CIC to use 6.1% of JKH shareholding into equity accounting

• Move follows CIC holding approximately 25.3% of the voting rights in JKH via Paints & General Industries, Sohli Captain, related companies and Rusi Captain
• CIC says it exercises significant influence on JKH as per Sri Lanka Accounting Standards

 CIC Holdings Plc (CIC) yesterday said it will apply equity accounting on its 6.1% shareholding in leading blue chip John Keells Holdings Plc (JKH).

In a disclosure to the Colombo Stock Exchange, CIC said it and its subsidiaries own approximately 6.6% of the issued shares of JKH, which calculates to an effective shareholding of 6.1 % by CIC.

CIC said it has entered into an agreement on the 6 October 2023 with Paints & General Industries Ltd., (P&GI) and P&GI›s major shareholder Sohli Captain and several companies held by him and Rusi Captain ‹whereby they have granted CIC an irrevocable unconditional proxy over their voting rights from their shareholdings in JKH to CIC for a period of 10 years. The shares which are the subject matter of this agreement aggregate at present to approximately 18.7% of the issued shares of JKH.

This agreement results in CIC holding approximately 25.3% of the voting rights in JKH.

As per paragraph 5 of LKAS 28 - Investments in Associates and Joint Ventures, Significant Influence is presumed to exist when an investor holds, directly or indirectly (e.g. through subsidiaries), 20% or more of the voting power of another entity. Therefore CIC now holds approximately 25.3% of the voting rights in JKH through the contractual agreement.

Accordingly, CIC said it has determined that CIC exercises significant influence on JKH and therefore, permitted to treat JKH as an associate company in terms of Sri Lanka Accounting Standards, only to the extent of the percentage of shares effectively held by CIC in JKH.

Thus, CIC will apply equity accounting only in respect of CIC and its subsidiaries› holdings in JKH, currently amounting to approximately 6.1 % of the issued shares or the percentage of shares effectively held in JKH at that time, from the quarter ending 31 December 2023.