Annual Report - 2008 - Colombo Stock Exchange

Learning from the Past… Investing for the Future.Ceylon Theatres PLCAnnual Report 2008

ContentsCorporate Profile 2-3 Origins 4 Corporate Information 5 Profile of Directors 6-7 Financial Highlights 8 Chairman’sStatement 9-11 Operations Review 12-33 Corporate Governance 34 Statement of Directors’ Responsibilities 35 FinancialInformation 37-87 Five Year Review - Group 88 Group Real Estate Portfolio 89-90 Information to Shareholders 91-92Notice of Annual General Meeting 93 Ceylon Theatres PLC Group Directory 94-96 Notes 97-98 Form of Proxy 99

Ceylon Theatres PLC | Annual Report 2008 | We areProfessionals inspired bythe ingrained family valuesinherited over generationsValue creators drivenby innovation andtechnology towardsbuilding strong brandsAccountable, firmlycommitted to transparencyand good governanceDedicated to people as ourmost important assetSocially responsiblepursuing trustedleadershipCeylon Theatres PLC

Ceylon Theatres PLC | Annual Report 2008 | Corporate ProfileFood and BeverageCargills (Ceylon) PLC is spearheadingthe sustainable development of thefood industry in Sri Lanka with astrong focus on innovation and yearon-year investment in people andprocesses. It has the largest retailnetwork in the island with over 50%of modern retail market share, whileleading sectoral growth in the foodmanufacturing sector with three ofthe largest production facilities in thecountry.The Cargills agribusiness model hasgained global recognition for linkingthe farmer to the market througha sustainable and inclusive valuecreation process. The company isthe leading player in the country’srestaurant sector and holds thefranchise for KFC which is the largestinternational restaurant chain in SriLanka.Real EstateThe Group’s interests in Real Estateare driven by CT Land Developmentand CT Properties. CT LandDevelopment owns Majestic City,Sri Lanka’s premier shopping andentertainment complex, while CTProperties is currently in the finalstages of developing ‘Empire’, SriLanka’s tallest residential buildingstructure, and CT Gardens, atownship development project, whilehaving other projects in the pipeline.Bandarawela Hotel is the only hotelunder the Group, but is a highlypatronized favourite get-away spotin the hills for many local and foreigntourists.Ceramics, Tiles and WoodenFlooringThe Group’s interests in this segmentinclude mining of ceramic rawmaterials and retailing of ceramic andallied products through its subsidiaryLanka Ceramic, and the manufactureof wall tiles, floor tiles and woodenflooring. Lanka Walltile is the solemanufacturer of wall tiles in Sri Lanka,while Lanka Tiles is the pioneer floortile producer in Sri Lanka for both thedomestic and export markets. Parquetmanufactures wooden flooring.Through its marketing and distributionarm Millers, the company distributesits manufactured brands andinternationally acclaimed food andnon-food brands via a network ofdistributors spread across the 25districts of the island.

Ceylon Theatres PLC | Annual Report 2008 | PlantationsThe Group’s Plantation segment isspearheaded by Ceytea PlantationManagement, the holding company oflisted subsidiary Horana Plantations,which has leasehold rights to 16estates, constituting approximately7,500 ha of land. The company hasalso developed its leisure sector withinvestments into the renovation andrefurbishment of bungalows in itsestates.Financial ServicesThis segment includes stockbrokering, capital market solutionsand fund management throughcompanies CT Smith Stockbrokers,CT Capital and CT FundManagement. CT Smith Stockbrokersis one of the leading brokering firms inSri Lanka, while CT Capital primarilyengages in providing a diverse rangeof capital market solutions andfinancial advisory services. CT FundManagement manages ComtrustEquity Fund, which is structured toyield optimum results for investors.EntertainmentThis segment consists of CT Films.Ceylon Theatres has been associatedwith the entertainment industry in SriLanka for more than 75 years, andoperates some of the best knowncinemas in the country such asthe Regal and Majestic Cinemas inColombo, and the Regal Cinemasin Kandy and Negombo. CeylonTheatres has been a key player in thesustenance of the local film industry.PackagingThis segment consists of Uni Dilpackaging. Uni Dil is striving tobecome the preferred partner forPackaging among Sri Lanka’sindustrialists.

Ceylon Theatres PLC | Annual Report 2008 | OriginsCeylon Theatres PLC was established for the purpose of filmexhibition in 1928, with the late Sir Chittampalam A Gardineras its first Chairman and Managing Director.Under the guidance of the late Sir Chittampalam A Gardiner,the company acquired a controlling interest in Millers Ltd in1945, which in turn acquired a controlling interest in Cargills(Ceylon) Ltd in 1946. In 1971, the Company, after the demiseof its founder Chairman, made a decision to concentrate onthe cinema industry and divested its controlling shareholdingin Millers Ltd, thereby losing control of Cargills (Ceylon) Ltd.When the late Mr. Albert A Page was appointed the ManagingDirector of Ceylon Theatres Ltd in 1980, the Company wasfacing grave difficulties due to the establishment of the StateFilm Corporation which took over the import and distributionof motion films in the industry. To counter the adversebusiness climate faced by the Company, Mr. Albert A Pageset out to regain control of Millers Ltd and through it Cargills(Ceylon) Ltd. Under the stewardship of the late Mr. AlbertA Page, a great visionary, the Group then further diversifiedinto Food Processing, Property Development and FinancialServices, and also into the Ceramic, Tiles and Plantationssectors with the acquisition of Lanka Ceramic in 1999.During the year under review, the Group engaged in arestructure of operations, with Ceylon Theatres and Millersmerging into a single entity, and the operations of Millersbeing transferred to Cargills. The restructuring consolidatedthe investments in significant business entities within theGroup under a single holding company. The merger has alsoled to cost reductions and improved efficiency, while alsogiving Ceylon Theatres a larger holding in Cargills, which isthe holding company of one of the Group’s key businesssegments.

Ceylon Theatres PLC | Annual Report 2008 | Corporate InformationName of CompanyCeylon Theatres PLCStock Exchange ListingColombo Stock ExchangeRegistration No.PQ210Legal FormQuoted public company with limited liabilityIncorporated in Sri Lanka on 29th September 1928Board of DirectorsAnthony A Page (Chairman)L R Page (Deputy Chairman)J B L De SilvaA T P EdirisingheSunil MendisJ C PageV R PageMrs. T A SelvaratnamR SelvaskandanMrs. C K Muttukumaru (alternate to Mrs. T A Selvaratnam)Executive CommitteeA T P Edirisinghe (Chairman)Anthony A PageV R PageR SelvaskandanInvestment CommitteeAnthony A PageL R PageMrs. C K MuttukumaruAudit CommitteeA T P EdirisingheAnthony A PageJ B L De SilvaAuditorsKPMG Ford Rhodes Thornton & Co, Chartered AccountantsCompany SecretaryS C NilesTax ConsultantsPricewaterhouse Coopers, Chartered AccountantsRegistered OfficeNo 8 Sir Chittampalam A Gardiner MawathaColombo 2 , Sri LankaTelephone : 2431243E mail : ceylontheatres@sltnet.lkFax : 2447956Postal AddressP O Box 327, ColomboLegal ConsultantsJohn Wilson, Attorney at lawBankersCommercial Bank of Ceylon PLCHatton National Bank PLCNations Trust Bank PLCPeoples BankStandard Chartered BankUnion Bank of Colombo

Ceylon Theatres PLC | Annual Report 2008 | Profile of DirectorsMr. Anthony A Page (Chairman) **Mr. Anthony Page counts over 37 years of managementexperience in a diverse array of businesses. He serves onthe Boards of many group as well as other companies. He isa Fellow Member of the Institute of Chartered Accountantsof Sri Lanka. He was on the Board of the Colombo StockExchange and was a former Council Member of theEmployers Federation of Ceylon.Mr. Louis R Page (Deputy Chairman) **Mr. Louis Page is a Fellow Member of the Institute ofChartered Accountants of Sri Lanka and a Fellow Member ofthe Chartered Institute of Management Accountants (UK). Hehas been involved in the operations of the Ceylon TheatresGroup in a non-executive capacity and in the setting andreview of policy framework, and in key investment decisionmaking.He is also the Chairman of Cargills (Ceylon) PLC. Hehas also held a number of senior management and boardpositions in overseas companies.Mr. J B L De Silva *Mr. De Silva, a lawyer by profession, has substantialexperience in the rubber trade. He is a past Chairman of theColombo Rubber Traders’ Association and many other listedand non-listed companies.Mr. A T P Edirisinghe *Mr. Priya Edirisinghe is a Fellow Member of the Institute ofChartered Accountants of Sri Lanka, a Fellow Member of theChartered Institute of Management Accountants (UK) andholds a Diploma in Commercial Arbitration. He is the SeniorPartner of HLB Edirisinghe & Co, Chartered Accountants.He counts over 39 years experience in both public practiceand in the private sector. He serves on the Boards of Cargills(Ceylon) PLC as well as a number of other listed and nonlistedcompanies.Mr. Sunil Mendis *Desamanya Sunil Mendis was formerly the Chairman ofthe Hayleys Group and the former Governor of the CentralBank of Sri Lanka. He possesses 40 years wide and variedcommercial experience mostly in very senior positions.J C Page **Mr. Joseph Page is the Deputy Chairman / Managing Directorof C T Land Development PLC, and is also the ExecutiveDirector of C T Properties Limited. Prior to joining C T LandDevelopment Limited, he was Executive Director of MillersPLC. He has over 25 years of management expertise in theprivate sector.V Ranjit Page **Mr. Ranjit Page is the Deputy Chairman/Managing Directorof Cargills (Ceylon) PLC and possesses over 25 years ofmanagement experience with expertise in food retailing, foodservice, and manufacturing, having introduced the conceptof supermarketing to the Sri Lankan masses. He also serveson the Boards of several other companies. He is also aFounder Director of the Mawbima Lanka Foundation, set upto promote local industry and produce.

Ceylon Theatres PLC | Annual Report 2008 | Mrs. T A Selvaratnam **Mrs. Therese Selvaratnam has been a Director of CeylonTheatres since September 1994.Mr. R Selvaskandan **Mr. Selvaskandan is an Attorney-at-Law (SL) and Solicitor(England & Wales and Hong Kong) and was a seniorpartner of a leading law firm in Hong Kong prior to joiningthe property sector of the Ceylon Theatres Group. He isthe Deputy Chairman/CEO of CT Properties Limited and apartner of Varners in addition to his other responsibilities.He has more than 20 years experience in legal work andmanagement in Sri Lanka, UK and Hong Kong.Mrs. C K Muttukumaru (alternate to Mrs. T ASelvaratnam)Mrs. Muttukumaru is a Fellow Member of the Institute ofChartered Accountants of Sri Lanka and a Fellow Memberof the Chartered Institute of Management Accountants (UK).She is the Managing Director of C T Smith Stockbrokers (Pvt)Ltd and is also the Deputy Chairman of C T Capital (Pvt) Ltd.Prior to joining C T Smith, Mrs. Muttukumaru was Head ofFinance at Ceylon Theatres.* Independent Non - Executive** Non Independent Non - Executive

Ceylon Theatres PLC | Annual Report 2008 | Financial HighlightsGroupCompany008 2007 Change 2008 2007 ChangeRs ‘000 Rs ‘000 % Rs ‘000 Rs ‘000 %OperationsTurnover 31,866,470 24,923,917 27.85% 25,591 26,304 -2.71%Profit / (loss) from Operations 1,468,520 1,268,690 15.75% (97,547) (23,925) 307.72%Income from Investments 142,040 17,150 728.22% 306,993 79,264 287.30%Profit on sale of Property, Plant and Equipment 9,092 12,585 -27.76% 216 - -Other Income 641,302 521,150 23.06% 7,328 - -Finance Expense (Net) (648,836) (425,479) -52.50% (56,960) (16,671) -259.67%Profit Before Taxation 1,612,118 1,392,228 15.79% 157,030 38,668 306.10%Taxation (431,910) (386,582) -11.73% (446) - -Profit After Taxation 1,180,208 1,005,646 17.36% 156,584 38,668 305.01%Profit Attributable to EquityHolders of the Company 437,730 265,314 64.99% 156,584 38,668 305.01%Per share dataEarnings Per Share (Rs) 193.87 117.96 64.37% 69.62 17.19 304.94%Earnings Per Share - diluted (Rs) 179.87 109.02 65.00% 64.35 15.89 305.01%Dividends Per Share (Rs) 8.00 10.00 -20.00% 8.00 10.00 -20.00%Dividend Cover (Times) 24.23 11.80 105.44% 8.70 1.72 406.25%Shareholders’ interestStated Capital 516,858 85,348 505.59% 516,858 85,348 505.59%Shareholders’ Funds 4,436,925 2,221,954 99.69% 2,206,396 515,597 327.93%Return on Shareholders’ Funds (%) 9.87 11.94 -17.37% 7.10 7.50 -5.36%Shareholders’ Funds per Share (Rs) 1,823 988 84.57% 981 229 327.93%LeverageFinance Expense (Net) 648,836 425,479 52.50% 56,960 16,671 -259.67%Interest Cover (Times) 3.48 4.27 18.50% 3.26 3.32 13.27%Borrowing 5,509,346 4,523,435 21.80% 376,071 132,031 184.84%Borrowing as a Percentage ofTotal Equity 62.57 72.11 -13.24% 17.04 25.61 -33.44%

Ceylon Theatres PLC | Annual Report 2008 | Chairman’s StatementI am pleased to present the Seventy Seventh Annual Reportof the Company for the year ended 31st March 2008.You would observe that the presentation of the current year’sAnnual Report is quite different from the Reports presentedin the previous years, with more comprehensive informationregarding the Group and Company. This reflects the growthand diversity of the Group over the past several years andour expectation of the further growth and profitability, whilstmaintaining the highest standards of business ethics.Strategic DirectionAs you are all aware, the Group has been carrying outan internal re-organisation over the past year. As partof this process Ceylon Theatres PLC was merged withthe subsidiary, Millers PLC and the Food and Beverageoperations of the Group being consolidated under thesubsidiary, Cargills (Ceylon) PLC. Further, subsequent to theyear end, the traditional Cinema operations of the Companyhave been transferred under the subsidiary CT Films (Pvt)Ltd. Consequent to these changes, the company has ceasedfrom day to day commercial operations and will henceforthfunction only as an Investment Holding Company.The changes in structure and operation put in place duringthe year and after the accounting year end will enable theGroup to move forward more effectively in the future. TheGroup is definitely shaping well to face the challenges of thefuture.“The Group is definitely shapingwell to face the challenges of thefuture”Fixed Assets and InvestmentsDuring the year, the Group continued to invest heavily inProperty, Plant and Equipment and Development projects.The total investment in Property, Plant and Equipment andDevelopment projects over the past four years exceedsRs 7 bn. Our continued investments reflect the confidencethat we have in the strength of our core businesses and ourconfidence and expectations in the business and economicclimate of our country. The Group will continue to exploreopportunities for expansion and growth while being watchfulof global and local market conditions.The management structure of the Company and Group willalso be different as we look into the future. The Companywill not be headed by a Chief Executive. Instead, the variousinvestment, control and operational aspects of the Group /Company will be overlooked by an Executive Committee andan Investment Committee. The Group is also setting up aCorporate Affairs office at Holding Company level. SubsidiaryCompanies would carry on with their operations throughthe Boards of Directors of the companies concerned. Theoperations of the Group companies are reflected elsewhere inthis report under the caption “Operations Review”The Group’s total outlay in Property, Plant and Equipment andDevelopment projects during the year amounted to Rs 3.2 bn(2007 – Rs 2.42 bn). The company’s investment amountedto Rs 11.3 mn during the year. This expenditure was incurredto upgrade the Regal (Colombo) cinema with modern ‘DolbyDigital’ sound systems and other upgrades of the facilities inthe Colombo and Kandy cinemas.

Ceylon Theatres PLC | Annual Report 2008 | 10Chairman’s StatementSubsequent to the year end, the Company increased itsstake in subsidiary Lanka Ceramic PLC by the acquisition ofa stake of 18.5%, further strengthening the control over thatcompany and its subsidiaries.The results of our capital outlay and heavy investments in thecurrent and previous years would be reflected in our results inthe next few years.DirectorateIn keeping with our vision to strengthen the managementand operations of the group, I am pleased to welcome threeeminent persons, who have consented to serve on the Boardof the Company.Mr. Sunil Mendis and Mr. Jebba E De Silva joined the Boardon 28th March 2008 and Mr. R Selvaskandan (who wasalready associated with the Property sector of the Group)joined the Board on 8th August 2008. We also had theprivilege of welcoming the retired Sri Lankan diplomat andscholar Mr. Jayantha Dhanapala who joined the Board ofCargills (Ceylon) PLC on 1st June 2008.I have no doubt that the appointment of these distinguishedgentlemen would bring immense benefits to the groupthrough their vast experience, insight and knowledge. I wishthem a long and fruitful association with the Group.Operating resultsDuring the year, the Group turnover increased by 27.9% overthe previous year to Rs 31.9 bn. The highest turnover growthwas seen in the Food & Beverage sector. Turnover of thissector grew by 26.4% over the previous year. The Group’sProfit before Taxation also showed a growth of 15.8% overthe previous year (Rs 1.6 bn).The Company’s turnover decreased by a marginal 2.7%during the year. The Company ceased operations ofthe Regal (Nuwara Eliya) cinema during the year, due toinadequate patronage. The transfer of the movie exhibitionbusiness to a separate subsidiary would enable us toconsolidate the available resources and provide the movieloving public of the country with high quality entertainmentand service.“Our continued investmentsreflect the confidence we havein our core businesses and ourconfidence and expectationsin the business and economicclimate of our country.”The profitability of the company was boosted by the profiton disposal of a 4.2% stake in Cargills (Ceylon) PLC andincreased dividend income, although increased borrowingcosts also had an adverse impact. Profit After Tax of thecompany amounted to Rs 156.6 mn for the year (2007 – Rs38.7 mn).Share capital and DividendsThe Company issued 184,288 shares in the companyto shareholders of Millers PLC as part of the share swapscheme in connection with the merger of the Company withsubsidiary Millers PLC. Fractional shares were settled in cashas part of the same scheme.Subsequent to the accounting year end, the shareholdersapproved the subdivision of shares of Ceylon Theatres PLCon the basis of 70 shares for every share held. Consequently,the number of shares of the Company in issue increased

Ceylon Theatres PLC | Annual Report 2008 | 11to 170,348,920 ordinary shares. The subdivision of shareswould facilitate wider participation in the equity of thecompany and optimum market valuation of the company.The Company declared an interim dividend of Rs 8.00 pershare on 3rd January 2008. A second interim dividend ofRs. 0.15 per share was paid on 20th October 2008. TheDirectors do not propose a final dividend for the year from theprofits of the year 2007/08.AcknowledgementsOn a personal note, I relinquished my executive duties in theCompany in March 2008 upon reaching the age of 60, andI can reflect with pride on the growth and success achievedby the Group during my period as the Managing Director andthen as Chairman / Managing Director, upon the death of myfather, Mr. Albert A Page. I can say with confidence that theGroup is now stronger than it has ever been and will continueto grow and be profitable in the years to come.I will continue to serve the Company and some groupcompanies in my capacity as Chairman and as a Non-Executive Director in certain other Group companies.I wish to express my sincere appreciation to all my fellowDirectors for the assistance and cooperation given to me andalso thank our Customers, Bankers, Suppliers, and Principalsfor their continued patronage and support.Anthony A PageChairman28th November 2008

Ceylon Theatres PLC | Annual Report 2008 | 12Operations ReviewRs.31,866mn,Total Revenue 07/0827.86%increase over 06/07

Ceylon Theatres PLC | Annual Report 2008 | 13Consolidated Operating ResultsThe Group’s activities are focused on food and beverages,ceramics, tiles, property development, financial services,entertainment, plantations and packaging.The profit attributable to equity holders for the year increasedby 65% to Rs. 437.7 million.The Group’s EBIT for the year, excluding investmentproperties revalution profit and profit on disposal ofinvestments, totaled Rs. 2,077 million, a 22.21% increasefrom the previous financial year.GroupCompany008 2007 Change 2008 2007 ChangeRs ‘000 Rs ‘000 % Rs ‘000 Rs ‘000 %Total RevenueFood and Beverage 27,360,079 21,620,726 26.55% - - -Real Estate 234,117 205,751 13.79% - - -Ceramics Tiles and Wooden Flooring 5,077,366 4,543,121 11.76% - - -Plantations 1,659,660 1,344,654 23.43% - - -Entertainment 61,452 50,058 22.76% 25,591 26,304 2.71%Packaging & Others 756,087 740,097 2.16% - - -Gross turnover 35,148,761 28,504,407 23.31% 28,436 26,304 2.71%Intra Group sales (3,282,291) (3,580,490) -8.33% - - -Net turnover 31,866,470 24,923,917 27.85% 28,436 26,304 2.71%Profit after TaxFood & Beverage 584,154 462,096 26.41% - - -Real Estate 125,817 131,209 -4.11% - - -Ceramics Tiles and Wooden Flooring 601,963 540,908 11.29% - - -Plantations 171,079 198,305 -13.73% - - -Entertainment (38,943) (42,242) -7.81% (45,770) (42,465) 7.78%Packaging & Others (18,427) 40,947 -145.00% - - -1,425,643 1,331,223 7.09% (45,770) (42,465) 7.78%Intra Group transactions / eliminations (142,528) (338,534) -57.90% 306,968 81,133 278.35%Overheads not allocated to profit centres (104,614) - - (104,614) - -Share of Associates’ Profit (Financial Services) 1,707 12,957 -86.82% - - -Minority Interest (742,479) (740,332) 0.29% - - -437,730 265,314 64.99% 156,584 38,668 269.29%

Ceylon Theatres PLC | Annual Report 2008 | 14Food & Beverage SectorRs.27,360mnTurnover9,547 mn13,178 mn17,098 mn21,621 mn27,360 mn20042005200620072008Turnover205 mn272 mn322 mn462 mn584 mn20042005200620072008Profit after TaxCargills is a decisive player in Sri Lanka’s Food businessspearheading the sustainable development of thecountry’s Food and Agribusiness sectors through astrong focus on innovation and consistent investmentin people and processes. The company is the country’slargest retailer with over 50% of the market share inmodern trade while leading sectoral growth in thefood manufacturing sector with three of the largestproduction plants in the country. The agribusiness modeldeveloped by the company is globally recognized forsustainable value creation. Cargills also holds the KFCfranchise which is the largest international restaurantchain in the country. Its marketing and distribution armMillers, distributes the company’s manufactured brandsand international food and non-food brands through anetwork spread across the 25 districts of Sri Lanka.

Ceylon Theatres PLC | Annual Report 2008 | 15Modern TradeCargills is a company driven by innovation, continuouslychallenging conventional business wisdom in pursuit ofcreating value for all stakeholders of its business. Its pioneerventure into Modern Trade was an innovation of its tradinglegacy and thereafter the company continued to challengethe norm by taking what was traditionally an ‘affluent’focused business to the masses by offering ‘higher value forthe lowest price’.Not surprisingly Cargills has grown to become Sri Lanka’sleading player in the retail trade, with 136 outlets spreadacross 19 districts as “Cargills Food City” supermarkets,“Cargills Express” convenience stores and “Big City”hypermarkets. In its short span of operation of 25 years,Cargills Food City has also been rated the second ‘MostValuable Brand’ in Sri Lanka as per the 2008 UK basedBrand Finance Index ratings. The company controls morethan 50% of the modern trade market share.ManufacturingCargills is proud to have introduced the highest standardsof food production and innovation to Sri Lanka’s foodmanufacturing sector having been successful in growing thesector and challenging long established brands to becomea close number 2 in all its categories. The company’s highlyspecialized manufacturing units which are three of the largestin Sri Lanka produce ‘Cargills Supremo’ meat products,‘Cargills Magic’ dairy products and ‘Cargills Kist’ fruit basedproducts which have also established their presence in theexport market.Magic:Cargills Magic is the number one dairy ice cream in Sri Lankaand is the strong number two player in the overall ice creammarket. Cargills Quality Dairies (CQD) which produces CargillsMagic Ice Cream, Milk and Milk shakes is the first and onlydairy products manufacturing company in Sri Lanka to beaccredited with all three ISO certifications; ISO 9001: 2000Quality Management System certification, ISO 22000: 2005Food Safety Management System certification and ISO14001: 2004 Environment Management System certification.Cargills Magic is the first ice cream in Sri Lanka to introducefresh fruits and local flavors to its portfolio of recipes creatinga new trend in the overall Ice Cream industry. Through itsinnovation driven focus, Cargills Magic has expanded itsmarket share exponentially, becoming the fastest growing icecream brand in Sri Lanka.Supremo:The Cargills Supremo processed meats range is rapidlygaining market share for its product innovation, quality andunique taste. Cargills Quality Foods which produces theSupremo range is the only meat processing plant in Sri Lankathat has acquired the ISO 9001: 2000 Quality ManagementSystem certification, ISO 22000: 2005 Food SafetyManagement System certification and ISO 14001: 2004Environment Management System certification. The companyhas also secured international expertise to develop new andinnovative products which offer a novel variety of taste whilstcatering to the health and nutritional needs of the consumer.

Ceylon Theatres PLC | Annual Report 2008 | 18Real EstateRs.234mnTurnover163 mn178 mn191 mn200420052006206 mn2007234 mn200834 mn39 mn49 mn200420052006131 mn2007126 mn2008Interests in this segment are driven by theGroup’s listed subsidiary CT Land Development,the owning company of Majestic City, Sri Lanka’spremier shopping and entertainment complex,and CT Properties, which is currently in the finalstages of developing ‘Empire’, Sri Lanka’s tallestresidential building structure, which promises toadd style and vibrancy to the Colombo skyline.TurnoverProfit after Tax

Ceylon Theatres PLC | Annual Report 2008 | 21Lanka Ceramic PLC was formed in 1990 to take over theoperations of the state-owned Ceylon Ceramics Corporationand was privatized in 1994. The company was engaged inthe manufacture of ceramic products as well as mining forBall Clay, Kaolin and Feldspar which are key ingredients inthe manufacture of ceramic products. The manufacture oftableware and sanitary-ware products was discontinued as itcould not compete effectively in the market due to high costof production and low efficiency which rendered the divisionunprofitable. Lanka Ceramic’s main operations are the miningof ceramic raw materials and retailing of ceramic and alliedproducts, which also involves importing sanitary-ware andtableware.Lanka Ceramic is the holding company of listed companiesLanka Walltile, Lanka Tiles, Parquet (Ceylon) and HoranaPlantations.Wall TilesLanka Walltile PLC as the sole manufacturer of wall tiles in SriLanka is the clear market leader holding a market share of60%. Its superior quality and premier designing has enabledthe brand to make strong inroads into the export marketwhilst commanding prices of approximately 20% morethan that of imported products. Export sales account forapproximately 30% of Lanka Walltile’s turnover.The Company operates two factories, in Balangoda andMeepe, with a combined capacity of 2.7mn square metresper annum. Both factories currently employ approximately1,250 employees, with capacity utilization at approximately90%. The Balangoda factory is the older of the productionfacilities and caters to export sales while Meepe’s productionis mainly sold in the local market.Lanka Walltile’s rapid growth both in the domestic andexport markets has led to the acquisition of state-of-the-arttechnology from Italy. The factory at Meepe is now equippedwith advanced machinery to match international demand andhas the capacity to produce three million square metres oftiles annually. The limitations in the current range of productsof the Balangoda factory as a result of using technologywhich has been in use for over 3 decades will continue topose challenges to improve profitability, and Lanka Walltile willtherefore be critically evaluating the future operations of theBalangoda factory.Having in mind the continuous need to increase capacityin the tiling industry, the company is planning to expandproduction facilities at the Meepe factory, which wouldincrease capacity by 50%. We will be incurring a costof Rs.400mn for this, and expansion is expected to becommissioned in July 2009. Enhanced capacity would enableLanka Walltile to meet current demand prevalent in the localmarket, which would provide impetus for future growth inprofitability. Lanka Walltile is also looking at upgrading thefacilities at the Balangoda factory by replacing aging pressesand glazing lines.Lanka Walltile commenced refurbishment of its Nawalashowroom during the year under review, and is expected tobe completed shortly. Refurbishment is estimated to costapproximately Rs.15mn, and once completed, the showroomwill have in excess of 10,000 sq ft of display area and will bethe largest Wall and Floor tile showroom in the country.The company’s product range conforms to quality standardsof UK, Europe, Singapore, Hong Kong, Japan and the US

Ceylon Theatres PLC | Annual Report 2008 | 22Ceramics, Tiles and Wooden flooringmarkets while the factories are geared with ISO 9001 QualitySystems certification.Lanka Walltile aggressively pursues Research andDevelopment to ensure its products continue to meet thestringent quality standards of the global market as wellas the dynamic consumer demands for varying colours,textures and designs. Thereby Lanka Walltile has establisheda strong brand presence in Australia, Bangladesh, Canada,France, Hong Kong, India, Japan, Middle East, Maldives,Netherlands, New Zealand, Singapore, South Africa, Taiwan,USA and the UK.Floor TilesLanka Walltile’s 55% owned listed subsidiary Lanka Tiles PLCis the pioneer floor tile producer in Sri Lanka and continuesto be a market leader in the sector. Lanka Tiles enjoys anapproximate market share of 30% and has an extensive localdistribution network of 35 direct dealers and 700 sub-dealers.The Company’s business environment is similar to that ofLanka Walltile, although it has a higher exposure to the localmarket. Lanka Tiles’ total production increased 11% to 3.1million square metres during the year, mainly driven by animproved 93% capacity utilization of the factory.Similar to Lanka Walltile, energy costs contribute toapproximately 40% of total production costs and LankaTiles has been adversely affected by the recent hikes inLPG and kerosene prices. Lanka Tiles currently operatesthree kilns, two of which run on LPG and one on kerosene.However, due to the rising costs of these forms of energy, thecompany is in the process of converting part of their energyrequirement to coal.The company undertook several measures to mitigate theeffects of rising energy costs during the year. One suchmeasure is the conversion of spray dryers from keroseneto coal. The use of coal will be commissioned in December2008 at a cost of Rs.50 million. Shifting to this alternativesource of energy will enable Lanka Tiles to benefit fromsignificant cost savings.Lanka Tiles is in the process of expanding its productioncapacity by adding a 7,000 square metre kiln. The capacityfrom the new kiln will come into effect in July 2009 andfollowing the disposal of a 2,500 square metre per daykiln to Lanka Walltile, Lanka Tiles will have a productioncapacity of 14,500 square metres per day. The companyinvested Rs.60.0mn in the year under review to purchaseland in Biyagama to build a modern distribution centre andshowroom. This investment was made given the difficultiesfaced in running the existing leased warehouse located inRajagiriya. Construction of the warehouse commenced inAugust 2008, and is expected to be operational by June2009.Continuously investing in style and quality, 10% of the LankaTiles production caters to the export market. Our ongoingpush for excellence also leads us to regularly monitor andparticipate in international exhibitions such as ITSE CoveringsUSA, IITF India, CIVESAMA in Spain, CERSAI in Italy andTIGLS in Tokyo.The company’s current export destinations include Canada,USA, Baharain, India, Maldives, Singapore, Australia, NewZealand, Samoa, Fiji Islands, Guam and Japan.

Ceylon Theatres PLC | Annual Report 2008 | 23Wooden FlooringParquet (Ceylon) PLC was initially a fully export orientedcompany, manufacturing a variety of wooden flooringproducts. Due to recession in most international markets, anddeclining wooden flooring sales, the company has almostceased its timber-related production as part of a restructuringexercise. The company also intends on disposing somemachinery and part of the land at Imbulgoda, which will beunutilized in the future. Proceeds from these disposals willbe utilized to settle a significant portion of the company’sdebt, as well as investing in a new product line. The companywill continue to import and supply wood flooring under the‘Swissparkett’ trade name. Manufacture of the new productline of ‘Tile Adhesive’ is expected to commence by January2009, and the Company is expected to report significantlyimproved earnings in financial year 2009/10.

Ceylon Theatres PLC | Annual Report 2008 | 24PlantationsRs.1,660mnTurnover947 mn1,096 mn1,214 mn2004200520061,345 mn20071,660 mn200869 mn112 mn126 mn200420052006198 mn2007171 mn2008The Group’s Plantation segment has lease holdrights to 16 estates, which constitute around7,500 ha of land, with approximately 90% of theland extent for tea being high grown, and therubber estates are located in the Horana, Ingiriyaand Bulathsinghala subdistricts.TurnoverProfit after Tax

Ceylon Theatres PLC | Annual Report 2008 | 25The Group’s Plantation sector is spearheaded by CeyteaPlantation Management Limited which holds the listedsubsidiary Horana Plantations PLC.The company has lease hold rights to 16 estates, whichconstitute around 7,500 ha of land of which around 5,500 haare in revenue.rose 21% YoY to Rs.267 per kg for FY08 as a result of thecommodities boom and a reduction in global tea production.The company has continued to invest in the upgrading andmodernization of its tea and rubber factories with Gouravilla,Alton and Stockholm estates having received the ISO 22000certification for Food Safety Management.Upcountry tea estates are located in the Maskeliya andLindula sub districts and the low country tea estates arelocated in the Ingiriya and Bulathsinghala sub districts.The rubber estates located in the Horana, Ingiriya andBulathsinghala subdistricts have achieved impressive pricesat the rubber auctions.Ceytea Plantations Management Ltd has reduced themanagement fee payable by Horana Plantations to 5% ofEBITDA, with a cap of Rs.15mn, for a period of three yearscommencing from 1st April 2008. This will positively impactHorana Plantations’ earnings from the current year onwards.The plantation sector has also focused its priorities onevolving into a ‘green’ business in line with the overall groupvision. Accordingly measures have been taken to minimizethe company’s dependence on fossil fuels and the nationalgrid by developing its own hydro-power plants.Horana Plantations is keenly pursuing the Fairtrade LabelingOrganization activities which have kicked off as a pilot projectwithin one estate enabling our working community to enjoydirect benefits from overall development of the companyand the sector. This has also enabled the Management teamto build a dialogue with estate communities as means ofenhancing mutual confidence and trust.The company’s Net Sales Average of tea increased toRs.277.87 per kg from Rs.227.11 per kg, which wasmarginally below the national average of Rs.279.10 per kgdue to its higher exposure to high grown tea. The company’sNet Sales Average of rubber increased from Rs.233.27 perkg in the previous year to Rs.237.41 per kg in the year underreview. Rubber production was negatively impacted primarilydue to unfavourable weather conditions experienced duringthe customary dry months of February and March 2008.Tea and rubber prices rose significantly in the year underreview. Horana Plantations is predominantly a high grown teaplantation company, with 90% of land extent for tea used tocultivate high grown tea. The average price of high grown teaCSR has been an integral part of Horana Plantation’ssuccess and the company has consistently aimed to creatingan environment conducive to sustainable developmentwith a particular focus on the health and living conditionsof the estate communities. Substantial investments havebeen made towards the development of Maternity Wards,Dispensaries, Ambulance services as well as improvingeducation and awareness regarding health issues.Horana Plantations has focused on the development of itsleisure sector with investments made into the renovationand refurbishment of Tempo Bungalow in Neuchatal Estate,Neboda and Tillicoultry Bungalow, Lindula.

Ceylon Theatres PLC | Annual Report 2008 | 26Financial Services172 mn77 mn20042005110 mn2006175 mn2007170 mn200843 mn16 mn72 mn20042005200637 mn200714 mn2008The group’s Financial Services sector is adiversified comprehensive portfolio of StockBrokering, Capital Market solutions and FundManagement through companies C T SmithStock Brokers, CT Capital and CT FundManagement.TurnoverProfit after Tax

Ceylon Theatres PLC | Annual Report 2008 | 27C T Smith Stockbrokers (Pvt) Limited, a member of theColombo Stock Exchange (CSE), is one of the leadingbrokering firms in Sri Lanka. The Company commencedoperations in November 1992 and has accounted for over20% of the total turnover of the Colombo Stock Exchangefor the 15 years up to December 2007. C T Smith hasdominated foreign activity on the Colombo Stock Exchange,accounting for an exceptionally high foreign volume at thebourse.CT Capital (Pvt) Limited, primarily engages in providing abroad range of capital market solutions and financial advisoryservices. The company endeavours to be the financial advisorof choice for its clients and a leading participant in Sri Lanka’scapital market activities.CT Fund Management (Pvt) Limited, manages ComtrustEquity Fund, a licenced unit trust. The primary objectiveof this fund is to generate capital appreciation for the longterm whilst providing unit holders with a regular dividend byinvesting in a portfolio of equities and fixed income securities.

Ceylon Theatres PLC | Annual Report 2008 | 28PackagingNeed a Print Quality Image503 mn591 mn692 mn200420052006740 mn2007756 mn200832 mn53 mn46 mn20042005200641 mn2007(18) mn2008The Group’s interests in this segment include theservices of packaging through the Company’ssubsidiary Uni Dil Packaging, which specializesin the production of corrugated packaging,boxes, cartons and accessories.TurnoverProfit after Tax

Ceylon Theatres PLC | Annual Report 2008 | 29Uni Dil Packaging offers a full turnkey packaging servicefrom design to delivery. Uni Dil supplies packaging to thedomestic and export market and directly supplies packagingto manufacturers, and both retail and end-users. Uni Dilcurrently supplies packaging to several industries includingTea, Apparels, Food and Catering, Ceramics, Agriculture andRubber.Uni-Dil Packaging’s profitability has declined this year due toan oversupply situation in the market as well as an increase inthe cost of raw materials. The company also incurred higherfinance costs due to borrowings undertaken to finance itsexpansion into the manufacture of paper sacks.A National Productivity Award winner, Uni Dil is geared withISO 9001- Quality Management System certification and theISO 14001 Environmental Management System certificationand is focused on providing an unparalleled service andon-time delivery of high quality products. The companyalso effectively utilized a range of productivity enhancementtools such as ‘5 S’ ‘6 Sigma’ ‘Kaize’, ‘Quality Circles’ etc toenhance its service to customers, minimize production costs,and maximize benefits to its employees through a focus oninnovation and creativity.Uni Dil strives to become the preferred partner for Packagingamong Sri Lanka’s industrialists.

Ceylon Theatres PLC | Annual Report 2008 | 30Entertainment36 mn29 mn45 mn20042005200650 mn2007(10) mn(31) mn(36) mn(42) mn(39) mn61 mn200820042005200620072008Ceylon Theatres has been a key player in thesustenance of the local film industry, having beenassociated with the entertainment industry inSri Lanka for more than 75 years. This segmentincludes CT Films.TurnoverProfit after Tax

Ceylon Theatres PLC | Annual Report 2008 | 31Ceylon Theatres PLC has been associated with theentertainment industry in Sri Lanka for more than 75 years,and operates some of the best known cinemas in the countrysuch as the Regal and Majestic Cinemas in Colombo, andthe Regal Cinemas in Kandy and Negombo.Ceylon Theatres has been a key player in the sustenanceof the local film industry having produced landmarkmotion pictures such as ‘Asokamala’, ‘Nidhanaya’, ‘GoluHadawatha’ and ‘Akkara Paha’ which have won criticalacclaim locally and internationally. During the golden jubileecelebrations of the film industry in 1997, the film ‘Nidhanya’produced by Ceylon Theatres in 1970 was adjudged the bestSri Lankan film produced in the past 50 years.To mark 75 years of its existence Ceylon Theatres produced‘Sakman Maluwa’, which won the Best Film award at theSarasaviya Film Awards in 2003.

Ceylon Theatres PLC | Annual Report 2008 | 32Investing in PeopleOur PeopleCeylon Theatres is a dynamic group that is focused on theproblems of unemployment and underemployment facedby Sri Lanka’s youth. The group is also conscious that thecountry depends, for almost one third of its foreign exchangerevenue, on the earnings of our unskilled labour engagedprimarily in the Middle East.With ‘People’ identified as our single most important assetCeylon Theatres is continuously investing in building our16,000 strong work force into an efficiently trained andmotivated growing team.The Group is driven by the need to improve the ability of therural communities to blend & intermingle within a developedcity environment. Ceylon Theatres has concentratedon employing a greater majority of its team from ruralbackgrounds. The induction of rural youth as a focal towardsthe sustainable growth of the company & the community,has voluntarily incorporated the Group’s contribution to SriLanka’s CSR progamme.The Albert A. Page Institute of Food Business was designedby our subsidiary, Cargills, in memory of our late Chairman,who with sound business acumen, energetically delivereda solid framework for our group to further explore therapid development of a conglomerate utilising moderninfrastructure. Cargills established this institute to deliverjob oriented skill development programmes via a nonprofitventure targeting under privileged youth. The trainingthey receive gives them substantial knowledge of the foodbusiness enabling them to secure lucrative jobs. Through athirty module e-learning programme, youth spread the acrossthe island enjoy training which is of international standard.Steps are underway to upgrade the training providedthrough the Institute to a ‘Certificate’ and ‘Diploma’ level viacollaborations with leading academic bodies in the country.The Plantation, Ceramics, Tiles, and Wooden Flooring, andPackaging sectors have also made investments into capacitybuilding of its work forces.Horana Plantations has initiated training programmes forpluckers and tappers of all estates via the National Instituteof Plantation Management and the Tea and Rubber ResearchInstitute. These include class room training on scientificharvesting techniques.Lanka Walltile, Lanka Tiles and Parquet (Ceylon) conducttraining programmes for their staff and regularly expose theirteams to international exhibitions and symposiums so thattheir products consistently meet international standards ofquality and dynamic changes in consumer demand.Uni Dil Packaging is focused on becoming the preferredpackaging partner for Sri Lanka’s industrialists and hasintensified its training and development on productivitymanagement techniques such as ‘5S’, ‘6 Sigma’, ‘ QualityCircles’, ‘Kaizen’ etc. This is aimed towards developingaffordable cost-effective and high quality packaging solutionsfor all industrialists in the country.Our CommunitiesCeylon Theatres has taken its businesses to the four cornersof the island, invested without discrimination and movedbeyond the comfort zone to ensure that the companyachieves its core target of creating value for all stakeholdersof its business.Cargills has taken on the challenge of investing in thesecommunities by taking the market to small and mediumscale entrepreneurs and farmers, thereby strengthening theirbargaining power and created for them a more viable andcompetitive market. The assurance of a minimum guaranteedprice which is above the cost of production as well as a

Ceylon Theatres PLC | Annual Report 2008 | 33consistent market has meant a higher income and a betterquality of life for hundreds of communities in Sri Lanka.Trust’s primary focus remains the children of Sri Lanka andtheir empowerment to become better and stronger citizens.Reducing the cost of living so that the masses can enjoy abetter quality of life is a task that is very close to the heartof Ceylon Theatres. Being in the food business, Cargills hastaken ‘supermarketing’ to the masses giving all Sri Lankansequitable opportunity to enjoy high quality products at anaffordable price, using its retail and distribution strength toensure that all Sri Lankans have access to nutrition at a lowerprice.In the estate sector we have played a major role in bringingabout sustainable community development. HoranaPlantations has pursued Fairtrade Labelling Organizationactivities to ensure that the community yields direct dividendsfrom company growth. The company is engaged in theEthical Tea Partnership Program which calls upon all teafactories to adhere to the highest standards of ethical andsocial responsibility towards their workforce and the localcommunities.Childcare, Sanitation and Health of local communitieshave also been key focus areas of the group. Substantialinvestments have been made towards improvement ofMaternity wards, Dispensaries, providing ambulance servicesand awareness programmes targeting women and children inthe estate sector.International organizations such as the Bill and Melinda GatesFoundation and the World Bank have initiated researchinto the Cargills business model as a sustainable model forcorporate driven rural development, which can be effectivelyadopted in other countries.A report published in February 2008, by the WorldAgInfoProject which functions under the Bill and Melinda GatesFoundation proposes that “a case study be developed aboutCargills which highlights the information supply and technicalsupport networks which have been developed to benefitsmallholders, consumers and Cargills alike. Special attentionwill be given to the multiplier impact that Cargills has had onthe broader agricultural sector in Sri Lanka. Lessons will bedrawn from this country-wide success story for the benefitof private and public sector initiatives in both South Asia andSub- Saharan Africa.” (www.worldaginfo.org)Ceylon Theatres firmly believes that a business cannot createvalue for its shareholders if it fails to create value for theconsumer and the community.One Trust was formed by Cargills in the aftermath of thetsunami disaster and was conceptualized as a long termsustainable development project towards rebuilding lives andlivelihoods devastated by the ferocious waves. The projects’initial focus was on the educational and recreational needs oftsunami affected children. Today One Trust has evolved intothe philanthropic arm of our larger CSR efforts. However One

Ceylon Theatres PLC | Annual Report 2008 | 34Corporate GovernanceThe Board of Directors of Ceylon Theatres PLC isstrongly committed to the highest standards of CorporateGovernance. Active steps are being taken to comply with therequirements of the Securities and Exchange Commissionof Sri Lanka and the Colombo Stock Exchange as well asguidelines of the Institute of Chartered Accountants of SriLanka.Board of DirectorsThe Board of Directors of the company consists of fivenon-executive and three independent Directors. As anInvestment Holding Company, the various investment, controland operational aspects of the Group / Company will beoverlooked by an Executive Committee and an InvestmentCommittee, the names of the members of these Committeesare given in page 5 of this report.Audit CommitteeThe Audit Committee consists of M/s A T P Edirisinghe,Anthony A Page and Mr. J B L De Silva. This committee wasconstituted on 24th March 2008 and would commence workduring the ensuing year.Each Quoted Public Company and/or identifiable maincompany of a operating sector and their subsidiaries havetheir own separate Audit and Remuneration Committees.Compensation CommitteeThe Company has not constituted a CompensationCommittee, in the absence of any Executive Directors forthe Company. Where appropriate, the subsidiaries haveconstituted separate Compensation Committees.The Operations within the Group are carried out throughdifferent sectors as mentioned in pages 2 & 3 under thesupervision of the separate Boards of Directors of theindividual subsidiaries concerned. All public companies withinthe Group maintain the required number of IndependentDirectors for purposes for independent oversight.All appointments to the Board of Directors of the Companyand the subsidiaries are approved by the Board of Directorsof the parent Company.

Ceylon Theatres PLC | Annual Report 2008 | 35Statement of Directors’ ResponsibilitiesThe Companies Act No 7 of 2007 places the responsibilityon the Directors to prepare financial statements for eachyear comprising a balance sheet, and statements of income,cash flows and changes in equity along with the accountingpolicies and notes thereto, which give a true and fair viewof the state of affairs of the Company and the Group at theBalance Sheet date and the results for that financial year. TheAct also places the responsibility on the Directors to maintainadequate accounting records to be able to disclose withreasonable accuracy, the financial position of the Companyand the Group and for ensuring that the financial statementsare prepared and presented in accordance with the Sri LankaAccounting Standards and provide the information requiredby the Companies Act.M/s KPMG Ford Rhodes Thornton & Co audit our accounts.Their responsibilities as the auditors of these accounts differfrom that of the Directors and are set out in the Auditors’Report (Page 41).The Directors are responsible for the proper management ofthe resources of the Company. The internal control systemhas been designed and implemented to obtain reasonablebut not absolute assurance that the Company is protectedfrom undue risks, frauds and other irregularities. The Directorsare satisfied that the control procedures operated effectivelyduring the year.The Directors confirm that all statutory payments have beenmade up to date.By order of the Board.S C NilesCompany Secretary28th November 2008Considering the present financial position of the Groupthe forecasts for the foreseeable future, the Directors haveadopted the going concern basis for the preparation ofthese financial statements. The Directors confirm that thesefinancial statements have been prepared in accordancewith the Companies Act No 7 of 2007 and the Sri LankaAccounting Standards, which have been consistently appliedand supported, by reasonable and prudent judgments andestimates.

Ceylon Theatres PLC | Annual Report 2008 | 36Learning from the Past…

Ceylon Theatres PLC | Annual Report 2008 | 37Financial InformationInvesting for the Future.Annual Report of the Board of Directorson the Affairs of the Company 38-40Auditors’ Report 41Income Statement 42Balance Sheet 43Statement of Changes in Equity 44Cash Flow Statement 45-46Accounting Policies 47-53Notes to the Accounts 54-87

Ceylon Theatres PLC | Annual Report 2008 | 38Annual Report of the Board of Directorson the Affairs of the CompanyThe Directors are pleased to submit the Annual Reporttogether with the Audited Financial Statements of CeylonTheatres Ltd and the Consolidated Audited FinancialStatements of the Group for the year ended 31st March2008.ActivitiesThe Chairman’s Statement and Review of operations onpages 9 and 12 describe the Group’s activities and importantevents during the year. The attached audited accounts reflectthe state of affairs of the Company and the Group at theBalance Sheet date.The company merged with the subsidiary Millers PLC (MPL)on 13th March 2008, resulting in the assets and liabilities ofMPL becoming part of the Company. On 12th March 2008,the operations of MPL together with the operating assetswere transferred to a wholly owned subsidiary namely MillersDistributors Limited.Two subsidiaries, LCL Distributors Ltd and Great WesternInvestment (Pvt) Ltd have ceased operations and have goneinto voluntary liquidation since the end of the last financialyear and have not been consolidated in the Group’s financialstatements for the current year.Results and dividendsPROFITS GROUP COMPANY008 2007 2008 2007Rs’000 Rs’000 Rs’000 Rs’000Profit Attributable to Equity Holders of theCompany amounted to 437,730 265,314 156,584 38,668From which your Directors have made thefollowing appropriationsPaid Interim Dividends of Rs 8.00 per share(2007 - Interim Rs 5.00 per share & Final 5.00 per share) (17,994) (22,492) (17,994) (22,492)To which is addedbrought forward profit of the Company 1,218,626 964,784 136,625 120,449adjusted for - - - 137,206Prior year adjustments - (1,757)Brought forward negative goodwill - 12,777Disposal of revalued land 10,492Deferred Tax on Revaluation (13,811)Applicable portion of the brought forward profit of Millers PLC 558,454 - 179,1912,193,497 1,218,626 591,612 136,625

Ceylon Theatres PLC | Annual Report 2008 | 39ReservesAfter the above mentioned appropriations, the total reservesof the Group stand at Rs 3.92 bn (2007 – Rs 2.14 bn), whilethe total reserves of the company stand at Rs 1.69 mn (2007- Rs 0.43bn).Capital ExpenditureThe Group’s capital outlay on Property, Plant and Equipmentamounted to Rs 1.97 bn (2007 – Rs 1.81 bn) while theCapital outlay of the Company on Property, Plant andEquipment amounted to Rs 11.3 mn (2007 - Rs 255,000).The movement of Property, Plant and Equipment during theyear is given in Note 9 to the accounts.ShareholdersThere were 1,231 registered shareholders as at 31st March2008 (2007 - 464 shareholders). An analysis of shareholdersaccording to size and holdings and the names of the 20largest shareholders of the Company are given on pages 91and 92.DirectorateThe Directors listed on Page 5 have been Directors of theCompany throughout the year under review except for Mr.Sunil Mendis and Mr. J B L De Silva who were appointed tothe Board on 24th March 2008. Mr. R Selvaskandan wasappointed a Director on 8th August 2008. Details of Directorsof subsidiary companies as at the Balance Sheet date aregiven on pages 94 to 96 of this report.and being eligible offer themselves for re-election. Mr. SunilMendis, Mr. J B L De Silva and R Selvaskandan also retirebeing eligible offer themselves for re-election.The election of the retiring Directors has the unanimoussupport of the other Directors.Directors’ Interest in ContractsThe Directors’ interests in contracts and proposed contractswith the company are included in Note 32 to the accounts.The Directors have declared their interests at meetings of theBoard.Directors’ ShareholdingsThe Directors’ Shareholdings in the company were as follows:As AtAs At-Mar-2008 31-Mar-2007Mr Anthony A Page 128,866 117,527Mr A T P Edirisinghe 407 332Mr L R Page 725 473Mr J C Page 57,145 62,000Mr V R Page 91,545 90,671Mr Sunil Mendis - -Mr J B L de Silva 3 -Mrs T A Selvaratnam 29,960 29,800Mr. J C Page, Mr. V R Page and Mrs. T A Selvaratnam retireby rotation in terms of the Company’s Articles of Association

Ceylon Theatres PLC | Annual Report 2008 | 40Annual Report of the Board of Directorson the Affairs of the CompanyPost Balance Sheet EventsPost Balance Sheet Events of the company are given in Note33 to the accounts.DonationsDonations made by the Group for the year amounted toRs 828,000. Donations made by the Company for the yearamounted to Rs 40,350.00 (2007 - Rs 28,100.00), whichincludes Rs 39,600.00 to Government approved charities.AuditorsMessrs KPMG Ford, Rhodes, Thornton and Company haveexpressed their willingness to accept re-appointment asAuditors.By Order of the BoardAnthony A. Page A T P Edirisinghe S C NilesChairman Director Company Secretary28th November 2008

Ceylon Theatres PLC | Annual Report 2008 | 41Auditors’ ReportINDEPENDENT AUDITORS’ REPORTTO THE SHAREHOLDERS OF CEYLONTHEATRES PLCReport on the Financial StatementsWe have audited the accompanying financial statements of CeylonTheatres PLC and the consolidated financial statements of theCompany and its subsidiaries as at 31 March 2008 which comprisethe balance sheet as at that date and the income statement,statement of changes in equity and cash flow statement for the yearthen ended, and a summary of significant accounting policies andother explanatory notes.Management’s Responsibility for the FinancialStatementsManagement is responsible for the preparation and fair presentationof these financial statements in accordance with Sri LankaAccounting Standards. This responsibility includes: designing,implementing and maintaining internal control relevant to thepreparation and fair presentation of financial statements that arefree from material misstatement, whether due to fraud or error;selecting and applying appropriate accounting policies; and makingaccounting estimates that are reasonable in the circumstances.Scope of Audit and Basis of OpinionOur responsibility is to express an opinion on these financialstatements based on our audit. We conducted our audit inaccordance with Sri Lanka Auditing Standards. Those standardsrequire that we plan and perform the audit to obtain reasonableassurance whether the financial statements are free from materialmisstatement.An audit includes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overallfinancial statement presentation.We have obtained all the information and explanations which to thebest of our knowledge and belief were necessary for the purposes ofour audit. We therefore believe that our audit provides a reasonablebasis for our opinion.OpinionIn our opinion, so far as appears from our examination, the Companymaintained proper accounting records for the year ended 31 March2008 and the financial statements give a true and fair view of theCompany’s state of affairs as at 31 March 2008 and its profit andcash flows for the year then ended in accordance with Sri LankaAccounting Standards.In our opinion, the consolidated financial statements give a true andfair view of the state of affairs as at 31 March 2008 and the profit andcash flows for the year then ended, in accordance with Sri LankaAccounting Standards, of the Company and its subsidiaries dealtwith thereby, so far as concerns the members of the Company.Report on Other Legal and Regulatory RequirementsThese financial statements also comply with the requirements ofSections 153(2) to 153(7) of the Companies Act No. 07 of 2007.KPMG Ford, Rhodes, Thornton & Co.Chartered Accountants28th November 2008Colombo

Ceylon Theatres PLC | Annual Report 2008 | 42Income StatementGroupCompanyFor the Year Ended 31st March 008 2007 2008 2007Note Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000Turnover 1 31,866,470 24,923,917 25,591 26,304Cost of Sales (28,165,596) (21,413,377) (33,861) (34,565)Gross Profit / (Loss) 3,700,874 3,510,540 (8,270) (8,261)Non Operating Income 2 847,343 601,705 315,100 79,264Administrative Expenses (1,285,518) (1,453,650) (81,969) (15,664)Compensation Paid (7,170) (7,203) - -Selling and Distribution Expenses (717,587) (611,066) - -Other Operating Expenses (357,529) (178,867) (7,308) -Loss on Revaluation of Buildings (13,635) - - -Finance Expense 3 (703,745) (478,167) (60,523) (16,671)Share of Associates’ Results 1,707 8,939 - -Subsidiaries not Consolidated 188,378 - - -Provision for Fall in Value of Investment (41,000) - - -Profit before Taxation 4 1,612,118 1,392,228 157,030 38,668Taxation 5 (431,910) (386,582) (446) -Profit for the Year 1,180,208 1,005,646 156,584 38,668Attributable toEquity Holders of the Company 437,730 265,314 156,584 38,668Minority Interest 742,478 740,332 - -1,180,208 1,005,646 156,584 38,668Earnings per Share (Rs.) 6 193.88 117.96 69.36 17.19Dividend per Share (Rs) 7 8.00 10.00 8.00 10.00Accounting Policies and Notes from pages 47 to 87 form an integral part of these Financial Statements.

Ceylon Theatres PLC | Annual Report 2008 | 43Balance SheetGroupCompanyAs At 31st March 00 00 00 007Note Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000(Re-Stated)ASSETSNon Current AssetsProperty, Plant & Equipment 9 9,887,408 7,805,289 1,095,021 205,424Project Work in Progress 10 282,503 2,257,674 - -Investment Properties 11 2,298,000 2,175,000 - -Intangible Assets 12 490,366 221,506 688,467 -Deferred Tax Assets 13 20,454 11,059 - -12,978,731 12,470,528 1,783,488 205,424Investments 14Subsidiaries - 132 829,552 1,161,755Associates 51,566 33,099 28,144 19,727Others 30,266 37,236 18,216 9,04581,832 70,467 875,912 1,190,527Current AssetsInventories 15 3,978,899 3,213,102 843 2,046Project Work In Progress 16 3,200,459 - - -Debtors and Other Receivables 17 2,350,841 3,047,892 2,530 13,849Amount Receivable from Subsidiary Companies 18 - - 104,438 5,098Amount Receivable from Related Companies - 35,721 - -Short Term Deposits with Banks 19 156,119 144,792 - -Cash at Bank & in Hand 304,171 518,834 4,089 1,0919,990,489 6,960,341 111,900 22,084TOTAL ASSETS 23,051,052 19,501,336 2,771,300 1,418,035EQUITY AND LIABILITIESEquity Attributable to Equityholders of the CompanyStated Capital 20 516,858 85,348 516,858 85,348Reserves 21 1,726,571 917,980 1,097,926 293,624Retained Profits 2,193,496 1,218,626 591,612 136,625Shareholders’ Funds 4,436,925 2,221,954 2,206,396 515,597Minority Interest 4,368,432 4,050,621 - -Total Equity 8,805,357 6,272,575 2,206,396 515,597Non-Current LiabilitiesSubscription in Advance - Minority - 79,815 - -Creditors Amounts Falling Due After More Than One Year 22 1,715,342 1,991,185 15,000 60,000Retirement Benefit cost - Gratuity 23 616,184 498,352 14,809 12,289Deferred Taxation 24 736,941 636,591 13,811 -Deferred Income 25 96,131 85,580 - -3,164,598 3,291,523 43,620 72,289Current LiabilitiesCurrent Portion of Subsciption in Advance - Minority - 9,017 - -Creditors and Accruals 26 7,003,450 7,205,144 74,489 682,833Income Tax Payable 204,582 124,872 - -Amounts Due to Subsidiary Companies 27 - - 71,500 73,000Amounts Due to Related Companies - 79 - -Dividends 14,224 2,285 14,224 2,285Short Term Bank Loan (Secured) 28 2,120,956 998,615 260,000 25,000Bank Overdraft (Secured) 29 1,737,885 1,597,226 101,071 47,03111,081,097 9,937,238 521,284 830,149TOTAL EQUITY AND LIABILITIES 23,051,052 19,501,336 2,771,300 1,418,035I certify that these financial statements have been prepared in accordance with the requirements of Companies Act No 7 of 2007.(Signed)S C Niles (Director Group Corporate Affairs)The Board of Directors is responsible for the preparation and presentation of these Financial Statements.Accounting Policies and Notes from pages 47 to 87 form an integral part of these Financial Statements.The Financial Statements have been approved by the Board of Directors on 28th November 2008.Signed for and on behalf of the Board:Anthony A Page (Chairman)A T P Edirisinghe (Director)Colombo.

Ceylon Theatres PLC | Annual Report 2008 | 44Statement of Changes in EquityFor The Year Ended 31st March Stated Capital Revaluation Surplus on Investment Other General Retained Total Minority TotalCapital Reserve on Reserve Sale of Depreciation Reserves Reserve Profit InterestGroup Consolidation Property, ReservePlant &EquipmentRs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000As at 1st April 2006 85,348 22,962 569,922 70,000 4,500 5,337 143,253 964,784 1,866,106 4,047,466 5,913,572Brought forward Negative Goodwill - - - - - - - 12,777 12,777 12,777Net Profit for the year - - - - - - - 265,314 265,314 740,332 1,005,646Dividends Paid - - - - - - - (22,492) (22,492) (188,782) (211,274)Revaluation during the year - - 102,006 - - - - - 102,006 82,632 184,638Adjustment due to changes in holding - - - - - - - - - (617,065) (617,065)As at 31st March 2007 85,348 22,962 671,928 70,000 4,500 5,337 143,253 1,220,383 2,223,711 4,064,583 6,288,294Prior Year Adjustments (Note A) - - - - - - - (1,757) (1,757) (13,962) (15,719)Balance as at 31st March 2007(Re-stated) 85,348 22,962 671,928 70,000 4,500 5,337 143,253 1,218,626 2,221,954 4,050,621 6,272,575Issue of Shares 431,510 - - - - - - - 431,510 127,331 558,841Adjustment on Merger with Millers PLC - - 696,575 - - - (124,683) 544,643 1,118,535 (404,101) 712,434Revaluation during the year - - 261,002 - - - - - 261,002 115,026 376,028Disposal of revalued land - - (10,492) - - - - 10,492 - - -Deferred Tax on revaluation - - (13,811) - - - - - - - (13,811)Net Profit for the year - - - - - - - 437,730 437,730 742,478 1,180,208Dividends Paid - - - - - - - (17,994) (17,994) (268,749) (286,743)Adjustment due to changes in holding - - - - - - - - - 5,825 5,825Balance as at 31st March 2008 516,858 22,962 1,605,202 70,000 4,500 5,337 18,570 2,193,497 4,436,925 4,368,432 8,805,357CompanyStated Revaluation Surplus on Investment General Retained TotalCapital Reserve Sale of Depreciation Reserve ProfitProperty,Plant &EquipmentRs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000As at 1st April 2006 85,348 201,624 70,000 4,500 17,500 120,449 499,421Net Profit for the year - - - - - 38,668 38,668Dividends - - - - - (22,492) (22,492)As at 31st March 2007 85,348 201,624 70,000 4,500 17,500 136,625 515,597Issue fo Shares 431,510 - - - - - 431,510Adjustment on Merger with Millers PLC - 696,575 - - 121,538 179,191 1,134,510Deferred Tax on Revaluation - (13,811) - - - - (13,811)Net Profit for the year - - - - - 156,609 156,584Dividends - - - - - (17,994) (17,994)Balance as at 31st March 2008 516,858 884,388 70,000 4,500 139,038 591,612 2,206,396Note AA tax refund received by the subsidiary Uni-Dil Packaging (Pvt) Ltd due to applying incorrect tax rates and in prior years the re-statement of the opening deferred taxliability by the subsidiary Horana Plantations PLC and associate Parquet (Ceylon) PLC have been accounted as Prior Year Adjustments in accordance with Sri LankaAccounting Standard 10 – “Accounting Policies, Changes in Accounting Estimates and Errors”.

Ceylon Theatres PLC | Annual Report 2008 | 45Cash Flow StatementGroupCompany008 2007 2008 2007Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000CASHFLOWS FROM OPERATING ACTIVITIESProfit/(Loss) From Operations 1,612,183 1,396,246 157,030 38,668Adjustment for:Depreciation of Property, Plant & Equipment 810,826 791,477 (673) 1,364Amortisation of Franchise Fees 4,858 4,474 - -Interest Received (46,756) (12,404) (563) -(Profit) on Sale of Other Investments (116,158) (16,152) (221,860) -(Profit)/Loss on Sale of Property, Plant & Equipment (9,092) (12,585) (216) -Dividend Income (25,882) (998) (85,133) (81,133)Finance Expense 703,745 478,167 60,523 16,671Share of Associates Results (1,707) (12,957) - -Subsidiaries not Consolidated (72,063) - - -Provision/(Reversal) for Bad Debts (45,516) (9,209) - -Bad Debts Written Off (505) 105 8,945 -Amortisation of Capital Grants (3,566) (2,841) - -Provision/(Reversal) for Slow Moving & Obsolete Stock (13,580) (1,211) - -Provision for Diminution in Value of Investment 41,000 (383) - -Gain on Revaluation of Investment Properties (123,000) (156,856) -Provision for Gratuity 171,799 104,781 3,198 -Operating Profit/(Loss) before Working Capital Changes 2,886,586 2,549,654 (77,403) (24,430)(Increase)/Decrease in Inventories (2,034,772) (919,577) 1,203 53(Increase)/Decrease in Trade and Other Receivables 934,798 (1,584,871) 11,113 (2,216)(Increase)/Decrease in Related Party Receivables 44,128 (29,300) 600 3,614Increase/(Decrease) in Trade and Other Payables (191,498) 3,040,808 (609,209) (21,336)Increase/(Decrease) in Related Party Payables (79) (6,339) (4,585) 44,104Cash Generated from/(Used in) Operations 1,639,163 3,050,375 (678,281) (211)Interest Received 46,756 12,404 563 -Interest Paid (619,033) (478,167) (60,523) (16,671)Income Tax Paid (464,090) (280,490) (230) -Gratuity Paid (53,851) (50,820) (680) (1,017)Net Cash Generated from/(used in) Operating Activities 548,945 2,253,302 (739,151) (17,899)

Ceylon Theatres PLC | Annual Report 2008 | 46Cash Flow StatementGroupCompany008 2007 2008 2007Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000CASHFLOWS FROM INVESTING ACTIVITIESPurchase of Property ,Plant & Equipment and Expenditureon Capital Work in Progress (1,845,235) (2,428,080) (8,177) (248)Additions of Investment Properties - (6,666) - -Additions to Franchise Fees (13,368) (20,178) - -Dividend Received 25,882 998 85,133 81,133Capital Grants Received 14,117 9,362 - -Proceeds from Sale of Property, Plant & Equipment 440,700 23,527 258 1Proceeds from Sale of Investments 248,929 48,822 448,929 -Purchase of Investment (122,610) (19,474) (10,418) (19,474)Cash flow from Investments (1,251,580) (2,391,689) 517,725 61,412CASHFLOWS FROM FINANCING ACTIVITIESRepayments of Long Term Loans (434,168) (331,437) (35,000) (35,000)Dividend Paid (17,616) (22,163) (17,616) (22,163)Minority Interest (268,749) (188,782) - -Proceeds on Rights Issue - 88,832 - -Short Term Loans Obtained/(Paid) During the Year 445,129 (336,319) 225,000 -Increase in Security Deposit 2,736 - - -Long Term Loans Obtained 692,470 1,000,572 - -Lease Payments (61,162) (28,649) - -Cash flow from Financing 358,640 182,054 172,384 (57,163)Decrease in Cash and Cash Equivalents (343,995) 43,667 (51,042) (13,650)Cash and Cash Equivalents at 1st April (933,600) (977,267) (45,940) (32,290)Cash and cash equivalents at 31st March (Note A) (1,277,595) (933,600) (96,982) (45,940)Note ACash and Cash Equivalents at 31st MarchCash at Bank & in Hand 304,171 518,834 4,089 1,091Short Term Deposits with Banks 156,119 144,792 - -Bank Overdraft (Secured) (1,737,885) (1,597,226) (101,071) (47,031)(1,277,595) (933,600) (96,982) (45,940)

Ceylon Theatres PLC | Annual Report 2008 | 47Accounting Policies1. General1.1. Accounting Policies1.1.1. The Balance Sheet, Income Statement, CashFlow Statement, Statement of Changes in Equityand Accounting Policies and Notes (“FinancialStatements”) of the Group as at 31 March 2008are prepared in accordance with the AccountingStandards laid down by the Institute of CharteredAccountants of Sri Lanka. and in compliance with therequirement of the Companies Act No 7 of 20071.1.2. The Financial Statements of the Group are preparedunder the historical cost convention except thatcertain Property, Plant & Equipment are stated atvaluation.1.1.3. No adjustment has been made for inflationary factorsaffecting the Financial Statements.1.1.4 Where appropriate significant policies are explained insucceeding notes.1.1.5 The Financial Statements of the Group are prepared inSri Lankan Rupees Thousands (Rs.000’s).1.1.6 New Accounting Standard Effective as at the BalanceSheet date –Sri Lanka Accounting Standard 16 (revised 2006)– “Employee Benefits”which is applicable to financialstatements covering accounting periods beginningon or after 1st July 2007 and not effective for theyear ended 31st March 2008 has not been applied inpreparing these consolidated financial statements.SLAS 16 (revised 2006) requires extensive disclosuresabout the method adopted for the actuarial valuationof the defined benefit plan, measurements of theactuarial gains and losses and recognition of suchgains and losses. The Group / Company has not yetdetermined the potential effect of this standard.1.2. Accounting policy used for MergerAccountingThe Amalgamation of Ceylon Theatres PLC & MillersPLC has been accounted applying the purchasemethod as specified in Sri Lanka Accounting Standard25 (revised 2004) – “Business Combinations”.Accordingly the analogy of the said standard has beenused in accounting for the said merger.Applying the purchase method involves the following -a) Identifying an Acquirer ;b) Measuring the cost of the businesscombination ; andc) Allocating, at the date of acquisition the costof the business combination to the assetsacquired, liabilities and contingent liabilities.Ceylon Theatres PLC has been considered theacquirer for the above business combination.1.3. Consolidation Policies1.3.1. The Consolidated Financial Statements comprisea consolidation of the Financial Statements of theCompany and its subsidiaries except as stated underNote 11.8 All the companies in the Group have acommon financial year, which ends on 31st March.1.3.2. The total profits & losses of the subsidiary companiesare included in the Consolidated Income Statementand the proportion of the Profit or Loss after taxationapplicable to outside shareholders shown under theheading “Minority Interest”, is deducted in arriving atthe profit or loss attributable to the shareholders ofCeylon Theatres PLC.1.3.3. All assets and liabilities of the Company and itssubsidiaries are included in the Consolidated BalanceSheet. The interests of the outside shareholdersin the net assets employed, represented by thepaid up value of Share Capital held by the outsideshareholders together with their proportion of therespective reserves and accumulated profit or loss is

Ceylon Theatres PLC | Annual Report 2008 | 48Accounting Policiesstated separately in the Consolidated Balance Sheetunder the heading “Minority Interest”.resulting gains and losses are accounted for in the IncomeStatement.1.3.4. The result of associate companies have beenaccounted for under the equity method of accountingwhere the Group’s share of profit is incorporated inthe Consolidated Income Statement and the relatedinvestment carried forward in the ConsolidatedBalance Sheet at values adjusted to reflect theGroup’s share of retained assets.1.3.5. Goodwill arising in connection with the acquisitionof Subsidiaries, which is due to the excess of thepurchase price or consideration over the net assetsacquired, is shown as an intangible asset in theBalance Sheet and is tested for impairment andcarried at cost less accumulated impairment losses.1.6. Taxation1.6.1. Taxation has been provided on the elements ofincome & expenditure as reported in the financialstatements and computed in accordance with theprovisions of the Inland Revenue Act. No: 10 of 2006and subsequent amendments thereto. Relevantdetails have been disclosed in Note 5 to theseFinancial Statements.1.6.2. Deferred TaxationDeferred taxation is the tax attributable to thetemporary differences that arise when the carryingamount of assets differ from their value derived basedon the taxation rules (tax base).The excess of the value of the net assets of SubsidiaryCompanies over the purchase price or considerationat the date of acquisition is treated as negativegoodwill. Such negative goodwill is directly recognizedin the Income Statement.Deferred tax assets are recognised for all deductibletemporary differences, carry forward of unused taxcredits and unused tax losses only to the extent that itis probable that future taxable profits will be availableagainst which the assets can be utilized.1.4 Franchisee FeeFranchisee fee is shown at historical cost. Franchiseefee have a finite useful life and are carried at cost lessaccumulated amortisation. Amortisation is calculatedusing the straight-line method to allocate the cost ofFranchisee fee over their estimated useful life of 10years.1.5. Foreign Currency TranslationAll foreign exchange transactions are converted to SriLanka Rupees, which is the reporting currency, at therates of exchange prevailing at the time the transactionswere effected. Monetary assets and liabilities denominatedin foreign currencies are translated to Sri Lanka Rupeeequivalents using year end spot foreign exchange rates. Nonmonetaryassets and liabilities are translated using exchangerates that existed when the values were determined. TheThe carrying amount of deferred tax assets isreviewed at each balance sheet date and reduced tothe extent that it is no longer probable that sufficienttaxable profits will be available to allow all or part ofthe deferred tax assets to be utilized.Deferred tax assets and liabilities are measured at taxrates that are expected to apply to the year when theasset is realized or liability is settled, based on the taxrates that have been enacted or substantively enactedas at the balance sheet date.1.7. Borrowing CostsBorrowing costs are recognised as an expense in theperiod in which they are incurred, except to the extentwhere borrowing costs that are directly attributable to theacquisition, construction or production of Property, Plant

Ceylon Theatres PLC | Annual Report 2008 | 49& Equipment, that takes a substantial period of time to getready for its intended use or sale and are capitalised as partof that asset during the period of construction/development[Refer Note 9.6]1.8 Comparative InformationThe accounting policies have been consistently applied bythe Company and Group and are consistent with those usedin the previous year. Where necessary comparative figureshave been re-classified to conform with the current yearpresentation.2.1.5 Provision is made, where necessary, for obsolete,slow moving and defective inventories.2.2 Trade and other Receivables.Trade and other receivables are stated at the amounts theyare estimated to realize, net of provision for bad and doubtfuldebts.2.3 Related Company Current AccountsThese are treated as current assets/liabilities as they aredeemed to be of a temporary nature.1.9 Events after the Balance Sheet DateAll material events occurring after the Balance Sheet dateare considered and where appropriate adjustments to ordisclosures have been made in the respective notes to theFinancial Statements.2. Assets and Bases of their Valuation2.1. Inventories2.1.1 Inventories are valued at lower of cost or net realisablevalue, after making the due allowances for obsoleteand slow moving items. Net realisable value is theprice at which inventories can be sold in the ordinarycourse of business less the estimated cost ofcompletion and the estimated cost necessary to makethe sale.2.1.2 The cost of the inventory is determined at actual coston a first in first out and weighted average basis.2.1.3 In the case of manufactured products, cost includesall direct expenditure and appropriate proportionof fixed production overheads based on normaloperating capacity.2.1.4 Harvested crop is valued at since realised prices netof packing, despatch & selling expenses.2.4 InvestmentsInvestments are of a long-term nature and are stated atcost. No adjustment is made for the fall in value of theseinvestments, unless it is deemed to be permanent.The cost of the investment is the cost of acquisition inclusiveof brokerage fees, stamp duty and bank fees.2.5 Property, Plant & Equipment2.5.1 The Property, Plant & Equipment is recorded atcost/valuation less accumulated depreciation and anyaccumulated impairment losses.2.5.2 Expenditure incurred for the purpose of acquiringextending or improving assets of a permanent natureby means of which to carry on the business or toincrease the earning capacity of the business hasbeen treated as capital expenditure.2.5.3 The cost of Property, Plant & Equipment includesborrowing costs and any expenses incurred inbringing the assets to its working condition for itsintended use.2.6 Depreciation2.6.1 Freehold land is not depreciated. Depreciation hasbeen provided so as to write off the cost or valuation

Ceylon Theatres PLC | Annual Report 2008 | 50Accounting Policiesof Property, Plant & Equipment over their estimateduseful lifetime as follows:-AssetLeasehold Land & Buildings -Improvements toLeasehold BuildingsMining LandPlant & Machinery andIndustrial Air-conditionersMotor VehiclesWater Supply SchemeElectricity \Distribution SchemeCommunication EquipmentLight Plant, Equipment,Furniture & Fittingsand Motor vehiclesTools ImplementDepreciation10 to 53 years or period oflease which ever is lower.4 years5 years5 to 20 years5 to 10 years2 to 15 years15 years10 to 12 years4 to 20 years2 yearsDepreciation is provided from the date of purchaseupto the date of disposal for both the Companyand the subsidiary as per SLAS 18 (Revised 2007)Property, Plant and Equipment.2.6.2 Cargills (Ceylon) PLC (except for the amortisationof improvements on leasehold buildings which areamortised over the lower of their economic usefullives or unexpired period of lease) uses the reducingbalance method whereas the other companies in theGroup use the straight- line method of depreciation.2.6.3 Depreciation of an asset begins when it is availablefor use and ceases at the earlier of the date that theasset is classified as held for sale and the date thatthe asset is derecognised.2.6.4 The useful life, the depreciating methods and residualvalues are assessed annually or at an earlier datewhere any circumstances indicate that such anassessment is necessary.2.6.5 Impairment of assets – tangible and intangibleAssets that have an indefinite useful life, for exampleland, are not subject to amortization and are testedannually for impairment. Assets that are subject toamortization are reviewed for impairment annuallyor at an earlier date where events or changes incircumstances indicate that the carrying amount maynot be recoverable. An impairment loss is recognisedin the income statement for the amount by whichthe asset’s carrying amount exceeds its recoverableamount. The recoverable amount is the higher of anasset’s fair value less costs to sell and value in use.2.7 Investment PropertiesInvestment property, principally comprising freehold landand building held to earn rentals or for capital appreciationor both, rather than for use in the production or supply ofgoods or services or for administrative purposes or sale in theordinary course of business.Investment property is recognised as an asset when, andonly when it is probable that the future economic benefitsthat are associated with the investment property will flow tothe entity and the cost of the investment property can bemeasured reliably.Investment property is carried out at fair value determinedonce in three years by an independent valuer and annually bythe Board of Directors. A gain or loss arising from a change inthe fair value of investment property is recognised as a profitor loss for the period in which it arises.2.8 Operating LeasesAssets in use which are under operating lease are notcapitalised in the books of the Group. The lease rental ischarged consistently against profits on the basis of total leaserentals payable over the life of the contract.2.9 Financial LeasesWhere assets are financed in an agreement under whichsubstantially all the risks and rewards of ownership aretransferred to the lessee, such assets are recorded in theBalance Sheet as Property, Plant & Equipment at their cashprice while the total interest payable is accounted as interestin suspense. The corresponding credit is recorded as anamount payable to the lessor. The instalments paid are usedto reduce this liability. An amount equal to the interest chargefor the year is transferred from interest in suspense accountto the Income Statement.

Ceylon Theatres PLC | Annual Report 2008 | 512.10 Plantations2.10.1 Permanent Land Development CostPermanent land development cost and infrastructuredevelopment expenditure on leasehold land, the economicbenefit of which accrues over a future period of time arecapitalized and amortised over the lease period.2.10.2 Limited Life Land Development CostThe limited life land development cost incurred in the formof “infilling” has been capitalized only where the number ofplants per hectare has exceeded 3,000 plants that results insignificant increase in yield of mature plantations.The costs of replanting/new planting incurred during theimmature period are reflected as immature areas up to thetime of the harvesting of crops. The borrowing costs incurredfor financing immature plantations have been capitalized.2.10.3 Immature Area (Reforestation)The cost incurred on reforestation are reflected as immaturearea costs up to the time of maturity and will be matched withthe resulted revenue arising out of disposal subsequently.2.10.4 DepreciationThe number of years over which depreciation is charged is asfollows:Lease Property, Plant & Equipment at takeover YearsLand (Planted & Bare) 53Mature Plantations 30Permanent Land Development Cost 30Buildings 25Plant & Machinery 5Property, Plant & Equipment acquired aftertakeover, and plantation areas on whichlimited life land development has beenundertaken after acquisitionYearsMature Plantations (Tea) 33 1/3Mature Plantations (Rubber) 20Plant Equipment 3Permanent Land Development Cost 202.11 Cash and Cash EquivalentsCash and cash equivalents are defined as cash in hand,demand deposits in bank and short term highly liquidinvestments, readily convertible to known amounts of cashand subject to insignificant risk of change in value.For the purpose of the Cash Flow Statement cash and cashequivalents consists of cash in hand and deposits in banksnet of outstanding overdraft.Interest paid and received are classified as operatingcash flows, dividends received are classified as investingcash flows while dividends paid are classified as financingcash flows for the purpose of presentation of Cash FlowStatement, reported based on the indirect method.3 Liabilities & Provisions3.1 Trade and Other PayablesTrade and other payables are stated at their cost.3.2 Capital Commitments & ContingenciesAll material Capital expenditure commitments and contingentliabilities as at the date of the Balance Sheet have beendisclosed in the respective Notes to the Financial Statements.3.3 Retirement Benefit Costs3.3.1 Defined Benefit Plan – Retirement GratuityFull provision has been made on account of retiring gratuityfrom the first year of service of the employee except as statedin accounting policy No.3.3.1.1 in conformity with Sri LankaAccounting Standard No. 16 - “Retirement Benefit Costs” athalf (1/2) month salary for each year of service from the dateof commencement of service.However, according to the Payment of Gratuity Act No. 12of 1983 the liability for gratuity to an employee arises onlyon completion of five years of continued service with thecompany.The liability is not actuarially valued or externally funded. Thisitem is grouped under non-current liabilities in the BalanceSheet.

Ceylon Theatres PLC | Annual Report 2008 | 52Accounting Policies3.3.1.1 Horana Plantations PLCAccounting policy for providing terminal benefits has beenmade using actuarial method in accordance with Sri LankaAccounting Standard No. 16 - “Retirement Benefit Costs”.Projected Unit Credit (PUC) method has been applied for thispurpose. The actuarial valuation method was carried out by aprofessionally qualified actuary from a firm of actuaries, M/S.Watson What Lanka (Pvt) Limited, as at 31.12.1997. Thecompany expects to carry out the actuarial valuation once inevery two years. All employee categories have been coveredby this plan and no separate fund is being maintained forthese purposes. The key assumptions used by the actuaryincludes the following:Rate of interest (Net of Tax) 10%Salary increment rate 7.5%Retiring age – Workers (Male)60 Years– Workers (Female) 55 Years– Other categories of staff(Male & Female)60 YearsThe company will continue as a going concern.3.3.2 Cost of Living GratuityProvision has not been made in the Group FinancialStatements for the payment of Non-recurring Cost of LivingGratuities to employees covered by the Collective Agreement.These are accounted for on a cash basis.3.3.3 Defined Contribution Plan – Employees’ ProvidentFund & Employees’ Trust Fund.All employees who are eligible for Employees’ Provident FundContributions and Employees’ Trust Fund Contributions arecovered by relevant contribution funds in line with respectivestatutes and Regulations.Contributions to Provident Fund and Trust Fund coveringthe employees are recognized as an expense in the IncomeStatement in the period in which it is incurred.3.4 ProvisionProvisions are recognised when the company has a legalor constructive obligation as a result of past events and it isprobable that an outflow of economic benefits will be requiredto settle the obligation.4 Income Statement4.1 TurnoverThe turnover of the Group represents the invoiced value ofgoods and services net of trade discounts and returns andgross receipts at cinemas net of entertainment tax. Intragroup sales are excluded when computing Group Turnover.4.2 Revenue RecognitionRevenue is recognized to the extent that it is probable thatthe economic benefits will flow to the Group and the revenuecan be reliably measured. The following recognition criteriaare applied.4.2.1 Sale of goodsRevenue from sale of goods is recognised at the pointof invoicing.4.2.2 Cinema OperationsRevenue from cinema operations are recognised atthe point of issuance of tickets.4.2.3 Rental IncomeRental income is recognized on an accrual basis.4.2.4 Interest IncomeInterest income is recognized on an accrual basisunless collectability is in doubt.4.2.5 Dividend IncomeDividend income is recognized when the Company’sright to receive the payment is established.4.2.6 OthersGains or losses of a revenue nature on the disposal ofProperty, Plant & Equipment have been accounted forin the Income Statement. Where the gain is of capitalnature, such gain has been appropriated to capitalreserve.Other income is recognized on an accrual basis.4.3 Revenue ExpenditureAll expenditure incurred in the running of the business and inmaintaining the capital assets in a state of efficiency has beencharged to revenue in arriving at the profit for the year.

Ceylon Theatres PLC | Annual Report 2008 | 53For the purpose of presentation of the Income Statement, theDirectors are of the view that function of expenses methodfairly presents the elements of the Company’s and Group’sperformance, hence such a presentation method is adopted.4.4 Deferred ExpenditureDeferred expenditure represents the cost of setting upthe factory and product development costs and they areamortised over a period of 10 years commencing from thesecond year of operation.5. Segment ReportingA segment is a distinguishable component of the Groupthat is engaged either in providing products or services(business segment) or in providing product or services withina particular economic environment (geographical segment),which is subject to risks and rewards that are different fromthose of other segment.Segment information is presented in respect of the Group’sbusiness. There are no distinguishable components tobe identified as geographical segment for the Group. Thebusiness segments are reported based on the Groupmanagement and reporting structure.Inter segment pricing is determined at prices mutually agreedby the companies.Segment results, assets and liabilities include items directlyattributable to a segment as well as those that can beallocated on a reasonable basis.Franchisee/ Operator for ‘Kentucky Fried Chicken’Restaurants in Sri Lanka.5.1.2 Real EstateOwner/operator of the popular ‘Majestic City’shopping and entertainment mall.Development and sale/rental of residentialcondominiums and commercial development.5.1.3 Ceramics, Tiles and Wooden FlooringManufacture floor and wall tiles and wooden flooringfor local and export market.Mining and processing of raw materialRetail and wholesale trading of ceramic and alliedproducts.5.1.4 PlantationsCultivation and processing of tea and Rubber.5.1.5 Financial Services (Associate Companies)Stock brokering, capital market solutions and fundmanagement.5.1.6 EntertainmentOperation of cinema halls.5.1.7 PackagingManufacture and sale of corrugated boards andcartons.Segment capital expenditure is the total cost incurred duringthe period to acquire segment assets, which are expected tobe used for more than one accounting period.5.1 The Group comprises the following mainbusiness segments;5.1.1 Food and BeverageOperation of a chain of supermarkets, convenientstores and mega stores.Local distributor for world renown brands of food andbeverages.Manufacturer/distributor of processed meats, dairy icecream, jams, cordials and sauces.

Ceylon Theatres PLC | Annual Report 2008 | 54Notes to the AccountsGroupCompany008 2007 2008 2007Rs ‘000 Rs ‘000 Rs’000 Rs ‘0001 TurnoverTurnover is made up as follows:Food and Beverage 27,360,079 21,620,726 - -Real Estate 234,117 205,751 - -Ceramics, Tiles and Wooden Flooring 5,077,366 4,543,121 - -Plantations 1,659,660 1,344,654 - -Entertainment 61,452 50,058 25,591 26,304Packaging 756,087 740,097 - -Gross turnover 35,148,761 28,504,407 25,591 26,304Intra Group sales (3,282,291) (3,580,490) - -Net turnover 31,866,470 24,923,917 25,591 26,3041.1 The above turnover is stated after deducting Value Added Tax and Turnover Tax.GroupCompany008 2007 2008 2007Rs ‘000 Rs ‘000 Rs’000 Rs ‘0002 Non Operating IncomeDividend Income-Related Companies - - 85,108 81,133Dividend Income-Others 25,882 998 25 -Profit on Sale of Property, Plant & Equipment 9,092 12,585 216 -Profit on Sale of Investments 116,158 16,152 221,860 (1,869)Amortisation of Capital Grants 3,566 2,841 - -Interest Received 54,909 12,404 563 -Revenue Grants Received 1,483 214 - -Exchange Gain 3,735 22,456 - -Merchandising Income 405,682 303,496 - -Gain on Revaluation of Investment Properties 123,000 156,856 - -Other Income 103,836 75,572 7,328 -847,343 601,705 315,100 79,264

Ceylon Theatres PLC | Annual Report 2008 | 55GroupCompany008 2007 2008 2007Rs ‘000 Rs ‘000 Rs’000 Rs ‘0003 Finance ExpenseBank Loans, Borrowings & Other Charges 311,122 210,857 50,227 16,671Overdrafts 300,198 191,151 10,296 -Finance Leases 108,957 91,680 - -720,277 493,688 60,523 16,671Less : Capitalisation of Borrowing Cost (16,532) (15,521) - -703,745 478,167 60,523 16,6714 Profit before TaxationProfit before Taxation is stated after charging / (crediting) all expenses /(income) including the following;GroupCompany008 2007 2008 2007Rs ‘000 Rs ‘000 Rs’000 Rs ‘000Depreciation 870,946 784,047 673 1,364Directors’ Emoluments -Directors’ Fees 1,160 945 10 -For Managerial Services 55,488 56,207 5,285 3,63256,648 57,152 5,295 3,632Auditors’ RemunerationAudit 4,302 4,671 155 135Non-Audit 160 75 - -Audit Expenses 95 60 - -4,557 4,806 155 135Bad Debts Written Off 505 105 - -Donation 788 729 - -Exchange Loss / (Gain) (1,204) 3,006 - -Provision / (Reversal) for Slow Moving and Obsolete Inventories 13,580 (1,211) - -Compensation Paid 7,170 - - -Social Responsibility Levy 3,222 - - -Operating Lease Rentals 15,368 - - -Provision / (Reversal) for Bad Debts 45,516 (9,209) - -Personnel Cost (Note 4.1) 2,494,559 (2,319,464) 72,403 16,367

Ceylon Theatres PLC | Annual Report 2008 | 56Notes to the AccountsGroupCompany008 2007 2008 2007Rs ‘000 Rs ‘000 Rs’000 Rs ‘0004.1 Personnel CostsSalaries ,Wages and Other Related Expenses 2,077,441 2,045,530 14,955 13,983Defined Benefit Plan Cost - Retirement Gratuity 233,194 104,781 56,627 1,214Defined Contribution Plan Costs - EPF & ETF 183,924 169,153 821 1,1702,494,559 2,319,464 72,403 16,3675 Taxation(a) Liability to Income tax for the company and subsidiaries have been computed in accordance with the Inland Revenue Act.No 10 of 2006 and subsequent ammendments thereto.(b)The Company has no liability to Income Tax in view of tax losses during the year.(c)Deferred Taxation is provided for in all Group Companies except Companies with tax losses available for carry forwardexceeding temporary taxable differences.(d)The tax loss estimated to be allocated to the subsidiary Horana Plantations PLC under the conversion of PublicCorporations of Government Owned Business Undertakings in to Public Companies Act No.23 of 1987, is Rs.98.2 million.The said loss of previous board/ corporation from which the company’s estates devolved have not been agreed to as yetwith the Department of Inland Revenue.(e)The tax charge for the year is made up as follows:GroupCompany008 2007 2008 2007Rs ‘000 Rs ‘000 Rs’000 Rs ‘000Income Tax on Profit for the Year 326,112 288,258 - -Under/(Over) Provision in Respect of Prior Years 2,609 (23,508) 446 -Transferred (rom)/to Deferred Taxation 77,331 85,102 - -Tax effect on intercompany dividends 25,858 36,732 - -431,910 386,582 446 -

Ceylon Theatres PLC | Annual Report 2008 | 57(h)Reconciliation Between the Accounting Profit and Tax Expense / (Income)GroupCompany008 2007 2008 2007Rs ‘000 Rs ‘000 Rs’000 Rs ‘000Accounting Profit 1,612,118 1,392,228 157,030 38,668Aggregate Disallowed Items 882,348 811,590 2,271 3,874Aggregate Allowable Expenses (780,761) (639,184) (3,126) (4,343)Aggregate Allowable Income (723,997) (541,887) (299,726) (81,133)Aggregated Income liable to Tax (409,799) (549,189) - -Intercompany adjustments - 199,646 - -Exempt profits - (39,076) - -Tax losses b/f and utilised (27,785) (66,309) - -552,124 567,819 (143,551) (42,934)Tax Loss Brought Forward (1,161,035) (981,645) (158,446) (115,512)Tax Loss Carried Forward (171,747) 45,120 (301,997) (158,446)Tax calculated at 15% 23,362 27,243 - -Tax calculated at 32.5% - 6,769 - -Tax calculated at 35% 302,750 254,246 - -326,112 288,258 - -(i)Subsidiary Companies Enjoying Tax Holidays / Concessionary Rates of TaxCargills Retail (Pvt) LimitedIn terms of the agreement entered into with the Board of Investment (BOI) of Sri Lanka, the company enjoyed tax holiday until 30thSeptember 2007 and became liable for Income Tax from 1st October 2007.Cargills Quality Foods (Pvt) Ltd, Cargills Quality Dairies (Pvt) Ltd,CPC Agrifoods (Pvt) LtdCargills Food Processors (Pvt) ltd and Cargills Food Services (Pvt) LtdThe above companies are exempt from income tax in accordance with the provisions of the Inland Revenue Act No. 10 of 2006and subsequent ammendments thereto.Ceytea Plantation Management LimitedAs per the provisions of the Inland Revenue Act No.10 of 2006, the income tax on profits of the company has been provided at15% on the taxable income.Horana Plantations PLCIn terms of Section 16 of the Inland Revenue Amendment Act No.10 of 2006,”Profits from any Agricultural Undertaking “ is exemptfrom income tax for a period of five (5) years commencing from 1st April 2006. Manufacturing profit and other income are liable forincome tax at normal rates of Income Taxation.

Ceylon Theatres PLC | Annual Report 2008 | 58Notes to the AccountsCeradec (Pvt) Ltd, Uni-Dil Packaging LimitedAs per the provisions of the Inland Revenue Act No.10 of 2006, the companies are entitled to 15% concessionery rate of incometax on export profits. Other profits are taxable at normal rates of Income taxation.Lanka Tiles PLCUnder the Inland Revenue (amendment) Act No.19 of 2003 (Section 21A), the Company is entitled to the following concessioneryrates of Income Tax, in respect of profits generated from its expansion unit (which commenced operations on 1st October 2003).PeriodTax RateFirst five years 0Sixth and seventh year 10%Eighth year onwards - Exports 15%- Other 20%Uni-Dil Packaging LimitedIn accordance with the provisions of Inland Revenue Act No 10 of 2006 the company is entitled to a 15% concessionary rate oftax on Export Profits. Other profits are liable to taxation at 35%.Lanka Walltile PLCIn accordance with the provisions of the Inland Revenue Act No 10 of 2006 the Company is liable to tax at a 15%concessionary rate of tax on qualifying export profit. Other profits are liable at 35%.(j) Notes on Deferred Income Tax of Group CompaniesLanka Walltile PLCDeferred income tax has been computed using effective tax rate for the period after 01 April 2007.Lanka Tiles PLCIn Lanka Tiles Limited deferred income taxes are calculated on all temporary differences under the liability method.Ceytea Plantation Management LimitedIn respect of Ceytea Plantation Management Limited, no provision has been made in the accounts for deferred taxation since thereare no significant temporary differences of capital allowances on property, plant and equipment of the Company.Horana Plantations PLCTemporary differences arising from Immature and MaturePlantations were not considered in computing the deferred tax assets /liability in the financial statements in the previous years. Due to the impracticability involved in determining the deferred tax liabilityas at 1st April 2006, the adjustment to correct this prior period error was made in the retained earning and deferred tax liability asat 31st March 2007. Accordingly, Rs 26.4m, which is the deferred tax liability as at 31st March 2007 was transferred from retainedearnings to deferred tax liability as at that date.

Ceylon Theatres PLC | Annual Report 2008 | 596 Earnings Per ShareEarnings Per Share is calculated by dividing the net profit for the year attributable to equity holders of the Company by theweighted average number of ordinary shares outstanding during the year.The following reflects the income and share data issued in the Earnings Per Share computationGroupCompany008 2007 2008 2007Rs ‘000 Rs ‘000 Rs’000 Rs ‘000Net profit/(loss) attributable to equity holders 437,730 265,314 156,584 38,668‘000s ‘000s ‘000s ‘000sWeighted average number of ordinary shares in issue 2,258 2,249 2,258 2,2497 Dividends Per ShareDividends Per Share is based on the dividends paid for theperiod covered by the financial statementsGroupCompany008 2007 2008 2007Rs ‘000 Rs ‘000 Rs’000 Rs ‘000Dividends Paid 17,994 22,492 17,994 22,492Rs. Rs. Rs. Rs.Dividends Per Share 8.00 10.00 8.00 10.00GroupCompany008 2007 2008 2007Rs ‘000 Rs ‘000 Rs’000 Rs ‘0008 Segmental ProfitsSegmental Operating profit after taxation -Food & Beverage 584,154 462,096 - -Real Estate 125,817 131,209 - -Ceramics, Tiles and Wooden Flooring 601,963 540,908 - -Plantations 171,079 198,305 - -Entertainment (38,943) (42,242) (45,770) (42,465)Packaging (18,427) 40,947 - -1,425,643 1,331,223 (45,770) (42,465)Intra Group transactions / eliminations (142,528) (338,534) 306,968 81,133Overheads not allocated to profit centres (104,614) - (104,614) -Share of Associates’ Profit (Financial Services) 1,707 12,957 - -Minority Interest (742,479) (740,332) - -437,730 265,314 156,584 38,668)

Ceylon Theatres PLC | Annual Report 2008 | 60Notes to the AccountsLand & Improvements Mines Plant & Immature Transport and Permanent Water supply Furniture & Total TotalBuildings to Leasehold Machinery Mature Communication Land and Fittings 2008 2007Buildings Plantations Equipment Development ElectricalCost DistributionSystemsRs. ‘000 Rs. ‘000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’0009 Property, Plant& Equipment9.1 GroupCOST / VALUATIONAs at 1st April 2007 2,861,754 935,050 25,360 5,536,016 954,222 507,473 4,014 172,147 524,058 11,523,122 9,751,666Additions 235,726 128,221 9,300 1,164,999 97,482 92,964 - 4,450 46,990 1,780,132 1,624,562Disposals (5,438) (148,989) - (409,921) - (18,127) - - (44,579) (627,054) (35,076)Subsidiaries not consolidated - - - - - (1,890) - - - (5,800) -Revaluations 1,361,271 - - - - - - - - 1,361,271 184,638Transfers (14,281) - - - (2,088) (1,589) - - - (17,958) (1,959)As at 31st March 2008 4,439,032 914,282 34,660 6,291,094 1,049,616 578,831 4,014 176,597 520,669 14,011,823 11,523,093DEPRECIATIONAs at 1st April 2007 392,095 389,863 18,842 2,253,409 161,715 315,570 1,977 85,762 330,532 3,949,765 3,183,758Charge for the year 57,017 135,569 7,771 488,445 31,235 44,241 134 12,497 33,919 810,828 791,477Disposals (4,650) (33,207) - (109,528) - (17,609) - - (30,452) (195,446) (24,872)Subsidiaries not consolidated - - - - - (1,082) - - (4,841) (5,923)Transfers (7,478) - - - (486) (1,589) - - - (9,553) (599)As at 31st March 2008 436,984 492,225 26,613 2,632,326 192,464 339,531 2,111 98,259 329,158 4,549,671 3,949,736NET BOOK VALUEAs at 31st March 2008 4,002,048 422,057 8,047 3,658,768 857,152 239,300 1,903 78,338 191,511 9,462,152Capital Work-in-progress 425,2564,002,048 422,057 8,047 3,658,768 857,152 239,300 1,903 78,338 191,511 9,887,408As at 31st March 2007 2,469,659 545,187 6,518 3,282,607 792,507 191,903 2,037 86,385 193,526 7,573,357Capital Work-in-progress 231,9322,469,659 545,187 6,518 3,282,607 792,507 191,903 2,037 86,385 193,526 7,805,2899.1.1 Land & Buildings consist of Freehold & Leasehold Land, Road Ways & Buildings and Furniture and Equipment consisting of Tools,Implements, Furniture & Fittings, Office & Other Equipments.9.1.2 Some of the items of Plant & Machinery which have been funded by long term loans have been pledged as security for the loans. Detailshave been given in Note 22.49.1.3 The property at Dekatana owned by Uni-Dil Packaging (Pvt) Ltd. was revalued by a Professional valuer on 1st June 1996 and wasincorporated into the accounts for the year ended 31st March 1998. Nine acres of the Land along with the building situated at Dekatanais pledged to Standard Chartered Bank against the long term loan

Ceylon Theatres PLC | Annual Report 2008 | 61Freehold Plant, Motor Total TotalLand Machinery Vehicles 2008 2007& Building & OthersRs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘0009 Property, Plant and Equipment (Contd.)9.2 CompanyCOST/VALUATIONAs at 1st April 207,932 18,490 9,557 235,979 236,706Additions - 11,312 - 11,312 248Revaluations 879,000 879,000 -Disposals - (303) - (303) (975)As at 31st March 1,086,932 29,499 9,557 1,125,988 235,979DEPRECIATIONAs at 1st April 3,171 17,829 9,555 30,555 30,165Charge for the year 97 576 - 673 1,364Disposals - (261) - (261) (974)As at 31st March 3,268 18,144 9,555 30,967 30,555NET BOOK VALUEAs at 31st March 2008 1,083,664 11,355 2 1,095,021As at 31st March 2007 204,761 661 2 205,4249.3 Property, Plant and Equipment stated at a valuationThe following assets have been reflected in the financial statments at a valuation at the balance sheet date. The surplus arising onsuch valuations have been transferred to Revaluation ReservesCompany / Property Method of valuation Date of ValuerValuationCeylon Theatres PLCLand and buildings Open Market Value 1991 Mr. M S T P Senadhira, Professional ValuerFreehold land Open market value 1992 Mr. M S T P Senadhira, Professional Valuerfor existing useLand and buildings Open market value 2008 Mr. Tissa WeerathnaCargills (Ceylon) PLC Contractors’ 1991, 1995 & Mr. M S T P Senadhira, Professional ValuerFreehold land principle 2003Unidil Packaging (Private) Limited Land & Building 1996 Mr. Dunstan Kelaart, Professional ValuerLand and buildingsMethod

Ceylon Theatres PLC | Annual Report 2008 | 62Notes to the AccountsCompany / Property Method of valuation Date of ValuerValuationLanka Ceramic PLCLand & Building Land & Building Method 2007 Ariyatillake & Co. (Pvt) Ltd,Chartered ValuersParquet (Ceylon) PLCFreehold Land Contractors’ Principle 2007 R J Samarakoon, Professional Valuer9.4 Carrying value of revalued Property, Plant and EquipmentThe carrying amount of revalued assets of the company and the group as at 31st March, 2008 had they been carried at cost isRs. 153,300Cost Accumulated GroupDepreciation / 2008 2007AmortisationRs’000 Rs’000 Rs’000 Rs’0009.5 Leased Assets CapitalisedLeasehold right to bare land of JEDB/SLSPC estates ImmovableJEDB/SLSPC Estate assets on finance lease (other than bare land) 204,931 61,010 143,921 147,790Mature plantations 214,810 96,684 118,126 125,289Permanent land development cost 4,014 2,111 1,903 2,035Buildings 47,173 29,774 17,399 19,287Plant & Machinery 6,818 6,818 - 97477,746 196,397 281,349 294,4989.6 Borrowing costs amounting to Rs.18.1 mn ( 2006 - Rs.29.4 mn ) directly relating to investment in immature plantations oftea, rubber diversification and reforestation have been capitalised during the period at an average borrowing rate of 13.87%( 2006-13.53%).9.7 The leasehold rights to the bareland on all estates (except for Dumbara Estate which is under an operating lease) havebeen taken into the books of Horana Plantations PLC., (HPL) as at 22nd June 1992, immediately after the formation ofHPL, in terms of the opinion obtained from the Urgent Issues Task Force (UITF) of the Institute of Chartered Accountantsof Sri Lanka. For this purpose lands have been revalued at Rs. 204.9 mn being the value established for these lands byvaluation specialist, Mr.D.R Wickramasinghe just prior to the formation of HPL.

Ceylon Theatres PLC | Annual Report 2008 | 639.8 In terms of the opinion obtained from the UITF all immovable estate property, plant & equipment under finance leaseshave been taken into the books of HPL retroactive to 22nd June 1992. For this purpose all estate immovable have beenrevalued at their book values as they appear in the books of the lessor (JEDB/SLSPC) as the case may be on the dayimmediately preceding the date of formation of the company.9.9 The company has entered into an agreement withy its subsidiary company CT Properties Limited to develop the land into atwin towered multi storied residential condominium. Ownership of this land will be transferred to the company or directly tothe buyers of the condominium units once the development is completed.GroupCompany008 2007 2008 2007Rs ‘000 Rs ‘000 Rs’000 Rs ‘00010 Project work in progressAs at 1st April 2,257,674 1,159,962 - -Expenditure incurred during the year 1,225,288 1,097,712 - -Transferred Current Assets (3,200,459) - - -At the end of the year 282,503 2,257,674 - -Land Building Group Company008 2007 2008 2007Rs.’000 Rs.’000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘00011 Investment PropertiesAs at 1st April 1,309,500 865,500 2,175,000 2,003,000 - -Additions -Buildings - - - 870 - -Plan & Machinery - - - 5,796 - -Transferred from WIP - - - 8,478 - -Revaluation Gain/(Loss) 50,135 72,865 123,000 156,856 - -At 31st March 1,359,635 938,365 2,298,000 2,175,000 - -11.1 The Directors have adopted the fair value model value Investment Properties. The Property has been valued by Mr. TissaWeeratne, Professional Valuer. At 31st March 2008, the Investment properties were revalued by Mr. Tissa Weeratne forRs.2,298 million (2006 - Rs 2,175 million) and the resulted gains were recognised in the Income Statement.

Ceylon Theatres PLC | Annual Report 2008 | 64Notes to the AccountsGroupCompany008 2007 2008 2007Rs ‘000 Rs ‘000 Rs’000 Rs ‘00012 Intangible Assets12.1 Goodwill on ConsolidationGross ValueAs at 1st April 405,485 243,083 - -Additions during the year 260,354 162,402 688,467 -As at 31st March 665,840 405,485 688,467 -AmortisationAs at 1st April 222,390 222,390 - -Amortisation for the current year - - - -As at 31st March 222,390 222,390 - -Net ValueAt the end of the year 443,450 183,095 688,467 -12.2 Franchisee FeesAs at 1st April 59,336 39,158 - -Additions during the year 13,363 20,178 - -As at 31st March 72,699 59,336 - -AmortisationAs at 1st April 20,925 16,451 - -Amortisation for the current year 4,858 4,474 - -As at 31st March 25,783 20,925 - -Net ValueAs at 31st March 46,916 38,411 - -Total Intangible Assets as at 31st March 490,366 221,506 688,467 -GroupCompany008 2007 2008 2007Rs ‘000 Rs ‘000 Rs’000 Rs ‘00013 Deferred Tax AssetsDeferred tax assets at the beginning of the year 11,059 7,142 - -Deferred tax (charge) / reversal 9,395 3,917 - -Deferred tax assets at the end of the year 20,454 11,059 - -

Ceylon Theatres PLC | Annual Report 2008 | 65No of Group No of CompanyOrdinary 2008 2007 Ordinary 2008 2007Shares Rs. ‘000 Rs. ‘000 Shares Rs. ‘000 Rs. ‘00014 Investments14.1 SubsidiariesQuotedMillers PLC - - 715,769CT Land Development PLC - - - 20,056,950 123,884 76,361Cargills (Ceylon) PLC - - - 3,918,731 78,504 78,132Lanka Ceramic PLC - - - 11,790,762 422,589 140,643Lanka Walltile PLC - - - 878,350 49,725 -Parquet (Ceylon) PLC - - - - - -Un-QuotedCargills Quality Foods (Pvt) Limited - - - 1,133,333 52,300 48,300C T Properties Ltd - - - 10,000,000 100,000 100,000CT Films (Pvt) Limited - - - 250,000 2,500 2,500Cargills Developers (Pvt) Limited * - - - - - -Alliance Tours Limited - - - 19,993 50 50Horana Woodexxe Limited * 4,540,000 45,400 45,400 - - -Fairlawn Power Limited * 13,207 132 132 - - -Less: Provision for fall in value (45,532) (45,400) - - -- 132 829,552 1,161,75514.2 Associates (Equity AccountedInvestments) - GroupOpening Net Book Amount/Cost 33,099 26,079 - -Restatement adjustment - (1,570) - - -Opening Balance (re-stated) 33,099 24,509Acquisition 9,913 9,850 - -Share of Results 1,707 8,939 - -Share of revaluation 13,222 - - -Dividends (6,375) (10,200) - -Closing Net Book Amount/Cost 51,566 33,099 - -

Ceylon Theatres PLC | Annual Report 2008 | 66Notes to the AccountsNo of Group No of CompanyOrdinary 2008 2007 Ordinary 2008 2007Shares Rs. ‘000 Rs. ‘000 Shares Rs. ‘000 Rs. ‘00014.3 Associates (Equity AccountedInvestments) - CompanyParquet (Ceylon) PLC - - - 119,800 2,042 -CT Capital Limited - - - 2,720,000 20,800 15,700CT Smith Stock Brokers (Pvt) Limited - - - 637,500 5,302 4,027- - 28,144 19,72714.4 OthersUn-QuotedHome Entertainment & Comm. Limited 894,512 - 8,745 894,512 - 8,945Lanka Film Distributors Co. (Pvt) Limited 10,000 100 100 1,000 100 100Cinema Entertainment (Pvt) Ltd 200,000 2,000 - 100,000 1,000 -QuotedCeylon Printers PLC 6,932 365 365 6,932 365 -Kalamazoo Systems PLC 9,756 571 570 9,756 571 -Office Equipment PLC 16,370 427 427 16,370 427 -Paragon Ceylon PLC 20,424 490 490 20,424 490 -Overseas Realty (Ceylon) PLC 3,000 21 22 3,000 21 -Lanka Indian Oil Company PLC 525,000 15,441 15,441 325,000 10,041 -Hotel Developers PLC 27,700 2,740 2,740 27,700 2,740 -Housing Dev. & Finance Corp. PLC 7,000 2,460 2,460 7,000 2,460 -Sierra Cables PLC 49,500 150 150 - - -Money Market InvestmentsVanik Debentures 5,500 5,500 5,500 - -30,266 37,236 18,216 9,045Total Investments 81,832 70,467 875,912 1,190,527* Subsidiary Companies not consolidated with the financial statements of the Company.

Ceylon Theatres PLC | Annual Report 2008 | 67Investor Direct / No.of Cost14.5 Group Company Investments in Subsidiarieswhich are consolidatedIndirect Shares 2007 2006Holding (%) Rs. ‘000 Rs. ‘000SubsidiariesMillers PLC - - - 35,387Cargills (Ceylon) PLC 69.98 4,151,731 103,803 103,803CT Land Development PLC 48.67 25,286,507 153,345 153,345Lanka Ceramic PLC 61.92 17,088,300 368,681 368,681CT Properties Limited 50.00 10,000,000 100,000 50,000Alliance Tours Limited 100.00 1,600 - -Alliance Tours & Travels (Pvt) Limited 100.00 50,000 500 500Sub-subsidiariesCargills Quality Foods (Pvt) Limited 76.62 1,648,147 112,746 112,746CPC Agri Foods Limited 76.62 21,487,448 45,629 45,629CPC Lanka Limited 76.62 16,673,985 14,200 14,200Cargills Quality Diaries (Pvt) Limited 76.62 7,500,000 75,000 75,000Cargills Distributors (Pvt) Limited 76.62 10,802 369 369Cargills Food Processors (Pvt) Limited 76.62 5,700,020 61,500 61,500Cargills Food Services (Pvt) Limited 76.62 2 0 0Cargills Retail (Pvt) Limited 69.98 2,500,002 25,000 25,000Millers Distributors Limited 76.62 30,000,000 300,000 -CT Property Management Company (Pvt) Limited 50.00 2 0 0CT Properties G S (Pvt) Limited 50.00 2 0 0Lanka Walltile PLC 34.70 13,120,100 4,005 4,005Lanka Walltile (Meepe) (Pvt) Limited 34.70 70,000,000 700,000 700,000Lanka Tiles PLC 19.13 11,550,028 212,304 212,304Ceradec (Pvt) Limited 19.13 16,490,296 167,754 167,754Lanka Tiles Trading (Pvt) Limited 19.13 50,000 500 500Ceytea Plantation Management Limited 17.70 6,935,980 150,000 150,000Uni -Dil Packaging (Pvt) Limited 17.70 5,000,002 161,992 161,992Uni-Dil Paper Sacks (Pvt) Limited 17.70 0 0 0Horana Plantations PLC 9.03 12,750,000 149,415 149,41514.6 Associates - (Equity Accounted Investments)CT Smith Stock Brokers (Pvt) Limited 25.50 500,000 3,527 3,527Parquet (Ceylon) PLC 12.80 3,075,075 31,023 31,023CT Capital (Pvt) Limited 34.00 635 6,350 4,000

Ceylon Theatres PLC | Annual Report 2008 | 68Notes to the Accounts14.7 Summarised Financial Information of Associates (Equity Accounted Investees)GroupCompanyIncome Statement - for the year ended 31 March 008 2007 2008 2007Rs ‘000 Rs ‘000 Rs’000 Rs ‘000Revenue & Other Income 316,872 310,998Profit after Taxation 2,965 29,640Balance Sheet - as at 31 MarchTotal Assets 525,384 1,351,585Total Liabilities 297,552 1,252,04014.8 The financial statements of the subsidiary Cargills Developers (Pvt) Ltd and Fairlawn Power Limited have not beenconsolidated with the financial statments of the Company since these Companies have not commenced any commercialactivity.The Financial Statements of Horana Woodexxe (Pvt) LCL Distributors Limited and Great Western Finance & Investment(Pvt) Ltd. have not been consolidated with the financial statments of the Company, since the companies are underliquidation.GroupCompany008 2007 2008 2007Rs ‘000 Rs ‘000 Rs’000 Rs ‘00014.9 The market value of Quoted Equity InvestmentsAs at 31st March 831 29,000 8,933,484 2,291,00015 InventoriesRaw Material and Consumables 1,066,173 917,988 - -Work in Progress 84,305 80,294 - -Finished Goods 2,745,744 2,145,260 843 2,917Goods in transit 3,884 23,928 - -Harvested crops 157,249 124,680 - -Growing nurseries 10,077 5,960 - -Food and Beverages-Restaurant Operations 13,370 12,535 - -4,080,802 3,310,645 843 2,917Less -Provision for obsolete and slow moving items (101,903) (97,543) - (871)3,978,899 3,213,102 843 2,046

Ceylon Theatres PLC | Annual Report 2008 | 6916 Construction Work in ProgressConstruction work in progress consists of the current component of the cost incurred on the ongoing propertydevelopment projects at the balance sheet date.GroupCompany008 2007 2008 2007Rs ‘000 Rs ‘000 Rs’000 Rs ‘00017 DebtorsTrade debtors 1,631,856 2,273,219 143 1,929Amount recoverable from Commissioner General of Inland Revenue 173,299 61,475 673 889Other receivables 322,467 305,451 1,368 12,429Restatement - 12,240 - -Loans Given to Employees ( Note 16.1) 37,510 35,760 461 166Prepayments and accrued income 249,544 405,441 44 543Less: Provision for Bad Debts (63,835) (45,694) (159) (2,107)2,350,841 3,047,892 2,530 13,84917.1Balance at the Beginning of the year 35,760 29,937 166 349Non Consolidated Subsidiaries (173) - - -Loans Granted During the year 21,226 17,498 674 -Less: Recoveries (19,303) (11,675) (379) (183)Balance at the end of the year 37,510 35,760 461 16617.2 Lanka Ceramic PLC (LCL) when formed in 1990 took over the assets & liabilities, except for one division, of CeylonCeramics Corporation& a sum of approximately Rs.26.2 Mn reflected as from the Corporation at the time of the take overof the business is still outstanding in the books of LCL. Therefore a sum Rs.26.2 Mn has been provided during the yearunder review.18 Amount Receivable from Subsidiary CompaniesGroupCompany008 2007 2008 2007Rs ‘000 Rs ‘000 Rs’000 Rs ‘000Cargills Quality Foods (Pvt) Ltd. - - 100,000 -CT Films (Pvt) Limited - - 3,950 5,098Millers Distributors Ltd. - - 90 -Horana Plantations PLC - - 398 -- - 104,438 5,098

Ceylon Theatres PLC | Annual Report 2008 | 70Notes to the AccountsGroupCompany008 2007 2008 2007Rs ‘000 Rs ‘000 Rs’000 Rs ‘00019 Short Term Deposits with BanksTreasury Bills 71,591 55,607 - -Fixed deposits and other deposits 84,528 89,185 - -156,119 144,792 - -20 Stated CapitalIssued and fully paidAs at 1st April (2,249,268 Ordinary Shares) 85,348 85,348 85,348 85,348Issued during the year (184,288 Ordinary Shares) 431,510 - 431,510 -As at 31st March (2,433,556 Ordinary Shares) 516,858 85,348 516,858 85,34820.1 In accordance with Sec 58 of the companies Act No 7 of 2007, Share Capital and Share Premium have been re-classifiedas Stated Capital. Presentation of comparative information also have been re-classified accordingly.20.2 As mentioned in Note 32 the Company issued 184,288 ordinary shares during the year to shareholders of Millers PLC aspart of the merger with that Company.20.3 As mentioned in Note 35 (b) the number of ordinary shares of the company increased from 2,433,556 to 170,348,920consequent to the subdivision of shares.GroupCompany008 2007 2008 2007Rs ‘000 Rs ‘000 Rs’000 Rs ‘00021 ReservesCapital ReservesCapital Reseve on Consolidation 22,962 22,962 - -Revaluation Reserve (Note 22.1) 1,605,202 671,928 884,388 201,624Surplus on Sale of Property, Plant & Equipment 70,000 70,000 70,000 70,0001,698,164 764,890 954,388 271,624

Ceylon Theatres PLC | Annual Report 2008 | 71GroupCompany008 2007 2008 2007Rs ‘000 Rs ‘000 Rs’000 Rs ‘00021 Reserves contd.Revenue ReservesInvestment Depreciation Reserve 4,500 4,500 4,500 4,500Other Reserves 5,337 5,337 - -General Reserve (Note 21.2) 18,570 143,253 139,038 17,50028,407 153,090 143,538 22,0001,726,571 917,980 1,097,926 293,62421.1 Revaluation ReserveThe above revaluation surplus consists of net surplus resulting from the revaluation of property, plant & equipment asdescribed in Note 8.321.2 General ReserveGeneral Reserve represents the amounts set aside by the Directors for General Application.GroupCompany008 2007 2008 2007Rs ‘000 Rs ‘000 Rs’000 Rs ‘00022 Creditors Amounts Falling Due After One YearSecurity Deposits (Note 22.1) 97,249 94,513 - -Long term loans (Note 22.2 ) 1,342,949 1,761,860 15,000 60,000Obligations under finance leases (Note 22.3 ) 275,144 134,812 - -1,715,342 1,991,185 15,000 60,00022.1 This represents deposits which are repayable at the termination of tenancy agreements.

Ceylon Theatres PLC | Annual Report 2008 | 72Notes to the AccountsGroupCompany008 2007 2008 2007Rs ‘000 Rs ‘000 Rs’000 Rs ‘00022.2 Long Term LoansAs at 1st April 2,290,314 1,621,179 85,000 120,000Loans obtained during the year 692,470 1,000,572 - -Repayments during the year (434,169) (331,437) (35,000) (35,000)As at 31st March 2,548,615 2,290,314 50,000 85,000Repayments due within one year (Note 28) (1,205,666) (528,454) (35,000) (25,000)1,342,949 1,761,860 15,000 60,000Loans falling due after more than one yearBetween one and two years 646,652 314,029 15,000 35,000Between two to five years 622,057 1,267,098 - 25,000Over five years 74,240 180,733 - -1,342,949 1,761,860 15,000 60,00022.3 Finance Lease CreditorsNet Liability to Lessor of JEDB/SLSPC EstatesAs at 1st April 212,542 220,014 - -Repayments (10,324) (7,472) - -As at 31st March 202,218 212,542 - -Other Finance Lease CreditorsAs at 1st April 67,940 50,082 - -New Leases obtained 286,495 39,035 - -Repayments (50,838) (21,177) - -As at 31st March 303,597 67,940 - -Gross Liability 505,815 280,482 - -Finance Charges Allocated to future period (188,310) (114,748) - -Net Liability 317,505 165,734 - -Amount payable within one year (Note 26) (42,361) (30,922) - -Amount payable after one year 275,144 134,812 - -

Ceylon Theatres PLC | Annual Report 2008 | 7322.4 Details of loans obtained by the Group are set out belowFinancial InstitutionRepayment TermsPrincipalRs’000InterestRateSecurityAnnualRepaymentRs’0002008Rs’000Cargills (Ceylon) PLCHong Kong and ShanghaiBanking Corporation Ltd24 installments ofRs.1,050,000/- each.150,00019.75Unsecured50,000150,000Company Total Cargills(Ceylon) PLC150,000Cargills Retail (Private) LimitedCommercial Bank60 installments ofRs.2,500,000/- each.After a grace period of 12 months.150,00016.78%30,00057,500Commercial BankCommercial Bank60 installments ofRs.2,080,000/- each.After a grace period of 12 months.60 installments ofRs.1,670,000/- each.After a grace period of 12 months.125,000100,00017.19%18.35%Primary mortgage overequipment & a CorporateGuarantee by Cargills(Ceylon) Limited24,96020,04028,40560,040Commercial BankCompany Total - Cargills Retail(Private) Limited60 installments ofRs.2,500,000/- each.After a grace period of 12 months.150,00019.75%30,000150,000295,945Cargills Quality Dairies (Pvt)LimitedSeylan Bank59 installments ofRs.2,090,000/- eachand a final installment ofRs.1,690,000/-125,00019.5%Corporate Guarantee byCargills (Ceylon) Limited12,14012,140Seylan BankCompany Total - CargillsQuality Dairies (Pvt) Limited59 installments of Rs.420,000/-each and a final installment ofRs.220,000/-25,00019.5%Primary mortgage over Plant& Machinery CorporateGuarantee by Cargills(Ceylon) Limited2,3302,33014,470

Ceylon Theatres PLC | Annual Report 2008 | 74Notes to the AccountsFinancial Institution Repayment Terms PrincipalRs’000InterestRateSecurityAnnualRepaymentRs’0002008Rs’000Cargills Quality Foods (Pvt)LimitedCommercial Bank59 installments of Rs.840,000/-each and a final installment ofRs.440,000/-50,00018.83Corporate Guarantee fromCargills (Ceylon) Limited10,0805,480Commercial BankCompany Total - CargillsQuality Foods (Pvt) Limited71 installments of Rs.4,200,000/-each and a final installment ofRs.1,800,000/-300,00017.88Corporate Guarantee fromCargills (Ceylon) Limited50,400262,200267,680Ceytea PlantationManagement Limited (CPL)Seylan Bank47 equal quarterly installments ofRs.825,500/-40,00020%Mortgage over 12.75 Mn 1,875Shares of Horana PlantationsLimited, demand promissorynote and loan agreement1,875Seylan BankCompany Total - CeyteaPlantation Management Limited33 equal monthly installments ofRs. 195,000/-7,00020%Mortgage over 12.75 MnShares of Horana PlantationsLimited, demand promissorynote and loan agreement1751752,050CT Properties LimitedCommercial Bank/DFCC8 instalments of Rs 106.25m850,00023%Land and condominium 616,000property being Constructed &lien over imported goods850,000HNBCompany Total - CT PropertiesLimited11 monthly instalments of Rs22.92m and a final instalment of Rs22.88m.275,00023%Property & CorporateGuarantee from CeylonTheatres Ltd225,000275,0001,125,000Lanka Ceramic PLCHNBCompany Total - LankaCeramic PLC5 annual installments ofRs.12,000,00060,00016.5%Shares of Lanka Walltile Ltdand a Corporate Guaranteefrom Ceylon Theatres Ltd.10,33117,95017,950

Ceylon Theatres PLC | Annual Report 2008 | 75Financial Institution Repayment Terms PrincipalRs’000InterestRateSecurityAnnualRepaymentRs’0002008Rs’000Lanka Tiles PLCDFCC DebentureDFCCDFCC12 equal semi annual installmentsof Rs 19,784,170.48 equal monthly instalments aftergrace period of 12 months from thedate of 1st instalment.48 equal monthly instalments aftergrace period of 12 months from thedate of 1st instalment.237,410144,69554,980AWDR +5%AWDR +4.9%AWDR +4.9%A primary mortgage over theland, building and plant andmachinery of Lanka TilesPLC at Ranala amountingto Rs 240m.79,137106,25054,980Commercial Bank47 equal installments of Rs1,560,000 and a final installment ofRs 1,680,00075,000AWPLR+ 1%A primary mortgage overthe land & building at Ranalaand immovables of Ceradec(Pvt) Limited, furnishedjointly by Lanka Tiles PLCand Ceradec (Pvt) Limitedamounting to Rs 17.28m18,72017,280Commercial BankCompany Total - Lanka TilesPLC47 equal monthly installments aftera grace period of 12 months fromthe date of first disbursement78,882AWPLR+ 1%Rs 18.88m mortgage over 65,000Generator and Rs 60mmortgage over land ofLanka Tiles PLC in Biyagama 109,77478,882336,529Lanka Walltile PLCHatton National Bank PLCCompany Total - Lanka WalltilePLC53 equal monthly installments of Rs85,284/-3,4536.50%Primary Mortgage oversagger press equipment853,4533,453Lanka Walltile Meepe (Pvt)LimitedNationalDevelopment BankCompany Total - Lanka WalltileMeepe (Pvt) Limited54 equal monthly installments of Rs65,633 54 equal monthlyinstallments of Rs 10,203 with6 months grace period from August20063,9385516.50%2.00%Primary mortgage over theplant & machinery worth ofRs.4.7 million1,0052,8522,852

Ceylon Theatres PLC | Annual Report 2008 | 76Notes to the AccountsFinancial Institution Repayment Terms PrincipalRs’000InterestRateSecurityAnnualRepaymentRs’0002008Rs’000Uni-Dil Packaging (Pvt)LimitedSampath Bank LimitedCompany Total - Uni-DilPackaging (Pvt) LimitedMonthly installments of US $ 3,000.44,884LIBOR+3%Stocks & Debtors4,11528,47628,476Horana Plantations PLCBank of Ceylon(75% of project cost out ofADB Line of credit)120 equal monthly installmentsof Rs. 670,833.33 commencingfrom March 2003 plus interestcommencing from April 199780,50011% -15%8,05032,200Bank of Ceylon(75% of project cost out ofADB Line of credit)120 equal monthly installmentsof Rs. 206,208.33 commencingfrom January 2003 plus interestcommencing from February 199824,74511% -15%2,47411,960Bank of Ceylon(75% of project cost out ofADB Line of credit)120 equal monthly installmentsof Rs. 50,058.33 commencingfrom February 2003 plus interestcommencing from March 19986,00711% -15%6012,953Bank of Ceylon(75% of project cost out ofADB Line of credit)Bank of Ceylon(75% of project cost out ofADB Line of credit)120 equal monthly installmentsof Rs. 140,283.33 commencingfrom July 2003 plus interestcommencing from July 1998120 equal monthly installmentsof Rs. 77,283.33 commencingfrom October 2003 plus interestcommencing from October 199816,8349,27411% -15%11% -15%Leasehold rights ofAlton,Bambarakelle, EildonHall and Gouravilla Estates,to the value of Rs. 244.989million.1,6839278,9785,178Bank of Ceylon(75% of project cost out ofADB Line of credit)120 equal monthly installmentsof Rs. 348,016.66 commencingfrom December 2003 plus interestcommencing from December 199841,76211% -15%4,17623,665Bank of Ceylon(75% of project cost out ofADB Line of credit)120 equal monthly installmentsof Rs. 57,208.33 commencingfrom May 2004 plus interestcommencing from May 19996,86511% -15%6864,233

Ceylon Theatres PLC | Annual Report 2008 | 77Financial Institution Repayment Terms PrincipalRs’000InterestRateSecurityAnnualRepaymentRs’0002008Rs’000Bank of Ceylon(75% of project cost out ofADB Line of credit)120 equal monthly installmentsof Rs. 391,408.33 commencingfrom June 2005 plus interestcommencing from June 200046,96911%-15%4,69734,053Bank of Ceylon(75% of project cost out ofADB Line of credit)120 equal monthly installmentsof Rs. 100,266.66 commencingfrom November 2005 plus interestcommencing from November 200012,03311%-15%1,2039,124Seylan BankOut of NDB e- Friendsline of credit (Rs. 1.8million.)Seylan BankOut of NDB e- Friendsline of credit107 equal monthly installments ofRs. 18,224.30 commencing fromSeptember 2002.107 equal monthly installments ofRs. 32,710.28 commencing fromOctober 2002.1,9503,5008.5%8.5%Additional mortgage forRs.1.95 million. over theleasehold rights of land,buildings and floating assetsof Stockholm estate.Primary mortgage for Rs.3.50million. over the leaseholdrights of Mahanilu Estate2193897311,329Seylan BankOut of NDB e- Friendsline of credit107 equal monthly installments ofRs. 22,897.20 commencing fromJanuary 2003.2,4508.5%Secondary mortgage forRs.2.45 million. over theleasehold rights ofMahanilu Estate273997Seylan BankOut of NDB e- Friendsline of credit107 equal monthly installments ofRs. 43,177.57 commencing fromDecember2003.4,6208.5%Primary mortgage over theleasehold rights of FairlawnEstate5132,352Seylan Bank36 equal monthly installments ofRs. 416,000 commencing fromDecember 2003.15,00015.00%Primary mortgage over theleasehold rights of FairlawnEstate1,8511,851Seylan BankOut of NDB e- Friendsline of credit84 monthly installments of Rs.621,607 commencing from May2009.52,2158.5%-10.86%-52,215Seylan BankOut of NDB e- Friendsline of credit84 monthly installments of Rs.250,952 commencing fromOctober 2009.21,0808.5%-11.63%Secondary mortgage overthe leasehold rights ofMillakanda Estateand Mirishena Estate-21,080Seylan Bank60 equal monthly installments20,0006.50%Primary mortgage overleasehold rights of FrocesterEstate2,33117,669

Ceylon Theatres PLC | Annual Report 2008 | 78Notes to the AccountsFinancial Institution Repayment Terms PrincipalRs’000InterestRateSecurityAnnualRepaymentRs’0002008Rs’000Seylan BankCompany Total - HoranaPlantations PLC48 equal monthly installments23,64213.32%Primary mortgage overpromisoryNote and Right of lien overLeasedMotor Vehicles-23,642254,210Ceylon Theatres PLCCommercial bank10 bi-annual installments of Rs12.5m125,00018%- 20%Shares of Cargills (Ceylon)Limited and CT LandDevelopment Ltd25,00025,000Commercial bank10 bi-annual installments of Rs 5m50,00018%- 20%10,00025,000Total Company - CeylonTheatres PLC50,0002,548,615

Ceylon Theatres PLC | Annual Report 2008 | 7922.5 The lease rentals have been amended with effect from 22nd June 1996 to an amount substantially higher than the previousnominal lease rental of Rs.500/- per estate per annum. The basic rental payable under the revised basis is Rs.5.228 Mn perannum. This amount is to be inflated annually by the Gross Domestic Product (GDP) deflator in the form of contingent rent.This lease agreement was further amended on 10th June 2005, freezing the annual lease rental at Rs.7.472 Mn for aperiod of six years commencing from 22nd June 2002. Hence, the GDP deflator adjustment will be frozen at Rs.2.244 Mnper annum until 21st June 2008. Accordingly, the Financial Statements of Ceytea Plantations Management Limited havebeen adjusted in the current financial year in order to reflect the future net liability in the following manner :-Future liability on the revised annual lease payment of Rs.7.472 Mn will continue until 21st June 2008, and thereafter from22nd June 2008, annual lease payment will remain at Rs.5.228 Mn, until 21st June 2045. The net present value of thisliability at a 4% discounting rate would result in a liability of Rs.107.529 Mn.The Net Present Value at date is represented by :-Rs. ‘000Gross Liability - Overdue 8,784- 37 Years at Rs.5.228 Mn per annum 193,436202,220Less: Interest in Suspense (94,691)Net Present Value 107,529GroupCompany008 2007 2008 2007Rs ‘000 Rs ‘000 Rs’000 Rs ‘00023 Retirement Benefit Costs - GratuityAs at 1st April 498,352 444,391 12,289 13,306Charge for the year 171,801 104,781 3,200 -Subsidiaries not consolidated (118) - - -Payments made during the year (53,851) (50,820) (680) (1,017)As at 31st March 616,184 498,352 14,809 12,28923.1 LiabilityThis obligation is not externally funded.23.2 Actuarial ValuationNo acturial valuationof retirement gratuities has been carried out except as stated in Note 23.3 below.23.3 Horana Plantations PLCIn the case of Horana Plantations PLC, the actuarial present value of all benefits accrued to the existing employees of thescheme based on the current labour wage rate as at 31st March 2008 was Rs.213.81 million (2007 - Rs.165.74 million). If the

Ceylon Theatres PLC | Annual Report 2008 | 80Notes to the Accountscompany has provided for gratuity on the basis of 14 days wages for workers and half month salary for each completed year ofservice to the other staff members, the liability would have been Rs.255.0 mn (2007 - Rs. 240.9 mn). Hence there is acontingent liability of Rs. 40.0 mn (2007 - Rs.39.2 mn), which would crystalise only if the company ceases to be a goingconcern. The value of benefit gets adjusted at the point of actuarial valuation every two years. This includes a provision ofRs.143.4 mn (2007- Rs. 156.1 mn ) of Horana Plantations PLC which represents the actuarial present value of allbenefits accruing to the existing employees of the scheme as at 31st March 2008.GroupCompany008 2007 2008 2007Rs ‘000 Rs ‘000 Rs’000 Rs ‘00024 Deferred TaxationAt at 1st April 636,591 521,181 - -Restatement due to previous year adjustments - 26,389 - -Transferred to Deferred Tax Assets (418) - - -Deferred Tax Liability Charged to Equity 13,811 - 13,811 -Transferred from / (to) Income Statement 86,957 89,021 - -As at 31st March 736,941 636,591 13,811 -24.1 Deferred Tax Liability Directly Charged to EquityAccording to Sri Lanka Accounting Standard 14-“Income Taxes” Deferred Tax shall be charged or credited directly to equity if thetax relates to items that are credited or charged in the same or in a different period, directly to equity. Accordingly a sum ofRs. 13.8 mn relating to the revaluation of buildings of the company has been directly charged to equity during the current year.GroupCompany008 2007 2008 2007Rs ‘000 Rs ‘000 Rs’000 Rs ‘00025 Deferred IncomeAs at 1st April 85,580 79,059 - -Received during the year 14,117 9,362 - -Amortized during the year (3,566) (2,841) - -As at 31st March 96,131 85,580 - -25.1 The above deferred income includes capital grants received from Sri Lanka Tea Board, Plantation Development Project(PDP), Plantation Human Development Trust (PHDT), Estate Infrastructure Development Project, Rubber DevelopmentProject (RDD) and Asian Development Bank (ADB) for purchase of Property, Plant and Equipment, Improvement of WorkersLiving Environment, Rubber Replanting Subsidy and forestry programme to be conducted by Horana Plantations PLC.These grants are amortised over the respective asset’s useful life.

Ceylon Theatres PLC | Annual Report 2008 | 81GroupCompany008 2007 2008 2007Rs ‘000 Rs ‘000 Rs’000 Rs ‘00026 Creditors and AccrualsTrade Creditors 2,980,382 2,740,700 2,054 4,068Accruals, other accounts payable & Provisions 3,980,707 4,433,521 72,435 678,765Net liability JEDB / SLSPC estate (Note 22.3) 9,604 - - -Obligations under finance leases (Note 22.3) 32,758 30,922 - -7,003,450 7,205,143 74,489 682,83327 Amounts Due to Subsidiary CompaniesMillers Distributors Ltd - - 1,495 1,500Cargills (Ceylon) PLC - - 55 1,500Cargills Quality Dairies (Pvt) Ltd. - - 71,500 -CT Properties Limited - - 69,950 70,000- - 71,500 73,00028 Short Term Bank LoansShort Term Bank Loans (Secured)) 595,290 153,933 225,000 -Bank loans repayable within one year (Note 23.2) 1,205,666 528,454 35,000 25,000Commercial Papers 320,000 316,228 - -2,120,956 998,615 260,000 25,00029 Cash and Cash EquivalentsCash and bank balances 304,171 518,834 4,089 1,091Short term deposits 156,119 144,792 - -Bank overdrafts (1,737,885) (1,597,226) (101,071) (47,031)(1,277,595) (933,600) (96,982) (45,940)30 Segmental Assets and Liabilities30.1 Total AssetsFood & Beverage 9,598,761 10,969,134 - -Property Development 6,444,607 5,972,159 - -Ceramics, Tiles & Wooden Flooring 5,519,890 6,720,247 - -Plantations 2,026,867 1,859,604 - -Entertainment 2,701,743 1,432,831 2,699,800 708,428Packaging & Others 816,787 525,633 - -27,108,655 27,479,608 2,699,800 708,428Consolidation adjustments / eliminations (4,057,603) (7,988,942) - -23,051,052 19,490,666 2,699,800 708,428

Ceylon Theatres PLC | Annual Report 2008 | 82Notes to the AccountsGroupCompany008 2007 2008 2007Rs ‘000 Rs ‘000 Rs’000 Rs ‘00030.2 Total LiabilitiesFood & Beverage 6,387,402 8,166,844 - -Property Development 4,319,665 3,914,533 - -Ceramics, and Tiles Wooden Flooring 1,587,908 3,247,375 - -Plantations 1,011,953 963,280 - -Entertainment 494,768 923,482 493,404 209,040Packaging & Others 488,187 236,260 - -14,289,883 17,451,774 493,404 209,040Consolidation adjustments / eliminations (44,188) (4,249,401) - -14,245,695 13,202,373 493,404 209,04030.3 Capital ExpenditureFood & Beverage 1,015,282 905,548 - -Property Development 8,209 1,115,321 - -Ceramics, Tiles and Wooden Flooring 284,518 312,270 - -Plantations 187,900 79,876 - -Entertainment 11,312 2,684 11,312 255Packaging & Others 272,911 12,383 - -1,780,132 2,428,082 11,312 25530.4 DepreciationFood & Beverage 506,884 526,576 - -Property Development 17,082 6,245 - -Ceramics, Tiles and Wooden Flooring 183,230 193,579 - -Plantations 72,625 47,153 - -Entertainment 2,145 1,364 673 2,387Packaging & Others 28,862 16,560 - -810,828 791,477 673 2,38731 Merger of Millers PLC with Ceylon Theatres PLCIn accordance with the resolution passed by the shareholders of Millers PLC and Ceylon Theatres PLC at an extraordinarygeneral meeting on 28th December 2008, an application was made under section 243 of the Companies Act No 7 of 2007 to theRegistrar of Companies to effect the merger of Millers PLC with Ceylon Theatres PLC.The Registrar of Companies issued the amalgamation certificate stating the date of amalgamation as 13th March 2008.Accordingly, The merger has taken effect on 13th March 2008. Millers PLC has been, in terms of Section 245(c) of the CompaniesAct been removed from the Register by the Registrar on the 13th March 2008 and it ceases to exist thereafter.The merger was effected by a share swap, where every minority shareholder of Millers PLC received 2 (two) shares of CeylonTheatres PLC for every 7 (seven) shares of Millers PLC held prior to the date of the merger with fractional shares being settled atRs 669.00 per share

Ceylon Theatres PLC | Annual Report 2008 | 8332 Related Party Transactions32.1 The details of transaction of company with such other group companies are given below -Company Name of Director Transactions Value (Rs)Millers PLC Mr. Anthony A Page Purchases 36(Up to the date of the merger) Mr. V R Page Loan facility 1,500Mr. L R PageMr. J C PageMr. A T P EdirisingheCargills (Ceylon) PLC Mr. Anthony A Page Purchases 91Mr. V R Page Loan facility 1,500Mr. L R PageMr. J C PageMr. A T P EdirisingheCargills Quality Dairies (Pvt) Ltd Mr. Anthony A Page Purchases 1,243Mr. V R PageMr. A T P EdirisingheHorana Plantations PLC Mr. Anthony A Page Office rental 1,737Re-imbursement of expenses 16CT Smith Stock Brokers (Pvt) Ltd Mr. Anthony A Page Sales 5,880Mrs. C K MuttukumaruCT Films (Pvt) Ltd Mr. Anthony A Page Interest free advances 5,817Mr. J C PageMr. L R PageMr. V R PageCT Properties Ltd. Mr. Anthony A Page Interest free advances 45,583Mr. J C PageMr. L R PageMr. V R PageMrs. C K MuttukumaruPE Management Consultancy (Pvt) Ltd Mr. A. T. P. Edirisinghe Consultancy services. 60

Ceylon Theatres PLC | Annual Report 2008 | 84Notes to the Accounts32.2 Transactions between Group CompaniesA list of transactions between Group Companies is given below -Value Balance Purchase/ Receipt/ Interest CorporateRecd/(Paid) 2008 Sale of Rendering of Received GuaranteesRs’000 Rs’000 Goods Services PaidCargills (Ceylon) PLC 1,079,881 734,818 a a a aCargills Distributors (Pvt) Limited (66,654) (60,981) a 0 0 0Cargills Food Processors (Pvt) Limited (103,651) 15,272 a a 0 0Cargills Food Services (Pvt) Limited 120,427 (24,990) a a 0 0Cargills Quality Dairies (Pvt) Limited (250,862) 22,286 a 0 0 0Cargills Quality Foods (Pvt) Limited (365,830) (452,272) a 0 0 0Cargills Retail (Pvt) Limited (410,900) (173,826) 0 0 0 0Ceradec (Pvt) Limited (1,478) 363,706 a 0 0 0CPC Agri Foods Limited (468,908) (126,489) a 0 0 0CPC Lanka Limited 69,797 22,573 a 0 0 0CT Films (Pvt) Limited 6,874 (3,817) a a 0 0CT Land Development PLC 49,465 (32,354) a a 0 0CT Properties G S (Pvt) Limited (77,519) (298,175) 0 0 0 0CT Properties Limited (68,303) 116,927 a a 0 0CT Property Management Company (Pvt) Limited (48) (82,343) 0 0 0 0Horana Plantations PLC 77,980 4,892 a a a 0Lanka Ceramic PLC (57,309) 25,553 a 0 0 0Lanka Tiles PLC 31,008 (523,739) a a 0 0Lanka Tiles Trading (Pvt) Limited 1,725 197,484 a 0 0 0Lanka Walltile (Meepe) (Pvt) Limited (23,784) (807,750) a 0 0 0Lanka Walltile PLC 14,344 (488,764) a 0 a aLCL Distributors Limited 52,447 0 a 0 0 0Millers PLC (Up to the date of the merger) 176,789 0 a 0 0 0Uni -Dil Packaging (Pvt) Limited 170,925 171,806 a 0 0 032.3 Group’s transactions withAssociate CompaniesCT Smith Stockbrokers (Pvt) Ltd 2,451 0 0 a 0 0CT Capital (Pvt) Ltd 629 0 0 a 0 0Parquet (Ceylon) PLC (51,053) 0 0 0 0 0

Ceylon Theatres PLC | Annual Report 2008 | 8532.4 Transactions of the Group with other related CompaniesGroup Company Related Party Name of Director Transactions Value(Rs’000)Cargills (Ceylon) PLC Directories Lanka (Pvt) Ltd Mr. E A D Perera Provision of Services 153Cargills (Ceylon) PLC Galle Face Hotel Co. Ltd Mr. S E C Gardiner Sales 3,204Cargills (Ceylon) PLC Kandy Hotels (1938) Co. Ltd Mr. S E C Gardiner Sales 1,028Cargills (Ceylon) PLC Kalamazoo Systems Ltd Mr. Anthony A Page Provision of Services 487CT Land Development PLC Orient Hongkong R Selvaskandan Provision of Services 758Express (Pvt) Ltd32.5 Transactions with Key Management Personnel(a) The subsidiaries CT Land Development PLC and Cargills (Ceylon) PLC provide an apartment each to the Deputy Chairmanof the Company concerned for the due performance of his office.(b)Mrs. T A Selvaratnam, Mrs. A M T S Page (wife of Mr. J C Page), Mr. V R Page, Mrs. C K Muttukumaru, Mr. Sunil Mendisand Mr. R. Selvaskandan have entered into agreements with the subsidiary company, CT Properties Limited to purchaseapartments at their Empire development.(c)The Company paid post employment benefits of Rs 56 Mn to Key Management personnel during the year.(d)Mrs.R. Page, the wife of Mr.V. R. Page, is a Director of Panadaria (Pvt) Ltd from whom Cargills (Ceylon) PLC has purchasedgoods for resale amounting to Rs. 20.01 Mn in the ordinary course of business.There were no significant related party transactions or transactions involving the Directors / Key management personnelother than those disclosed above and as Note 4 to the Financial Statements33 Events Occurring after Balance Sheet Date(a) On 25th June 2008, the Board of Directors of Uni Dil Packaging Limited resolved to convert Rs 102,400,000.00 out of atotal sum advanced to Uni Dil Paper Sacks (Pvt) Ltd of Rs 166,903,462.00 into 10,240,000 ordinary shares in Uni Dil PaperSacks (Pvt) Ltd in settlement of Rs 102,4 Mn advanced.(b)On 25th April 2008, each existing fully paid ordinary share of the Company was subdivided into 70 ordinary sharesin the company. Consequent to this subdivision, the number of ordinary shares in issue increased from 2,433,556 to170,348,920 ordinary shares. On the same day each of the existing fully paid ordinary shares of Cargills (Ceylon) PLC wassub divided into 40 ordinary shares, resulting in the increase of the ordinary shares in issue in that company to increasefrom 5,600,000 to 224,000,000.

Ceylon Theatres PLC | Annual Report 2008 | 86Notes to the Accounts(c)Subsequent to the year end, the entirety of the Film Exhibition operation of the Company has been transferred to the whollyowned subsidiary, CT Films (Pvt) Ltd.There are no other material events occurring after the balance sheet date that require adjustments or disclosure to theFinancial Statements.34 Contingent Liabilities(a) Cargills (Ceylon) PLC, Lanka Ceramic PLC and Ceytea Plantation Management Ltd have given letters of guarantee tocommercial banks on behalf of subsidiary companies amounting to Rs.1.5 bn. The Directors do not expect any claim onthese guarantees.(b)Lanka Walltile PLC issued the following guarantees in favour of its subsidiary Lanka Walltile Meepe (Pvt) Limited.• To the Hong Kong & Shanghai Banking Corporation guaranteeing the liabilities up to a principal amount of Rs.34 mn.• To the Hatton National Bank PLC guaranteeing the liabilities up to an amount of Rs.25 mn.• To the Commercial Bank of Ceylon PLC guaranteeing the liabilities up to an amount of Rs.85 mn.(c) Rulings are awaited on appeals made by the company on possible liabilities in the following court cases -• A case has been filed against Millers Distributors Limited claiming damages of Rs.500,000/-.• A case has been filed by a former manager of the Bandarawela Hotel in the labour tribunal.(d)(e)Employees of certain group companies have filed action against the respective companies in respect of termination ofemployment. The Directors do not expect these actions to result in material liabilities to the Companies concerned.Lanka Walltile PLC purchased a land from Collettes Limited. A shareholder of Collettes Limited has instituted an action inthe District Court of Colombo seeking to have the said sale null and void and to have Collettes Limited declared as ownersof the said property, on the basis that at the time the said property was sold, an action to wind up Collettes Limited waspending. The case was concluded with the decision in favour of the Company. However the other party appealed againstthe Court Order and the hearing of the appeal is pending.On 07/08/2000, the above mentioned land was sold for Rs.47.5 mn subject to the condition that in the event of the saidappeal pending before the Court of Appeal and or any appeal there from decided against Lanka Walltile PLC and thesaid deed on the transfer of land to Lanka Walltile PLC being declared null and void then Lanka Walltile PLC refund thepurchase consideration of Rs.47.5 mn with the interest rate at 4% p.a (from the date of execution of this transfer until thesaid sum of Rs.47.5 mn and interest thereupon is paid) plus the reimbursement of stamp duty charge of Rs.1,889,000/- onthe deed of transfer.(f)There were no material contingent liabilities in Ceytea Plantation Management Limited and its subsidiaries outstanding atthe Balance Sheet date, except for the following;• Premium on annual lease rental - There is a premium due on finance lease rental of Rs.5.2 mn, to the Secretary of theTreasury of Government of Sri Lanka, in order to compensate the inflation on such rentals in respect of each year. This is

Ceylon Theatres PLC | Annual Report 2008 | 87determined by multiplying Rs.5.2 mn by the Gross Domestic Product (GDP) deflator applicable for the previous year ofwhich the rental is due and continue till the end of the leases on 21st June 2045.• Unfulfilled conditions on capital grants - Capital grant received from the Ceylon Electricity Board (CEB) for stand of powergeneration is subject to a condition of minimum usage of CEB power as against the Generator power. A liability will arise ifthis condition is not fulfilled.• Freezing of GDP deflator on annual lease rentals (ref note 22.5)(g)The residential development project of the subsidiary CT Properties Ltd has not been completed within the completion datecommitted to certain Purchasers with whom the Company has signed Sale and Purchase agreements. The project wouldbe completed and handed over to purchasers before 31st December 2008. None of the purchasers have intimated theirintention to cancel their agreements due to the delay and/or demanded repayment of the progress payments made underthe agreements signed with the Company. Accordingly, the Directors are confident that no material liability would arise as aresult of the delay in completion of this project.(h)Letter of Credit amounting to Rs.41.6 mn have been obtained at the Balance Sheet Date.35 Commitments(a) The capital expenditure commitments of the Company and Group approved by the Directors as at 31st March 2006were as follows: -GroupCompany008 2007 2008 2007Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000(b) Approved and contracted 213,374 182,500 - -Approved and not contracted 185,000 - - -398,374 182,500 - -(c) Operating lease rentals payable within 1 year 220,958 183,465 - -Operating lease rentals payable between 1-5 years 809,190 619,437 - -Operating lease rentals payable after 5 years 1,584,280 1,306,850 - -2,614,428 2,109,752 - -(d) Horana Plantations PLC had commitments under operating lease rentals on Dumbara Estate as given below,Ceytea Plantation Management Limited & its subsidiary operating lease rentals on Dumbara Estate1-10 years (per annum) Rs 0.55 mn11-20 years (per annum) Rs 0.70 mn21-30 years (per annum) Rs 0.84 mnFinance lease rentals payable to the Secretary to the Treasury:22.06.2008 to 21.06.2045 (per annum) Rs.5.2 mn(e)Lanka Walltile PLC discounted export bills amounting to Rs. 2.8 mn

Ceylon Theatres PLC | Annual Report 2008 | 88Five Year Review - GroupYear Ended 31st March 008 2007 2006 2005 2004Rs’000 Rs’000 Rs’000 Rs’000 Rs’000Financial ResultsTurnover 31,866,470 24,923,917 21,018,802 16,446,758 12,534,676Operating Profit 2,164,731 1,842,529 1,592,144 1,139,194 828,870Investment Income 142,040 15,281 41,919 1,901 4,992Profit on Disposal of Property, Plant and Equipment 9,092 12,585 17,697 20,249 140,349Finance Expense (703,745) (478,167) (360,164) (330,986) (399,619)Profit Before Taxation 1,612,118 1,392,228 1,291,596 830,358 574,592Taxation (431,910) (386,582) (424,750) (186,968) (185,654)Profit After Taxation 1,180,208 1,005,646 866,846 643,390 388,938Attributable to -Equity Holders of the Company 437,730 265,314 205,924 162,091 159,157Minority 742,479 740,332 660,922 481,299 229,781Profit Carried Forward 1,180,208 1,005,646 866,846 643,390 388,938Financial PositionStated Capital 516,858 85,348 85,348 85,348 85,348Reserves 3,920,067 2,136,606 1,780,758 1,201,281 1,057,184Shareholders’ Funds 4,436,925 2,221,954 1,866,106 1,286,629 1,142,532Negative Goodwill - - 12,777 40,569 75,102Minority Interest 4,368,432 4,050,621 4,047,466 3,041,431 2,641,152Total Equity 8,805,357 6,272,575 5,926,349 4,368,629 3,858,786Net AssetsCurrent Assets 9,990,489 6,960,341 5,234,267 4,144,840 3,701,278Current Liabilities (11,081,097) (9,937,238) (6,062,522) (4,597,051) (4,175,624)Net Current Assets / (Liabilities) (1,090,608) (2,976,896) (828,255) (452,211) (474,346)Non Current Liabilities (3,164,598) (3,291,523) (2,485,962) (2,319,009) (1,907,702)Investments 81,831 70,467 84,486 70,961 39,462Non Current Assets 12,978,731 12,470,528 9,156,080 7,068,888 6,201,3728,805,357 6,272,575 5,926,349 4,368,629 3,858,786Ratios & StatisticsGrowth in Annual Turnover (%) 27.85 18.58 27.80 31.21 -Earnings Per Share (Rs) 193.87 117.96 91.55 72.06 70.76Growth in Earnings (%) 64.36 28.84 27.04 1.84 -Shareholders’ Funds Per Share (Rs) 1,823.23 913.05 766.82 528.70 469.49Growth in Shareholders’ Funds (%) 99.69 19.07 45.04 12.61 -Return on Shareholders’ Funds (%) 9.87 11.94 11.03 12.60 13.93Non Current Assets to Shareholders’ Funds (%) 292.52 561.24 490.65 549.41 542.77Current Ratio (times) 0.90 0.70 0.86 0.90 0.89Debt Equity Ratio (times) 3.21 5.95 4.58 5.38 5.32Dividend Per Share (Rs) 8.00 10.00 8.40 10.00 10.00Dividend Cover (times) 60.62 44.71 45.88 28.60 17.29Effective Rate of Dividends (%) 3.48 26.35 22.14 26.35 26.35Market Price Per Share (Rs) 4,500.00 1,451.50 3,799.00 1,100.00 400.00Price Earnings Ratio (times) 23.21 12.31 41.50 15.26 5.65

Ceylon Theatres PLC | Annual Report 2008 | 89Group Real Estate PortfolioLocation Land extent Building area Cost/valuation Date of last(sq ft) (Rs mn) RevaluationCeylon Theatres PLCKandy 170 perches 9,650 180 2008Nuwara Eliya 60 perches 6,500 60 2008Negombo 91 perches 17,500 105 2008Welimada Rd, Bandarawela 447 perches 30,600 450 2008Dawson Road, Colombo 2 93.6 perches 32,300 425 2008Ceylon Theatres PLC / CT Properties Ltd **Braybrooke Place, Colombo - 2.Kotahena156 perches196 perchesCT Properties Ltd. **Gangarama Road, Piliyandala17 acresCT Land Development PLCMajestic City complex, Col. 4 300 perches 2,298 2008Cargills (Ceylon) PLCHead Office - York Street 141 perches 140,000 2008Food City, Staples Street, Col. 2 82 perches 12,450 2008Food City, Kandy 94 perches 6,729 2008Food City, Maharagama 145 perches 6,384 883 2008Food City, Nuwara Eliya 57 perches 6,900 2008Mattakkuliya 330 perches 65,000 2008Park Road - 4,332 -Cargills Quality Dairies (Private) LtdBanduragoda - Plant and Warehouse 22 acres 56,200 36 -Cargills Quality Foods (Private) LtdMattakkuliya - Factory premises 1.5 acres 6,667 20 -Ja-ela - Factory premises 5.1 acres 23,067 392 31/03/2008CPC Agrifoods LimitedKatana - Factory premises 11.3 acres 10,210 265 31/03/2008

Ceylon Theatres PLC | Annual Report 2008 | 90Group Real Estate PortfolioLocation Land extent Building area Cost/valuation Date of last(sq ft) (Rs mn) RevaluationMillers Distributors LtdBandarawela - Cargills Food City 85 perches 6,345 99 2008Kelaniya - Office and Warehouse premises 1.2 acres 62,985 179 2008Lanka Ceramic PLCGalle Road, Col. 3 (Head Office) 41.1 perches 25,000 197 2008Kandy (showroom) 5.8 perches 3,970 28 2008Boralesgamuwa (land) 45.7 acres 39,750 4 -Mettiyagoda (factory) 45.2 acres 39,900 3 -Owela (factory) 27.7 acres 6,500 1 -Waskaduwa (factory) 67.1 acres 16,500 1 -Lanka Walltile PLCNawala (Head Office and Warehouse) 113 perches 17,670 31 -Balangoda (Factory) 35.2 acres 211,743 42 -Meepe (Factory) 23.7 acres 176,829 247 -Lanka Tiles PLCColombo 2 (Head Office)Ranala, Kaduwela (Factory) 23.5 acres 209,600 248 2005Uni Dil Paper Sacks (Private) LtdDekatana 6.2 aeres 20,000 50 2008Uni Dil Packaging (Private) LtdDekatana 9.8 acres 64,000 138 2008Parquet (Ceylon) PLCBelummahara, Imbulgoda 6.5 acres 77,000 338 2007** Properties under development

Ceylon Theatres PLC | Annual Report 2008 | 91Information to Shareholders1 Distribution of shareholdingsSize of shareholdings st March 200 st March 2007ShareholdersHoldingsNumber % Number % Number % Number %1 1,000 1,160 94.23 127,794 5.25 427 92.03 76,655 92.031,001 5,000 52 4.22 100,913 4.15 25 5.39 51,512 5.395,001 10,000 3 0.25 22,301 0.92 3 0.65 21,418 0.6510,001 50,000 9 0.73 168,507 6.92 2 0.43 62,000 0.4350,001 100,000 3 0.25 240,690 9.89 3 0.65 244,671 0.65100,001 500,000 2 0.16 389,498 16.00 2 0.43 378,159 0.43500,001 1,000,000 2 0.16 1,383,853 56.87 2 0.42 1,414,853 0.421,231 100.00 2,433,556 100.00 464 100.00 2,249,268 100.002 Analysis of shareholdersSize of shareholdings st March 200 st March 2007Shareholders Holdings Shareholders HoldingsNumber % Number % Number % Number %Institutions 56 4.55 1,796,325 73.81 35 7.55 1,788,936 79.53Individuals 1,175 95.45 637,231 26.19 429 92.45 460,332 20.47Total 1,231 100.00 2,433,556 100.00 464 100.00 2,249,268 100.00Residents 1,121 91.06 2,317,135 95.22 359 77.37 2,172,699 96.60Non-Residents 110 8.94 116,421 4.78 105 22.63 76,569 3.40Total 1,231 100.00 2,433,556 100.00 464 100.00 2,249,268 100.00

Ceylon Theatres PLC | Annual Report 2008 | 92Information to Shareholders5 Analysis of shareholders20 Major Shareholders as at 31st March 200831st Match 2008Number %Odeon Holdings (Ceylon) Ltd. 850,560 34.95Gardiners Ltd. 533,293 21.91A.A.Enterprises Ltd. 260,632 10.70Anthony A.Page 128,866 5.29Chittampalam A.Gardiner Trust 92,000 3.78V.R.Page 91,545 3.76J.C.Page 57,145 2.35Ms M.M.Page 32,360 1.33Mrs T.A.Selvaratnam 29,960 1.23Bishop of Jaffna & the Archbishop of Colombo 26,071 1.07HSBC/National Equity Fund 25,000 1.03D.F.K.Jayamaha,Estate of 11,785 0.48Mrs D.Grimshaw 10,851 0.44K.B.de Vos 10,851 0.44R.D.de Vos 10,829 0.44J.A.Aloysius 10,800 0.44Renuka Holdings Ltd. 9,388 0.38H.W.M.Woodward 6,865 0.28Mrs C.K.Muttukumaru 6,048 0.25National Asset Management Ltd/ Ceylon Chamber of Commerce 5000 0.206 DividendsDuring the year ended 31st March 2008, the company paid an interim dividend of Rs 8.00 per share on 5th January 2008.7 Share ValuationThe market value of the Ceylon Theatres Ltd ordinary shares of Rs 8.00 each on 31st March 2008 was Rs 4,500.00 (2007 - Rs1,451.50). The highest and lowest values recorded during the twelve months ended 31st March 2008 were Rs 5,300.00 on25th March 2008 and Rs 811.00 on 15th May 2008 respectively.8 Public HoldersThe percentage of shares held by the public as at 31st March 2008 was 19.27% (2007 - 16.78%).

Ceylon Theatres PLC | Annual Report 2008 | 93Notice of Annual General MeetingNotice is hereby given that the Seventy Seventh AnnualGeneral Meeting of Ceylon Theatres PLC will be held at theRegistered Office of the Company, 8, Sir Chittampalam A.Gardiner Mawatha, Colombo on 13th January 2009 at 3.00p.m. and the business to be brought before the meeting willbe:• To receive and consider the Report of the Directors andthe Statement of Accounts for the year ended 31st March2008 with the Report of the Auditors thereon.• To re-elect Mr. J C Page who retires in terms of theArticles of Association at the Annual General Meeting as aDirector• To re-elect Mr. V R Page who retires in terms of theArticles of Association at the Annual General Meeting as aDirector• To re-elect Mrs. T A Selvaratnam who retires in terms ofthe Articles of Association at the Annual General Meetingas a Director• To re-elect Mr. Sunil Mendis who retires in terms of theArticles of Association at the Annual General Meeting as aDirector• To re-elect Mr. J B L De Silva who retires in terms of theArticles of Association at the Annual General Meeting as aDirector• To re-elect Mr. R Selvaskandan who retires in terms of theArticles of Association at the Annual General Meeting as aDirector• To authorise the Directors to determine contributions tocharities.• To re-appoint Messrs KPMG Ford, Rhodes, Thornton &Co., as Auditors and authorise the Directors to determinetheir remuneration.Note:(i) A shareholder is entitled to appoint a proxy to attendand vote in his/her stead and a proxy need not be ashareholder of the Company. A form of proxy is enclosedfor this purpose. The instrument appointing a proxy mustbe completed and deposited at the Registered Office ofthe Company not less than 48 hours before the time fixedfor the holding of the Meeting.By Order of the Board,S. C. NilesCompany SecretaryColombo,28th November 2008

Ceylon Theatres PLC | Annual Report 2008 | 94Ceylon Theatres PLC Group DirectoryParent CompanyCeylon Theatres PLC (Quoted Public Company)Address – 8 Sir Chittampalam A Gardiner Mw, Colombo 2Phone – 2431243 Fax – 2447956 Email – ctl@serendib.wsDirectors – Anthony A Page (Chairman), L R Page, J B LDe Silva, A T P Edirisinghe, Sunil Mendis, J C Page, V RPage, Mrs. T A Selvaratnam, R Selvaskandan, Mrs. C KMuttukumaru (Alternate to Mrs T.A.Selvaratnam)EntertainmentCT Films (Private) LimitedAddress – 8 Sir Chittampalam A Gardiner Mw, Colombo 2Phone – 2431243 Fax – 2447956Directors – Anthony A Page (Chairman), J C Page, S C Niles,V R Page, Mrs. C K MuttukumaruFood & BeverageCargills (Ceylon) PLC (Quoted Public Company)Address – 40, York Street, Colombo 1Phone – 2427777 Fax – 2338704Email – ccl@cargillsceylon.comDirectors – L R Page (Chairman), V R Page, S V Kodikara, PS Mathavan, J Dhanapala, A T P Edirisinghe S E C Gardiner,Sunil Mendis, Anthony A Page, J C Page, Errol A D Perera,Mrs. S R Thambiayah,Cargills Retail (Private) LimitedAddress – 40, York Street, Colombo 1Phone – 2427777 Fax – 2338704Directors – Anthony A Page (Chairman), V R Page, S VKodikara, P S MathavanCargills Quality Foods (Private) LimitedAddress – 40, York Street, Colombo 1Phone – 2427777 Fax – 2338704Directors – A T P Edirisinghe (Chairman), V R Page, S VKodikara, P S Mathavan, Dr. J S Punjrath, Anthony A Page, JC Page, J C M Victoria, P E V FernandoCargills Distributors (Private) LimitedAddress – 40, York Street, Colombo 1Phone – 2427777 Fax – 2338704Directors – A T P Edirisinghe (Chairman), V R Page, S VKodikara, Anthony A Page, J C Page, J C M Victoria, P E VFernandoCargills Quality Dairies (Private) LimitedAddress – 40, York Street, Colombo 1Phone – 2427777 Fax – 2338704Directors – Anthony A Page (Chairman), V R Page, S VKodikara, P S Mathavan, Dr. J S PunjrathCargills Foods Processors (Private) LimitedAddress – 40, York Street, Colombo 1Phone – 2427777 Fax – 2338704Directors – Anthony A Page (Chairman), V R Page, S VKodikara, P S Mathavan, A T P EdirisingheCargills Foods Services (Private) LimitedAddress – 40, York Street, Colombo 1Phone – 2427777 Fax – 2338704Directors – Anthony A Page (Chairman), V R Page, A T PEdirisingheCPC Agrifoods LimitedAddress – 40, York Street, Colombo 1Phone – 2427777 Fax – 2338704Directors – Anthony A Page (Chairman), V R Page, S VKodikara, P S Mathavan, Dr. J S PunjrathCPC Lanka LimitedAddress – 40, York Street, Colombo 1Phone – 2427777 Fax – 2338704Directors – Anthony A Page (Chairman), V R Page, Dr. J SPunjrath

Ceylon Theatres PLC | Annual Report 2008 | 95Millers Distributors LimitedAddress – 40, York Street, Colombo 1Phone – 2427777 Fax – 2338704Directors – V R Page (Chairman),E P A J Nelson, T D EJayanithie, S R Balachandran, D G O Dias, Mrs. M G PereraLanka Tiles Trading (Private) LimitedAddress – 34/5 W A D Ramanayake Mw, Colombo 2Phone – 2430998/2430054 Fax – 2437846/2304410Directors - Anthony A. Page (Chairman), Dr S Selliah, J A P MJayasekera, P L Amarasinghe, J C Page, S R De SilvaCeramics, Tiles and Wooden FlooringLanka Ceramic PLC (Quoted Public Company)Address – 696, Galle Road, Colombo 3Phone – 2587526 Fax – 2503359Directors - Anthony A Page (Chairman), Air Marshall P MFernando, P S R Casie Chitty, Prof. C L V Jayatillake, J A PM Jayasekera, E A D Perera, Mrs. C K Muttukumaru, T DE Jayanithie, A T P Edirisinghe, Dr. T Senthilverl, J C Page(alternate to Mr. Anthony A Page)Lanka Walltile PLC (Quoted Public Company)Address – 215, Nawal Road, Narahenpitiya, Colombo 5Phone – 4526700 Fax – 4541612/3Email – info@lankawalltile.lkDirectors - Anthony A. Page (Chairman), Dr S Selliah, J A P MJayasekera, P S R Casie Chitty, Prof. C L V Jayatillake, TilakDe Zoysa, T D E Jayanithie, Sriyan De SilvaLanka Walltile Meepe (Private) LimitedAddress – 215, Nawal Road, Narahenpitiya, Colombo 5Phone – 4526700 Fax – 4541612/3Directors - Anthony A. Page (Chairman), Dr S Selliah, J A P MJayasekera, P S R Casie Chitty, Prof. C L V Jayatillake, TilakDe Zoysa, T D E Jayanithie, Sriyan De SilvaLanka Tiles PLC (Quoted Public Company)Address – 34/5 W A D Ramanayake Mw, Colombo 2Phone – 2430998/2430054 Fax – 2437846/2304410email – flotiles@slt.lkDirectors - Anthony A. Page (Chairman), Dr S Selliah, J A P MJayasekera, P L Amarasinghe, J C Page, S R De SilvaCeradec (Pvt) Ltd.Address – 34/5 W A D Ramanayake Mw, Colombo 2Phone – 2430998/2430054 Fax – 2437846/2304410Directors - Anthony A. Page (Chairman), Dr S Selliah, J A P MJayasekera, P L Amarasinghe, J C Page, S R De SilvaParquet Ceylon Limited (Quoted Public Company)PlantationsCeytea Plantation Management LimitedAddress – 8 Sir Chittampalam A Gardiner Mw, P O Box,2042, Colombo 2Phone – 5365984-7 Fax – 5365982Directors – Anthony A Page (Chairman), P S R Casie Chitty, LJ RuberaHorana Plantations PLC (Quoted Public Company)Address – 8 Sir Chittampalam A Gardiner Mw, P O Box,2042, Colombo 2Phone – 5365984-7 Fax – 5365982Email – horanap@mymail.lkDirectors – Anthony A Page (Chairman), P S R Casie Chitty, CKingsworth, (Alternate – D Painter), W Kulatunga, L J Rubera,M S K P Wijesinghe, L J A FernandoReal EstateCT Land Development PLC (Quoted Public Company)Address – 10 Station Road, Colombo 4Phone – 2508673- 4 Fax – 2592427Directors – R Selvaskandan (Chairman), J C Page, AnthonyA Page, L R Page, V R Page, M M Udeshi Dr. T Senthilverl, SC Niles

Ceylon Theatres PLC | Annual Report 2008 | 96Ceylon Theatres PLC Group DirectoryCT Properties LimitedAddress – 4th Floor, Majestic City, 10 Station Road, Colombo 4Phone – 25555656 Fax – 2505214Directors – Anthony A Page (Chairman), R Selvaskandan,J C Page, S C Niles, B M Amarasekera, L R Page, V R Page,Mrs. C K MuttukumaruUni-Dil Paper Sacks (Private) LimitedAddress - Narampola Road, Moragala, DekatanaPhone - 2570894/5 Fax - 2535139Directors - Anthony A. Page (Chairman), P.S.R. Casie Chitty,L.J. Rubera, E.A.D. Perera, D.B. GamalathOthersCT Smith Stockbrokers (Private) LimitedAddress – 4th Floor, Majestic City 10 Station Road, Colombo 4Phone – 2552293/0 Fax – 2552289Email - ctsmith@sltnet.lkDirectors – Anthony A.Page (Chairman),Mrs C.K.Muttukumaru, M A R Fernando, G D NadesanCT Capital (Private) LimitedAddress – 4th Floor, Majestic City, 10 Station Road, Colombo 4Phone – 2584843/2503523 Fax – 2580181Email – info@ctcapital.lkDirectors – Anthony A.Page (Chairman),Mrs C.K.Muttukumaru, C Amaratunga,W M De F .ArsakularatneCT Fund Management (Private) LimitedAddress - 4th Floor, Majestic City, 10 Station Road, Colombo 4Phone - 5759570Fax - 2506347Email - comtrust@ctfund.netDirectors - Anthony A Page (Chairman), C. Amaratunga,W.M. De F. Arsakularatne, W. C. ChanUni-Dil Packaging (Private) LimitedAddress –Narampola Road, Moragala, DekatanaPhone – 2570894/5 Fax – 2535139Email – unidil@unidil.comDirectors – Anthony A.Page (Chairman), P.S.R.Casie Chitty,L.J.Rubera, E.A.D.Perera, D.B.Gamalath

Ceylon Theatres PLC | Annual Report 2008 | 97Notes

Ceylon Theatres PLC | Annual Report 2008 | 98Notes

Ceylon Theatres PLC | Annual Report 2008 | 99Form of ProxyI/We .................................................................................................................................................................................................of .....................................................................................................................................................................................................being a Shareholder / Shareholders of CEYLON THEATRES PLC hereby appoint1. ..............................................................................................................................................................................................of ..........................................................................................................................................................................................or failing him/her2. the Chairman of the Meeting as my/our proxy to vote as indicated hereunder for me/us and on my/our behalf at theSeventy Fourth Annual General Meeting of the Company to be held on 13th January 2008 and at any adjournment thereof.For Against(i) To adopt the Accounts for the year ended 31st March 2008(ii)(iii)(iv)(v)(vi)(vii)(viii)(ix)To re-elect Mr. J.C. Page as a DirectorTo re-elect Mr. V.R. Page as a DirectorTo re-elect Mrs. T.A. Selvaratnam as a DirectorTo re-elect Mr. Sunil Mendis as a DirectorTo re-elect Mr. J.B.L. De Silva as a DirectorTo re-elect Mr. R. Selvaskandan as a DirectorTo authorise Directors to determine contributions to charitiesTo re-appoint Messrs KPMG Ford, Rhodes, Thornton & Co.,as Auditors and authorise the Directors to determine theirremuneration.The proxy may vote as he/she thinks fit on any other resolution brought before the meeting.Dated this .............................................. day of .................................................. 2009.Witnesses: ...............................................................................................................................................................................Signature of Shareholder(i)(ii)A proxy need not be a member of the Company.Instructions as to completion appear on the reverse hereof.

Ceylon Theatres PLC | Annual Report 2008 | 100Form of Proxy1. To be valid, this proxy form must be completed, signed anddeposited at the Registered Office of the Company, 8 SirChittampalam A. Gardiner Mawatha, Colombo 2, not less than 48hours before the time appointed for holding the meeting.2. In perfecting the form of proxy, please ensure that all details arelegible.3. If you wish to appoint a person other than the Chairman as yourproxy, please insert the relevant details at 1 overleaf and initialagainst this entry.4. Please indicate with an X in the space provided how your proxyis to vote on each resolution. If no indication is given, the proxy athis discretion will vote as he thinks fit. Please also delete* if you donot wish your proxy to vote as he thinks fit on any other resolutionbrought before the meeting.5. In the case of a Company/Corporation, the proxy must be under itsCommon Seal which should be affixed and attested in the mannerprescribed by its Articles of Association.6. In the case of joint holders, only one need sign. The votes of thesenior holder who tenders a vote will alone be counted.7. In the case of non-resident Shareholders, the stamping will beattended to upon return of the completed form of proxy to SriLanka.

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Ceylon Theatres PLC8, Sir Chittampalam A. Gardiner Mawatha, Colombo 2, Sri LankaT. 2431243 F. 2447956 E. ceylontheatres@sltnet.lk