City Housing & Real Estate Company PLC

2018 - 2019 ANNUAL REPORT

Table of Contents Corporate Information ................................................................................................................................ 2

Financial Highlights ..................................................................................................................................... 3

Chairman's Message ................................................................................................................................... 4

Profile of Directors ...................................................................................................................................... 5

Annual Report of the Board of Directors .................................................................................................... 6

Risk Management Report ......................................................................................................................... 17

Audit Committee Report ........................................................................................................................... 18

Remuneration Committee Report ............................................................................................................ 19

Related Party Transaction Review Committee Report .............................................................................. 20

Independent Auditors’ Report .................................................................................................................. 21

Statement of Comprehensive Income ...................................................................................................... 24

Statement of Financial Position ................................................................................................................ 25

Statement of Changes in Equity ................................................................................................................ 26

Statement of Cash Flows .......................................................................................................................... 27

Notes to the Financial Statements ............................................................................................................ 28

Investor Relations Supplement ................................................................................................................. 54

Notes of the Annual General Meeting ...................................................................................................... 56

Proxy Form ................................................................................................................................................ 57

Page 1 of 58

Corporate Information LEGAL FORM A Public Limited Liability Company incorporated in Sri Lanka under the provisions of the Companies Act. No. 17 of 1982 (Reregistered under the Companies Act No. 07 of 2007) and listed on the Colombo Stock Exchange.

DATE OF INCORPORATION

18th April 1983

BOARD OF DIRECTORS

Janaka Ratnayake

B.Sc (P.Ad), DRIR (USSR), MBA

Chairman

J. W. M. R. L. B. Ratnayake

B.Sc (Accouting/ Finance), UK

Yasas Vitharana F.C.A, A.C.M.A.

H.K. K. S. Hiswella

B.B. Mgt Human Resource

M. S. S. Paramananda

APFA, MAAT

Miss P. I. A. G. B. Illanperuma

Non-Executive Director

SECRETARIES

Chart Business System (Pvt) Ltd.

No. 141/3, Vauxhall Street, Colombo 02.

Tel:2543011 Fax :4716922

REGISTRARS

SSP Corporate Services (Pvt) Ltd.

No. 101, Inner Flower Road, Colombo 03.

Tele: 2576871, 2573894

REGISTERED OFFICE

No. 38, Somadevi Place, Kirulapone, Colombo 05.

Tel: +94 (0) 11 2 514 545

Fax: +94 (0) 11 2 514 546 Website: www.trillium.lk

BANKERS

People’s Bank

Hatton National Bank

Commercial Bank

Seylan Bank PLC

AUDITORS

Messrs. Tudor V Perera & Company Chartered

Accountants

SUBSIDIARY COMPANY

Trillium Residencies Ltd.

ASSOCIATE COMPANY

Ceylinco Project Management Services Ltd.

Page 2 of 58

Financial Highlights

RESULTS (GROUP) 2018/19 Rs.

2017/18 Rs.

2016/17 Rs.

2015/16 Rs.

2014/15 Rs.

Revenue 9,900,000 17,500,000 39,494,031 78,055,843 96,500,000

Gross Profit/(Loss) (5,307,922) 5,394,222 10,098,263 13,472,216 12,265,679

Profit/(Loss) before Tax (27,811,708) 10,036,342 (9,911,384) (17,856,098) (46,794,778)

Profit/(Loss) after Tax (30,255,056) 6,063,217 (11,748,162) (18,863,552) (49,258,673)

Total Comprehensive Income/(Loss) (30,255,056) 6,353,531 (5,689,703) (17,767,102) (41,646,592)

Total Assets 314,729,094 327,423,723 360,172,198 373,292,475 431,579,051

Stated Capital 133,798,500 133,798,500 133,798,500 133,798,500 133,798,500

Revaluation Reserves 50,279,447 30,279,447 30,279,447 30,279,447 30,279,447

Revenue Reserves (84,543,244) (66,568,463) (72,921,994) (67,231,661) (49,464,559)

Share Holders’ Funds 99,535,403 97,510,184 91,156,653 96,846,356 114,613,458

Earnings/(Loss) per Share (2.26) 0.45 (0.88) (1.41) (3.68)

Dividend per Share - - - - -

Net Assets per Share 7.44 7.29 6.81 7.24 8.57

Market Value per share

Highest 6.40 8.80 12.60 15.00 18.70

Lowest 3.60 5.30 5.10 7.90 9.40

Year End 3.60 5.70 5.50 9.50 11.00

Return on Capital Employed (Avg) 4.45% -6.22% -19.38% -36.86%

Price Earnings Ratio (1.59) 12.67 (6.26) (6.74) (2.95)

Earnings Yield -63% 7.89% -16% 15% -33.9%

Page 3 of 58

Chairman's Message

Dear Shareholders I would like to welcome all of you and our valued shareholders to the 36th Annual General Meeting of City Housing & Real Estate Co PLC and I am pleased to present you the Audited Financial Statements and the Annual Report for the financial year 2018/2019. Financial Performance. During the year we have invested in our main project at "Thalapathpitiya" and the project is nearing completion. The full sales value could not be recognized due to requirements in revenue recognize policy. This has made to record a loss in operations of the company during the year. Therefore we made a loss of Rs. 30.25 Million. Business Environment With volatile economic condition triggered by Ester Sunday Attack and restrictions by lending institutions has reduced the investment ability of our target market the middle income earners. Therefore, the demand has marginally reduced. Nevertheless we will be able to dispose significant part our stock with effective marketing strategy. I foresee that the market would settle during the next year and prices of the houses, apartments would be decided according to the demand and supply of the units. Future Outlook As I assumed, it would be easy to compete with our competitive advantage derived from the experience, brand name, quality and cost saving strategies, with the prediction of the economy being stabilized during next two years, Since the reduction in demand was due to the unavailability of loanable funds to our target market, with economic stabilization, expansion of private lending by lending institutions would help to adjust the demand in upward in future. Appreciation. I would like to express my gratitude to our shareholders for the continued confidence that they keep on the company and management of the company. I also appreciate the management team and the staff for their dedication and finally the board of directors for their guidance throughout the year. Sgd. Janaka Ratnayake Chairman

Page 4 of 58

Profile of Directors

Mr. J. W. M. J. P. K. Ratnayake - Chairman/Director * Mr. Janaka Ratnayake joined the board of City Housing and Real Estate Co PLC on September 2009. Mr. Janaka Ratnayake holds a BSc (Hons.) Degree from the University of Sri Jayawardenapura and a Master of Business Studies from the University of Colombo. In addition, he has successfully completed an Executive Education Program titled "Making Corporate Boards More Effective" - at the Harvard Business School (HBS) in USA. Chairman/Director of - Trillium Residencies Ltd. Trillium Property Management & Services Ltd., JR Management Consultants (Pvt) Ltd, Computer care (Pvt) Ltd., Rent A Comp Services (Pvt.) Ltd. Former chairman of Merchant Bank of Sri Lanka and Export Development Board. Mr. J. W. M. R. L. B. Ratnayake - Director * He joined the board on 11th September 2014. He holds a B.Sc Accounting and Finance degree from University of Southampton (UK). Director of Rent A Com Services (Pvt) Ltd & Computer Care (Pvt) Ltd.,Trillium Residencies Ltd and Trillium Property Management & Services Ltd. Mr. W. A. Y. Vitharana - Director ** He joined the board in September 2009. A Fellow Member of the Institute of Chartered Accountants of Sri Lanka and Associate Member of Institute of Certified Management Accountants of Sri Lanka. Director of Trillium Residencies Limited Mr. M.S.S. Paramananda- Director *** He joined the board on 8th October 2015 as a Independent Non- Executive Director. He has Diploma in Public Finance Management, Diploma in Accountancy and Diploma in Commerce. He is a fellow member of Associate of Public Finance Accountant of Sri Lanka (APFA) and member AAT (MAAT) Former Director of Merchant Bank of Sri Lanka and Finance PLC, MBSL Savings Bank Ltd, Worked as Chief Accountant, Senior Accountant, Deputy Finance Secretary and Project Accountant in various government departments and institutions. Mr. H. K. K. S. Hisswella - Director *** He joined the board on 22nd September 2014 as a Non-Executive Director. He holds a diploma in Mass Communication from Jayawardenapura University & a Degree in Human Resources Management from Kelaniya University. He processes 11 years’ experience in the field of Media & Mass Communication. Miss.P.I.A.G.B. Illanperuma - Director *** She joined the board on 31st March 2016 as a Non- Executive Director. Director of Trillium Residencies Limited.

***Executive

***Non-Independent Non-Executive

***Independent Non-Executive

Page 5 of 58

Annual Report of the Board of Directors

REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANY The Board of Directors of City Housing and Real Estate Company PLC has pleasure in presenting their Report on the affairs of the Company and of the subsidiary together with the Audited Financial Statements for the year ended 31st March 2019. While were approved by the Board of Directors on 30th August 2019. Set out herein provide pertinent information, required by the Companies Act, No. 7 of 2007, the Colombo Stock Exchange Listing Rules and are guided by recommended best accounting policies. PRINCIPAL ACTIVITIES The Principal Activities of the Company which are the construction and sale of houses and semi Luxury apartments remain unchanged. The principal activity of Trillium Residencies Limited, a fully owned subsidiary of City Housing and Real Estate Co. PLC is construction and sale of residential apartments. The Directors to the best of their knowledge and belief confirm that the Group has not engaged in any activities that contravene laws and regulations. FINANCIAL STATEMENTS The Audited Financial Statements for the year ended 31st March 2019 are in accordance with the Sri Lanka Accounting Standards. (SLFRS/ LKAS), issued by the Institute of Chartered Accountants of Sri Lanka and the requirements of the Companies Act No. 07 of 2007. The Financial Statements duly signed by the Directors are provided on page on 25to 58 in this Annual Report. INDEPENDENT AUDITORS’ REPORT The Auditor’s Report on the Financial Statements is given on page 21. TURNOVER The Turnover of the group during the year was Rs.9,900,000/- .as compared with a turnover of Rs.17,500,000/- during the previous financial year. Further information on group turnover is detailed in Note 03 to the Financial Statements. ACCOUNTING POLICIES The Accounting Policies adopted in preparation of the Financial Statements are provided in details in the notes of the Financial Statement on pages 28 to 36The accounting policies adopted are consistent with those of the previous financial year. STATED CAPITAL The sated Capital of the Company consisting of 13,379,850 Ordinary shares of Rs. 10/- each valuing to Rs. 133,798,500/- as compared with Stated Capital of Rs. 133, 798,500/- during the previous Financial Year. INTEREST REGISTER The Directors of the Company has ma17de the General Disclosures provided for in Section 192(2) of Companies Act No. 07 of 2007 and maintains an Interest Register. DIRECTORS AND THEIR SHAREHOLDINGS Directors of the Company and their respective shareholdings as at 31st March 2019 are set out below.

NAME OF DIRECTORS As at 31.03.2019 As at 31.03. 2018 Mr. J.W.M.J.P.K. Ratnayake 1,404,609 1,404,609 Mr. M.S.S.Paramananda - - Mr. W.A.Y. Vitharana - - Mr. H.K.K.S. Hisswella - - Mr. J.W.M.R.L.B. Ratnayake - - Miss. P.I.A. G.B. Illanperuma - -

DIRECTORS REMUNERATION AND OTHER BENRFITS Directors remuneration in respect of the Company for the financial year ended 31st March 2019 is given in Note 06 to the Financial Statements.

Page 6 of 58

Annual Report of the Board of Directors AUDITORS The Financial Statements for the year ended 31st March 2019 have been audited by Messrs Tudor. V. Perera & Co., Chartered Accountants, who have expressed their willingness to continue as Auditors of the company and are recommended for re-appointment. In accordance with the Companies Act No. 07 of 2007, a resolution relating to their re-appointment and authorizing the Board to determine their remuneration will be proposed at the forthcoming Annual General Meeting. The Auditors Messrs Tudor V. Perera & Co., Chartered Accountants was paid Rs.391,970/- as audit fees by the Company. As far as the Directors are aware, the Auditors do not have any relationship (other than that of an Auditor) with the company. The Auditors also do not have any interest in the Company. SUMMARY OF RESULTS

Year ended 31st March 2019 2018

Group Rs. Rs.

Revenue 9,900,000 17,500,000

Operating Income (Gross Profit) (5,307,922) 5,394,222

Net Profit / (Loss) (30,255,056) 6,063,217

DIVIDENDS The Directors do not recommend the payment of a dividend for the year ended 31st March 2019. INVESTMENTS Details of investments held by the Company are disclosed in notes 11 to 13 to the Financial Statements. PROPERTY, PLANT AND EQUIPMENT An analysis of the property, plant and equipment of the Company, additions and disposals made during the year and depreciation charged during the year are set out in Note 10 to the Financial Statements. CAPITAL COMMITMENTS There are no material capital commitment that would require disclosures in the Financial Statements. SHARE INFORMATION Information relating to earnings, net assets & market value per share is given on page 54 of this report. MAJOR SHAREHOLDERS The twenty largest shareholders of the Company as at 31st March 2019 is given on page55. ENVIRONMENT, HEALTH AND SAFETY All the laws and regulations in this regard are strictly adhered to by the company. CORPORATE GOVERNANCE / INTERNAL CONTROL The Company has put in place systems and procedures to ensure the implementation of sound Corporate Governance principles, and the Corporate Governance Principles adheared to by the Company are given on pages 9 to 16. EMPLOYMENT POLICY The Company's employment policy is totally nondiscriminatory which respects individuals and provides carrier opportunities irrespective of the gender, race or religion. There are no material issues pertaining to employees & industrial relations of the Company.

Page 7 of 58

Annual Report of the Board of Directors CONTINGENT LIABILITIES There were no material contingent liabilities outstanding as at 31st March 2019 other than those disclosed in Note 31 to the financial statements. ANNUAL GENERAL MEETING The 36th Annual General Meeting of the Company will be held on Monday,30th September 2019 at 4.00 pm at No.38,Somadevi Place,Kirulapone Avenue,Colombo 05. The notice of the Annual General Meeting is on page 56 of the report. for and on behalf of the Board of Directors of CITY HOUSING AND REAL ESTATE COMPANY PLC. (Sgd) Janaka Ratnayake Chairman (Sgd) Company Secretary Chart Business System (Pvt) Ltd Secretaries Colombo 30th August 2019

(Sgd) P.I.A.G.B Illanperuma Director

Page 8 of 58

Corporate Governance City Housing and Real Estate Company PLC has designed its

Corporate Governance policies and practices to ensure that

the interest of all stakeholders are reasonably safeguarded.

Thus, the Board strives to take all possible steps to comply

with best practices on Corporate Governance as it builds

trust among stakeholders and established a basis for

responsible conduct. The board of directors ensure that all

activities of the Board are conducted upholding the highest

standards of transparency, accountability and ethics.

1.0.The Board of Directors

1.1. Board Responsibilities

The Board’s Key Responsibilities include:

• Providing guidance and direction to the Company in formulating business strategies taking into consideration of Company’s strengths

• Reviewing and approving annual plans and longer term business plans

• Monitoring systems of governance and compliance

• Overseeing systems of Internal Control, Risk Management

• Reviewing, Monitoring and ratifying all acquisitions, disposals and capital expenditure

• Monitoring Senior Management Performance

• Approving and monitoring financial statements

• Reviewing and approving Annual and Interim Financial Statements prior to publication

1.2. Role and Function of the Board of Directors

The Board has overall control and oversight of the activities,

the strategic direction and the governance of the Company.

Its role includes control and oversight of the Company^

businesses, risk management and compliance, the

performance of management, approving and monitoring

financial statements and other reports and capital

expenditure and reporting to shareholders.

The Board meets as a practice as and when required.

Agendas and papers are circulated in advance to enable

informed deliberations at meetings and decisions are made

by consensus.

1.3 Board Composition

The Board comprised of Six Directors, with four of them

being Non-Executive and three of them being Independent

non executive. The Company policy is to maintain a healthy

balance between the Executive, Non- Executive and

Independent Directors with the Executive Directors

bringing in deep knowledge of the businesses and the Non-

Executive Independent Directors bringing in experience,

objectivity and independent oversight

1.4. Board Skills

As a group, the Board brings in a wealth of varied exposure

in the fields of management, business, administration,

banking, finance, information technology, economics and

marketing. All Directors possess the skills, expertise and

knowledge complemented with a high sense of integrity

and Independent judgment. Further details of their

qualifications and experience are provided under the Board

Profiles section of the Annual Report.

1.5. Board Appointment

Board appointments follow a formal and transparent

procedure which is in line with the Articles of Association of

the Company and also in compliance with the Best Practices

of Corporate Governance. Details of new directors are

disclosed to the shareholders at the time of their

appointment by making announcements to the Colombo

Stock Exchange as well as in the Annual Report.

1.6. Board Independence

Independent Directors have not held executive

responsibilities in the Company. All Non Executive Directors

have submitted the declaration confirming their

independence in accordance with Section 7 of the CSE

listing regulations on Corporate Governance as at 31st

March 2018. The Non-Executive Directors do not have any

business interest that could materially interfere with the

exercise of their Independent Judgments. The Board

members are permitted to obtain independent professional

advices from a third party including the Company’s External

Auditors and other professional consultants whenever

deemed necessary.

1.7. Company Secretary

Chart Business System (Private) Limited functions as

Secretary to the Board, It ensures that appropriate Board

processes are adopted and a proper record of all

proceedings of Board Meetings are maintained.

2.0. Board Sub-Committees

The Board has delegated some of its functions to Board Sub-

Committees, while retaining final decision rights. Members

of these subcommittees are able to focus on their

designated areas of responsibility and impact knowledge

and oversight in areas where they have greater experience.

The Board Sub-Committees are as follows.

i. Audit Committee ii. Remuneration Committee iii. Related Party Transaction Review

Committee

The Board Sub Committees comprised principally of

Independent Non-Executive Directors.

Page 9 of 58

Corporate Governance

2.1Audit Committee Composition

The Audit Committee comprises of three Non- Executive,

Directors with at least one member having significant,

recent and relevant financial management and accounting

experience and a professional accounting qualification.

Scope

i. To monitor and supervise management’s financial reporting process in ensuring; a. Accurate and timely disclosure b. Transparency, Integrity and Quality of

Financial Reporting ii. To oversee the preparation, presentation

and adequacy of disclosures in the financial statements of a Listed Entity, in accordance with SLFRS/LKAS.

iii. To oversee of the Entity’s compliance with financial reporting requirements, information requirements of the Companies Act and other relevant financial reporting related regulations and requirements.

iv. To oversee the processes to ensure that the Entity’s internal controls and risk management are adequate, to meet the requirements of the Sri Lanka Auditing Standards.

v. To assess the independence and performance of the Entity’s external auditors.

vi. To make recommendation to the board pertaining to appointment, re-appointment and removal of external auditors and to approve the remuneration and terms of engagement of the external auditors.2.1Remuneration Committee Composition

The Remuneration Committee comprises of three Non-

Executive, Directors.

Scope

The remuneration committee shall recommend the

remuneration payable to the executive directors and Chief

Executive Officer of the Company, to the Board of Directors

which will make the final determination upon consideration

of such recommendations.

2.2Related Party Transaction Review Committee

Composition

The Related Party Transaction Review Committee

comprises of two Non-Executive, Independent Directors.

Scope

The Related Party Transaction Review Committee should

ensure on behalf of the Board that all related party

transactions of the Company are consistent with the Code

of Best Practices on related party transactions issued by the

Securities and Exchange Commission.

Page 10 of 58

Corporate Governance Corporate Governance Rule Compliance Status Details

7.10.1. Non-Executive Directors

a. The Board of Directors of a Listed Entity shall include at least, i. Two non-executive directors; or ii. Such number of non-executive director’s equivalent to one third of the total number of directors whichever is higher.

Complied with. Company has four non-executive directors and two executive directors on its board.

b. The total number of directors is to be calculated based on the number as at the conclusion of the immediately preceding Annual General Meeting.

Complied with.

c. Any change occurring to this ratio shall be rectified within ninety (90) days from the date of the change.

Complied with.

7.10.2 Independent Directors

a. Where the constitution of the Board of Directors includes only two non-executive directors as mentioned above, both such non-executive directors shall be ‘independent’. In all other instances two or 1/3 of non-executive directors appointed to the Board of Directors, whichever is higher shall be ‘independent’

Complied with.

Three of four Non-executive directors are determined to be independent.

b. The board shall require each non-executive director to submit a signed and dated declaration annually of his/her independence or non-independence against the specified criteria.

Complied with.

Each Non-executive director has provided a signed and dated declaration of his/ her independence or non independence against the criteria laid down in the listing rules.

7.10.3 Disclosures Relating to Directors

a. The board shall make a determination annually as to the independence or non-independence of each non-executive director based on such declaration and other information available to the board and shall set out in the annual report the names of directors determined to be ‘independent.’

Complied with.

b. In the event a director does not qualify as ‘independent’ against any of the criteria set out below but if the board, taking account all the circumstances, is of the opinion that the director is nevertheless ‘independent’, The board shall specify the criteria not met and the basis for its determination in the annual report.

Complied with.

Three of four non-executive directors are deemed independent by the Board.

c. In addition to the disclosures relating to the Independence of a director set out above, the board shall publish in its annual report a brief resume of each director on its board which includes information on the nature of his/her expertise in relevant functional areas.

Complied with.

Please refer profile of directors on page 05.

d. Upon appointment of a new director to its board, the Entity shall forthwith provide to the exchange a brief resume of such director for dissemination to the public. Such resume shall include information on the matters itemized in paragraphs (a),(b) and (c) above.

Complied with.

Please refer profile of directors on page 05.

7.10.5 Remuneration Committee

A Listed Entity shall have a remuneration committee in conformity with the following: a. Composition The remuneration committee shall comprise of; i. a minimum of two independent non-executive directors (in instances where an Entity has only two directors of its board); or

Complied with.

The remuneration committee comprises three non-executive directors two of them are Page 11 of 58

Corporate Governance Rule Compliance Status Details

ii. non-executive directors a majority of whom shall be independent, whichever shall be higher. In a situation where both the parent company and the subsidiary are ‘Listed Entities’, the remuneration committee of the parent company may be permitted to function as the remuneration committee of the subsidiary. However, if the parent company is not a Listed Entity, then the remuneration committee of the parent company is not permitted to act as the remuneration committee of the subsidiary. The subsidiary shall have a separate remuneration committee. One non-executive director shall be appointed as Chairman of the committee by the Board of Directors.

N/A N/A Complied with.

b. Functions The remuneration committee shall recommend the remuneration payable to the executive directors and Chief Executive Officer of the Listed Entity and/or equivalent position thereof, to the board of Listed Entity which will make the final determination upon consideration of such recommendations.

Complied with.

The Committee recommends to the Board the remuneration payable to the Executive Directors and the Chief Executive Officer. In recommending an appropriate remuneration package the primary objective of the Committee is to attract and retain the services of highly qualified and experienced personnel.

c. Disclosures The annual report should set out the names of directors (or persons in the parent company’s committee in the case of a group company) comprising the remuneration committee, contain a statement of the remuneration policy and set out the aggregate remuneration paid to executive and non-executive directors. The term “remuneration” shall make reference to cash and all noncash benefits whatsoever received in consideration of employment with the Listed Entity (excluding statutory entitlements such as Employees Provident Fund and Employees Trust Fund).

Complied with. Complied with.

7.10.6 Audit Committee

A Listed Entity shall have an audit committee in conformity with the following: a. Composition The audit committee shall comprise of; i. a minimum of two independent non-executive directors (in instances where a Entity has only two directors on its board); or ii. non-executive directors a majority of whom shall be independent, whichever shall be higher. In a situation where both the parent company and the subsidiary are ‘Listed Entities’, the audit committee of the parent company may function as the audit committee of the subsidiary. However, if the parent company is not a Listed Entity, then the audit committee of the parent company is not permitted to act as the audit committee of the subsidiary. The subsidiary should have a separate audit committee.

Complied with. N/A N/A

The audit committee comprise three non-executive directors and two of them are independent. N/A N/A Page 12 of 58

independent. The details are given on the page19 N/A N/A Details are given on the page No19

Please refer inner back cover for the names of directors of the remuneration committee. Please refer the remuneration committee report on page 19 for a statement of the remuneration policy. Please refer note 6 to the financial statements for the aggregate remuneration paid to the directors.

Corporate Governance Rule Compliance Status Details

One non-executive director shall be appointed as Chairman of the committee by the Board of Directors. Unless otherwise determined by the audit committee, the Chief Executive Officer and the Chief Financial Officer of the Listed Entity shall attend audit committee meetings. The Chairman or one member of the committee should be a member of a recognized professional accounting body.

Complied with. Complied with. Complied with.

Please refer inner back cover. Please refer Audit Committee report on page 18. The Chairman of the committee is a fellow member of Associate of Public Finance Accountants in Sri Lanka. (APFA)

b. Functions The Functions of the Audit Committee shall include, i. Overseeing of the preparation, presentation and adequacy of disclosures in the financial statements of a Listed Entity, in accordance with SLFRS/LKAS. ii. Overseeing of the Entity’s compliance with financial reporting requirements, information requirements of the Companies Act and other relevant financial reporting related regulations and requirements. iii. Overseeing the processes to ensure that the Entity’s internal controls and risk management are adequate, to meet the requirements of the Sri Lanka Auditing Standards. iv. Assessment of the independence and performance of the Entity’s external auditors. v. To make recommendation to the board pertaining to appointment, re-appointment and removal of external auditors and to approve the remuneration and terms of engagement of the external auditors.

Complied with. Complied with. Complied with. Complied with. Complied with.

Please refer audit committee report on page 18.

c. Disclosures The names of the directors (or persons in the parent company’s committee in the Case of a group company) comprising the audit committee should be disclosed in the annual report. The committee shall make a determination of the independence of the auditors and shall disclose the basis for such determination in the annual report. The annual report shall contain a report by the audit committee, setting out the manner of compliance by the Entity in relation to the above, during the period to which the annual report relates.

Complied with. Complied with. Complied with.

Please refer inner back cover. Please refer audit committee report on page 18. Please refer audit committee report on page 18.

Page 13 of 58

Company’s adherence to the Provisions of Rule 7.6 as required by the Listing Rules of the Colombo Stock Exchange

on disclosure in Annual Reports of Listed Entities:

Corporate Governance Rule Compliance Status Details A Listed Entity must include in its annual reports and accounts, inter alia;

i. Names of persons who were Directors of the Entity during the financial year.

Complied with. Please refer the corporate information for the names of directors of the company.

ii. Principal activities of the Entity and its subsidiaries during the year and any changes therein.

Complied with. Please refer page 28 to the financial statements.

iii. The names and the number of shares held by the 20 largest holders of voting and non-voting shares and the percentage of such shares held.

Complied with. Please refer Investor relations supplement on page 55.

iv. The public holding percentage.

Complied with. Please refer Investor relations supplement on page xx.

v. A statement of each director’s holding and Chief Executive Officer’s holding in shares of the Entity at the beginning and end of each financial year.

Complied with. Please refer page 55.

vi. Information pertaining to material foreseeable risk factors of the Entity.

Complied with. Please refer report on risk management on page 17.

vii. Details of material issues pertaining to employees and industrial relations of the Entity.

N/A No material issues pertaining to employees and industrial relations.

viii. Extents, locations, valuations and the number of buildings of the Entity’s land holding and investment properties.

Complied with.

xi. Number of shares representing the Entity’s stated capital.

Complied with

x. A distribution schedule of the number of holders in each class of equity securities and the percentage of their total holdings in the specified categories.

xi. The following ratios and market price information. EQUITY 1. Dividend per share 2. Dividend pay out 3. Net asset value per share 4. Market value per share 5. Highest and lowest value recorded 6. Value as at the end of financial year.

Complied with. Complied with.

DEBT (only if listed) 1. Interest rate of comparable government security 2. Debt/Equity ratio 3. Interest cover 4. Quick asset ratio 5. The market prices & yield during the year (ex interest) •• Highest price •• Lowest price •• Last traded price 6. Any changes in credit rating (for the entity or any other instrument issued by the entity), if applicable

N/A

N/A

xii. Significant changes in the Entity’s or its subsidiaries’ fixed asset and the market value of land, if the value differs substantially from the book value.

N/A N/A

Page 14 of 58

Complied with. Please refer Investor relations supplement on page 55.

Please refer page 3 for Five year summary. Please refer Investor relations supplement on page 54.

xiii. If during the year the Entity has raised funds either through a public issue, Right issue, and private placement; a. A statement as to the manner in which the proceeds of such issue has been utilized. b. If any shares or debentures have been issued, the number, class and consideration received and the reason for the issue; and, c. Any material change in the use of funds raised through an issue of securities.

N/A N/A

xiv. a. EMPLOYEE SHARE OPTION SCHEMES The following information shall be disclosed in the Annual Report of the Listed Entity in respect of each ESOS: •• The number of options granted to each category of Employees during the financial year. •• Total number of options vested but not exercised by each category of Employees during the financial year. •• Total number of options exercised by each category of Employees and the total number of shares arising there from during the financial year. •• Options cancelled during the financial year and the reasons for such cancellation. •• The exercise price. •• A Declaration by the directors of the Entity confirming that the Entity or any of its subsidiaries has not, directly or indirectly, provided funds for the ESOS.

N/A

N/A

b. EMPLOYEE SHARE PURCHASE SCHEMES The following information shall be disclosed in the Annual Report of the Listed Entity in respect of each ESPS: •• The total number of shares issued under the ESPS during the financial year. •• The number of shares issued to each category of Employees during the financial year. •• The price at which the shares were issued to the Employees. •• A Declaration by the directors of the Entity confirming that the Entity or any of its subsidiaries has not, directly or indirectly, provided funds for the ESPS.

N/A

N/A

xv. Disclosures pertaining to Corporate Governance practices in terms of Rules 7.10.3, 7.10.5 c. and 7.10.6 c. of section 7 of the Rules.

Complied with. Please refer page 9 to 15 for the disclosures in terms of Section 7.10.

Page 15 of 58

Corporate Governance

The responsibilities of the Directors, in relation to the

Financial Statements of the Company differ from the

responsibilities of the Auditors, which are set out in the

Independent Auditors' Report on page 21.

As per the provisions of the Companies Act No. 7 of 2007

the Directors are required to prepare Financial Statements

for each financial year giving a true and fair view of the state

of affairs of the Company as at the end of the financial year

and of the results of its operations for the financial year.

The Directors consider that, in preparing these Financial

Statements set out through pages 24 to 27 appropriate

Accounting Policies have been selected and applied in a

consistent manner, supported by reasonable and prudent

judgement and that all applicable Sri Lanka Accounting

Standards, (SLFRS/LKAS) as relevant, have been followed

The Directors are confident that the Company has adequate

resources to continue in operation and have applied the

going concern basis in preparing these Financial

Statements. Further the Directors have a responsibility to

ensure that the Company maintains 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 Companies Act No.

7 of 2007.

The Directors are also responsible for taking reasonable

steps to safeguard the assets of the Company and in this

regard to give proper consideration to the establishment of

appropriate internal control systems to prevent and detect

fraud and other irregularities.

The Directors are confident that they have discharged their

responsibilities as set out in the statement. The Directors

also confirm that to the best of their knowledge, all

statutory payments payable by the Company as at the

Balance Sheet date have been paid or where relevant,

provided for.

By order of the Board of Directors

(Sgd)

Chart Business System (Pvt) Ltd.

Secretaries

Colombo.

30th August 2018.

Page 16 of 58

Risk Management Report

Risk is defined as the possibility that an event will occur which will impact an organizations achievement of objectives. The Board of Directors has overall responsibility for the establishment and oversight of the group's risk management framework. Having a risk management plan is an important part of maintaining a successful, stable and reputed organization. Which a variety of different strategies can mitigate or eliminate risk. The Board of Directors sets goals and objectives annually after reviewing the overall risk profile and the Senior Management team is responsible to implement that task with greater emphasis on managing risks with prudence. Our approach on risk management relies on individual responsibility and major risks are conveyed to the Board by comprehensive reporting & quarterly reports with key economics & performance indicators presented to the Board & Audit Committee to alert on possible risks. Risks faced by the company are numerous and varied risk factors and are highlighted as follows:

▪ Business Risk ▪ Environment Risk ▪ Credit & Operational Risk ▪ Market Risk ▪ Interest Risk ▪ Investment Risk ▪ Liquidity Risk ▪ Risk of Competition

Brief descriptions of the areas of risk are disclosed in the Note 36 to the Financial Statement.

Page 17 of 58

Audit Committee Report

The Audit Committee is appointed by the Board of Directors of the Company and reports directly to the Board. The composition of the members of the Audit Committee satisfies the criteria as specified in the Standards on Corporate Governance for listed companies. The Members of the Audit Committee: Mr. M.S.S Paramananda - Chairman Independent Mr.W.A.Y Vitharana Mr. H.K.K.S. Hiswella - Independent The Audit Committee functioned during the year focusing on the following scope in discharging its responsibilities. Scope

i. To monitor and supervise management’s financial reporting process in ensuring; a. Accurate and timely disclosure b. Transparency, Integrity and Quality of Financial Reporting

ii. To oversee the preparation, presentation and adequacy of disclosures in the financial statements of a Listed Entity, in accordance with SLFRS/LKAS.

iii. To oversee of the Entity’s compliance with financial reporting requirements, information requirements of the Companies Act and other relevant financial reporting related regulations and requirements.

iv. To oversee the processes to ensure that the Entity’s internal controls and risk management are adequate, to meet the requirements of the Sri Lanka Auditing Standards.

v. To assess the independence and performance of the Entity’s external auditors. vi. To make recommendation to the board pertaining to appointment, re-appointment and removal of external auditors

and to approve the remuneration and terms of engagement of the external auditors. The proceedings of the committee were regularly reported to the board. The Audit Committee met six times during the year according to a pre-determined agenda. The Audit Committee obtains an ‘Auditor’s Statement’ from M/s. Tudor V. Perera & Co., confirming independence as required by Section 163 (3) of the Companies Act No.07 of 2007 on the audit of the statement of financial position and the related statements of profit or loss and other comprehensive income, changes in equity, and cash flows of the Company and the Group. The Audit Committee has recommended to the Board of Directors that M/s. Tudor V Perera & Co., Chartered Accountants be re-appointed as External Auditors for the Financial Year ending 31st March 2019 subject to the approval of the shareholders at the Annual General Meeting. (Sgd) M. S. S. Paramananda Chairman-Audit Committee. 24th August 2019

Page 18 of 58

Remuneration Committee Report

The Remuneration Committee of City Housing & Real Estate Co PLC which consists of the three Non-Executive Directors namely Mr. M. S. S. Paramananda (Chairman), Mr. W. A.Y. Vitharana and H. K. K. Hisswella are responsible for determining the remuneration policy relating to the Key Management Personnel of City Housing & Real Estate Co PLC. The Members of the Audit Committee: Mr. M.S.S Paramananda – Independent Mr. H.K.K.S. Hiswella - Independent Mr.W.A.Y Vitharana It is the firm belief of this committee that it should formulate policies to attract, motivate and retain Key Management Personnel. The Chairman may also be invited to join in the deliberations. (Sgd) M. S. S. Paramananda Chairman- Remuneration Committee 24th August 2019

Page 19 of 58

Related Party Transaction Review Committee Report

The Related Party Transactions Review Committee was appointed by the Board of Directors of the Company on 29 January 2016 and reports directly to the Board. The Committee comprises two members who are Independent Non-Executive Directors. The composition of the members of the Related Party Transactions Review Committee satisfies the criteria as specified in the Standards on Corporate Governance for listed companies. The Members of the Related Party Transactions Review Committee: Mr. M. S. S. Paramananda-Chairman Independent Mr. H. K. K. S. Hiswella - Independent The Company Secretary acts as the Secretary to the Committee. Scope The RPTRC was formed by the Board to assist the Board in reviewing all Related Party Transactions (RPT) carried out by the Company. The directive of the Committee includes inter-alia the assurance of the following:

▪ Developing and recommending for adoption by the Board of Directors of the Company and its subsidiary, a RPT Policy consistent with that proposed by the CSE.

▪ Making immediate market disclosures on applicable RPT, as required by Section 9 of the Continuing Listing Requirements of the CSE.

▪ Making appropriate disclosures on RPT in the Annual Report, as required by Section 9 of the Continuing Listing Requirements of the CSE.

The Related Party Transactions Review Committee (RPTRC) met five times during the year and communicated our observations to the Board of Directors. (Sgd) M. S. S. Paramananda Chairman- Related Party Transactions Review Committee 24th August 2019

Page 20 of 58

Independent Auditors’ Report

TUDOR V.PERERA& Co. Chartered Accountants

Telephone : 011 2828749 / 0112828759 No. 296/20, Shanthi Mawatha,

Fax : 011 2768448 Hight Level Road, Kirulapone,

E-mail : tudorv@sltnet.lk Colombo 06.

TO THE SHAREHOLDERS OF CITY HOUSING & REAL ESTATE COMPANY PLC REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS QUALIFIED OPINION We have audited the financial statements of City Housing & Real Estate Company PLC (the Company), and the consolidated financial statements of the Company and its Subsidiary (“the Group”), which comprise the Statement of Financial Position as at 31st March 2019 and the Statement of Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information. In our opinion, except for the effects of the matters described in the Basis for Qualified Opinion paragraph of our report, the accompanying financial statements of the Company and the Group give a true and fair view of the financial position of the Company and the Group as 31st March 2019 and of their financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards. BASIS FOR QUALIFIED OPINION

a. Due to non-availability of share certificates we were unable to establish the ownership and existence of the Fair Value Through OCI - Investments, carrying a net book value of Rs.9,379,766/-, where no provision for impairment is made.

b. Included, under amounts due from related parties an amount of Rs. 51,078,471/-, where the group has no security or written agreements for its recovery with Ceylinco Homes International (Lotus Tower) Limited, Ceylinco Homes International (Lotus Grove) Limited and Ceylinco Leasing Corporation Limited and in our opinion is unlikely to recover any amount in the foreseeable future and a provision should have been made after assessing the impairment of these receivables which has remained unchanged for a considerable period of time.

c. Included under Trade & Other Receivables as morefully explained under Note 16 to these Group financial statements a

total amount of Rs. 34,000,000/- has remained outstanding for a considerable period of time where no recoveries were made, hence an impairment should have been made.

d. Included, under Trade & Other Payables in Note 26 a total amount of Rs.189,123,329/- reported under in Other Payables

and Project Advances to these financial statements were neither directly confirmed nor other audit evidences were received, hence we were unable to check the existence and completeness of the liability.

e. We draw attention to the (net) written off / written back long outstanding balances credited in the Statement of

Comprehensive Income under other income, where we were not provided with evidences over the existence or the non existence of the balance.

We conducted our audit in accordance with Sri Lanka Auditing Standards (SLAuSs). Our responsibilities under those standards are further described in the Auditors Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Group in accordance with the Code of Ethics issued by CA Sri Lanka (Code of Ethics), and we have fulfilled our other ethical responsibilities in accordance with the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion. EMPHASIS OF MATTER We draw attention to Note 2.3.7 on calculation of retirement benefit obligation. KEY AUDIT MATTERS Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the company financial statements and the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the company financial statements and the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Page 21 of 58

Independent Auditors’ Report (Contd) Inventory Valuation As at 31st March 2019, the Group held Rs.113,930,493/- worth of inventories. As disclosed in Note 2.2.1, inventories are held at the lower of cost and net realizable value. At year end, the valuation of inventory is reviewed by management. The determination of whether inventory will be realized for a value less than cost requires management to exercise judgment and apply assumptions. Our Response Our audit procedures involved assessing the Group’s accounting policies over recognizing inventory in compliance with applicable accounting standards. We tested the costing of the inventory and performed net realizable value testing to assess whether the cost of the inventory exceeds net realizable value and whether the variable and fixed costs are allocated to the inventory based on normal capacity. OTHER INFORMATION Management is responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation of financial statements that give a true and fair view in accordance with Sri Lanka Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s and the Group’s financial reporting process. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SLAuSs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with SLAuSs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company and the Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Page 22 of 58

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities

within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with ethical requirements in accordance with the Code of Ethics regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We descr ibe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on Other Legal and Regulatory Requirements As required by section 163 (2) of the Companies Act No. 07 of 2007, we have obtained all the information and explanations that were required for the audit and, as far as appears from our examination, proper accounting records have been kept by the Company. CA Sri Lanka membership number of the engagement partner responsible for signing this independent auditor’s report is 1585.

TUDOR V. PERERA & CO. Chartered Accountants

Colombo. Date :.....................

Page 23 of 58

Statement of Comprehensive Income For the Year Ended 31st March,

Group Company

2019 2018 2019 2018

Notes Rs. Rs. Rs. Rs.

Revenue 3 9,900,000 17,500,000 9,900,000 17,500,000

Cost of Sales 15,207,922 12,105,778 15,207,922 12,105,778

Gross Profit / (Loss) (5,307,922) 5,394,222 (5,307,922) 5,394,222

Net Service Charge Income / (Loss) 4 234,650 141,113 234,650 141,113

Other Income 5 8,229,902 35,877,087 7,575,730 17,125,301

Administration Expenses (22,148,556) (36,369,915) (18,254,127) (27,612,106)

Selling and Distribution Expenses (9,341,185) (11,204) (7,205,716) (11,204)

Profit / (Loss) from Operations 6 (28,333,110) 5,031,303 (22,957,384) (4,962,674)

Net Finance Income / (Cost) 7 521,402 5,005,039 80,987 2,303,146

Profit / (Loss) before Taxation (27,811,708) 10,036,342 (22,876,397) (2,659,528)

Income Tax Expense 8 (2,443,348) (3,973,125) (2,470,625) (2,718,560)

Profit / (Loss) for the Year (30,255,056) 6,063,217 (25,347,022) (5,378,087)

Other Comprehensive Income

Actuarial Gains / (Losses) on Employee Benefit Plan

- 572,557 - 572,557

Fair Value Gain / (Loss) on Available for Sale Investments

- (282,243) - (282,243)

Total Other Comprehensive Income for the Year

- 290,314 - 290,314

Total Comprehensive Income for the Year, Net of Tax

(30,255,056) 6,353,531 (25,347,022) (5,087,773)

Profit / (Loss) Per Share 9.1 (2.26) 0.45 (1.89) (0.40)

Dividends Per Share 9.2 Nil Nil Nil Nil

Figures in brackets indicate deductions. The significant Accounting Policies from pages 28 to 36 and Notes to the Financial Statements from pages 37 to 53 form an integral part of these Financial Statements.

Page 24 of 58

Statement of Financial Position As at 31st March,

Group Company 2019 2018 2019 2018

ASSETS Notes Rs. Rs. Rs. Rs.

Non-Current Assets

Property, Plant and Equipment 10 62,615,258 46,207,319 62,396,948 45,914,279

Investment in Subsidiary 11 - - 20,000,000 20,000,000

Investment in Associate 12 - - - -

Investment - Fair Value Through OCI 13 9,379,766 20,407,706 9,067,266 20,095,206

Employee Benefits Plan 14 - - - -

Net Deferred Tax Asset 15 - 2,120,056 - 1,850,166

Total Non-Current Assets ` 71,995,024 68,735,081 91,464,214 87,859,651

Current Assets

Trade and Other Receivables 16 64,919,718 72,252,253 25,773,315 29,765,850

Inventories 17 113,930,493 107,534,205 113,930,493 107,534,206

Amounts Due from Related Parties 18 54,984,371 54,921,871 14,453,121 14,421,871

Cash and Cash Equivalents 19 8,899,488 23,980,312 3,200,350 11,217,068

Total Current Assets 242,734,070 258,688,641 157,357,279 162,938,995

TOTAL ASSETS 314,729,094 327,423,722 248,821,493 250,798,646

EQUITY

Stated Capital 20 133,798,500 133,798,500 133,798,500 133,798,500

Revaluation Reserve 21 50,279,447 30,279,447 50,279,447 30,279,447

Non-Controlling Interest 700 700 - -

Retained Earnings (84,543,244) (66,568,463) (107,517,375) (94,450,627)

Total Equity 99,535,403 97,510,184 76,560,572 69,627,320

Non-Current Liabilities

Interest Bearing Borrowings 22 - 1,048,435 - 1,048,435

Employee Benefits Plan 23/14 2,488,999 14,619,799 1,313,999 13,519,799

Net Deferred Tax Liability 15 323,291 - 620,459 -

Total Non-Current Liabilities 2,812,290 15,668,234 1,934,458 14,568,234

Current Liabilities

Interest Bearing Borrowings 22 575,395 610,618 575,395 610,618

Other Borrowings 24 15,000,000 15,000,000 15,000,000 15,000,000

Amounts Due to Related Parties 25 - - 88,697,857 83,207,758

Trade and Other Payables 26 194,169,146 194,423,381 64,648,502 64,904,000

Current Tax Liability 27 2,184,149 2,215,015 1,404,708 1,415,237

Bank Balances Overdrawn 19 452,710 1,996,290 - 1,465,478

Total Current Liabilities 212,381,400 214,245,304 170,326,463 166,603,092

Total Liabilities 215,193,691 229,913,538 172,260,921 181,171,326

TOTAL EQUITY AND LIABILITIES 314,729,094 327,423,722 248,821,493 250,798,646

Net Assets per Ordinary Share (Rs.) 7.44 7.29 5.72 5.20

The significant Accounting Policies from pages 28 to 36 and Notes to the Financial Statements from pages 37 to 53 form an integral part of these Financial Statements. I certify that these Financial Statements have been prepared in compliance with the requirements of the Companies Act No.7 of 2007. (Sgd) Accountant The Board of Directors is responsible for the preparation and presentation of the Financial Statements. Approved and signed on behalf of the Board. (Sgd) Janaka Ratnayake (Sgd) P. I. A. G. B. Illanperuma Chairman Director Colombo 30th August 2019

Page 25 of 58

Statement of Changes in Equity For the Year Ended 31st March 2019

Figures in brackets indicate deductions. The significant Accounting Policies from pages 28 t 36 and Notes to the Financial Statements from pages 37 to 53 form an integral part of these Financial Statements.

Attributable to Owners of the Company

Group Stated Revaluation Retained Non Controlling

Total Capital Reserve Earnings Interest

Rs. Rs. Rs. Rs. Rs.

Balance as at 01st April 2017 133,798,500 30,279,447 (72,921,994) 700 91,156,653

Total Comprehensive Income

Profit / (Loss) for the Year - - 6,063,217 - 6,063,217

Other Comprehensive Income - - 290,314 - 290,314

Balance as at 31st March 2018 133,798,500 30,279,447 (66,568,463) 700 97,510,184

Total Comprehensive Income

Profit / (Loss) for the Year - - (30,255,056) - (30,255,056)

Revaluation of Land - 20,000,000 - - 20,000,000

Adjustment - - 12,280,275 - 12,280,275

Balance as at 31st March 2019 133,798,500 50,279,447 (84,543,244) 700 99,535,403

Company Stated Revaluation Retained

Capital Reserve Earnings Total

Rs. Rs. Rs. Rs.

Balance as at 01st April 2017 133,798,500 30,279,447 (89,362,854) 74,715,093

Total Comprehensive Income

Profit / (Loss) for the Year - - (5,378,088) (5,378,088)

Other Comprehensive Income - - 290,315 290,315

Balance as at 31st March 2018 133,798,500 30,279,447 (94,450,627) 69,627,320

Total Comprehensive Income

Profit / (Loss) for the Year - - (25,347,022) (25,347,022)

Revaluation of Land - 20,000,000 - 20,000,000

Adjustment - - 12,280,275 12,280,275

Balance as at 31st March 2019 133,798,500 50,279,447 (107,517,375) 76,560,572

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Statement of Cash Flows For the Year Ended 31st March, Group Company 2019 2018 2019 2018 Rs. Rs. Rs. Rs. (Restated) (Restated) Cash Flow from Operating Activities

Profit / (Loss) before Taxation (27,811,708) 10,036,342 (22,876,397) (2,659,528) Adjustment for:

Depreciation 3,592,061 3,613,894 3,517,331 3,504,242 Interest Expenses 248,332 314,754 230,390 278,634 Interest Income (769,735) (5,319,794) (311,377) (2,581,779) Provision for Retirement Benefit Obligation 144,375 1,611,298 69,375 665,057 Profit / Loss from Sale of Property Plant and Equipment (6,462,500) (2,085,000) (6,431,250) (2,005,000) Loss on Disposal of Investment 2,543,214 - 2,543,213 - Investment in Associate - 4,799,922 - 7,600,000 Written off Investments - (7,584,159) - 2,784,063 Written off / Written Back Long Outstanding Balances 1,144,480 (33,602,087) 1,144,480 (15,120,301) Adjustment (1,139,380) 2,675,452 (1,139,380) (19,556)

Operating Profit before Working Capital Changes (28,510,860) (25,539,377) (23,253,615) (7,554,169)

(Increase) /Decrease in Real Estate Inventories (6,396,288) (14,243,427) (6,396,287) (14,243,426) (Increase) /Decrease in Trade and Other Receivables 7,332,535 (8,993,642) 3,992,534 2,606,358 (Increase) /Decrease in Amounts Due from Related Parties (62,500) - (31,250) - Increase /(Decrease) in Amounts Due to Related Parties - - 5,490,100 (497,019) Increase /(Decrease) in Trade and Other Payables (254,235) 5,400,623 (255,496) (5,125,690) .

Cash Generated from Operations (27,891,348) (43,375,823) (20,454,014) (24,813,946)

Gratuity Paid - (1,480,000) - - Income Tax Paid / Withholding Tax Paid (30,866) (764,209) (10,529) (362,454)

Net Cash Flow from Operating Activities (27,922,215) (45,620,032) (20,464,543) (25,176,400)

Cash Flow from Investing Activities

Acquisition of Property, Plant and Equipment - (16,000) - (16,000) Fixed Deposits Withdrawn - 26,403,002 - - Investments Withdrawn 8,484,725 4,675,186 8,484,725 4,675,187 Interest Received 769,737 5,319,794 311,377 2,581,779 Proceeds on Sale of Property, Plant and

Equipment 6,462,500 2,085,000 6,431,250 2,005,000

Net Cash Flow from Investing Activities 15,716,962 38,466,982 15,227,352 9,245,966

Cash Flow from Financing Activities

Interest Paid (17,942) (314,754) - (278,634) Lease Rental Paid (1,314,048) (1,113,911) (1,314,048) (1,113,911)

Net Cash Flow from Financing Activities (1,331,990) (1,428,665) (1,314,048) (1,392,544)

Net Increase / (Decrease) in Cash and Cash Equivalent (13,537,244) (8,581,715) (6,551,239) (17,322,978) Cash and Cash Equivalent at the Beginning of the Year (Note 19) 21,984,022 30,565,737 9,751,590 27,074,568

Cash and Cash Equivalents at the End of the Year 8,446,778 21,984,022 3,200,351 9,751,590

Figures in brackets indicate deductions. The significant Accounting Policies from pages 28 to 36 and Notes to the Financial Statements from pages 37 to 53 form an integral part of these Financial Statements.

Page 27 of 58

Notes to the Financial Statements For the Year Ended 31st March 2019 1. CORPORATE INFORMATION 1.1.Domicile and Legal Form City Housing & Real Estate Company PLC is a quoted public limited liability company incorporated and domiciled in Sri Lanka. The registered office of the Company is located at 38, Somadevi Place, Kirulapone, Colombo 5. The name of the Company has been changed from Ceylinco Housing & Real Estate Co. PLC to City Housing & Real Estate Company PLC with effect from 17th November 2009. 1.2.Trillium Residencies Limited is a fully owned subsidiary of City Housing and Real Estate Company PLC. City Housing & Real Estate Company PLC became the holding Company of Trillium Residences Ltd. in financial year ended 31st March 2005. 1.3.Basis of Consolidation Subsidiaries are controlled by the Company. Control exists when the Company has the power, directly or indirectly to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. The financial statements of the subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The interests of the outside shareholders of the Group if any, are disclosed separately under the heading “Non Control Interest”; The Group financial statements comprise a consolidation of the financial statements of the Company and its Subsidiary, Trillium Residencies Limited. The name of the Subsidiary has been changed from Ceylinco Condominiums Limited to Trillium Residencies Limited with effect from 16th October 2009. 1.4.Investment in Associate Company City Housing & Real Estate Company PLC acquired 40% of shares at 30th November 2005 in the Ceylinco Project Management Services Limited. 1.5.Principal Activities and Nature of Operations During the year, the principal activity of the Company was to undertake, carry out, exercise and perform projects connected with any type of housing, and the subsidiary was to construct and sale of apartments. 1.6.Number of Employees The number of Employees at the end of the year was 2018/201 2017/2018 - Company 2 9 - Group 2 9 1.7.These Financial Statements are presented in Sri Lanka Rupees. (LKR) 2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1.General Policies 2.1.1.Basis of Preparation The Statement of Financial Position, Statement of Comprehensive Income, Statement of Changes in Equity, Cash Flow Statement and Accounting Policies and Notes (Financial Statements) of City Housing & Real Estate Company PLC, have been prepared in accordance with the accounting standards (SLFRS/LKAS) issued by the Institute of Chartered Accountants of Sri Lanka and incompliance with the requirements of the Company’s Act No. 07 of 2007. These financial statements were authorized to issue by the Board of Directors on 30th August 2019.

(a) Basis of measurement The financial statements have been prepared on the historical cost basis except for the following material items in the Statement of Financial Position:

o Assets and Liabilities held for trading are measured at fair value. o Other financial assets held by the group whose objective is to hold assets to collect contractual cash flows or

whose contractual terms give rise solely to payment of interest and principal. Interest are measured at amortized cost.

o Financial Liabilities not designated at fair value are measures at amortized cost.

Page 28 of 58

Notes to the Financial Statements (Contd) For the Year Ended 31st March 2019

(b) Comparative Information Comparative information is reclassified wherever necessary comply with the current years’ presentation.

(c) Going Concern The management has made an assessment of its ability to continue as a going concern and is satisfied that it has the resources to continue in business for a foreseeable future. 2.2 Significant Assumptions, Judgments and Accounting Estimates The preparation of the financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amounts of the assets and liabilities in the future period. 2.2.1.Estimation of Net Realizable Value for Inventory Property Inventory is stated at the lower of cost and net realisable value (NRV). NRV for completed inventory is assessed with reference to market conditions and prices existing at the reporting date and is determined in the light of recent market transactions. NRV in respect of inventory under construction is assessed with reference to market prices at the reporting date for similar completed property, less estimated costs to complete construction and less an estimate of the time value of money to the date of completion. 2.3 Summary of Significant Accounting Policies 2.3.1. Property, Plant and Equipment

i. Recognition and Measurement Land and building held for use in the supply of services, rent or for administrative purposes are recognised and measured at their revalued amounts, being the fair value at the date of revaluation, less any subsequent accumulated depreciation and subsequent accumulated impairment. Revaluation surpluses of land and buildings are recognised in other comprehensive income and accumulated in equity, under revaluation reserve except to the extent it reverses a revaluation decrease previously recognised in profit or loss, in which case the increase is credited to profit or loss to the extent of the decrease previously charged. A decrease in the carrying amount arising on the revaluation of such land and building is charged to Statement of Comprehensive Income. Depreciation on revalued buildings is charged to Statement of Comprehensive Income. All other items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. (ii) Recognition of Cost The cost of Property, Plant and Equipment is the cost of purchase or construction together with any incidental expenses thereon. The Property, Plant and Equipment are recorded at cost/ valuation less accumulated depreciation which is provided for on the bases specified below in (iii). (iii) Depreciation Depreciation has been provided at varying rates on straight line method in order to write off such amounts over the estimated useful lives as follows:

Class of Asset % per Annum

Period

Motor Vehicles 25 4 years

Office Equipment 20 5 years

Office Furniture & Refurbishment 10 10 years

IT Equipment, Software & Website Development 33.33 3 years

Depreciation is charged from the date of acquisition of the asset to the date of disposal or up to the end of estimated useful life whichever comes first. Land is not depreciated.

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Notes to the Financial Statements (Contd) For the Year Ended 31st March 2019 (iv) Impairment of Non-Financial Assets The Group assesses at each reporting date or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. If such indication exists or when an annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognized immediately in Statement of Comprehensive Income, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. 2.3.2 Financial instruments Recognition and initial measurement Trade receivables and debt securities issued are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised when the Group becomes a party to the contractual provisions of the instrument. A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price. Financial Assets - Policy applicable from 1st April 2018 Classification and subsequent measurement of financial assets On initial recognition, a financial asset is classified as measured at: amortised cost; fair value through other comprehensive income (FVOCI) - debt investment; fair value through other comprehensive income (FVOCI) - equity investment; or fair value through profit or loss (FVTPL). Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model. A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:

− it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

− its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

The Group’s financial assets classified and measured at amortised cost are limited to its trade debtors, related party receivables, short term investments and cash & cash equivalents. A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

− it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

− its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment’s fair value in OCI. This election is made on an investment-by investment basis. All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Group may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise. Financial assets - Business model assessment The Group makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:

− the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management’s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realising cash flows through the sale of the assets;

− how the performance of the portfolio is evaluated and reported to the Group’s management;

− the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;

− how managers of the business are compensated

− e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and

− the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity

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Notes to the Financial Statements (Contd) For the Year Ended 31st March 2019 Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the Companies’ continuing recognition of the assets. Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL. Financial assets - Assessment whether contractual cash flows are solely payments of principal and interest For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin. In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Group considers:

− contingent events that would change the amount or timing of cash flows;

− terms that may adjust the contractual coupon rate, including variable-rate features;

− prepayment and extension features; and

− terms that limit the Companies’ claim to cash flows from specified assets (e.g. non-recourse features). A prepayment feature is consistent solely with the payments of principal and interest criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable additional compensation for early termination of the contract. Additionally, for a financial asset acquired at a discount or premium to its contractual paramount, a feature that permits or requires prepayment at an amount that substantially represents the contractual par amount plus accrued (but unpaid) contractual interest (which may also include reasonable additional compensation for early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition. Financial assets - Subsequent measurement and gains and losses Financial assets at amortised cost These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss . Any gain or loss on derecognition is recognised in profit or loss Equity investments at FVOCI These assets are subsequently measured at fair value. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never reclassified to profit or loss. Equity investments at FVOCI These assets are subsequently measured at fair value. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never reclassified to profit or loss Financial Assets Policy applicable prior to 1st April 2018 The Group classified its financial assets into one of the following categories:

− Loans and receivables;

− Held to maturity;

− Available for sale; and

− FVTPL, and within this category as: - held for trading; - derivative hedging instruments; or - designated as at FVTPL

Financial assets - Subsequent measurement and gains and losses: Financial assets at FVTPL

− Measured at fair value and changes therein, including any interest or dividend income, were recognised in profit or loss.

Held-to maturity financial assets

− Measured at amortised cost using the effective interest method.

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Notes to the Financial Statements (Contd) For the Year Ended 31st March 2019 Loans and receivables

− Measured at amortised cost using the effective interest method. Available-for sale financial assets

− Measured at fair value and changes therein, other than impairment losses, interest income and foreign currency differences on debt instruments, were recognised in OCI and accumulated in the fair value reserve. When these assets were derecognised, the gain or loss accumulated in equity was reclassified to profit or loss.

Financial liabilities Classification, subsequent measurement and gain and losses Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held – for – trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss. De-recognition Financial assets The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset. The Group enters into transactions whereby it transfers assets recognised in its statement of financial position, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognised. Financial liabilities The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. The Group also derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognised at fair value. On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised in profit or loss. Offsetting Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously. Impairment Financial instruments and contract assets - Policy applicable from 1st April 2018 The Group recognises loss allowances for Expected Credit Losses (ECLs) on:

− financial assets measured at amortised cost;

− debt investments measured at FVOCI; and

− contract assets. The Group measures loss allowances at an amount equal to lifetime ECLs, except for the following, which are measured at 12-month ECLs:

− debt securities that are determined to have low credit risk at the reporting date; and

− other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowances for trade receivables is always measured at an amount equal to lifetime ECLs. The Group uses simplified approach to measure expected credit losses which uses a lifetime expected loss allowance for all trade and other receivables. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group’s historical experience and informed credit assessment and including forward-looking information. Credit-impaired financial assets At each reporting date, the Group assesses whether financial assets carried at amortised cost and debt securities at FVOCI are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

Page 32 of 58

Notes to the Financial Statements (Contd) For the Year Ended 31st March 2019 Evidence that a financial asset is credit impaired includes the following observable data:

− significant financial difficulty of the borrower or issuer;

− a breach of contract such as a default;

− the restructuring of a loan or advance by the Group on terms that the Group would not

− consider otherwise;

− it is probable that the borrower will enter bankruptcy or other financial reorganisation; or -

− the disappearance of an active market or a security because of financial difficulties. Presentation of allowance for ECL in the statement of financial position Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets. For debt securities at FVOCI, the loss allowance is charged to profit or loss and is recognised in OCI. Impairment of Financial Assets - Policy applicable prior to 1st April 2018 Financial assets not classified as fair value through Profit or Loss were assessed at each reporting date to determine whether there was an objective evidence of impairment. A financial asset or a group of financial assets was deemed to be impaired if, and only if there was objective evidence of impairment as a result of one or more events that had occurred after the initial recognition of the asset and that loss event had an impact on the estimated future cash flows of the financial asset that can be estimated reliably. Impairment losses on assets carried at amortised cost were measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows discounted at the asset’s original effective interest ra te. Impairment losses were recognised in the Profit or Loss and reflected in an allowance account against loans and advances. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss was reversed through Profit or Loss. The Group considered evidence of impairment for loans and receivable on each specific asset. Therefore, all loans and receivables were assessed individually and specific impairment provisions were made. Write-off The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For individual customers, the Group has a policy of writing off the gross carrying amount when the financial asset is irrecoverable based on historical experience of recoveries of similar assets. For Agents, the Group individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group’s procedures to recovery of amounts due. Further write-off requires the approval of Board of Directors. Non-financial assets At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than inventories) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination. The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount. Impairment losses are recognised in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis. Impairment of 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 asset’s recoverable amount is estimated. An impairment loss is recognised if the carrying amount of an assets or cash generating unit (CGU) exceeds its recoverable amount. The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs.

Page 33 of 58

Notes to the Financial Statements (Contd) For the Year Ended 31st March 2019 Impairment losses are recognised in the Profit or Loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to CGU (if any) and then to reduce the carrying amounts of other assets in the CGU (group of CGUs) on pro rata basis. For other assets, an impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. 2.3.3. Real Estate Inventory All items related to Development of housing units are classified in to building sites, work in progress, completed houses and property trade debtors. Building sites are carried at cost or net realizable value whichever is lower. Costs include purchase price and development & construction costs. Borrowing costs are not allocated to cost. Work in progress consists of sold and unsold residential projects under construction and is carried at costs incurred. If the project qualifies as an agreement for the construction of real estate commissioned by a third party, the result is also recognized in. Work in progress according to the stage of completion. Expected losses on projects are immediately deducted from the work in progress. If the buyer has no or only limited influence, but the risk is gradually transferred to the buyer during construction, the result is also recognized in work in progress according to the stage of completion. If there is no such gradual transfer of risk, the result is recognized on the date of completion. Progress installments invoiced to buyers and principals are deducted from work in progress. If the balance of a project is negative (progress installments invoiced exceed the costs recognized in the statement of financial position), the balance of that project is transferred to ‘other liabilities. Property trade debtors-concern receivables from buyers of residential property. These receivables can be either unpaid installments, past due on work in progress or the balance due on sale of completed houses. Finished goods-Unsold residential properties are carried at the cost of production, less any necessary provisions. Both the carrying amount of finished goods and unsold work in progress are annually reviewed for indications of any decline in value. 2.3.4. Other Receivables Other receivables are stated at the amounts they are estimated to be realized. Provision for impairment has been made as decided by the Directors. 2.3.5. Cash and Cash Equivalents Cash and cash equivalents include cash in hand, unrestricted balances held with banks and highly liquid financial assets with maturities of three months or less from the acquisition date that are subject to an insignificant risk of changes in their fair value, and are used by the group in the management of its short-term commitments. 2.3.6. Liabilities and Provisions (a) Interest Bearing Borrowings

All loans and borrowings are initially recognized at fair value less directly attributable transaction costs. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using effective interest rate.

(b) Trade and Other Payables Trade and other payables are stated at their cost. 2.3.7 Employee Benefit Obligations (a) Defined Contribution Plan

A defined contribution plan is a post employment benefit plan under which the Group pays fixed contributions in to a separate entity and will have no legal or constructive obligation to pay further amounts. Contributions to a defined benefit plan are recognized as a “Personal Expenses” in the Statement of Comprehensive Income in the period during which services are rendered by employees. Accordingly the Group contributes 12%-15% and 3% of gross emoluments of employees to Employees’ Provident Fund and Employees’ Trust Fund respectively and is recognized as an expense under ‘Personal Expenses’.

(b) Defined Benefit Plans A defined benefit plan is a post employment benefit plan other than a Defined Contribution Plan. The liability recognized in the Statement of Financial Position is the present value of the defined benefit obligation at the reporting date. The Group operates two types of Defined Benefits Plans as described below.

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Notes to the Financial Statements (Contd) For the Year Ended 31st March 2019 (c) Gratuity Fund

The Group makes contributions to a privately managed Gratuity Fund “City Housing and Real Estate Company PLC Gratuity Fund” for each employee, based on most recent valuation on gratuity liability. Gratuity has been calculated on 1 month salary in to number of years in service. Accordingly there is a deficit of Rs. 2,488,999/- when compared with the plan asset and liability. Short Term Employee Benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.

2.3.8. Provisions A provision is recognized if, as a result of a past event, the group has a present legal or contractual obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. 2.3.9. Capital Commitments and Contingencies All material capital commitments and contingent liabilities of the group are disclosed in the respective Notes in the Annual Report. 2.3.10.Taxation (a) Current Tax

Tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in Statement of Comprehensive Income. Current tax is expected tax payable or receivable on the taxable income or loss for the year. The provision for Income Tax is based on the elements of Income and Expenditure as reported in the Financial Statements and computed in accordance with the provisions of the Inland Revenue Act No. 10 of 2006 and subsequent amendments, there on.

(b) Deferred Taxation Deferred taxation is provided using the liability method. The tax effect on all temporary timing differences which occur where items are allowed for income tax purposes in a period different from that when they are recognized in financial statements is included in the provision for deferred taxation (or future income tax benefits as applicable) at current rates of taxation.

Deferred tax assets (debits) are recognized for all deductible temporary timing differences and carried forward unused tax losses to the extent that it is probable that future taxable profit will be available against which such unused tax losses and deductible temporary timing differences can be utilized. The carrying amount of such deferred tax asset is reviewed at each reporting date and reduced to the extent that it is no longer probable that the related tax benefit will be realized.

2.3.11.Stated Capital Ordinary shares are classified as equity. 2.3.12.Revenue Recognition (a) Sale of Completed Houses

A property is regarded as sold when the significant risks and rewards have been transferred to the buyer, which is normally on unconditional exchange of contracts. For conditional exchanges, sales are recognized only when all the significant conditions are satisfied.

(b) Sales of Property Under Development Where property is under development and agreement has been reached to sell such property when construction is complete, it is considered whether the contract comprises.

(a) A contract to construct a property or, (b) A contract for the sale of a completed property

Where a contract is judged to be for the construction of a property, revenue is recognized using the percentage of completion method as construction progress. Where the contract is judged to be for the sale of a completed property, revenue is recognized when the significant risks and rewards of ownership of the real estate have been transferred to the buyer. If, however, the legal terms of the contract are such that the construction represents the continuous transfer of work in progress to the purchaser, the percentage-of-completion method of revenue recognition is applied and revenue is recognized as work in progresses. Continuous transfer of work in progress is applied when the buyer controls the work in progress, typically when the land on which the development takes place is owned by the final customer and all significant risks and rewards of ownership of the work in progress in its present state are transferred to the buyer as construction progresses, typically, when buyer cannot put the incomplete work back to the group. In such situations, the percentage of work completed is measured based on the costs incurred up until the end of the reporting period as a proportion of total costs expected to incur. Page 35 of 58

Notes to the Financial Statements (Contd) For the Year Ended 31st March 2019 (c) Interest income

Interest income is recognized as it accrues using the effective interest rate method. (d) Service charges

Full credit is taken for service charges received on sale of houses and land on installment basis at the inception of the contract.

2.3.13. Cost of Sales The cost of construction of houses and the cost of acquisition of lands together with development cost is accounted for as cost of sales. 2.3.14. Expenditure Recognition Expenses are recognized in the Statement of Comprehensive Income on the basis of direct association between the cost incurred and the earning of specific items of Income. All expenditure incurred in the running of the business and in maintaining the Property, Plant and Equipment in a state of efficiency has been charged to Income in arriving at the profit for the year. 2.3.15. Gain / Loss on Disposal of Property, Plant and Equipment Net financial result on disposal of Property, Plant and Equipment is treated as Other Income. 2.4. Critical Accounting Judgments and Key Source of Estimation Uncertainty In the application of the group accounting policies, which are described in significant Accounting Policies, the directors are required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. 2.5. New Accounting Standards issued but not yet effective The institute of Chartered Accountants of Sri Lanka has issued a number of New Accounting Standards (SLFRSs/LKASs) and amendments to standards which are effective for the annual periods beginning after 1 January 2018 and earlier applications is permitted. The Group has not early adopted the following new or amendments standards in papering these financial statements. The new standards and amendments listed below are those that could potentially have an impact on the Group’s performance, financial position or disclosures. SLFRS 16 – Leases Effective for annual periods beginning on or after 1st of January 2019. SLFRS 16 replaces LKAS 17 Leases and related interpretations (IFRIC 4 Determining whether an arrangement contains a Lease, SIC-15 Operating leases - Incentives and SIC-27 Evaluating the substance of transactions involving the legal form of a lease). SLFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under LKAS 17. The standard includes two recognition exemptions for lessees - leases of ‘low-value’ assets (e.g. personal computers) and short-term leases (i.e. leases with a lease term of 12 months or less). A lessee can choose to apply the standard using either a full retrospective or a modified retrospective approach. The Group is assessing the potential impact on its consolidated financial statements resulting from the application of SLFRS 16. 2.5.1. Amendments to the existing accounting standards effective from 1st April 2019 A number of standards have been modified on miscellaneous points these include plan amendments, Curtailment or Settlements (Amendments to LKAS 19), annual improvements to IFRSs 2015-2017 Cycle (Amendments to SLFRS 3, SLFRS 11, LKAS 12, LKAS 23 and LKAS 28). None of these amendments are expected to have a material effect on the Group’s financial Statements.

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Notes to the Financial Statements (Contd) For the Year Ended 31st March 2019

Group Company

2019 2018 2019 2018

3 Revenue Rs. Rs. Rs. Rs. Sale of Apartments, Houses and Lands 9,900,000 17,500,000 9,900,000 17,500,000 9,900,000 17,500,000 9,900,000 17,500,000

4 Net Service Charge Income / (Expense)

4.1 Service Charge Income

Legal Fees 234,650 178,603 234,650 178,603 234,650 178,603 234,650 178,603

4.2 Service Charge and Other Project Maintenance Expenses

Project Expenses - - - - Project Maintenance . - 37,490 - 37,490 - 37,490 - 37,490 234,650 141,113 234,650 141,113

5 Other Income

Legal Fees 121,810 190,000 - -

Gain / (Loss) on Sale of Property, Plant and Equipment 6,462,500 2,085,000 6,431,250 2,005,000

Non Refundable Deposit - Project Delkanda - - - -

Foreign Exchange Gain 501,112 - - - Written (Off) / Written Back Long Outstanding Balances 1,144,480 33,602,087 1,144,480 15,120,301 8,229,902 35,877,087 7,575,730 17,125,301

6 Profit from Operations is Generated from after Deducting Expenses Including Following,

Directors' Remuneration 4,800,000 4,200,030 3,600,000 3,000,030

Non Executive Director Expenses - 168,450 - 50,000

Salaries , Wages and Other Related Cost 3,252,176 6,835,769 2,590,967 5,495,439

Defined Contribution Plan Costs - EPF and ETF 587,932 1,097,431 388,672 825,990

Defined Benefit Plan Costs - Gratuity 144,375 1,038,741 69,375 92,500

Depreciation on Property, Plant and Equipment 3,592,061 3,613,893 3,517,331 3,504,242

Audit Fees 569,970 569,970 391,970 391,970

Professional and Legal Fees 131,400 198,900 131,400 123,900

Rent and Rates 5,400,000 5,400,000 5,400,000 5,400,000

7 Net Finance Income / (Cost)

7.1. Finance Income

Interest on Easy Payment Scheme -

2,738,015

-

-

Interest on Deposits 647,815

2,581,779

189,457

2,581,779

Interest Income on Plan Asset

Foreign Exchange Gain 121,920

-

121,920

-

769,735

5,319,794

311,377

2,581,779

7.2. Finance Cost

Expenses on Project Participation Home Investments -

-

-

-

Interest on Long Term Borrowings 2,795

-

-

-

Interest on Overdraft 15,148

36,121

-

-

Lease Interest 230,390

278,634

230,390

278,633 248,332

314,755

230,390

278,633

521,402

5,005,039

80,987

2,303,146

Page 37 of 58

Notes to the Financial Statements (Contd) For the Year Ended 31st March 2019

Group

Company

2019

2018

2019

2018

Rs.

Rs.

Rs.

Rs.

8 Taxation

8.1 The Major Components of Tax Expense for the Year Includes,

Current Tax Expense

Current Year Provision

- 1,567,637 - 336,354

- 1,567,637 - 336,354 Deferred Tax Expense

Origination and Reversal of Temporary Differences

(2,443,348) 2,405,488 (2,470,625) 2,382,206

(2,443,348) 2,405,488 (2,470,625) 2,382,206 Total Tax Expense

(2,443,348) 3,973,125 (2,470,625) 2,718,560

8.2 As per first Schedule of the Inland Revenue Act No 24 of 20017 every group company is taxable at the rate of 28% for any year of assessment commencing after 01st April 2018. However, the Subsidiary company is tax under the Board of Investment

agreement. Trillium Residencies Limited entered into an agreement with the Board of Investment of Sri Lanka and enjoyed a tax exemption period of five (05) years reckoned from the year of assessment, 2005/2006 as determined by the Board. After expiration of the aforesaid tax holiday period the profits and income of the enterprise shall be charged at the rate of ten percent (10%) for a period of two (2) years immediately succeeding the last date of the tax exemption period, and after the expiration of the aforesaid concessionary tax rate of ten percent (10%) referred to above, the profits and income of the enterprise shall for any year of assessment be charged at the rate of twenty percent (20%). 8.3. Reconciliation between current tax expenses / (income) and the accounting profit / (loss);

Accounting Profit / (Loss)

(27,811,707)

7,236,265

(22,876,397)

(2,659,528)

Non Business Income

(7,232,235)

(7,404,794)

(6,742,627)

(4,586,779)

Aggregate Disallowable Items

4,751,577

5,325,551

3,817,096

4,112,077

Aggregate Allowable Expenses

(187,503)

(1,771,949)

(135,192)

(214,092)

Add: Profit on Realization of Business Assets

63,750

-

32,500

-

Add: Loss on Disposal of Investment Assets

2,543,213

-

2,543,213

-

(27,872,905)

3,385,073

(23,361,407)

(3,348,322)

Adjusted Profit / (Loss)

-

3,385,073

-

-

Interest Income

769,735

4,586,115

311,377

1,848,100

Loss Claimed

(769,735)

(3,961,829)

(311,377)

(646,835)

Assessable Income

-

4,009,359

-

1,201,265

Taxation @ 28%

-

336,354

-

336,354

Taxation @ 20%

-

1,231,283

-

-

Taxation Provided for in the Accounts

-

1,567,637

-

336,354

9 Loss Per Share / Dividend Per Share 9.1 Loss per Share: The loss per share is based on the loss for the year attributable to ordinary shareholders. The average number of ordinary shares deemed to be in outstanding during the year, is determined by weighing the shares in issue on a time basis.

Loss after Tax Attributable to Ordinary Shareholders

(30,255,056)

6,063,217

(25,347,022)

(5,378,087)

Number of Ordinary Shares

13,379,850

13,379,850

13,379,850

13,379,850

Loss per Share

(2.26)

0.45

(1.89)

(0.40)

9.2 Dividend per Share The Board of Directors has not recommended a dividend on ordinary share capital for the year ended 31st March 2019.

`Proposed Dividend for the Year Nil

Nil

Nil

Nil

Number of Shares 13,379,850

13,379,850

13,379,850

13,379,850

Dividend Per Share Nil

Nil

Nil

Nil

Page 38 of 58

Notes to the Financial Statements (Contd)

10.1. The Group uses fully depreciated assets amounting to Rs. 53,274,989/-. 10.2. The cost of block of land reserved for the construction of management building in extent of 11P, marked in the Semi Condominium Plan No. 2825 as management building "D" referred to as "Developers Management Building" in the plans approved by the Colombo Municipal Council and identified as "building D" comprising of two parcels of apartments bearing assessment Nos. 135A and 135A 1/1, valued at Rs. 58,500,000/- is reflected as property of the company as resolved by the Board of Directors of City Housing and Real Estate Company PLC (the owner) and Trillium Residencies Limited (the Developer). The land was inspected on 22nd March 2019 and revalued for Rs. 58,500,000/- by an independent professional valuer, Mr. Amila Kodikara (Chartered Real Estate Consultant and Valuer) and revaluation surplus of Rs. 20,000,000/- has been credited to revaluation reserve account. Director's have assed the value of the land have resolved that no indications exsit on the impairment of the value.

As at 31st March,

10. Property, Plant and Equipment (Group)

a) Cost / Valuation Freehold Land

Office Refurbishment and

Partitions

Furniture and Fittings

Office Equipment

Computer Equipment

Motor Vehicles

Total

Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Balance as at 01-04-2018 38,500,000 4,722,913 4,008,302 6,515,579 12,691,634 49,334,485 115,772,913 Additions During the Year - - - - - - -

Disposals during the year - - - - - (7,930,960) (7,930,960)

Revaluation of Land 20,000,000 - - - - - 20,000,000

Balance as at 31-03-2019 58,500,000 4,722,913 4,008,302 6,515,579 12,691,634 41,403,525 127,841,953

b) Accumulated Depreciation Land

Office

Refurbishment and Partitions

Furniture and Fittings

Office Equipment

Computer Equipment

Motor Vehicles

Total

Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Balance as at 01-04-2018 - 4,722,913 3,674,919 6,261,697 12,588,903 42,317,162 69,565,594

Depreciation for the Year - - 30,216 91,955 44,890 3,425,000 3,592,061

Depreciation for Disposal - - - - - (7,930,960) (7,930,960)

Balance as at 31-03-2019 - 4,722,913 3,705,135 6,353,652 12,633,793 37,811,202 65,226,695

Carrying Amount as at 31-03-2018 38,500,000 - 333,383 253,882 102,731 7,017,323 46,207,319

Carrying Amount as at 31-03-2019 58,500,000 - 303,167 161,927 57,841 3,592,323 62,615,258

Page 39 of 58

Notes to the Financial Statements (Contd) As at 31st March

10.1. The company uses fully depreciated assets amounting to Rs. Rs.43,906,999.74.

Group

Company Shareholding

2019

2018

2019

2018

Rs.

Rs.

Rs.

Rs. 11. Investment in Subsidiary

Shares

Share Price

Trillium Residencies (Pvt) Ltd 100%

2,000,000

10.00

-

-

20,000,000

20,000,000

2,000,000

-

-

20,000,000

20,000,000 12. Investment in Associate Shareholding

Group

Company

2019

2018

2019

2018

Ceylinco Project Management Services Ltd. 40%

-

4,799,922

7,600,000

7,600,000 Less: Share of Profit / (Loss)

-

-

-

Less : Impairment

-

(4,799,922)

(7,600,000)

(7,600,000)

12.1 After assessing the recoverability of the investment The Board of Directors of the Company resolved to write off the investment in Associate us of the reply date

10. Property, Plant and Equipment (Company )

a) Cost / Valuation Freehold Land Office Refurbishment

and Partitions

Furniture and Office Computer Motor Total

Fittings Equipment Equipment Vehicles

Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Balance as at 01-04-2018 38,500,000 4,314,102 2,073,838 3,965,440 8,641,596 36,807,635 94,302,611

Additions During the Year - - - - - - -

Revaluation of Land 20,000,000 - - - - - 20,000,000

Disposals during the year - - - - - (7,801,910) (7,801,910)

Balance as at 31-03-2019 58,500,000 4,314,102 2,073,838 3,965,440 8,641,596 29,005,725 106,500,701

b) Accumulated Depreciation Freehold Land Office Refurbishment

and Partitions

Furniture and Office Computer Motor Total

Fittings Equipment Equipment Vehicles

Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Balance as at 01-04-2018 - 4,314,102 1,976,858 3,768,195 8,538,865 29,790,312 48,388,332

Depreciation for the Year - - 12,122 35,318 44,891 3,425,000 3,517,331

Depreciation for the Disposal - - - - - (7,801,910) (7,801,910)

Balance as at 31-03-2019 - 4,314,102 1,988,980 3,803,513 8,583,756 25,413,402 44,103,753

Carrying Amount as at 31-03-2018 38,500,000 - 96,980 197,245 102,731 7,017,323 45,914,279

Carrying Amount as at 31-03-2019 58,500,000 - 84,858 161,927 57,840 3,592,323 62,396,948

-

-

-

-

Page 40 of 58

Notes to the Financial Statements (Contd)

As at 31st March Group Company

2019 2018 2019 2018

13. Investments - Fair Value Through OCI

13.1 Investments in Equity- Measured at Fair Value

1,449,334 11,078,541 1,449,334 11,078,541

13.2 Investments in Equity- Measured at Cost 8,254,165 8,254,165 7,941,665 7,941,665

13.3 Other Investments - 1,075,000 - 1,075,000

9,703,499 20,407,706 9,390,999 20,095,206

13.1 In Quoted Company Share – Measured at Fair Value

No. of Market

Shares Value 2019 2018 2019 2018

Rs. Cts. Rs. Rs. Rs. Rs.

Blue Diamond Jewellery Worldwide PLC 13,664 0.80 10,931 10,931 10,931 10,931

Seylan Bank PLC 127,050 86.80 - 11,027,940 - 11,027,940

Nations Lanka Finance PLC 39,670 1.00 39,670 39,670 39,670 39,670

50,601 11,078,541 1,449,334 11,078,541

Impairment Group Company

13.2. In Unquoted Company Shares- Measured at Cost

2019 2018 2019 2018

Rs. Rs. Rs. Rs. Rs.

Middle Way Limited 612,500 612,500 612,500 612,500 612,500

Ceylinco Hotels Ltd. - 312,500 312,500 - -

Ceylinco Travels Ltd. 100 100 100 100 100

Ceylinco Mgt. & Acc. Ser. Ltd. - Shares - 560,000 560,000 560,000 560,000

- Debentures - 150,000 150,000 150,000 150,000

UB Finance Co., Ltd. - 1,000,000 1,000,000 1,000,000 1,000,000

Ceylinco Homes International Ltd. - 5,641,665 5,641,665 5,641,665 5,641,665

Ceylinco Venture Capital Co. Ltd. 450,000 450,000 450,000 450,000 450,000

Ceylinco Sports Complex Co. Ltd. 15,000 15,000 15,000 15,000 15,000

Ceylinco Shriram Capital Mgt. Services Co. (Pvt) Ltd.

- 90,000 90,000 90,000 90,000

Ceylinco Consolidated Co. (Pvt) Ltd. - - - - -

Ceylinco Leasing Corporation Ltd. - 500,000 500,000 500,000 500,000

Ceylinco Capital Investment Company (Pvt) Ltd.

- - - - -

Seraka Investment Ltd.-Shares 400,000 400,000 400,000 400,000 400,000

International College of Business & Technology

40,000 40,000 40,000 40,000 40,000

Ceylinco Travels & Tours Ltd. 416,500 416,500 416,500 416,500 416,500

The Finance Company - Homes 300,000 300,000 300,000 300,000 300,000

Tropical Foliage Exports (Pvt) Ltd. 500,000 500,000 500,000 250,000 250,000

Ceylinco Coloured Stone (Pvt) Ltd 1,750,000 1,750,000 1,750,000 875,000 875,000

Ceylinco Cellular Communication (Pvt) Ltd

125,000 125,000 125,000 125,000 125,000

The Sitar (Pvt) Ltd 662,500 662,500 662,500 331,250 331,250

The Standard Credit Lanka Ltd 250,000 250,000 250,000 125,000 125,000

Ceylinco Freight International (Pvt) Ltd 500,000 500,000 500,000 250,000 250,000

Ceylinco Niranjan 50,000 50,000 50,000 - -

Ceylinco International Property Development (Pvt) Ltd

2,500,000 2,500,000 2,500,000 - -

8,571,600 16,825,765 16,825,765 12,132,015 12,132,015

Less Impairment (8,571,600) (8,571,600) (4,190,350) (4,190,350)

8,254,165 8,254,165 7,941,665 7,941,665

Page 41 of 58

Notes to the Financial Statements (Contd)

As at 31st March,

Impairment

Group

Company

2019 2018 2019 2018

13.3 Other Investments Rs. Rs. Rs. Rs. Rs. Ceybank Unit Trust 200,000

200,000

200,000

200,000

200,000

Seraka Investment Ltd.- Debentures 220,000

220,000

220,000

220,000

220,000

South Asian Travels Ltd 15,000

15,000

15,000

15,000

15,000

MBSL Savings Bank PLC -

1,075,000

1,075,000

1,075,000

1,075,000

Less: Impairment 435,000

(435,000)

(435,000)

(435,000)

(435,000)

1,075,000

1,075,000

1,075,000

1,075,000

13.4 The management is of the view that the recoverable amounts from the investments other than those impared have been provided for, remains collectible.

14. Employee Benefits Plan

14.1 Defined Benefit Plan - Retiring Gratuity Obligations

Gratuity Obligation - Funded (1,360,000)

(13,565,800)

(1,360,000)

(13,565,800)

Plan Asset 46,001

46,001

46,001

46,001

Present Value of Net Obligations (1,313,999)

(13,519,799)

(1,313,999)

(13,519,799)

Recognized (Liability) / Asset for Defined Benefit Obligations

(1,313,999)

(13,519,799)

(1,313,999)

(13,519,799)

Movement of Present Value of Gratuity Obligation

Opening Balance

13,565,800

13,473,300

13,565,800

13,473,300

Gratuity Charge for the Year

69,375

665,057

69,375

665,057

Adjustment

(12,275,175)

-

(12,275,175)

-

Gain from Changes in the Assumptions

-

(572,557)

-

(572,557)

Closing Balance

1,360,000

13,565,800

1,360,000

13,565,800

Movement in Fair Value of Plan Assets

Opening Balance

46,001

16,260,940

46,001

16,260,941

Investment of Treasury Bills

-

(15,067,000)

-

(15,067,000)

Adjustment

-

(1,147,940)

-

(1,147,940)

Closing Balance

46,001

46,000

46,001

46,001

Group (2019)

Present Value of

Obligation

Fair Value of

Plan Asset

Total

Rs.

Rs.

Rs.

Balance at the Beginning of the Year

Current Service Cost

13,565,800

(46,001)

13,519,799

Investment of Treasury Bills

-

-

Adjustment

(12,275,175)

-

(12,275,175)

Gratuity Charge for the Year

69,375

-

69,375

Gain from Change in Financial Assumptions

-

-

-

Payments from Plans:

-

-

-

Balance at the End of the Year

1,360,000

(46,001)

1,313,999

Page 42 of 58

Notes to the Financial Statements (Contd) As at 31st March

15 Deferred Tax Group Company

(i) Deferred tax has been computed at the rate of 28% and 20% 2019 2018 2019 2018

Deferred Tax Liabilities Rs. Rs. Rs. Rs.

Related to Depreciation Charges (3,689,611) (7,094,171) (3,575,924) (6,958,065)

Deferred Tax Assets

Related to Gratuity Provision 2,535,000 14,665,800 1,360,000 13,565,800

Related to Tax losses - - - -

Reflected in the Statement of Financial Position (1,154,611) 7,571,629 (2,215,924) 6,607,735

28% 28% 28% 28%

Deferred Tax Asset (323,291) 2,120,056 (620,459) 1,850,166

Recognized in the Accounts (323,291) 2,120,056 (620,459) 1,850,166

15.1 Deferred tax has been recognized on all the taxable temporary differences other than for tax losses, since the company has

make continuous losses.

18.1 The management is of the view that the recoverable amounts from the related parties remains collectible hence no

impairment is provided for doubtful recoveries.

17 Inventories

Projects Under Development 113,930,493 107,534,206 113,930,493 107,534,206

113,930,493 107,534,206 113,930,493 107,534,206

18 Amounts Due from Related Parties

Ceylinco Homes International (Lotus Tower) Ltd 37,582,715 37,582,715 2,082,715 2,082,715

Ceylinco Homes International (Lotus Grove) Ltd 8,495,756 8,495,756 8,495,756 8,495,756

Ceylinco Leasing Corporation Ltd 5,000,000 5,000,000 - -

Trillium Property Management & Services Ltd 3,905,900 3,843,400 3,874,650 3,843,400

54,984,371 54,921,871 14,453,121 14,421,871

Group Company

16 Trade and Receivables 2019

Rs.

2018

Rs.

2019

Rs.

2018

Rs.

16.1 Trade Receivables

Trade Debtors 13,038,268 16,492,253 8,641,865 8,755,850

13,038,268 16,492,253 8,641,865 8,755,850

16.2 Other Receivable

Deposits Advances and Other Receivables 20,790,000 20,750,000 40,000 -

Temporary Loan 14,000,000 14,000,000 - - Project Advance (Thalapathpitiya Project) 17,091,450 21,010,000 17,091,450 21,010,000

51,881,450 55,760,000 17,131,450 21,010,000

64,919,718 72,252,253 25,773,315 29,765,850

Page 43 of 58

Page 44 of 58

Notes to the Financial Statements (Contd) As at 31st March 24. Other Borrowing is obtained from the company's own Gratuity Trust Fund, which is an interest free borrowing.

Group Company

2019 2018 2019 2018

Rs Rs Rs Rs

25 Amounts Due to Related Companies

Trillium Residencies Ltd

-

-

88,697,858

83,207,759

-

-

88,697,858

83,207,759

26 Trade and Other Payable

Provision for Project Related Expenses

15,619,655

15,619,655

15,619,655

15,619,655

Trade Payables

44,150

221,705

44,150

221,705

Project Advances

44,359,345

44,350,407

44,359,343

44,350,407

Other Payables and Accrued Charges

134,145,996

134,231,614

4,625,355

4,712,233

194,169,146

194,423,381

64,648,503

64,904,000

27 Current Tax Liability

Balance at the Beginning of the Year

2,215,015

1,411,587

1,415,237

1,441,337

Current Tax Expenses (Note 8.1)

-

1,567,637

-

336,354

Less: Installment Payments

-

-306,905

-

-177,644

Less : Adjustments

-

-

-

-

Less: Withholding Tax

-30,866

-457,304

-10,529

-184,810

Balance as at the Reporting Date

2,184,149

2,215,015

1,404,708

1,415,237

28. Going Concern Trillium Residencies Limited ("the subsidiary") an enterprise entered into an agreement with the Board of Investment of Sri Lanka (BOI) Law No. 04 of 1978 has duly functioned over the past years and has executed its business activities, and after the completion of the Project (selling of the last apartment) the company intends entering into new undertakings or projects hence, will continue as a going concern in the foreseeable future.

Page 45 of 58

Notes to the Financial Statements (Contd) As at 31st March 29.Related Parties 29.1. Transactions with Key Management Personal 29.1.1.The Compensation of KMPs For the Year Ended 31st March

2019

Group 2018

Group

Executive Directors

Rs

Non-Executive Directors

Rs

Executive Directors

Rs

Non-Executive Directors

Rs

Short Term Employment Benefit 4,800,000 NIL 4,200,030 50,000

For the Year Ended 31st March

2019

Company 2018

Company

Executive Directors

Rs

Non-Executive Directors

Rs

Executive Directors

Rs

Non-Executive Directors

Rs

Short Term Employment Benefit 4,800,000 NIL 4,200,030 50,000

29.2. Dealings with Related Parties (a)

Name of the Company and

Relationship Name of Directors Nature of Transaction

Amount of Outstanding

Balances/ Amount of the

Transaction (Rs.)

Trillium Residencies Ltd

Mr. J.W.M.J.P.K. Ratnayake

Mr. J.W.M.R.L.B. Ratnayake

Mr. H.K.K.S. Hiswella

Mr. W.A.Y. Vitharana

Mrs. M.S.S. Paramananda

Mrs. P.I.A.G. Bimba

Investments in Equity

shares 20,000,000

Payable Group Expense (88,697,858)

Trillium Property Management

and Services (Private) Limited

Mr. J.W.M.J.P.K. Ratnayake

Mr. J.W.M.R.L.B. Ratnayake

Group expenses -

Receivable 3,905,900

Advance Paid on

Construction Agreement 17,091,450

Rent Paid 5,400,000

Bill Paid 46,545,425

Agreement for the

Construction of

Condominium Housing

Project

154,000,000

Ceylinco Homes International

(Lotus Tower ) Ltd. Mrs. P.K. Karunanayake

(Resigned with effect from 29-07-2016)

Group expenses -

Receivable 37,582,715

Ceylinco Homes International

(Lotus Grove) Limited Mrs. P.K. Karunanayake

(Resigned with effect from 29-07-2016)

Group expenses -

Receivable 8,495,756

Ceylinco Leasing Corporation Ltd Mrs. P.K. Karunanayake

(Resigned with effect from 29-07-2016) Advance Payment 5,000,000

29.3.The Board of Directors confirm that the related party transactions were made on terms equivalent to those that prevail in arm’s length transactions are made only if such terms can be substantiated and all relevant transactions which needed disclosure been disclosed above and there are no related party transactions other than those disclosed in Notes 19 and 25 to the financial statements. 29.4. Other Disclosure

Description Remark

Subsidiaries Trillium Residencies Limited 100%

Page 46 of 58

Notes to the Financial Statements (Contd) As at 31st March 30.Capital Commitments No known capital commitments as at the reporting date. 31.Contingencies Pending Legal Cases

32.Event after the reporting period There have been no material events occurring after the reporting date that require adjustments or disclosures in the Financial Statements. 33.Securities Pledged (Subsidiary) There are no assets have been pledge as security for liabilities as at the reporting date. 34.Directors Shareholdings in the Company (Voting)

Name As at 31.03.19 As at 31.03.18

Mr. J.W.M.J.P.K. Ratnayake 1,404,609 1,404,609

Mr. J.W.M.R.L.B. Ratnayake - -

Mr. H.K.K.S. Hiswella - -

Mr. W.A.Y. Vitharana - -

Mrs. M.S.S. Paramananda - -

Mrs. P.I.A.G. Bimba - -

Nature of the Litigation The Progress of the Case to Date

HC/CIVIL298/2015/MR Management Corporation Vs. Trillium

Residencies

Hearing held on 27.08.2015, 10.12.2015, 23.03.2016, 27.01.2017,31.03.2017,02.06.2017,28.07.2017, 24.08.2017,13.11.2017,12.10.2017,24.07.2018,18.09.2018, 28.01.2019,01.07.2019,

Page 47 of 58

Notes to the Financial Statements (Contd) As at 31st March 35.Financial Instruments-By Category (Group) 35.1 Financial Assets by Categories

Fair Value Through Profit or Loss

Fair Value Through Other Comprehensive Income

Amortized Cost Total

2019 2018 2019 2018 2019 2018 2019 2018

Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Financial Instruments in Non-Current Assets

Investments - Fair Value Through OCI - - 9,379,766 20,407,706 - - 9,379,766 20,407,706

- - 9,379,766 20,407,706 - - 9,379,766 20,407,706

Financial Instruments in Current Assets

Trade and Other Receivables 64,919,718 72,252,253 - - - - - 72,252,253

Amounts Due from Related Parties 54,984,371 54,921,871 - - - - - 54,921,871

Cash and Cash Equivalents 8,899,488 23,980,312 - - - - 8,899,488 23,980,312

128,803,577 151,154,436 - - - - 137,703,065 151,154,436

128,803,577 151,154,436 9,379,766 20,407,706 - - 147,082,831 171,562,142

35.2 Financial Liabilities by Categories

Financial Liabilities at Fair

Value Through / Profit or Loss

Financial Liabilities at Amortized Cost Total

2019 2018 2019 2018 2019 2018

Rs. Rs. Rs. Rs. Rs. Rs.

Financial Instruments in Non-Current Liabilities

Interest Bearing Borrowings - - - 1,048,435 - 1,048,435

- - - 1,048,435 - 1,048,435

Financial Instruments in Current Liabilities

Interest Bearing Borrowings - - 575,395 610,618 575,395 610,618

Other Borrowings - - 15,000,000 15,000,000 15,000,000 15,000,000

Amounts Due to Related Parties - - - - - -

Trade and Other Payables - - 194,169,146 194,423,381 194,169,146 194,423,381

Bank Balances Overdrawn 452,710 1,996,290 - - - -

- - 209,744,541 210,033,999 209,744,541 210,033,999

452,710 1,996,290 209,744,541 211,082,434 209,744,541 211,082,434

The above table does not include fair value information for financial assets and liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value. The Group has not disclosed the fair values for financial instruments such as short-term trade receivables and payables, because their carrying amounts are a reasonable approximation of fair value.

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Notes to the Financial Statements (Contd) As at 31st March Fair Value Hierarchy The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Input other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3: Inputs for the assets or liability that are not based on observable market data (unobservable inputs).

Level 1 Level 2 Level 3 Total

As at 31st March 2019 2018 2019 2018 2019 2018 2019 2018

Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Group

Fair Value Through OCI 8,497,375 33,062,563 9,329,165 9,329,165 119,904,093 127,171,124 137,730,533 169,562,852

Fair Value Through Profit or Loss - - 8,958,417 21,223,101 - - 8,958,417 21,223,101

Amortized Cost - - - - 209,744,540 211,082,433 209,744,540 211,082,433

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Notes to the Financial Statements (Contd) As at 31st March 36.Financial Instruments-By Category (Company)

36.1 Financial Assets by Categories Fair Value Through

Profit or Loss Fair Value Through Other Comprehensive Income

Amortized Cost Total

2019 2018 2019 2018 2019 2018 2019 2018

Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Financial Instruments in Non-Current Assets

Investments - Fair Value Through OCI - - 9,067,266 20,095,206 - - 9,067,266 20,095,206

- - 9,067,266 20,095,206 - - 9,067,266 20,095,206

Financial Instruments in Current Assets

Trade and Other Receivables 25,773,315 29,765,850 - - - - 25,773,315 29,765,850

Amounts Due from Related Parties 14,453,121 14,421,871 - - - - 14,453,121 14,421,871

Cash and Cash Equivalents 3,200,350 11,217,068 - - - - - -

43,426,786 55,404,789 - - - - - .

43,426,786 55,404,789 9,067,266 20,095,206 - - - -

The above table does not include fair value information for financial assets and liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value. The Company has not disclosed the fair values for financial instruments such as short term trade receivables and payables, because their carrying amounts are a reasonable approximation of fair value.

36.2 Financial Liabilities by Categories

Financial Liabilities at Fair Value Through Profit

or Loss

Financial Liabilities at Amortized Cost Total

2019 2018 2018 2019 2019 2018

Rs. Rs. Rs. Rs. Rs. Rs.

Financial Instruments in Non-Current Liabilities

Interest Bearing Borrowings - - - 1,048,435 - 1,048,435

- - - 1,048,435 - 1,048,435

Financial Instruments in Current Liabilities

Interest Bearing Borrowings - - 575,395 610,618 575,395 610,618

Other Borrowings - - 15,000,000 15,000,000 15,000,000 15,000,000

Amounts Due to Related Parties - - 88,697,857 83,207,758 88,697,857 83,207,758

Trade and Other Payables - - 64,648,502 64,904,000 64,648,502 64,904,000

Bank Balances Overdrawn - 1,465,479 - - - 1,465,479

- 1,465,479 168,921,754 163,722,376 168,921,754 165,187,855

- 1,465,479 168,921,754 164,770,810 168,921,754 166,236,290

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Notes to the Financial Statements (Contd) As at 31st March Fair Value Hierarchy The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Input other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3: Inputs for the assets or liability that are not based on observable market data (unobservable inputs).

As at 31st March

Level 1 Level 2 Level 3 Total

2019 2018 2019 2018 2019 2018 2019 2018

Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Category

Available For Sale (AFS) 50,601 11,078,541 - - 9,016,665 9,016,665 9,067,266 20,095,206

Held For Maturity (HTM) - - 8,958,417 21,223,101 - - 8,958,417 21,223,101

Fair value Through Profit or Loss (FVTPL) - - - - - - - -

Loans and Borrowings - - - - 40,226,436 44,187,721 40,226,436 44,187,721

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Notes to the Financial Statements (Contd) As at 31st March Financial Risk Management Overview The Group has exposure to the following risks from its use of financial instruments: • Credit risk • Liquidity risk • Market risk This 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. Further quantitative disclosures are included throughout these consolidated financial statements. Risk Management Framework The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. Credit risk Credit risk is the risk of financial loss to the Group if a customer or counter party to a financial instrument fails to meet its contractual obligation, and arise principally from the Group’s receivables from customers. Carrying amount of financial assets represents the maximum credit exposure The maximum exposure to credit risk at the reporting date was as follows;

Group Company

2019 2018 2018 2018

Rs. Rs. Rs. Rs.

Trade Receivables 64,919,718 72,252,253 25,773,315 29,765,850

Amount due from Related Companies 54,984,371 54,921,871 14,453,121 14,421,871

Cash and Cash Equivalents 8,899,488 23,980,312 3,200,350 11,217,068

Total Credit Risk Exposure 128,803,577 151,154,436 43,426,786 55,404,789

Available for Sale Investments 9,379,766 20,407,706 9,067,266 20,095,206

Total Equity Risk Exposure 9,379,766 20,407,706 9,067,266 20,095,206

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.

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Notes to the Financial Statements (Contd) As at 31st March The following are the contractual maturities of financial liabilities as at 31st March 2019.

Group Within 1 year Between 1-2 years

Between 2-3 years

Between 3-4 years

Between 4-5 years

More than 5 years

Total

Financial Instruments in Non-Current Liabilities

Finance Lease - - - - - - -

- - - - - - -

Financial Instruments in Current Liabilities

Other Borrowings - - - 15,000,000 - - 15,000,000

Finance Lease 575,395 - - - - - 575,395

Trade and Other Payable 134,190,146 - - 44,359,345 - - 178,549,491

Bank Balance Overdrawn 452,710 - - - - - 452,710

135,218,251 - - 59,359,345 - - 194,577,596

Company Within 1 year

Between 1-2 years

Between 2-3 years

Between 3-4 years

Between 4-5 years

More than 5 years

Total

Financial Instruments in Non-Current Liabilities

Finance Lease - - - - - - 1,980,422

- - - - - - 1,980,422 Financial Instruments in Current Liabilities

Other Borrowings - - - 15,000,000 - - 15,000,000

Finance Lease 575,395 - - - - - 575,395

Amounts Due to Related Parties - - - 88,697,857 - - 88,697,857

Trade and Other Payable 4,669,505 - - 44,359,343 - - 49,028,848

5,244,900 - - 148,057,200 - - 153,302,100

Market Risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. Currency Risk The Group is exposed to currency risk on sales and purchases that are denominated in a currency other than the Sri Lankan rupees (LKR). The Group also has limited exposure in respect of recognised foreign currency assets and liabilities. Interest Rate Risk The Group is exposed to interest rate risk on borrowings and deposits. The Group’s interest rate policy seeks to minimize the cost and volatility of the Group’s interest expense by maintaining a diversified portfolio of fixed rate, floating rate and inflation-linked liabilities.

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Investor Relations Supplement

1.GENERAL STATED CAPITAL ISSUED SHARES STOCK EXCHANGE LISTING

The issue lisiting ordinary shares of the company are listed with the Colombo Stock Exchange

2.ANALYSIS OF SHAREHOLDERS

RESIDENT NONRESIDENT TOTAL

Shareholdings Number of Shareholders

No of Shares Percentage

(%)

Number of

Shareholders

No of Shares

Percentage ("/•)

Number of No of Shares Percentage

Shareholders (%)

1 to 1000 Shares 1,312 325,855 2.44 6 2,423 0.02 1,318 328,278 2.46

1001 to 10,000 Shares 471 1,615,531 12.07 8 32,710 0.24 479 1,648,241 12.31

10,001 to 100,000 Shares 115 2,930,112 21.90 1 10,900 0.08 116 2,941,012 21.98

100,001 to 1,000,000 Shares 5 1,478,934 11.05 0 0 0.00 5 1,478,934 11.05

Over 1,000,000 Shares 3 6,983,385 52.19 0 0 0.00 3 6,983,385 52.19

1906 13,333,817 99.66 15 41,033 0.34 1,921 13,379,850 100.00

The percentage of shares held by the Public =47.81%

3. Categories of Shareholders Number of Shareholders Number of Shares

Individual 1,800 6,545,799

Institutional 101 6,834,051

1,921 13,379,850

4. SHAREVALUATION

The market value per share

Recorded the year ended 31st March

2019

Rs

2018

Rs

Highest Value 6.40 8.80

Lowest Value 3.60 5.30

Last Traded price 3.60 5.70

5. DIRECTORS’ SHAREHOLDINGS

As at 31.03.19

Ordinary Shares As at 31.03.18

Ordinary Shares

Mr. J.W.M.J.P.K. Ratnayake 1,404,609 1,404,609

Mr. J.W.M.R.L.B. Ratnayake - -

Mr. H.K.K.S. Hiswella - -

Mr. W.A.Y. Vitharana - -

Mrs. M.S.S. Paramananda - -

Mrs. P.I.A.G. Bimba - -

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Investor Relations Supplement (Contd) 6. MAJOR SHAREHOLDERS 31-03-2019 31-03-2018 Issued Share Capital Issued Share Capital 13,379,850 @Rs.10/-each 13,379,850 @Rs.10/-each

Name of Shareholder No. of Shares % Name of Shareholder No. of Shares %

1) The Finance Company PLC 13,298,950 24.66 1) The Finance Company PLC 13,298,950 24.66

2) Ceylinco Capital Investment Company (Private)

Ltd. 2,279,826 17.04

2) Ceylinco Capital Investment Company

(Private) Ltd. 2,279,826 17.04

3) Mr. J.W.M.J.P.K. Ratnayake 1,404,609 10.50 3) Mr. J.W.M.J.P.K. Ratnayake 1,404,609 10.50

4) Mr.J.L.B.KotelawaIa 797,634 5.96 4) Mr.J.L.B.KotelawaIa& 797,634 5.96

5) Mr.Kotelawala & Mrs.S.P.C.Kotelawala 234,000 1.75 5) Mr.Kotelawala& 234,000 1.75

6) Mrs..Kotelawala 225,900 1.69 6) Mrs.S.P.C.Kotelawala 225,900 1.69

7) Finance and Guarantee Property Developers

(Pvt) Ltd. 117,500 0.88

7) Finance and Guarantee Property Developers

(Pvt) Ltd. 117,500 0.88

8) Asha Financial Services Limited /Mr.C.N Pakianathan

103,900 0.78 8) Asha Financial Services Limited / 103,900 0.78

9) Mr.W.L.Gunasena 82,631 0.62 9) Mr.W.L.Gunasena 82,631 0.62

10) Mr.Padma Kumara 75,100 0.56 10) Mr.Pathirana 70,000 0.52

11) Oxford Garment Industries Ltd. 67,500 0.50 11) Oxford Garment Industries Ltd. 67,500 0.50

12) Merchant Bank Of Sri Lanka PLC / 67,450 0.50 12) Merchant Bank Of Sri Lanka PLC / 67,450 0.50

13). Mr. Premadasa & Mrs. H.N. Fernando 64,524 0.48 13) Mr.Peiris 64,207 0.48

14) Mr.Peiris 64,207 0.48 14) People’s Leasing & Finance PLC/ Dr. H.S.D.

Soysa & Mrs. G. Soysa 61,095 0.46

15) People’s Leasing & Finance PLC/ Dr. H.S.D.

Soysa & Mrs. G. Soysa

61,095 0.46 15) Mr. Premadasa & Mrs. H.N. Fernando 56,455 0.42

16) .Mr.B.R.R Kariayawasam 60,658 0.45 16) New Interiors (Pvt) Ltd 56,250 0.42

17).Mrs.R Mythily 60,100 0.45 17) Mr. Nassim Hussain 54,597 0.41

18). 20) People’s Merchant Finance PLC/R.M Samarakkody

58,120 0.43 18) Miss.Muththettuwatte Kankanamlage 54,279 0.41

19) New Interiors (Pvt) Ltd Mr. Nassim Hussain 56,250 0.42 19) Estate Of Mr. J.F. Pereira (Deceased) 54,000 0.40

20) Miss.Muththettuwatte Kankanamlage 54,279 0.41 20) People’s Leasing & Finance PLC/

LP.Hapangama 51,443 0.38

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Notes of the Annual General Meeting NOTICE IS HEREBY GIVEN THAT the 36th Annual General Meeting of the City Housing & Real Estate Company PLC will be held on Monday the 30th day of September 2019 at 4.00 p.m. at No.38, Somadevi Place, Kirulapone, Colombo 05. AGENDA

1. To receive and consider the Annual Report of the Board of Directors along with the Audited Financial Statements for the year ended 31st March 2019 and the report of the Auditors thereon.

2. To re-elect Mr. J.W.M.R..B. Ratnayake who retires in terms of the Articles of Association as a Director of the Company.

3. To re-elect Ms. P.I.A.G.B. Illanperuma, who retires in terms of the Articles of Association as a Director of the Company.

BY ORDER OF THE BOARD City Housing and Real Estate Company PLC (Sgd) Authorised Signatory Chart Business System (Pvt) Ltd. Secretaries Colombo Note : A member entitled to attend and vote at the meeting is entitled to appoint a Proxy (whether a member or not) to attend and vote instead of him. A Form of Proxy is enclosed with the report for this purpose and shareholders who are unable to attend the meeting in person are requested to kindly complete and return such Form of Proxy in due time. In accordance with the instructions noted on the Form of Proxy.

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5. To authorize the Directors to determine payments for the year 2019/2020 for charitable and other Purposes as set out in the Companies Donation Act.

4. To appoint new auditors for the year 2019/2020 since M/s Tudor V. Perera & Co., Chartered Accountants has tendered their resignation as Auditors of the Company with effect from the financial year 2019/2020 and to authorize the board of directors to determine their remuneration.

Proxy Form I/We . .. ....................................................................................................................................................................................... Of ………………………………………………………………………………………………………………………………………………………………………………………… being a Member/Members of City Housing & Real Estate Company PLC, hereby appoint: Mr. J.W.M.J.P.K. Ratnayake of Colombo or failing him Mr. W.A.Y. Vitharana of Wennappuwa of failing him Mr. M.S.S. Paramananda of Colombo or failing him Mr. H. K. K. S. Hiswella of Colombo or failing him Ms. P.I.A.G.B. Illanperuma of Colombo or failing her Mr. J.W.M.R.L.B. Ratnayake of Colombo or failing as my/our proxy to represent me/us on my/our behalf as at the Annual General Meeting of the Company to be held on Monday the 30th day of September 2019 at 4.00 p.m. at No.38, Somadevi Place, Kirulapone,Colombo 05 and at any adjournment thereof and at any poll which may be taken in consequence thereof. Indicate your preference by placing a √ against the Resolution No.

1.To receive and consider the annual reportof the board of Directors along with the financial

statements for the year ended 31st March 2019& The Report of the Auditors thereon

2. To re elect Mr.J.W.M.R.L.B Ratnayake who retires in terms of the Articles of Association as

a director of the Company

3. To re elect Ms.P.I.A.G.B Illanperuma who retires in terms of the Articles of Association as a

director of the Company

5.To authorize the the board of Directors to determine payment for the year 2019/2020 for

charitable and other purposes as set out in the companies donations act

As witness my/our hand(s) this ... ........................................................................................................ day of Two Thousand and Nineteen(2019)

Signature ……………………………………………………..

Note

1) Please delete inappropriate words

2) Instructions as to completion are noted on the reverse thereof.

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4. To appoint new auditors for the year 2019/2020 since M/s Tudor V. Perera & Co., Chartered Accountants has tendered their resignation as Auditors of the Company with effect from the financial year 2019/2020 and to authorize the board of directors to determine their remuneration.

INSTRUCTIONS AS TO COMPLETION OF FORM OF PROXY 1. Kindly perfect the Farm of Proxy, after filling in legibly your full name and address, by signing in the space provided and filling in the

date of signature.

2. If the proxy is signed by an Attorney, the relative Power of Attorney should also accompany the Proxy Form for registration, if such

Power of Attorney has not already been registered with the Company.

3. If the shareholder is a Company or Corporate Body, the Form of Proxy should be executed under its Common Seal in accordance

with its Articles of Association or Constitution.

4. The completed Form of Proxy should be deposited with the Company Secretary - Chart Business System (Pvt) Ltd. No. 141/3, Vauxhall

Street, Colombo 02., not later than 48 hours before the Meeting.

5. If there is any doubt as to how the vote is to be exercised, by reason of the manner in which the Form of Proxy has been completed,

no vote will be recorded by the Form of Proxy.

Page 58 of 58