt) Ltd, a subsidiary of the Parent Company which acts as one of the insurance advisers to the Company. During the quarter, the Company paid Rs.581,493/- as Insurance premium to Continental Insurance Lanka Ltd, wherein Mr.A.L.Gooneratne, a Director of the Company functions as a Director. The above insurance premiums were paid through Commercial Insurance Brokers (Pvt) Ltd. No payments were made during the quarter ended June 30,2021.
   ( c ) As at the reporting date, the Company has invested Rs.501,860,457/- in Fixed Deposits (inclusive of interest) at market interest rates at CBC Finance Limited, which is a fully owned subsidiary of the Parent.
7. All known expenses have been provided for in these Interim Financial Statements.
8. There were no material events that took place since June 30, 2022, that require disclosure in these Interim Financial Statements, except that the Company has planned to renovate the Commercial House Building.The renovation project is expected to commence in third quarter of 2022 and is expected to be completed before the end of first quarter of 2023.
   It is pertinent to mention that the decrease in cost of sales for the quarter/six months ended June 30, 2022 was due to a provision made on account of above mentioned renovation of Commercial House building amounting to Rs.60 Mn during the second quarter of 2021. However, the expected renovations could not be carried out due to the pandemic.

STATEMENT OF COMPREHENSIVE INCOME	03

9 The Government of Sri Lanka in its Budget for 2022 proposed a one-time tax, referred to as a Surcharge Tax, at the rate of 25% to be imposed on any individual, partnership, company or each company of a group of companies (holding and subsidiaries) that have earned a taxable income in excess of Rs.2,000 million for the year of assessment 2020/2021.

Being part of the Commercial Bank of Ceylon PLC Group, the Company was liable for Surcharge Tax of Rs. 50.6 Mn. According to the provisions of Surcharge Tax Act No. 14 of 2022, the Surcharge tax shall be deemed to be an expenditure in the financial statements relating to the year of assessment which commenced on April 01,2020. The Act supersedes the requirements of the Sri Lanka Accounting Standards and hence the expense of Surcharge tax is accounted in accordance with the requirements of the said Act as recommended by the Statement of Alternative Treatment (SoAT) on Accounting for Surcharge Tax issued by the Institute of Chartered Accountants of Sri Lanka, in April 2022.

The quantified impact of the tax imposed by the Surcharge Tax Act No.14 of 2022 which was passed by the Parliament of Sri Lanka on April 7, 2022 amounted to Rs.50,556,342/-.

The Company paid the 1st installment out of two equal installments amounting to Rs. 25,278,171/- on April 19, 2022. The second installment was paid on July 19, 2022 and hence this tax payment has been accounted as a liability as at June 30, 2022.

10 There were no contingent assets, contingent liabilities or capital commitments outstanding as at the Reporting date except that a case was filed against the Company by a former employee at the Labour Tribunal, Negombo. The Labour Tribunal ordered that the said employee be compensated with Rs. 2,034,000/- . The Company has appealed against this order to the High Court.

No provision is made in these Interim Financial Statements in respect of the above claim as the lawyers are of the opinion that the outcome of the appeal to the High Court is more likely to be favorable to the Company and the likelihood of the payment is remote.

STATEMENT OF FINANCIAL POSITION			04
	As at		As at	Change
	June 30,		December 31,
	2022	2021
			(Audited)
ASSETS	Rs.'000		Rs.'000	%
Non-Current Assets
Property, Plant & Equipment	114,830	90,897	26.33
Intangible Assets	2,449	2,762	(11.33)
Investment Property	2,966,713	2,966,713	-
Deposits Receivable	10,917		10,857	0.55
	3,094,909	3,071,229	0.77
Current Assets
Trade and Other Receivables	54,173	43,011	25.95
Financial Investments	614,236	565,585	8.60
Cash and Cash Equivalents	108,060		105,524	2.40
	776,469	714,120	8.73
Total Assets	3,871,378	3,785,349	2.27
EQUITY AND LIABILITIES
Equity
Stated Capital	120,000	120,000	-
Other Reserves	2,416,331	2,418,164	(0.08)
Retained Earnings	802,329		789,199	1.66
Total Equity	3,338,660	3,327,363	0.34
Non-Current Liabilities
Deposits Payables	55,906	54,492	2.59
Employee Benefits	54,948	50,966	7.81
Lease Creditors	53,206	14,374	270.15
Deferred Tax	261,641		263,159	(0.58)
	425,701	382,991	11.15
Current Liabilities
Trade and Other Payables	27,464	16,958	61.95
Lease Creditors	11,520	5,080	126.77
Deferred Revenue	9,078	10,566	(14.08)
Surcharge Tax Payable	25,278	-	-
Current Tax	33,677		42,391	(20.56)
	107,017		74,995	42.70
Total Equity and Liabilities	3,871,378	3,785,349	2.27
Net Assets Value Per Ordinary Share (Rs.)	278.22	277.28	0.34

The above figures are provisional and subject to audit unless indicated as audited.

I certify that these Financial Statements have been prepared in accordance with the requirements of the Companies Act No.07 of 2007 and amendments thereto.

(Sgd.)

W.H. Wijesekara

Accountant

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

(Sgd.)	(Sgd.)
B.R.L. FERNANDO	S.C.U.MANATUNGE
CHAIRMAN	MANAGING DIRECTOR
August 8, 2022

STATEMENT OF CHANGES IN EQUITY					05
	Stated		Other Reserves		Retained	Total
	Capital		Fair Value	Fair Value	Earnings	Equity
			Reserve -	Reserve -
			Investment	Financial
			Property	Assets
	Rs.'000	Rs.'000	Rs.'000	Rs.'000	Rs.'000
Balance as at January 1, 2021	120,000		2,287,444	-		587,661	2,995,105
Total Comprehensive Income for the six months ended June 30, 2021
Profit for the six months ened June 30, 2021	-		-	-		128,325	128,325
Other Comprehensive Income for the six months ended June 30, 2021	-		-	-		-	-
	-		-	-		128,325	128,325
Transaction with equity holders, recognized directly in equity
Final Dividend for 2020	-		-	-		(42,000)	(42,000)
Transfer of Deferred Tax reversal consequent to change in the Income Tax rate	-		38,398	-		(38,398)	-
Balance as at June 30, 2021	120,000		2,325,842	-		635,588	3,081,430
Total Comprehensive Income for the six months ended December 31, 2021
Profit for the six months ended December 31, 2021	-		-	-		273,181	273,181
Other Comprehensive Income for the six months ended December 31, 2021	-		-	(185)	2,621	2,436
	-		-	(185)	275,802	275,617
Transaction with equity holders, recognized directly in equity
Interim Dividend for 2021	-		-	-		(30,000)	(30,000)
Write back of Unclaimed Dividends	-		-	-		316	316
Transfer of Fair Value Gain on Investment Property	-		92,507	-		(92,507)	-
Balance as at December 31, 2021 - Audited	120,000		2,418,349	(185)	789,199	3,327,363
Balance as at January 01, 2022	120,000		2,418,349	(185)	789,199	3,327,363
Surcharge Tax for the year 2020	-		-	-		(50,556)	(50,556)
Adjusted Balance as at January 01, 2022	120,000		2,418,349	(185)	738,643	3,276,807
Total Comprehensive Income for the six months ended June 30, 2022
Profit for the six months ened June 30, 2022	-		-	-		111,686	111,686
Other Comprehensive Income for the six months ended June 30, 2022	-		-	(1,833)	-	(1,833)
	-		-	(1,833)	111,686	109,853
Transaction with equity holders, recognized directly in equity
Final Dividend for 2021	-		-	-		(48,000)	(48,000)
Balance as at June 30, 2022	120,000		2,418,349	(2,018)	802,329	3,338,660

The above figures are provisional and subject to audit unless indicated as audited.