Commercial Development : Interim Financial Statements as of 31.12.2021

INTERIM FINANCIAL STATEMENTS

For the year ended December 31, 2021

COMMERCIAL DEVELOPMENT COMPANY PLC

STATEMENT OF COMPREHENSIVE INCOME			02
For the year ended December 31,	For the Year Ended	Change	For the Quarter Ended	Change
	December 31,		December 31,		December 31,		December 31,
	2021	2020			2021	2020
			(Audited)
	Rs. 000		Rs. 000	%	Rs. 000		Rs. 000	%
Revenue	632,287	454,906		39.0	146,884	116,079	26.5
Cost of Sales	(292,384)		(252,017)		16.0	(797)		(63,935)	(98.8)
Gross Profit	339,903	202,889		67.5	146,087	52,144	180.2
Other Income	78	23,163		(99.7)	42	18,276	(99.8)
	339,981	226,052		50.4	146,129	70,420	107.5
Administrative Expenses	(32,824)	(31,182)		5.3	(8,089)	(8,410)	(3.8)
Fair Value Gain/(Loss) on Investment Property	89,132	(45,046)		(297.9)	89,132	(45,046)	(297.9)
Operating Profit	396,289	149,824		164.5	227,172	16,964	1,239.1
Net Finance Income	30,976	12,011		157.9	8,665	3,865	124.2
Share of Profit of Equity Accounted Investee, Net of Tax	-		9,438		(100.0)	-		3,476	(100.0)
Profit before Tax	427,265	171,273		149.5	235,837	24,305	870.3
Income Tax Expense	(25,759)		(48,691)		(47.1)	(31,903)		(8,602)	270.9
Profit for the year attributable to Owners of the Company	401,506	122,582		227.5	203,934	15,703	1,198.7
Other Comprehensive Income,Net of Tax
Items that will never be reclassified to profit or loss
Actuarial Gains/(losses) on Defined Benefit Plans	3,449	(985)		(450.2)	3,449	(985)	(450.2)
Related Tax	(828)	276		(400.0)	(828)	276	(400.0)
	2,621	(709)		(469.7)	2,621	(709)	(469.7)
Share of Other Comprehensive Income of the Equity
Accounted Investee, Net of Tax	-		44,213		(100.0)	-		44,213	(100.0)
	-	44,213		(100.0)	-	44,213	(100.0)
Items that are or may be reclassified to profit or loss
Net change in fair value of Debt investments at FVOCI	(243)	99		(345.5)	(243)	-	-
Related Tax	58		(28)		(307.1)	58		-	-
	(185)	71		(360.6)	(185)	-	-
Other Comprehensive Income for the year, Net of Tax	2,436		43,575		(94.4)	2,436		43,504	(94.4)
Total Comprehensive Income for the year, Net of Tax	403,942	166,157		143.1	206,370	59,207	248.6
Earnings per Share (Rs.)	33.46	10.22		227.5	16.99	1.31	1,198.7

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, 2020.
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. The significant reduction in the cost of sales for the quarter ended December 31, 2021 was due to a reversal of a provision made on account of renovation of Commercial House building amounting to Rs.60 Mn. The expected renovations did not commence due to the pandemic.
4. The income tax expense includes reversal of income tax consequent to reduction in income tax rate from 28% to 24%, in line with the requirements of the Inland Revenue Amendment Act No 10 of 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. 44,521,738/- have been adjusted in arriving at the income tax expense for the year ended December 31, 2021. Income tax/deferred tax liability for the comparative period have been calculated using the tax rate of 28%.
5. During the quarter, there were no material changes in the composition of assets and liabilities except that Investment Properties have been stated at the revalued amounts as at December 31, 2021 as per the requirements of the Sri Lanka Accounting Standard - LKAS 40 on ''Investment Property''.

STATEMENT OF COMPREHENSIVE INCOME	03

1. Related Party Transactions
2. 1. Mr.S.Renganathan, Managing Director of the Company is also the Managing Director/Chief Executive Officer of Commercial Bank of Ceylon PLC, the sole tenant and the Parent of the Company. Mr.U.I.S.Tillakawardana, Director of the Company functions as the Deputy General Manager - Human Resource Management of Commercial Bank of Ceylon PLC. During the quarter ended December 31, 2021, the Company received Rs. 143,376,230/- as rental, income from outsourcing services, vehicle hiring charges and other utility services from Commercial Bank of Ceylon PLC (Rs.115,528,859/- during the quarter ended December 31, 2020).
   2. 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.25,112/- as Insurance premium to Insurance Companies through Commercial Insurance Brokers (Pvt) Ltd (Rs.174,977/- was paid during the quarter ended December 31, 2020).
   3. As at the reporting date, the Company has invested Rs.467,000,000/- in Fixed Deposits for a period of 1 year at interest rates ranging from 6.25% - 8.5% per annum at CBC Finance Limited, which is a fully owned subsidiary of the Parent.
3. All known expenses have been provided for in these Interim Financial Statements.
4. There were no material events that took place since December 31, 2021, that require disclosure in these Interim Financial Statements.
5. 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 an ex employee at the Labour Tribunal, Negombo. The Labour Tribunal ordered that the former employee be compensated with Rs. 2,034,000/-. The Company has appealed against this order to the High Court.

However, no provision has been made in these Interim Financial Statements as the lawyers are of the opinion that the outcome of the potential liability on this case cannot be assessed with reasonable certainty at this stage.

1. Impact of Covid-19 Pandemic to the Financial Statements
   It is pertinent to mention that the Company is permitted to provide its services only to Commercial Bank of Ceylon PLC, the Parent of the Company. As a result of COVID-19 pandemic, the direct impact on our business operations is expected to be at a minimal level. However, any adverse impact on operations of the Parent could have impact on our operations. Therefore, our response to the impact can be varied, which largely depends on operational outcomes of the Parent.
2. Surcharge Tax

The Surcharge Tax was proposed in Budget 2022, as a one-time tax. As per the Gazette published on February 07, 2022, Surcharge Tax is payable by any individual, partnership, company or each company of a group of companies (holding and subsidiaries) subject to the taxable income threshold as specified in the Bill. There shall be levied a Surcharge Tax on any individual, partnership or company, whose taxable income calculated in accordance with the provisions of the Inland Revenue Act No. 24 of 2017, exceeds rupees two thousand million, for the year of assessment commenced on 1 April 2020, at the rate of twenty-five per centum on the taxable income of such individual, partnership or company, for such year of assessment. The proposed surcharge tax has not been accounted for in these financial statements of the Company on December 31, 2021 as the said Bill is not considered to be substantially enacted as per LKAS - 12 as of the Reporting date.

The quantified impact on Surcharge Tax to the next year's financial statements would be Rs. 50,556,342/-.

STATEMENT OF FINANCIAL POSITION			04
	As at		As at	Change
	December 31,		December 31,
	2021	2020
			(Audited)
ASSETS	Rs.'000		Rs.'000	%
Non-Current Assets
Property, Plant & Equipment	90,897	96,893	(6.19)
Intangible Assets	2,762	589	368.93
Investment Property	2,966,713	2,876,679	3.13
Deposits Receivable	10,857		11,181	(2.90)
	3,071,229	2,985,342	2.88
Current Assets
Inventories	-	18	(100.00)
Trade and Other Receivables	43,011	47,429	(9.31)
Financial Investments	565,585	206,288	174.17
Cash and Cash Equivalents	105,524		210,433	(49.85)
	714,120	464,168	53.85
Total Assets	3,785,349	3,449,510	9.74
EQUITY AND LIABILITIES
Equity
Stated Capital	120,000	120,000	-
Other Reserves	2,418,164	2,287,444	5.71
Retained Earnings	789,199		587,661	34.29
Total Equity	3,327,363	2,995,105	11.09
Non-Current Liabilities
Deposits Payables	54,492	37,796	44.17
Employee Benefits	50,966	51,776	(1.56)
Lease Creditors - Long Term	14,374	1,626	784.01
Deferred Taxation	263,159		311,652	(15.56)
	382,991	402,850	(4.93)
Current Liabilities
Trade and Other Payables	16,958	16,609	2.10
Lease Creditors - Short Term	5,080	4,347	16.86
Deferred Revenue	10,566	1,841	473.93
Current Tax Liabilities	42,391		28,758	47.41
	74,995		51,555	45.47
Total Equity and Liabilities	3,785,349	3,449,510	9.74
Net Assets Value Per Ordinary Share (Rs.)	277.28	249.59	11.09

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.) B.R.L. FERNANDO	(Sgd.) S.RENGANATHAN
CHAIRMAN	MANAGING DIRECTOR
February 21, 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, 2020	120,000	2,327,172	(71)	453,609	2,900,710
Total Comprehensive Income for the year ended December 31, 2020
Profit for the year ened December 31, 2020	-	-	-		122,582	122,582
Other Comprehensive Income for the year ended December 31, 2020	-	-	71		43,504	43,575
	-	-	71		166,086	166,157
Transaction with equity holders, recognized directly in equity
Final Dividend for 2019	-	-	-		(48,000)	(48,000)
Interim Dividend for 2020	-	-	-		(24,000)	(24,000)
Write back of Unclaimed Dividends	-	-	-		238	238
Transfer of Fair Value Loss on Investment Proprty	-	(39,728)	-		39,728	-
Balance as at December 31, 2020 - Audited	120,000	2,287,444	-		587,661	2,995,105
Total Comprehensive Income for the year ended December 31 2021
Profit for the year ended December 31, 2021	-	-	-		401,506	401,506
Other Comprehensive Income for the year ended December 31, 2021	-	-	(185)	2,621	2,436
	-	-	(185)	404,127	403,942
Transaction with equity holders, recognized directly in equity
Final Dividend for 2020	-	-	-		(42,000)	(42,000)
Interim Dividend for 2021	-	-	-		(30,000)	(30,000)
Write back of unclaimed Dividends	-	-	-		316	316
Transfer of Fair Value Gains on Investment Property	-	130,905	-		(130,905)	-
Balance as at December 31, 2021	120,000	2,418,349	(185)	789,199	3,327,363

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