COMMERCIAL CREDIT LIMITED - CSE

Commercial Credit Limited Introductory Document i

COMMERCIAL CREDIT LIMITED (Company Registration No. PB 269)

INTRODUCTORY DOCUMENT

FOR OBTAINING THE LISTING OF

218,074,365

ORDINARY VOTING SHARES

ON THE DIRI SAVI BOARD OF

THE COLOMBO STOCK EXCHANGE

“THE COLOMBO STOCK EXCHANGE (CSE) HAS TAKEN REASONABLE CARE TO ENSURE FULL

AND FAIR DISCLOSURE OF INFORMATION IN THE INTRODUCTORY DOCUMENT. HOWEVER,

THE CSE ASSUMES NO RESPONSIBILITY FOR THE ACCURACY OF THE STATEMENTS MADE,

OPINIONS EXPRESSED OR REPORTS INCLUDED IN THE INTRODUCTORY DOCUMENT.

You are advised to carefully read this Introductory Document prior to making any investment decision. If you

are in any doubt as to the action you should take you should consult your stockbroker or other professional

adviser immediately. Neither the delivery of this Introductory Document shall, under any circumstances, create

an implication that there has not been any change in the facts set forth in the Introductory Document or in the

affairs of the Company, since the date of this Introductory Document.

Commercial Credit Limited Introductory Documentii

DECLARATION

This Introductory Document has been prepared by Kenanga Investment Corporation Limited from Information supplied by

Commercial Credit Limited (The Company) or which is publicly available. The Directors of the Company, collectively and

individually, having made all reasonable inquiries, confirm that to the best of their knowledge and belief, the information

contained herein is true and correct in all material respects and that there are no other material facts, the omission of which,

would make any statement herein misleading. While Kenanga Investment Corporation Limited has taken reasonable care

to ensure full and fair disclosure it does not assume any responsibility for any investment decision made by investors based

on information contained herein.

In making an investment decision, prospective investors must rely on their own examination and assessments of the

Company including the risks involved. No person is authorised to give any information or to make any representations not

contained in this Introductory Document and if given or made, any such information or representation must not be relied

upon as having been authorised by the Company.

MANAGERS TO THE INTRODUCTION

Commercial Credit Limited Introductory Document iii

ABBREVIATIONS USED IN THIS INTRODUCTORY DOCUMENT

AWPLR - Average Weighted Prime Lending Rate

AWCMR - Average Weighted Call Money Rate

AWDR - Average Weighted Deposit Rate

Bn - Billion

CSE - Colombo Stock Exchange

CBSL - Central Bank of Sri Lanka

CRIB - Credit Information Bureau

EGM - Extraordinary General Meeting

Mn - Million

NPL - Non-Performing Loans

NII - Net Interest Income

NIM - Net Interest Margin

RFC - Registered Finance Companies

Rs. - Sri Lankan Rupees

ROE - Return on Equity

ROA - Return on Assets

Shares - Ordinary Voting Shares

The ‘Company’ - Commercial Credit Limited

VAT - Value Added Tax

Commercial Credit Limited Introductory Documentiv

TABLE OF CONTENT

1.0 CORPORATE INFORMATION ...................................................................................................................................01

2.0 FINANCE SECTOR REPORT .....................................................................................................................................02

2.1 Introduction ..........................................................................................................................................................02

2.2 Sources and Uses of Funds.................................................................................................................................03

2.3 Efficiency of the Business Environment ...............................................................................................................06

2.4 Risk Management ................................................................................................................................................09

2.5 Future Outlook .....................................................................................................................................................11

3.0 PROFILE OF THE ENTITY .........................................................................................................................................12

3.1 Incorporation and History .....................................................................................................................................12

3.2 Purpose, Vision and Mission................................................................................................................................13

3.3 Future Strategies and Major Assumptions ...........................................................................................................13

3.4 Financial Products offered by Commercial Credit................................................................................................15

3.5 Stated Capital ......................................................................................................................................................16

3.6 Dividend Policy and Payments During the Past Three Years ..............................................................................17

3.7 Human Resource .................................................................................................................................................17

3.8 Major Shareholders as at 07th March 2011 .........................................................................................................17

3.9 Degree of Dependency ........................................................................................................................................18

3.10 Particular of Debt and Loan Capital as at 31st December 2010 ........................................................................18

4.0 COMPANY PERFORMANCE ANALYSIS ..................................................................................................................19

5.0 BOARD OF DIRECTORS AND MANAGEMENT .......................................................................................................24

5.1 Board of Directors ................................................................................................................................................24

5.2 Management Team ..............................................................................................................................................28

6.0 STATUTORY AND GENERAL INFORMATION .........................................................................................................30

6.1 Corporate Governance Practices.........................................................................................................................30

6.2 Litigation, Disputes and Contingent Liabilities .....................................................................................................30

6.3 Other Disclosures ................................................................................................................................................31

6.4 Declaration by the Directors.................................................................................................................................32

7.0 FINANCIAL STATEMENTS ........................................................................................................................................33

7.1 Accountant’s Report.............................................................................................................................................34

7.2 Unaudited Interim Financial Statements as at 31st December 2010 ...................................................................43

7.3 Audited Financial Statements as at 31st March 2010..........................................................................................61

7.4 Audited Financial Statements as at 31st March 2009..........................................................................................97

7.5 Audited Financial Statements as at 31st March 2008........................................................................................127

ANNEXTURE A - COMMERCIAL CREDIT LIMITED NETWORK ..................................................................................154

ANNEXTURE B - MEMBERS OF COLOMBO STOCK EXCHANGE (CSE) ...................................................................155

ANNEXTURE C - ADDITIONAL NOTES TO THE 31ST MARCH 2010 - AUDITED FINANCIAL STATEMENTS ..........157

ANNEXTURE D - DETAILS ABOUT THE RIGHT ISSUE HELD ON 01ST DECEMBER 2010 .......................................158

Commercial Credit Limited Introductory Document 1

1.0 CORPORATE INFORMATION

Company Name Commercial Credit Limited

Legal Form Incorporated as a private limited liability company under the Companies

Act No. 17 of 1982 on 4th October 1982 and converted to a public company

on 16th December 1989 and re-registered under the Companies Act No. 07 of

2007 on 8th April 2008.

The Company is registered under the Finance Companies Act No.78 of 1988.

The Company is registered under the Finance Leasing Act No. 56 of 2000.

Registration Number (Under the Companies Act No.17 of 1982)

N (PBS) 62

New Registration Number (Under the Companies Act No.07 of 2007)

PB 269

Place of Incorporation Kandy, Sri lanka

Registered Office No. 106, Yatinuwara Veediya, Kandy

Telephone No. 081-2234963 - 4

Fax 081-2234390

E-mail [email protected]

Website www.cclk.lk

Board of Directors of the Company Mrs. V.W. Fernando (Executive Chairperson)Mr. G.G. Hemachandra (Non-Executive Director)Mr. C. Perera (Independent Non-Executive Director)Mr. S.K. Gunarathne (Independent Non-Executive Director)Mr. T. Someswaran (Independent Non-Executive Director)Mrs. G.R. Egodage (Executive Director) Mr. R.S. Egodage (Managing Director)

Company Secretary NEXIA Corporate Consultants

No. 51/1A, Fife Road, Colombo 5

Lawyers of the Company Nithya Partners

Attorneys-at-Law & Notaries Public

97A, Galle Road, Colombo 03, Sri Lanka

Company Auditors External -

Ernst & Young

201, De Saram Place, Colombo 10

Internal -

B.R. de Silva & Co.

No. 80, King Street, Kandy

D.K.B. Pethiyagoda & Co.

No. 353, Colombo Road, Peradeniya.

Bankers of the Company Commercial Bank of Ceylon PLC

Hatton National Bank PLC

Nations Trust Bank PLC

Sampath Bank PLC

National Development Bank PLC

Seylan Bank PLC

People’s Bank

Bank of Ceylon

Commercial Credit Limited Introductory Document2

2.0 FINANCE SECTOR REPORT

2.1 IntroductionFinance companies are either non-bank companies or lending institutions, which primarily raise money from the public

(deposits) and lend to its customers by way of Loans, Leases, Hire Purchases, Microfinance. Finance companies play an

essential role in the economy of the country by helping to increase the investment capacity of the economy by converting

low cost funds to investments.

The regulation and supervision of Registered Finance Companies (RFC) is governed by the Finance Companies Act.

The Department of Supervision of Non-Bank Financial Institutions of the Central Bank carries out the regulatory and

supervisory functions in respect of RFC, with the objective of ensuring that these institutions comply with the minimum

prudential requirements stipulated by the Central Bank. These functions are carried out mainly through off-site surveillance

and on-site examinations.

The Directions and Rules issued under the provision of the Finance Companies Act cover minimum capital adequacy

and liquidity requirements, deposits, provisioning for bad and doubtful debts, single borrower limits and limits on equity

investments. Matters relating to non-compliance with prudential requirements and any weaknesses and deficiencies in the

financial condition, controls and systems of a finance company are brought to the notice of its Board of Directors, to ensure

that corrective action is taken by the finance company.

Currently, the sector consists of 36 financial institutions categorised under registered financial institutions and monitored by

the Central Bank of Sri Lanka (CBSL). The decline in demand for new credit and the failure of several entities connected

to banks and finance companies in the Ceylinco Group, significantly hindered the normal business activities of the sector

in the past two years. As a result of that, the performance of the RFC sector, in terms of profitability, earnings and capital

adequacy was adversely affected in the last few years.

However, RFC sector continued to make an important contribution, especially in the area of vehicle financing by catering

to a diverse and important customer base that have limited access to bank finance. The RFC sector grew by approximately

9% at the end of September 2010, and with an asset base of Rs. 202 Billion. The two largest RFC, The Finance Company

PLC and Central Finance, together accounted for approximately 40% of the sector in FYE10.

Summary of the sector assets composition is given in the following table:

Table 01As at 31st December 2005 2006 2007 2008 2009 2010 (Sept.)

Rs. Billion Rs. Billion Rs. Billion Rs. Billion Rs. Billion Rs. Billion

Total RFC Assets 87 113 142 175 185 202Growth – 29% 26% 23% 6% 9%Total Assets Base of Finance Sector 3,150 3,733 4,311 4,840 5,616 N/AGrowth – 18% 15% 12% 16% –Total RFC Assets as a % of Total Assets base of the Finance Sector 3% 3% 3% 4% 3% –Source: CBSL Annual Report

Assets distribution of the sector has been quite stable during the past five years. As at September 2010, loans and

advances accounted for 65% of the total assets in the sector with an assets base of Rs. 131,156 Million.

Furthermore, owing to the current depression in the real estate market, loans against real estate declined by 8% to

Rs. 7,154 Million as at September 2010. The reduction in interest rates in 2009 had a positive impact on the business,

resulting in a drastic reduction in the borrowing cost.


FINANCE SECTOR REPORT

2.2 Sources and Uses of FundsThe failure of several entities connected to banks and finance companies in the Ceylinco Group significantly hindered the

normal business activities of the sector. As a consequence, the performance of the RFC sector, in terms of profitability,

earnings and capital adequacy was adversely affected. The major source of funding continued to be from public deposits

and its contribution has remained at 68% compared to previous year (2009).

Graph 01 illustrates the current composition of funding sources and their relevant contribution given to RFC sector.

Source: RAM Rating

Public Deposits continued to be the major source of funding. Deposits of RFCs accounted for 68% of total funds of RFC.

Deposit liabilities increased by 9%, for six months ended, to Rs. 137 Billion in September 2010 compared to 28% growth in

the last year. The declining growth in deposits could be attributed to the lower interest rates. The other two main sources

of funding by RFC were borrowings and capital funds, which accounted for 13% and 10%, respectively of total resources.

Table 02Total Liabilities Composition 31.3.06 31.3.07 31.3.08 31.3.09 31.3.10 30.9.10

Rs. Million Rs. Million Rs. Million Rs. Million Rs. Million Rs. Million

Public Deposits 49,945 64,822 85,981 98,280 125,585 137,479 (56%) (55%) (59%) (60%) (68%) (68%)

Deposit Growth – 30% 33% 14% 28% 9%Bills & Acceptances Payable – 968 1,824 1,530 2,753 3,302

(0%) (1%) (1%) (1%) (1%) (2%)Other Borrowing 14,610 22,425 25,400 25,284 19,056 25,633

(16%) (19%) (17%) (16%) (10%) (13%)Subordinated Debt and Hybrid Capital 2,469 241 315 243 50 50

(3%) (0.21%) (0.22%) (0.15%) (0.03%) (0.02%)Other Liabilities 9,161 9,843 9,436 13,607 15,435 15,347

(10%) (8%) (6%) (8%) (8%) (8%)Total Equity 13,523 18,692 22,953 23,933 21,779 20,342

(15%) (16%) (16%) (15%) (12%) (10%)Total Liabilities 89,708 116,993 145,910 162,876 184,659 202,152

(100%) (100%) (100%) (100%) (100%) (100%)Source: RAM Rating


Despite the severe stresses encountered by some companies, RFCs sector continued to make an important contribution,

especially in the area of vehicle financing by catering to a diverse and important customer base that have no easy access

to bank finance. The total assets of RFC as at September 2010 stood at Rs. 202 Billion, a growth of 9% compared to a

growth of 6% in 2009.

Loans and advances accelerated due to the higher demand for hire purchases and leasing as interest rates declined

drastically. Credit for investment activities, including loans (13.25%), hire purchase (25.35%), leasing including motor

vehicles (20.32%) and real estate investments including housing and property development (3.54%) are the sectors to

which the RFC have given most credit. These four sectors account for about 62.45% of the total assets base.

Graph 02 illustrates the current composition of uses of funds by RFC’s.

Source: RAM Rating

Table 03Total Assets Composition 31.3.06 31.3.07 31.3.08 31.3.09 31.3.10 30.9.10


Cash and Money at Call 1,636 2,124 3,348 3,261 4,252 4,240 (2%) (2%) (2%) (2%) (2%) (2%)

Deposits with Financial Insts. 1,330 2,463 2,935 5,839 3,447 3,023 (1%) (2%) (2%) (4%) (2%) (1%)

Securities 7,524 8,448 12,284 8,151 14,667 16,170 (8%) (7%) (8%) (5%) (8%) (8%)

Net Loans and Advances 62,538 81,294 93,941 103,217 113,373 131,156 (70%) (69%) (64%) (63%) (61%) (65%)

Investments in Subsidiaries/Ass. 1,469 1,774 1,864 1,323 2,047 1,993 (2%) (2%) (1%) (1%) (1%) (1%)

Investment Land and Properties 8,997 6,299 8,607 14,005 15,618 15,394 (10%) (5%) (6%) (9%) (8%) (8%)

Other Assets – 7,247 10,053 13,503 17,735 16,774 (0%) (6%) (7%) (8%) (10%) (8%)

Property, Plant & Equipment 6,213 7,343 12,878 13,577 13,519 13,403 (7%) (6%) (9%) (8%) (7%) (7%)

Total Assets 89,708 116,992 145,909 162,876 184,658 202,152 (100%) (100%) (100%) (100%) (100%) (100%)

Source: RAM Rating



Since the assets base of RFC comprises more loans, HPs and leases, the advantage of falling interest rates has resulted

in a positive benefit to the sector, that is deposit base of the RFC’s is re-pricing faster than assets base including long-

term lending. Further, decline in real estate market may cause to reduce the business risk as market risk and liquidity risk,

associated with real estate business remained at higher position.

Growths in different assets classes attached to loans and advances portfolio are presented below -

Table 0431.3.06 31.3.07 31.3.08 31.3.09 31.3.10 30.9.10


Loans 5,994 10,158 13,441 16,870 20,900 26,777 Growth – 69% 32% 26% 24% 28%Hire purchase 17,840 27,684 37,001 41,395 45,205 51,236 Growth – 55% 34% 12% 9% 13%Leasing 26,749 36,101 36,070 34,626 35,830 41,073 Growth – 35% 0% -4% 3% 15%Real estate 6,986 9,515 9,823 9,802 7,746 7,154 Growth – 36% 3% 0% -21% -8%Interest & other Rec. 3,403 1,895 – – – 24 Growth – -44% – – – –Others 4,286 1,222 3,354 5,876 9,320 13,231 Growth – -71% 174% 75% 59% 42%Source: CBSL-Economic Department

Graph 03 illustrates the composition of Loans & Advances and their relevant contribution to the RFC sector.

Source: CBSL - Economic Department

Sri Lankan financial markets became more liquid and stable during the last year. The easing of monetary policy and

increased liquidity resulted in a gradual decline in interest rates and reduced volatility in the money market. Enabled by the

decline in inflation as well as a favourable outlook for inflation, CBSL continued to lower its policy rates signalling to the

market the need to lower the overall interest rate structure. Short-term money market interest rates remained at a low level

with much of the volatility smoothened out during 2010. The average weighted call money rate (AWCMR), was brought

within CBSL’s policy interest rate corridor by end March 2009, thus improving the effectiveness of the monetary policy

operations of CBSL through the interest rate channel. This has resulted in credit expansion in the RFC sector.



Following graphs illustrate the movements in market rates, AWDR and AWPLR, over the past six years:

Graph 04

Source: CBSL-Economic Indicators (Monthly)

Table 05Annualised 31.3.06 31.3.07 31.3.08 31.3.09 31.3.10 30.9.10

AWPLR 12.14 14.74 17.00 19.17 11.12 10.23AWDR 6.24 7.60 10.31 11.63 8.01 6.92Source: CBSL- Economic Indicators (Monthly)

2.3 Efficiency of the Business EnvironmentProfitability of RFC in year 2009/10 was severely affected due to the slowdown of business activities and adverse impact

from few peer companies. The sector reported an after tax loss of Rs. 1382 Million as at March 2010, compared with

the after tax profit of Rs. 311 Million in 2008. Nevertheless, the sector’s profitability has been largely influenced by the

significant losses incurred by a few RFC. However, some RFC performed well even during the crisis, due to their well-

adopted business practices and good governance.

However, it should be noted that the sector is now performing well with reported six month after tax profit of Rs. 990 Million

as at the end of September 2010. NIM of the sector has remained at stable level during five years with 2009/10 NIMs at

6.09%. Even though, the sector reported positive NIMs for the period ended March 2010, net profit show a negative figure

due to higher non-interest expenses and loan loss provisions incurred by the sector. Other than that, the sector was reporting

a taxable income and thereby the tax expenses have increased. However, the reduction of VAT in Financial Services and

rationalisation of the overall tax regime in the recent Budget will positively benefit RFC performance in the future.



Graph 05 illustrates the changes in profitability over the five years.

Source: RAM Rating

Table 06Profitability 31.3.06 31.3.07 31.3.08 31.3.09 31.3.10 30.9.10

Profit before Tax 3,159.83 3,955.85 3,708.68 1,305.74 126.18 2,593.10Net Interest Margin 6.26% 7.43% 6.68% 5.85% 6.07% 7.95%Cost to Income 54.63% 57.85% 66.45% 78.93% 83.35% 70.03%Return on Assets 4.02% 3.83% 2.82% 0.85% 0.07% 2.68%Return on Equity 26.91% 24.56% 17.81% 5.57% 0.55% 24.06%Source: RAM Rating

Graph 06 shows movements in cost to income ratio and its direction over the period.

Source: RAM Rating



Cost to income ratio measures the efficiency of the business operation of a lending institute. The RFC has been recording

an increasing rate of cost to income ratio during the past 6 years, hence the efficiency of RFC is considered to be low. The

main reason for having higher cost to income ratio is due to higher non-interest expenses incurred by the sector in their

operations. However, the six months ended 11th September have shown a decline and this trend urges well for the future

of the industry.

As far as Assets’ Quality of the sector is concerned, sector shows weak performance of asset management. The main

purpose of a finance company is to convert their financial assets to future cash flows without incurring substantial losses on

the transactions. Simply, this is measured by the Non-Performing Loans (NPL) statistics of the sector. At RFC, their gross

NPL ratio has increased to 7.90% as at March 2010, compared to 6.46% in 2009. Impact of this event has resulted in a

higher annual provision requirement. The continued trend in the increase as reflected in the 11th September figure (9.22%)

is of great concern and needs the attention of all stakeholders for the sake of future stability of the sector.

Graph 07

Source: RAM Rating

Table 07Asset Quality 31-3-06 31-3-07 31-3-08 31-3-09 31 3-10 30-9-10

Gross NPL Ratio 5.66% 4.56% 5.19% 6.46% 7.90% 9.22%Net NPL Ratio 1.76% 2.39% 2.85% 4.40% 4.99% 5.47%Specific Loan Loss Provisions for Current Year 0.98% 0.80% 0.78% 1.34% 1.86% 0.53%Source: RAM Rating

Liquidity position of the sector shows the strength of the sector to meet outside obligations in future. Additionally, it provides

an indication of the quality of ALM, (Assets and Liability Management), and soundness of the monetary policy adopted by

the companies. The sector Loans to Deposit ratio is a key indicator by which an assessment can be made of the quality of

ALM. Loans to Deposits ratio for the sector has reduced to 90.28% in 2001/10 from 105.02% in previous year, 2008/09.

This was mainly due to the increase in the deposit base as a result of opening of new branches in the North and the East

regions. RAM Ratings Lanka has estimated the industry’s statutory liquid asset ratio as 13.97% as at September 2010,

from 15.62% in the previous year. The sector maintains adequate level of liquid assets, which satisfies the minimum

statutory liquid assets ratio of 10% as mandated by CBSL regulations.



Graph 08

Source: RAM Rating

Table 08Liquidity 31-3-06 31-3-07 31-3-08 31-3-09 31 3-10 30-9-10

Liquid Asset Ratio (LAR) 19.47% 18.60% 19.78% 15.49% 16.49% 15.33%Statutory (LAR) 18.92% 18.51% 19.99% 15.84% 15.62% 13.97%Loans to Deposits Ratio 125.21% 125.41% 109.26% 105.02% 90.28% 95.40%Source: RAM Rating

2.4 Risk ManagementRisk management is “the process of analysing exposure to risk and determining how to best handle such exposure”,

which ensures that participants assume well calculated business risks which safeguard their capital, funding sources and

profitability from various sources of risks. The mechanism permits to create a culture of risk awareness across all sections

of the Company, to identify, measure, analyse and evaluate risks and to set appropriate policies to the risk appetite in

order to manage and hedge such identified risks identified.

Credit risk - The borrowers’ inability to meet the obligations towards the Company on time would expose a company to this

risk. The management of this risk is in the hands of each company hence there are several actions companies take prior

to lending facilities to clients. Assessing the credit worthiness of the client is done by considering details of the property

held by the client, obtaining a report from Credit Information Bureau (CRIB), getting creditworthy guarantors, etc. Valuing

the credit worthiness of the customer depends on the knowledge and experience of the credit officer concerned, hence

companies make sure that the staff is given a comprehensive training in this regard. Further, being conservative, the

companies provide provisions out of the profit to meet this risk. RFC also maintain such fund in their account but increasing

trend of this figure does not show good performance of the Company.

Economic risk associated with debtors’ capability to meet the obligations as well as a potential borrowers’ ability to borrow

would get adversely affected due to changes in the state of the economy. This too is to a greater extent beyond the control

of the Company. However, in order to mitigate the risk, participant can improve the accuracy of the predictions made,

based on the analysis of past trends and prevailing market conditions.



Interest rate risk is the potential impact on an institution’s earnings and net assets values of changes in interest rates.

Interest rate risk arises when an institution’s principal and interest cash flows (including final maturities), both On and

Off-Balance Sheet, have mismatched re-pricing dates. The amount at risk is a function of the magnitude, direction of

interest rate changes and the size and maturity structure of the mismatch position.

Managing interest rate risk is a fundamental component of safe and sound management of all institutions. It involves prudently

managing positions in order to control, within set parameters, the impact of changes in interest rate on the institution.

Significant factors in managing the risk include the frequency, volatility and direction of rate changes, the slope of the

interest rate yield curve, the size of the interest-sensitive position and the basis of re-pricing at roll over dates.

Liquidity risk is the risk faced by the participants due to the shortage of cash or cash equivalent to meet the obligations

of the Company on time. Management of this risk is mainly a responsibility of the Treasury Department. Each company

should ensure that there are sufficient liquid assets to meet the working capital requirement, thus ensuring a smooth run in

daily operations. One of the main risks RFC face in this context is the asset liability mismatch and RFC must ensure that the

Company’s cash inflow is in line with cash outflow. All RFC participants should maintain minimum amount of liquid assets,

10%, which is mandated by CBSL regulations.

Operational risk is the risk caused by the failure in the routine operational functions of the Company. This could arise

as a result of a failure in the systems, procedures, processes, failure of the employees to comply with the set rules and

regulations or through human error. As a mitigation strategy, RFC participants place special emphasis on training given

to employees, thus ensuring that they have comprehensive knowledge and skills required to perform the particular job

assigned to them. Further, all the employees are given a well-defined job profile, which clearly communicates the roles

and responsibilities of each. Authority levels are assigned to employees considering the role he/she plays in the corporate

hierarchy and it is clearly communicated to the staff, thus ensuring that every employee follows the relevant instructions.

Reputation risk can be defined as the risk arising from negative perception on the part of customers, counterparties,

shareholders, investors or regulators that can adversely affect a RFC ability to maintain existing, or establish new business

relationships and continued access to sources of funding. This risk is not directly related to one particular company but

affects the whole sector. RFC sector experienced this risk with the failure of several entities connected to banks and

finance companies in the Ceylinco Group, significantly hindering the normal business activities of the sector.



2.5 Future Outlook Since the profitability of the sector depends on the interest rates prevailing in the country, reduction in interest rates will

positively affect the sector’s profitability. Therefore, reduction in interest rates will stimulate investments in the country and

thereby sector’s net interest margins will increase. This effect is shown in the six month ended Financial Statements of

the sector where NIM of the sector has increased from 6.07% to 7.95% as at September 2010. In addition, the revision

in Government tax policy is also expected to benefit the sector with the reduction in the tax rates effective from January 2011.

The regulatory framework relating to RFC is strengthened. In order to make the Board of Directors of RFC responsible and

accountable for the companies’ performance and risk management, compliance with the Finance Companies (Corporate

Governance) Direction is closely monitored. The Finance Companies (Reporting Requirement) Direction No. 5 of 2009 was

imposed to grant more powers to CBSL to regulate RFC.

Furthermore, listing on the Colombo Stock Exchange was made compulsory for RFC by end June 2011. This is expected

to improve Corporate Governance and Transparency in the Management of the RFC resulting in overall performance of

the sector.

More importantly, to prevent further financial scams arising from the misconduct of unauthorised players, the Finance

Business Act is to be enacted in the near future. This will replace the current Finance Companies Act (FCA). The major

revisions proposed in the draft Finance Business Act are: to make the acceptance of deposits without authority an

offence, to provide a clear definition of the term ‘deposits’, to enhance powers for examinations and investigations to curb

unauthorised finance/deposits taking businesses, to enhance public disclosure, and to empower the Monetary Board to

establish a mandatory deposit insurance scheme.



3.0 PROFILE OF THE ENTITY

3.1 Incorporation and HistoryFourth October 1982 witnessed the birth of Commercial Credit Limited in the hill capital of Kandy. The Company, registered

as a Finance Company under Finance Companies Act No. 78 of 1988 under the Monetary Board of Central Bank of

Sri Lanka from a steady foundation laid over a period of 28 years has re-emerged as the NEW KID IN THE BLOCK with

the shifting of the main operations of the Company to Colombo in March 2010.

During the initial stages of operations, the Company was mainly focused on lending to the Agricultural sector with this

sector accounting for over 50% of the lending portfolio. Although the Company had 16 locations spread around the country,

the traditional agricultural regions of the country, such as Anuradhapura, Dehiattakandiya, etc., accounted for the bulk of

the business of the Company.

A key achievement of the Company during its first phase of the existence was the inculcation of a very strong culture of

Process and System driven mind set. This has resulted in the development of a highly advanced Management Information

System (MIS), enabling the Company to manage day-to-day operations with a very lean staff structure. The Process Mind

Set also enabled the Company to obtain ISO 9001:2008 in October 2006 for enhanced quality management compliance.

A change in the majority shareholding of the Company in October 2009 resulted in a new management team with

Mr. Roshan Egodage, taking over the operations of the Company. A well-planned and executed strategy of New Corporate

Image, New Innovative Products and Modern Infrastructure together with an empowered work culture has resulted in the

Company recording a huge growth in the deposit and lending base, unprecedented in the sector in the past. The very robust

and user friendly MIS system together with the extended branch reach were the key enabling factors for the growth of

the Company.

The driving force behind the Company’s astronomical success todate is the Company’s dedicated workforce drawn from

the cream of the industry’s talent pool. The Company’s culture of liberalisation and empowerment has enabled the team

to over deliver in terms of Industry norms. The loyalty and commitment of the team members have been a pivotal factor in

the Company’s success story. During this period, the Company has increased the staff strength threefold from 150 to 458

with over 80% of the new recruits being marketers.

The scalability the Company has achieved has been possible due to the culture of empowerment practiced thoughout the

Company together with the MIS system, which has facilitated the Credit Management at the front line, while ensuring that

control and information flow is maintained at the head office to ensure compliance and creditworthiness. This has enabled

the Company to achieve one of the best NPL ratios and Cost to Income Ratios in the industry.

During this period, the Company has introduced many new innovative and trail-blazing products, both for mobilisation of

funds and increase of the lending portfolio. Microfinance, Education Loan, Quick Loan, etc. has enabled the Company to

reach out to a wider segment of the society and serve a client base of over 100,000 customers.

During the past 15 months, the Company expanded its reach from 16 locations to 36 locations spread across the country.

The Company also upgraded the existing branch infrastructure in order to create a modernised ambience for both staff

and the customers. This branch expansion and the infrastructure upgrading, coupled with the NEW BRAND LOGO and

innovative marketing and advertising strategy have laid the foundation for the future growth of the Company and its

aspiration to be among the Top-3 Finance Companies in the country within the next three years.

Having served over 100,000 customers across the country, Commercial Credit will strive to create future leaders, who will

be empowered to uplift the living standards of society at large, with enhanced customer service and innovative products.


PROFILE OF THE ENTITY

3.2 Purpose, Vision and MissionPURPOSE

Build leaders who uplift the lives of people by simple acts of love.

VISION

To be the Most Liberated Company admired for its people, partnerships and performance.

MISSION

To be the dynamic Finance Company; which develops and nurtures leaders at every level of the organisation to serve the

society with passion.

Commercial Credit Shared Values

The values provide guidance for everything Commercial Credit does from strategic planning to day-to-day decision making;

it governs the manner in which the Company treats all stakeholders -

1. Loving and Caring

2. Learning and Development

3. Think Win-Win

4. Integrity and Trust

5. Synergy and Teamwork

Corporate Goals are formulated based on following perspectives:GOAL 1: Shareholder Perspective

To build an esteemed company that has the utmost market respect reflected through key performance indicators.

GOAL 2: Customer Perspective

To build sincere long-lasting relationships with our customers, through win-win solutions and become their preferred choice.

GOAL 3: Employee Perspective

To build a passionate and learning company where everybody takes pride being part of the team and enjoys every moment.

GOAL 4: Community Perspective

To build a socially responsible company where the wealth created through its operation is shared with the community for

its well-being.

3.3 Future Strategies and Major Assumptions The future success and the growth of the Company will be based creating a nourishing culture, with self-managed and

dedicated employees, who are empowered to perform to their optimum. The development of the Nourishing Culture will be

pivotal in the Company’s aspiration to be ‘A Leader’ in the Finance Industry within the next three years.

The Shared Values of the Company will not be mere words but the actual ethos of the Company with every transaction and

relationship within and outside of the Company guided by these Shared Values. The Company Performance Management

and Rewarding Systems will be aligned to these Shared Values in order to nurture and create LEADERS who will uplift

the lives of people and VISION to be the Most Liberated Company admired for its People, Partnerships and Performance.


The People-Driven Culture combined with SPEED and SERVICE EXCELLENCE will support the successful implementation

of the following strategies:

1. The Expansion of Reach with a total of 25 branches and 50 service locations operational within the next three years.

2. Regular launch of New and Innovative products to cater to the specific needs of customers from different parts of

the country.

3. A well-balanced portfolio of products with no products being more than 30% of the total product value. This will insulate

the Company from overexposure and sudden dips due to changes in the environment outside of the Company’s control.

4. Pawning will be one of the key products of the future, which would address the issue of duration mismatch, which is an

inherent problem of the Finance Industry.

5. Land sales to be a major contributor to the bottom line performance of the Company. However, this will be achieved

while ensuring the total investment in the land bank to be below 5% of the asset base of the Company.

The effectiveness and the implementation of the above strategies can be best judged by the performance of the Company

in the six month period March 2010 to September 2010, viz-a-viz the industry -

(a) Deposit Growth - From Rs. 1.7 Billion to Rs. 2.7 Billion. This represents a growth of 60%, during this same period the

industry has recorded a deposit increase of Rs. 11.8 Billion representing a growth of 9%. The increase in the Company

deposit during this period represents 8.48% of the total industry increase in deposits.

(b) Lending Growth - From Rs. 1.6 Billion to Rs. 2.6 Billion. This represents a growth of 68.41%, during this same period

the industry has recorded a lending increase of Rs. 17.78 Billion representing a growth of 15.68%. The increase in the

Company lending during this period represents 5.6% of the total industry increase in lending during this period.

(c) Cost to Income Ratio, improved to 49% as at 30th September 2010, well below the industry standard of 60% for the

same date. By December 2010, the Company has managed to reduce it to 41%.

(d) Loans to Deposits Ratio of Commercial Credit has moved from 91% to 96% from end of March 2010 to September

2010; when the movement in the industry is from 90% to 95%.

Risk Associated to the Future Plans

Credit risk - the borrowers’ inability to meet the obligations towards the Company on time would expose the Company to

this risk. The management of this risk is in the hands of each company, hence there are several actions companies take

prior to lending facilities to clients. Assessing the creditworthiness of the client is done by considering details of the property

held by the client, obtaining a report from Credit Information Bureau (CRIB), getting creditworthy guarantors, etc.

The Company has a very tight credit evaluation process with a well-developed MIS to manage the Credit Risk. In addition,

the Company has adopted CBSL guidelines to identify trends and take corrective actions to rectify negative patterns to

mitigate credit risk.

Economic risk associated with debtors’ capability to meet the obligations as well as a potential borrowers’ ability to

borrow, would get adversely affected due to changes in the state of the economy. This too is, to a greater extent, beyond

the control of the Company.

The Company has a diversified lending base which covers Agriculture, Corporate Finance, Hire Purchase; Lease Products,

etc. The Company has a policy of no one class of product being more than 30% of the total portfolio and this balance basket

of products will help the Company mitigate the Economic risk due to overexposure.



Interest rate risk is the potential impact on an institution’s earnings and net assets values of changes in interest rates.

Interest rate risk arises when an institution’s principal and interest cashflows (including final maturities), both On and Off-

Balance Sheet, have mismatched re-pricing dates.

Significant factors in managing the risk include the frequency, volatility and direction of rate changes, the slope of the

interest rate yield curve, the size of the interest-sensitive position and the basis of re-pricing at roll over dates.

As the product portfolio of the Company has a mix of long-term and short-term lending products, Commercial Credit is less

exposed to interest rate risk.

Liquidity risk is the risk faced by the participants due to the shortage of cash or cash equivalent to meet the obligations

of the Company on time. Management of this risk is mainly a responsibility of the Treasury Department. Each company

should ensure that there are sufficient liquid assets to meet the working capital requirement, thus ensuring a smooth run

in daily operations.

In addition to maintaining well above stipulated liquid asset criteria as mandated by CBSL, the Company arranged Credit

Lines from Licensed Banks to mitigate any cash shortfall arsing when liabilities are due.

Reputation risk can be defined as the risk arising from negative perception on the part of customers, counterparties,

shareholders, investors or regulators that can adversely affect a RFC ability to maintain existing, or establish new business

relationships and continued access to sources of funding.

The Company has carried out various CSR and PR activities to enhance both the social welfare and corporate image in

the minds of various stakeholders. The Company’s Innovative Brand Building campaign and the superior level of service

delivery has helped the Company build a very Strong Loyalty among its customer base.

3.4 Financial Products offered by Commercial CreditLending Products

1. Motor Credit (Hire purchase) - A vehicle hire with the option to purchase the vehicle at the conclusion of the agreed

rental period.

2. Motor Quick - This product is similar as Motor Credit, where the Company grants the facility within one hour to the

registered owner up to 50% of the valuation with a maximum repayment of 24 months.

3. Microfinance - This product caters specifically to women entrepreneurs who have no access to normal channels of

banking, with the objective of uplifting their lives.

4. Leasing - The Company will retain ownership of the vehicle, while the lessee will have possession on the asset and

enjoy its usage upon payment of a specified amount of rental over a specified period of time.

5. Lease Purchase - Similar to a normal leasing product but will be extended for machinery and a mortgage will be

executed on the asset.

6. Cash Loan - The facility is granted with a view for facilitating personal financial requirements such as wedding expenses,

purchase of home appliances, house renovation, etc.

7. Land Easy Payment - The Company will purchase real estate, block out, develop and sell the land to customers either

outright or on an easy payment scheme. The ownership of the land will be transferred to the customer upon complete

repayment of the total rentals.



8. Short-Term Loans - This product is targeted towards farmers engaging in seasonal cultivation.

9. Consumer Credit - This facility is granted to mainly Government and selected private sector employees to purchase

consumer durables (TV, Refrigerators, Sewing Machines, Washing Machines, etc.), and jewellery.

10. Short-Term Loan Against FD - This is a specified facility available only for Fixed Deposit holders where up to 75% of

the face of the certificate value would be granted as a loan by securitising the FD certificate.

11. Educational Loan - Facility granted for both local and international educational purposes, where the borrower may be

the student or the parents of the student.

Deposit ProductsFixed Deposits

Deposits can be for a period of 1 month to 5 years and the minimum deposits should be Rs. 5,000/-. Interest is paid monthly

or at maturity.

Fixed Savers Deposits

“Punchi Panchi” Children Savings - Children below the age of 18 can open accounts to save on a daily or monthly basis.

A CCL ‘Till’ will be given to the depositor and collections will be made on a regular basis and credited to their account.

Birthday Gifts, Emergency Insurance Covers, Bonus Interests and many more rewards are on offer to encourage the habit

of saving among young depositors.

CCL Daily Business - A deposit scheme where Commercial Credit officers visit the customer daily to collect deposits. The

minimum deposit amount is Rs. 250/- and the minimum period of deposit is six months.

CCL Regular - Similar to CCL Daily Business with deposits on a monthly basis instead of daily. The minimum deposit

amount is Rs. 250/- and minimum period of deposit is one year.

One To One (1 to 1) Bonus - Similar to CCL Regular, however the customer will be offered one-to-one Bonus interest at

maturity of the deposit when it is converted to a normal Fixed Deposit.

3.5 Stated CapitalThe Stated Capital of the Company as at 31st January 2011 was Rs. 170,640,315.00 representing 14,538,291 Ordinary

Shares.

Details of the shares issued two years immediately preceding the date of the Introductory Document are set out in the table

given below:

Table 9Date of allotment Nature of the issue Value per share (Rs.) Number of shares issued Total consideration (Rs.)

01st December 2010 Right Issue 10 9,692,194 96,921,940

The Company, with the sanction of the shareholders at an Extraordinary General Meeting held on 24th March 2011

subdivided its 14,538,291 Ordinary Shares in issue on the basis of 15 Ordinary Shares for every 01 Ordinary Share held

and thereby the number of shares in issue increased to (Two hundred eighteen million seventy-four thousand and three

hundred sixty-five) 218,074,365 Ordinary Shares.

There had not been any reduction of Stated Capital nor any redemption or repurchase of shares in terms of the provisions

of the Companies Act No. 07 of 2007 during the two years immediately preceding the date of the Introductory Document.



The Company has not issued any Convertible Debt Securities or any other classes of shares other that the shares stated

above. Further, there are no securities of the same or other class subscribed or sold privately in conjunction with the listing

of shares on the Colombo Stock Exchange.

Upon the Ordinary Shares of the Company being listed on the CSE, such shares shall be freely transferable and the

registration of the transfer of such listed shares shall not be subject to any restrictions.

3.6 Dividend Policy and Payments During the Past Three YearsThe declaration and payment of dividend is based on a number of factors, including but not limited to the Company’s

earnings, capital requirements and the overall financial condition.

The amount of dividends paid during the financial years immediately preceding the date of this Introductory Document is

given below:

Type of the dividend 2007/08 2008/09 2009/10

Ordinary Dividend Rs. 1.73 – –(Per Share)

3.7 Human ResourceThe staff strength of the Company as at 28th February 2011 was 492 employees. The Company does not have any

labour unions and have not entered into any collective agreements. The Company does not have any subsidiaries and is

a solitary entity.

3.8 Major Shareholders as at 07th March 2011Table 10Name Number of shares Shareholding (%)

Messrs B. G. Investments (Pvt) Limited 11,206,932 77.09%Mrs. Vagdevi Wimalangi Fernando 1,032,951 7.11%Mr. George Ginendra Hemachandra 495,168 3.41%Ms. Deegala Nilanthi Keerthisinghe 228,383 1.57%Mr. Sri Deva Kumara Semage 171,099 1.18%Messrs Pedrison Limited 159,250 1.10%Mr. Thusitha Kumara Hemachandra 95,000 0.65% Dr. Eresha Fernando 76,570 0.53% Ms. Nirmala Samudra Hemachandra 74,966 0.52% Mr. Deegala Jayantha Keerthisinghe 74,469 0.51%

Public Shareholding Percentage as at 07th March 2011-11.88%

3.8.1 Details about Shareholders and Directors of B.G.Capital (Pvt) Limited Shareholders No. of shares held

1. Mr. R.S. Egodage 512. Mrs. G.R. Egodage 253. Mr. G. J. Suwandaratne 25

Directors1. Mr. R.S. Egodage

2. Mrs. G.R. Egodage

3. Mr. G. J. Suwandaratne

4. Mr. A.P. Egodage



3.8.2 Details about Shareholders and Directors of B. G. Investments (Pvt) Ltd.Name Number of shares Shareholding (%)

Messrs B. G. Capital (Pvt) Limited 3,250,001 100Mr. Garuthman Janaka Suwandaratne 1 –

Directors1. Mr. R.S. Egodage

2. Mrs. G.R. Egodage

3. Mr. G. J. Suwandaratne

3.9 Degree of Dependency There is no significant dependency by the Company on either its Customers or Suppliers.

3.10 Particular of Debt and Loan Capital as at 31st December 2010Description1. Particulars of the loan capital - Rs. 49,955,066/-

2. Particulars of term loan - Rs. 204,216,111/-

3. Particulars of leases - Rs. 13,415,240/-

4. Particulars of Guarantees and Contingent Liabilities - None

5. A statement of mortgages and charges on the assets of the Entity - None



4.0 COMPANY PERFORMANCE ANALYSIS

Performance SummaryTable 11Commercial Credit LimitedIncome and Profit Summary

(A) Summary of Operations 2008/09* 2009/10* 1Q10** 2Q10** 3Q10**Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000

Net Interest Income 126,666 140,142 76,808 113,990 182,283Non-Interest income 36,195 78,622 31,704 46,467 67,096 Profit/Loss before Tax (1,279) (25,942) 15,911 55,241 115,970

(B) Balance Sheet Summary 2008/09* 2009/10* 1Q10** 2Q10** 3Q10**Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000

Total Assets 1,388,813 2,300,687 2,793,746 3,540,058 4,308,086 Total Deposits 854,330 1,732,558 2,100,681 2,760,848 3,203,761 Total Shareholders’ Fund 224,048 226,924 242,835 298,077 510,968 * Audited. ** Quarterly Un-Audited Source: Commercial Credit Audited Accounts and Management Accounts.

‘The proof of the Pudding is in the Eating’ and in this case the Soundness and the Implementation of the Future Strategy

of the Company as mentioned in Chapter 1 is seen in the financial performance of the Company in the past three quarters.

The growth in the Assets and Deposits and the increase in the profitability of the Company is without doubt the best

recorded by any RFC in the country. The Company is confident of maintaining the current trend in growth to become a

Leading Finance Company in the country in the near future.

Further, the Company is striving for excellence in terms of financial ratings, with the clear objective to achieve A+ Financial

Rating by end of 2013.

The Growth of the CompanyFollowing indicators are given to showcase Commercial Credit’s present growth, which is probably the highest in the industry.

Asset BaseThe Asset base of the Company recorded a growth of 106% within the nine months ending September 2010, as against

the industry average of 9% within the same period .The above growth of Commercial Credit accounts for 11% of the total

growth of the industry. Effectively, Commercial Credit represented 0.92% of the Total Asset Base of the industry at the end

of December 2009, which has grown to be 1.73% by the end of September 2010.


COMPANY PERFORMANCE ANALYSIS

Chart 9

Source: Commercial Credit Audited Accounts and Management Accounts.

Fixed Deposit BaseThe Fixed Deposit Base of the industry increased by 9% from 31st March 2010 to 30th September 2010, However,

Commercial Credit recorded a 59% increase over the same period, which shows the confidence the public has on the

Company. The Growth of Commercial Credit accounts for 8% of the Total Industry Growth, which is significant.

Lending Base An increase of 68% in Lending Base as against 16% of the industry was recorded for six months ending 30th September 2010.

Movements in NPL The asset quality of Commercial Credit is depicted by its NPL ratios.

From March to September 2010, net NPL of RFC industry moved from 4.99% to 5.47% showing a slight negative movement

in the industry; while commercial credit has shown a favourable movement from 2.11% to 1.29% and further favourable

movement at December 2010 dropping to 1.04%.

Gross NPL of the RFC industry has also shown a negative movement from 7.90% to 9.22% from March 2010 to September

2010, whilst Commercial Credit has shown a favourable movement from 5.19% to 3.30% and further it has come down to

2.80% at December 2010 showing a further favourable picture on the Asset Quality of the Company.

Cost to Income RatioCost to income ratio demonstrates the operational efficiency of the Company. The Cost to Income Ratio of the Industry

stood at 83.35% for the period ending 31st March 2010, whereas Commercial Credit was 96.4%.

However, the Company Cost to income ratio improved to 68% for the six months ending September 2010, which is better

than the Industry average of 70% for the same period. This ratio has further improved to 59% for the nine months ending

December 2010. However, it is encouraging to note that the Cost to Income Ratio for the month of December 2010 is 45%

which is remarkable.


Chart 10


Loans and AdvancesChart 11

Source: Commercial Credit.

Above Graph illustrates the product portfolio of the Company as at 31st December 2010, which depicts a well-balanced

portfolio of products. Loans to deposits ratio of the Company has moved from 91% to 96% from end of March 2010 to

September 2010, when the movement in the industry is from 90% to 95%. However, in December 2010 it has further

improved to 106%.

Net Interest Income, Net Interest Margin and Non-Interest IncomeInterest Income of the Company has recorded an increase of 10.37% in Financial Year 2009/10 compared to Financial

Year 2008/09. Quarterly performance for FY 2011 reflects a phenomenal growth quarter-on-quarter, where the Company

recorded 166% growth within the last nine months compared to the whole of the previous year.



The Net Interest Margin of the industry for the year ended 31st March 2010 was 6.07 %, which has grown to 7.95% for the

six months ending 30th September 2010. Commercial Credit however has recorded 7.6% and 12.8%, respectively for the

same periods, which reveals that the Net Interest Margin of Commercial Credit has grown by 68% as against 31% of the

industry over the last six months ended 30th September 2010.

Real estate income is the main contributor in non-interest income and the Company is planning to keep this at 5% of the

Total Portfolio. In this instance, Commercial Credit capitalised on the opportunity created in the market with a huge demand

for real estate.

The profit earned for the nine months ending December 2010 was Rs. 52 Million with an IRR of over 100%. The stock

carried over is just Rs. 54 Million which represents only 1.2% of the Company’s total Asset base. Graph given below

illustrates the improvement in Net Interest Income and Non-Interest Income:

Chart 12


ProfitabilityThe Company recorded a net profit after tax of Rs. 45.1 Million for the Financial Year 2009/10, compared to Rs. 7.0 Million

Financial Year 2008/09. For the nine months ended December 2010, Company has recorded an after tax profit of

Rs. 177.7 Million. This is a 294% improvement on FY’11 performance with one more quarter left to go.

The improved profitability has resulted in a significant improvement on Return on Equity (ROE) as reflected in the Chart

below. RFC industry average Return on Assets (ROA) has been 2.68% for the six months ending September 2010; whereas

Commercial Credit has achieved 5.37% during the same period. Further, it has enhanced to 8.24% for the nine months

ending December 2010. Commercial Credit has achieved ROE of 54% for the six months ending September 2010, when

the industry figure has been 24%. However, it has further enhanced to 68% for the nine months ending December 2010.



Chart 13


Deposit Growth and Capital FundPublic deposits were the major generator of funds for the Company during the Financial Year 2009/10, in addition to the

bank borrowings and equity. Deposit base has experienced a significant growth during the last eighteen months. Despite

the intense competition, the Company managed to maintain the momentum by recording a 158 % increase of the deposit

base from Rs. 1.2 Billion in December 2009 to Rs. 3.2 Billion in December 2010.

The Company offered attractive and competitive interest rates coupled with value added services. For the six months

ended September 2010, the Company has recorded a notable 60% growth in deposit base compared to the RFC sector

deposit growth of 9%. During the last six months, total industry deposit growth was Rs. 12 Billion, whereas Commercial

Credit has mobilised Rs.1 Billion, which is 8.47% of the total growth.

Prudent management of operations and finances contributed towards a significant growth in Shareholders’ Funds which

showed an impressive growth during the last three quarters. The growth in the after tax profits and the proceeds from the

rights issue being the main contributory factor for the growth in Shareholders’ Funds. The Asset growth in RFC sector for

the nine months ended December 2010 was 9%, whereas out of this 9%, Commercial Credit accounts for 11%.

Table 14(C) Key ratios 2008/09* 2009/10* 1Q10** 2Q10** 3Q10**

Cost to Income 100.79% 111.86% 76.60% 61.59% 49.28%Return on Shareholders’ Funds 3.17% 19.91% 27.10% 81.70% 114.67%Return on Assets 0.51% 19.60% 2.44% 6.98% 11.82%Gross NPL 9.6% 5.19% 4.61% 3.30% 2.80%Net NPL 6.97% 2.11% 1.89% 1.29% 1.04%Tier I (Statutory Limit - 5%) 7.14% 7.64% 7.10% 7.63% 10.65%Tier II (Statutory Limit - 10%) 14.70% 11.38% 10.25% 10.17% 12.48%

* Audited. ** Un-Audited.

Source: Commercial Credit Limited Management Accounts, Central Bank of Sri Lanka Annual Report 2009, Central Bank of Sri Lanka Economic Department and RAM ratings.



5.0 BOARD OF DIRECTORS AND MANAGEMENT

5.1 Board of DirectorsThe Company’s business and operations are managed under the supervision of the following members of the Board. The

Board of Directors of the Company comprises seven Directors consisting three Executive Directors, one Non-Executive

Director and three Non-Executive Independent Directors:

Table 12Name Age Other Directorships/Positions held

Mrs. Vagdevi Wimalangi Fernando 73 Past President of Finance Houses AssociationExecutive Chairperson Director - Kelani Paper Converters Limited

Mr. George Hemachandra 67 Chairman of Hemachandras (Kandy) LimitedNon-Executive Director Director of Hotel Hiltop, Kandy.

Mr. Cecil Perera 54 Director - Management Systems (Pvt) LimitedIndependent Non-Executive Director Director - Eurocentre DDC Lanka (Pvt) Limited

Director - Winall (Pvt) Limited Director - Thilanka Hotels (Pvt) Limited

Mr.Samantha Kumara Gunarathne 43 Director - Best Cars Lanka (Pvt) Limited Independent Non-Executive Director Director - SK Consultants (Pvt) Limited

Mr. Thirunavukarasu Someswaran 67 Director - Panasian Power PLCIndependent Non-Executive Director Director - Someswaran Centre (Pvt) Limited

Director - Sunrise Senior (Pvt) Limited Director - Centre for Advancement of Resource Mobilization (CARM)

Mrs. Geya Rasi Egodage 46 Director - R. D. S. Bakers (Pvt) LimitedExecutive Director Director - B. G. Investments (Pvt) Limited

Mr. Roshan Sanjaya Egodage 47 Director - B. G. Investments (Pvt) LimitedManaging Director

A brief profile of each of the Directors is given below:

Mrs. V.W. Fernando - Executive Chairperson

Address: No. 847/2, Peradeniya Road, Kandy

Mrs. Vagdevi Fernando joined the Board of Directors of Commercial Credit Limited on the demise of her late husband

Mr. K.H. Donald Fernando who was the Founder Chairman of the Company in 1988. Having entered the teaching profession

for a few years following her graduation from the University, Mrs. Fernando has also worked internationally in Germany and

England in various capacities.

She is a respected businesswoman who has earned the recognition of the corporate fraternity for her contributions to the

business arena.

Mrs. Fernando is a senior member of the Finance Houses Association (FHA), and was its first female Chairman and

the only female to have held the position of President for two consecutive years. She was the recipient of the Central

Province Entrepreneur of the Year Gold Award in 2006, the Central Province Business for Unity Silver Award in recognition

of her contribution to social responsibility and peace, a Merit Award winner at the National Entrepreneur of the Year

Award. She was also named in the 2003 American International WHO’s WHO of Professional and Business Women.

She is a Life Member of the Ceylon Chamber of Commerce (Central Province), The Women’s Chamber of Commerce

(Central Province), The Sri Lanka Federation of University Women, The Alliance Francasie de Kandy, The Organisation of

Professionals of Kandy and the Sinhala Velanda Sangamaya.


A past pupil of Visakha Vidyalaya, Colombo, she holds a BA General Arts Degree from the University of Peradeniya, and is

an active member of the University Alumni Association. She also served on the University Council for a period of 3 years.

Having made her mark in the business arena at a time when the field was dominated by men, Mrs. Fernando continues to

serve as the Company’s Chairman with the wisdom, capability, integrity and efficiency. She has gleaned for nearly 23 years

in this post, and will continue to do so in the future.

Mr. R.S. Egodage - Managing Director

Address: No. 475/5, Elvitigala Mawatha, Colombo 05.

Mr. Egodage took over the reins of Commercial Credit Limited in October 2009, following the takeover of the Company

by B.G. Investments at the same time. As the CEO of the Company, he has been the driving force behind the Company’s

stellar success, charting a visionary course of leadership and growth, ensuring the Company’s status today as one of the

country’s most successful and respected finance companies.

An industry veteran with a wealth of experience and achievements to his credit, Mr. Egodage is a skilled corporate strategist

with a proven track record in guiding corporate entities towards record growth and success. His passion and innate talent

for establishing pioneering and liberated corporate strategies have been validated by Commercial Credit’s trail-blazing

success in just 18 months, growing from a relatively small market share to being within the top five registered finance

companies in terms of Net Interest Income.

His success is due in part to the multi-disciplinary approach he brings to the table, gleaned through a diverse career in a

range of industries, including Engineering, Manufacturing, Plantations and Finance.

Prior to taking over the stewardship of Commercial Credit, Mr. Egodage has held several top level management positions

in the finance industry. He was appointed as the Deputy Chief Executive Director of The Finance Company PLC in 2006.

Holding overall responsibility for the Company’s operations, while serving on the Boards of several Group Companies at

the same time, he led The Finance Company to declare the highest ever profits in over 70 years of operation, in what is

popularly referred to as the Billion Month. Other positions Mr. Egodage has held in reputed listed companies include Deputy

Manager - Corporate Finance of the Merchant Bank of Sri Lanka, where he was instrumental in restructuring the Plantations

sector, General Manager - Finance Planning and Administration - Kotagala Plantations PLC. and General Manager - Project

and Planning, Agalawatte Plantations PLC - both positions where he held key responsibilities for the overall direction of

the company. He also held key positions of responsibility in companies including Central Finance, Peoples Ventures and

Ceylon Pencil Company. He currently serves on the Board of Directors of BG Investments (Pvt) Limited.

An avid sportsman and a firm believer in the wisdom of an organisation with a bottom-heavy management strategy,

Mr. Egodage places strong emphasis on employee participation and empowerment, as well as a liberated corporate culture.

His continuing focus remains the Company’s strategic direction and its expansion into new markets, whilst facilitating its

continued growth and success.

Having acquired a BSc. Eng. (Hons.) Degree from the Univeristy of Peradeniya and initially embarking on a career in the

engineering field, he then set his sights on a career in management, earning a MBA from the University of Colombo. He

has since then gone on to earn numerous professional qualifications including FCMA, Dip.M(UK), ACIM and ASCMA. He

is undoubtedly one of the most qualified CEO’s in the Finance Industry today.

BOARD OF DIRECTORS AND MANAGEMENT


Mrs. G.R. Egodage - Executive Director

Address: No. 475/5, Elvitigala Mawatha, Colombo 05.

Mrs. Egodage joined Commercial Credit as an Executive Director following the Company’s management takeover in 2009.

She is presently a Director of B.G. Investments (Pvt) Limited and R.D.S. Bakers (Pvt) Limited.

Mrs. Egodage began her career as an assistant lecturer at the Department of Chemistry, University of Peradeniya. As her

career advanced she collaborated on many research projects before joining Ansell Lanka, where she served for a period

of 4 years as a Process Chemist. From 1996 to 2005 she held the post of Assistant Director for Quality Control and Quality

Assurance at the Coconut Development Authority.

Following this, Mrs. Egodage switched careers, putting her qualification in Business Administration to good use as she

took up a position as the Managing Director of R.D.S. Bakers (Pvt) Limited. Here she quickly gained a reputation for skilled

management ability and an adherence to the highest ethical standards, and was instrumental in developing the popular

brand ‘Wonder B’ which R.D.S. Bakers is now synonymous with.

She brings these same skills and dedication to her role as Executive Director of Commercial Credit and is an integral

component of the Company’s success story.

She holds a BSc. Special Degree with a Major in Chemistry from the University of Peradeniya and a Postgraduate Diploma

in Business Administration from the Open University of Sri Lanka.

Mr. G.G. Hemachandra - Non-Executive Director

Address: No. 454/23, Piachaud Gardens, Kandy

A founder Director of the Company, Mr. Hemachandra is the Chairman of Hemachandras (Kandy) Limited, one of the

oldest and well-known jewellery businesses in Kandy. He is also a Director of Hotel Hilltop, Kandy.

A doyen in his industry with over 45 years of experience in the field of commerce, he has been indispensable in advising

and guiding the Company to reach the heights it has today.

Mr. C. Perera - Independent Non-Executive Director

Address: No. 10, Gonawala, Kelaniya.

During a career spanning over 28 years as an Attorney-at-Law of the Supreme Court, he has gained a vast amount of

expertise in all areas of the Law, including Corporate Law, Banking Law, Leasing & Finance Law, Capital Market & Fund

Management Services, Corporate Debt Financing Services, and Intellectual Property Advisory Services.

A well-respected figure in legal circles, Mr. Perera is currently a partner of Legal Inc. - Attorneys-at-Law & Notaries Public.

Prior to this he served as the Head of Legal Department at Merchant Bank of Sri Lanka Limited for a period of 10 years, as

well as at LB Finance PLC and The Finance PLC as a legal officer.

He currently serves on the Boards of Management Systems (Pvt) Limited, Thilanka Hotels (Pvt) Limited, Eurocenter DDC

(Pvt) Limited and Winall (Pvt) Limited.

He has passed the Certificate Course on Modern Banking conducted by the Postgraduate Institute of Management,

Sri Jayewardenepura University.



Mr. S. K. Gunarathne - Independent Non-Executive Director

Address: No. 38, Panawala, Eheliyagoda

Mr. Gunarathne is an Independent Consultant in Energy Conservation and Management, and serves as an Independent

Non-Executive Director at Commercial Credit. Mr. Gunarathne has worked in senior engineering positions at some of the

leading apparel companies such as MAS Holdings and Brandix, as well as in the Sugar and Plantation Industry.

With over 22 years of experience in the fields of Engineering and Energy Management, he has participated in many project

teams and forums, involved in construction and commissioning of many mass scale manufacturing facilities for Plywood

and Textile Industry.

Further he played a key role in the technical teams, who visited United Kingdom, Malaysia, China and India in order to

evaluate the suitability of adaptation of new Machinery and Technologies for the Sri Lankan industry.

He holds a National Diploma in Engineering Sciences specialising in Mechanical Engineering. He is currently a Director of

Best Cars Lanka (Pvt) Limited and SK Consultants (Pvt) Limited.

Mr. T. Someswaran - Independent Non-Executive Director

Address: No. 3/1, St. Michael’s Apartment, 4, Alfred House Gardens, Colombo 03.

Mr. Someswaran is a Chartered Accountant in practice for more than 35 years and recently retired from the post of Senior

Partner of SJMS Associates, a firm of Chartered Accountants, which is associated with Deloitte in Sri Lanka. He serves on

the Audit Committee of The Institute of Chartered Accountants of Sri Lanka and Serendib Lands (Pvt) Limited.

He also serves on the Director Board of Panasian Power PLC and European Chamber of Commerce, Equity Based

Community Support and Training, Business Council of Indonesia of the Ceylon Chamber of Commerce and the Vice-

President of The International Chamber of Commerce.

He is a member of Tax Faculty, Organisation for Professional Association, International Fiscal Association and Sri Lanka

Institute of Directors. He is a Fellow Member of CMA and a member of its Governing Council.

The Chairperson nor any Director of the Company is or was not involved in any of the following events:

A petition under any bankruptcy laws filed against such person or any partnership in which he/she was a partner or any

corporation of which he/she was an Executive Officer;

Conviction for fraud, misappropriation or breach of trust or any other similar offence which the CSE considers a

disqualification.



5.2 Management TeamMr. Roshan Sanjaya Egodage Managing Director/Chief Executive Officer

Address: No. 475/5, Elvitigala Mawatha, Colombo 05

(Please refer to Director Profile)

Mr. C. Prasanna WickramasingheDeputy General Manager - Information Technology

Mr. C. Prasanna Wickramasinghe is currently employed at Commercial Credit Limited as the Deputy General Manager -

Information Technology.

One of the most skilled and qualified professionals in the industry, Mr.Wickramasinghe leads Commercial Credit’s IT

department, which boasts of one of the best state-of-the-art IT systems in the Finance Industry.

One of the Company’s longest serving employees, Mr.Wickramasinghe is a Chartered IT Professional and a member of

the British Computer Society – MBCS CITP. He has completed a MSc. in Information Technology at the Charles Stuart

University, Australia, and in addition holds both IDM – Diploma in Programming in IT – SL, and ACS - Advanced Diploma

in IT – Australia.

Mr. K.L.A. SenevirathneDeputy General Manager - Operations

Mr. K.L.A.Senevirathne is currently employed at Commercial Credit Limited as a Deputy General Manager - Operations.

He has also worked for both Kelani Cables Limited and The Finance PLC, where he held the position of an Assistant

General Manager. He has more than 25 years of Finance Industry experience.

His self-motivation and vision of empowerment is a key contribution and motivator of the Company’s ethos, which is to

cultivate and encourage a new breed of corporate workforce, which will take the country’s corporate culture into a new era

of incentive, impetus and inspiration.

Mr. J.L.A.S. PriyankaraDeputy General Manager - Operations

As the Deputy General Manager - Operations at Commercial Credit, Mr. Priyankara is responsible for a wide range of the

Company’s day-to-day activities as well as holding joint responsibility for implementing its strategic focus.

Mr. Priyankara brings with him over 22 years of experience in the industry in various key positions, which enables him to

discharge his duties with the highest levels of efficiency and skill.

Mr. Priyankara’s skill in working with leaders and teams to set goals and his effectiveness in motivating teams to achieving

these goals, thereby linking the Company’s vision and strategy with its growth imperatives is vital in Commercial Credit’s

market growth plans and aspirations.

He is a Bachelor of Arts (Hons.), Graduated from the University of Ruhuna and has also completed his MBA at the

University of Manipal - India.



Mr. P. Madhawa EdussuriyaDeputy General Manager - Sales & Marketing

As Deputy General Manager - Sales & Marketing, Mr. Edussuriya heads Commercial Credit’s Fixed Deposits and Micro-

finance functions. With over 15 years of experience in a wide range of senior management positions in industries ranging

from Finance and Marketing to Automobiles and Commercial Forestry, his multi-dimensional view and understanding of

business strategies and concepts has proved valuable and insightful to the Company’s operations.

Previous positions he has held include Director, Ceylinco Grameen Group. and Director - Head of Investments at Ceylinco

Grameen Credit Company Limited where his responsibilities included establishing marketing and sales objectives and

strategising and executing business development and promotional activities. Under his stewardship, the Company evolved

as a more responsive and market-driven organisation, with a significantly increased deposit base. He was Director - CEO

of Need wood Plantation Limited, where he contributed to the commercial forestry and organic tea plantation.

Mr. Edussuriya is a highly qualified professional and an Associate Member of the Institute of Professional Financial

Managers (UK), Micro Finance Association (UK) and United Kingdom Association of Professionals. Mr. Edussuriya is also

qualified in Microfinance and Fund Management from the Institute of Bankers Sri Lanka (IBSL). He also holds numerous

international professional qualifications pertaining to management, finance and sales and marketing, and is currently

reading for MBA in Australian Institute of Business Management (AIBA).

Mr. Andrew SamuelDeputy General Manager - Corporate Planning

Andrew Samuel joined Commercial Credit Limited as the Deputy General Manager - Corporate Planning in February 2010.

In this capacity, he heads both Human Resources and Corporate Planning. With 17 years of diverse experience and

knowledge, he brings the understanding of the business‘ needs to the design and facilitation of transformational programmes.

Prior to his current position, he had a long and successful career in the Plantations Industry in several key management

positions. Having joined the sector as a Trainee Assistant Manager in 1994 at Mackwoods Plantations Pvt. Limited, his

natural capability, intelligence and enthusiasm earned him distinction and recognition, as well as the position of Manager

within just seven years. He joined Aspic Plantations Pvt. Limited in the capacity of CEO in 2008, and was also a Director of

several Group Companies, later moving on to Deranayigala Plantations Pvt. Limited where he held the position of Director/

CEO. He was also a Director of Next Finance.

During his career he has managed several noteworthy achievements, including initiating and implementing participatory

management structures, achieving record crops in both Tea and Rubber Estates and facilitating significant estate

development projects.

An Old Boy of Trinity College, Mr.Samuel is currently completing the final research report for his MBA from the University

of Peradeniya. He is an Associate Member of the National Institute of Plantation Management (AIPM), and a Fellow of the

Chartered Institute of Management Accountants (FCMA).

The Chief Executive Officer nor any person nominated to become the Chief Executive Officer is or was not involved in the

following events:

Petition under bankruptcy laws filed against such person or any partnership in which he was a partner or any corporation

of which he was an Executive Officer.

Convicted for fraud, misappropriation or breach of trust or any other similar offence, which the Exchange considers a

disqualification.



6.0 STATUTORY AND GENERAL INFORMATION

6.1 Corporate Governance PracticesThe Board of Directors understands the necessity and the importance of adhering to Corporate Governance practice

and thereby committed to ensure that a sound Corporate Governance practice is implemented within the Company in

compliance with the regulatory requirements of the Central Bank of Sri Lanka Non-Banking Supervision Division, the CSE

and Corporate Best Practices. The Company has implemented systems and processes to ensure balance between Risk

and Rewards and reduce any systemic failures.

Composition of the Board

The Board of Directors of the Company comprises seven Directors consisting three Executive Directors, one Non-Executive

Director and three Non-Executive Independent Directors.

Audit Committee

The Audit Committee is responsible for the reviewing of the functions of the internal finance and operational controls in the

Company and ensuring the effectiveness of such controls. It also monitors all audit activities and ensures compliance with

Financial Standards and Statutory Regulations.

Mr. T. Someswaran Non-Executive Independent Director Chairman

Mr. C. Perera Non-Executive Independent Director Member

Mr. S. Gunarathne Non-Executive Independent Director Member

Remuneration Committee

The Remuneration Committee sets the guidelines for the remuneration policy for the senior management staff of the

Company and recommends to the Board the remuneration payable to the CEO and the Executive Directors. The Committee

works closely with the senior management team in the development of the Performance Management Policies of the

Company. Remuneration Policies which are formulated by the above Committee will enable to attract the best people in

the Industry to the Company and it aims to enhance the level of motivation and job satisfaction of current employees.

Mr. S. Gunarathne Non-Executive Independent Director Chairman

Mr. T. Someswaran Non-Executive Independent Director Member

Mr. G. Hemachandra Non-Executive Director Member

Aggregate of the emoluments including bonus and profit sharing payments made to Executive and Non-Executive Directors

of the Company for the Financial Year 31st March 2010 was Rs. 6,967,906/-.

An estimate of the aggregate emoluments including bonus and / or profit sharing payments payable to the Directors for the

current Financial Year 2010/11 would be approximately Rs. 7,107,264/-.

6.2 Litigation, Disputes and Contingent LiabilitiesThere are no material legal, arbitration or mediation proceedings as at 15th February 2011, which may have had a

significant effect on the financial position or profitability of the Company.

Hirer of a leasing contract has filed a case against Commercial Credit at District Court, Anuradhapura. Case No. is 24082/M

and next calling date is 20/04/2011, for Answer. Customer has not been able to repay as the vehicle has met with an

accident while it was not insured. However, as per the lease contract it’s the hirer’s responsibility to insure the vehicle.

There have been no penalties imposed by Regulatory or State Authorities on the Company. The Company does not have

any contingent liabilities that would affect its current and future profits.


6.3 Other DisclosuresPurchases of shares made by the Directors during the year immediately preceding the date of the issue of the Introductory

Document -

Right Issue Share Purchases - 1st December 2010No. of shares Amount (Rs.)

Messrs B. G. Investments (Pvt) Limited 8,783,397 87,833,970Mrs. Vagdevi Wimalangi Fernando 300,000 3,000,000Mr. George Ginendra Hemachandra 100,000 1,000,000

6.3.1 Interest of Directors

The Directors hold no interests in any assets acquired, disposed of or leased by the Company during the two years

preceding this issue of shares and in the two years succeeding the issue of shares.

6.3.2 Management Agreements

There are no Management Agreements in place as at the date of this Introductory Document and no such Agreements are

under consideration.

6.3.3 Taxation

In accordance with the provisions of the Inland Revenue Act No. 10 of 2006 and its subsequent amendments, Commercial

Credit Limited is liable to corporate income tax.

The Company is liable to VAT, under the Value Add Tax Act No.13 of 2002, as amended by the Value Added Tax

Amendments Act No.8 of 2006. The Company is also liable to pay Financial VAT at a rate of 20 % up to December 2010

and at the rate of 12 % from 1st January 2011 for its value addition on Financial VAT liable turnover.

The Company is liable to pay ESC at the zero decimal one per centum (0.1%), under the Schedule to the Economic Service

Charge Act No. 13 of 2006, as amended. The Company is entitled to claim ESC against income tax liability and unclaimed

ESC can be carried forward to five subsequent years of assessment.

6.3.4 Details of Commission Paid

No commission has been paid in the two (02) years preceding the Introduction for subscribing or agreeing to subscribe or

procuring or agreeing to procure subscriptions for any shares of the Company.

6.3.5 Shareholding of Directors as at 07th March 2011Name of shareholder Shareholding

B. G. Investments (Pvt) Limited

(Directors nominated by B.G. Investments to the Board

Mr. R.S. Egodage and Mrs. G.R. Egodage) 77.09%Mrs. V.W. Fernando 7.11%Mr. G.G. Hemachandra 3.41%

6.3.6 Material Contracts

The Company has not entered into any material contracts other than those contracts entered into in the ordinary course

of business.

STATUTORY AND GENERAL INFORMATION


6.3.7 Rights and Obligations Attached to the Shares

Ordinary voting shares of the Company will have the right to vote, the right to an equal share in any dividend that may be

declared by the Company and the right to an equal share in the distribution of the surplus assets of the Company in a liquidation.

6.3.8 The Introductory Document and the Articles of Association of the Company will be hosted in the www.cclk.lk,

www.cse.lk and www.kenangasl.com for a period of not less than fourteen (14) days.

6.4 Declaration By The DirectorsWe, the undersigned, who are named in the Introductory Document as Directors of Commercial Credit Limited, hereby

declare and confirm that we have read the provisions of the Companies Act No. 07 of 2007 and the Colombo Stock

Exchange Listing Rules and any amendments to it relating to the issue of this Introductory Document and that those

provisions have been complied with.

This Introductory Document has been seen and approved by us and we collectively and individually accept full responsibility

for the accuracy of the information given and confirm that provisions of the CSE Listing Rules and of the Companies Act

No. 7 of 2007 and any amendments to it from time to time have being complied with after making all reasonable enquiries

and to the best of our knowledge and belief, there are no other facts, the omission of which would make any statement

herein misleading or inaccurate.

(Sgd.) (Sgd.) (Sgd.)

Mrs. Vagdevi Fernando Mr. George Hemachandra Mr. Cecil Perera


Mr. S. Gunarathne Mr. T. Someswaran Mrs. G.R. Egodage

(Sgd.)

Mr. R.S. Egodage

At Kandy

5th April 2011

STATUTORY AND GENERAL INFORMATION


7.0 FINANCIAL STATEMENTS7.1 Accountant’s Report7.2 Unaudited Interim Financial Statements as at 31st December 20107.3 Audited Financial Statements as at 31st March 20107.4 Audited Financial Statements as at 31st March 20097.5 Audited Financial Statements as at 31st March 2008


7.1 ACCOUNTANT’S REPORT

28th March 2011

The Board of Directors

Commercial Credit Limited

No. 106, Yatinuwara Street

Kandy

Dear Sirs

ACCOUNTANTS’ REPORT FOR INCLUSION IN THE INTRODUCTORY DOCUMENT OF COMMERCIAL CREDIT LIMITED

INTRODUCTIONThis report has been prepared for the inclusion in the prospectus issued in connection with the Introductory Document.

We have examined the Financial Statements of the Commercial Credit Limited (the ‘Company’) and report as follows:

1. INCORPORATION AND OTHER REGISTRATIONS

The Company was incorporated in Sri Lanka on October 04, 1982 as a limited liability company under the Companies Act

No. 17 of 1982 and subsequently re-registered under the Companies Act No. 07 of 2007 with the objective of collecting

deposits and lending money to the general public.

The Company was registered under the Finance Companies Act No. 78 of 1988.

2. FINANCIAL STATEMENTS2.1 Five-Year Summary of Audited Financial Statements

A summary of the Company’s audited Income Statements, Balance Sheets, Statements of Changes in Equity and Cash

Flow Statements for the financial years ended 31st March 2006 to 31st March 2010, based on the audited Financial

Statements, are set out on pages 38 to 42 of the Introductory Document.

2.2 Audited Financial Statements for the year ended 31st March 2010

Our audit report on financial years 2007/08, 2008/09 and 2009/10 together with such Financial Statements comprising

the Balance Sheet and Income Statement, Statement of Changes in Equity and Cash Flow Statement along with the

accounting policies and notes thereon is given on page 62 to 151 of the Introductory Document.

2.3 Audit Reports

KPMG Ford, Rhods, Thornton & Co. has audited the Financial Statements for the year ended 31st March 2006 to 31st

March 2007. We have audited the Financial Statements of the Company for the year ended 31st March 2008 to 31st March

2010. Unqualified audit opinions have been issued for the financial years 2005/06, 2006/07 to 2007/08. Qualified opinions

have been issued for the financial years 2008/09 to 2009/10 as described on page 37 of the Introductory Document.

L M AssociAtesChartered aCCountants

30-2/1, Galle road,Colombo 06, sri Lanka.

tel : +94 (11) 2501677, 5667829, 5624303Fax : +94 (11) 2507522e-mail : Lmassociates.lk

Partners : P.e.a. Jayewickrema, M.B. Ismail, Ms. a.M.J. Patrick, t. Krishnakumar, Ms. s.L. Jayasuriya, d.s.W. andradi, G.J. david, Ms. F.M. Marikkar, Ms. M.s.J. henry, Ms. a.u.M. Keppetipola, M. thavaraj


ACCOUNTANT’S REPORT

2.4 Accounting Policies

The Financial Statements of the Company for the year ended 31st March 2006 to 31st March 2010 complied with the

Sri Lanka Accounting Standards, except for the qualification made on non-compliance with standards for the financial

years 2008/2009 to 2009/2010 as described on page 37 of the Introductory Document.

The accounting policies of the Company are stated in detail in the audited Financial Statements for the year ended

31st March 2010. During the period 1st April 2005 to 31st March 2010, there were no material changes in the accounting

policies of the Company except for the changes made to the accounting policies for measurement of Defined Benefit Plans

(2008/2009) and Deferred Tax Computation (2007/2008) to comply with Sri Lanka Accounting Standards, as detailed on

page 37 to the Introductory Document.

2.5 Revaluation of Property

The revaluation of the Company’s freehold land as at 31st March 2008 was based on a valuation carried out on

15th May 2008 by Mr. S.G. Fernando, Incorporated Valuer, who possesses appropriate qualifications and experience in

the valuation of properties in the relevant locations. The valuation, which conforms to valuation standards, was arrived at

by reference to market evidence of transaction processes for similar properties. The surplus arising from the revaluation

was transferred to the Company’s equity reserve.

2.6 Dividends

The Company declared dividends in respect of Ordinary Shares of the Company in the following financial year.

Year Net dividends declared (Rs.) Dividend per share (Rs.)

2006 2,200,000 1.582007 4,886,544 1.73

2.7 Events after the Balance Sheet Date

No circumstances have arisen since the balance sheet date which require adjustment or disclosure in the Financial

Statements other than: the Company issued 9,692,194 shares as rights to the existing shareholders as of 31st October

2010 in the proportion of two new ordinary shares for each ordinary share held by shareholders as at date, at the rights

issue price of Rs. 10/- per share.

Yours faithfully,

(Sgd.)

LM ASSOCIATES

Chartered Accountants

Colombo

28th March 2011




Accounting Policy ChangesYear Accounting Policy Changes

2005/06 There were no material changes.


2007/08 Except for the following there were no material accounting policy changes to the Financial Statements:

Deferred TaxesDeferred taxation is provided using the Balance Sheet method, providing for the temporary differences

between the carrying amount of assets and liabilities for financial reporting purposes and the amounts

used for taxation purposes. The amount of deferred tax provided is based on expected manner of

realisation or settlement of the carrying amounts of the assets and liabilities, using tax rates enacted or

substantively enacted by the reporting date.

Deferred tax assets including those relating to temporary tax effects of income tax losses and credits

available to carried forward are recognised only to the extent that is probable that future taxable profit will

be available against which the asset can be utilised. Deferred tax assets are reviewed at each reporting

date and are reduced to the extent that is no longer probable that related tax benefit will be realised.

2008/09 Except for the following there were no material accounting policy changes to the Financial Statements:

The accounting policies adopted are consistent with those of the previous financial year except where the

Group has made changes to be in compliance with Sri Lanka Accounting Standard No. 16 - ‘Employee

Benefits’ (Revised 2006, which is discussed below).

Measurement of Defined Benefit PlansDuring the year ended 31st March 2009, the Company changed its accounting policy for the

measurement of Retirement Gratuity (Defined Benefit Plan). The Company now performs the

computation based on Actuarial Valuation Method of SLAS 16 (Revised 2006).

The principal assumptions used in determining the post employment benefit liability for the Company are

shown below:

Staff turnover rate

Age 20 25 30 35 40 45 50Turnover (%) 10.00 10.00 10.00 7.50 5.00 2.5 1.00

Salary increase rate 11.00% Discount rate 14% Retirement age 55 years




Qualification made in Auditor’s ReportYear Qualification made in Audit Report

2005/06 Unqualified opinion.



2008/09 No other qualification reported except for the following:

We were unable to satisfy ourselves as to the accuracy of the following balances due to non availability

of supporting evidence:

Dealer Advance Branches Cr. 4,318,043Suspense Clearance Cr. 665,896Receivable GST Dr. 1,060,890Interest SFD for the year Cr. 1,113,175

A significant difference was noted with regard to unearned income between the credit base and the

ledger balance of the Company amounting to Rs. 35,274,234/- as at 31st March 2009.

2009/10 No other qualification reported except for the following:

As discussed in Note 4.18, profit on sale of real estate under easy payment scheme amounting to

Rs. 17,272,424/- has been recognised upon entering into the contract of agreement to sell. However, the

equitable interest and legal title of the property are transferred to the buyer upon settlement of 100% of the

instalment. In our opinion, the Company had not transferred to the buyer, the significant risk and rewards

of ownership of the land, and retains continuing managerial involvement to the degree usually associated

with ownership and effective control of the land at the time of entering into an agreement to sell, which is

not in compliance with Sri Lanka Accounting Standard 29 - ‘Revenue Recognition’. Accordingly, profit for

the year has been overstated by the said amount.

As discussed in Note 35 C, assessment of net realisable value of real estate stock was carried out as

at 31st March 2010 and the provision for fall in value amounting to Rs. 36,034,423/- has been adjusted

through reserves. In our opinion, it is not a prior period error in accordance with Sri Lanka Accounting

Standards 10 - ‘Accounting Policies, Changes in Accounting Estimates and Errors’. Therefore, profit for the

year has been overstated by the said amount.

As discussed in note 35 H and I, advance company tax amounting to Rs. 1,671,329/- and GST receivable

amounting to Rs. 1,060,890/- had been charged to retained earnings due to non availability of information.

In our opinion, it is not a prior period error in accordance with Sri Lanka Accounting Standards 10 -

‘Accounting Policies, Changes in Accounting Estimates and Errors’. Therefore, profit for the year has been

overstated by Rs. 2,732,219/-.

The Company has not maintained the minimum core capital as required by the Central Bank Direction

No. 1 of 2006 throughout the year.

The Audit Committee does not comprise solely of Non-Executive Directors as required by the Central Bank

Direction No. 3 of 2008.



Income Statement

For the year ended 31st March 2010 2009 2008 2007 2006Rs. Rs. Rs. Rs. Rs.

Revenue 425,466,094 350,461,448 249,126,276 183,165,909 124,398,395 Interest income 346,843,191 314,266,305 212,162,506 144,008,486 94,118,010 Direct interest cost (206,700,994) (187,599,538) (109,114,526) (67,202,631) (50,694,739)Net interest income 140,142,197 126,666,767 103,047,980 76,805,855 43,423,271 Net income from real estate 22,961,942 3,247,850 2,001,818 10,446,040 8,139,400 Other income 55,660,962 32,947,293 34,961,952 28,711,383 22,140,985 Net income 218,765,100 162,861,909 140,011,750 115,963,278 73,703,656

LessOperating ExpensesPersonnel costs 114,310,266 59,513,250 45,826,179 33,594,539 25,283,925 Premises, equipment &

establishment expenses 63,734,303 36,641,124 32,735,443 26,081,021 23,385,712 Provision for staff

retirement benefit cost 2,440,000 2,220,000 1,726,100 1,647,725 1,344,850 Provision for bad and

doubtful debt 33,768,762 41,470,910 14,165,417 3,741,436 4,521,465 Other overhead expenses 30,454,178 24,296,611 17,548,259 16,576,881 5,004,494

244,707,510 164,141,895 112,001,398 81,641,602 59,540,446 Net profit before taxation (25,942,410) (1,279,986) 28,010,352 34,321,676 14,163,210 Taxation 71,132,513 8,378,280 (3,478,091) 3,145,435 (1,247,407)Net profit for the year 45,190,103 7,098,294 24,532,261 37,467,111 12,915,803 Earnings per share 9.33 1.46 7.38 16.59 8.01

Proposed dividend per share – – 1.73 1.58 –



Balance Sheet

As at 31st March 2010 2009 2008 2007 2006Rs. Rs. Rs. Rs. Rs.

AssetsCash in hand and cash

at banks 49,438,469 12,577,606 5,342,523 4,984,732 7,928,781 Investment in Government

Securities 86,245,402 96,559,565 88,525,683 70,498,109 54,574,999 Short-term investments

with banks 39,712,372 11,170,312 8,407,748 8,197,264 7,711,898 Investments in dealing securities 55,084 55,084 55,084 55,084 55,084 Loans & advances 915,342,409 269,602,610 241,849,493 247,585,797 130,659,386 Net investment in lease 592,977,866 548,361,075 451,218,711 282,532,065 248,973,895 Trade & other receivables 229,152,308 185,229,829 86,468,736 48,869,597 46,831,238 Repossessed inventory 21,728,865 18,457,290 22,943,804 14,099,245 815,000 Deferred tax assets 121,445,236 36,993,319 28,615,039 32,093,130 26,236,074 Investments in real estates 44,777,434 43,156,700 57,569,582 54,428,679 54,043,801 Investment securities 201,900 201,900 201,900 201,900 201,900 Commissioner General

of Inland Revenue 7,913,443 15,795,511 8,860,370 3,615,605 4,353,050 Intangible assets 758,827 3,169,434 3,174,137 2,046,034 –Investment property 22,000,000 – – – –Leasehold right over land 3,441,270 3,486,550 3,532,213 – –Property & equipment 165,495,763 143,996,372 144,917,662 72,901,331 74,288,526 Total Assets 2,300,686,646 1,388,813,156 1,151,682,685 842,108,572 656,673,632

LiabilitiesBank overdraft 8,219,823 57,596,344 13,264,946 29,776,622 30,217,756 Deposits from customers 1,732,558,979 854,330,911 712,919,050 569,042,700 444,480,950 Trade & other payables 249,517,391 150,075,850 125,691,074 87,715,116 58,253,123 Long-term borrowings 59,814,550 81,591,713 66,867,578 26,069,700 25,088,744 Lease creditors 13,761,514 11,850,907 13,516,010 10,989,814 24,728,800 Retiring gratuity obligations 9,889,650 9,319,150 8,627,400 7,069,850 5,482,000

2,073,761,906 1,164,764,876 940,886,058 730,663,802 588,251,373

Shareholders’ FundStated capital 73,718,375 73,718,375 58,718,375 41,021,820 33,266,420 Revaluation reserve 74,603,594 74,603,594 74,603,594 17,341,132 17,341,132 Statutory reserve 50,294,760 50,294,760 50,294,760 45,294,760 18,294,760 General reserve 58,751,125 58,751,125 58,751,125 40,751,125 22,751,125 Retained earnings (30,443,114) (33,319,574) (31,571,227) (32,964,067) (23,231,178)

226,924,740 224,048,280 210,796,627 111,444,770 68,422,259 Total liabilities & shareholders’ funds 2,300,686,646 1,388,813,156 1,151,682,685 842,108,572 656,673,632

Figures in brackets indicate deductions.



Statement of Changes in Equity

Stated Capital Other Reserves

Stated Share Revaluation Statutory General Retained Total Capital Premium Reserve Reserve Reserve Earnings

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

As at 1st April 2005 as previously reported 13,266,420 – 17,341,132 12,368,521 15,343,326 405,901 58,725,300 Effect on adoption of revised SLAS 14 on income taxes – – – – – 31,388,573 31,388,573 Error correction - interests receivable – – – – – (1,180,057) –Error correction - future interests adjustments – – – – – (35,274,234) –Prior year adjustment for repossessed stocks written off – – – – – (18,153,126) (18,153,126)Restated balance as at 1st April 2005 13,266,420 – 17,341,132 12,368,521 15,343,326 (22,812,943) 71,960,747 Share issued 10,000,000 10,000,000 – – – – 20,000,000 Net profit for the year (restated) – – – – – 12,915,803 12,915,803 Transfer to general reserve – – – – 7,407,799 (7,407,799) –Transfer to statutory reserve – – – 5,926,239 – (5,926,239) –As at 31st March 2006 23,266,420 10,000,000 17,341,132 18,294,760 22,751,125 (23,231,178) 104,876,550 Net profit for the year (restated) – – – – – 37,467,111 37,467,111 Right issue 7,755,400 – – – – – 7,755,400 Transfer to general reserve – – – – 18,000,000 (18,000,000) –Transfer to statutory reserve – – – 27,000,000 – (27,000,000) –Dividend paid – – – – – (2,200,000) (2,200,000)As at 31st March 2007 31,021,820 10,000,000 17,341,132 45,294,760 40,751,125 (32,964,067) 147,899,061 Net profit for the year (restated) – – – – – 24,532,261 24,532,261 Right issue 17,696,555 – – – – – 17,696,555 Revaluation reserve – – 57,262,462 – – – 57,262,462 Transfer to general reserve – – – – 18,000,000 (18,000,000) –Transfer to statutory reserve – – – 5,000,000 – (5,000,000) –Prior year adjustments – – – – – 4,747,123 4,747,123 Dividend paid – – – – – (4,886,544) (4,886,544)As at 31st March 2008 48,718,375 10,000,000 74,603,594 50,294,760 58,751,125 (31,571,227) 247,250,918 Net profit for the year (restated) – – – – – 7,098,294 7,098,294 Share issue 15,000,000 – – – – – 15,000,000 Transferred to stated capital 10,000,000 (10,000,000) – – – – –Dividend paid – – – – – (7,345,749) (7,345,749)Write off – – – – – (1,500,892) (1,500,892)As at 31st March 2009 73,718,375 – 74,603,594 50,294,760 58,751,125 (33,319,574) 260,502,571 Error correction - write off of bogus contract – – – – – (2,856,641) (2,856,641)Error correction - receivable company advance tax (Note 35 F) – – – – – (1,671,329) (1,671,329)Error correction - GST receivable (Note 35 G ) – – – – – (1,060,890) (1,060,890)Error correction - write-down of real estate inventory to NRV (Note 35 H) – – – – – (36,034,423) (36,034,423)Error correction - suspense clearance account (Note 35 I) – – – – – (690,361) (690,361)Net profit for the year – – – – – 45,190,103 45,190,103 As at 31st March 2010 73,718,375 – 74,603,594 50,294,760 58,751,125 (30,443,114) 263,379,031




Cash Flow Statement


Cash flow from operating activitiesInterest and commission receipts 347,776,214 314,109,797 195,973,278 134,666,912 94,812,986 Interest payments (206,700,994) (187,599,538) (109,109,878) (67,202,631) (50,694,739)Other income 55,670,561 32,947,293 49,627,432 37,836,628 21,551,107 Operating expenditure (195,369,551) (95,464,240) (81,228,421) (62,309,558) (51,414,407)Operating profit before changes in operating assets (Note A) 1,376,229 63,993,312 55,262,411 42,991,351 14,254,947

(Increase)/decrease in operating assetsFunds advanced to customers (605,578,258) (263,125,864) (174,924,533) (166,576,382) (152,705,115)Sale of real estate 108,512,102 17,625,900 2,001,818 10,446,040 1,456,140 Purchase of real estate (127,358,891) – (3,140,903) (384,878) –Investment in treasury bills (21,583,413) (8,033,882) (18,027,574) (18,046,001) (11,649,512)Sundry debtors (69,042,998) (17,456,429) (15,329,129) (6,161,202) 28,133,541 Other current assets (20,024,024) (85,864,920) (31,205,019) (17,296,541) (2,788,511)Increase/(decrease) in operating liabilities (735,075,482) (356,855,195) (240,625,340) (198,018,964) (137,553,457)Deposits from customers 875,661,621 141,411,861 143,876,350 124,561,750 57,067,800 Other liabilities 103,526,005 (8,278,602) 36,361,194 25,500,354 32,835,480

979,187,626 133,133,260 180,237,544 150,062,104 89,903,280 Net cash from operating activities 245,488,373 (159,728,623) (5,125,385) (4,965,509) (33,395,230)Gratuity paid (1,869,500) (1,528,250) (168,550) (59,875) (225,250)Income tax paid (5,580,023) (6,935,141) (10,514,303) (7,844,694) –Net cash inflow/(outflow) from operating activities 238,038,850 (168,192,014) (15,808,238) (12,870,078) (33,620,480)

Cash flow from investing activitiesDividends received 8,167 7,000 3,019 4,837 3,826 Purchase of property & equipment (21,080,230) (14,164,328) (14,090,284) (6,731,327) (9,694,283)Proceeds from sale of property

& equipment 3,564,672 948,970 889,651 52,850 649,195 Net cash inflow/(outflow) from investing activities (17,507,391) (13,208,358) (13,197,614) (6,673,640) (9,041,262)



Cash flow from financing activitiesProceeds from right share issued – 15,000,000 17,696,555 7,755,400 20,000,000 Loan obtained 66,500,000 52,590,000 55,925,752 22,146,651 (5,761,751)Loan repayment (172,252,014) (41,909,067) (22,649,957) (10,175,881) 17,720,834 Dividends paid – (7,345,749) (4,886,544) (2,200,000) –Net cash flow from financing activities (105,752,014) 18,335,184 46,085,806 17,526,170 31,959,083 Net increase in cash & cash

equivalents 114,779,445 (163,065,187) 17,079,953 (2,017,548) (7,957,887)Cash & cash equivalents at

the beginning of the period (33,848,427) 485,327 (16,594,626) (14,577,077) (6,619,190)Cash & cash equivalents at the end of the period 80,931,018 (162,579,860) 485,327 (16,594,625) (14,577,077)

Reconciliation of cash & cash equivalentsCash in hand and cash in Bank 49,438,469 12,577,606 5,342,523 4,984,732 7,928,781 Short-term Investments 39,712,372 11,170,312 8,407,748 8,197,264 7,711,898 Bank overdrafts (8,219,823) (57,596,344) (13,264,946) (29,776,621) (30,217,756)

80,931,018 (33,848,427) 485,325 (16,594,625) (14,577,077)

Reconciliation of operating profit (Note A)Profit before taxation (25,942,410) (1,279,986) 28,010,352 34,321,676 14,163,210 VAT on financial institutions 7,174,160 7,462,032 4,516,912 5,870,518 2,434,396 Profit on sale of real estate (22,961,942) (3,247,850) (2,001,818) (10,446,040) (8,139,400)Depreciation 7,902,433 7,116,056 8,084,735 5,731,131 3,971,494 Bad debt reversed – – (194,622) – –Provision for bad and

doubtful debts 33,768,762 41,470,910 14,165,417 3,741,436 4,521,465 Investment income (8,167) (7,000) (3,019) (4,837) (3,826)(Profit)/loss on sale of fixed assets – 2,904,824 (755,646) 288,508 (215,796)Gratuity provision 2,440,000 2,220,000 1,726,100 1,647,725 1,344,850 Written off of real estate (996,608) 2,732,624 – – –Adjustments made due

to restatement – 4,621,702 1,714,000 1,841,234 (3,821,446)Cash flow from operating profit 1,376,229 63,993,312 55,262,411 42,991,351 14,254,947


7.2 UNAUDITED INTERIM FINANCIAL STATEMENTS AS AT 31ST DECEMBER 2010

44 Commercial Credit Limited Introductory Document

INCOME STATEMENT

31.12.2010 31.12.2009 31.3.2010(Restated) (Audited)

Note Rs. Rs. Rs.

Revenue 1 775,831,870 280,185,635 425,466,094 Interest income 2 642,111,223 243,309,627 346,843,191 Direct interest cost 3 (261,335,862) (149,202,601) (206,700,994)Net interest income 380,775,362 94,107,026 140,142,197 Net income from real estate 52,523,183 3,159,803 22,961,942 Other income 4 81,197,463 33,716,204 55,660,962 Net income 514,496,008 130,983,033 218,765,100

LessOperating expensesPersonnel costs 5 181,750,190 57,533,632 114,310,266 Premises, equipment and establishment expenses 63,139,828 27,785,653 63,734,303 Provision for staff retirement benefit cost 3,765,000 2,220,000 2,440,000

Provision for bad and doubtful debt 6 17,591,370 26,373,197 33,768,762 Other overhead expenses 62,236,278 16,243,304 30,454,178

328,482,667 130,155,785 244,707,510 Net profit before taxation 186,013,342 827,248 (25,942,410)

Taxation 7 (8,240,391) 0 71,132,513 Net profit for the year 177,772,951 827,248 45,190,103

Earnings per share 8 30.01 0.17 9.33 Proposed dividend per share 9 – – –


The Accounting Policies and Notes from pages 49 to 59 form an integral part of these Financial Statements.

For Nine months ended 31st December 2010 (Unaudited)

45Commercial Credit Limited Introductory Document

BALANCE SHEET

31.12.2010 31.03.2010 31.12.2009(Audited) (Restated)

Note Rs. Rs. Rs.

AssetsCash in hand and cash at banks 10 62,424,624 49,438,469 86,011,891 Investment in Government Securities 11 134,688,085 86,245,402 88,663,894 Short-term investments with banks 10,363,831 39,712,372 67,976,821 Investments in Dealing Securities 12 55,084 55,084 55,084 Loans and Advances 13 2,679,220,207 915,342,409 400,646,757 Net investment in lease 14 670,161,988 592,977,866 557,572,007 Trade and other receivables 15 224,325,038 229,152,308 220,544,008 Repossessed inventory 16 29,123,249 21,728,865 29,189,522 Deferred tax assets 17 121,445,236 121,445,236 36,993,319 Investments in real estates 18 54,152,953 44,777,434 41,214,032 Investment Securities 19 201,900 201,900 201,900 Commissioner General of Inland Revenue 20 4,465,066 7,913,443 19,828,832 Intangible assets 21 758,827 758,827 758,827 Investment property 22 22,000,000 22,000,000 –Leasehold right over land 23 3,441,270 3,441,270 3,486,550 Property & equipment 24 189,175,611 165,495,763 165,495,762 Total Assets 4,205,213,985 2,300,686,646 1,718,639,205

LiabilitiesBank overdraft 154,261,046 8,219,823 2,234,180 Deposits from customers 25 3,203,272,707 1,732,558,979 1,263,022,635 Trade and other payables 26 269,393,245 249,517,391 181,958,617 Long term borrowings 27 49,955,066 59,814,550 26,673,953 Lease creditors 28 13,415,241 13,761,514 8,318,930 Retiring gratuity obligations 29 13,297,050 9,889,650 9,506,150

3,703,594,354 2,073,761,906 1,491,714,465

Shareholders’ fundStated capital 30 170,640,315 73,718,375 73,718,375 Revaluation reserve 31 74,603,594 74,603,594 74,603,594 Statutory reserve 32 50,294,760 50,294,760 50,294,760 General reserve 33 58,751,125 58,751,125 58,751,125 Retained earnings 147,329,836 (30,443,114) (30,443,114)

501,619,630 226,924,740 226,924,740 Total liabilities and shareholders’ funds 4,205,213,985 2,300,686,646 1,718,639,205



I certify that the Financial Statements comply with the requirements of the Companies Act No. 07 of 2007. (Sgd.) Senior Manager Finance and MIS The Board of Directors is responsible for the preparation and presentation of these Financial Statements.

Approved and signed for and on behalf of the Board. (Sgd.) (Sgd.)Chairman Director 10th March 2011 10th March 2011

As at 31st December 2010 (Unaudited)


STATEMENT OF CHANGES IN EQUITY

Stated Capital Other ReservesStated Share Revaluation Statutory General Retained Total Capital Premium Reserve Reserve Reserve Earnings

(Restated)Rs. Rs. Rs. Rs. Rs. Rs. Rs.

As at 1st April 2009 (Restated) 73,718,375 – 74,603,594 50,294,760 58,751,125 (33,319,574) 224,048,280 Net profit for the Period – – – – – 827,248 827,248 As at 31st December 2009 73,718,375 – 74,603,594 50,294,760 58,751,125 (32,492,326) 224,875,528

As at 31st March 2010 73,718,375 – 74,603,594 50,294,760 58,751,125 (30,443,114) 226,924,740

New Right Issue 96,921,940 – – – – – 96,921,940 Net profit for the period – – – – – 177,772,951 177,772,951 As at 31st December 2010 170,640,315 – 74,603,594 50,294,760 58,751,125 147,329,836 501,619,630


Stated capital and share premium have been reclassified as stated capital in accordance with the Companies Act No. 07 of 2007.


Same Accounting Policies and methods of computation are followed in the interim Financial Statements as compared with the

most recent Audited Annual Financial Statements.(2009/10).



CASH FLOW STATEMENT

31.12.2010 31.12.2009 31.3.2010Rs. Rs. Rs.

Cash flow from operating activitiesInterest and commission receipts 642,041,967 242,492,476 347,776,214 Interest payments (241,106,534) (118,671,662) (206,700,994)Other income 92,899,046 34,014,333 55,670,561 Operating expenditure (319,742,264) (118,234,751) (195,369,551)Operating profit before changes in operating assets (Note A) 174,092,215 39,600,396 1,376,229

(Increase)/decrease in operating assetsFunds advanced to customers (1,550,807,154) (140,007,225) (605,578,258)Sales of real estate 157,472,102 6,085,325 108,512,102 Purchase of real estate (236,110,553) (50,943,556) (127,358,891)Investment in Treasury Bills (19,255,086) (10,851,904) (21,583,413)Sundry debtors (85,704,317) (6,820,533) (69,042,998)Other current assets (170,615,124) (6,802,321) (20,024,024)Increase/(decrease) in operating liabilities (1,905,020,131) (209,340,214) (735,075,482)Deposits from customers 1,471,195,211 387,889,908 875,661,621 Other liabilities 10,038,246 7,030,255 103,526,005

1,481,233,457 394,920,164 979,187,626 Net cash from operating activities (249,694,460) 225,180,346 245,488,373 Gratuity paid (357,600) (1,638,000) (1,869,500)Income tax paid (12,076,089) (6,718,764) (5,580,023)Net cash inflow/(outflow) from operating activities (262,128,149) 216,823,582 238,038,850

Cash flow from investing activitiesDividends received 8,755 8,167 8,167 Purchase of property, plant & equipment (34,391,809) 0 (21,080,230)Proceeds from sale of property, plant & equipment 8,183,847 1,097,190 3,564,672 Net cash inflow/(outflow) from investing activities (26,199,207) 1,105,357 (17,507,391)



CASH FLOW STATEMENT

31.12.2010 31.12.2009 31.3.2010Rs. Rs. Rs.

Cash flow from financing activitiesProceeds from right share issued 96,921,940 0 –Loan Obtained 113,000,000 66,500,000 66,500,000 Loan Repayment (83,968,193) (91,480,232) (172,252,014)Dividends paid – (7,345,749) –Net cash flow from financing activities 125,953,747 (32,325,981) (105,752,014)

Net increase in cash and cash equivalents (162,373,609) 185,602,958 114,779,445 Cash and cash equivalents at the beginning of the period 80,931,018 (33,848,427) (33,848,427)Cash and cash equivalents at the end of the period (81,442,590) 151,754,531 80,931,018

Reconciliation of cash and cash equivalentsCash in hand and cash in bank 62,424,624 86,011,891 49,438,469 Short-Term Investments 10,393,831 67,976,821 39,712,372 Bank Overdrafts (154,261,046) (2,234,180) (8,219,823)

(81,442,590) 151,754,532 80,931,018

Reconciliation of operating profit (Note A)Profit before taxation 187,121,515 9,305,496 (25,932,810)VAT on financial institutions 17,562,547 4,399,872 7,164,561 Profit on sale of real estate (52,523,183) (3,159,803) (22,961,942)Depreciation 5,046,300 5,046,300 7,902,433 Provision for bad and doubtful debts 17,591,370 22,178,254 33,768,762 Investment income (8,755) (8,167) (8,167)(Profit)/loss on sale of fixed assets (4,462,579) 13,444 –Gratuity provision 3,765,000 1,825,000 2,440,000 Written off of real estate – 0 (996,608)Cash flow from operating profit 174,092,215 39,600,396 1,376,229





NOTES TO THE FINANCIAL STATEMENTS

31.12.2010 31.12.2009 31.3.2010Rs. Rs. Rs.

1. RevenueInterest income (Note 2) 642,111,223 243,309,627 346,843,191 Other operating income (Note 4) 81,197,463 33,716,204 55,660,962 Net income from real estate 52,523,183 3,159,803 22,961,942

775,831,870 280,185,635 425,466,094

2. Interest IncomeLeasing - vehicle 142,154,505 136,410,036 183,457,641 Leasing - machinery 29,888,443 18,494,589 24,418,717 Consumer credit loans 4,583,381 12,831,074 15,706,013 Motor credit loans 224,144,164 20,509,487 46,861,283 Long-term loans 2,104,580 6,000,039 7,097,858 Short-term loans 4,653,342 2,495,527 3,918,717 Personal loans 13,909,801 32,386,343 40,882,969 Pawning 43,754 – 5,422 Motor finance 127,468,021 – 1,898,253 Motor plus 2,443,166 – 44,616 CCL cash loans 68,608,820 365,763 5,703,288 Land finance 11,824,649 1,789,922 2,978,433 Short-term investments 10,284,598 12,026,847 13,869,981 Total interest income 642,111,223 243,309,627 346,843,191

3. Direct interest costFixed deposits 243,094,840 130,635,433 184,915,816 Savers’ deposits 2,226,174 1,337,293 1,844,496 Borrowings 16,014,848 17,229,875 19,940,682

261,335,862 149,202,601 206,700,994

4. Other incomeDividend income 8,755 8,167 8,167 Profit on sale of property, plant & equipment 4,462,579 – 956,349 Service charges 18,386,853 2,029,388 9,723,969 Rent income – 990,000 1,320,000 Real estate other income 2,443,960 41,592 1,512,695 Commission income on insurance 1,266,569 276,379 1,592,172 Bad debt recoveries 1,719,128 863,046 955,062 Profit on repossessed Item – 829,191 –Documentation charges 9,112,280 2,629,914 3,041,784 Default interest 39,066,866 22,051,215 30,258,227 Other charges 4,725,440 3,981,887 6,273,123 Commission from Western Union Money Transfers 5,034 14,427 18,414

Discount on Purchase – 1,000 1,000 81,197,463 33,716,204 55,660,962




31.12.2010 31.12.2009 31.3.2010Rs. Rs. Rs.

5. Provision for bad and doubtful debtsConsumer credit 3,558 2,311,665 3,558 Motor credit 1,000,266 2,982,595 1,920,266 Term loans 355,253 168,939 355,253 Repossessed stock 943,395 823,063 3,943,395 Leases 3,233,637 4,697,968 14,031,029 Personal loan (487,385) 4,008,070 (487,385)Short-term loan 11,038,239 11,380,897 11,038,239 Repossessed stock 1,504,407 0 2,964,407

17,591,370 26,373,197 33,768,762

6. Net profit before taxationNet profit before taxation is stated after charging all expenses including the following:

31.12.2010 31.12.2009 31.3.2010Rs. Rs. Rs.

Directors’ remuneration 6,251,704 5,694,253 6,967,906 Salaries 93,214,957 27,754,907 62,958,934 EPF 11,531,100 3,942,139 6,860,269 ETF 2,933,208 787,277 1,543,659 Auditors’ remuneration 338,650 40,313 561,751 Donations 261,324 72,777 116,150 Corporate social responsibility 26,729 29,987 125,736 Commission paid to brokers 811,924 2,767,041 3,749,820 Legal expenses 217,326 196,560 566,760 Depreciation 5,046,300 5,046,300 7,902,433

7. TaxationThe Company is liable for income tax at the rate of 35% on taxable income.

8. Earnings per shareThe basic earnings per share have been calculated by dividing the profit/loss for the period attributable to the equity

holders of the Company, by the weighted average number of ordinary shares in issue during the NINE MONTHS ENDED

31ST DECEMBER 2010, as per the requirements of the Sri Lanka Accounting Standard 34 -”Earnings per Share”.

31.12.2010 31.12.2009 31.3.2010Rs. Rs. Rs.

Profit/loss attributable to the equity shareholders used as the numerator 177,772,951 827,248 45,190,103 Number of shares exist for entire year 4,846,097 4,846,097 4,846,097 Share issued during the year 9,692,194 0 0 Weighted average number of ordinary shares outstanding during the period used as the denominator 5,923,007 4,846,097 4,846,097 Earnings/(loss) per share (Rs.) 30.01 0.17 9.33



9. Dividend per shareNo interim dividend has been declared by the Company.

31.12.2010 31.12.2009 31.3.2010

Rs. Rs. Rs.

10. Cash in hand and cash at banksPetty cash 1,830,316 685,958 1,139,522 Cash at banks 60,594,309 85,325,934 48,298,947

62,424,624 86,011,891 49,438,469

11. Investment in the Government SecuritiesGross value 137,558,173 89,906,145 88,297,236 Unearned income (2,870,088) (1,242,251) (2,051,834)

134,688,085 88,663,894 86,245,402

12. Investments in Dealing Securities

No. ofshares

Cost as at31.12.2010

Marketvalue as at31.12.2010

No. of shares

Cost as at 31.03.2009


Quoted companiesPeoples’ Merchant Bank PLC 100 625 – 100 625 –Vanik Incorporation PLC 218 108 – 218 108 –Hatton National Bank PLC -Voting 770 25,145 144,953 385 25,145 30,030 Hatton National Bank PLC - Non-voting 214 6,786 29,960 107 6,786 4,146 Sampath Bank PLC - Voting 341 13,420 75,702 310 13,420 26,582 The Finance Company PLC 648 9,000 11,340 648 9,000 14,824

55,084 261,955 55,084 75,582

13. Loans and Advances31.12.2010 31.12.2009 31.3.2010

(Audited)Rs. Rs. Rs.

Consumer credit 13,001,860 32,320,187 25,298,810 Motor credit 1,858,721,109 284,562,873 884,439,970 Staff loans 11,176,322 8,551,993 3,728,991 Reschedule 41,188,692 4,126,129 3,984,916 CCL cash loan 582,507,000 36,531,282 190,986,754 Microfinance 1,013,177,571 – 55,293,200 Term loans 272,808,501 177,399,845 187,592,869 Pawning 236,346 – 595,482 Stock Control Mq Active 352,340 – –Rescheduled contracts (3,025,126) 55,010 279,808

3,790,144,615 543,547,319 1,352,200,800 Advance Rentals (931,295) – (206,783)Provision for bad debt (Note -13.1) (9,074,223) (7,357,646) (9,074,223)Unearned income (Note -13.2) (1,100,918,890) (135,542,916) (427,577,384)

2,679,220,207 400,646,757 915,342,409




31.12.2010 31.12.2009 31.3.2010(Audited)

Rs. Rs. Rs.

13.1 Provision for bad debtsBalance at the beginning of the year 7,357,646 10,805,633 7,357,646 Provision for the year 972,889 22,949,879 972,889 Provision transferred to legal repossessed provision – (3,484,722) –Write (off)/back during the year 743,688 (22,913,144) 743,688 Balance at the end of the year 9,074,223 7,357,646 9,074,223

13.2 Unearned incomeBalance at the beginning of the year 427,577,384 64,365,717 64,365,717 Originated during the year 435,855,255 84,284,189 435,855,255 Amount recovered 237,486,251 (13,106,990) (72,643,587)Balance at the end of the year 1,100,918,890 135,542,916 427,577,384

14. Lease Balance at the beginning of the year 935,877,125 852,811,995 852,811,995 Leases granted during the year 602,299,150 (6,772,400) 424,963,130 Lease rentals due during the year (481,839,320) 5,417,920 (341,898,000)

1,056,336,955 851,457,515 935,877,125 Initial rental received (28,850,460) (27,726,940) (29,251,290)

1,027,486,495 823,730,575 906,625,835 Unearned income (Note 14.1) (327,541,350) (250,671,672) (284,895,071)Provision for bad debts (Note 14.2) (29,783,158) (15,486,896) (28,752,899)

670,161,988 557,572,007 592,977,866

Receivable within one year 283,098,444 228,518,075 283,098,444 Receivables after one year 387,063,544 329,053,932 309,879,422

670,161,988 557,572,007 592,977,866

14.1 Unearned incomeBalance at the beginning of the year 284,895,071 260,850,674 260,850,674 Originated during the year 224,159,502 255,237,029 224,159,502 Amount recovered (181,513,223) (265,416,031) (200,115,105)Balance at the end of the year 327,541,350 250,671,672 284,895,071

14.2 Provision for bad debtBalance at the beginning of the year 15,486,896 8,533,448 15,486,896 Provision for the year 21,781,239 14,697,968 21,781,239 Write off during the year (765,026) (781,776) (765,026)Provision transferred to legal repossessed (6,719,951) (6,962,744) (7,750,210)Balance at the end of the year 29,783,158 15,486,896 28,752,899




31.12.2010 31.12.2009 31.3.2010Rs. Rs. Rs.

15. Trade and other receivablesRental receivables on loans, advances and leases (Note 15.1) 205,145,377 181,022,289 173,346,688 Other receivables (Note 15.2) 19,179,661 39,521,719 55,805,620

224,325,038 220,544,008 229,152,308

15.1 Rental receivables on loans, advances and leasesConsumer credit 7,222,983 12,038,552 10,037,809 Leasing 68,453,279 93,047,519 95,619,211 Lease purchase 30,508,462 23,097,958 21,032,346 Motor credit 49,633,765 10,358,119 13,566,471 Short-term loan 17,998,581 22,454,643 14,083,286 Long-term loan 13,026,145 11,553,398 12,450,993 Land finance 746,541 446,298 486,243 Personal loan 13,203,695 16,954,450 13,816,444 Project finance 1,032,243 2,559,771 3,098,412 Motor plus 415,251 – 16,145 Receivable-Mq 26,732 – –Stock Repossessed - Ps – – –CCL cash loans 15,918,830 354,417 1,717,075 Future interest adjustment – – –Other interest receivables – – –

218,186,505 192,865,123 185,924,434 Interest in suspense (13,041,129) (11,842,834) (12,577,746)

205,145,377 181,022,289 173,346,688

15.1.1 Interest in suspenseBalance at the beginning of the year 12,577,746 4,814,785 5,114,785 Suspended during the year 9,225,772 8,475,995 9,225,772 Amount recovered during the year (8,762,389) (1,447,946) (1,762,811)Balance at the end of the year 13,041,129 11,842,834 12,577,746

15.2 Trade and Other ReceivablesAdvances, deposits and prepayments (18,470,404) 6,499,422 25,471,812Goods and Services Tax (GST) – 1,060,890.00 –Value Added Tax (VAT) 15,515,914 16,100,527 15,774,656 Interest receivable on fixed deposits and Treasury Bills 451,489 1,205,433 518,890 Stock of stationery 4,942,939 881,107 1,302,790 Receivable from ‘Guild Fund’ – – 2,485,637 Other receivables 16,739,724 13,774,340 10,251,835

19,179,661 39,521,719 55,805,620




31.12.2010 31.12.2009 31.3.2010Rs. Rs. Rs.

16. Repossessed inventoryGeneral inventory 46,624,627 36,435,491 38,858,673 Legal inventory 32,267,816 21,696,256 21,153,205

78,892,443 58,131,748 60,011,877 Provision for general stock (Restated) (17,511,587) (8,661,891) (15,217,328)Provision for legal stock (Restated) (Note 16.1) (32,257,607) (20,280,335) (23,065,684)

29,123,249 29,189,522 21,728,865

16.1 Provision for repossessed legal stockBalance as at the beginning of the year 26,408,050 10,533,023 14,330,856 Transferred from/to the bad and doubtful debt provision 5,915,626 13,235,090 8,800,897 Write off during the year (66,069) (3,487,778) (66,069)Balance as at the end of the year 32,257,607 20,280,335 23,065,684

17. Deferred tax assetsBalance as at the beginning of the period 121,445,236 36,993,319 36,993,319 Amount released/(originated) during the year – – 84,451,917 Balance as at the end of the period 121,445,236 36,993,319 121,445,236

In arriving at the temporary differences for deferred tax calculation, the cumulative tax losses have been recognised as an

asset since future taxable profit will be available against which the unutilised tax losses can be utilised according to the

tax plan of the company.

18. Stocks of Real estates31.12.2010 31.12.2009 31.3.2010

Rs. Rs. Rs.

Property at Mahakanda (Uplands) 58,573 2,989,890 272,273 Property at Thalathuoya (Green Village) 918,051 3,687,348 918,051 Property at Lagundeniya (Peak View Garden) 1,003,213 19,441,113 1,003,213 Property at Wariyagala (Park Land) 634,286 3,423,603 517,381 Property at Arambehena (Isuru Uyana) 187,888 (808,720) 187,888 Property at Wariyagala (Misty Groove) 292,380 1,752,915 189,335 Property at Malkaduwawa 1,211,811 9,953,535 1,166,311 Labeema Project 583,799 – 6,252,045 Thithawella Project 2,067,800 774,348 4,820,232 Other Lands Projects 24,467,141 – 21,659,953 Wariyapola Project 210,312 – 2,030,674 Hanhamuna Project 8,739,734 – 5,760,079 Mawathagama Project (87,192) – –Bemmulla Project 13,435,423 – –Polgahawela Project 429,734 – –

54,152,953 41,214,032 44,777,434




No. of shares 31.12.2010 31.12.2009 31.3.2010Rs. Rs. Rs.

19. Investment SecuritiesCredit Information Bureau 19 1,900 1,900 1,900 Finance House Consortium (Pvt) Limited 2,000 200,000 200,000 200,000

201,900 201,900 201,900

20. Commissioner General of Inland RevenueIncome tax recoverable (1,764,415) 6,714,438 5,572,656 Economic Service Charges 6,229,481 11,443,065 2,340,787 Advance Company tax recoverable (Note 35 - F) – 1,671,329 –

4,465,066 19,828,832 7,913,443

Cost/Valuation - Rs.Balance as at

31.12.2009 AdditionsBalance as at

31.12.2010

21. Intangible assetsComputer software 9,642,430 – 9,642,430Total cost 9,642,430 – 9,642,430

Amortisation - Rs.Balance as at

31.12.2009Amortisation for the year

Balance as at31.12.2010

Computer software 8,883,604 – 8,883,604Total amortisation 8,883,604 – 8,883,604Net book value 758,827 758,827

31.12.2010 31.12.2009 31.3.2010Rs. Rs. Rs.

22. Investment propertyBalance at the beginning of the year 22,000,000 – –Additions during the year – – 22,000,000Balance at the end of the year 22,000,000 – 22,000,000

23. Leasehold right over landBalance at beginning of the year 3,441,270 3,486,550 3,486,550Additions during the year – – –

3,441,270 3,486,550 3,486,550Amortisation during the year – – (45,279)

3,441,270 3,486,550 3,441,270

The Company obtained the land under the operating lease which was initially for 99 (1st lessor). The remaining period is

77 years. The Company amortises the land cost over a period of 78 years.






31.12.2009Additions/Transfers Disposals Transfers


24. Property and EquipmentFreehold assetsLand 71,165,000 – – – 71,165,000 Building 42,299,764 – – – 42,299,764 Office equipment and machinery 3,471,766 2,182,941 – – 5,654,706 Furniture and fittings 25,638,730 16,638,298 – – 42,277,028 Motor vehicles 7,719,392 – (6,910,449) – 808,943 Computers 9,922,847 6,796,640 – – 16,719,487 Air-conditioners 5,064,377 1,748,729 – – 6,813,106 Generators 1,734,926 – – – 1,734,926

167,016,801 27,366,607 (6,910,449) – 187,472,959 Leasehold assetsEquipment 3,560,989 – – – 3,560,989 Vehicles 16,336,913 – – – 16,336,913 Vehicles (Guild Fund) – – – – –Computers 8,737,662 34,510 – – 8,772,172 Provi’ for depreciation (202,412) 5,014,800 – – 4,812,388

28,433,151 5,049,310 – – 33,482,461 Total cost 195,449,953 32,415,917 (6,910,449) 220,955,421

Depreciation - Rs.Balance as at

31.12.2009Charged for

the yearCharged on

Disposals/Transfer TransfersBalance as at

31.12.2010

Freehold assetsBuilding 1,635,673 – – – 1,635,673Office equipment and machinery 1,477,686 – – – 1,477,686Furniture and fittings 2,982,973 – – – 2,982,973Motor vehicles 3,794,982 1,241,150 (4,430,331) – 605,801Computers 5,445,059 – – – 5,445,059Air-conditioners 2,281,964 – – – 2,281,964Generators 1,012,259 – – – 1,012,259

18,630,596 1,241,150 (4,430,331) – 15,441,415Leasehold assetsEquipmentVehicles 9,350,199 – – – 9,350,199Vehicles (Guild Fund) – 5,014,800 – – 5,014,800Computers 1,973,396 – – – 1,973,396

11,323,595 5,014,800 – – 16,338,395Total depreciation 29,954,191 6,255,950 (4,430,331) – 31,779,810Net book value 165,495,762 189,175,611

24.1 Land and building were revalued as at 31st March 2008 by a valuer resulting in the carrying amount being written

up by Rs. 48,840,951 and Rs. 8,421,511 for land and building respectively.



31.12.2010 31.12.2009 31.03.2010Rs. Rs. Rs.

25. Deposits from CustomersFixed deposits - monthly 1,087,735,415 398,351,132 477,696,741Fixed deposits - maturity 2,004,044,270 819,313,394 1,207,103,637Savers’ deposits 111,493,022 45,358,109 47,758,601

3,203,272,707 1,263,022,635 1,732,558,979

26. Trade and Other PayablesInterest payable 86,635,221 65,911,536 68,362,653Supplier payable 110,014,058 104,494,414 129,807,619Accrued expenses 56,799,259 23,017,684 33,788,687Advances received from depositors (1,650,310) 2,692,162 1,067,978Other payables 17,595,017 (14,157,180) 16,490,455

269,393,245 181,958,617 249,517,391

27. Long-term BorrowingsBalance as at the beginning of the period 59,814,550 81,591,713 81,591,713Loans obtained during the year – – 46,000,000

59,814,550 81,591,713 127,591,713Loan repayments during the year (9,859,484) (54,917,760) (67,777,163)Balance as at the end of the period 49,955,066 26,673,953 59,814,550

Payable within one year 17,856,872 17,870,600 18,957,000Payable after one year 32,098,194 8,803,353 40,857,550

49,955,066 26,673,953 59,814,550

The ‘Company has pledged the following securities for the bank loans, bank overdrafts and lease facilities as at

31st December 2010.

Bank Securities

Commercial Bank PLC 1. Primary Mortgage Bond No. 3197 and Secondary Mortgage Bonds for Rs. 56.3 Million

over the business premises of the Company at No 106, Yatinuwara Veediya, Kandy.

2. Registered Mortgage Bond No. 2006/01 over Lease and Hire Purchase contract for

revolving loan of Rs. 25 Million.

3. Primary Mortgage Bond No.1530 for Rs. 6.5 Million over the business premises of the

Hingurakgoda Branch at No. 01, Main Street, Hingurakgoda.

Hatton National Bank PLC 1. Primary floating mortgage Bond No 3246 for Rs. 6 Million over immovable property at

stage 1, New Town, Anuradhapura.

2. Mortgages over lease receivables for Rs. 25 Million.




31.12.2010 31.12.2009 31.03.2010Rs. Rs. Rs.

28. Lease creditorsBalance at beginning of the year 17,216,024 13,354,761 14,722,040Lease obtained 5,465,844 0 10,186,800Lease settled (6,186,347) (3,519,746) (7,692,816)

16,495,521 9,835,015 17,216,024Interest in suspense (3,080,280) (1,516,085) (3,454,510)

13,415,241 8,318,930 13,761,514

Payable within one year 6,148,524 2,465,574 6,383,615Payable after one year 7,266,717 5,853,356 7,377,899

13,415,241 8,318,930 13,761,514

29. Retiring gratuity obligationBalance as at the beginning of the period 9,889,650 9,319,150 9,319,150Provision made during the year 3,765,000 1,825,000 2,440,000Payments made during the Year (357,600) (1,638,000) (1,869,500)Balance as at the end of the period 13,297,050 9,506,150 9,889,650

30. Stated capitalFully-Paid ordinary shares - 4,846,097 shares 73,718,375 73,718,375 73,718,375 Right Issue - 9,692,194 shares 96,921,940 – – Transfer of share premium to stated capital – – –

170,640,315 73,718,375 73,718,375

In accordance with Section 58 of the Companies Act No. 07 of 2007 which became effective from 3rd May 2007, share

capital and share premium had been reclassified as stated capital.

Number of Ordinary SharesNumber of

Shares

At the beginning of the year (01st April 2010) 4,846,097Right issue during the period 9,692,194At the end of the period (31st December 2010) 14,538,291

31.12.2010 31.12.2009 31.03.2010Rs. Rs. Rs.

31. Revaluation ReservesBalance as at 1st April 74,603,594 74,603,594 74,603,594 Balance as at 31st December 74,603,594 74,603,594 74,603,594

32. Statutory ReserveBalance as at 1st April 50,294,760 50,294,760 50,294,760 Balance as at 31st December 50,294,760 50,294,760 50,294,760

The company’s reserve fund is maintained in accordance with Direction No. 1 of 2003 issued by the Central Bank of Sri

Lanka under Section 9 of the Finance Companies Act No. 78 of 1988.

33. General Reserve31.12.2010 31.12.2009 31.03.2010

Rs. Rs. Rs.

Balance as at 1st April 58,751,125 58,751,125 58,751,125 Balance as at 31st December 58,751,125 58,751,125 58,751,125




34. Commitments and contingent liabilities There were no commitments or contingent liabilities as at the Balance Sheet Date.

35. Post-Balance Sheet Events No circumstances have arisen since the Balance Sheet date, which require adjustment or disclosure in the Financial

Statements.

36. Related Party transactions The Company carries out transactions in the ordinary course of business with the related party.

36.1 Transactions with Key Managerial Personnel

Key managerial personnel include Directors of the Company.

(a) Directors’ fees and expenses amounted to Rs. 6,251,703.67/- for nine months ended 31st December 2010

(Rs. 5,694,253.23 for nine months ended 31st March 2009).

(b) No loans and advances given to key managerial personnel and their close family members.

(c) Deposit and investment from key managerial personnel amounted to Rs. 3,500,000/- for nine months ended

31st December 2010. (Rs. 2,000,000/- for nine months ended 31st March 2009).

(d) Transactions with other related parties

There are no transaction with related parties during the year

37-A Comparative figures

Comparative information of the Company has been restated or reclassified to conform to current year presentation or

classification.

37-B Same accounting policies and methods of computation are followed in the Interim Financial Statements as compared

with the most recent Audited Annual Financial Statements.(2009/10).



This page is intentionally left blank

7.3 AUDITED FINANCIAL STATEMENTS AS AT 31ST MARCH 2010


INDEpENDENT AUDIToR’S REpoRT

INDEpENDENT AUDIToR’S REpoRT To THE SHAREHoLDERS oF CoMMERCIAL CREDIT LIMITEDReport on the Financial Statements

We have audited the accompanying financial statements of Commercial Credit Ltd. which comprise the balance sheet as

at 31st March 2010, and the income statement, statement of changes in equity and cash flow statement for the year then

ended, and a summary of significant accounting policies and other explanatory notes.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with

Sri Lanka Accounting Standards. This responsibility includes: designing, implementing and maintaining internal control

relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether

due to fraud or error: selecting and applying appropriate accounting policies, and making accounting estimates that are

reasonable in the circumstances.

Scope of Audit and Basis of opinion

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in

accordance with Sri Lanka Auditing Standards. Those standards require that we plan and perform the audit to obtain

reasonable assurance whether the financial statements are free from material misstatements.

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.

An audit also includes assessing the accounting principles used and significant estimates made by management, as well

as evaluating the overall financial statement presentation.

We have obtained all the information and explanations, except for the matters referred to in paragraph 1 below, which to

the best of our knowledge and belief were necessary for the purposes of our audit. We therefore believe that our audit

provides a reasonable basis for our opinion.

opinionDisagreement with the Management

As discussed in note 4.18, profit on sale of real estate under easy payment scheme amounting to Rs 17,272,424 has

been recognised upon entering into the contract of agreement to sell. However, the equitable interest and legal title of

the property are transferred to the buyer upon settlement of 100% of the installment. In our opinion, the company had

not transferred to the buyer, the significant risk and rewards of ownership of the land, and retains continuing managerial

involvement to the degree usually associated with ownership and effective control of the land at the time of entering into an

agreement to sell, which is not in compliance with Sri Lanka Accounting Standard - 29 “Revenue Recognition”. Accordingly,

profit for the year has been overstated by the said amount.

L M AssociAtesChartered aCCountants

30-2/1, Galle road,Colombo 06, sri Lanka.

tel : +94 (11) 2501677, 5667829, 5624303Fax : +94 (11) 2507522e-mail : Lmassociates.lk



As discussed in note 35-H, assessment of net realizable value of real estate stock was carried out as at 31 March 2010

and the provision for fall in value amounting to Rs 36,034,423 has been adjusted through reserves. In our opinion, it is not

a prior period error in accordance with Sri Lanka Accounting Standards - 10 “Accounting policies, Changes in Accounting

Estimates and Errors”. Therefore, profit for the year has been overstated by the said amount.

As discussed in note 35-F and G, advance company tax amounting to Rs. 1,671,329 and GST receivable amounting to

Rs. 1,060,890 had been charged to retained earnings due to non availability of information. In our opinion, it is not a

prior period error in accordance with Sri Lanka Accounting Standards - 10 “Accounting policies, Changes in Accounting

Estimates and Errors”. Therefore, profit for the year has been overstated by Rs. 2,732,219.

In our opinion, except for the effect of any adjustment in the financial statements resulting from the matters referred to in the

preceding paragraphs, so far as appears from our examination, the Company maintained proper accounting records for the

year ended 31 March 2010, and the financial statements give a true and fair view of the Company’s state of affairs as at 31

March 2010 and of its profit and cash flows for the year then ended, in accordance with Sri Lanka Accounting Standards.

Report on Legal and other Regulatory Requirements

The Company has not maintained the minimum core capital as required by the Central Bank Direction No. 1 of 2006

throughout the year.

The audit committee does not comprise solely of Non-Executive directors as required by the Central Bank Direction No. 3

of 2008.

Except for the above, the financial statements also comply with the requirements of Section 151(2) of the Companies Act

No. 07 of 2007 and Finance Companies Act No. 78 of 1988.

(Sgd.)

LM ASSoCIATESChartered Accountants

Colombo

3rd February 2011




INCoME STATEMENT

For the year ended 31st March 2009/10 2008/09(Restated)

Note Rs. Rs.

Revenue 1 425,466,094 350,461,448

Interest income 2 346,843,191 314,266,305 Direct interest cost 3 (206,700,994) (187,599,538)Net interest income 140,142,197 126,666,767 Net income from real estate 22,961,942 3,247,850 Other income 4 55,660,962 32,947,293 Net income 218,765,100 162,861,909

Lessoperating expensesPersonnel costs 5 114,310,266 59,513,250 Premises, equipment & establishment expenses 63,734,303 36,641,124 Provision for staff retirement benefit cost 2,440,000 2,220,000

Provision for bad and doubtful debt 6 33,768,762 41,470,910 Other overhead expenses 30,454,178 24,296,611

244,707,510 164,141,895 Net profit/(loss) before taxation (25,942,410) (1,279,986)

Taxation 7 71,132,513 8,378,280 Net profit for the year 45,190,103 7,098,294

Earnings per share 8 9.33 1.46

Proposed dividend per share 9 – –




BALANCE SHEET

As at 31st March 2009/10 2008/09(Restated)

Note Rs. Rs.

AssetsCash in hand and cash at banks 10 49,438,469 12,577,606 Investment in Government Securities 11 86,245,402 96,559,565 Short-term investments with banks 39,712,372 11,170,312 Investments in Dealing Securities 12 55,084 55,084 Loans & advances 13 915,342,409 269,602,610 Net investment in lease 14 592,977,866 548,361,075 Trade and other receivables 15 229,152,308 185,229,829 Repossessed inventory 16 21,728,865 18,457,290 Deferred tax assets 17 121,445,236 36,993,319 Investments in real estates 18 44,777,434 43,156,700 Investment Securities 19 201,900 201,900 Commissioner General of Inland Revenue 20 7,913,443 15,795,511 Intangible assets 21 758,827 3,169,434 Investment property 22 22,000,000 –Leasehold right over land 23 3,441,270 3,486,550 Property & equipment 24 165,495,763 143,996,372 Total Assets 2,300,686,646 1,388,813,156

LiabilitiesBank overdraft 8,219,823 57,596,344 Deposits from customers 25 1,732,558,979 854,330,911 Trade & other payables 26 249,517,391 150,075,850 Long-term borrowings 27 59,814,550 81,591,713 Lease 28 13,761,514 11,850,907 Retiring gratuity obligations 29 9,889,650 9,319,150

2,073,761,906 1,164,764,876

Shareholders’ fundStated capital 30 73,718,375 73,718,375 Revaluation reserve 31 74,603,594 74,603,594 Statutory reserve 32 50,294,760 50,294,760 General reserve 33 58,751,125 58,751,125 Retained earnings (30,443,114) (33,319,574)

226,924,740 224,048,280 Total liabilities & shareholders’ funds 2,300,686,646 1,388,813,156



I certify that the Financial Statements also comply with the requirements of Companies Act No. 07 of 2007.

(Sgd.) Senior Manager Finance and MIS

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

Approved and signed for and on behalf of the Board.

(Sgd.) (Sgd.)Chairman Director

3rd February 2011


Stated Capital Other Reserves

Stated Share Revaluation Statutory General Retained Total Capital Premium Reserve Reserve Reserve Earnings

( Restated )Rs. Rs. Rs. Rs. Rs. Rs. Rs.

As at 1st April 2008 as previously reported 48,718,375 10,000,000 74,603,594 50,294,760 58,751,125 12,883,515 255,251,369

Error correction - Provision for bad debtors from whom adequate securities had not been taken (Note 35 - A) – – – – – (3,087,497) (3,087,497)

Error correction - Interests receivable (Note 35 - B) – – – – – (1,004,777) (1,004,777)

Error correction - Payable to suppliers (Note 35 - C) – – – – – (5,088,234) (5,088,234)

Error correction - Future interests adjustments (Note 35 - D) – – – – – (35,274,234) (35,274,234)

Restated balance as at 1st April 2008 48,718,375 10,000,000 74,603,594 50,294,760 58,751,125 (31,571,227) 210,796,627

Net profit for the year (Restated) – – – – – 7,098,294 7,098,294

Share issue 15,000,000 – – – – – 15,000,000

Transferred to stated capital 10,000,000 (10,000,000) – – – – –

Dividend paid – – – – – (7,345,749) (7,345,749)

Write-off – – – – – (1,500,892) (1,500,892)

As at 31st March 2009 73,718,375 – 74,603,594 50,294,760 58,751,125 (33,319,574) 224,048,280

Error correction - Write-off of bogus contract (Note 35 - E) – – – – – (2,856,641) (2,856,641)

Error correction - Receivable company advance tax (Note 35 - F) – – – – – (1,671,329) (1,671,329)

Error correction - GST receivable (Note 35 - G) – – – – – (1,060,890) (1,060,890)

Error correction - Write-down of real estate inventory to NRV (Note 35 - H) – – – – – (36,034,423) (36,034,423)

Error correction - Suspense clearance account (Note 35 - I) – – – – – (690,361) (690,361)

Net profit for the year – – – – – 45,190,103 45,190,103

As at 31st March 2010 73,718,375 – 74,603,594 50,294,760 58,751,125 (30,443,114) 226,924,740


Share capital and share premium have been reclassified as stated capital in accordance with Companies Act No. 07 of 2007.


STATEMENT oF CHANGES IN EQUITY


CASH FLoW STATEMENT


Rs. Rs.

Cash flow from operating activitiesInterest and commission receipts 347,776,214 314,109,797Interest payments (206,700,994) (187,599,538)Other income 55,670,561 32,947,293Operating expenditure (195,369,551) (95,464,240)Operating profit before changes in operating assets (Note A) 1,376,229 63,993,312

(Increase)/decrease in operating assetsFunds advanced to customers (605,578,258) (263,125,864)Sale of real estate 108,512,102 17,625,900Purchase of real estate (127,358,891) –Investment in Treasury Bills (21,583,413) (8,033,882)Sundry debtors (69,042,998) (17,456,429)Other current assets (20,024,024) (85,864,920)Increase/(decrease) in operating liabilities (735,075,482) (356,855,195)Deposits from customers 875,661,621 141,411,861Other liabilities 103,526,005 (8,278,602)

979,187,626 133,133,260Net cash from operating activities 245,488,373 (159,728,623)Gratuity paid (1,869,500) (1,528,250)Income tax paid (5,580,023) (6,935,141)Net cash inflow/(outflow) from operating activities 238,038,850 (168,192,014)

Cash flow from investing activitiesDividends received 8,167 7,000Purchase of property & equipment (21,080,230) (14,164,328)Proceeds from sale of property & equipment 3,564,672 948,970Net cash inflow/(outflow) from investing activities (17,507,391) (13,208,358)

Cash flow from financing activitiesProceeds from right share issued – 15,000,000Loan obtained 66,500,000 52,590,000Loan repayment (172,252,014) (41,909,067)Dividends paid – (7,345,749)Net cash flow from financing activities (105,752,014) 18,335,184

Net increase in cash & cash equivalents 114,779,445 (163,065,187)Cash & cash equivalents at the beginning of the year (33,848,427) 485,327Cash & cash equivalents at the end of the year 80,931,018 (162,579,860)

Reconciliation of cash & cash equivalentsCash in hand and cash in bank 49,438,469 12,577,606Short-term investments 39,712,372 11,170,312Bank overdrafts (8,219,823) (57,596,344)

80,931,018 (33,848,427)

Reconciliation of operating profit (Note A)Profit before taxation (25,932,810) 7,547,155VAT on financial institutions 7,164,561 7,462,032Profit on sale of real estate (22,961,942) (3,247,850)Depreciation 7,902,433 7,116,056Provision for bad and doubtful debts 33,768,762 37,265,471Investment income (8,167) (7,000)(Profit)/Loss on sale of fixed assets – 2,904,824Gratuity provision 2,440,000 2,220,000Written-off of real estate (996,608) 2,732,624Cash flow from operating profit 1,376,229 63,993,312




1. GeneralCorporate Information

Commercial Credit Limited (‘the Company’) is a public company incorporated on 4th October 1982 with limited liability and

domiciled in Sri Lanka. The registered office of the Company is situated at No.106, Yatinuwara Street, Kandy.

principal Activities and Nature of operations

The principal activity of the Company during the year was providing a comprehensive range of financial services, which

include leasing, hire purchasees, trade financing, land finance, project finance and capital market operations to industrial,

commercial and Agricultural enterprises in Sri Lanka. There were no changes in the principal activities during the year.

Date of Authorisation for Issue

The Financial Statements of the Company for the year ended 31st March 2010 were authorised for issue by the Director

on 3rd February 2011.

2. Standards in Issue but not yet Effective:At the date of authorisation of these Financial Statements, the following Standards were in issue but not effective for the

reporting period:

LKAS39 Financial Instruments : Recognition and Measurement - Effective 1 January 2012

LKAS32 Financial Instruments : Presentation

SLFRS7 Financial Instruments : Disclosures

The Directors anticipate that both these Standards will be adopted in the Company’s Financial Statements when they

become applicable and the adoption could significantly affect amounts reported under financial assets and liabilities as

well as reported results of operations.

3. preparation of Financial Statements3.1 Statement of Compliance

The Balance Sheet, Income Statement, changes in equity and cash flows, together with accounting policies and other notes

(the ‘Financial Statements’) have been prepared in accordance with Sri Lanka Accounting Standards and the requirements

of the Companies Act No. 07 of 2007 and the Finance Companies Act No. 30 of 1988.

3.2 Basis of preparation

These Financial Statements have been prepared and presented in Sri Lankan Rupees and rounded to the nearest Rupee.

No adjustment has been made for inflationary factors affecting these Financial Statements, which have been prepared on

a historical cost basis with the following notable exceptions:

Revaluation of properties using a professional valuation

Re-measuring Dealing Securities at market values

Provisions for doubtful debts and fall in value of Investment Securities

Recognition of impairment losses, if any.

The Directors have made an assessment of the Company’s ability to continue as a going concern and they do not intend

either to liquidate or to cease operations in the foreseeable future.

The accounting policies have been consistently applied by the Company and are consistent with those used in the previous

year.

SIGNIFICANT ACCoUNTING poLICIES


3.3 Critical Judgments and Key Sources of Estimation Uncertainty

The preparation of Financial Statements requires management to make judgments, estimates and assumptions that affect

the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results

may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised

in the period in which the estimate is revised or in the period of revision and future periods only if the revision affects both

current and future periods.

3.4 Comparative Information

Comparative information is re-classified where necessary to comply with the current presentation.

4. Significant Accounting PoliciesThe accounting policies set out below have been applied consistently to all periods presented in these Financial Statements.

The accounting policies of the Company have been consistently applied where applicable and any deviations have been

disclosed accordingly.

Summary of Significant Accounting Policies

The principal accounting policies adopted in the preparation of these Financial Statements are set out below.

The Directors have made an assessment of the Company’s ability to continue as a going concern in the foreseeable future,

and they do not intend to liquidate, cease or curtail the trading.

4.1 Financial Investments - Dealing Securities

Securities held for resale in the near future to benefit from short-term market movements are treated as Dealing Securities.

These investments are stated at lower of cost and market value determined on an aggregate portfolio basis, in total. The

cost of an investment is the cost of acquisition inclusive of brokerages, duties, and bank charges.

Financial investments - Investment Securities

Investments acquired with the positive intent to hold on long-term basis are classified as Investment Securities. These are

acquired and held for yield or capital growth in the long-term and are recorded at cost net of provision for any diminution

in value which is non-temporary.

4.2 Investment in Treasury Bills Held to Maturity.

Investment in Treasury Bills held to maturity is reflected at the value of bills purchased and the discount/premium accrued

thereon. Discount received/premium paid is taken to the Income Statement based on the pattern reflecting a constant

periodic rate of return.

4.3 Advances to Customers

Advances to customers represent loans and advances originated by the Company and are recognised when cash is

advanced to borrowers. They are de-recognised when the borrower repays their obligations, or when the loans are sold or

written off, or when all the risks and rewards of ownership are substantially transferred. They are recorded at the amount

disbursed.



4.4 Lease Receivables

Assets leased to customers under agreement that transfer substantially all the risk and rewards associated with ownership

other than legal title are classified as finance leases. Amounts receivable under finance leases are included under ‘lease

receivable’ and trade receivables. Leasing balances are stated in the Balance Sheet after deducting initial rentals received,

unearned lease income and the provisions for rentals doubtful of recovery.

4.5 provision for Non-performing Advances and Leases

Advances (including leases), which are 180 days or more in arrears of due capital and/or interest, are classified as

non-performing. Provision for such advances is recognised when there is adequate evidence of non-performance, as

determined by the management, and according to the directions issued by the Central Bank of Sri Lanka and Sri Lanka

Accounting Standard No. 33 “Revenue Recognition and disclosures in the Financial Statements of finance companies”.

Losses expected from future events are not recognised. Any provision identified is charged to the Income Statement and

the carrying amount of the loan on the Balance Sheet is reduced.

Thresholds used for making specific provisions for bad and doubtful debts -

Period outstanding Classification Provision as a percentage of net exposure

6-12 months Doubtful 50%12 months and over Loss 100%

Revenue Recognition on Non-performing Advances and Leases

When an advance or a lease is classified as non-performing, interest income ceases to be recognised using the accrual

basis and is taken to income only on a cash basis.

4.6 InventoriesReal Estate

Real estates are valued at cost or net realisable value whichever is lower. Cost includes all expenses necessary to bring

the real estate to the condition as at the balance sheet date. Net realisable value is the price at which inventories can be

sold in the ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale.

other Inventories

These are valued at the lower of cost and net realisable value.

4.7 Hire purchase Receivables

Assets purchased by customers under agreements that transfer substantially all the risks and rewards associated with

ownership other than legal title are classified as hire purchase receivables. Hire purchase receivables in the Balance Sheet

include total hire purchase installments due, net of unearned interest and provision for doubtful debts.

4.8 Cash and Cash Equivalents

Cash and cash equivalents include cash in hand, balances with banks, and short-term highly liquid investments, readily

convertible to known amounts of cash and subject to insignificant risk of changes in value.

For the purpose of cash flow statement, cash and cash equivalents consist of cash in hand and deposits in banks net of

outstanding bank overdrafts. The cash flow statement is reported based on the direct method.

4.9 property and Equipment

Property and equipment are stated at cost or valuation less subsequent accumulated depreciation and any subsequent

accumulated impairment losses. All items of property and equipment are initially recorded at cost. The cost of property

and equipment is the cost of acquisition or construction together with any expenses incurred in bringing the asset to the



condition for its intended use. Where items of property and equipment are subsequently re-valued, the entire class of such

assets is re-valued. The Company has adopted a policy of revaluing assets every 5 years. When an asset is re-valued,

any increase in the carrying amount is credited directly to a revaluation reserve, except to the extent that it reverses a

revaluation decrease of the same asset previously recognised in the Income Statement, in which case the increase is

recognised in the Income Statement. Any revaluation deficit that offsets a previous surplus in the same asset is directly

offset against the surplus in the revaluation reserve and any excess recognised as an expense. Upon disposal, any

revaluation reserve relating to the asset sold is transferred to retained earnings.

Items of property and equipment are de-recognised upon disposal or when no future economic benefits are expected from

its use. Any gain or loss arising on de-recognition of the asset is included in the Income Statement in the year the asset is

de-recognised.

Subsequent expenditure incurred for the purpose of acquiring, extending or improving assets of a permanent nature

by means of which to carry on the business or to increase the earning capacity of the business are treated as capital

expenditure.

Depreciation

Depreciation is provided on written-down value basis to write off net book value of all the assets appropriate to the estimated

useful lives of the different type of assets-

Building 2%Motor vehicles 25%Furniture and fittings 12.5%Office equipment 12.5%Computers 20%Photocopy/fax machines 12.5%Air conditioners 12.5%Generators 12.5%

4.10 Investment property

Investment property, which is property held to earn rentals and/or for capital appreciation, is measured initially at its cost,

including transaction costs. Subsequent to initial recognition, investment property is measured at fair value, which reflects

market conditions at the Balance Sheet date. Gains or losses arising from changes in the fair value of investment property

are included in profit or loss for the period in which they arise.

4.10 Intangible Assets4.10.1 Basis of Recognition

Intangible assets are recognised if it is probable that the future economic benefits that are attributable to the assets will

flow to the entity and the cost of the assets can be measured reliably in accordance with Sri Lanka Accounting Standard

No. 37 ‘Intangible Assets’. Accordingly, these assets are stated in the Balance Sheet at cost less accumulated amortisation

and impairment losses.

4.10.2 Subsequent Expenditure

Subsequent expenditure on intangible assets is capitalised only when it increases the future economic benefits embodied

in these assets. All other expenditure is expensed as incurred.



4.10.3 Amortisation

The useful lives of intangible assets are assessed to be either finite or infinite. Intangible assets with finite lives are

amortised over the useful economic life. The amortisation period and the amortisation method for an intangible asset with

a finite useful life are reviewed at each financial year-end. Changes in the expected useful life or the expected pattern of

consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period

or method, as appropriate and are treated as changes in accounting estimates. The amortisation expense on intangible

assets with finite lives is recognised in the Income Statement in the expenses category consistent with the function of

intangible asset.

4.10.4 Computer software

Computer software is stated at cost less accumulated amortisation and any accumulated impairment loss. Amortisation is

made at 25% per annum on cost.

4.11 Leasehold Assets

Leases are classified as finance leases whenever terms of the lease transfer substantially all the risks and rewards of

ownership to the lessee. All other leases are classified as operating leases.

Finance leases

Assets held under finance leases are initially recognised as assets of the Company at their fair value at the inception of the

lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included

in the Balance Sheet as a finance lease obligation.

Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant

rate of interest on the remaining balance of the liability. Finance charges are charged directly to Income Statement, unless

they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Company’s

general policy on borrowing costs (see Note 4.17). Contingent rentals are recognised as expenses in the periods in which

they are incurred.

operating leases

Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where

another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are

consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they

are incurred.

4.12 Impairment 4.12.1 Financial assets

In addition to the provision made for possible loan losses based on the parameters and directives for the specific and

general provisions on loans and advances by the Central Bank of Sri Lanka, the Company reviews its loans and advances

portfolio at each reporting date to assess whether a further allowance for impairment should be provided in the Income

Statement. The judgment by the management is required in the estimation of these amounts and such estimates are based

on assumptions about a number of factors though actual results may differ, resulting in future changes to the provisions.

4.12.2 Impairment of Non-Financial Assets

At each Balance Sheet date, the Company reviews the carrying amounts of its tangible and intangible assets to determine

whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the

recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not

possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the

cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified,



corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest

group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the

carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised

immediately in the Income Statement, unless the relevant asset is carried at a revalued amount, in which case the

impairment loss is treated as a revaluation decrease.

4.13 Income Taxes

Income tax expense represents the sum of taxes currently payable and deferred. Income tax relating to items recognised

directly in equity is recognised in equity.

Deferred Taxes

Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are generally

recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available

against which those deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the

temporary difference arises from goodwill or from initial recognition (other than in business combination) of other assets

and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

The carrying amount of deferred income tax assets is reviewed at each Balance Sheet date and reduced to the extent that

it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to

be utilised. (Income tax relating to items recognised directly in equity is recognised in equity.)

Deferred Income Tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which

the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantially

enacted by the Balance Sheet date.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets

against current liabilities and when they relate to income taxes levied by the same taxation authority and intends to settle

them on a net basis.

Current Taxes

Current Income tax is based on the elements of income and expenditure as reported in the Financial Statements but is

computed in accordance with provisions of Inland Revenue Act No. 10 of 2006 and its subsequent amendments.

4.14 Value Added Tax on Financial Services

The base for the computation of Value Added Tax on Financial Services is the accounting profit before income tax

adjusted for the economic depreciation, emoluments of employees and computed on prescribed rates. During the year,

the Company’s total value addition was subject to a 20% Value Added Tax on financial services as per the Section 25 A of

Value Added Tax Act No. 14 of 2002 and amendments thereto.

4.15 Employee Retirement BenefitsDefined Benefit Plan - Gratuity

The Company is liable to pay gratuity in terms of the payment of Gratuity Act No. 12 of 1983, according to which an obligation

to pay gratuity arises only on completion of 5 years of continued service. A provision for the Company’s obligations under

this act is determined based on an actuarial valuation, using the projected unit credit method, carried out by a professional

actuary as at each Balance Sheet date. Actuarial gains and losses that exceed 10% of the greater of the present value of

defined benefit obligations are amortised over the expected average remaining working lives of the employees. This liability

is not externally funded.



Defined Contribution Plan - Employees’ Provident Fund and Employees’ Trust Fund

Employees are eligible for Employees’ Provident Fund contributions and Employees’ Trust Fund contributions in line with

respective statutes and regulations. The Company contributes the defined percentages of gross emoluments of employees

to an approved Employees’ Provident Fund and to the Employees’ Trust Fund respectively, which are externally funded.

4.16 provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it

is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount

of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at

the Balance Sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is

measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those

cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party,

the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the

receivable can be measured reliably.

4.17 Deposits from customers

Deposits include savers’ deposits and term deposits. They are recognised at the gross value of the outstanding balance.

Interest accrued is charged to the Income Statement.

4.18 Revenue RecognitionInterest Income - Advances

Interest income from advances is recognised on an accrual basis. Interest ceases to be taken into revenue when the

recovery of interest and/or principal is in arrears for six (6) months.

Interest Income - Lease / Hire purchase Receivables

Interest income on leasing is accounted for based on a pattern reflecting a constant periodic rate of return on capital

outstanding. The excess of aggregate lease/hire purchase rentals receivable over the cost of the leased/hire purchased

assets constitutes the total unearned lease interest/hire purchase income at the commencement of a lease/hire purchase.

The unearned lease/hire purchase interest income is taken into income over the term of the lease/hire purchase commencing

with the month in which the lease/hire purchase is executed in proportion to the declining receivable balance.

Interest income ceases to be taken to revenue when installments are in arrears for six months.

Interest Income - Investments

Interest income from investments is recognised on an accrual basis.

Interest Income - Non-performing Advances, Leases and Investments

Interest income on non-performing advances, investments and leases is accounted for on a cash basis.

Real Estate Income - outright Sales

Revenue is recognised when properties are sold and the buyer has taken possession of such properties.



Real Estate Income - Sales Under Easy payment

Profit is recognised 100% on land sales under loans easy payment contracts upon the receipt of 30% down payment, even

before the transfer of risk and rewards to the buyer.

Dividend Income

Dividend income is recognised in the Income Statement when the Company’s right to receive the payment is established.

Rent Income

Rent income is recognised on accrual basis.

Commission Income

Commission income is recognised on cash basis.

Amortisation of Discount on Government Treasury Bills

The discount on the Treasury Bills is amortised over the period to the maturity.

Profit on Disposal of Assets

Profit earned on disposal of investment and seized assets are accounted for in the Income Statement based on realised

net profit.

4.19 Expenditure Recognition operating Expenses

All expenditure incurred in the running of the business and in maintaining the property and equipment in a state of efficiency

has been charged to revenue in arriving at the profit for the year.

For the purpose of presentation of the Income Statement, the “nature of expenses” method has been adopted, on the basis

that it presents fairly the elements of the Company’s performance.

4.20 Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset that normally take

a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such

time as the assets are substantially ready for their intended use or sale. Income earned from temporarily investing specific

borrowings pending their expenditure on a qualifying asset is deducted from the borrowing costs eligible to be added to

the carrying amount.

All other borrowing costs are recognised in profit or loss in the year in which they are incurred.

4.21 Segment Reporting

Business segment has been determined based on the nature of the service provided by the Company subject to risk and

rewards of each type of product.

Segment income and expenses are allocated to the segment to the extent that it is directly attributable to the segment or/

and allocated to the segment on a reasonable basis.

The activities of each of the reported business segments of the Company are detailed in Note 39.



NoTES To THE FINANCIAL STATEMENTS


Rs. Rs.

1. RevenueInterest income (Note 2) 346,843,191 314,266,305 Other operating income (Note 4) 55,660,962 32,947,293 Net income from real estate 22,961,942 3,247,850

425,466,094 350,461,448

2. Interest incomeLeasing - vehicle 183,457,641 169,189,222 Leasing - machinery 24,418,717 24,129,722 Consumer credit loans 15,706,013 21,061,743 Motor credit loans 46,861,283 23,519,244 Long-term loans 7,097,858 10,376,547 Short-term loans 3,918,717 4,092,376 Personal loans 40,882,969 38,333,621 Pawning 5,422 –Motor finance 1,898,253 –Motor plus 44,616 –CCL Cash loans 5,703,288 –Land finance 2,978,433 2,723,687 Short-term investments 13,869,981 20,840,144

346,843,191 314,266,305

3. Direct interest costFixed deposits 184,915,816 163,945,860 Savers’ deposits 1,844,496 130,708 Borrowings 19,940,682 23,522,970

206,700,994 187,599,538

4. other incomeDividend income 8,167 7,000 Profit on sale of property, plant & equipment 956,349 –Service charges 9,723,969 1,346,502 Rent income 1,320,000 1,870,000 Real estate other income 1,512,695 911,163 Commission income on insurance 1,592,172 1,103,014 Bad debt recoveries 955,062 535,557 Profit on repossessed item – 829,191 Documentation charges 3,041,784 4,573,776 Default interest 30,258,227 8,080,913 Other charges 6,273,123 12,785,512 Commission from Western Union Money Transfers 18,414 60,624 Discount on purchase 1,000 844,041

55,660,962 32,947,293




Rs. Rs.

5. provision for bad and doubtful debtsConsumer credit 3,558 2,311,665 Motor credit 1,920,266 5,080,308 Term loans 355,253 168,939 Repossessed stock (restated) (Note 35 - A) 3,943,395 3,823,063 Leases (restated) (Note 35 - A) 14,031,029 14,697,968 Personal loan (487,385) 4,008,070 Short-term loan 11,038,239 11,380,897 Repossessed stock 2,964,407 –

33,768,762 41,470,910

6. Net profit/(loss) before taxationNet profit before taxation is stated after charging all expenses including the following:

Directors' remuneration 6,967,906 7,159,912 Salaries 62,958,934 29,508,950 EPF 6,860,269 3,949,002 ETF 1,543,659 987,251 Auditors' remuneration 561,751 409,550 Donations 116,150 103,329 Corporate social responsibility 125,736 214,207 Commission paid to brokers 3,749,820 3,169,759 Legal expenses 566,760 171,857 Depreciation 7,902,433 7,116,056

7. TaxationThe Company is liable for income tax at the rate of 35% on taxable income. The Company earned a taxable profit of

Rs. 33,184,849 during the year ended 31st March 2010 after claiming Rs. 57,164,404 as tax loss carried forward. The tax

losses available for setting off against the future taxable profits as at the Balance Sheet date amount to Rs. 135,047,107/-.


Rs. Rs.

Income taxation on current year profit 11,614,697 –Under provision in 2007/08 1,530,487 –Social responsibility levy 174,220 –Deferred taxation (Note - 17) (84,451,917) 8,378,280

(71,132,513) 8,378,280


7.1 Reconciliation of accounting profit to income taxation

Tax charge is based on taxable profit which differs from profit for financial reporting purposes. These differences are

explained in the following reconciliation statement:


Rs. Rs.

Net profit before taxation (25,942,410) 7,547,155 Aggregate disallowable expenses 69,276,074 399,029,368 Aggregate allowable expenses (40,167,486) (446,734,045)Claim of tax loss (57,114,404) –Profit on leasing business 87,123,475 –Taxable income/(loss) for the period 33,175,249 (40,157,522)

Income tax @ 35% 11,614,697 –Social responsibility levy @ 1% 174,220 –Taxation charged to the Income Statement 11,788,917 –Effective tax rate -78% 0%

7.2 Taxable LossesBrought forward from previous year 192,484,263 152,326,741 Loss set off during the year (57,164,404) 40,157,522

135,319,859 192,484,263

8. Earnings per shareThe basic earnings per share have been calculated by dividing the profit/loss for the period attributable to the equity

holders of the Company, by the weighted average number of ordinary shares in issue during the year ended 31st March

2010, as per the requirements of the Sri Lanka Accounting Standard 34 -”Earnings per Share”.


Rs. Rs.

Profit/loss attributable to the equity shareholders used as the numerator 45,190,103 7,098,294

Number of shares exist for entire year 4,846,097 4,846,097

Share issued during the year – –

Weighted average number of ordinary shares outstanding during the year used as the denominator 4,846,097 4,846,097

Earnings/(loss) per share (Rs.) 9.33 1.46

9. Dividend per shareDirectors have decided that no dividend will be paid for 2009/10 (The Company did not pay dividend for 2008/09).

10. Cash in hand and cash at banksFor the year ended 31st March 2009/10 2008/09

Rs. Rs.

Petty cash 1,139,522 531,976 Cash at banks 48,298,947 12,045,630

49,438,469 12,577,606



11. Investment in the Government SecuritiesFor the year ended 31st March 2009/10 2008/09

Rs. Rs.

Gross value 88,297,236 100,758,049 Un earned income (2,051,834) (4,198,484)

86,245,402 96,559,565


No. ofshares

Cost as at31.3.2010

Rs.

Marketvalue as at

31.3.2010Rs.

No. ofshares

Cost as at 31.3.2009(Restated)

Rs.


Rs.

Quoted companiesPeoples’ Merchant Bank PLC 100 625 2,350 100 625 –Vanik Incorporation PLC 218 108 – 218 108 –Hatton National Bank PLC -Voting 770 25,145 144,953 385 25,145 30,030 Hatton National Bank PLC - Non-voting 214 6,786 29,960 107 6,786 4,146 Sampath Bank PLC - Voting 341 13,420 75,702 310 13,420 26,582 The Finance Company PLC 648 9,000 11,340 648 9,000 14,824

55,084 264,305 55,084 75,582


Rs. Rs.

13. Loans and AdvancesConsumer credit 25,298,810 52,113,297 Motor credit 884,439,970 95,529,683 Staff loans 3,728,991 8,745,559 Reschedule 3,984,916 –CCL cash loan 190,986,754 –Microfinance 55,293,200 –Term loans 187,592,869 184,937,434 Pawning 595,482 –Rescheduled contracts 279,808 –

1,352,200,800 341,325,973 Advance Rentals (206,783) –Provision for bad debt (Note - 13.1) (9,074,223) (7,357,646)Unearned income (Note - 13.2) (427,577,384) (64,365,717)

915,342,409 269,602,610

13.1 provision for bad debtsBalance at the beginning of the year 7,357,646 10,805,633 Provision for the year 972,889 22,949,879 Provision transferred to legal repossessed provision – (3,484,722)Write (off)/back during the year 743,688 (22,913,144)Balance at the end of the year 9,074,223 7,357,646

13.2 Unearned incomeBalance at the beginning of the year 64,365,717 37,762,748 Originated during the year 435,855,255 84,284,189 Amount recovered (72,643,587) (57,681,220)Balance at the end of the year 427,577,384 64,365,717




Rs. Rs.

14. Lease Balance at the beginning of the year 852,811,995 675,824,363 Leases granted during the year 424,963,130 534,779,656 Lease rentals due during the year (341,898,000) (357,792,024)

935,877,125 852,811,995 Initial rental received (29,251,290) (28,113,350)

906,625,835 824,698,645 Unearned income (Note 14.1) (284,895,071) (260,850,674)Provision for bad debts (Note 14.2) (28,752,899) (15,486,896)

592,977,866 548,361,075

Receivable within one year 283,098,444 228,518,075 Receivables after one year 309,879,422 319,843,000

592,977,866 548,361,075


14.2 provision for bad debtBalance at the beginning of the year 15,486,896 8,533,448 Provision for the year 21,781,239 14,697,968 Write off during the year (765,026) (781,776)Provision transferred to legal repossessed (7,750,210) (6,962,744)Balance at the end of the year 28,752,899 15,486,896

15. Trade and other receivablesRental receivables on loans, advances and leases (Note 15.1) 173,346,688 153,322,664 Other receivables (Note 15.2) 55,805,620 31,907,165

229,152,308 185,229,829

15.1 Rental receivables on loans, advances and leasesConsumer credit 10,037,809 10,257,186 Leasing 95,619,211 76,813,458 Lease purchase 21,032,346 14,783,820 Motor credit 13,566,471 9,754,121 Short-term loan 14,083,286 20,831,899 Long-term loan 12,450,993 9,167,853 Land finance 486,243 364,628 Personal loan 13,816,444 14,582,280 Project finance 3,098,412 1,882,205 Motor plus 16,145 –CCL cash loans 1,717,075 –Future interest adjustment (Note 35 - D) – –Other interest receivables (Note 35 - B) – –

185,924,434 158,437,449 Interest in suspense (Note 15.1) (12,577,746) (5,114,785)

173,346,688 153,322,664




Rs. Rs.

15.1.1 Interest in suspenseBalance at the beginning of the year 5,114,785 4,114,750 Suspended during the year 9,225,772 8,475,995 Amount recovered during the year (1,762,811) (7,475,960)Balance at the end of the year 12,577,746 5,114,785

15.2 Trade and other ReceivablesAdvances, Deposits and Prepayments 25,471,812 6,329,483Goods and Services Tax (GST) – 1,060,890Value Added Tax (VAT) (Note 35 - G) 15,774,656 16,040,824Interest receivable on Fixed deposits and Treasury Bills 518,890 1,451,913Stock of stationery 1,302,790 499,447Receivable from ‘Guild Fund’ 2,485,637 –Other receivables 10,251,835 6,524,607

55,805,620 31,907,165

16. Repossessed InventoryGeneral inventory 38,858,673 21,251,845 Legal inventory 21,153,205 15,582,943

60,011,877 36,834,788 Provision for general stock (Restated) (15,217,328) (4,046,642)Provision for legal stock (Restated) (Note 16.1) (23,065,684) (14,330,856)

21,728,865 18,457,290

16.1 provision for repossessed legal stockBalance as at the beginning of the year 14,330,856 5,584,041 Transferred from/to the bad and doubtful debt provision 8,800,897 12,234,593 Write off during the year (66,069) (3,487,778)Balance as at the end of the year 23,065,684 14,330,856

17. Deferred tax assetsFor the year ended 31st March 2009/10 2008/09

Rs. Rs.

Balance as at the beginning of the period 36,993,319 28,615,039 Amount released/(originated) during the year 84,451,917 8,378,280 Balance as at the end of the period 121,445,236 36,993,319

In arriving at the temporary differences for deferred tax calculation, the cumulative tax losses have been recognised as an

asset since future taxable profit will be available against which the unutilised tax losses can be utilised according to the

tax plan of the Company.



18. Stocks of Real EstatesFor the year ended 31st March 2009/10 2008/09

Rs. Rs.

Property at Mahakanda (Uplands) 272,273 3,822,500 Property at Thalathuoya (Green Village) 918,051 4,721,100 Property at Lagundeniya (Peak View Garden) 1,003,213 19,441,113 Property at Wariyagala (Park Land) 517,381 3,657,681 Property at Arambehena (Isuru Uyana) 187,888 456,680 Property at Wariyagala (Misty Groove) 189,335 1,200,000 Property at Malkaduwawa 1,166,311 9,857,626 Labeema Project 6,252,045 –Wariyapola Project 4,820,232 –Hanhamuna Project 21,659,953 –Mawathagama Project 2,030,674 –Polgahawela Project 5,760,079 –

44,777,434 43,156,700

For the year ended 31st March 2009/10 2008/09No. of shares Rs. Rs.

19. Investment SecuritiesCredit Information Bureau 19 1,900 1,900 Finance House Consortium (Pvt) Limited 2,000 200,000 200,000

201,900 201,900

20. Commissioner General of Inland RevenueIncome tax recoverable 5,572,656 5,334,407 Economic service charges 2,340,787 8,789,775 Advance Company tax recoverable (Note 35 - F) – 1,671,329

7,913,443 15,795,511

Cost/Valuation - Rs.

For the year ended 31st MarchBalance as at

2009Additions Balance as at

2010

21. Intangible assetsComputer software 9,642,430 – 9,642,430Total cost 9,642,430 – 9,642,430

Amortisation - Rs.

For the year ended 31st MarchBalance as at

2009Amortisation for the year

Balance as at2010

Computer software 6,472,996 2,410,608 8,883,604 Total amortisation 6,472,996 2,410,608 8,883,604 Net book value 3,169,434 – 758,827




Rs. Rs.

22. Investment propertyBalance at the beginning of the year – –Additions during the year 22,000,000 –Balance at the end of the year 22,000,000 –

23. Leasehold right over landBalance at beginning of the year 3,486,550 3,532,212 Additions during the year – –

3,486,550 3,532,212Amortisation during the year (45,279) (45,662)

3,441,270 3,486,550

The Company obtained the land under the operating lease which was initially for 99 (1st lessor). The remaining period is

77 years. The Company amortises the land cost over a period of 78 years.

Cost/ValuationBalance as at

31.3.2009Rs.

Additions/Transfers

Rs.Disposals

Rs.Transfers

Rs.

Balance as at 31.3.2010

Rs.

24. property & EquipmentFreehold assetsLand 71,165,000 – – – 71,165,000Building 42,299,764 – – – 42,299,764Office equipment and machinery 2,753,239 718,526 – – 3,471,765Furniture and fittings 7,402,747 18,235,983 – – 25,638,730Motor vehicles 12,019,392 – (4,300,000) – 7,719,392Computers 9,421,279 875,723 (374,155) – 9,922,847Air-conditioners 3,430,427 1,633,951 – – 5,064,378Generators 1,734,926 – – – 1,734,926

150,226,774 21,464,183 (4,674,155) – 167,016,802

Leasehold assetsEquipment – 3,560,989 – – 3,560,989Vehicles 16,336,913 – – – 16,336,913Vehicles (Guild Fund) 1,439,374 – – (1,439,374) –Computers 4,492,100 4,043,149 – – 8,535,249

22,268,387 7,604,138 – (1,439,374) 28,433,151Total cost 172,495,161 29,068,322 (4,674,155) (1,439,374) 195,449,953




DepreciationBalance as at

31.3.2009Rs.

Change forRs.

Change onRs.

TransfersRs.


Rs.

Freehold assetsBuilding 805,794 829,879 – – 1,635,673 Office equipment and machinery 1,278,540 199,145 – – 1,477,685 Furniture and fittings 2,185,197 797,776 – – 2,982,973 Motor vehicles 6,361,837 472,836 (3,039,692) – 3,794,981 Computers 4,774,258 790,134 (119,332) – 5,445,060 Air-conditioners 2,021,052 260,912 – – 2,281,964 Generators 970,436 41,824 – – 1,012,260

18,397,114 3,392,506 (3,159,024) – 18,630,596

Leasehold assetsEquipment – – – – –Vehicles 8,038,257 1,311,942 – – 9,350,199 Vehicles (Guild Fund) 719,688 112,450 – (832,138) –Computers 1,343,730 629,666 – – 1,973,396

10,101,675 2,054,058 – (832,138) 11,323,595 Total depreciation 28,498,789 5,446,564 (3,159,024) (832,138) 29,954,191 Net book value 143,996,372 165,495,763

24.1 Land and building were revalued as at 31st March 2008 by a valuer resulting in the carrying amount being written up

by Rs. 48,840,951/- and Rs. 8,421,511/- for land and building respectively.

For the year ended 31st March 2010 2009(Restated)

Rs. Rs.

25. Deposits from CustomersFixed deposits - monthly 477,696,741 250,076,400Fixed deposits - maturity 1,207,103,637 564,697,914Savers’ deposits 47,758,601 39,556,597

1,732,558,979 854,330,911

26. Trade and other payablesInterest payable 68,362,653 56,708,320Supplier payable 129,807,619 72,589,837Accrued expenses 33,788,687 10,960,497Advances received from depositors 1,067,978 –Other payables 16,490,455 9,817,196

249,517,391 150,075,850


For the year ended 31st March 2009/10 2008/09Rs. Rs.

27. Long-Term BorrowingsBalance as at the beginning of the period 81,591,713 66,867,578Loans obtained during the year 46,000,000 51,590,000

127,591,713 118,457,578Loan repayments during the year (67,777,163) (36,865,865)Balance as at the end of the year 59,814,550 81,591,713

Payable within one year 18,957,000 27,870,600Payable after one year 40,857,550 53,721,113

59,814,550 81,591,713

The ‘Company has pledged the following securities for the Bank loans, Bank overdrafts and Lease facilities as at

31st March 2010.

BankCommercial Bank pLC

1. Primary Mortgage Bond No. 3197 and Secondary Mortgage Bonds for Rs. 56.3 Million over the business premises of

the Company at No. 106, Yatinuwara Veediya, Kandy.

2. Registered Mortgage Bond No. 2006/01 over Lease and Hire Purchase contract for revolving loan of Rs. 25 Million.

3. Primary Mortgage Bond No.1530 for Rs. 6.5 Million over the business premises of the Hingurakgoda Branch at No. 01,

Main Street, Hingurakgoda.

Hatton National Bank pLC

1. Primary Floating Mortgage Bond No. 3246 for Rs. 6 Million over immovable property at Stage 1, New Town, Anuradhapura.

2. Mortgages over lease receivables for Rs. 25 Million.

28. Lease CreditorsFor the year ended 31st March 2009/10 2008/09

Rs. Rs.

Balance at beginning of the year 14,722,040 18,231,018 Leases obtained during the year 10,186,800 1,534,224 Leases settled during the year (7,692,816) (5,043,202)

17,216,024 14,722,040 Interest in suspense (3,454,510) (2,871,133)Balance at the end of the year 13,761,514 11,850,907

Payable within one year 6,383,615 4,766,002 Payable after one year 7,377,899 7,084,905

13,761,514 11,850,907




Rs. Rs.

29. Retiring Gratuity obligationBalance as at the beginning of the year 9,319,150 8,627,400Provision made during the year 2,440,000 2,220,000Payments made during the year (1,869,500) (1,528,250)Balance as at the end of the period 9,889,650 9,319,150


Rs. Rs.

30. Stated CapitalFully-paid ordinary shares - 4,846,097 shares 73,718,375 48,718,375 600,000 ordinary shares @ 25/- – 15,000,000 Transfer of share premium to stated capital – 10,000,000

73,718,375 73,718,375

In accordance with Section 58 of the Companies Act No. 07 of 2007 which became effective from 3rd May 2007, share

capital and share premium had been reclassified as stated capital.


Rs. Rs.

31. Revaluation ReservesBalance as at 1st April 74,603,594 74,603,594 Balance as at 31st March 74,603,594 74,603,594

32. Statutory ReserveBalance as at 1st April 50,294,760 50,294,760Balance as at 31st March 50,294,760 50,294,760

The Company’s reserve fund is maintained in accordance with Direction No. 1 of 2003 issued by the Central Bank of

Sri Lanka under Section 9 of the Finance Companies Act No. 78 of 1988.


Rs. Rs.

33. General ReserveBalance as at 1st April 58,751,125 58,751,125 Balance as at 31st March 58,751,125 58,751,125

General reserve is the amount allocated by the Board of Directors for future expansions of the Company.



34. Commitments and Contingent LiabilitiesThere were no commitments or contingent liabilities as at the Balance Sheet date.

34. Events after the Balance Sheet Date No circumstances have arisen since the Balance Sheet date which require adjustment or disclosure in the Financial

Statements other than: the Company issued 9,692,194 shares as rights for the existing shareholders as of 31st October

2010 in the proportion of two new ordinary shares for each ordinary share held by shareholders as at date, at the rights

issue price of Rs. 10/- per share.

35-A Provision for bad debtors form whom adequate securities had not been taken-

Amount Rs.

Provision relating to repossessed stock pertaining to year 2008/09 3,661,428Provision relating to lease stock pertaining to year 2008/09 544,011Provision relating to periods prior to 1st April 2008 3,087,497

7,292,936

35-B Correction of erroneously recognised interest income during the following financial years:

Financial YearAmount

Rs.

2003/04 205,9592004/05 974,0982005/06 324,7202006/07 (500,000)Total 1,004,777

35-C Correction of erroneously recognised payable amounts to suppliers during the following financial years:


Rs.

2005/06 1,033,000 2006/07 2,341,234 2007/08 1,714,000 Total 5,088,234

35-D The Company had recognised the unreconciled interest amounting to Rs. 35,274,234/- as an income during the

following financial years:


Rs.

2001/02 4,021,000 2002/03 4,014,690 2003/04 27,238,544 Total 35,274,234



35-E Fifty-three bogus contracts have been created in the system during the month of February 2009 and Rs. 2,060,000/-

has been withdrawn. Rs. 217,877/- has been settled as at 31/03/2010 . The outstanding amount of Rs. 2,856,641/- is

written-off during the year.

35-F Recoverable amount of Advance Company Tax of Rs. 1,671,329/- was reflected in the Financial Statements since

2003. The Company does not have adequate documentary evidence in order to recover the amount.

35-G Recoverable amount of Goods and Services Tax (GST) of Rs. 1,060,890/- was reflected in the Financial Statements

from the date of the implementation of the computer system. Further, documentary evidence is not available to claim

the said amount. The Company is writing off the amount since the period has lapsed for the recovery of the same, in

accordance with the provisions of Inland Revenue Act.

35-H Write-down of real state inventory to Net Realisable Value -

Rs.

Investments in real estates as previously reported 43,156,700Value of real estate after valuation 7,122,277Net change 36,034,423

Assessment of net realisable value of real estate inventory was carried out as at 31/03/2009 and 31/03/2010 respectively.

Write-down of inventory to NRV is made through reserves.

35-I The Company is writing off the unidentified balances coming from the periods prior to implementation of the new

computer system. No further information is available.

36. Related party Transactions The Company carries out transactions in the ordinary course of business with the related party.

36.1 Transactions with Key Managerial personnel


(a) Directors’ fees and expenses amounted to Rs. 6,909,832/- for the year ended 31st March 2010 (Rs. 6,399,890/- for

the year ended 31st March 2009).


(c) Deposit and investment from key managerial personnel amounted to Rs. 7,907,500/- for the year ended 31st March

2010 (Rs. 2,000,000/- for the year ended 31st March 2009).

(d) Transactions with other related parties There are no transactions with related parties during the year.

37. Comparative FiguresComparative information of the Company has been restated or reclassified to conform to current year presentation or

classification.



38. Maturity Analysis38.1 Definition of Maturity

Time interval between Balance sheet date and contractual maturity date.

38.2 Allocation of Amounts

Amounts are allocated to respective maturity groupings based on instalments falling due as per contract. The amounts

therefore represent total amount receivable or payable in each maturity grouping.

38.3 ProfileRs.

Up to 3 3 – 12 1 – 3 3 – 5 More than Total Months % Months % Years % Years % 5 years

38.3.1 AssetsCash in hand and at banks 49,681,147 100% – 0% – 0% – 0% – 49,681,147

Investment in Treasury Bills and FDs 66,903,440 51% 63,166,767 49% – 0% – 0% – 130,070,207

Loans, leases and advances 365,903,815 21% 427,709,956 25% 779,185,002 45% 154,716,483 9% – 1,727,515,256

Repossessed stocks 37,195,700 100% – 0% – 0% – 0% – 37,195,700

Repossessed legal stock – – – – – – – – – –

Trade receivables – 0% 1,227,911 1% – 0% 96,485,412 99% – 97,713,323

Unsold real estate – 0% – 0% 94,099,452 100% – 0% – 94,099,452

Investment in marketable shares – 0% – 0% – 0% 256,984 100% – 256,984

Deferred tax asset – 0% – 0% – 0% 36,993,319 100% – 36,993,319

Other assets – 0% – 0% – 0% 28,031,518 100% – 28,031,518

Property & equipment – 0% – 0% – 0% 165,433,471 100% – 165,433,471

Total assets 519,684,102 492,104,634 873,284,454 481,917,187 – 2,366,990,377

38.3.2 LiabilitiesBank overdraft 10,424,069 100% – 0% – 0% – 0% – 10,424,069

Creditors & accrued expenses 251,927,589 100% – 0% – 0% – 0% – 251,927,589

Medium & long - term borrowings 3,549,607 5% 10,648,820 14% 59,814,550 81% – 0% – 74,012,977

Deposits from Customers - FD/FSD 771,020,572 44% 745,686,685 43% 198,819,338 11% 18,100,361 1% – 1,733,626,956

Provision for Gratuity – 0% – 0% – 0% 9,889,650 100% – 9,889,650

Total liabilities 1,036,921,837 756,335,505 258,633,888 27,990,011 2,079,881,241

Shareholders funds 287,109,136 287,109,136

Total liabilities and shareholders funds 287,109,136 2,366,990,377




39. Segment reporting Rs.

For the year ended 31st March 2010 Finance Hire Term Real Short-term Unallocated Total Lease Purchase Loan Estate Investment 2010

Revenue

Interest income 207,876,358 62,611,912 59,506,507 2,978,433 13,869,981 – 346,843,191

Other income 27,862,585 21,990,318 407,753 25,288,369 8,167 3,075,311 78,632,502

235,738,943 84,602,230 59,914,260 28,266,802 13,878,148 3,075,311 425,475,694

Percentage 55% 20% 14% 6% 3% 1% 100%

Expenditure

Other operating & interest expenses 246,137,674 88,334,137 62,557,151 29,513,685 14,490,330 3,210,966 444,243,943

Profit before taxation (10,398,731) (3,731,907) (2,642,891) (1,246,883) (612,182) (135,656) (18,768,249)

VAT on financial institutions (7,164,561)

Profit on ordinary activities before tax (25,932,810)

Income tax on profit on ordinary activities –

(25,932,810)

Assets 709,629,424 771,993,677 200,043,862 44,249,795 132,123,369 442,118,881 2,300,159,008

Percentage 30% 23% 13% 5% 5% 24% 100%

Liabilities 639,617,184 695,828,562 180,307,478 39,884,098 119,088,040 398,499,307 2,073,224,669

Percentage 30% 23% 13% 5% 5% 24% 100%

Rs.For the year ended 31st March 2010 Finance Hire Term Real Short term Unallocated Total

lease purchase loan estate investment 2009

Revenue

Interest income 193,318,944 44,580,987 52,802,544 2,723,687 20,840,144 - 314,266,306

Other income 16,584,362 4,447,766 7,572,276 4,159,013 7,000 3,424,726 36,195,143

209,903,306 49,028,753 60,374,820 6,882,700 20,847,144 3,424,726 350,461,449

Percentage 60% 14% 17% 2% 6% 1% 100%

Expenditure

Other operating & interest expenses 171,957,948 40,918,700 63,480,093 11,201,479 14,564,571 33,329,471 335,452,261

Profit before taxation 37,945,359 8,110,053 (3,105,273) (4,318,779) 6,282,573 (29,904,745) 15,009,188

VAT on Financial institutions (7,462,032)

Profit on ordinary activities before tax 7,547,156

Income tax on profit on ordinary activates –

Profit on ordinary activities after tax 7,547,156

Assets 660,771,171 129,631,057 207,639,125 46,093,059 107,986,861 285,352,064 1,437,473,337

Percentage 46% 9% 14% 3% 8% 20% 100%

Liabilities 487,777,613 95,692,927 153,278,050 34,025,640 79,715,303 309,653,641 1,160,143,174

Percentage 42% 8% 13% 3% 7% 27% 100%


STATEMENT oF EXpENSES

For the year ended 31st March 2009/10 2008/09Note Rs. Rs.

1. personnel CostsDirectors’ remuneration 4,850,000 5,512,025 Directors’ travelling & subsistence 2,117,906 1,647,887 Staff salaries 62,958,934 29,508,950 E.P.F 6,860,269 3,949,002 E.T.F 1,543,659 987,251 Employees’ Medical Fund 4,173,117 755,125 Casual wages 146,066 4,053 Travelling and subsistence 26,767,691 8,799,983 Annual bonus (Restated) (1.1) – 5,500,094 Staff welfare 3,635,617 2,501,210 Staff training 1,046,681 206,927 H/O travelling expenses 47,935 140,443 Transport expenses 162,392 300

114,310,266 59,513,250

1.1 The Company paid a bonus of Rs. 4,621,702.00 in the month of April 2009 for the financial year 2008/09 which had

not been accrued as at 31 March 2009.


2. other operating ExpensesCompany vehicle maintenance 1,879,676 1,832,316 Depreciation 7,902,433 7,116,056 Management fees 5,285,327 3,814,871 Internal audit expenses 4,089 84,287 Building upkeep 2,505,221 1,168,405 Office rent 7,255,100 2,442,900 Building renovation 404,948 –Rates and taxes 182,861 207,414 Electricity 3,571,684 2,522,188 Water 362,584 208,074 Company insurance 2,746,393 2,604,000 Generator 1,580,954 2,031,471 Security charges 701,818 438,374 Branch opening expenses 6,533,069 –AIG-FD insurance expenses 1,037,939 603,976 Legal expenses 2,000 –Charity & donation 116,150 103,329 Sundry expenses 394,234 41,079 Office equipment upkeep 700,616 442,361 Computer service & repairs 561,554 317,708 Telephone 5,006,984 1,848,795


STATEMENT oF EXpENSES


Internet & lease line 2,352,751 1,420,951 Postage & telegrams 1,797,620 809,706 Printing & stationery 330,632 360,323 Subscription 105,936 100,867 Secretarial fees 264,553 189,653 Internal audit fees 1,986,781 1,363,050 External audit fees 561,751 409,550 Professional fees 2,293,225 962,678 Legal fees 566,760 171,857 Image building 153,548 85,893 Research and development – 34,168 Complementary expenses 12,500 –Fixed asset disposal loss – 2,904,824 Loss on repossessed items 94,441 –Write-off of insurance receivable 4,478,173 –

63,734,303 36,641,124

3. other overhead ExpensesBank charges 512,429 369,665 VAT on financial services 7,164,561 7,462,032 Taxes on share issue – 320,600 Deemed dividend tax – –Debit tax 2,275,369 1,647,713 VAT expense 2,747,758 1,971,298 Advertising & promotional 6,960,585 1,691,567 Social responsibility levy 125,736 214,207 Compliments and hampers 10,750 44,010 25th anniversary expenses (1,000) –Business commission 5,017,075 1,158,743 FD commission 3,749,820 3,169,759 Business promotional expenses 2,828,550 3,424,782 Entertainment 22,173 89,611 Incentives 36,979 –Written off of real estate (996,608) 2,732,624

30,454,178 24,296,611


SCHEDULES To THE ACCoUNTS


1. Cash in Hand and Cash at BanksBank of Ceylon – Galnewa 3,947,920 1,146,638 Bank of Ceylon – Kandy (2nd city branch) – – Bank of Ceylon – Galenbindunuwewa 3,910,311 804,485 People’s Bank – Tambutthegama 1,978,323 227,741 Commercial Bank – Kandy 1 143,049 – Commercial Bank – Kandy 2 458,832 6,766,635 Commercial Bank – Kandy 3 – 340,576 Commercial Bank – Anuradhapura – – Commercial Bank – Avissavella 13,012 – Commercial Bank – Embilipitiya 13,012 – Commercial Bank – Kurunegala 49,200 – Commercial Bank – Higurakgoda – – Commercial Bank – Negombo 13,012 – Commercial Bank – Rathnapura 1,383,139 – Commercial Bank – Colombo 20,216,315 – Hatton National Bank 5,952,888 – Sampath Bank – Kandy – 386,436 Sampath Bank – Mahiyangana 27,257 27,257 Sampath Bank – Anuradhapura 23,800 8,500 National Development Bank – Kandy 10,119 1,219 HSBC – Kandy 103,226 189,341

People’s Bank – Padaviya 901,867 60,827 Seylan Bank – Hingurakgoda 9,099,253 2,035,975 People’s Bank 50,000 50,000 Slip cash book 4,414 –

48,298,947 12,045,630

2. Income Tax RecoverableBalance as at the beginning of the year 5,334,407 3,675,824 Withholding tax deducted on fixed deposit 1,568,736 2,165,865 Adjustments (1,330,487) (507,283)Balance as at the end of the year 5,572,656 5,334,407

3. Economic Service ChargeBalance as at the beginning of the year 8,789,775 3,513,217 Economic service charges for the year 5,339,929 5,276,558 Set off during the year (11,788,917) – Balance as at the end of the year 2,340,787 8,789,775

4. Advance Company Tax (ACT) RecoverableBalance as at the beginning of the year 1,671,329 1,671,329 Write-off during the year (1,671,329) – Balance as at the end of the year – 1,671,329

ESC and ACT can be recovered only to the extent that the Company can make taxable income in the future.




5. Advances, prepayments and DepositsRent prepaid 8,229,360 3,174,000 Refundable deposits 515,500 314,000 Dealer advances (35 - C) 3,507,200 2,495,355 Prepaid company insurance – 142,393 Advance for land 13,219,752 203,735

25,471,812 6,329,483

6. other ReceivablesOther receivables 10,251,835 6,524,607

10,251,835 6,524,607

7. Interest in SuspenseConsumer credit 14,025 (68,553)Leasing 817,752 295,606 Lease purchase 1,249,657 333,184 Motor credit 369,431 399,510 Long-term loan 4,210,409 2,145,435 Land finance 376,493 204,953 Personal loan 3,348,150 1,157,247 Project finance 2,184,868 644,056 Short-term loan 6,961 3,346

12,577,746 5,114,785

8. Interest payableInterest on fixed deposits 64,415,773 53,173,314 Interest on savers’ deposits 3,946,880 3,535,006

68,362,653 56,708,320

9. Supplier payablesConsumer durable suppliers 72,489,826 7,227,650 Lease suppliers 57,317,793 65,362,187

129,807,619 72,589,837

10. other payablesLand sale advances 9,443,339 547,611 Unclaimed dividend 466,688 466,688 Staff guild fund – 1,881,824 Other advances 1,065,982 –Suspense collection 3,358,389 2,299,371 Rentals received in advance 1,618,819 –Infrastructure development cost of Akuressa Project 537,238Bonus payable – 4,621,702

16,490,455 9,817,196



11. Accrued ExpensesEmployees’ Provident Fund (EPF) 1,629,839 577,040 Employees’ Trust Fund (ETF) 244,476 86,556 Legal fees 419,978 362,656 Pay As You Earn (PAYE) 246,830 47,862 Audit fees 790,637 564,350 Electricity, water 981 57,116 Servers deposit conversion payable 399,214 274,597 Telephone 234,400 230,772 Turnover tax on land sale 993,778 767,078 Withholding tax 249,513 123,337 Insurance payable 14,395,841 1,552,175 Other charges payable 5,857,329 1,684,851 Refundable deposit 50,000 200,000 Rent received in advance (UAL&LI) – 1,032,000 ESC payable 1,708,935 1,281,871 Payable Stationery 149,785 60,115 Payable professional fee – 360,000 Payable VAT on profit 971,906 333,831 Payable of Dividend Tax – 734,583 Interest payable on returned cheques 764 –Payable VAT (20,874) 245,486 Other accrued expenses 5,465,355 384,222

33,788,687 10,960,497

12. Bank overdraftCommercial Bank – Anuradhapura 347,177 7,418,072 Commercial Bank – Higurakgoda 7,318,225 6,398,440 Commercial Bank – Kandy 1 – 37,411,802 Commercial Bank – Kandy 3 554,421 – Hatton National Bank – 5,181,320 Commercial Bank – Ratnapura – 1,178,588 Slip cash book – 8,122

8,219,823 57,596,344




INDEpENDENT AUDIToR’S REpoRT To THE SHAREHoLDERS oF CoMMERCIAL CREDIT LIMITEDReport on the Financial Statements

We have audited the accompanying financial statements of Commercial Credit Ltd. which comprise the balance sheet as

at 31st March 2009, and the income statement, statement of changes in equity and cash flow statement for the year then

ended, and a summary of significant accounting policies and other explanatory notes.

Management’s Responsibility for the Financial Statemetns

Management is responsible for the preparation and fair presentation of these financial statements in accordance with

Sri Lanka Accounting Standards. This responsibility includes: designing, implementing and maintaining internal control

relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether

due to fraud or error: selecting and applying appropriate accounting policies, and making accounting estimates that are

reasonable in the circumstances.

Scope of Audit and Basis of opinion

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in

accordance with Sri Lanka Auditing Standards. Those standards require that we plan and perform the audit to obtain

reasonable assurance whether the financial statements are free from material misstatements.

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.

An audit also includes assessing the accounting principles used and significant estimates made by management, as well

as evaluating the overall financial statement presentation.

We have obtained all the information and explanations, except for the matters referred to in paragraph 1 below, which to

the best of our knowledge and belief were necessary for the purposes of our audit. We therefore believe that our audit

provides a reasonable basis for our opinion.

opinionScope Limitation

1. We were unable to satisfy ourselves as to the accuracy of the following balances due to non availability of supporting

evidence. Rs.

i. Dealer Advance Branches Cr. 4,318,043

ii. Suspense Clearance Cr. 665,896

iii. Receivable GST Dr. 1,060,890

iv. Interest SFD for the year Cr. 1,113,175

v. A significant difference was noted with regard to unearned income between the Credit base and the Ledger balance

of the company amounting to Rs. 35,274,234 as at 31st March 2009.

LAWRIE MUTHU KRISHNA & CO.CHARTERED ACCOUNTANTS

30-2/1, Galle Road,Colombo 06, Sri Lanka.

Tel: +94 (11) 2501677, 5667829, 5624303Fax: +94 (11) 2507522E-mail: [email protected]

PARTNERS : M. Thavaraj, P.E.A. Jayewickreme, M.B. Ismail, Ms. A.M.J. Patrick, T. Krishnakumar, Ms. S.L. Jayasuriya, D.S.W. Andradi, G.J. David, Ms. F.M. Marikkar, Ms. S.J. Henry, Ms. A.U.M. Keppetipola



PARTNERS : M. Thavaraj, P.E.A. Jayewickreme, M.B. Ismail, Ms. A.M.J. Patrick, T. Krishnakumar, Ms. S.L. Jayasuriya, D.S.W. Andradi, G.J. David, Ms. F.M. Marikkar, Ms. S.J. Henry, Ms. A.U.M. Keppetipola

In our opinion, except for the effect of any adjustment in the financial statements resulting from the matters referred to in the

preceding paragraph 1, so far as appears from our examination, the Company maintained proper accounting records for

the year ended March 31, 2009 and the financial statements give a true and fair view of the Company’s state of affairs as at

March 31, 2009 and of its profit and cash flows for the year then ended, in accordance with Sri Lanka Accounting Standards.

Report on Legal and other Regulatory Requirements

These financial statements also comply with the requirements of Section 151(2) of the Companies Act No. 07 of 2007 and

Finance Companies Act No. 78 of 1988.

(Sgd.)

LAWRIE MUTHU KRISHNA & CoChartered Accountants

Colombo28th November 2009


INCoME STATEMENT

For the year ended 31st March 2009 2008Note Rs Rs

Revenue 1 350,461,448 249,126,276


Lessoperating expenses 5Personnel costs 54,891,548 45,826,179 Premises, equipment & establishment expenses 36,641,124 32,735,443 Provision for staff retirement benefit cost 2,220,000 1,726,100 Provision for bad and doubtful debt 6 37,265,471 11,077,920 Other Overhead expenses 24,296,611 15,834,259

155,314,754 107,199,900 Net profit before taxation 7,547,155 32,811,849

Taxation 7 8,378,280 (3,478,091)Net profit for the year 15,925,435 29,333,758


Proposed dividend per share 9 0 1.73

The Accounting Policies from pages 105 to 112 and the Notes from pages 113 to 122 form an integral part of these

Financial Statements.


BALANCE SHEET

As at 31st March 2009 2008Note Rs Rs

(Restated)

AssetsCash in hand and cash at banks 10 12,577,606 5,342,523 Investment in the Government Treasury Bills 11 96,559,565 88,525,683 Short-term investments with banks 11,170,312 8,407,748 Investments in dealing securities 12 55,084 55,084 Loans and Advances 13 269,602,610 241,849,493 Lease rental receivables within one year 14 230,594,344 164,413,424 Lease rental receivables after one year 14 319,843,000 286,805,287 Rental receivables on loans, advances and leases 15 189,601,675 103,736,755 Repossessed stocks 16 23,673,957 22,943,804 Deferred tax asset 17 36,993,319 28,615,039 Stocks of real estates 18 43,360,435 57,569,582 Investment securities 19 201,900 201,900 Commissioner General of Inland Revenue 20 15,795,511 8,860,370 Trade and other receivables 21 36,791,663 27,186,723 Intangible assets 22 3,169,434 3,174,137 Leasehold right over land 23 3,486,550 3,532,213 Property, plant & equipment 24 143,996,372 144,917,662 Total assets 1,437,473,336 1,196,137,427

LiabilitiesBank overdraft 57,596,344 13,264,946 Deposits from customers 25 854,330,911 712,919,050 Trade and other payables 26 145,454,148 125,691,074 Long-term borrowings 27 53,721,113 46,807,578 Long-term borrowings payable within one year 27 27,870,600 20,060,000 Lease creditors payable within one year 28 4,766,002 6,088,632 Lease creditors payable after one year 28 7,084,905 7,427,378 Retiring gratuity obligations 29 9,319,150 8,627,400

1,160,143,174 940,886,058

Shareholders’ fundStated capital 30 73,718,375 58,718,375 Revaluation reserve 31 74,603,594 74,603,594 Statutory reserve 32 50,294,760 50,294,760 General reserve 33 58,751,125 58,751,125 Retained earnings 19,962,309 12,883,515

277,330,163 255,251,369 Total liabilities and shareholders’ funds 1,437,473,336 1,196,137,427

I certify that the Financial Statements have been prepared in compliance with the requirements of Companies Act No. 7

of 2007.

(Sgd.)

Chief Executive Officer


Signed for and on behalf of the Board by:


Chairman Chief Financial Officer Director28th November 2009 28th November 2009






As at 1st April 2007 31,021,820 10,000,000 17,341,132 45,294,760 40,751,125 6,689,178 151,098,015


Rights issue 17,696,555 – – – – – 17,696,555

Transferred to the general reserve – – – – 18,000,000 (18,000,000) –

Revaluation reserve – – 57,262,462 – – – 57,262,462

Transferred to statutory reserve fund – – – 5,000,000 – (5,000,000) –

Prior year adjustment – – – – – 4,747,123 –

Dividend paid – – – – – (4,886,544) (4,886,544)

As at 31st March 2008 48,718,375 10,000,000 74,603,594 50,294,760 58,751,125 12,883,515 250,504,246

As at 1st April 2008 48,718,375 10,000,000 74,603,594 50,294,760 58,751,125 12,883,515 255,251,369


Share issue 15,000,000 – – – – – 15,000,000

Transferred to stated capital 10,000,000 (10,000,000) – – – – –

Dividend paid – – – – – (7,345,749) (7,345,749)

W/off – – – – – (1,500,892) (1,500,892)

As at 31st March 2009 73,718,375 – 74,603,594 50,294,760 58,751,125 19,962,309 277,330,163

The Accounting Policies from pages 105 to 112 and the Notes from pages 113 to 122 form an integral part of these Financial Statements.

In accordance with Companies act No. 07 of 2007 stated capital and share premium have been reclassified as stated capital.

Statutory reserve fund represents the statutory requirement in terms of Direction No. 1 of 2003 issued by the Central Bank under Finance Companies

Act No. 78 of 1988.

Revaluation reserve represents revaluation of freehold land and building carried out in 17th May 2008 and includes the surplus on revaluation of

those assets.

General reserve is the amount allocated by the Board of Directors for the general purposes of the Company.

STATEMENT oF CHANgES IN EqUITy


CASH FLoW STATEMENT

For the year ended 31st March 2009 2008Rs. Rs.

Cash flow from operating activitiesInterest and commission receipts 314,109,797 195,973,278Interest payments (187,599,538) (109,109,878)Other income 32,947,293 49,627,432Operating expenditure (95,464,240) (81,228,421)Operating profit before changes in operating assets (Note A) 63,993,312 55,262,411

(Increase)/decrease in operating assetsFunds advanced to customers (134,394,430) (174,924,533)Sales of real estate 17,625,900 2,001,818Purchase of real estate 0 (3,140,903)Investment in Treasury Bills (8,033,882) (18,027,574)Sundry debtors (17,456,429) (15,329,129)Other current assets (85,864,920) (31,205,019)Increase/(decrease) in operating liabilities (228,123,761) (240,625,340)Deposits from customers 141,411,861 143,876,350Other liabilities (8,278,602) 36,361,194

133,133,260 180,237,544Net cash from operating activities (30,997,189) (5,125,386)Gratuity paid (1,528,250) (168,550)Income tax paid (6,935,141) (10,514,303)Net cash inflow/(outflow) from operating activities (39,460,580) (15,808,239)

Cash flow from investing activitiesDividends received 7,000 3,019Purchase of property, plant & equipment (14,164,328) (14,090,284)Proceeds from sale of property, plant & equipment 948,970 889,651Net cash inflow/(outflow) from investing activities (13,208,358) (13,197,614)

Cash flow from financing activitiesProceeds from right share issued 15,000,000 17,696,555Loan obtained 52,590,000 55,925,752Loan repayment (41,909,067) (22,649,957)Dividends paid (7,345,749) (4,886,544)Net cash flow from financing activities 18,335,184 46,085,806

Net increase in cash and cash equivalents (34,333,754) 17,079,953Cash and cash equivalents at the beginning of the period 485,327 (16,594,626)Cash and cash equivalents at the end of the period (33,848,427) 485,327



Reconciliation of cash & cash equivalentsCash in hand and cash in bank 12,577,606 5,342,523Short-term investments 11,170,312 8,407,748Bank overdrafts (57,596,344) (13,264,946)

(33,848,427) 485,327

Reconciliation of operating profit (Note A)Profit before taxation 7,547,155 32,811,849VAT on financial Institutions 7,462,032 4,516,911Profit on sale of real estate (3,247,850) (2,001,818)Depreciation 7,116,056 8,084,735Bad debt reversed 0 (194,622)Provision for bad and doubtful debts 37,265,471 11,077,920Investment income (7,000) (3,019)(Profit)/loss on sale of fixed assets 2,904,824 (755,646)Gratuity provision 2,220,000 1,726,100Written off of real estate 2,732,624 0Cash flow from operating profit 63,993,312 55,262,411



CASH FLoW STATEMENT


1. general Corporate Information

Commercial Credit Limited (‘Company’) is a public company incorporated on 4th October 1982 with limited liability and

domiciled in Sri Lanka. Registered office of the Company is situated at No.106, Yatinuwara Street, Kandy.

Principal Activities and Nature of Operations

The principal activity of the Company during the year was providing a comprehensive range of financial services which

includes leasing, hire purchase, trade financing, land finance, project finance and capital market operations to industrial,

commercial and agricultural enterprises in Sri Lanka. There were no changes in the principle activities during the year.

Date of Authorisation for Issue

The Financial Statements of the Company for the year ended 31st March 2009 were authorised for issue by the Director

on 28th November 2009.

2. Adoption of New and Revised Sri Lanka Accounting StandardsIn the current year, the Company adopted SLAS 16 - ‘Employee Benefits’ (Revised 2006), which became effective for

financial periods beginning on or after 1st July 2007. The impact of this adoption has been to use a professional actuary

in valuing retirement benefit obligations and other long-term post-employment benefits with respective comparative

information been restated to be in line with the new accounting standard. Further details of this have been provided in Note.

Standards in Issue but not yet Effective:

At the date of authorisation of these Financial Statements, the following Standards were in issue but not yet effective:

SLAS 44 Financial Instruments: Disclosures - Effective 1st January 2011

SLAS 45 Financial Instruments: Recognition and Measurement - Effective 1st January 2011

The Directors anticipate that both these standards will be adopted in the Company’s Financial Statements when they

become applicable and the adoption could significantly affect amounts reported under financial assets and liabilities as

well as reported results of operations.

3. preparation of Financial Statements3.1 Statement of Compliance

The Balance Sheet, Income Statement, Changes in Equity and Cash Flows, together with Accounting Policies and Other

Notes (the ‘Financial Statements’) have been prepared in accordance with Sri Lanka Accounting Standards and the

requirements of the Companies Act No. 07 of 2007 and the Finance Companies Act No. 30 of 1988.


These Financial Statements have been prepared and presented in Sri Lankan Rupees and rounded to the nearest Rupee.

No adjustment has been made for inflationary factors affecting these Financial Statements, which have been prepared on

a historical cost basis with the following notable exceptions:

Revaluation of properties using a professional valuation

Remeasuring Dealing Securities at market values

Provisions for doubtful debts and fall in value of investment securities

Recognition of impairment losses, if any

SIgNIFICANT ACCoUNTINg poLICIES


Directors have made an assessment of the Company’s ability to continue as a going concern and they do not intend either

to liquidate or to cease operations in the foreseeable future.

The accounting policies have been consistently applied by the Company and are consistent with those used in the previous

year.

3.3 Critical Judgments and Key Sources of Estimation Uncertainty

The preparation of Financial Statements requires management to make judgments, estimates and assumptions that affect

the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results

may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised

in the period in which the estimate is revised or in the period of revision and future periods only if the revision affects both

current and future periods.


Comparative information is reclassified where necessary to comply with the current presentation.

4. Significant Accounting PoliciesThe accounting policies set out below has been applied consistently to all periods presented in these Financial Statements

implicated. The accounting policies of the Company have been consistently applied where applicable and any deviations

have been disclosed accordingly.

Summary of Significant Accounting Policies

The principal accounting policies adopted in the preparation of these Financial Statements are set out below.

The Directors have made an assessment of the Company’s ability to continue as a going concern in the foreseeable future,

and they do not intend to liquidate, cease or curtail the trading.

4.1 Financial Investments - Dealing Securities

Securities held for resale in the near future to benefit from short-term market movements are treated as dealing securities.

These investments are stated at lower of cost and market value determined on an aggregate portfolio basis, in total. The

cost of an Investment is the cost of acquisition inclusive of brokerages, duties and bank charges.

Financial Investments - Investment Securities

Investments acquired with the positive intent to hold on long-term basis, are classified as investment securities. These are

acquired and held for yield or capital growth in the long term and are recorded at cost net of provision for any diminution

in value which is non-temporary.

4.2 Investment in Treasury Bills Held to Maturity

Investment in Treasury Bills held to maturity is reflected at the value of bills purchased and the discount/premium accrued

thereon. Discount received/premium paid is taken to the Income Statement based on the pattern reflecting a constant

periodic rate of return.

4.3 Advances to Customers

Advances to customers represent loans and advances originated by the Company and are recognised when cash is

advanced to borrowers. They are de-recognised when either borrower repays their obligations, or the loans are sold or

written off, or substantially all the risks and rewards of ownership are transferred. They are recorded at the amount disbursed.



4.4 Lease Receivables

Assets leased to customers under agreement that transfer substantially all the risk and rewards associated with ownership

other than legal title are classified as finance leases. Amounts receivable under finance leases are included under ‘lease

receivable’ and trade receivables. Leasing balances are stated in the Balance Sheet after deducting initial rentals received,

unearned lease income and the provisions for rentals doubtful of recovery.

4.5 Provision for Non-Performing Advances and Leases

Advances (including leases), which are 180 days or more in arrears of due capital and/or interest, are classified as

non-performing. Provision for such advances is recognised when there is adequate evidence of non-performance, as

determined by the management, and according to the directions issued by the Central Bank of Sri Lanka and Sri Lanka

Accounting Standard No. 33 - ‘Revenue Recognition and Disclosures in the Financial Statements of Finance Companies’.

Losses expected from future events are not recognised. Any provision identified is charged to the Income Statement and

the carrying amount of the loan on the Balance Sheet is reduced.

Thresholds used for making specific provisions for bad and doubtful debts:

Period outstanding Classification Provision as a percentage of net exposure


Revenue Recognition on Non-Performing Advances and Leases

When an advance or a lease is classified as non-performing, interest income ceases to be recognised using the accrual

basis and is taken to income only on a cash basis.

4.6 InventoriesReal Estate

Real estates are valued at cost or net realisable value whichever is lower. Cost includes all expenses necessary to bring

the real estate to the condition as at the Balance Sheet date. Net realisable value is the price at which inventories can be

sold in the ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale.

Other Inventories

These are valued at the lower of cost and net realisable value.

4.7 Hire Purchase Receivables

Assets purchased by customers under agreements that transfer substantially all the risks and rewards associated with

ownership other than legal title are classified as hire purchase receivables. Hire purchase receivables in the Balance Sheet

include total hire purchase instalments due net of unearned interest and provision for doubtful debts.

4.8 Cash and Cash Equivalents

Cash and Cash Equivalents include cash in hand, balances with banks and short-term highly liquid investments, readily


For the purpose of Cash Flow Statement cash and cash equivalent consists of cash in hand and deposits in banks net of

outstanding bank overdrafts. The Cash Flow Statement is reported based on the direct method.

4.9 properties and Equipment

Property and equipment are stated at cost or valuation less subsequent accumulated depreciation and any subsequent

accumulated impairment losses. All items of property and equipment are initially recorded at cost. The cost of property and

equipment is the cost of acquisition or construction together with any expenses incurred in bringing the asset to its condition



for its intended use. Where items of property and equipment are subsequently revalued, the entire class of such assets is

revalued. The Company has adopted a policy of revaluing assets every 5 years. When an asset is revalued, any increase in

the carrying amount is credited directly to a revaluation reserve, except to the extent that it reverses a revaluation decrease

of the same asset previously recognised in the Income Statement, in which case the increase is recognised in the Income

Statement. Any revaluation deficit that offsets a previous surplus in the same asset is directly offset against the surplus in

the revaluation reserve and any excess recognised as an expense. Upon disposal, any revaluation reserve relating to the

asset sold is transferred to retained earnings.

Items of property and equipment are de-recognised upon disposal or when no future economic benefits are expected from

its use. Any gain or loss arising on de-recognition of the asset is included in the Income Statement in the year the asset is

de-recognised.

Subsequent expenditure incurred for the purpose of acquiring, extending or improving assets of a permanent nature

by means of which to carry on the business or to increase the earning capacity of the business are treated as capital

expenditure.

Depreciation

Depreciation is provided on written down value basis to write off net book value of all the assests appropriate to the

estimated useful lives of the different type of assets.

Building 2%Motor vehicles 25%Furniture and fittings 12.5%Office equipment 12.5%Computers 20%Photocopy/fax machines 12.5%Air-conditioners 12.5%Generators 12.5%

4.10 Intangible Assets4.10.1 Basis of Recognition

Intangible asset is recognised if it is probable that the future economic benefits that are attributable to the asset will flow

to the entity and the cost of the assets can be measured reliably in accordance with Sri Lanka Accounting Standard

No. 37 on ‘Intangible Assets’. Accordingly, these assets are stated in the Balance Sheet at cost less accumulated

amortisation and impairment losses.

4.10.2 Subsequent Expenditure

Subsequent expenditure on intangible asset is capitalised only when it increases the future economic benefits embodied

in these assets. All other expenditure is expensed as incurred.

4.10.3 Amortisation

The useful lives of intangible assets are assessed to be either finite or infinite. Intangible assets with finite lives are

amortised over the useful economic life. The amortisation period and the amortisation method for an intangible asset with

a finite useful life are reviewed at least each financial year end. Changes in the expected useful life or the expected pattern

of consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period

or method, as appropriate and are treated as changes in accounting estimates. The amortisation expense on intangible

assets with finite lives is recognised in the Income Statement in the expenses category consistent with the function of

intangible asset.



4.10.4 Computer Software

Computer software is stated at cost less accumulated amortisation and any accumulated impairment loss. Amortisation is

made at 25% per annum on cost.

4.11 Lease Hold Assets

Leases are classified as finance leases whenever terms of the lease transfer substantially all the risks and rewards of

ownership to the lessee. All other leases are classified as operating leases.

Finance Leases

Assets held under finance leases are initially recognised as assets of the Company at their fair value at the inception of the

lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included

in the Balance Sheet as a finance lease obligation.

Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant

rate of interest on the remaining balance of the liability. Finance charges are charged directly to Income Statement, unless

they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Company’s

general policy on borrowing costs (see Note 4.17). Contingent rentals are recognised as expenses in the periods in which

they are incurred.

operating Leases

Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where

another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are

consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they

are incurred.

4.12 Impairment 4.12.1 Financial Assets

In addition to the provision made for possible loan losses based on the parameters and directives for the specific and

general provisions on loans and advances by the Central Bank of Sri Lanka, the Company reviews its loans and advances

portfolio at each reporting date to assess whether a further allowance for impairment should be provided in the Income

Statement. The judgment by the management is required in the estimation of these amounts and such estimates are based

on assumptions about a number of factors through actual results may differ, resulting in future changes to the provisions.

4.12.2 Impairment of Non-Financial Assets

At each Balance Sheet date, the Company reviews the carrying amounts of its tangible and intangible assets to determine

whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the

recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not

possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the

cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified,

corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest

group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the

carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised

immediately in the Income Statement, unless the relevant asset is carried at a revalued amount, in which case the

impairment loss is treated as a revaluation decrease.



4.13 Income Taxes

Income tax expense represents the sum of taxes currently payable and deferred. Income tax relating to items recognised

directly in equity is recognised in equity.

Deferred Taxes

Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are generally

recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available

against which those deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the

temporary difference arises from goodwill or from initial recognition (other than in business combination) of other assets

and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

The carrying amount of deferred income tax assets is reviewed at each Balance Sheet date and reduced to the extent that

it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to

be utilised. (Income tax relating to items recognised directly in equity is recognised in equity.)

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the

liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantially enacted

by the Balance Sheet date.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets

against current liabilities and when they relate to income taxes levied by the same taxation authority and intends to settle

them on a net basis.

Current Taxes

Current income tax is based on the elements of income and expenditure as reported in the Financial Statements, but is

computed in accordance with provisions of Inland Revenue Act No. 10 of 2006 and its subsequent amendments.

4.14 Value Added Tax on Financial Services

The base for the computation of Value Added Tax on financial services is the accounting profit before income tax adjusted for

the economic depreciation, emoluments of employees and computed on prescribed rates. During the year, the Company’s

total value addition was subject to a 20% Value Added Tax on financial services as per the Section 25 A of Value Added

Tax Act No. 14 of 2002 and amendments thereto.

4.15 Employee Retirement BenefitsDefined Benefit Plan - Gratuity

The Company is liable to pay gratuity in terms of the payment of Gratuity Act No. 12 of 1983, according to which an obligation

to pay gratuity arises only on completion of 5 years of continued service. A provision for the Company’s obligations under

this act is determined based on an actuarial valuation, using the Projected Unit Credit Method, carried out by a professional

actuary as at each Balance Sheet date. Actuarial gains and losses that exceed 10% of the greater of the present value of

defined benefit obligations are mortised over the expected average remaining working lives of the employees. This liability

is not externally funded.

Defined Contribution Plan - Employees’ Provident Fund and Employees’ Trust Fund

Employees are eligible for Employees’ Provident Fund contributions and Employees’ Trust Fund contributions in line with

respective statutes and regulations. The Company contributes the defined percentages of gross emoluments of employees

to an approved Employees’ Provident Fund and to the Employees’ Trust Fund respectively, which are externally funded.



4.16 Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it

is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount

of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at

the Balance Sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is

measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those

cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party,

the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the

receivable can be measured reliably.

4.17 Deposits from Customers

Deposits include savers’ deposits and term deposits. They are recognised at the gross value of the outstanding balance.

Interest accrued is charged to the Income Statement.

4.18 Revenue RecognitionInterest Income - Advances

Interest income from advances is recognised on an accrual basis. Interest ceases to be taken into revenue when the

recovery of interest and/or principal is in arrears for six (6) months.

Interest Income - Lease/Hire Purchase Receivables

Interest income on leasing is accounted based on a pattern reflecting a constant periodic rate of return on capital outstanding.

The excess of aggregate lease/hire purchase rentals receivable over the cost of the leased/hire purchase assets constitutes

the total unearned lease interest/hire purchase income at the commencement of a lease/hire purchase. The unearned

lease/hire purchase interest income is taken into income over the term of the lease/hire purchase commencing with the

month in which the lease/hire purchase is executed in proportion to the declining receivable balance.

Interest income ceases to be taken to revenue when instalments are in arrears for six months.

Interest Income - Investments


Interest Income - Non-Performing Advances, Leases and Investments

Interest income on non-performing advances, investments and leases is accounted for on a cash basis.

Real Estate Income - Outright Sales

Revenue is recognised when properties are sold and the buyer has taken possession of such properties. When there is

insufficient assurance as to the receipt of the total consideration, income is accounted for on a cash received basis.

Real Estate Income - Sales Under Easy Payment





Dividend Income

Dividend income is recognised in the Income Statement when the Company’s right to receive the payment is established.

Rent Income


Commission Income


Amortisation of Discount on Government Treasury Bills

The discount on the Treasury Bill is amortised over the period to the maturity.

Profit on Disposal of Assets

Profit earned on disposal of investment and seised assets are accounted for in the Income Statement based on realised

net profit.

4.19 Expenditure Recognition operating Expenses

All expenditure incurred in the running of the business and in maintaining the Property, Plant & Equipment in a state of

efficiency has been charged to revenue in arriving at the profit for the year.

For the purpose of presentation of the Income Statement, the ‘nature of expenses’ method has been adopted, on the basis

that it presents fairly the elements of the Company performance.

4.20 Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset that normally take

a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such

time as the assets are substantially ready for their intended use or sale. Income earned from temporarily investing specific

borrowings pending their expenditure on a qualifying asset is deducted from the borrowing costs eligible to be added to

the carrying amount.

All other borrowing costs are recognised in profit or loss in the year in which they are incurred.

4.21 Segment Reporting

Business segment has been determined based on the nature of the service provided by the Company after risk and


Segment income and expenses are allocated to the segment to the content that is directly attributable to the segment

or/and allocated to the segment on a reasonable basis.

The activities of each of the reported business segments of the Company are detailed in Note 38.






350,461,448 249,126,276

2. Interest incomeLeasing - vehicle 169,189,222 105,359,018 Leasing - machinery 24,129,722 12,524,874 Consumer credit loans 21,061,743 19,018,981 Motor credit loans 23,519,244 25,707,514 Long-term loans 10,376,547 8,106,647 Short-term loans 4,092,376 2,649,438 Personal loans 38,333,621 19,816,457 Land finance 2,723,687 3,334,355 Short-term investments 20,840,144 15,645,222

314,266,305 212,162,506

3. Direct interest costFixed deposits 163,945,860 91,047,771 Savers’ deposits 130,708 2,587,501 Borrowings 23,522,970 15,479,254

187,599,538 109,114,526

4. other incomeDividend income 7,000 3,019 Profit/(loss) on sale of property, plant & equipment 0 755,646 Service charges 1,346,502 2,023,018 Rent income 1,870,000 1,530,000 Real estate other income 911,163 144,902 Commission income 1,103,014 742,579 Bad debt recoveries 535,557 299,934 Bad debt reversed 0 194,622 Profit on repossessed item 829,191 802,922 Other charges 25,440,201 28,438,855 Commission from Western Union Transactions 60,624 26,455 Discount on purchase 844,041 0

32,947,293 34,961,952




5. Net profit before taxationNet profit before taxation is stated after charging all expenses including the following:

Directors’ remuneration 7,159,912 6,128,535 Auditors’ remuneration 409,550 280,000 Donations 103,329 29,250 Corporate social responsibility 214,207 0Commission paid to brokers 3,169,759 2,097,793 Legal expenses 171,857 351,171 Depreciation 7,116,056 8,084,735

6. Provision for bad and doubtful debtsConsumer credit 2,311,665 1,256,256 Motor credit 5,080,308 3,703,769 Term loans 168,939 835,237 Repossessed stock 161,635 2,010,706 Leases 14,153,957 3,271,952 Personal loan 4,008,070 0Short-term loan 11,380,897 0

37,265,471 11,077,920

7. TaxationThe Company is liable for income tax at the rate of 35% on taxable income. However, Company incurred loss of

Rs. 37,690,867/- during the year ended 31st March 2009. The tax losses available for setting off against the future taxable

profits as at the Balance Sheet date amount to Rs. 192,484,263.


Income taxation on current year profit 0 0Social responsibility levy 0 0Deferred taxation (Note - 17) 8,378,280 (3,478,091)

8,378,280 (3,478,091)





Net profit before taxation 7,547,155 32,811,849 Aggregate disallowable expenses 399,029,368 245,865,353 Aggregate allowable expenses (446,734,045) (290,262,096)Loss set off during the year 0 0Taxable income/(loss) for the period (40,157,522) (11,584,894)

Income tax @ 35% 0 0Social responsibility levy @ 1% 0 0Taxation charged to the Income Statement 0 0Effective tax rate 0% 0%


7.2 Taxable LossesFor the year ended 31st March 2009 2008

Rs. Rs.

Brought forward from previous year 152,326,741 140,741,847Loss set off during the year 40,157,522 11,584,894

192,484,263 152,326,741

8. Earnings per shareThe basic earnings per share have been calculated by dividing the profit for the period attributable to the equity holders of

the Company, by the number of ordinary shares in issue (Weighted average) during the year ended 31st March 2008, as

per the requirements of the Sri Lanka Accounting Standard 34 -”Earnings per Share”.


Profit attributable to the equity shareholders used as the numerator 15,925,435 29,333,758


Share issued during the year 0 221,737



9. Dividend per shareDirectors have decided that no dividend will be paid for 2008/09 however in 2007/08 a dividend of Rs. 1.73 per share was paid.


10. Cash in hand and cash at banksPetty cash 531,976 250,107 Cash at banks 12,045,630 5,092,416

12,577,606 5,342,523

11. Investments in the Government Treasury BillsGross value 100,758,049 91,092,400 Unearned income (4,198,484) (2,566,717)

96,559,565 88,525,683


For the year ended 31st MarchNo. of

shares Cost as at

31.3.2009

Marketvalue as at

31.3.2009 Cost as at

31.03.2008


quoted companiesPeoples’ Merchant Bank PLC 100 625 0 625 5,350 Vanik Incorporation PLC 218 108 0 108 371 Hatton National Bank PLC -Voting 385 25,145 30,030 25,145 45,430 Hatton National Bank PLC - Non-voting 107 6,786 4,146 6,786 5,725 Sampath Bank PLC - Voting 310 13,420 26,582 13,420 35,650 The Finance PLC 648 9,000 14,824 9,000 40,824

55,084 75,582 55,084 133,350




13. Loans and AdvancesConsumer credit 52,113,297 50,897,367 Motor credit 95,529,683 70,984,830 Staff loans 8,745,559 8,394,776 Term loans 184,937,434 160,140,901

341,325,973 290,417,874 Provision for bad debt (Note -13.1) (7,357,646) (10,805,633)Unearned income (Note -13.2) (64,365,717) (37,762,748)

269,602,610 241,849,493

13.1 Provision for bad debtBalance at the beginning of the year 10,805,633 8,290,190 Provision for the year 22,949,879 5,795,262 Provision transferred to legal repossessed provision (3,484,722) (2,089,505)Write offs during the year (22,913,144) (1,190,314)Balance at the end of the year 7,357,646 10,805,633




824,698,645 652,172,243 Unearned lease income (Note 14.1) (260,850,674) (193,952,342)Provision for bad debts (Note 14.2) (13,410,627) (7,001,190)

550,437,344 451,218,711 Receivable within one year (230,594,344) (164,413,424)Receivables after one year 319,843,000 286,805,287


14.2 Provision for bad debtBalance at the beginning of the year 7,001,190 5,283,827 Provision for the year 14,153,957 3,271,952 Write off during the year (781,776) (1,554,589)Provision transferred to legal repossessed (6,962,744) 0Balance at the end of the year 13,410,627 7,001,190




15. Rental receivables on loans, advances and leasesConsumer credit 10,257,186 13,436,297 Leasing 76,813,458 36,256,142 Lease purchase 14,783,820 9,543,699 Motor credit 9,754,121 9,714,161 Short-term loan 20,831,899 11,824,632 Long-term loan 9,167,853 7,677,075 Land finance 364,628 255,950 Personal loan 14,582,280 16,905,592 Project finance 1,882,205 1,533,181 Future interest adjustment 35,274,234 0Other interest receivables 1,004,777 1,004,777

194,716,460 108,151,505 Interest in suspense (Note 15.1) (5,114,785) (4,414,750)

189,601,675 103,736,755

15.1 Interest in suspenseBalance at the beginning of the year 4,114,750 0Suspended during the year 8,475,995 4,114,750 Amount recovered during the year (7,475,960) 0Balance at the end of the year 5,114,785 4,114,750

The Company has not segregated the interest in suspense from the rental receivable on loans, advances and leases for

the year ended 31st March 2007.


16. Repossessed stocksGeneral stock 21,251,845 21,555,357 Legal stock 15,582,943 7,427,955

36,834,788 28,983,312 Provision for repossessed stock (2,172,341) (2,010,706)Provision for repossessed legal stock (Note16.1) (10,988,490) (4,028,802)

23,673,957 22,943,804

16.1 Provision for repossessed legal stockAs at 1st April 4,028,802 3,279,369 Transferred from/to the bad and doubtful debt provision 10,447,466 2,089,505 Provision reversed 0 (194,622)Write off during the year (3,487,778) (1,145,450)As at 31st March 10,988,490 4,028,802

17. Deferred tax assetBalance as at 01 April 2008 28,615,039 32,093,130 Amount released/(originated) during the year 8,378,280 (3,478,091)Balance as at 31st March 2009 36,993,319 28,615,039

When arriving at the temporary differences for deferred tax calculation, the cumulative tax losses have been recognised

as an asset since future taxable profit will be available against which the unutilised tax losses can be utilised according to

the tax plan of the Company.



18. Stocks of Real estatesFor the year ended 31st March 2009 2008

Rs. Rs.

Property at Mahakanda (Uplands) 3,822,500 4,046,900 Property at Thalathuoya (Green Village) 4,721,100 5,643,453 Property at Lagundeniya (Peak View Garden) 19,441,113 17,950,785 Property at Wariyagala (Park Land) 3,657,681 8,401,813 Property at Arambehena (Isuru Uyana) 456,680 5,386,598 Property at Malpana Village 0 0Property at Wariyagala (Misty Groove) 1,200,000 6,959,682 Property at Malkaduwawa 9,857,626 9,180,351 Advance for stocks 203,735 0

43,360,435 57,569,582

19. Investment SecuritiesFor the year ended 31st March No. of shares 2009 2008

Rs. Rs.

Credit Information Bureau 19 1,900 1,900Finance House Consortium (Pvt) Limited 2,000 200,000 200,000

201,900 201,900

For the year ended 31st March 2009 2008

Rs. Rs.

20. Commissioner General of Inland RevenueIncome tax recoverable 5,334,407 3,675,824 Economic service charges 8,789,775 3,513,217 Advance Company tax recoverable 1,671,329 1,671,329

15,795,511 8,860,370

21. Trade and Other ReceivablesAdvance, deposits and prepayments 11,645,028 7,421,307 Goods and Service Tax (GST) 1,060,890 1,060,890 Value Added Tax (VAT) 16,040,824 8,833,280 Interest receivable on fixed deposits and Treasury Bills 1,451,913 1,295,405 Receivable from Malpana Project 0 6,438,115 Stock of stationery 499,447 856,827 Other receivables 6,093,561 1,280,886

36,791,663 27,186,711





1.4.2008Additions Balance as at

31.3.2009

22. Intangible assetsComputer software 9,642,430 0 9,642,430Total cost 9,642,430 0 9,642,430




Computer software 6,468,293 4,703 6,472,996 Total amortisation 6,468,293 4,703 6,472,996 Net book value 3,174,137 – 3,169,434

23. Leasehold right over landFor the year ended 31st March 2009 2008

Rs. Rs.

Balance at beginning of the year 3,532,212 0Additions during the year 0 3,555,000

3,532,212 3,555,000 Amortisation during the year (45,662) (22,788)

3,486,550 3,532,212

The Company has obtained the land under the operating lease which initially for 99 (1st lessor) years remaining period is

77 years now. The Company amortise the land cost over the period of 78 years.

24. property & EquipmentCost/Valuation - Rs.


Additions/Transfers Disposals


Freehold assetsLand 71,165,000 – – 71,165,000 Building 36,335,000 5,964,764 – 42,299,764 Office equipment and machinery 2,269,354 483,885 – 2,753,239 Furniture and fittings 5,730,505 2,658,524 986,282 7,402,747 Motor vehicles 19,601,198 2,593,543 10,175,349 12,019,392 Computers 7,945,176 2,199,188 723,085 9,421,279 Air-conditioners 3,203,503 226,924 – 3,430,427 Generators 1,697,426 37,500 – 1,734,926

147,947,162 14,164,328 11,884,716 150,226,774 Leasehold assets 76,782,162 – – –Vehicles 17,380,456 (1,043,543) – 16,336,913 Vehicles (Guild Fund) 1,439,374 – – 1,439,374 Computers 3,492,100 1,000,000 – 4,492,100

22,311,930 (43,543) – 22,268,387 Total cost 170,259,092 14,120,785 11,884,716 172,495,161 Working in progress 4,122,591 –

172,495,161



1.4.2008Charged for

the yearCharged on

Disposals/TransferBalance as at

31.3.2009

Freehold assetsBuilding – 805,794 – 805,794 Office equipment and machinery 1,124,914 153,626 – 1,278,540 Furniture and fittings 2,345,530 462,257 622,590 2,185,197 Motor vehicles 11,437,020 1,151,529 6,226,712 6,361,837 Computers 4,505,054 737,469 468,265 4,774,258 Air-conditioners 1,962,063 58,989 – 2,021,052 Generators 925,837 44,599 – 970,436

22,300,418 3,414,263 7,317,567 18,397,114 Leasehold assetsVehicles 6,105,339 2,646,273 713,355 8,038,257 Equipment 359,844 359,844 – 719,688 Computers 698,420 645,310 – 1,343,730

7,163,603 3,651,427 713,355 10,101,675 Total depreciation 29,464,021 7,065,690 8,030,922 28,498,789 Net book value 144,917,662 7,055,095 3,853,794 143,996,372

24.1 Land and building have been revalued on 31st March 2008 (Inspected on 15th May 2008), the surplus on revaluation

amounting to Rs. 48,840,951/- and Rs. 8,421,511/- respectively have been transferred to the revaluation reserve

account. The revaluation was done based on the valuation report dated 17th May 2008 issued by an incorporated valuer,

Mr. S.G.Fernando.


25. Deposits from customersFixed deposits - monthly 250,076,400 215,966,700 Fixed deposits - maturity 564,697,914 456,767,300 Savers’ deposits 39,556,597 40,185,050

854,330,911 712,919,050

26. Trade and other payablesInterest payable 56,708,320 28,666,644 Supplier payable 72,589,837 78,103,546 Accrued expenses 10,960,497 11,106,759 Other payables 5,195,494 7,814,125

145,454,148 125,691,074

27. Long-term borrowingsBalance as at 1st April 2008 66,867,578 26,069,700 Loans obtained during the year 51,590,000 55,925,752

118,457,578 81,995,452 Loan repayments during the year (36,865,865) (15,127,874)Balance as at 31st March 2008 81,591,713 66,867,578 Payable within one year (27,870,600) (20,060,000)Payable after one year 53,721,113 46,807,578

Company has pledged the following securities for the bank loans, bank overdrafts and Lease facilities as at 31st March 2008.



Bank Commercial Bank PLC

1. Primary Mortgage Bond No. 3197 and Secondary Mortgage Bonds for Rs. 17.5 Million over the business premises of

the Company at No. 106, Yatinuwara Veediya, Kandy.

2. Registered Mortgage Bond No. 2006/01 over Lease and Hire Purchase Contract for revolving loan of Rs. 50 Million.

Hatton National Bank PLC

Primary Floating Mortgage for Rs. 6 Million over immovable property at Stage 1, New Town, Anuradhapura.


28. Lease creditorsBalance at beginning of the year 18,231,018 14,606,061 Lease obtained 1,534,224 11,147,040 Lease settled (5,043,202) (7,522,083)

14,722,040 18,231,018 Interest in suspense (2,871,133) (4,715,008)

11,850,907 13,516,010 Payable within one year (4,766,002) (6,088,632)

7,084,905 7,427,378

29. Retiring gratuity obligationBalance as at 1st April 2008 8,627,400 7,069,850 Provision made during the year 2,220,000 1,726,100 Payments made during the year (1,528,250) (168,550)Balance as at 31st March 2009 9,319,150 8,627,400

30. Stated capitalAs at 1st April fully-paid Ordinary shares - 3,102,182 Shares 48,718,375 31,021,820Employee share option issued and fully-paid ordinary shares - 250,000 – 2,500,000 “Shares issued during the year 2007/ 2008, fully-paid ordinary shares - 893,915” – 15,196,555“Shares issued during the year 2008/2009, fully-paid ordinary shares - 600,000” 15,000,000 –

48,718,375 Share premium 10,000,000 10,000,000

73,718,375 58,718,375

In accordance with Section 58 of Companies Act No. 07 of 2007, which became effective from 03rd May 2007, share

capital and share premium had been reclassified as stated capital. The comparative information has also been reclassified

accordingly.

31. Revaluation ReservesFor the year ended 31st March 2009 2008

Rs. Rs.

Balance as at 1st April 2008 74,603,594 17,341,132 Land 0 48,840,951 Building 0 8,421,511 Balance as at 31st March 2009 74,603,594 74,603,594




32. Statutory reserveBalance as at 1st April 2008 50,294,760 45,294,760 Transfers during the year – 5,000,000 Balance as at 31st March 2009 50,294,760 50,294,760

33 . General reserveBalance as at 1st April 2008 58,751,125 40,751,125 Transferred during the year – 18,000,000 Balance as at 31st March 2009 58,751,125 58,751,125

34. Commitments and contingent liabilities There were no commitments or contingent liabilities as at the Balance Sheet date.

35. Post-Balance Sheet events No circumstances have arisen since the Balance Sheet date, which require adjustment or disclosure in the

Financial Statements other than ordinary shares of 646,667 and 40,000 held by Isuru Finance and Insurex Brokers

respectively had been aquired by B.G. Investment (Pvt) Limited on 29th August 2009.





1. Cash in Hand and Cash at BanksBank of Ceylon - Galnewa 1,146,638 384,390 Bank of Ceylon - Kandy (2nd city branch)Bank of Ceylon - Galenbindunuwewa 804,485 51,739 People’s Bank - Tambuttegama 227,741 –Commercial Bank - Kandy 2 6,766,635 96,696 Commercial Bank - Kandy 3 340,576 7,694 Commercial Bank - Anuradhapura – 1,251,554 Commercial Bank - Higurakgoda – 356,977 Commercial Bank - Ratnapura – 110,091 Hatton National Bank – 123,327 Sampath Bank - Kandy 386,436 150,970 Sampath Bank - Mahiyangana 27,257 27,517 Sampath Bank - Anuradhapura 8,500 8,500 Savings account at Commercial Bank - Kandy – 2,136,239 Savings account at Sampath Bank – 1,548 National Development Bank - Kandy 1,219 5,319 HSBC - Kandy 189,341 258,059 People’s Bank - Padaviya 60,827 44,823 Seylan Bank - Hingurakgoda 2,035,975 26,975 People’s Bank 50,000 50,000

12,045,630 5,092,416

2. Income Tax RecoverableBalance as at 1st April 3,675,824 (2,307,091)Withholding tax deducted on fixed deposit 2,165,865 1,497,278ESC – 3,150,039Adjustment (507,283) 1,350,075Social responsibility levy – 35,219WHT Reversal – (49,696)Balance as at 31st March 5,334,407 3,675,824

3. Economic Service ChargesBalance as at 1st April 3,513,217 4,251,367Economic service charges for the year 5,276,558 2,411,889Set off Previous year – (3,150,039)Balance as at 31st March 8,789,775 3,513,217

4. Advance Company Tax RecoverableBalance as at 1st April 1,671,329 1,671,329Claimed for the year – –Balance as at 31st March 1,671,329 1,671,329

ESC and ACT can be recovered only to the extent that the Company can make taxable income in the future.




5. Advance, Prepayment and Deposits 3,174,000 831,121Rent prepaid 431,046 205,986Receivable from (Union Assurance and Std. Trust Co.) 314,000 309,000Refundable deposit 7,583,589 5,932,807Dealer Advance 142,393 142,393Prepaid Company insurance 11,645,028 7,421,307

6. Other ReceivablesOther receivables 6,093,561 680,885Nominal asset 0 600,000

6,093,561 1,280,886

7. Interest in SuspenseConsumer credit (68,553) 252,856Leasing 295,606 1,332,395Lease Purchase 333,184 288,018Motor credit 399,510 504,455Long-term loan 2,145,435 1,891,575Land finance 204,953 145,451Personal loan 1,157,247 0Project finance 644,056 0Short-term loan 3,346 0

5,114,785 4,414,750

8. Interest payableInterest on fixed deposits 53,173,314 23,476,552Interest on savers' deposits 3,535,006 5,190,092

56,708,320 28,666,644

9. Supplier payablesConsumer durable suppliers 7,227,650 7,516,827Lease suppliers 65,362,187 70,586,719

72,589,837 78,103,546

10. Advance ReceivedLand sale advances 547,611 1,267,197Share suspense account – 3,058,660Unclaimed dividend 466,688 931,571Staff guild fund 1,881,824 2,556,697Suspense collection 2,299,371 –

5,195,494 7,814,125




11. Accrued ExpensesEmployee’s Provident Fund (EPF) 577,040 413,800Employee’s Trust Fund (ETF) 86,556 62,071Legal fees 362,656 22,188 Pay as You Earn (PAYE) 47,862 232,791Audit fees 564,350 275,425Provision for bonus – 3,481,682Electricity, water 57,116 196,931Servers deposit conversion payable 274,597 180,311Telephone 230,772 390,713Turnover tax on land sale 767,078 553,778Withholding tax 123,337 238,826Insurance payable 1,552,175 2,445,874Other charges payable 1,684,851 919,752Refundable deposit 200,000 200,000Rent received in advance (UAL&LI) 1,032,000 405,000Other accrued expenses 384,222 425,292ESC payable 1,281,871 662,326Payable Stationery 60,115 –Payable professional fee 360,000 –Payable VAT on profit 333,831 –Payable of dividend tax 734,583 –Payable VAT 245,486 –

10,960,497 11,106,759

12. Bank OverdraftCommercial Bank - Anuradhapura 7,418,072 –Commercial Bank - Higurakgoda 6,398,440 –Commercial Bank - Kandy 1 37,411,802 13,264,946Hatton National Bank 5,181,320 – Commercial Bank - Ratnapura 1,178,588 –Slip cash book 8,122 –

57,596,344 13,264,946



To THE SHAREHoLDERS oF CoMMERCIAL CREDIT LIMITEDReport on the Financial StatementsWe have audited the accompanying financial statements of Commercial Credit Limited, which comprise the balance sheet as at 31st March 2008, and the income statement, statement of changes in equity and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes exhibited on pages 129 to 151 of the Financial Statement.

Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance with Sri Lanka Accounting Standards. The responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatements, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Scope of Audit and Basis of opinionOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Sri Lanka Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatements.

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. We therefore believe that our audit provides a reasonable basis for our opinion.

opinion

In our opinion, so far as appears from our examination, the Company maintained proper accounting records for the year ended 31st March 2008 and the financial statements give a true and fair view of the Company’s state of affairs as at 31st March 2008 and its profit and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

Report on other Legal and Regulatory Requirements

These financial statements also comply with the requirements of Section 151(2) of the Companies Act No. 07 of 2007 and

Finance Companies Act No. 78 of 1988.

(Sgd.)

LAWRIE MUTHU KRISHNA & CoChartered Accountants

Colombo21st April 2008

LAWRIE MUTHU KRISHNA & CO.CHARTERED ACCOUNTANTS

30-2/1, Galle Road,Colombo 06, Sri Lanka.

Tel: +94(11) 2501677, 5624303Fax: +94(11) 2508874

81 1/7, 1/8, Ashika Building,Prince Street, Colombo 11, Sri Lanka.

Tel: +94(11) 2329642-3, 2341178Fax: +94(11) 2432660

E-mail: [email protected]

PARTNERS : M. Thavaraj, T. Someswaran, P.E.A. Jayewickreme, M.B. Ismail, Ms. A.M.J. Patrick, M. Thiagarajen, T. Krishnakumar, Ms. S.L. Jayasuriya, D.S.W. Andradi, G.J. David, Ms. F.M. Marikkar, Ms. S.J. Henry, Ms. A.U.M. Keppetipola.

CONSULTANTS : M. Nallanthuwan


INCoME STATEMENT

For the year ended 31st March 2008 2007Note Rs. Rs.

Revenue 1 249,126,276 182,665,909


Lessoperating expenses 5Personnel costs 45,826,179 33,594,539 Premises, equipment and establishment expenses 32,735,443 26,081,021 Provision for staff retirement benefit cost 1,726,100 1,647,725 Provision for bad and doubtful debt 6 11,077,920 3,741,436 Other Overhead expenses 15,834,259 14,235,647

107,199,900 79,300,368 Net profit before taxation 32,811,849 36,162,910

Taxation 7 (3,478,091) 3,145,435 Net profit for the year 29,333,758 39,308,345


Proposed dividend per share 9 1.73 1.58




BALANCE SHEET

As at 31st March 2008 2007(Restated)

Note Rs. Rs.

AssetsCash in hand and cash at banks 10 5,342,523 4,984,732 Investment in the Government Treasury Bills 11 88,525,683 70,498,109 Short-term investments with banks 8,407,748 8,197,264 Investments in dealing securities 12 55,084 55,084 Loans and Advances 13 241,849,493 247,585,797 Lease rental receivables within one year 14 164,413,424 114,265,803 Lease rental receivables after one year 14 286,805,287 168,266,263 Rental receivables on loans, advances and leases 15 103,736,755 78,280,025 Repossessed stocks 16 22,943,804 14,099,245 Deferred tax asset 17 28,615,039 32,093,130 Stocks of real estates 18 57,569,582 54,428,679 Investment securities 19 201,900 201,900 Commissioner General of Inland Revenue 20 8,860,370 3,615,605 Trade and other receivables 21 27,186,723 10,242,817 Intangible assets 22 1,660,344 2,046,034 Leasehold right over land 23 3,532,213 –Property, plant & equipment 24 141,684,345 72,901,331 Total assets 1,191,390,304 881,761,817

LiabilitiesBank overdraft 13,264,946 29,776,622 Deposits from customers 25 712,919,050 569,042,700 Trade and other payables 26 125,691,074 87,715,116 Long-term borrowings 27 46,807,578 18,121,748 Long-term borrowings payable within one year 27 20,060,000 7,947,952 Lease creditors payable within one year 28 6,088,632 4,452,996 Lease creditors payable after one year 28 7,427,378 6,536,818 Retiring gratuity obligations 29 8,627,400 7,069,850

940,886,057 730,663,802

Shareholders’ fundStated capital 30 58,718,375 41,021,820 Revaluation reserve 31 74,603,594 17,341,132 Statutory reserve 32 50,294,760 45,294,760 General reserve 33 58,751,125 40,751,125 Retained earnings 8,136,392 6,689,178

250,504,246 151,098,015 Total liabilities and shareholders’ funds 1,191,390,304 881,761,817

I certify that the Financial Statements have been prepared in compliance with the requirements of Companies Act No. 07

of 2007.

(Sgd.)

Chief Executive Officer


Signed for and on behalf of the Board by,

(Sgd.) (Sgd.)

Chairman Director

21st April 2008






As at 1st April 2006 23,266,420 10,000,000 17,341,132 18,294,760 22,751,125 14,580,833 106,234,270


Rights issue 7,755,400 – – – – – 7,755,400



Dividend paid – – – – – (2,200,000) (2,200,000)

As at 31st March 2007 31,021,820 10,000,000 17,341,132 45,294,760 40,751,125 6,689,178 151,098,015

As at 1st April 2007 31,021,820 10,000,000 17,341,132 45,294,760 40,751,125 6,689,178 151,098,015


Rights issue 17,696,555 – – – – – 17,696,555


Revaluation reserve – – 57,262,462 – – – 57,262,462


Dividend paid – – – – – (4,886,544) (4,886,544)

As at 31st March 2008 48,718,375 10,000,000 74,603,594 50,294,760 58,751,125 8,136,392 250,504,246

The Accounting Policies from pages 134 to 139 and the Notes from pages 140 to 151 form an integral part of these Financial Statements.

In accordance with Companies Act No. 07 of 2007 stated capital and share premium have been reclassified as stated capital.

Statutory reserve fund represents the statutory requirement in terms of Direction No. 1 of 2003 issued by the Central Bank under Finance Companies

Act No. 78 of 1988.

Revaluation reserve represents revaluation of freehold land and building carried out in 17th May 2008 and includes the surplus on revaluation of

those assets.

General reserve is the amount allocated by the Board of Directors for the general purposes of the Company.

STATEMENT oF CHANgES IN EqUITy


CASH FLoW STATEMENT


Cash flow from operating activitiesInterest and commission receipts 195,973,278 134,666,912 Interest payments (109,109,878) (67,202,631)Other income 49,627,432 37,836,628 Operating expenditure (81,228,421) (62,309,558)Operating profit before changes in operating assets (Note A) 55,262,411 42,991,351

(Increase)/decrease in operating assetsFunds advanced to customers (174,924,533) (166,576,382)Sales of real estate 2,001,818 10,446,040 Purchase of real estate (3,140,903) (384,878)Investment in Treasury Bills (18,027,574) (18,046,001)Sundry debtors (15,329,129) (6,161,202)Other current assets (31,205,019) (17,296,541)Increase/(decrease) in operating liabilities (240,625,340) (198,018,964)Deposits from customers 143,876,350 124,561,750 Other liabilities 36,361,194 25,500,354

180,237,544 150,062,104 Net cash from operating activities (5,125,386) (4,965,509)Gratuity paid (168,550) (59,875)Income tax paid (10,514,303) (7,844,694)Net cash inflow/(outflow) from operating activities (15,808,239) (12,870,078)

Cash flow from investing activitiesDividends received 3,019 4,837 Purchase of property, plant & equipment (14,090,284) (6,731,327)Proceeds from sale of property, plant & equipment 889,651 52,850 Net cash inflow/(outflow) from investing activities (13,197,614) (6,673,640)

Cash flow from financing activitiesProceeds from share issued 17,696,555 7,755,400 Loan obtained 55,925,752 22,146,651 Loan repayment (22,649,957) (10,175,881)Dividends paid (4,886,544) (2,200,000)Net cash flow from financing activities 46,085,806 17,526,170

Net increase in cash and cash equivalents 17,079,953 (2,017,548)Cash and cash equivalents at the beginning of the period (16,594,626) (14,577,077)Cash and cash equivalents at the end of the period 485,327 (16,594,625)



Reconciliation of cash and cash equivalentsCash in hand and cash in bank 5,342,523 4,984,732 Short-term investments 8,407,748 8,197,264 Bank overdrafts (13,264,946) (29,776,621)

485,327 (16,594,625)

Reconciliation of operating profit (Note A)Profit before taxation 32,811,849 36,162,910 VAT on financial Institutions 4,516,911 5,870,518 Profit on sale of real estate (2,001,818) (10,446,040)Depreciation 8,084,735 5,731,131 Bad debt reversed (194,622) –Provision for bad and doubtful debts 11,077,920 3,741,436 Investment income (3,019) (4,837)(Profit)/loss on sale of fixed assets (755,646) 288,508 Gratuity provision 1,726,100 1,647,725 Cash flow from operating profit 55,262,411 42,991,352



CASH FLoW STATEMENT


significant accounting policies

1. Summary of Significant Accounting Policies1.1 Reporting entity

Commercial Credit Limited (‘Company’) is a public company incorporated on 4th October 1982 with limited liability and

domiciled in Sri Lanka. The registered office of the Company is situated at No. 106, Yatinuwara Veediya, Kandy.

There were no significant changes in the nature of the principal activities of the Company during the financial year under

review.

The principal activity of the Company continued to be comprehensive range of financial services to industrial, commercial

and agricultural enterprises in Sri Lanka.


The Financial Statements are prepared in Sri Lankan Rupees rounded to the nearest Rupee. The Balance Sheet and the

related Statement of Income, Changes in Equity, Cash Flows and the Accounting Policies thereto of Commercial Credit

Limited has been prepared under Historical Cost Convention in accordance with the Accounting Standard issued by The

Institute of Chartered Accountants of Sri Lanka. No adjustment is made for inflationary factors affecting these Financial

Statements. Exceptions to the Historical Cost Convention of accounting related to dealing securities and revaluation of

land and buildings as described in Accounting Policies 3.2.2 and Note 17. The accounting principles applied consistently

in accordance with the criteria explained in Sri Lanka Accounting Standard - 3, “Presentation of Financial Statements.”

1.3 Going concern

The Directors have made an assessment of the Company’s ability to continue as going concern and they do not intend

either to liquidate or to cease operations.


The accounting policies have been consistently applied by the Company and are consistent with those of previous year,

and the previous year’s figures and phrases have been rearranged wherever necessary to conform to the current year’s

presentation.

1.5 Changes in accounting policies

At the time of authorisation of these Financial Statements, the following standards and interpretations were in issue but

not yet effective:

Accounting Standards Effective Date

SLAS-16 Employees Benefits Effective for annual period beginning on or after 1st July 2007.

SLAS-44 Financial Instrument Presentation Effective for annual period beginning onSLAS-45 Financial Instrument or after 1st January 2009.Recognition and Measurement

1.6 Materiality and aggregation

Each material item is presented separately in the Financial Statements. Other amounts are aggregated with amounts of

similar nature or function.

2. Taxation2.1 Income Tax

Provision for taxation is based on the elements of income and expenditure as reported in the Financial Statements and

computed in accordance with the provisions of the Inland Revenue Act No.10 of 2006 and amendments thereto at the rates

specified in Note 7 of the Financial Statement.



2.2 Deferred Tax

Deferred taxation is provided using the Balance Sheet method, providing for temporary differences between the carrying

amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount

of differed tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and

liabilities, using tax rates enacted or substantively enacted by the reporting date.

Deferred tax assets, including those related to temporary tax effects of income tax losses and credits available to be carried

forward are recognised only to the extent that it is probable that future taxable profits will be available against, which the

asset can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no

longer probable that the related tax benefit will be realised.

2.3 Value Added Tax on financial services

The base for the computation of Value Added Tax on financial services is the accounting profit before income tax adjusted

for the economic depreciation, emoluments of employees and computed on prescribed rates. During the year the the

Company’s total value addition was subject to a 20% Value Added Tax on financial services as per the Section 25A of

Value Added Tax Act No.14 of 2002 and amendments thereto.

3. Assets and Basis of Their Valuation3.1 Cash and Cash Equivalents

Cash and cash equivalents include cash in hand, balances with banks, and short-term highly-liquid investments, readily


For the purpose of Cash Flow Statement, cash and cash equivalent consists of cash in hand and deposits in banks net of

outstanding bank overdrafts.

The Cash Flow Statement is reported based on the direct method.

3.2 Investments3.2.1 Investment Securities

Equity shares, which are acquired with the positive intent to hold on long-term basis, are classified as Investment Securities.

These are acquired and held for yield or capital growth in the long term. Such securities are recorded at cost net of

provision for permanent diminution in value.

3.2.2 Dealing Securities

Securities including equity shares, which are held for resale in the near future to benefit from short-term market movements,

are classified as Dealing Securities and accounted for at the lower of cost and market value determined on portfolio basis.

Dealing Securities currently comprise of shares quoted on the Colombo Stock Exchange.

3.2.3 Fall in Value of Investments

Unrealised losses on revaluation of Dealing Securities at the lower of cost and market value are taken to the Income

Statement as per SLAS-22 Accounting for Investments. This is a departure from Historical Cost Convention but it is

considered to be prudent accounting practice.

3.3 Advances and leases

Advances and leases to customers are stated in the Balance Sheet at the recoverable amount represented by the gross

value of the outstanding balance adjusted for provision for bad and doubtful debts and interest in suspense (interest which

is not accrued to revenue).



3.3.1 Non-performing Advances and Leases

Advances and leases which are 180 days or more in arrears of due capital and/or interest are classified as non-performing.

Provision for possible bad and doubtful debts are made on the basis of a continuous review of all advances to customers,

in accordance with the Sri Lanka Accounting Standard 33, “Revenue Recognition” and the Directions issued by the Central

Bank of Sri Lanka and disclosed in the Financial Statements of the Company.

3.3.2 Provision for Bad and Doubtful Debts

Specific provision for bad and doubtful debts are made as follows:

Period outstanding ClassificationProvision made net of realisable value of security


The provision made relates to all categories of advances and leases identified as doubtful and loss.

3.3.3 Revenue Recognition on Non-performing Advances and Leases

When an advance or a lease is classified as non-performing as set out in accounting Policy No 3.3.1 Interest Income

ceases to be recognised and is taken to income only on a cash basis.

3.3.4 Finance Leases

Assets leased to the customers under agreement that transfer substantially all the risk and rewards associated with

ownership other than legal title are classified as finance leases. Amounts receivable under finance leases are included

under ‘rentals receivable’ and trade receivables. Leasing balances are stated in the Balance Sheet after deduction of initial

rentals received, unearned lease income and the provisions for rentals doubtful of recovery.

3.3.5 Term Loans

Debtors are stated at their estimated realisable amounts. Provision had been made in the accounts for bad and doubtful debts.

3.3.6 Hire purchase Agreements

Assets granted under agreements that transfer substantially all the risks and rewards associated with ownership other than

legal title are classified as hire purchase stock. Hire purchase instalments receivables in the Balance Sheet include total

hire purchase instalments due net of unearned interest and doubtful debts.

3.4 Inventories3.4.1 Real Estate Stock

Inventories are valued at cost or net realisable value whichever is lower. Development costs incurred during the development

period of the project are capitalised to the cost of the land.

3.4.2 Repossessed Stocks

Repossessed stocks are stated at cost less provision for reduction in their realisable value and for legal receivable in

relation to such lease or loan contracts.

3.4.3 other Stocks

Inventories are valued at cost or net realisable value whichever is lower.


3.5 property, plant & Equipment3.5.1 Recognition and Measurement

Property, Plant & Equipment is recorded at cost of purchase or construction or valuation together with any incidental

expenses thereon. These assets are stated at written-down value, which is provided for on the basis specified in 3.5.2 below:

3.5.2 Depreciation

Depreciation is provided on written down value basis to write off net book value of all the periods appropriate to the

estimated useful lives of the different type of assets -

Building 2%Motor vehicles 25%Furniture and fittings 12.5%Office equipment 12.5%Computers 20%Photocopy/Fax machines 12.5%Air-conditioners 12.5%Generators 12.5%

3.6 (a) Lease Hold Assets (Finance)

Lease in terms of which the Company assumes substantially all the risk and rewards of the ownerships are classified as

finance lease. Motor vehicle and computers acquired by the way of finance lease is stated at an amount equal to the lower

of its fair value or present value of the minimum payments at the inception of the lease, less accumulated depreciation. The

depreciation policy for the leased assets is consistent with that for depreciable assets, which are owned.

(b) Lease Hold Assets (operating)

Leases of assets under which all the risks and benefits of ownership are effectively retained by the lessor are classified as

operating leases. The lease holds rights under operating leases are charged to the Income Statement on a straight-line

basis over the period of the lease.

When an operating lease is terminated before the lease period has expired , any payment required to be made to the lessor

by way of penalty is recognised as expense in the period in which termination take place.

The cost of improvements to or on leased property is capitalised and depreciated over the unexpired period of the lease or

the estimated useful lives of improvements, which ever is shorter.

4. Liabilities and Provisions4.1 Creditors and accrued expenses

Creditors and accrued expenses include all financial liabilities, interest, fees and expenses payable. These liabilities are

recorded at the cash value to be realised when settled.

4.2 Borrowings

Borrowings include refinance borrowings and borrowings from financial institutions. They are brought to account at the

gross value of the outstanding balance.

4.3 Deposits from customers

Deposits include savers’ deposits and term deposits. They are brought to account at the gross value of the outstanding

balance. Interest paid is charged to the Income Statement.



4.4 Employee benefits4.4.1 Defined Benefit Plan-Retirement Gratuity

Full provision has been made on account of retiring gratuity from the first year of service of the employees in conformity

with Sri Lanka Accounting Standard No.16 “Retirement Benefit Cost”, at half a month’s salary for each year of service from

the date of commencement of service.

However, according to the Payment of Gratuity Act No.12 of 1983, the liability from gratuity to an employee arises only on

completion of five years continued service with the Company. The liability is not externally funded.

4.4.2 Defined Contribution Plans

“Employees’ Provident Fund and Employees’ Trust Fund”

All employees who are eligible for Employees’ Provident Fund contributions and Employees’ Trust Fund contributions are

covered by relevant funds in line with respective statute and regulations.

The Company contributes 12% and 3% to the above funds respectively.

4.5 Proposed dividends

Dividend proposed/declared by the Board of Directors, after the Balance Sheet date is not recognised as a liability and is

only disclosed as a note to the Financial Statements.

5. Commitments and ContingenciesAll material capital commitments and contingent liabilities of the Company are disclosed in the respective notes to the

accounts.

6. Income Statement6.1 Revenue Recognition6.1.1 Interest Income

Interest receivable is recognised on an accrual basis. Interest from advances and leases ceases to be accrued when

the recovery of interest or principal is in arrears for six (6) months. Interest on non-performing advances and leases is

accounted for on a cash basis.


6.1.2 Interest Income on Advances and Term Loans

Interest income from advances is recognised on an accrual basis, interest ceases to be recognised when a contract is

classified as non-performing where the recovery of interest or principal is in arrears for over six (6) months. Thereafter

interest on advance is accounted on cash basis.

6.1.3 Interest income on Leasing/Hire purchase Agreements

The excess of aggregate lease/hire purchase rentals receivable over the cost of the leased hire purchase assets constitutes

the total unearned lease interest/hire purchase income at the commencement of a lease/hire purchase. The unearned

lease/hire purchase interest income is taken into income over the term of the lease/hire purchase commencing with the

month in which the lease/hire purchase is executed in proportion to the declining receivable balance.

Gross earnings under finance leases in respect of lease rental due, cease to be taken to revenue when they are in arrears

for six (6) months. Thereafter, such income is recognised on a cash basis.

6.1.4 Real Estate IncomeLand

Revenue is recognised when properties are sold and the buyer has taken possessions of such properties. (When there is

insufficient assurance as to the receipt of the total consideration, income is accounted for on a cash-received basis).



Profit on Land Sold under Loans Easy Payment



6.1.5 Dividend Income

Dividend income is recognised in the Income Statement in the period in which they are received.

6.1.6 Rent Income


6.1.7 Commission Income


6.1.8 Recovery of Bad Debt Written Off

Recovery of bad debt written off is recognised on cash basis.

6.1.9 Amortisation of Discount on Government Treasury Bills

The discount on the Treasury Bill is amortised over the period to the maturity.

6.1.10 Profit on Disposal of Investment and Seized Assets

Profit earned on disposal of investment and seized assets are accounted for in the Income Statement based on realised

net profit.

6.1.11 Profit on Disposal of Property, Plant & Equipment

Gains or losses of revenue nature on disposal of Property, Plant & Equipment have been accounted for in the Income

Statement, in the year it is realised.

6.1.12 other Income

All other income is recognised on cash basis, except the income specifically mentioned in the accounts.

6.2 Expenditure Recognition6.2.1 Interest Expenses

Interest expenses incurred on short-term and long-term borrowings are recognised on accrual basis.

6.2.2 operating Expenses

All expenditure incurred in the running of the business and in maintaining the Property, Plant & Equipment in a state of

efficiency has been charged to revenue in arriving at the profit for the year.

7. Segment ReportingSegmental information is provided for the different business segments of the Company, which are Finance Leasing, Hire

Purchase, Term Loans and Real Estate.

Business segment has been determined based on the nature of the service provided by the Company after risk and


Segment income and expenses are allocated to the segment to the content that is directly attributable to the segment

or/and allocated to the segment on a reasonable basis.






249,126,276 182,665,909

2. Interest IncomeLeasing - vehicle 105,359,018 52,276,018 Leasing - machinery 12,524,874 6,268,771 Consumer credit loans 19,018,981 23,671,529 Motor credit loans 25,707,514 28,877,184 Long-term loans 8,106,647 7,701,221 Short-term loans 2,649,438 1,434,110 Personal loans 19,816,457 11,897,076 Land finance 3,334,355 2,541,003 Short-term investments 15,645,222 8,841,574

212,162,506 143,508,486

3. Direct Interest CostFixed deposits 91,047,771 57,184,734 Savers’ deposits 2,587,501 2,351,741 Borrowings 15,479,254 7,666,156

109,114,526 67,202,631

4. other IncomeDividend income 3,019 4,837 Profit/(loss) on sale of property, plant & equipment 755,646 (288,508)Service charges 2,023,018 4,592,680 Rent income 1,530,000 1,446,600 Real estate other income 144,902 340,696 Commission income 742,579 791,355 Bad debt recoveries 299,934 280,481 Bad debt reversed 194,622 –Profit on repossessed item 802,922 349,325 Other charges 28,438,855 28,438,855 Commission from Western Union transactions 26,455 21,193,917 Discount on purchase 0 –

34,961,952 28,711,383




5. Net Profit before TaxationNet profit before taxation is stated after charging all expenses including the following:

Directors’ remuneration 6,128,535 5,578,692 Auditors’ remuneration 280,000 170,000 Donations 29,250 128,122 Corporate social responsibility 0 0 Commission paid to brokers 2,097,793 1,892,182 Legal expenses 351,171 80,189 Depreciation 8,084,735 5,731,131

6. Provision for Bad and Doubtful DebtsConsumer credit 1,256,256 550,000 Motor credit 3,703,769 875,900 Term loans 835,237 462,530 Repossessed stock 2,010,706 624,706 Leases 3,271,952 1,228,300 Personal loan 0 0 Short-term loan 0 0

11,077,920 3,741,436

7. TaxationThe Company is liable for income tax at the rate of 35% on taxable income. However, Company incurred loss of

Rs. 11,584,894/- during the year ended 31st March 2008. The tax losses available for setting off against the future taxable

profits as at the Balance Sheet date amount to Rs. 152,326,541/-.


Income taxation on current year profit 0 (2,684,773)Social responsibility levy 0 (26,848)Deferred taxation (Note - 17) (3,478,091) 5,857,056

(3,478,091) 3,145,435





Net profit before taxation 32,811,849 36,162,910 Aggregate disallowable expenses 245,865,353 132,352,285 Aggregate allowable expenses (290,262,096) (156,713,996)Loss set off during the year 0 (4,130,419)Taxable income/(loss) for the period (11,584,894) 7,670,780

Income tax @ 35% 0 2,684,773 Social responsibility levy @ 1% 0 26,848 Taxation charged to the Income Statement 0 2,711,621 Effective tax rate 0.0% 7.5%


7.2 Taxable LossesFor the year ended 31st March 2008 2007

Rs. Rs.

Brought forward from previous year 140,741,847 144,872,266 Loss set off during the year 11,584,894 (4,130,419)

152,326,741 140,741,847

8. Earnings per ShareThe basic earnings per share have been calculated by dividing the profit for the period attributable to the Equity holders of the Company, by the number of ordinary shares in issue (Weighted average) during the year ended 31st March 2008, as per the requirements of the Sri Lanka Accounting Standard No. 34 - ”Earnings per Share”.


Profit attributable to the equity shareholders used as the numerator 29,333,758 39,308,345


Share issued during the year 221,737 646,283



9. Dividend Per ShareDirectors have proposed the payment of final dividend of Rs. 1.73, (Rs. 1.58 in 2007), for the year ended which will be

approved at the Annual General Meeting.

In accordance with the Sri Lanka Accounting Standard No. 12 (Revised) on Events after the Balance Sheet date, this

proposed final dividend has not been recognised as a liability.


10. Cash in Hand and Cash at BanksPetty cash 250,107 81,597 Cash at banks 5,092,416 4,903,135

5,342,523 4,984,732

11. Investments in the Government Treasury BillsGross value 91,092,400 72,621,000 Unearned income (2,566,717) (2,122,891)

88,525,683 70,498,109


No. ofshares

Cost as at31.3.2008

Marketvalue as at

31.3.2008 Cost as at

31.03.2007


quoted companiesPeoples’ Merchant Bank PLC 100 625 5,350 625 2,300 Vanik Incorporation PLC 218 108 371 108 348 Hatton National Bank PLC -Voting 385 25,145 45,430 25,145 38,500 Hatton National Bank PLC - Non-voting 107 6,786 5,725 6,786 5,109 Sampath Bank PLC - Voting 310 13,420 35,650 13,420 33,170 The Finance PLC 648 9,000 40,824 9,000 31,104

55,084 133,349 55,084 110,531




13. Loans and AdvancesConsumer credit 50,897,367 69,850,378 Motor credit 70,984,830 113,449,084 Staff loans 8,394,776 6,293,905 Term loans 160,140,901 122,537,739

290,417,874 312,131,106 Provision for bad debt (Note - 13.1) (10,805,633) (8,290,190)Unearned income (Note - 13.2) (37,762,748) (56,255,119)

241,849,493 247,585,797

13.1 Provision for bad debtBalance at the beginning of the year 8,290,190 11,144,681 Provision for the year 5,795,262 3,000,000 Provision transferred to legal repossessed provision (2,089,505) (2,859,012)Write offs during the year (1,190,314) (2,995,479)Balance at the end of the year 10,805,633 8,290,190




652,172,243 400,855,588 Unearned lease income (Note 14.1) (193,952,342) (113,039,695)Provision for bad debts (Note 14.2) (7,001,190) (5,283,827)

451,218,711 282,532,066 Receivable within one year (164,413,424) (114,265,803)Receivable after one year 286,805,287 168,266,263


14.2 Provision for bad debtBalance at the beginning of the year 5,283,827 5,150,635 Provision for the year 3,271,952 741,436 Write off during the year (1,554,589) (608,244)Provision transferred to legal repossessed 0 0 Balance at the end of the year 7,001,190 5,283,827




15. Rental Receivables on Loans, Advances and LeasesConsumer credit 13,436,297 11,024,074 Leasing 36,256,142 22,580,500 Lease purchase 9,543,699 9,142,359 Motor credit 9,714,161 8,102,130 Short-term loan 11,824,632 7,869,740 Long-term loan 7,677,075 7,494,614 Land finance 255,950 321,759 Personal loan 16,905,592 9,999,791 Project finance 1,533,181 740,283 Future interest adjustment 0 0 Other interest receivables 1,004,777 1,004,777

108,151,505 78,280,025 Interest in suspense (Note 15.1) (4,414,750) –

103,736,755 78,280,025

15.1 Interest in suspenseBalance at the beginning of the year 0 0 Suspended during the year 4,114,750 0 Amount recovered during the year 0 0 Balance at the end of the year 4,114,750 0

The Company has not segregated the interest in suspense from the rental receivable on loans, advances and leases for

the year ended 31st March 2007.


16. Repossessed StocksGeneral stock 21,555,357 11,302,855 Legal stock 7,427,955 6,075,759

28,983,312 17,378,614 Provision for repossessed stock (2,010,706) –Provision for repossessed legal stock (Note16.1) (4,028,802) (3,279,369)

22,943,804 14,099,245

16.1 Provision for repossessed legal stockAs at 1st April 3,279,369 10,125,186 Transferred from/to the bad and doubtful debt provision 2,089,505 (2,859,012)Provision reversed (194,622) –Write off during the year (1,145,450) (3,986,805)As at 31st March 4,028,802 3,279,369

17. Deferred Tax AssetBalance as at 1st April 2008 32,093,130 26,236,074 Amount released/(originated) during the year (3,478,091) 5,857,056 Balance as at 31st March 2009 28,615,039 32,093,130

When arriving at the temporary differences for deferred tax calculation, the cumulative tax losses have been recognised

as an asset since future taxable profit will be available against which the unutilised tax losses can be utilised according to

the tax plan of the Company.



18. Stocks of Real EstatesFor the year ended 31st March 2008 2007

Rs. Rs.

Property at Mahakanda (Uplands) 4,046,900 4,023,800 Property at Thalathuoya (Green Village) 5,643,453 5,643,453 Property at Lagundeniya (Peak View Garden) 17,950,785 15,972,663 Property at Wariyagala (Park Land) 8,401,813 8,387,176 Property at Arambehena (Isuru Uyana) 5,386,598 8,339,814 Property at Malpana Village 0 4,142,750 Property at Wariyagala (Misty Groove) 6,959,682 7,919,023 Property at Malkaduwawa 9,180,351 0 Advance for stocks 0 0

57,569,582 54,428,679

19. Investment SecuritiesFor the year ended 31st March No. of shares 2008 2007

Rs. Rs.

Credit Information Bureau 190 1,900 1,900Finance House Consortium (Pvt) Limited 2,000 200,000 200,000

201,900 201,900

For the year ended 31st March 2008 2007

Rs. Rs.

20. Commissioner General of Inland RevenueIncome tax recoverable 3,675,824 (2,307,091)Economic service charges 3,513,217 4,251,367 Advance Company tax recoverable 1,671,329 1,671,329

8,860,370 3,615,605

21. Trade and Other ReceivablesAdvance, deposits and prepayments 7,421,307 2,123,147 Goods and Service Tax (GST) 1,060,890 1,060,890 Value Added Tax (VAT) 8,833,280 3,488,657 Interest receivable on fixed deposits and Treasury Bills 1,295,405 1,499,523 Receivable from Malpana Project 6,438,115 –Stock of stationery 856,827 480,645 Other receivables 1,280,886 1,589,955

27,186,710 10,242,817





1.4.2007Additions Balance as at

31.3.2008

22. Intangible AssetsComputer software 9,614,930 27,500 9,642,430 Total cost 9,614,930 27,500 9,642,430




Computer software 7,568,896 413,190 7,982,086 Total amortisation 7,568,896 413,190 7,982,086 Net book value 2,046,034 1,660,344

23. Leasehold Right Over LandFor the year ended 31st March 2008 2007

Rs. Rs.

Balance at beginning of the year 0 0 Additions during the year 3,555,000 0

3,555,000 0 Amortisation during the year (22,788) 0

3,532,212 0

The Company has obtained the land under the operating lease which initially for 99 years, (1st lessor) remaining period is

77 years now. The Company amortise the land cost over the period of 78 years.

24. property and EquipmentCost/Valuation - Rs.


Additions/Transfers Disposals


Freehold assetsLand 22,324,049 48,840,951 – 71,165,000 Building 30,768,518 9,046,511 – 39,815,029 Office equipment and machinery 2,226,904 72,450 30,000 2,269,354 Furniture and fittings 4,061,885 1,668,622 – 5,730,507 Motor vehicles 17,087,897 2,993,300 480,000 19,601,197 Computers 7,049,065 896,114 – 7,945,179 Air-conditioners 3,046,296 157,207 – 3,203,503 Generators 1,697,426 – – 1,697,426

88,262,040 63,675,155 510,000 151,427,195 Leasehold assetsVehicles 8,915,042 8,465,421 – 17,380,463 Vehicles (Guild Fund) 1,439,374 – – 1,439,374 Computers 3,492,100 302,609 – 3,794,709

13,846,516 8,768,030 – 22,614,546 Total cost 102,108,556 72,443,185 510,000 174,041,741 Work-in-progress 4,122,591

178,164,332



1.4.2007Charged for

the yearCharged on

Disposals/TransferBalance as at

31.3.2008

Freehold assetsBuilding 2,895,358 584,671 – 3,480,029 Office equipment and machinery 1,409,286 106,395 9,902 1,505,779 Furniture and fittings 2,176,303 316,163 – 2,492,466 Motor vehicles 13,887,220 1,267,509 366,094 14,788,635 Computers 3,652,707 757,017 – 4,409,724 Air-conditioners 1,751,119 169,012 – 1,920,131 Generators 864,059 104,171 – 968,230

26,636,052 3,304,938 375,996 29,564,994 Leasehold assetsVehicles 2,571,173 3,285,556 – 5,856,729 Vehicles (Guild Fund) – 359,844 – 359,844 Computers – 698,420 – 698,420

2,571,173 4,343,820 – 6,914,993 Total depreciation 29,207,225 7,648,758 375,996 36,479,987 Net book value 72,901,331 64,794,427 134,004 141,684,345

24.1 Land and building have been revalued on 31st March 2008 (Inspected on 15th May 2008), the surplus on revaluation

amounting to Rs. 48,840,951/- and Rs. 8,421,511/- respectively have been transferred to the revaluation reserve

account. The revaluation was done based on the valuation report dated 17th May 2008 issued by an incorporated valuer,

Mr. S.G.Fernando.


25. Deposits from CustomersFixed deposits - monthly 215,966,700 171,830,000 Fixed deposits - maturity 456,767,300 349,586,900 Savers’ deposits 40,185,050 47,625,800

712,919,050 569,042,700

26. Trade and other payablesInterest payable 28,666,644 20,605,941 Supplier payable 78,103,546 56,170,539 Accrued expenses 11,106,759 8,445,713 Other payables 7,814,125 2,492,923

125,691,074 87,715,116

27. Long-term BorrowingsBalance as at 1st April 2008 26,069,700 16,941,000 Loans obtained during the year 55,925,752 15,000,000

81,995,452 31,941,000 Loan repayments during the year (15,127,874) (5,871,300)Balance as at 31st March 2008 66,867,578 26,069,700 Payable within one year (20,060,000) (7,947,952)Payable after one year 46,807,578 18,121,748



Company has pledged the following securities for the bank loans, bank overdrafts and Lease facilities as at 31st March 2008.

Bank Commercial Bank pLC

1. Primary Mortgage Bond No. 3197 and Secondary Mortgage Bond for Rs. 17.5 Million over the business premises of the

Company at No. 106, Yatinuwara Veediya, Kandy.

2. Lease and hire purchasae contract for revolving loan of Rs. 50 Million.

Hatton National Bank pLC

Primary Floating Mortgage for Rs. 6 Million over immovable property at Stage 1, New Town, Anuradhapura.


28. Lease CreditorsBalance at beginning of the year 14,606,061 11,733,323 Lease obtained 11,147,040 7,177,319 Lease settled (7,522,083) (4,304,581)

18,231,018 14,606,061 Interest in suspense (4,715,008) (3,616,247)

13,516,010 10,989,814 Payable within one year (6,088,632) (4,452,996)

7,427,378 6,536,818

29. Retiring gratuity obligationBalance as at 1st April 2008 7,069,850 5,482,000 Provision made during the year 1,726,100 1,647,725 Payments made during the year (168,550) (59,875)Balance as at 31st March 2009 8,627,400 7,069,850

30. Stated capitalAs at 1st April fully-paid ordinary shares - 3,102,182 31,021,820 23,266,420 Employee share option issued and fully-paid ordinary shares - 250,000 2,500,000 0 Shares issued during the year 2007/2008, fully-paid ordinary shares - 893,915 15,196,555 7,755,400 Shares issued during the year 2008/2009, fully-paid ordinary shares - 600,000 – –

48,718,375 31,021,820 Share premium 10,000,000 10,000,000

58,718,375 41,021,820

In accordance with Section 58 of Companies Act No. 07 of 2007, which became effective from 03rd May 2007, share

capital and share premium had been reclassified as stated capital. The comparative information has also been reclassified

accordingly.

30.1 The Company has issued shares to its employees based on seniority in employment as at October 2007 to the total

value of Rs.2.5 Million from the profits of year of assessment 2007/2008.




31. Revaluation ReservesBalance as at 1st April 2008 17,341,132 17,341,132 Land 48,840,951 0 Building 8,421,511 0 Balance as at 31st March 2009 74,603,594 17,341,132

32. Statutory ReserveBalance as at 1st April 2008 45,294,760 18,294,760 Transfers during the year 5,000,000 27,000,000 Balance as at 31st March 2009 50,294,760 45,294,760

33 . General ReserveBalance as at 1st April 2008 40,751,125 22,751,125 Transferred during the year 18,000,000 18,000,000 Balance as at 31st March 2009 58,751,125 40,751,125

34. Commitments and Contingent Liabilities There were no commitments or contingent liabilities as at the Balance Sheet date.

35. Post-Balance Sheet Events Directors have proposed the payment of a final dividend of Rs.1.73 per share for the year ended 31st March 2008, which

requires the approval of the shareholders at the Annual General Meeting.

36. Related party Transactions The Company carries out transactions in the ordinary course of business with the related party.

36.1 Transactions with Key Managerial Personnel


(a) Directors’ fees and expenses amounted to Rs. 6,128,535/- for the year ended 31st March 2008 (Rs. 5,578,692/- for

the year ended 31st March 2007).


(c) Deposit and investment from key managerial personnel amounted to Rs. 2,000,000/- for the year ended 31st March

2008. (Rs. 1,150,000/- for the year ended 31st March 2007).

(d) Transactions with Other Related Parties

Mr. A.W. Warnakula, the Chairman and Mr.K.G.Fernando an Executive Director of INSUREX Insurance Brokers Co.

(PVT) Limited, are also Directors of Commercial Credit Limited. INSUREX Insurance Brokers Co. (PVT) Limited provides

all insurance facility to Commercial Credit Limited.

Name of Related Party Name of the Director Nature of the Transaction Amount - Rs.

Insurex Insurance brokers Company (Pvt) Limited

Mr. A.W. Warnakula Payments for insurances 28,563,279.00Mr. K.G. Fernando Balance outstanding 2,445,874.00




37. Comparative FiguresComparative information of the Company has been restated or reclassified to conform with current year presentation or

classification.

38. Maturity Analysis38.1 Definition of Maturity

Time interval between Balance Sheet date and contractual maturity date .

38.2 Allocation of Amounts

Amounts are allocated to respective maturity groupings based on installments falling due as per contract. The amounts

therefore represent total amount receivable or payable in each maturity grouping.

38.3 ProfileRs.

Less than 6 - 12 1 - 3 Over Total6 Months % Months % Years % 3 Years % 31.03.2007

38.3.1 AssetsCash in hand and at banks 5,342,523 100 – – – – – 0 5,342,523

Investment in Treasury Bills and FDs 93,231,628 96 3,701,803 4 – – – 0 96,933,431

Loans, leases and advances 196,055,739 27 159,749,121 22 411,954,803 47 29,045,295 4 796,804,958

Reprocessed stocks 10,777,679 50 12,166,125 50 – – – 0 22,943,804

Trade receivables 32,783,783 60 3,263,297 40 – – – 0 36,047,080

Unsold real estate 3,869,537 6 32,891,063 51 20,808,982 43 – 0 57,569,582

Investment in marketable shares – – – – – – 256,984 100 256,984

Deferred tax asset – – 3,147,654 11 8,584,511 30 16,882,872 59 28,615,037

Other assets 3,192,557 61 2,000,000 39 – – – 0 5,192,557

Property, plant & equipment – – – – – – 141,684,345 100 141,684,345

Total assets 345,253,446 216,919,063 441,348,296 187,869,496 1,191,390,301

38.3.2 LiabilitiesBank overdraft 13,264,946 100 – – – – – – 13,264,946

Creditors and accrued expenses 40,121,974 30 65,203,291 50 13,767,619 13 6,598,189 7 125,691,073

Medium and long-term borrowings 17,019,719 20 17,870,705 21 33,579,360 45 11,913,803 14 80,383,587

Deposits from customers - FD/FSD 85,571,923 12 292,370,738 41 319,279,948 45 15,696,441 2 712,919,050

Provision for gratuity – – 1,294,110 15 3,192,138 37 4,141,152 48 8,627,400

Total liabilities 155,978,562 376,738,844 369,819,065 38,349,585 940,886,056

Shareholders funds 250,504,245

Total liabilities and shareholders funds 1,191,390,301



39. Segment ReportingFor the year ended 31st March 2007

Rs.Finance Hire Term Real Short-term Unallocated Total

Lease Purchase Loan Estate Investment 2007

RevenueInterest Income 58,544,789 52,548,713 23,573,410 10,446,040 8,841,574 – 153,954,526

Other Income 8,195,247 11,233,175 2,119,392 4,238,783 – 2,924,786 28,711,383

66,740,036 63,781,888 25,692,802 14,684,823 8,841,574 2,924,786 182,665,909

Percentage* 37 34 14 8 5 2 100

ExpenditureOther operating and interest expenses 53,995,989 51,602,701 20,786,747 11,880,748 – 2,366,296 140,632,481

Profit before taxation 12,744,047 12,179,187 4,906,055 2,804,075 8,841,574 558,490 42,033,428

VAT on Financial Institutions (5,870,518)


Income tax on profit on ordinary activities 3,145,435


Assets 297,834,562 162,455,216 135,379,347 54,428,679 80,818,264 171,612,909 902,528,977

Percentage* 33 18 15 6 9 19 100

Liabilities 316,442,907 241,514,598 95,105,015 54,813,837 32,728,156 10,826,449 751,430,962

Percentage* 42 32 13 7 4 2 100

For the year ended 31st March 2008Rs.

Finance Hire Term Real Short-term Unallocated TotalLease Purchase Loan Estate Investment 2008

RevenueInterest Income 117,883,892 25,704,495 49,591,523 3,334,355 15,648,241 – 212,162,506

Other Income 22,733,386 6,674,407 667,441 2,146,720 – 4,741,816 36,963,770

140,617,278 32,378,902 50,258,964 5,481,075 15,648,241 4,741,816 249,126,276

Percentage* 56 13 20 2 6 2 100

ExpenditureOther operating and interest expenses 118,547,689 27,268,860 42,323,142 4,615,621 13,177,405 5,864,799 211,797,516

Profit before taxation 22,069,589 5,110,042 7,935,822 865,454 2,470,836 (1,122,983) 37,328,760

VAT on financial institutions (4,516,911)


Income tax on profit on ordinary activates (3,478,091)


Assets 340,282,681 86,806,482 250,719,810 81,027,128 102,203,919 328,735,519 1,189,775,539

Percentage* 29 7 21 8 9 28 100

Liabilities 139,811,594 14,827,716 26,877,032 13,988,987 – 743,765,964 939,271,293

Percentage* 15 2 3 1 – 79 100

ANNEXURE


ANNEXURE A - COMMERCIAL CREDIT LIMITED NETWORK

Anuradhapura No. 272, Maithripala Senanayake Mawatha,

Anuradhapura.Tel: 025 4640902-3

Avissawella

No. 64/141 C, Hospital Road, Avissawella

Tel: 036 4926366-7

City Office - ColomboNo. 45, Dharmapala Mawatha, Colombo 07

Tel: 011 4655655

DambullaNo. 738, Anuradhapura Road, Dambulla

Tel: 066 4928122-4

DehiattakandiyaCommercial No. 10, Opposite Bank of Ceylon,

Dehiattakandiya

Tel: 027 4926819, 027 4926750

EmbilipitiyaNo. 53, Hayesha Building, Main Street, Embilipitiya

Tel: 047 4931142, 047 4931141

GalenbindunuwewaNo. 131, Sippikulama Road, Galenbindunuwewa

Tel: 025 4927149, 025 4927148

GalleNo. 14, Dickson Road, Galle

Tel: 0914941462-3

GALNEWANo. 03, Jaya Mawatha, Galnewa

Tel: 025 4927175-6

HingurakgodaNo. 01, Medirigiriya Road, Hingurakgoda.

Tel: 027 4640903/4

KandyNo. 106, Yatinuwara Veediya, Kandy

Tel : 081 4655655/081 4655636

Kurunegala No. 53, Ground Floor, Rajapihilla Road, Kurunegala

Tel: 037 4936681, 037 4936679

MaharagamaNo. 223, High Level Road, Maharagama

Tel: 011 4340978/0114 340954

Mahiyanganaya No. 24, 1st Floor, New Town, Mahiyanganaya

Tel: 055 4928371-2

NegomboNo.113A, Greens Road, Negombo

Tel: 031 4934697/031 4934664

Nuwara Eliya No. 50, Kandy Road, Nuwara Eliya

Tel: 052 4924544, 052 4924542

ThambuththegamaNo. 150, Opposite Public Fare, Thambuththegama

Tel: 025 4927173/025 4927172

Rathnapura

No. 126 B, Bandaranayaka Mawatha, Ratnapura.

Tel: 045 4640902-3


ANNEXURE B - MEMBERS OF COLOMBO STOCK EXCHANGE (CSE)

Asia Securities (Private) LimitedLevel 21, West Tower, World Trade Centre,Echelon Square, Colombo 01Tel: 011 2423905, 011 5320000Fax: 011 2336018 E-mail: [email protected]

Assetline Securities (Private) Limited282, Kaduwela Road, BattaramullaTel: 011 4700111, 011 2307366Fax: 011 4700112, 011 2307365 E-mail: [email protected]

Bartleet Mallory Stockbrokers (Private) LimitedLevel ‘G’, ‘Bartleet House’65, Braybrooke Place, Colombo 02Tel: 011 5220200Fax: 011 2434985 E-mail: [email protected]

Ceylinco Stockbrokers (Private) Limited‘Ceylinco House’ Level 969, Janadhipathi Mawatha, Colombo 01Tel: 011 4714300, 011 4714388-9, 077 7891871, 077 7896064Fax: 011 2387228 E-mail: [email protected]

John Keells Stockbrokers (Private) Limited130, Glennie Street, Colombo 02Tel: 011 2326003, 011 2338066-7, 011 2342066-7,011 2446694-5, 011 2439047-8, 011 4710721- 4Fax: 011 2342068, 011 2326863E-mail: [email protected]

Lanka Securities (Private) Limited228/2, Galle Road, Colombo 04Tel: 011 4706757, 011 2554942Fax: 011 4706767 E-mail: [email protected]

SC Securities (Private) Limited2nd Floor, 55, D.R. Wijewardena Mawatha, Colombo 10Tel: 011 4711000Fax: 011 2394405E-mail: [email protected]

J B Securities (Private) Limited150, St. Joseph’s Street, Colombo 14Tel: 011 2490900, 077 2490900, 077 2490901Fax: 011 2430070, 011 2446085, 011 2447875E-mail: [email protected]

Asha Phillip Securities LimitedLevel 4, ‘Millennium House’46/58, Navam Mawatha, Colombo 02Tel: 011 2429100Fax: 011 2429199E-mail: [email protected]

Capital Trust Securities (Private) Limited42, Sir Mohamed Macan Markar Mawatha, Colombo 03Tel: 011 5335225Fax: 011 5365725E-mail: [email protected]

Somerville Stockbrokers (Private) Limited137, Vauxhall Street, Colombo 02Tel: 011 2329201-5, 011 2332827, 011 2338292-3Fax: 011 2338291E-mail: [email protected]

Acuity Stockbrokers (Private) LimitedLevel 6, Acuity House53, Dharmapala Mawatha, Colombo 03Tel: 011 2206206Fax: 011 2206298-9E-mail: [email protected]

D N H Financial (Private) LimitedLevel 16, West TowerWorld Trade Centre, Colombo 01Tel: 011 5732222Fax: 011 5736264E-mail: [email protected]

NDB Stockbrokers (Private) Limited5th Floor, NDB Building40, Navam Mawatha, Colombo 02Tel: 011 2314170-8Fax: 011 2314180E-mail: [email protected]

CT Smith Stockbrokers (Pvt) Limited4-14, Majestic City, 10, Station Road, Colombo 4 Tel. 2552290 Fax: 2552289E-mail: [email protected]


TRADING MEMBERS OF COLOMBO STOCK EXCHANGE (CSE)

Capital Alliance Securities (Private) LimitedLevel 5, ‘Millennium House’

46/58, Navam Mawatha, Colombo 02

Tel: 011 2317777

Fax: 011 2317788

SMB Securities (Private) Limited47, Dharmapala Mawatha, Colombo 03

Tel: 011 5539593

Fax: 011 2339292


First Guardian Equities (Private) Limited32nd Floor, East Tower

World Trade Centre, Colombo 01

Tel: 011 5884400

Fax: 011 5884401


Taprobane Securities (Private) Limited2nd Floor, 10, Gothami Road, Colombo 08

Tel: 011 5231000

Fax: 011 5328177


Heraymila Securities Limited532/4F, Srikotha Lane, Galle Road, Colombo 03

Tel: 011 2372561-4

Fax: 011 2372565


SKM Lanka Holdings (Private) Limited377/3, Galle Road, Colombo 03

Tel: 011 2372413-4

Fax: 011 2372416


IIFL Securities Ceylon (Pvt) Limited27th Floor, East Tower, World Trade Centre, Colombo 01

Tel: 011 2333000

Fax:011 2333383

E-mail : [email protected]

TKS Securities (Pvt) Limited14, Reid Avenue, Colombo 7.

Tel: 011 2675200

Fax: 011 2682553


Claridge Stockbrokers (Pvt) LimitedNo.10, Gnanartha Mawatha, Colombo 08

Tel ; 011 2697974

Fax: 011 2677576

Richard Pieris Securities (Pvt) Limited69, Hyde Park Corner, Colombo 02

Tel: 077 7281281

Fax: 011 2675064


Arrenga Capital (Pvt) Limited 410/115, Bauddhaloka Mawatha, Colombo 07

Tel: 2689107, 0777-847720

Fax: 2689106


New World Securities (Pvt) Limited2nd Floor, 45/2, Braybrooke Street, Colombo 02.

Tel: 2358700/20

Fax: 2358701

Email: [email protected]


ANNEXURE C - ADDITIONAL NOTES TO THE 31ST MARCH 2010 - AUDITED FINANCIAL STATEMENTS

31.12.2010 31.03.2010 31.3.2009

1. Stated capitalAt the beginning of the Year (01-April) 4,846,097 4,846,097 4,246,097 Fully-paid Ordinary Share Issue @ 25/- – – 600,000 Right Issue @ 10/- 9,692,194 – –At the end of the Period 14,538,291 4,846,097 4,846,097

2. Non-Performing loans of each category as at 31.03.2010Loan Category Amount

Hire-Purchase 3,056,593 Finance Leases 21,834,669 Consumer Credits 7,561,256 Personal Loans 7,100,907 Land Easy-Payment Loans 3,771,631 Microfinance –Others 12,711,801 Total 56,036,857

3. Leasing Rental Receivables Amount

Lease Rental Receivables Within One Year 283,098,444Lease Rental Receivables 1 to 5 Years 309,819,379Lease Rental Receivables Over 5 Years 60,043Total 592,977,866

4. Company did not transfer the required 20% from net profit to the statutory reserve. Since it was an operational

loss and the profits derived through only differed tax computation.

However, in future Company will make the necessary transfers according to the Central Bank directions.


ANNEXURE D - DETAILS ABOUT THE RIGHT ISSUE HELD ON 01ST DECEMBER 2010

Seq. Allotment No. Name No. SharesAllotted

Additional Shares

Total No. of Shares

1. 002/2010 Mrs. Venodani Alahakoon 500 100 600 2. 003/2010 Mr. Jayampathi Alahakoon 500 100 600 3. 006/2010 Mrs. Palawa Elpitiyegedara Nishantha Kumari Alpitiya 7,500 – 7,500 4. 012/2010 M/s B.G Investments (Pvt) Limited 4,847,068 3,936,330 8,783,398 5. 013/2010 Ms. Pradeepa Sudharshani Bandara 1,926 – 1,926 6. 014/2010 Mr. Wickramasinghe Mudiyanselage Anura

Jayampathi Bandara

6,790 – 6,790

7. 021/2010 Ms. Kalogahathanne Gedara Ajani Rekha Damayanthi 4,610 – 4,610 8. 022/2010 Mr. Danasekara Mudiyanselage Nanda Kumara

Bandara Danasekara

7,752 – 7,752

9. 026/2010 Mr. Kenneth Skanda De Silva 7,992 100 8,092 10. 030/2010 Mr. Michael Nirmalan Anandakumar Dhas 4,500 100 4,600 11. 031/2010 Mr. Wasantha Wijethunga Dikkumburage 3,000 – 3,000 12. 056/2010 Mrs. Vagdevi Wimalangi Fernando 300,000 – 300,000 13. 059/2010 Mr. Hene Gedara Nelson Fernando 11,654 100 11,754 14. 075/2010 Mr. George Ginendra Hemachandra 100,000 – 100,000 15. 078/2010 Mrs. Herath Mudiyanselage Punchimenike Shalika Herath 1,444 100 1,544 16. 081/2010 Mr. Indika Hettihewa 9,606 100 9,706 17. 083/2010 Mr. Batapola Arachchige Lal Athula Indrasena 18,536 – 18,536 18. 087/2010 Mr. Liyadde Gedara Upali Jayashantha 10,438 100 10,538 19. 094/2010 Mr. Mahendra Nalaka Kariyawasam 22,912 100 23,012 20. 097/2010 Mrs. Chamilka Priyadarshani Keerthisinghe 676 – 676 21. 098/2010 Ms. Deegala Nilanthi Keerthisinghe 150,460 2,693 153,153 22. 099/2010 Mrs. Manjula Keerthisinghe 266 – 266 23. 100/2010 Mr. Deegala Mahendra Keerthisinghe 336 – 336 24. 101/2010 Mr. Deegala Jayantha Keerthisinghe 49,154 738 49,892 25. 107/2010 Ms. Buddhika Chamindani Kumari Kulathunga 3,620 – 3,620 26. 129/2010 Ms. Opatha Muhamdiramlage Suneetha Deepani Perera 4,586 – 4,586 27. 134/2010 Mr. Krishantha Premarathne 430 100 530 28. 137/2010 Mrs. Radampola Gamage Priyantha Kumari Radampola 9,044 – 9,044 29. 142/2010 Mr. Palle Kammale Gedara Gayan Rajarathne 760 – 760 30. 146/2010 Mr. Kandagolle Gedara Sampath Sri Chaminda Ranasinghe 8,562 – 8,562 31. 150/2010 Mr. Bathiya Ajith Randeniya 12,642 – 12,642 32. 151/2010 Mr. Korale Gedara Aruna Sanjeewa Rathnayaka 2,812 – 2,812 33. 156/2010 Mr. Lionel Ratnayake 532 100 632 34. 168/2010 Mr. Mahinda Kumara Seelagama 1,000 – 1,000 35. 171/2010 Mr. Sri Deva Kumara Semage 70,000 – 70,000 36. 172/2010 Mrs. Susila Semage 30,000 – 30,000 37. 176/2010 Dr. Vithanarachchige Geethanjali Sunethra Senaratne 4,828 100 4,928 38. 189/2010 Mrs. Vishaka Kumari Viswakula 6,916 – 6,916 39. 196/2010 Mrs. Chitrani Patricia Welivitigoda 193 – 193 40. 200/2010 Mr. Chandana Prasanna Wickramasinghe 10,034 – 10,034 41. 205/2010 Mr. Deniye Gedara Kapila Bandara Wijesena 2,100 – 2,100 42. 209/2010 Mrs. Rajapakse Appuhamilage Pushpalatha Wijethunga 10,538 – 10,538 43. 210/2010 Mr. Nambukarawasam Kolabaddage Dushantha Wijeweera 482 – 482 44. 212/2010 Mr. Haluwana Mudiyanselage Nihal Laxman

Bandara Yatibopitiya

4,534 – 4,534

Total 5,751,233 9,692,194

COMMERCIAL CREDIT LIMITED - CSE

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